I avoid talking about my own finances in this section, for obvious reasons (risk of kidnapping, marriage proposals, etc.). But I’m making an exception this week to say that $96,000 of the money in my TFSA account is attributable to one company: Communauto.
This sum may seem high, but it is actually miniscule: my family could have accumulated $1 million with Communauto alone within 20 years.
Before explaining to you how it is possible, a clarification: this section may pass over the heads of many people. If you do not live in Montreal, Quebec, Trois-Rivières, Gatineau, Sherbrooke, or in one of the nine cities in Ontario where the service is offered, you do not have access to Communauto.
On the other hand, if you live there but work away from home, have to drive several children to several schools or sports training every day, you probably need a car of your own.
I am not a car-sharing fundamentalist. Everyone leads their life as they see fit. But this system has enriched me, and I think tens of thousands of other people could benefit from it.
So how did I arrive at my figure of $96,000? How about 1 million?
A decade ago, when Daft Punk’s song Get Lucky was just coming out, Pauline Marois was premier of Quebec, and the province was recovering from the red square student strikes, we came back from Los Angeles with a newborn to settle in Montreal.
By reflex, we told ourselves that life without owning a vehicle was impossible.
Taking the subway to work is one thing. But how do you get to a medical appointment without a car? To activities? At friends’ parties? With grandparents out of town?
We did like many new parents and bought a car.
However, over the months, we realized that: 1) we have two legs; 2) we have bicycles; 3) newborns and children are allowed on buses and the metro (it’s crazy, I know); 4) Uber exists.
How is Communauto? It’s like owning a car: it has its upsides and downsides.
Negative sides: the company is a victim of its own success and it is sometimes difficult to find a car on weekends, the interior of the cars is not always super clean (empty coffee cup, muffin crumbs, etc.) , and sometimes it can take a long time to reach a customer service representative on the phone.
In nearly 10 years, I have never had to cancel a trip for lack of a car. But I had to row sometimes. Jogging 3 kilometers to pick up a car in a nearby neighborhood, taking a BIXI to get to the nearest car are part of my war feats.
And then, I’m not going to deny it, driving a Kia or a gray Toyota with a big green logo on the door is a lot less cool than driving a Jeep or a Tesla. I don’t care about it, but I realize it’s not to everyone’s taste.
On the benefit side: complete peace of mind regarding costs (gas and insurance are included in the price), no need to deal with maintenance, tire changes, or snow removal and shoveling for “change side of the street” in winter… And you pay for use: zero use, zero bill.
I also noticed that not owning a car prevents us from using it out of laziness, for example to go to the park a little far away, when it is accessible on foot, by bike or by bus. Communauto estimates that car sharing leads to a reduction of about 30% to 40% in kilometers traveled.
So there’s this kick-ass effect that forces us to be more active than we would be if we had a car available to us 24 hours a day, an effect that also causes us to take turns carpooling with other parents for sports meetings. Less car travel means less greenhouse gas emissions, less noise and dust, less danger for citizens on the streets, and also less expense for all taxpayers, who subsidize the maintenance of roads and snow removal of public roads reserved by the City for car owners to store their vehicles when they do not need them. In short, everyone is a winner.
Not to mention, of course, the financial gains.
On our end, it averaged around $3,000, including a one-month rental during the summer.
Leaving a conservative game of $1000 per year for Ubers, taxis and the like, I take the difference of $5500 and invest it annually in my tax-free savings account (TFSA).
I invested that money on a 50-50 formula in exchange-traded funds (ETFs) that track Canadian and U.S. markets. The funds I purchased are Vanguard FTSE Canada All Cap Index ETF (VCN) and Vanguard Index ETF S
From 2013 to 2023, this portfolio has grown by an average of 10% per year. The biggest drop was 32% at the start of 2020, which unfortunately reversed in August of the same year – I wish the sales had lasted longer, but that didn’t happen.
So our $5,500 saved and invested each year through car sharing has now become $96,000. Looked at differently, this service allowed us to accumulate the equivalent of the purchase price of two Tesla Model 3 in 10 years.
And if our savings and returns were to continue (not guaranteed, but the stock market has seen average annual returns of around 10% for several generations already), we’d be close to $350,000 in the TFSA in a decade. The equivalent of eight Tesla Model 3s.
In 20 years, $1 million attributable to our transportation savings could multiply tax-free in our investment account. Millionaires, just with Communauto.
Do you understand why the green logo on the door doesn’t really bother me?
Last week I was talking about day trading. Many of you reacted.
Rodrigue writes, “I’ve been investing in the stock market for 50 years and I’ve never met a day trader who makes money. In 2018, I treated myself to a totally useless $7500 course. »
Pierre writes: “I day traded for two years full time. I was renting an office in Montreal with about forty other guys. I lost money… A long time ago, a wise old man told me: “If you want to know where you will be in 10 years, look at someone who did the same thing as you in 10 years…” “
Alain writes: “Day trading and frequent trading breaks the magic of compound interest. »
Stéphane writes: “The facts are there: invest and wait. Don’t rush, pile the pennies, find yourself a hobby and don’t look too much. »