In this article, let’s talk about creating a cash flow plan.
But before you start, it is important to know what a cash flow plan is and why do you need one.
To put this in simple terms, a cash flow plan is a scheduled automatic deposit for the amount you set once and forgot about. Of course, you can change the amount at any time.
A cash flow plan works very similar to Robo-Advisor. For example, in Wealthsimple you can set an automatic deposit of $100 to be deposited into your piggy bank account (personal account/smart savings account) or your TFSA/RRSP accounts once every X weeks. (weekly, biweekly or monthly).
CIBC’s cash flow plan works very similar to Wealthsimple’s, or at least in many ways. It’s more or less the same approach. you set your autodeposit once and forget about it. It’s the easiest way to build wealth!
All this takes 2 minutes of your time and you will have finished setting up your cash flow plan.
How to create a CIBC cash flow plan in Investor’s Edge?
To create a cash flow plan for any Canadian bank, the approach is pretty much the same.
In this case, let’s learn how to create a cash flow plan for CIBC. (as an example). It’s simple and straightforward to do so.
1. Log in to your CIBC Investor’s Edge Account.
2. Click on the “Money transfers” section in the left menu.
3. Next, click on “Create Cash Flow Plan”
4. Choose the TFSA or RRSP account for which you want to create the cash flow plan.
5. Enter the “Cash flow plan amount” and set the frequency and start date and click “Next”.
That’s it, you have successfully created a cash flow plan for yourself.
How important is it to create a cash flow plan?
Okay, first of all, once you create a cash flow plan, the amount you set will automatically be deposited from your CIBC checking account (or any other bank account, the example we used is CIBC) to your TFSA or RRSP account.
By doing this, you will get into the habit of investing without having to worry about investing the lump sum/transferring money to your investment account once you have accumulated funds or have funds in the first place.
The beginning is important, the rest will follow. It’s rather easier than people say. Over time, you would have accumulated a good amount of money in your registered accounts to invest in mutual funds/ETFs/stocks that you like.
I do not bank with CIBC or Investor’s Edge. How do I create a cash flow plan?
If you don’t bank with CIBC, I’m pretty sure other Canadian banks offer the cash flow plan as well.
Well-known public banks such as TD, BMO, RBC and Scotia should all offer a similar cash flow plan to their customers. It’s just that CIBC is my primary bank and I’m comfortable with how they operate.
If you need help navigating the online menu of the bank you are dealing with, be sure to call customer service at the bank you are dealing with and ask them about the cash flow plan and how to do it. Maybe they can help you set one over the phone. It only takes a few minutes.
Also follow a similar approach for Questrade. Even Wealthsimple does it. With
Wealthsimple is even simpler, you can set the cash flow plan and change the amount at any time via the mobile app. And the best part is that they have an automatic portfolio that you can choose, 10 being the “Growth” (risky) portfolio with 90% stocks and 10% bonds.
If you would like to learn more about the Wealthsimple portfolio, click here.
In the case of Wealthsimple, once you add funds (autodeposit) on a regular basis, as soon as the money is deposited into your account, it is allocated to one of your chosen wallets. It’s that simple.
Wealthsimple portfolio managers will take care of the monetary allocation part. You don’t have to do anything. All you need to do is choose a wallet and the autodeposit amount. It really is that simple! Try it.
Last words
Creating a cash flow plan is extremely simple and will cost you just a few minutes. But the end goal is to help you save money consistently over a period of time. Because that’s when compound interest kicks in and your money multiplies.
With all the monthly bills and regular take-home pay after taxes, saving money or investing a lump sum to buy stocks can be difficult for the average family. So, creating a cash flow plan, whether it’s for just $50 a week, can help you achieve good savings/wealth over a period of time.
Remember to always make the best use of your time and resources when you can and cut down on 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. We’ll talk in the next one!
