First Credit Union & Insurance and Westview Agencies close early to enable staff to volunteer in the community.

orca busOn Thursday, June 22nd we will celebrate our 3rd annual Community Impact Day by closing at 2PM to enable all 140 employees to volunteer in the communities that they serve. This is an opportunity for us to lend a hand and show our gratitude to some of the remarkable non-profit organizations who work every day for the benefit of others.

Credit unions exist to serve their members, not to make a profit. Our ‘people-first’ philosophy inspires us to get involved in our community and support worthwhile causes. Every year we give back thousands of dollars to our communities through scholarships, donations and sponsorships – Community Impact Day is a way for us to give back by volunteering our time.

Join First Credit Union, First Insurance, and Westview Agencies for Community Impact Day on June 22nd by  volunteering for a cause you care about. Looking for volunteer opportunities in your community? Check out Volinspire, an online community engagement platform that connects volunteers with community organizations. http://www.volinspire.com

Are Cheques Obsolete?

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Cheques hold an odd place in our personal finances. In many ways, cheques seem like relics from a previous era. We maybe write one or two cheques a month (usually for rent or similar bill-paying situations where electronic payment simply isn’t an option). This is vastly different from only a few decades ago, when cheques represented more than
85% of all non-cash retail payments. (Can you imagine whipping out a chequebook in line at the grocery store? Times have certainly changed!)

However, despite their gradual decline in use, cheques haven’t become completely extinct. We still keep our money in chequing accounts, we still balance our chequebooks, and new banking technologies (mobile cheque imaging is one example) are being introduced to improve the process of paying by cheque. Writing cheques continues to walk the line between permanence and obsolescence.

Whether or not cheques are on their way out, there are still a couple of cheque-related best practices that you need to be aware of in order to stay on top of your finances.

Holding periods exist, and you need to keep track of them

Cheques often get a bad rap for the amount of time they take to clear. This is referred to as a holding period, and it can vary anywhere from a day to over a week, depending on your financial institution.

The clearing process itself is made up of several steps. First, the financial institution that receives the cheque for deposit encodes its dollar amount into the machine-readable numbers along the bottom of the cheque. Then the physical cheque is fed through a machine that scans its data. That data is then sent to a clearinghouse, which forwards the information to the financial institution that issued the cheque. The financial institution makes sure the cheque-writer’s account has sufficient funds to make the payment—if it does, the transaction goes through, but if the account has insufficient funds to complete the transaction, the cheque bounces.

Cheque clearing might sound like a long and overly complicated process, but it has come a long way. In 18th century England, the cheque clearing process was considerably less efficient. It involved clerks from each London bank meeting up at a tavern on Lombard Street to exchange cheques and settle account differences—not the most scalable process!

The introduction of mobile cheque imaging (also known as remote deposit capture) and other technologies is helping to shorten the holding period; however, to avoid fees, bad cheques and other sticky situations, it’s still important for you to understand what the holding period is at your credit union or bank.

If you’re the cheque writer: the holding period, combined with some absentmindedness, can create a situation where you’re spending money in your account that you don’t actually have. For this reason, when you write a cheque, it’s best to pretend that the related amount of money is already gone from your account.

If you’re the cheque receiver: keep in mind that when you deposit a cheque and the money shows up in your account, the cheque may not have cleared yet. Your financial institution may allow you to spend a portion or all of that deposited cheque, but if it bounces, you would be the one responsible for repaying any funds you used before the cheque bounced. It’s a good practice to confirm that a cheque has cleared before spending it. When in doubt, you can always give your financial institution a call to verify the status of a cheque.

Balancing a chequebook is still an important skill

The best way to avoid tricky scenarios created by holding periods is to keep track of your transactions with a chequebook register. Traditionally, chequebook registers are those lined notebooks that come with your cheques, but you can use any system that works for you, whether that’s a printable form, a digital spreadsheet or even an app on your phone.

Recording your transactions as you go will give you a more accurate idea of your account balance and help you avoid unnecessary fees or overdraft charges. It also takes the guesswork out of writing a cheque or making an ATM withdrawal—you will know whether or not you have the money in your account to cover it. Comparing your chequebook register to your monthly statements also makes it easier for you to spot any errors or fraudulent charges.

Start by recording all your chequing account transactions in your chequebook register— debit card payments, cheques written and received, and ATM withdrawals. Include online bill payments and direct deposits too—since those are sometimes automated, it can be easy to forget them. When you get your monthly statement, compare each transaction to your chequebook register and put a checkmark next to each transaction that matches your statement. If items in your statement do not match your chequebook register, figure out what’s at cause. Sometimes it’s an entry error or a slip-up in your math, but it could be an error by your financial institution.

Since we are not yet a totally digital society, understanding how to use paper cheques as well as keeping track of all of your transactions will keep your chequing account in the black and your financial matters running smoothly.

The Effect of Time on Investing

Investing can seem like a very risky, complex and fast-moving process. With endless combinations of investment vehicles to choose from, it can be difficult to take your first step as an investor—especially with the knowledge that all investments carry the risk of losing some or all of your money. So why bother?

Well, there are many compelling reasons to make investing a part of your overall financial plan. Investing can help preserve your wealth by overcoming the effects of inflation, help you save for long-term goals (such as retirement or your children’s education) and it can even generate income. So how can you get past all the negatives associated with investing and make it work for you? A helpful first step is to realize that, as a young investor, you have time on your side.

TIME AND LUCK

The Myth

We’ve all heard the stories (or seen the infomercials, or bought the e-book) about those people who took a chance on a risky investment and by some stroke of luck woke up the next day as millionaires. It’s easy to be drawn to “get rich quick” stories because we all secretly wish we could be the stars of those tales. Those success stories help establish the myth that being a successful investor is a lot like being a hotshot gambler—that you need to risk it all to get a worthwhile reward, and that some people are born with the innate ability to predict the market, make the right moves, buy and sell at the exact right time, and strike it rich.

The Reality

The truth is that serious investing requires a lot of time. There’s an entire education behind active trading. If you were to invest into the stock market without any prior research, you might as well be playing the lottery. Educating yourself about the stock market is no simple task and it requires ongoing research. It’s not only about understanding the way economies and global marketplaces work—it’s also about staying up to date on what’s happening in our world. Environment, technology, politics and culture all have the ability to influence economic forces. Beyond understanding those interactions, a smart investor also keeps very close tabs on the industries and companies they invest in by monitoring things like performance, governance, public opinion and industry trends. Now, imagine all that data changing and updating daily; suddenly, it’s clear why it can—and should—take so much time to make educated investment decisions.

When we acknowledge that preparation takes an incredible amount of time, it minimizes the role that luck plays in investing. Suddenly it’s less about taking a gamble and more about making calculated and educated decisions, which is a good thing—it means that investing is something you can practise, explore and ultimately improve on, over time.

TIME AND RISK

The Myth

For every investing success story, there’s an accompanying horror story. This myth comes in different flavours—acting on bad advice, losing every last dime, and getting taken advantage of by an evil or incompetent financial advisor are just some of the common scripts. This myth perpetuates the idea that investing is so scary and so unpredictable that it’s simply not worth the risk.

The Reality

It can be tricky trying to separate this myth from the truth, because risk and loss are both very real outcomes of investing. No investment is ever guaranteed, meaning your invested money is never absolutely safe. Some investment types may be safer than others, but the risk of losing your money is ever-present.

After making smart, thoroughly researched investment choices, your next best protection against risk and volatility is the amount of time you have for your investment to mature. The narrower your investment time frame, the more vulnerable you are to sudden and often unpredictable changes in the market. By contrast, if your investment is long term (think decades), day-to-day changes suddenly hold less influence. Plus, there is time to recover from market declines; the same cannot always be said for short-term investments.

TIME AND RETURNS

The Myth

Yet another investment myth is that it’s impossible to find a combination of investment products within your risk tolerance level that will result in a high yield. In other words, playing it safe with your investments means measly returns.

The Reality

Do you remember learning about compound interest? Time happens to be compound interest’s best buddy. Together, they can really put your money to work for you. This is especially important to note for long-term savings goals (retirement is a good example). Even products with a relatively low expected yield can accumulate a lot of wealth over long periods of time, so do not get discouraged by low interest rates on investment products. Look for opportunities to maximize the effect of compound interest, such as reinvesting your dividends or refraining from cashing out your investment early.

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As you can see, time plays a significant role when it comes to investing. It can give you more control over your investments, it can increase your tolerance for risk and your ability to recover from any losses, and it can maximize your returns. By starting early, investing wisely and giving yourself the time you need to reach your goals, you will discover the positive impact that a little bit of planning today will have on your lifestyle