Reflections & Resources

Converting a Crisis to an Inconvenience: The Power of a Reserve Fund

September 26, 2022

I’m an early riser, especially on a workday. I prefer to beat the traffic and get in early to enjoy my coffee and catch up on current events.

As I’m getting ready this morning, imagine my dismay as I realize that my shower is ice cold. Thankfully I always check the temperature before I step in! I head down to the basement, hoping nothing is seriously wrong. Water is spewing out everywhere and my utility room is soaked.

We can all agree that these issues never come up at a convenient time, and this early morning issue was no exception. My husband and I sprang into action and took care of the immediate need: shutting down the water, making sure nothing was damaged. Then the worry sinks in: how long will we be without hot water? In the era of supply chain shortages, when will a repair or replacement happen? To add to our worries, we have company coming to stay for the week.

The one thing I didn’t have to worry about was the bigger issue of how I was going to pay for the repairs or replacement. Why wasn’t I worried? Because long ago, I implemented a reserve fund.

In its simplest terms, a reserve fund is a cash flow planning strategy which involves periodically setting money aside for a major expense. This is a wise financial decision whenever you have a major asset, such as a property or a vehicle. It is inevitable that major expenses or the costs of upkeep are going to come up. The best course of action is to set funds aside regularly, in anticipation of these costs, versus trying to come up with the funds when an event has occurred.

What types of expenses can I set up a reserve fund for?

· Home Repairs

· Home Renovations

· Vehicle Expenses

· Major Holidays

I currently have two expense reserves: major home expenses and vehicles. In the past, I’ve had an expense reserve for parental leave and for planned vacations.

How do I start?

It’s important to keep these funds physically separate from your regular operating (chequing) account. This is because you are less likely to draw on the money for the wrong reasons once it is separate from everything else.

There are many types of accounts that you can use for this purpose, including, but not limited to:

· Savings Account

· High Interest Savings Investments

· Money Market Funds

· Mutual Funds and Exchange-Traded Funds (ETF’s)

I recommend speaking with a professional to see which account option makes the most sense for you.

How much do I put away?

Once you have the account set up, it’s time to contribute. With every paycheque, set funds aside to each of your dedicated expense reserves. The amount that you should set aside is dependent on a number of factors, including time and need. For example, someone with an older vehicle/home is more likely to have an expense come up than someone with a newer asset. As such, they have less time to save before a big expense comes up.

I currently add $600 monthly to my home expense reserve and $300 monthly to a vehicle expense reserve. I will also add lump sums to it if I have any extra funds coming to me, such as an income tax refund, or an unexpected windfall.

When should I start?

There’s no time like the present. The sooner you begin, the sooner you will be able to tackle the unexpected and turn a crisis into an inconvenience.

Additional Resources: I recommend that you watch our webinar Following Your Money Trail: Building an Effective Cash Flow Plan, available on our site: https://advisor.wellington-altus.ca/wagner/webinars/

Recent Posts

December + Annual 2025 Market Update – Tariff Turbulence, Volatility Peaks, and Commodities Diverge Tariff Turbulence, Volatility Peaks, and Commodities Diverge

Last year was productive for equity investors, with Canadian and American indexes delivering strong returns for the third consecutive year. However, it wasn’t without turbulence. The first quarter saw modest gains until a major policy announcement in early April introduced a new round of trade tariffs, sparking a global trade conflict.

By Friday, April 4, the North American equity indexes had plunged between 6.32 per cent and 10.02 per cent for the week. The MSCI All Country World Index fell 7.91 per cent over the same period, signifying the depth and breadth of the negative effects of tariffs on equity values around the world. Fortunately, by mid-May the TSX, S&P 500, Dow and NASDAQ had recovered these early losses.

Winter 2025 Newsletter – The Wagner Investment Management Team

As we step into 2025, now is the perfect time to review your financial goals and make sure your investments are aligned for success. Explore the advantages of portfolio rebalancing, tick off key items from your New Year’s financial checklist, and stay ahead with important deadlines like your RRSP contribution date. Plus, discover how strategies like spousal RRSPs can help maximize your retirement planning. Let’s make 2025 your most financially confident year yet

Last Month in the Markets – November 2025 – Shutdown Ends, Data Delays, and Rate Cut Uncertainty

The final, and Thanksgiving shortened, week of the month salvaged what had been a dismal period for North American equity indexes. The S&P 500 and Dow eked out small gains but gains nonetheless after rising more than 3 percent last week. The TSX rose 4 percent in the last week and achieved another all-time high. In the four trading days last week, NASDAQ jumped nearly 5 percent but remained 1½ percent below its level from the end of October.

Last Month in the Markets – October 2025 – Shutdown Shocks, Gold Surges, and Rate Cut Rebounds

North American equity investors saw strong performance, especially those focused on the U.S. indexes. Although the TSX moved up nearly one per cent, the American indexes moved up substantially more, with the NASDAQ delivering nearly five per cent.

This performance came with an increase of uncertainty and volatility that spiked in the middle of the month. Further evidence of the resultant flight-to-safety was the peak closing price for gold on October 20, when it reached $4,359 USD.

Last Month in the Markets – September 2025 – Rate Cuts, Inflation Creep, and Shutdown Surprises

Investors focused on equities and enjoyed spectacular performance over the last three months, including last month. From an economic news perspective, it was a relatively calm month. Conditions that had been in place continued their paths as indicators held their trajectory. Employment remained soft, inflation ticked upward, and central banks cut rates as a result.

The information contained herein has been provided for information purposes only. The information has been drawn from sources believed to be reliable. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. This does not constitute a recommendation or solicitation to buy or sell securities of any kind. Wellington-Altus Private Wealth Inc. (WAPW) does not guarantee the accuracy or completeness of the information contained herein, nor does WAPW assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Before acting on any of the above, please contact your financial advisor.