Students without much in their wallets might not know how to get on the investment track. (Matt Oxman / The Ryersonian)
Hands went flying when certified financial planner Shannon Lee Simmons, the guest speaker at the recent Managing Your Money workshop held at Ryerson, opened the floor to questions.
Students and recent graduates asked about everything, from whether they should put money into a Tax-Free Savings Account (TFSA) when they still have massive OSAP debt, to where they should go for investment help if the banks are just peddling their own products.
The event was organized by Alumni Relations to give attendees the tools they need to get their financial affairs straight. Simmons touched on topics like setting up a realistic budget and the tools available to those who want to start investing long-term.
“Personal finance isn’t something that is taught,” said Erin MacDonald, the Alumni Relations officer heading the event, at the outset of the workshop. Many students graduate without knowing how to manage their money and are thrown into the deep end of TFSAs, Registered Retirement Savings Plan (RRSPs), Exchange Traded Funds (ETFs), and a host of other intimidating acronyms, not to mention monthly loan repayments.
Shannon Lee Simmons instructed students and graduates on how to budget and start investing at a recent Ryerson workshop. (Courtesy Erin MacDonald)
But with a little help, the world of finance isn’t as difficult to navigate as young people often assume. Resources at Ryerson and other institutions aim to alleviate the stress of leaving school without a steadfast knowledge of financial planning.
One of the main reason students don’t invest their money is that they think it’s a complicated process, says Habib Mehrabi, a third-year business management student at Ryerson.
“There’s a lot of jargon in finance,” he explains. “That’s basically there to deter people, a barrier for people not to enter.”
Mehrabi adds that in high school, financial literacy isn’t a topic that’s often covered.
During the free, five-week Ryerson Investment and Securities Knowledge program that Mehrabi co-founded last year with student Alex Simonelli, students get the chance to learn about the stock market, portfolio management, risk management and how to start investing at a young age.
“If you just have the right start, the right motivation, [you can] help your financial situation,” says Mehrabi.
A startup that’s in the works at the University of Toronto is also looking to help out new grads who are specifically interested in entering the stock market. DiversifyForYou is an online platform that allows users to fill out a risk questionnaire, identify several stocks or industries they’d like to invest in and define their budget.
Seyon Vasantharajan, one of its founders and a former U of T student, says the startup addresses a problem people have when they’re confronted with thousands of stocks and only so much capital.
“A lot of people research stocks, but they don’t know how to create a diversified portfolio,” he says. “They don’t want to spend their time researching 20 to 30 stocks.” The online program puts a portfolio together for the user at a flat fee and without the sometimes-expensive advice of a financial advisor, adds Vasantharajan.
The engineering science graduate says he finds that graduates have the intellectual capital necessary to understand and invest in the stock market, and they’ll do self-directed research about stocks.
But even if they have an interest in learning how to invest, some students’ burdensome OSAP loans are enough to think about. Financial planner Simmons often sees recent grads who are concerned about debt in her office.
“There’s a healthy dose of fear,” she says, referring to the prospects of navigating a weak job market with significant outstanding loans. “We don’t learn in school how to pay off debt.”
Her tip to students who graduate with debt, which is almost half of all who graduate according to the most recent numbers from Statistics Canada, and who want to start investing is to put money into a TFSA. Savings can grow in a Tax Free Savings Account and you don’t pay tax on withdrawals, an important quality for grads who are uncertain about where they’ll be working in a few months and might need to withdraw from the account.
Simmons is just one of many certified financial planners in Canada. Those who are interested in getting more tips on financial planning can find other CFPs through the Financial Planning Standards Council, a not-for-profit body that enforces professional standards in the industry.
With the right advice, manoeuvring the financial landscape can be easier and make money management less stressful.
“If you can do something smart right after school, you can set a foundation that will set you up for life,” says Simmons. “It doesn’t have to be that scary or hard.
Want more money talk? Check out reporter A.A. Ali’s article and video on tips to start investing.
