Does Your Savings Rate Matter When You’re Investing? (I Find Out By Accident.)

If you haven’t heard, I’m new to this whole “investing thing”.

As luck would have it, I finally took the plunge and invested right before the market downturn in August.

Because of course I did.

Since then, I’ve lived through some market ups and downs.

Understatement alert.

My accounts have shown an investment gain for all of mayyyybe three days since then. It’s been a good test of whether I’m as risk tolerant as my Wealthsimple new-client questionnaire would have me believe I am – and it turns out, I kind of am.

After the big August downturn, and the subsequent iffy fall season and terrible January, my poor account balances are hovering between “pretty bad” and “egads.” Even still, I’ve stayed the course, because I knew this was a possibility going in. It’s part of the whole investing package – I was just lucky enough to experience it firsthand within my first month of investing, haha.

But another interesting thing happened when I set up my accounts to finally start investing. Entirely without meaning to, when I set up my Wealthsimple accounts – one TFSA and one RRSP – I also set up a perfect demonstration of two different ways to grow your money.

One: Rely Entirely On The Markets

Spoiler alert: do not do this.

When I transferred my money from the pitiful cash accounts I was holding at my old bank, I put my TFSA account directly into a TFSA with Wealthsimple.

For a few different reasons that deserve a blog post of their own, I decided that for right now, long-term savings in my RRSP makes more sense to me, so after I transferred the money… I did nothing else.

That’s right. I threw thousands of dollars into the market, in a single account, at one time, and haven’t added any new savings to the account since then.

Let’s see what that has looked like over the past six months.



That’s not what you want.

This is what a snapshot of the past few months has looked like in my TFSA, as I sat back and let the markets do their thing. It’s more on the “egads” side of things.

However, that doesn’t mean I haven’t been investing since August.

Two: Rely On The Markets And Your Savings Rate

As I mentioned, saving for retirement in my RRSP makes more sense for me right now. That’s why I’ve been throwing my entire retirement savings into my other Wealthsimple account, which is held in an RRSP.

Here’s what that account looks like over the past few months.


Muuuuch more palatable, right?

This account’s graph is a whole lot less stress-inducing, for the simple reason that I added more money to it on a regular basis.

Sure, it has still felt the effects of the market – that’s unavoidable, especially since I invested thousands of dollars at the peak of the market. But since I was buying more of the investments on a regular basis – i.e. dollar cost averaging, for you technical folks – when the prices of the stocks went down, I picked some up at the lower prices.

That’s meant that, in real numbers, this account is down by over 1% less than my TFSA, simply because I bought into the market at some of the times when it was cheaper to do so.

It also means that when the markets eventually do go back up, I have more of each type of investment in this account, so it’ll post a relatively higher return rate than my TFSA – which will only start to show a positive number when the market rises above where it was that one time I bought in, back in August.

I’m not going to lie, the other thing that has helped this account is the fact that I’ve significantly ramped up how much I was saving for retirement in these accounts.

Since I started tracking my spending, I’ve been a whole lot more aware of where my money is going. Before I started tracking, I was saving just under $400 a month in my retirement accounts. Now that I have a clear picture of where my money is going, and how much flexibility I have to save, I’ve been able to ramp up those contributions to more than $600 a month.

That’s where those little jumps you see on the graph come from – my twice-monthly contributions, sent directly from my bank account through an automatic bill payment.

Sure, I haven’t actually been able to out-save the market: the investments in my RRSP have still technically lost money since August, just like the ones in my TFSA. C’est la investing vie, which I am pretty sure is what they say in France. But by making bigger, regular contributions to my RRSP accounts, I’ve been able to take advantage of the “stock market sale” that’s been going on to varying degrees since August, and reduce the amount I’ve “lost.”

And when the stock market inevitably goes up, as it has over long periods of time forever?

I’ll be in good shape.

PS. If you want to get started investing yourself, but don’t know where to start, Wealthsimple has been a total godsend for me, and a great fit for what I want out of an investing tool. You can get your first $10,000 managed for free for a year with them if you sign up through this link!