'I Want to See How Far I Can Take It': How One Investor Stays Motivated

When Kelan¹, 29, first took control of his finances 10 years ago, his goal was relatively modest: save the money from summer jobs to help cover the costs of university. But upon graduation, he discovered that a frugal lifestyle and disciplined spending left him with some savings.

So Kelan set a new goal: to build his wealth as much as possible. He taught himself finance and put his savings to work in a combination of accounts and investments. Motivated by continuous improvement, Kelan would a pick a “random" investing milestone – just out of reach – and challenge himself to achieve it before setting the bar even higher.

“My motivation is to see just how far I can take it," says Kelan. “Is a quarter million dollars, or half a million dollars, the best I can do in my life? If it's really the best I can do, then I'll be satisfied."

These days, Kelan lives in Whitehorse, Yukon, where he works as a policy professional. We recently spoke with Kelan, who shared his approach to researching stocks, tips for budgeting and more about his investment strategy.

Relishing research

“I enjoy doing the research behind investing," says Kelan, an RBC Direct Investing client. “If I research something well, I feel rewarded. If I research poorly, then I'll lose money."

To take stock of broader trends, Kelan keeps close tabs on current affairs and reads widely. He analyzes past trends of mutual funds and friends are his sounding boards. He is not someone who makes snap decisions. “It's good to know stuff, but I don't necessarily pull the trigger based on any particular piece of information," he says, “I just read a lot and learn by trial and error."

Managing risk

The stock market can be enticing but investors should be mindful of risks, says Kelan. Recent economic headwinds lead Kelan to consider rounding out the individual stocks in his portfolio with exchange-traded funds and mutual funds to help him diversify his portfolio.

A specific problem — like a company's bad management — can drag on an individual stock's performance, he says. “If you had an ETF, that specific problem may not exist to the same degree, though you'd still have the risks of the underlying securities."

When he does invest in equities, he tends to favour growth stocks and those that pay dividends².

Budgeting beliefs

In Kelan's world, investing starts with budgeting. “I try to live off of 60 per cent of my income," Kelan says, adding that trimming recurring expenses is possible without altering one's lifestyle.

“Do I really need to buy a five-dollar coffee every day? I can make my own. And instead of the fanciest cellphone plans, there are cheaper options."

He offers other tips that have worked for him. Mindful of car-related costs, he has always tried to live within walking distance to work. Where you put your money also matters, he says. “Think about the opportunity cost. Do I really need to buy a snowmobile, which is a depreciating asset? Could I invest that money in the stock market instead?" He admits that his friends think he can sometimes take his budgeting beliefs a little too far, but says it works for him.

Powerful principles

As his savings grow, so does the need for a sound investment strategy. It doesn't have to be complicated, argues Kelan, pointing to the benefits of simple things like registered accounts. When he started investing, he knew little about these accounts. Now, he has both a tax-free savings account (TSFA) and a registered retirement savings plan (RRSP).

“They're very powerful, if you think long-term. I max out the contribution limits for registered accounts. The non-registered accounts can be used as backups," Kelan says. “Using a tax return to contribute back to an RRSP means you're constantly filling up your RRSP."

He doesn't expect quick results, but he understands the power of every incremental jump. This is where snowballing—think compound interest—comes in. “If you reach your first 100,000 dollars, then getting to the second 100,000 dollars can be quicker than your first 100,000," he says.

Kelan sees investing as a way to bolster his financial security. “It's nice to have additional income streams. If something happens in life, I'll have that backup plan."

Staying calm

Does he ever lose sleep over the recent market swings?

“I try to be cool as a cucumber. These fluctuations are normal," Kelan says. “I may sell one or two stocks, but I won't panic and sell off massively."

Discipline is important regardless of market conditions, Kelan says. When many investors jumped on the meme stock bandwagon in 2021, he was not swayed. “That's just not my style, and I've been just sticking to my investment plan."

He also sees an upside when markets are choppy. “One way to look at market volatility is that many things are on sale." Kelan says. “So if you have the cash you can go bargain hunting to find something that might be a bit undervalued. You can benefit in the long run."

He says he'll likely revisit his investment strategy “when things settle a bit."

“But largely, I'm just staying on course for now," he says.

¹Kelan is an RBC Direct Investing client. He has been compensated for sharing his story.