Financial Analysis and recommendations: Elijah Baker

Elijah is a friend I met at the McGill Toastmasters club. His speeches have always been thought-provoking and inspirational.

Elijah is a true hustler. He has several side gigs and jobs. Due to his many activities, he hasn’t much time to think about his financial goals. He only started saving after having a conversation with me about the possibility of retirement or having some money for emergencies.

This interview was held in May 2017

Age: 33
Work-life: Different jobs in different places and side hustles.
Education: Bachelors in communication and music.

Alain: What are your professional ambitions?
Elijah: After graduation, I never wanted to work a 9-5 job. So far, I have succeeded at that.

Alain: How do you earn your living?
Elijah:

• I have been a musician for years, I do gigs at different bars and events.
• I teach guitar and drums to a few private students
• I started a videography company, I do corporate videos, weddings, and events.
• I am a teacher at Trebas Institute

Alain: Can you tell me a bit about your financial planning?
Elijah: In the past, I have accumulated some savings, but I always ended up spending it.

I haven’t been disciplined about saving because:

• I didn’t have the motivation,
• I didn’t have the knowledge
• It wasn’t that important
• I never had a steady income

Only recently I have had the capacity to set aside a certain amount of money to save regularly.

Alain: Have you ever thought about retirement?
Elijah: I don’t think that far into the future. I can’t imagine what life would be like at age 65.

I am trying to set up my life so that even at 65 there will be demand for my services. I hope that people will want to have videos made, they will want to listen to my music and will want to learn to play musical instruments.

Alain: Do you have any goal which could affect your financial life? Do you want a house? Kids? Get married?
Elijah: Yeah, probably, but at the moment I am more focused on living on the present.

Alain: So what are your financial goals?
Elijah: I would like to have a bit of money set aside for emergencies. I would like to continue working until old age without the pressure of having to produce every month. I would like to work because I want to, not because I have to.

Diagnosis

The whole idea of financial planning is new to Elijah. He lives a frugal lifestyle and he is happy with it. His priority is to have lots of freedom, not to have a 9 to 5 but not to lack anything either. He doesn’t mind living a spartan life but if he feels like having a beer with friends, or taking a trip to Costa Rica, he would like to have the money to do it without worrying too much about how to pay for it.

1. We started by opening a brokerage at his main bank
2. I asked Elijah not to listen to the advice of the financial adviser at the bank. The bank offers actively managed mutual funds with high fees. The more a fund cost, the less money it makes for its investors.
3. We spoke about choosing and Index fund, broad-based investment products that represent the whole economy of a county.

Actions

1. Elijah opened an account and deposited some money he had in his bank account.
2. We chose the Canadian Index Fund with management fees of less than 0.33% per year.
3. He’s making contributions every month.

Conclusion

1. This is just the beginning, his present savings are not enough to fund a retirement. After a few months, he will have enough money to face any short term emergency.
2. Our first goal was accomplished, to get into a habit of saving and planning for the future.
3. In future meetings, we will speak about saving a bigger amount and about how to start diversifying his savings.

Follow up

The next meeting will be in May 2018.

Update: April 11, 2020

Elijah never followed any of my recommendations. He told me that he was more interested in Socially Responsible Investing. We never followed up and he hasn’t started saving yet.

In real life, many people are not interested in investing. They postpone it for one year in the future and maybe that day will come, perhaps when it’s a bit too late.

Related Posts

1. Asset allocation for a Canadian 10 years into the past
2. Currency diversification from the Canadain dollar
3. At what point should you start adding bonds to your portfolio

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