It occurs to me that the key to accumulating wealth is to play both a good offense and defense.
1 - Make good money
2 - Don't spend it all
I haven't heard of any millionaire single mom with three kids making $20K per year who saved all the money.
I haven't heard of people who make a mint but spend more making it to wealth either.
The way I look at it is you have to think like a beaver. (Canadian Eh!)
Water (Money) flows into your pond and you build a dam to keep it there. But you can never build a dam that doesn't allow any water to flow out because it will bust (your will power lets you down). Some of your money has to flow out, but if you can build a decent dam...you'll keep a lot of it. The bigger and more powerful the river flowing into your pond is...the more water you let out but you can also keep more water to use.
Now if you have no water (income) flowing into your pond, it'll dry up in no time. If you don't build a dam to keep the water from running away...there is no accumulation.
You need a good flow of water and a good strong dam to make it as a beaver. Also no one ever accused beavers of being lazy.
The parking spot for the van will cost $100K a year
I know a guy who bought a condo in a new development in Vancouver, then two weeks later decided to buy a second, identical unit in the same development (wealthy guy). In that two weeks time, the property decided they could charge an additional $30,000 (yes THIRTY grand) for his parking space. So he got his first unit for $300K with a parking space, and his second two weeks later for $330k. Ridiculous.
I've been hanging around here for a while now and this is what I've learned.
1 - You are probably best off hanging out here for a while and listening in the investing forum for a while
2 - After a while you will start to understand different approaches to investing. One will start to appeal to you as something that sounds interesting. Maybe you like the idea of dividend stocks or the couch potato strategy
3 - Get a self directed investment account
4 - Try out some strategies in a virtual account
For Instance I can tell you that I "bought" the 10 highest dividend paying stocks in Canada about 2-3 years ago in a virtual account and I'm still evaluating the results which are not as bad as you would expect.
This is advice on how to SAVE a Million Bucks, not how to MAKE a Million Bucks!
Ok here's a clue on how to make a million bucks.
Give up getting a job. Become self employed.
My very first business I was "making" (grossing) 25K - 50K per month for about 5 years. You can take it from me that it doesn't matter one bit how much you make. What matters is how much you get to keep after expenses.
I did not get to keep very much.
In my current business I keep a lot more.
When you see those big numbers and big checks roll in, you get very impressed with yourself and start to spend money on a lot of stuff that doesn't matter one bit which includes impressing your customers with nice wheels and a fancy office.
I'm the person who used to break out in hives when payday, rent day and mortgage day were in the same week. And if you think it's a hardship being a slave to your boss, try being self employed where you have the worst boss ever and you're a slave to your clients and your employees and your banker.
It's tough but if you are tougher you can make really good money working for yourself.
Do people recommend the Banks wealth management people or with private firms like Ed. Jones or something similar?
I am not in Toronto.
Most on here are here because they enjoy self-directing their own investments through simple purchase of stocks, index funds/EFTs, DRiPs, and more complex instruments like options. The goal is to not lose a VAST percentage of your eventual wealth through the fees that one pays to an advisor working for one of the investment companies/banks- they sell you their products, not what is necessarily in your best interests. You could, however, find a 'fee-only' financial planner who will look over your current and future needs and help you to construct a plan- so you might pay $300 for a couple of hours of advice tailored to your goals that you can implement yourself. Whereas with an investment firm, you will pay ongoing fees and sales charges that eat away huge percentages of your returns over time. That 2% or whatever is taken out of your returns, every day, robbing you of the opportunity of compound interest on that money.
A great place to start is with the "Wealthy Barber Returns, released last year. Great, easy to read book on finances for the average Canadian.
Thank You, Berubeland and Indexxx for your kind information.
I have to make the transfer soon on a T2151 and it must go to a registered plan, my pension plan or an annuity to avoid taxes.
I need to do this soon as it is just a year now since my husband died. It is his commuted value of his DB pension.
I can't afford to wait any longer so if I transfer to say RRSPs at a Bank and let their Wealth Mgmt look after it for now.
Would that be a huge mistake? I know I would have fees to transfer the funds at a later date to an annuity or something like that.
I am not that savvy yet and may never be.
I haven't been able to find anyone that will give me advice for a fee of say $300.
They all just want to manage the amount.
I have read Pensionise Your Nest Egg, recently, which has opened my eyes to some of the products out there.
I am still not confident that I could manage the funds myself yet.
I will read the Wealthy Barber Returns next, its just I need to take some action soon. I have been stalling and trying to decide for 9 months now.
I welcome any suggestions as to my next step.
Redrose if you just go to the bank or some name brand investment firm, they might dump your money in some mutual funds that skim 2-4% off your yearly return. (which is bad IMO)
You would be best finding a fee only advisor (might cost $500-$1500) and tell him you will only invest in products that have expense fees less than 1% with out any other strings attached. (ie holding fees, account fees, front load, rear load fees, etc)
At least you will not be getting hosed on fees and getting un-biased financial advice.