I used to trade stocks with my grandmother. Here’s what she taught me about money management
It was around 2004/2005. I was in college and living with my grandparents.
“Check the dividend yield, honey,” my grandmother said at the kitchen table.
I scanned and replied, “This one is at three percent.”
“Now let’s look at the returns of their competitors and see who has consistently increased their dividend. And, also manages the price/earnings ratio, my dear. This is so that we can compare well.
“Oh and by the way, did you see any red flags (other than no dividend) with WestJet stock when you read the MD&A?” asked my grandmother.
“Not at the moment. They seem like a welcome competitor in the market with a strong growth strategy. Eventually they will have to pay a dividend to investors,” I said.
“It’s okay. I’m going to add more shares today and take some profit off the table,” my grandmother said as she sipped her tea.
I followed his strategy and made enough money to pay my tuition the following year.
In the evenings, I read my finance and marketing textbooks to her (she had lost her sight a few years earlier) and she was my sounding board for my stock trading project – a dividend investing strategy – during from my last semester of college. Nana and I passed the course.
Fast forward to 2022.
My grandmother, Velma Scorgie, died last week at the age of 100.
She was one of the first financial feminists and shaped much of what I know about money today. In her twenties, she held a finance job on Bay Street until she became pregnant and her role was abruptly eliminated. But that hasn’t stopped her from continuing her financial education, investing and ensuring that her children and grandchildren become financially savvy themselves.
Here’s what she taught me about money.
Women are great investors
It wasn’t the norm for women to decide household investments 50 or 75 years ago, but my grandfather and Nana clearly knew she was better equipped to make those decisions. An avid reader and junkie of numbers, my Nana was the queen of compiling technical and fundamental market analysis and finding specific stocks that suited their balanced growth investment strategy.
On each payday, she allocated 20% of their money to their investments (always keeping tax mitigation opportunities in mind), met with the bank quarterly to review market conditions and performance, ran buying and selling decisions and ensuring that she and my grandfather would be well prepared for retirement at age 65.
Yes, she was definitely discriminated against along the way, especially when she brought her three little sons to investment appointments while my grandfather was working, but she overcame that and moved on.
It turns out that research shows that women, when given the opportunity to learn key investment skills, actually outperform their male counterparts in terms of returns, which is precisely what my grandma was doing. -mother.
Budget like a boss (mom)
My grandmother used two tools to help her budget at the time: a checkbook register to keep track of each transaction and a graph paper where she would show the household’s forecast of expenses for the coming month: mortgage, groceries, children’s clothing. children, etc. on. She often placed these two budgeting tools side by side to compare what she intended to do and how it ended up happening.
Today, we use budget templates and expense tracking tools in spreadsheets. But, the basic skill of spending within one’s means remains the same. According to my Nana, they just didn’t really have the ability to overspend because there were considerably fewer borrowing tools at that time. Imagine what it would look like today with no credit card space or emergency lines of credit – #Gulp.
I copied my grandmother’s budgeting strategy during my college years, living with her and working part-time (as a cashier at RBC) while going to class, and it worked like a charm. I even made sure that before paying anything, I put some money aside for my future. This cash reserve came in handy after graduation when I used it to buy my first house at age 21. And I always made sure my budget had room for fun because “that’s money,” my grandma used to say.
Give while you live
Before I entered university, my grandmother revealed to her eight grandchildren that she had invested a large sum of money specifically to help pay our school fees. Growing up with zero money in my house, finding out that I would receive financial support for my tuition and books was a financial game-changer for me!
In my grandmother’s opinion, passing on this money was a living investment in her family. “I want to smile at your success and attend your graduations while I’m still alive,” she said. Little did she know that today, early intergenerational giving has become one of the hottest trends in financial planning. It’s a great way to see the money work for the next generation, and in some cases, it can be useful for managing taxes.
(Here’s a fun tidbit: she blocked my grandfather from accessing that particular investment account because no matter what happened to him, she would have 100% control of that money.)
This too should pass
Born during the Great Depression and then raised watching World War II unfold, my grandmother considered resources and life in general to be very precious… almost scarce. I think we’ve all had a taste of that with the pandemic and watching the war break out between Russia and Ukraine.
My grandmother didn’t waste food or money on frivolous things. She used coupons and capitalized on sales to stretch her resources. She has always given money and time to her community. She spent money on books, learning, and traveling later in life because that’s what filled her cup. Sometimes she was a little too frugal; my grandmother didn’t buy a right side mirror on her early 90s Honda Accord. But from her perspective, if the purchase wasn’t going to help her financial health, support her family, or bring her joy, she could do without it: who counts anyway on this right mirror. (Just kidding, vehicle safety is important!)
What I mean is that the world, the markets, our health, the economy… it’s changing rapidly right now, and it’s not for the best. By staying focused on your financial strategy and protecting what’s yours — your family, your money, your community, your job — that’s how we’ll move forward.
Here is the biggest thing I learned from my Nana. She did not leave her future to chance in the hope that a better life would “just happen”. She always had a plan for her money and how she wanted her life to take shape. In this case, it is EXACTLY what it takes to move forward with money, relationships and your career.