Well, sorry, I wanted to find an original start to this text, but ultimately, I took a break, and I decided to go to the spa…
OK, she was easy.
If some people don’t know what I’m talking about, you will read the excellent article by my colleague Marie-Claude Malboeuf on CEGEP students who skip their classes.
This file made me smile. We read that young people decide to leave their classes during the break. The reason ? They had to go and relax at the spa. Or go grocery shopping…
Is everyone in their place at CEGEP? That wasn’t the case when I was there, and it’s clearly not the case today.
Encouraging figures
This should not make us forget that CEGEP and university graduation rates are at record levels.
In 2010, 56% of young Quebecers aged 17 to 24 accessed college studies. A decade later, 65% were pursuing post-secondary studies there.
And nearly 30% of people aged 25 to 64 hold a university degree in Quebec, a percentage that has been increasing for generations. In 1960, barely one in ten young Quebec adults attended university.
In short, Quebecers have never been as educated as today.
Since the dawn of time, people have liked to make fun of the younger generation, finding all kinds of faults in them. Laziness, ignorance, lack of determination, etc.
This is not the boat I want to get into when I say that young people have never had it so easy. I’m talking more about ways to get rich.
It has never been easier than today to open a brokerage account with an institution like Wealthsimple or Questrade, and to invest money there when you turn 18. It’s never been easier to invest in exchange-traded funds (ETFs), diversified products with low management fees, which require no special knowledge. In fact, the less an investor is interested in his investments, the richer he becomes in the long term.
But many young people don’t – including those who would be in a position to do so because of their income. This is what Allan deplores, a reader who is not impressed by the defeatism he senses in the young people around him.
“I have the impression that many young people do not invest because they believe they have no future,” he wrote to me. They believe that the planet is screwed and that the system is designed so that only the ultra-rich can get rich. This pessimism prevents them from thinking long term. So even if you give them all the tips to make investing very easy, they won’t do it! »
If young adults gave me this speech, I would answer them: what is the alternative?
Do you really want to go “yolo” and find yourself at 40 with $700 in your bank account? And at 65 with $2,000 to your name? Or, even worse, with consumer debt on your line of credit or credit card?
Look at the people today aged 40 and 65 who are in this situation. It’s not a pleasant position. Why do you want to wish it on yourself?
Yes, global warming is scary. But, on a day-to-day basis, I think the basic assumption is that human needs will continue to be met, and that society will continue to function.
According to the UN, there should be nearly 10 billion of us in 2050, compared to 8 billion today. In Canada, we could approach 50 million inhabitants in 2050, compared to 40 million today, according to Statistics Canada.
It’s difficult to see how the planet would go from 8 billion to 10 billion people, or how Canada would go from 40 million to 50 million inhabitants, without experiencing economic growth. By the way, economic growth does not automatically mean more CO2 released into the atmosphere. Canada emitted 18 tonnes of CO2 per person in the year 2000, compared to 14 tonnes today. During this period, the gross domestic product (GDP) per capita almost doubled in the country. A country like France currently emits 9 tonnes of CO2 per capita, and sees its standard of living increase year after year.
Bad image
Unfortunately, saving also has a bad image among young people, because it is seen as a black or white issue: either we save, or we have pleasure in life. This is completely false. With the magic of compound interest, small amounts invested over a long time can add up to large amounts. This is because our brain has difficulty understanding exponential returns.
For example, $400 (less than a car payment) invested each month in a diversified ETF portfolio at 7% average returns per year (less than historical average returns) from age 25 to age 65 give 1 million. Of this million, less than $200,000 comes from invested amounts, while more than $800,000 comes from growth.
The younger we start, the less money we have to invest, since each dollar invested will be able to work for us for a longer time.
This brings us to Felix, a young reader of this column who understands that getting rich doesn’t have to be complicated. It doesn’t matter how old we are.
“I’m 19, and I’m in the perfect age range to start investing,” he wrote to me.
Felix currently has $16,000 saved, and saves $300 per month, which he invests in a portfolio of diversified ETFs.
“I’ll watch my portfolio go up AND down over time, but by the time I’m 55, my portfolio will definitely have increased. So why worry about the next six months? I have a cheap car to get around. I’m lucky enough to still live with my parents, so I can afford to save more. As my coach always tells me: “At your age, invest and sleep. And go to work, of course.” »
Felix is building a financial foundation that will change his life. He will have less need for credit, less need for banks. He will have options later.
At 19, you can choose to spend your money at the spa. Or we can be patient and one day buy the spa.
Everyone has their own choice.