1 Investing Hack to Create Wealth in 2021

If you want to see wealth come your way in 2021, you simply need to add this investing hack to your arsenal, and invest in the TSX today!

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Most of us want to invest, but don’t know where to start. Many of us want to invest, but don’t have the cash. And likely even more of us want to invest, but feel they don’t have the time.

Today I’m going to cover one investing hack that will help you invest in the TSX today, and create wealth in 2021.

7-day rule

Impulse buying is the top culprit for everyone these days. In fact, analysts estimate around $6,800 is spent by the average Canadian each year on impulse buys! The e-commerce industry has made it incredibly easy to buy and receive products within a day, sometimes hours! So here is the first place you should look if you’re looking to invest in the TSX today.

It’s called the seven-day rule. Every time you want to buy something, wait seven days. It’s similar to when you have a craving for food. Usually that craving goes away within 30 minutes to an hour. The same goes for an impulse buy. Usually if you wait seven days, that urge is gone. If not, maybe it is something you really want!

Part 2, you guessed it…

Invest! Every time that impulse comes along, rather than buying something, invest it! The exact amount you were going to spend. If you were going to spend $150 on clothes, put that same amount into your Tax-Free Savings Account (TFSA). Want to buy a new cooler for $300? Into the TFSA it goes. How about just a $12 hat? Nope, TFSA.

Big or small, all of this adds up to serious cash. Just right there, you’ve put $462 into your TFSA! If you have the cash to spend on unnecessary items, that means you have the cash to invest.

And here’s the best part. By putting it in the TFSA, you’ve created a barrier to getting that cash back to buy the purchase in the future. So you really have to want it. Yes, you can take out that money any time you want, tax free. But it’s not a debit card. And it will take a day or two to get into your account. And it means you can’t recontribute that amount down the line if you reach your contribution limit.

Invest in the TSX today

Now here comes the “time” part of the equation. You don’t have to be risky to invest. You don’t even have to invest in a slew of stocks. You can simply choose an ETF or Index and let the management team do the work for you.

An ETF like iShares SP/TSX 60 Index Fund (TSX:XIU) is perfect in this scenario. Rather than picking and choosing from stocks on the TSX today, you can let this fund pick the top 60 stocks on the TSX. You then see your funds grow simply on how well those top stocks are performing.

These stocks have performed well. Shares in iShares stock have grown 34% in the last year. Even during the market crash, of which it wasn’t immune, the stock came back to pre-crash prices within a few months. Shares have also grown 93% in the last decade for a compound annual growth rate (CAGR) of 10%! That’s phenomenal, stable growth.

For example, let’s see what happens if you were to put that $6,800 in impulse buys toward investing. In a decade, that would turn into $17,623.94 without adding another sent at current levels!

Bottom line

Impulse buys are one of the biggest culprits of spending. I’m not saying you shouldn’t buy anything —  that’s simply not realistic. But by simply waiting and letting your money work for you in the process, you’ll pay off those purchases and create a huge amount of wealth in 2021 and beyond! All by saving, being patient, and investing in the TSX today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned.

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