Short Term Big Money Stint - Young Investor

[james1711]

Hello to the forum. I have been reading this forum for around 2 years now but have just recently made an account.

Background -

22 years old
2 years of University completed in Business( Accounting/Finance )

I completed 2 years of my schooling at Simon Fraser ( B.C). Because of family issues I decided that it would be best for me to get out of province and on my own and work for some time. My intention is to work for 8 months to a 1 year and then return and finish my bachelor's. I want to do my concentration in accounting and/or finance.

I have moved to Alberta and have been hired on for an entry level rig position with Precision Drilling . I come to the board for advice as I want to make the most of the money that I will be making. I will be making roughly $7,000-8,000 month gross. The big question is what to do with all this money .....

In the past I have proven myself to be extremely frugal and have lived on <$1,000/ month while living on my own. The budget that I have laid out for myself for the next year has me spending $800/month. This is doable and realistic especially as I will only be paying rent of $200/month.

Let's assume I end this year with roughly $65,000-70,000 in the bank.

I currently have both a TFSA and a unregistered account with Questrade. I plan to open up an RRSP account with them also ( advised ? )

I have contributed a total of $3,000 to my TFSA in the past. I have no RRSP's.


Current financial position-

Assets
$3,000 in TFSA in Canadian Div Fund ( CDZ )
$1,000 Cash
2002 Honda Civic

Liabilities - none


Goals - I plan to work part time during school and as such hardly need to touch this money; in this sense my time frame is long term. I would describe myself as having moderate to high tolerance for risk ( I guess you really never know though until it happens..). I think I could stomach losing 10-20% of my portfolio in the short term in exchange for greater returns in the long run.

I would ideally like to achieve 5-8% /year in total returns.

I like the idea of re-creating the broader market by buying 1or 2 stocks from each sector. Is this enough money to do this efficiently ? or am I better of going with ETFs ?

I'm excited to see the market taking a tumble right now .... I'm hoping that it continues a slide and stays there for me so I can get in nice and low.

I have also contemplated buying a home ( as an investment ) if we were to see a >20% correction in Canadian housing. Thoughts?

Basically the plan as of now is to wait till I have about $10,000 and then buy some blue chip stock, wait till I have another $10,000 and buy another, but in a different sector. I would also like to have some sort of Bond allocation which I plan to achieve through an ETF. I would also like to have some sort of physical metals position but I'm not sure if it would be best to do this through a gold/silver ETF or if to buy the actually physical gold/silver.

Anyways, this post really isn't that coherent, I have some more specific questions that I might later ask in dedicated threads. This is mainly to introduce myself and get peoples opinions from a really broad perspective without so much of the specifics.

Thanks,

James

[Spudd]

Don't forget about taxes. If you're grossing ~100k you'll pay about 30k in taxes (that's about what I gross and pay, with 8k RRSP contributions annually), leaving you 70k. Minus 10k for your spending, and you're looking at 60k max. I don't know what your RRSP limit is, but it's probably a good idea to max it so you minimize the tax hit on the 100k, plus if you won't need the money then it will have a good long time to grow until you retire. Also, max the TFSA. This will be great because you can take out the money if you need it to supplement your part-time work when you're back at school.

Most brokerages don't start giving you low fees until you have 50k with them, so if I were you, I'd start off just using TD e-series index funds. Once you have a larger nest-egg you can get into the individual stocks game.

Also, figure out how much you need for an emergency fund and potential school buffer, and keep that in a high-interest savings account since you want it to be readily available, and not destroyed by any potential stock market crashes.

[kcowan]

I agree with e- investment at any TD Bank branch. Also you can probably get an added small CRA deduction for the move to Alberta to find work.

I would stay out of real estate until you know more about your future. No one knows what will happen to real estate values in the next few years.

[james1711]

Also you can probably get an added small CRA deduction for the move to Alberta to find work.

This is interesting. I had no idea. I will have to look into this.

Thanks.

[KaeJS]

Hi, can I just ask a question?

Hopefully yourself or others can pitch in.

How easy is it to just "get a job" in Alberta making that kind of money?

I'm tired of this Ontario crap. I'll get my hands dirty and do some hard physical labour all day for a year if I'm going to get $70k.

I used to work 105 hour weeks. Now I work 37.5 hours per week making only $35k and I'm bored and broke as hell.

Would it be possible for someone like myself to do the same thing you have done?

[MoneyGal]

This is interesting. I had no idea. I will have to look into this.

Thanks.

Here you go! If you move more than 40 km away to get a new job, your eligible moving expenses are deductible from the income you earn at the new location:

http://www.cra-arc.gc.ca/tx/ndvdls/t...eng.html?=slnk

[Zoombie]

Welcome to Alberta son. Your calculations look optimistic, the way I see it:
New Pickup Truck $50 000 (at least!) + lift ($3500)
Weekend slush fund ($900 /month)
+Gas money (going to be quite alot more than for your civic)

You'll still end up nicely ahead, but not as much as you may be planning for. And thats IF you can hack it as a rig hand for a year.

[sharbit]

How easy is it to just "get a job" in Alberta making that kind of money?

This kind of depends on your skill set and how many hours you're willing to work. However, there's a bit of a labour crunch right now too so I'd imagine it wouldnt be too dificult to land a 70k job in northern Alberta. Start applying and find out! Worst case you can just say no.

[james1711]

Here you go! If you move more than 40 km away to get a new job, your eligible moving expenses are deductible from the income you earn at the new location:

http://www.cra-arc.gc.ca/tx/ndvdls/t...eng.html?=slnk

Thanks. Any idea how much it would be safe to "stretch" moving expenses ?

[james1711]

Hi, can I just ask a question?

Hopefully yourself or others can pitch in.

How easy is it to just "get a job" in Alberta making that kind of money?

I'm tired of this Ontario crap. I'll get my hands dirty and do some hard physical labour all day for a year if I'm going to get $70k.

I used to work 105 hour weeks. Now I work 37.5 hours per week making only $35k and I'm bored and broke as hell.

Would it be possible for someone like myself to do the same thing you have done?

I'm in Cold Lake. I would say that it really depends on what skills you have. The highest paying jobs are in the trades as well as in engineering. Then again, the money flows, and ALL sectors are hiring. It actually quite incredible to see the number of signs reading "hiring" or "help needed"; they are practically everywhere. This includes the gas stations, grocery stores, clothing stores, construction companies, drilling companies, car dealerships, bars and restaurants, etc. I'm sure that you could also find a higher paying white collar job for whatever skill set you have.

Also, keep in mind that my hourly rate is really nothing that amazing. What causes you to earn so much is the number of overtime hours you log each day ( up to 5 ). I'm going to be working roughly 200 - 250 hours /month. In other words - you earn lots not just because you are highly paid, but also largely because you can work many many hours.

For specifics of getting onto a rig look at this website - http://www.caodc.ca/ - this pretty much has all the information you need to know. Most companies like to see that you are actually already in town to know that you are serious. If you are, I would recommend getting your tickets ( H2S and First Aid ) and then moving here. You also need to have a class 5 drivers license with a clean record. Are you physically strong ? The company actually sent me through a "100lbs physical" at a physiotherapist office as part of my pre-employment testing. You have to repeatedly walk about 40 feet back and forth carrying a 100lbs bucket, each time you reach one end you must put it down and pick it back up. This is not easy. I would say that easily 40% of the health male, working age population would not be able to pass this test. Prepare if you think you might have troubles.