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Smart Financial Choices💲🏦
Avoiding Costly Mistakes with Car Loans and Growing Your Wealth💸💵
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Navigating the Canadian Visitor Visa Process
Managing Money
Navigating the financial landscape as an international student can be challenging, especially when it comes to making significant purchases like a car. It’s not uncommon for many to fall into the trap of financing expensive cars, only to face high interest rates and other hidden costs. This month, we’re here to provide you with essential information to make smarter financial decisions and secure a prosperous future. Share this newsletter with all your friends and family! 👫
Now on to this month’s newsletter 👇🏼
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The hidden cost of financing expensive cars
While we understand that owning an expensive and a flashy car can be exciting (yes we’re talking about beamers), financing such a vehicle often comes with high-interest rates and lengthy payment terms. Many students have reported being misled by dealers into deals that seem attractive initially but become financial burdens in the long run. These high monthly payments can strain your budget, leaving less money for essential expenses and savings. Imagine paying a loan for 7 years!!! Or worse yet, students work 3 different jobs just to pay 1 car off. Think about it, if you don’t have to work 3 different average or above average wage jobs you would have more time at hand to figure out ways on how to make more money. If you can relate to this idea, let’s see what you can do, in the next step👇🏼
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The benefits of buying a fully paid car
So, what can you do instead of financing an expensive car?
Consider purchasing a good, reliable vehicle that you can afford to pay for in full. This approach eliminates monthly payments and interest charges, allowing you to save significantly over time. Most students don’t realize that interest is compounded, which means that every time you make a payment towards your car, the interest is deducted first and the remaining amount goes towards the actual amount of the car. Long story short, when you finance the car, the bank or the lending authority makes a lot of money while you loose out on all of that money. A fully paid-down car reduces financial stress and frees up your income for more critical investments in your future. As students, we have bigger goals like owning businesses, houses and maybe for most of us, sending money back home. Between all of this, we strongly recommend to not fall into the trap of financing expensive car. (We can’t have our Porsche tey Bentley di jodi all on financing!) Now, the next question is, how do we decide on the price of a car? Well the experts say your car should be no more than 10% of your annual income! So, if your income is $50,000/yr don’t go out and finance that Mustang worth $60,000 instead get a Corolla or Civic for $5,000. Sounds strange right? check this link to see what the experts have to say - The No. 1 mistake car buyers make, according to millionaire money expert (cnbc.com)
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Growing your wealth
In the above steps, we showed you how to save money, now let’s see what we can do with the money.
a. High-Yield Savings Accounts:
• A high-yield savings account offers better interest rates compared to regular savings accounts, helping your money grow more quickly. Look for accounts with no monthly fees and competitive interest rates to maximize your savings.
b. Tax-Free Savings Account (TFSA):
• The TFSA is a powerful tool for growing your wealth. Contributions to a TFSA are not tax-deductible, but any income earned within the account, including interest, dividends, and capital gains, is tax-free. This makes it an excellent vehicle for both short-term and long-term savings goals.
c. Registered Retirement Savings Plan (RRSP):
• An RRSP is designed to help you save for retirement while offering immediate tax benefits. Contributions are tax-deductible, which can reduce your taxable income for the year. Additionally, the investments within an RRSP grow tax-deferred until withdrawal, typically at retirement when you may be in a lower tax bracket.
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Investing in stocks using online trading platforms
Investing in the stock market can be a viable way to grow your wealth over time. Online trading platforms like Questrade, Wealthsimple Trade, and others provide accessible and affordable options for buying and selling stocks. Educate yourself on the basics of stock investing, diversify your portfolio, and invest for the long term to mitigate risks and maximize returns.
By making informed financial decisions, you can avoid the pitfalls of high-interest car loans and build a solid foundation for your financial future. Focus on saving and investing wisely to ensure long-term financial stability and growth.
Featured place of the month
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Lynn Valley Trail
Explore this 8.9-mile loop trail near North Vancouver, British Columbia. Generally considered a moderately challenging route, it takes an average of 4 h 16 min to complete. This is a popular trail for hiking and running, but you can still enjoy some solitude during quieter times of day. The best times to visit this trail are March through November. Dogs are welcome, but must be on a leash.
Lynn Valley
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From the creator
I am passionate about empowering our readers with the knowledge and tools needed to make informed financial decisions. This month, we’re focusing on a critical aspect of financial literacy—understanding the true costs of financing expensive cars and exploring smarter ways to grow your wealth. By sharing insights into high-yield savings accounts, TFSAs, RRSPs, and stock investments, my goal is to help you build a secure financial future. Thank you for being part of our community, and let’s continue this journey of financial empowerment together.
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