Bruce Sellery’s book The Moolala Guide to Rockin’ Your RRSP takes a fresh approach to motivating people to save money. Saving and investing can be scary and boring, and requires self-sacrifice. Sellery’s five easy steps are aimed at helping those who feel overwhelmed by the process.
This book contains many of the technical facts people should know about RRSPs, but these get slipped in while Sellery is telling some entertaining stories that explain his five-step process. The first step is the most important: find a reason for saving that has meaning for you. Sellery’s answer is adventure, but everyone has their own reason they find motivating. In the remaining steps, Sellery remains keenly aware of the emotional reasons why people don’t follow through on their savings plans.
My biggest criticism of this book is that it tends to steer people to their banks to open RRSPs. Saving money in bank mutual funds with sky-high MERs is better than not saving at all, but there are better options. The book mentions some other choices, but I would like to have seen more discussion of the importance of keeping fees low.
In the nitpick category, when 30 years of 2% inflation increases prices by 81%, this is not the same as “your purchasing power would decline by 2% every year, or 81% over thirty years.” In fact, purchasing power declines only 45%. This type of basic error undermines confidence in other numerical parts of the book.
Sellery’s “Rule of $20” implicitly advocates a 5% starting withdrawal rate from savings when you retire. With the length of today’s retirements, even a 4% withdrawal rate is somewhat aggressive for portfolios with ultra-low fees. For people invested in expensive mutual funds, a 3% withdrawal rate is more realistic.
In an inspired effort to get past procrastination, Sellery says that whether your reason for not getting started saving in an RRSP is fear of looking foolish, boredom with thinking about money, lack of discipline, or lack of time, it’s not likely to change so there’s no point in waiting for it to change. You might as well get started.
Overall, this book is well-suited to people who feel overwhelmed by the process of learning how to save money in RRSPs. Those who are already on their way may still benefit from the ideas on how to create good habits and stay engaged.