Why I stopped “Saving for Retirement”

For 20 solid years I have been a customer at the same bank here in Canada – one of the so-called “Big Five“. Despite my loyalty for two decades, I am here to tell you that I will probably be breaking up with my bank very, very soon.

[*Disclaimer* I am in NO WAY a financial expert… not even close. I am just sharing my journey, hoping it will inspire you to learn too! Because if I can understand what a stock is (not the one you cook with), then anyone can!]

Over the past several months, I have learned quite a few things about finances. To be honest, embarking on this journey of “Financial Literacy” was purely by accident when I finally read “The Richest Man In Babylon” by George Samuel Clason.

You see, I have never been one to care too much about money as long as my bills were paid on time, I was putting a little bit away for the future, and I was able to give. Besides that, any talk about stocks, bonds and investments went over my head. Meetings with various financial advisers left me feeling more confused than reassured regarding our financial situation. Every attempt at creating a budgeting system failed, and I thought that as long as we were saving X% of income every month, we were doing pretty darned good.

I was wrong.

20 years after opening my original Big Five bank account, I am realizing that although I thought I was saving money, I might as well have been putting it under a mattress, just like the proverbial elderly woman who does not trust bankers.

There are three main reasons I have come to this conclusion:

  1. Banking Fees
  2. Taxes
  3. Inflation

white graphing paper

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According to my calculation, I have spent approximately $3600 on BANKING FEES alone over the past 20 years. That does not include the random ATM withdrawal fees, credit card fees and everything else the bank charges for these days.

When I got a little smarter and decided to open a “high interest” savings account, I was shocked when I learned that the interest of “1.000%” I was earning was also being TAXED by the government!

And finally, because of INFLATION, the money I had saved was losing value over time.

I’ll illustrate this final point with an example.

Inflation (in the study of Economics) is simply defined by the Oxford dictionary as a “general increase in prices and fall in the purchasing value of money”. I’m really sorry friends, but I can’t explain to you how and why inflation happens, or give you any formulas. Please don’t hold this against me!

Anyways, here’s the example.

So imagine I had $1000 in my bank account on January 1st 2019. At that time, I was able afford 10 bags of potatoes with this money. Let’s say I didn’t buy the potatoes, but decided to save the money instead. Let’s also say the inflation rate for that year was 2%. This means that if a bag of potatoes cost $100 in January, by December 31st 2019, one bag now costs $102. Essentially, my $1000 will not be able to buy as many potatoes, or go as far in general.

Bottom line, my money LOST its value over time.

[By the way, all numbers in this example are made up. I don’t know what the inflation rate for 2019 is off the top of my head. Also, potatoes are not that expensive where I live… but I hope you get my point i.e. Inflation sucks!]

So on top of paying banking fees, plus taxes on my 1.000% interest, my money has basically been sitting around, doing nothing and losing its value. The thought of it makes me quite uneasy!

Time to make my money WORK HARD, so it grows and stays far ahead of inflation rates, taxes and fees.

Friends, you see why simply “saving for retirement” doesn’t make sense?

I need to STOP saving my money, and START investing it!

Please don’t get me wrong, I will continue to save for short-term expenses (like a vacation for example). And I should also point out that the concept of investing is not new to me at all.

HOWEVER, the NECESSITY of investing is what escaped me completely.

I thought investing was optional. Thankfully, now I know better.

You may be asking, “Can you invest while paying off debt?” Absolutely! You may also be asking, “Do you have to be rich to invest?” Certainly not!

Friends, if you’re like me, and your money is sitting in a chequing account or a high interest savings account somewhere… it may be time to educate yourself by picking up a book, listening to a podcast or watching a YouTube video on financial literacy.
Again, if I did it, you can do it too!

Because what’s the point of putting in hours at a job, and not getting the most out of your earnings at the end of the day?

Where are you on your journey to financial literacy? Are you a newbie, or do you have tonnes of experience with finances and investing? I’d like to know, so do leave a comment!



14 thoughts on “Why I stopped “Saving for Retirement”

Add yours

  1. I have tried a lot of investment options: even the tax free savings account is like a SCAM to me😁 even though you can invest the Money contributed into the account but when withdrawn, you are charged for it plus other fees.
    The question is always what did I make from this investment.
    My conclusion check the trend and follow it… real estate, startups,…
    Rich people do lots of things to maximize profit.🙂


    1. You’re totally right… the rich know how to make money work hard, understand the law on taxes etc! Lol @ the TFSA being a scam. When it comes to fees, I think it has to do with which platform you use to invest. As for me, investing in Stocks, Bonds etc through my bank is a big NO-NO.
      Thanks for your comment!


  2. Love your explanation of inflation. Also never really considered/thought about how much I spend on banking fees till now.
    Worth mentioning that investing won’t reduce the amount you’re spending on fees, rather you’ll spend even more but the money CAN grow and offset those minuses. And as with any expense, you should put in some effort to cut down on them as much as you can. The more you have the more you can invest and grow 🙂


  3. 😮 1%. That’s insane.

    Great post! I’m on a journey to financial independence myself using stock investment as the vehicle of choice. Good luck on your journey!


  4. This is quite insightful, luckily enough for me i stumbled upon this realisation in 2018 and decided to take my money from the banks and invest. I decided to go with two main asset class, Real estate and Precious metals (Gold, Silver e.t.c). No bank savings rate would have given me the sort of returns i have gotten in the last two years from my Gold portfolio. I love the banks, after all i get my money from them but i just don’t keep my money there.


  5. Great info Yeye… I’ve been dabbling in the stock market through a self-ivesting company for two years. So far I’ve made some gains, but you have to be constantly monitoring the market and it’s a bit time consuming. So you have any suggestions for investing?


    1. Hi Sham! I’m also not interested in constantly monitoring the stockmarket myself. That’s why the concept of Roboinvestig suits me.

      It’s perfect for people who want someone else do pick their portfolio based on their goals. I can’t recommend a specific platform per say, but I just signed up for Wealthsimple here in Canada. I’ve heard great things so far! People in the US speak highly of Robinhood. I don’t have any personal experience though.
      All the best with your investments!


  6. Very insightful. We need to wake up and realise that just putting away money in the name of saving doesn’t cut it. Savings have to be towards something, something that can turn the money around. I’m one for real estate. Well done Yewwy. Amazing read


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