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Level Up Your Finances: Level Eleven

Updated: Nov 16, 2021

Level 11 - You have your retirement savings, and savings for any goals longer than 5-years away, invested in the market.

Why it Matters

The rate of return in the market is typically higher than a high-interest savings account. Making sure long-term goals are invested with the right asset allocation will increase your growth rate while taking an appropriate amount of risk.

Goals for this Level

In Level 11, we want to get you started investing by:

  1. Understanding how much you can invest

  2. Understanding what investing approach makes sense for you

  3. Understanding what platform to use

  4. Understanding what account to put it in

1 - Understand How Much You Can Invest

The amount you can look at investing is the amount that’s leftover after you:

  1. Have maxed out your employer’s matching program.* This is often the easiest way to get started investing AND it typically has higher returns than investing yourself because your employer will often match a portion of your contributions – essentially giving you free money! (See Level 5)

  2. Have paid off high-interest debt. The interest rate on debt is often higher than the average return in the markets, so you will do better financially over the long term by paying off debt first, and investing later. If you invest instead of paying off high-interest debt, your interest payments will likely be greater than your investment returns!* (See Level 3)

  3. Have funded your emergency fund that is held outside of your investments. Emergency funds can help you avoid high-interest debt in the event of unforeseen circumstances. The stock market is unpredictable, and it can take multiple days to get money out of the market and into your bank account. For both of these reasons, you should have a fully-funded emergency fund before starting to invest.* (See Level 6)

  4. Have saved for any goals within the next 5 years. The average stock market return is 6-8% BUT the return in any given year can be much higher or much lower. If you need the money you are investing in less than 5 years, do not invest it in the market because there is a high risk that the market may go down during that period, thwarting your savings efforts! If you need the money within 5 years, invest it in less-risky places like bonds.

2 - Understand What Investing Approach Makes Sense for You

Hands-down, the easiest way to get started investing is to get a robo-advisor. They are low-cost, diversified, and take care of portfolio allocation, rebalancing, and reinvesting dividends.

If you are sold on that prospect, jump to our section on how to pick a robo-advisor.

If you want more detail on what other options exist outside of robo-advisors, read on.

Are you Active or Passive?

There are two main investing strategies – active and passive. Within each of those strategies, there is a way you can do-it-yourself or have someone do-it-for-you.

Let’s explain them one by one.

Active Management is an investment strategy where you buy and sell individual stocks, with the goal of beating the average market return. It typically assumes that you will hire professional help (or indeed you are a professional yourself) such that you can outsmart the rest of the investors in the market and exploit market opportunities that no one else sees. Active Management generally involves trading more frequently, thus incurring higher fees. Active Management also involves less diversification as you are trying to maximize your benefit from a smaller number of trades.

Passive Management is an investment strategy where the goal is to match the market performance. This strategy assumes that there are so many smart humans out there trying to ‘exploit’ the market, that finding any opportunities to beat them will be quite difficult. Instead, this strategy is built on the idea of matching the market’s performance. Passive Management generally involves purchasing index funds that mimic the performance of a benchmark like the S&P 500 or Dow Jones. Because of its use of index funds, Passive Management tends to be less expensive (you trade less frequently and index funds are generally less expensive to trade) and involves more diversification (you are trying to own the entire market!).

There are multiple studies that show that passive management strategies tend to beat active management strategies over the long haul (like this study by Vanguard – the firm that invented index funds). Some proponents of Active Management will argue that it’s easy to just own the whole market when it’s going up, as it did between 2008 and 2018, and that instead, Active Management really shines when markets are in a downturn. But there are many studies (like this one) that suggest that Active Management may not actually be that much better during down markets.

What are my options for Active or Passive Management if I want to Do-it-Myself or have someone Do-It-For-Me?

There are a couple of ways to pursue a passive investing strategy depending on the amount of help you need. We’ve organized them from the most amount of effort required on your part (Index Investing) to the least amount of effort required from you (Financial Advisor and Robo Advisor).

Because passive management tends to perform better than active, we’re only going to focus on passive management.




Stock picking

Mutual Funds

Financial Advisor


Index Investing

All-in-One ETFs

Robo Advisor

Financial Advisor


What It Is



Index Investing

Purchasing a mix of index funds yourself using an online trading platform (like one through your bank or a low-free provider like Questrade or WealthSimple Trade)

Index ETFs own many different stocks, with the goal of tracking the performance of a specific index. The return is based on the return of multiple companies not just one

  • Low Management Fees (as low as 0.05%)

  • Flexibility – you can pick what indices you want to track

  • You have to pick what ETFs to buy

  • You have to determine your own portfolio mix, and maintain it

  • You have to reinvest dividends yourself

All-In-One ETFs

Purchase all-in-one ETFs that own a mix of ETFs based on your desired portfolio mix

These ETFs automatically pick what ETFs to own and maintain your desired portfolio mix.

  • Low management fees (as low as 0.25%)

  • Automatically maintain your desired portfolio mix once you've picked it

  • You have to pick your portfolio mix, but once you've picked they maintain it

  • Limited flexibility - you have to pick from the portfolios they offer

  • You have to reinvest dividends yourself


Builds a mix of low-fee ETFs optimized for your personal situation

All you have to do is deposit your money, the robo advisor will automatically pick what to buy, maintain your desired portfolio mix, and reinvest your dividends

  • Low management fee (often 0.5% or less)

  • Low minimum balance (often $0)

  • Automatically pick what to buy based on your unique situation

  • Automatically maintain your portfolio mix and reinvest dividends

Limited flexibility - what they pick for you is what you get

Financial Advisor

You hire a financial advisor to help you build and maintain a portfolio of index ETFs

This is like replacing a robo-advisor with a real-live human being

  • May require a minimum balance

  • Able to answer any questions you have in person

  • Automatically maintain your portfolio mix and reinvest dividends May require a minimum balance

  • Able to answer any questions you have in person

  • Automatically maintain your portfolio mix and reinvest dividends​

  • Higher management fees (often 1% or more)

  • Less likely to fully-embrace a passive strategy. Many financial advisors will advocate for an active approach

Generally speaking, if you are just getting started and are looking for a super-easy hands-off approach, opt for the Robo Advisor*. These services replicate many aspects of the experience of working with a financial advisor for a fraction of the cost.

If you are prepared to do a teensy bit more research and have more flexibility in what you’d like to invest in, opt for index investing yourself or all-in-one ETFs.

For the rest of this article, we’re going to focus on ETFs, All-In-One ETFs, and Robo Advisors.

3 - Understand What Platform to Use

Once you’ve picked an investing approach (e.g. ETFs, All-In-One ETFs, Robo Advisor), you need to pick what platform to use to actually invest through that method!

For ETFs and All-In-One ETFs

You can purchase ETFs and All-In-One ETFs through a brokerage account. Brokerages allow you to buy and sell assets such as stocks, bonds and ETFs on your own, typically at a very low cost. has a great comparison of online brokers in Canada. You can access it here:

For Robo Advisor

There are many robo-advisors available to Canadians. has a great comparison of existing robo-advisors, you can access it here:

4 – Understand what Account to Open

No matter whether you use an online brokerage or robo-advisor, when you go to open an account you will have to select an account type. The two most common are Registered Retirement Savings Plans (RRSP) and Tax Free Savings Accounts (TFSAs).




Are made with pre-tax dollars, so you get a tax refund on your contributions

Are made with after-tax dollars, do you don’t get a tax refund on your contributions

In-Year Contribution Limits

18% of your taxable income in 2020, or $27,230, whichever is less

$6,000 for 2020

If you have never contributed before, and you turned 18 in 2009 or later, you can contribute up to $69,500

Tax on Growth

Your money grows tax-free, so you don’t pay taxes on the returns you earn

Your money grows tax-free, so you don’t pay taxes on the returns you earn

Tax on Withdrawals

Anything you withdraw from your RRSP is taxed like income, unless you are withdrawing from specialized government programs like the Home Buyers Plan or Education Savings Plan

You do not pay taxes on withdrawals

What Happens to Contribution Room After Withdrawal

You lose it. So, if you withdraw $10,000 in one calendar year, you do not get that room back. Ever.

It replenishes the next calendar year. So, if you withdraw $10,000 in one calendar year, you can put the $10,000 back starting the next calendar year. You get the room back.

What Type of Investments can you Hold




Mutual Funds

High Interest Savings Accounts





Mutual Funds

High Interest Savings Accounts


Generally speaking, you want to try to max out your TFSA before you max out your RRSP*. The TFSA gives you greater flexibility because you can withdraw the money tax-free AND you do not lose the contribution room after withdrawal.

The size of the tax refund on your RRSP contributions is based on your income tax, so save your RRSP room for when you are earning a higher income and paying higher taxes to maximize your potential refund!

Be sure to check your contribution room online at CRA’s online portal:

*Untangle Take

We love maxing out employee matching programs. Estimates place the amount of money left on the table in these programs in the billions in Canada!

A rule-of-thumb that we like is that you have 1.5% - 2% between what you think you can get in your investments compared to what you pay on your debt. That looks like this. If you pay 4.5% on your student loan, then you need to have an investment portfolio that returns an average of 6.0% - 6.5% or higher before prioritizing investing.

Women are great savers, but we tend to keep too much in cash, this makes it even harder for us to reach our retirement goals. We like having a Life Happens cushion to keep you out of debt, and research shows an amount even as low as $2,500 is sufficient for most people.

We love robo-advisors at Untangle Money. They are such a great place to get started with investing and reduce the time burden of investing and managing money.

If you earn less money than $50,000/year then you should definitely prioritize your TFSA, otherwise, you may want to invest in your RRSPs, and use the money that you get back on your tax return to invest into your TFSA. Remember, women's salaries tend to peak much earlier than men's (in and around 40), so unlike men, there may not be enough high salary years to make waiting worth it. Also, research shows that women need to max out all of the tax-sheltered account room available to them in order to save enough for retirement.

What's next?

Stay tuned every Thursday for a new level in the series!

In case you missed it:

Pineapple Finance Co is a collaboration between Emily and Elizabeth with a goal to answer one simple question: could they use Instagram to improve Canadians' financial literacy.

You can follow Pineapple Finance Co. over on Instagram, and we've linked two other blog posts written by Emily and Elizabeth here:

You can also follow Untangle Money over on Instagram, Facebook, Pinterest, and LinkedIn, and sign up for our newsletter here!

Financial independence is a huge part of being a strong, independent person, and it is our mission to help women, and anyone who doesn't feel safe or welcome in financial spaces typically dominated by cis men, set themselves up for financial success.

At Untangle Money we help women understand their (real!) financial picture, and obtain financial guidance from people that actually, really, get it. We would love to help you, too! Join the community of hundreds of other women looking to strengthen their financial well-being. You can check out our products and plans here or get in touch for a free consultation!

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