Let's say you've paid of your debts and you've freed up some money. What should you invest it in?
Mutual funds, RRSPs, bonds, stocks?
All those things have some risk involved and the least risky investments have the poorest rates of return. Furthermore, when you invest in these you're handing money over to somebody else to manage it for you.
Financial planners, fund managers, the companies you hold stock in; in some way you become dependent on them.
I'm not knocking these types of investments. For some people they may be an excellent choice. However, there is an alternative:
Invest in your own home's ability to provide for you now and in retirement.
I'm sure we're all familiar of the many ways to do this so I won't go into too much detail; but it basically comes down to either conserving energy or generating your own.
Fortunately the most inexpensive things you can do which give the quickest "return on investment" are simple energy efficiency and conservation things like installing compact fluorescent lightbulbs, turning down your thermostat and installing insulation. On the more expensive side of this you can replace older appliances with more energy efficient ones.
The less energy you use, the less your utility bills will be, the less money you'll need in retirement. Makes sense, eh?
Once you've maxed out your energy efficiencies you're ready to begin investing in actually producing your own electricity. Now instead of just reducing the money going out to utilities you'll be living for "free" and maybe even making some money; "Green energy" actually can be an investment!
Many people think things like solar panels and wind generator are too expensive for the average person, but how many people do you know who buy brand new $40 000 cars or pay hundreds a month to credit cards or RRSPs? If you can afford those, you can afford to produce your own electricity.
Plus unlike cars or investments that can depreciate, things like solar panels will actually decrease your utility bills (possibly to zero), increase the value of your home and depending on which province you're in, give you an income by selling energy to the electrical grid!
Once you've paid off the cost of equipment (2-15 years depending on what you've installed) it will still continue to provide energy for many years (solar panels can last 25-40 years). If you would normally spend $200 a month on heat and electricity a month, producing your own energy would be equal to a $200+/month "return on investment".
You don't have to do this all at once either.
For example, our budget may not be able to provide for enough solar panels to generate all our electricity but I can buy an extra panel or two each year. Eventually I'll reach a point where all my power is provided for by solar!
Now that I've covered money and shelter, tomorrow I'll talk about what to do if you plan on eating during retirement.