I avoid talking about my own finances in this section, for obvious reasons (risk of kidnapping, marriage proposals, etc.). But I make an exception this week to say that $96,000 of the money in my TFSA account is attributable to a company: Communauto.
This sum may seem high, but it is actually miniscule: my family could have accumulated $1 million with Communauto alone within 20 years.
Before explaining to you how this is possible, a clarification: this section is likely to pass over the heads of many people. If you do not live in Montreal, Quebec, Trois-Rivières, Gatineau, Sherbrooke, or in one of the nine cities in Ontario where the service is offered, you do not have access to Communauto.
On the other hand, if you live there but work away from home, have to drive several children to several schools or sports training every day, you probably need a car of your own.
I am not a car-sharing fundamentalist. Everyone leads their life as they see fit. But this system has enriched me, and I think tens of thousands of other people could benefit from it.
So how did I arrive at my figure of $96,000? How about 1 million?
A decade ago, when the song Get Luckyof Daft Punk, had just been launched, that Pauline Marois was premier of Quebec and that the province was recovering from the student strikes of the red squares, we returned from Los Angeles with a newborn baby to establish ourselves in Montreal.
By reflex, we told ourselves that life without owning a vehicle was impossible.
Taking the subway to work is one thing. But how do you get to a medical appointment without a car? To activities? At friends’ parties? At the grandparents out of town?
We did like many new parents and bought a car.
However, over the months, we realized that: 1) we have two legs; 2) we have bicycles; 3) newborns and children are allowed on buses and the metro (it’s crazy, I know); 4) Uber exists.
Our car could sit idle on the street in front of the house for days on end – it’s not unique: the average car is idle 95% of the time. We finally decided to sell it and subscribe to Communauto.
How is Communauto? It’s like owning a car: it has its pros and cons.
Negative sides: the company is a victim of its own success and it is sometimes difficult to find a car on weekends, the interior of the cars is not always super clean (empty coffee cup, muffin crumbs, etc.) , and it can sometimes take a long time to reach a customer service representative on the phone.
In nearly 10 years, I have never had to cancel a trip for lack of a car. But I had to row sometimes. Jogging 3 kilometers to pick up a car in a nearby neighborhood, taking a BIXI to get to the nearest car are part of my wartime deeds.
And then, I’m not going to deny it, driving a Kia or a gray Toyota with a big green logo on the door is a lot less cool than driving a Jeep or a Tesla. I do not attach importance to it, but I realize that it is not to everyone’s taste.
On the benefits side: total peace of mind regarding costs (gas and insurance are included in the price), no need to manage maintenance, tire changes, or snow removal and shoveling to “change side of the street” in winter… And you pay for use: zero use, zero bill.
I also noticed that not owning a car prevents us from using it out of laziness, for example to go to the park a little far away, when it is accessible on foot, by bike or by bus. Communauto estimates that car sharing leads to a reduction of approximately 30% to 40% in kilometers travelled.
So there’s this kick-ass effect that forces us to be more active than we would be if we had a car at our disposal 24 hours a day, an effect that also pushes us to take turns carpooling with other parents for sports meetings. Less car travel means less greenhouse gas emissions, less noise and dust, less danger for citizens on the streets, and also less expense for all taxpayers, who subsidize the maintenance of roads and snow removal of public roads reserved by the City for car owners to store their vehicles when they do not need them. In short, everyone is a winner.
Not to mention, of course, the financial gains.
The typical Montreal household that owns a car (30% do not own one, a rate that exceeds 50% in central neighborhoods) has spent $9,500 on private automobile transportation on average per year over the past six years, according to the City. of Montreal, an amount which includes depreciation, operation and maintenance.
On our side, it turned around $3,000 on average, including a one-month rental during the summer.
Leaving a conservative game of $1000 per year for Ubers, taxis and the like, I take the $5500 difference and invest it annually in my Tax Free Savings Account (TFSA).
I invested this money on a 50-50 basis in exchange-traded funds (ETFs) that track Canadian and US markets. The funds I purchased are Vanguard FTSE Canada All Cap Index ETF (VCN) and Vanguard S&P 500 Index ETF (VFV). The total annual management fees for these funds are 0.05% and 0.09%, respectively.
From 2013 to 2023, this portfolio has grown by an average of 10% per year. The biggest drop was 32% at the start of 2020, which unfortunately reversed in August of the same year – I wish the sales had lasted longer, but that didn’t happen.
So our $5,500 saved and invested each year through car sharing has now become $96,000. Seen differently, this service allowed us to accumulate the equivalent of the purchase price of two Tesla Model 3 in 10 years.
And if our savings and our returns were to continue (not guaranteed, but the stock market has seen average annual returns of around 10% for several generations already), we would be close to $350,000 in the TFSA in a decade. The equivalent of eight Tesla Model 3s.
In 20 years, $1 million attributable to our transportation savings could be multiplied tax-free in our investment account. Millionaires, just with Communauto.
Do you understand why the green logo on the door doesn’t really bother me?
Last week, I told you about day trading. Many of you reacted.
Rodrigue writes: “I have been investing in the stock market for 50 years and I have never met a day trader who makes money. In 2018, I treated myself to a $7500 course, which was totally unnecessary. »
Pierre writes: “I made day trading for two years full time. I was renting an office in Montreal with about forty other guys. I lost money… A long time ago, a wise old man told me: “If you want to know where you will be in 10 years, look at someone who did the same thing as you in 10 years…” ”
Alain writes: “The day trading and frequent transactions interrupt the magic of compound interest. »
Stéphane writes: “The facts are there: invest and wait. Rush no, stack the pennies, find yourself a hobby and not look too much. »
The question of the week
What are your tips for limiting your transportation expenses?