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A Letter To My Younger Self

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Close to 42 per cent of investors believe the Canadian economy will enter into a recession in 2016, according to the Market Sentiment Report by Sun Life Global Investments. The numbers are even higher among young Canadians with half of millennials surveyed saying they believe a downturn is close.

The research also highlights a fairly troubling discord. Despite having the longest time horizon, Canadian millennials are risk-averse and conservative when it comes to investing. Forty-four per cent of millennials say they're either somewhat (36%) or highly (8%) risk averse while 44 per cent say they're conservative in their approach. On average, millennials' portfolios are 31% allocated to cash (vs. 26% among Gen X, 24% among Late Boomers, 24% among Early Boomers and 38% among 67-plus).

Given young Canadians have the most time left in their careers, this perspective could be harmful to their overall financial plan as they have a longer time horizon and may be able to take on more risk to achieve higher growth over the long run. These findings had me reflecting on words of wisdom I'd share with my younger self. Below are some timeless tips:

Automate your savings. If you don't see it, you won't miss it! This is so important for professionals in all career stages. The simple act of systematically allocating a portion of your paycheque or bonus to a regular investment plan, whether it is for retirement, buying a house or saving for a vacation, can really add up over time. Take advantage of employee savings plans where your employer matches your contribution up to a certain percentage or dollar amount.

Understand what you're buying and the impact it will have on your plan. Whether it's insurance, an investment, a vacation or buying a house or car, know what you're getting into and how it fits or impacts your overall plan. For example, buying a top-of-the-line car may feel good at the time, but those large monthly payments can have a huge impact on your cash flow and can negatively impact your ability to save.

Plan "money dates" with your partner. A surprising number of young people are in the dark when it comes to their partner's money habits, even when they're in serious relationships. My best guidance looking back is to work together: create a financial plan with near- and long-term savings goals. Draw up an everyday budget and track shared and individual expenses (apps like Mint, Spending Tracker and Goodbuget can make this easy).

Plan regular date nights to check in and monitor your progress. Finances can be a huge source of stress with couples but they don't have to be. Keeping the lines of communication open is critical. Find a financial advisor that you both trust and who can help you navigate over time to deal with changing financial challenges and priorities.

Know that buying cheap means buying twice. Seriously. Wherever you can, save up and splurge on better quality. Despite the higher price tag, it's usually worth it over time. On a related note: you need less clothing than you think you do. No matter what your style is, it pays to go for quality.

Negotiate your salary. Your ability to earn an income is one of your most powerful assets. Ensure you're compensated fairly for your skill set and expertise by checking in with industry groups or associations. Don't feel pressured to accept what's offered; negotiate before you accept a job. It is much harder to ask for a raise once you are in the role. Also, ask for a higher salary as your responsibilities expand.

Tune out market movements and stay invested. Retirement is still 25 to 30 years away. That means you can afford to take on a little more risk in order to reach your goals. On the other hand, stay away from hot tips that put your savings at risk. Pay attention to risk-adjusted returns. Focus on your goals and building a career that you find rewarding. Tune out the everyday noise that goes along with market ups and downs. Emotions are great for sports and movies, but not investing!

What do you wish you could tell your younger self? Sound off in the comments below.