In this article, let’s talk about creating a Cash Plan.
But, Before we begin, it is important to know what a Cash Plan is and why do you need one.
To put this across in layman terms, A Cash Plan is a scheduled auto-deposit for the amount you set once and forget. Of course, you can change the amount anytime you want to.
A cash plan works very similar to the Robo-Advisor. For example, in Wealthsimple, you can set an auto-deposit for $100 to be deposited into your piggy bank account (personal account/smart savings account) or TFSA/RRSP accounts once every X weeks. (weekly, bi-weekly or monthly).
CIBC’s cash plan works very similar to Wealthsimple or at least in many ways the same. It’s more or less the same approach. you set your auto-deposit once and forget it. This is the easiest way to create wealth!
All it takes 2 minutes of your time and you will be done with setting up your cash plan.
How To Create a CIBC Cash Plan In Investor’s Edge?
To create a cash plan for any of the Canadian banks, the approach is pretty much the same.
In the case here, let’s learn how to create a cash plan for CIBC. (as an example). It’s simple and straight forward to do so.
1. Log in to your CIBC Investor’s Edge account.
2. Click on the “Cash Transfers” section in the left menu.
3. Next, click on the “Create a Cash Plan”
4. Choose the TFSA or the RRSP account you wish to create the cash plan for.
5. Enter the “Cash plan amount” and set the frequency along with the start date and click on “Next”.
That’s it, you have successfully created a cash plan for yourself.
What Is the Importance Of Creating A Cash Plan?
Okay, first of all, once you have created a cash plan, the amount you’ve set will automatically be deposited from your CIBC chequing account (or any of any other bank account, the example we took was CIBC) to your TFSA or RRSP account.
By doing so, you’ll get into the Investment habit without you having to worry about investing the lump sum/transferring money to your investment account once you accumulate funds or have funds in the first place.
Starting is important, the rest will follow. It’s rather easier than said. Over time you would have accumulated a good amount of money in your registered accounts to invest in the mutual funds/ETFs/stock you like.
I do not bank with CIBC or the Investor’s Edge how do I Create a Cash Plan?
In case you don’t bank with CIBC, I’m pretty sure other Canadian banks offer the cash plan as well.
Well known public banks such as TD, BMO, RBC and Scotia should all have a similar cash plan for customers. It’s just that I bank with CIBC as my main bank and I’m comfortable with how they work.
In case you need help navigating the online menu for the bank you deal with, make sure to call the customer care of the bank you deal with and ask them about the cash plan and how to do it. Maybe they can help you set one over the phone. It hardly takes a couple of minutes.
Follow a similar approach for Questrade as well. Even Wealthsimple does this. With
Wealthsimple it’s even simpler, you can set the cash plan and change the amount anytime you want through the mobile App. And the best part is, they have an automatic portfolio which you can pick, with 10 being the “Growth” (risky) portfolio with 90% equities and 10% bond.
In the case of Wealthsimple, once you add funds (auto-deposit) on the regular basis, as soon the money is deposited into your account, it is allocated to one of the portfolio’s you’ve chosen. It’s that simple.
The portfolio managers at Wealthsimple will take care of the money allocation part. You need not do anything. All you have to do is pick a portfolio and auto-deposit amount. Its really that simple! Try it out.
Creating a cash plan is extremely easy will cost you a couple of minutes. But the end goal of it is to help you save money and consistently over a period of time. Because that’s when the compound interest kicks in and your money multiplies.
With all the monthly bills and regular take-home salary after taxes, saving money or investing lump sum to buy equities can be hard for the average family. So, creating a cash plan be it for a mere $50 weekly can help you achieve good savings/wealth over a period of time.
Remember, always make the best use of your time and resources when you still can and cut the unwanted expenses to maximize your savings. It’s your money after all!
Thanks for reading! Let me know your thoughts and comments below. Stay safe everyone. Talk to you in the next one!
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Sagar Sridhar is a personal finance blogger from Canada. His genuine passion for personal finance coupled with his unique style of writing is what stands out. Professionally, he is a computer engineer, agile certified and has a master’s degree in Project Management. His writing has been featured or quoted in the leading Canadian publications such as Credit Canada and many other personal finance publications. While he is juggling between his day job and blogging, he is the main author on this blog and has miles to go before making the final pit stop.