Blessed by the Potato

Sorry for all the talk about money and finances lately, I know it’s boring to some people. I promise to get back to hybrid cars, nuclear plants, copyright, and general all-out ranting and raving craziness soon. But first, a question: how much do you know about finances? I realize that most of the people who read this (at least, those who I know about and who comment) are students or young people in the beginning of their careers and moving-out-on-their-own lives. Thus they might not be (or feel that they are not) in a position to have significant long-term savings, and thus aren’t worried about how to manage those savings.

Nonetheless, knowing this stuff can be quite important, especially as our cohort comes to the age where savings is both possible and easily overlooked in favour of shiny things.

I take a lot of this stuff for granted, after all, my dad was an accountant/financial consultant, and passed a lot of it on to my brother and me (though I don’t know if he’s been teaching my sister). So I’m sometimes amazed at how little a lot of the general public knows about saving, investing, and finances in general. One example was a new student in our lab who, despite living on her own for years and being in university, did not have a chequing account for us to set up direct deposits for her. I had to explain why she needed to open an account, how cheques could be useful, etc. To be fair, she did have a bank account, an old one where she could go to the bank, in person, and withdraw or deposit money, and have the tellers pay bills. Why one of them never set her up with a more modern account I’ll never really know.

Similarly, there was some discussion recently about mutual fund fees, and how unaware many people are of them. That made me wonder how many people were aware of mutual funds at all? So I figured I’d put together a little list/quiz of sorts. Feel free to give your answers in the comments, or keep them to yourself… but please feel free to ask me if you’re not familiar with anything. I’d be happy to follow this post up with a blog entry on each, but don’t really want to waste my time if everyone already knows this stuff or will run off and learn about it somewhere else before I write it up :)

Are you familiar with/have:

1. A chequing account?
2. Online bill payments?
3. Savings accounts? (Especially high interest savings accounts)
4. GICs?
5. Bonds?
6. Mutual funds?
7. A brokerage account? (Online discount or otherwise)
8. Stocks?
9. Do you know about the power of compound interest? The exponential growth function? [Aside: I highly recommend that video series at least to part 3: At what point do you realize there’s a problem?]
10. Limit orders?
11. Risk? (Not the boardgame, though bonus points for people that do have the boardgame and want to play)
12. RRSPs?
13. Inflation?

There’s probably a lot of other things that could be added to a list like that (like “debt”), but that should do for starting discussion now…