Great income, that will really help your plan.
Nice mortgage term and rate, well done.
I suggest to focus on your personal debt and mortgage debt. With that income, maximize TFSA every year and contribute to RRSPs.
You're off to a fine start I think.
My Own Advisor - My blog about saving and investing my way to financial freedom.
You could be right, but I was thinking of evidence like this (which is comparing index funds to managed funds, but if you assume that managed funds are managed by professionals who work at this full time, how reasonable is it to expect part-time individual investors to do much better on their own?):Originally Posted by humble_pie
http://www.standardandpoors.com/serv...ervalue3=UTF-8
And then there's all the Nobel laureate economists who espouse index funds:
http://www.ifa.com/12steps/step2/
Snowbird
I should have also mentioned that you might want to think twice about putting tax deferred investments into an RRSP
You might want to consider the following but your the best judge as to how practical it would be for you.
With your current plan putting everything into stocks with in your RRSP when you want to buy an interest bearing investment to reduce risk in your portfolio your not going to have much or any RRSP room. So the interest bearing investment will be held outside RRSP being taxed every year.
If you buy a stock or ETF & it increases in value your not taxed on capital gains untill after it is sold if held outside RRSP account.
If held in an RRSP account you will be forced to switch it to a RIFF & have to with draw x amount when your 70 or is it 71 & having to pay tax on it. The tax rate will be higher because it wont be taxed as capital gain plus it will not be deferred as long if you were going to hold the etf or stock longer.
This is someting you might want to consider pay down mortgage & debt fast as possible, emergency money keep in TFSA or maybe consider having no energency fund & being able to borrow against the condo.
Only when mortgage is paid off put money into RRSP. Max out unused portion @ least so your income comes down from the highest tax bracket & do the math how practical it would be to go even into a lower tax bracket or save a little room for the following year or 2. Might be a gamble though if your job is lost. Put refund into TFSA unless you have enough funds to put money in sooner.
I would not buy any taxed deferred investments into the RRSP only interest bearing.
Once the RRSP is topped up remaining investment capital use that to buy stocks.
Your taxes will be lower when you retire on the stocks cashed if held till retirement if held outside an RRSP account.
The amount of money your making & saving you will have no problem catching up to balancing your portfolio to a higher level of stocks to fix income.
In the time between now & when your ready to put money into stocks I would spend some of it doing research on how to invest.
Easy - because the professionals are crippled by restrictive rules, unable to use derivatives even for risk control, hobbled by massive size, and worst of all... they are almost all long-only. You take a study that was done scientifically and then blindly try to infer that an individual could not beat a professional when the study in question has zero to do with that. All of this conjecture without even the slightest mention of all of the massive advantages the individual investor has over the professional.
I remember years ago where a bunch of PHD's and a nobel laureate or two went and set up their own investment company with all of their wonderful knowledge. They named the firm "Long Term Capital Management". Care to guess how that worked out?
These are the same type of well-meaning fellows who years ago came up with efficient market theory based on the idea that markets and investors are completely rational. A brief glance at the business news should end that fantasy for you.
Last edited by Lephturn; 2012-09-30 at 03:58 PM.
I failed in my thinking in my above post. All you would have to do to rebalance latter if stocks were bought in RRSP account would be to sell them & buy them back in a none regestered account & then buy the fixed income inside the RRSP account. What was I thinking before
Thanks, Lephturn. The ones that want to believe in mediocrity can do so. And the whole finance industry will try to convince you that you can never outperform.
I think that's an unfair characterization on many levels, but the point is not that one can never outperform; I think even the most ardent proponents of index investing acknowledge that people who buy individual stocks can and often do get triple-digit returns in any given year and tend to outperform indices over periods of 5-10 years, even longer. The point is that as the time horizon increases, the probability of beating those indices decreases, because over time the big gains are usually counterbalanced by signfiicant losses. If you're passionate about investing and are motivated to spend the time on research, learning, etc., your investment of time and education is likely to pay off. But it would be a shame if you spent all that time and in the end your returns weren't remarkably better than those of someone who spends 4 hours per year managing his or her investments. I don't think it has anything to do with settling for mediocrity; it has to do with priorities and probabilities.
There is nothing mediocre about indexing / couch potatoing. Only a small minority of retail investors are aware of strategy, recognize its power and have the discipline to successfully implement it.
lol you're saying that the masses who are not members of the Praetorian Guard with its secret key to couch potato success are destined to fail ?
ooh là. And here we were thinking that couch potato had been invented by a financial industry desperate to capture all the masses who have been permanently turned off old-fashioned mutual funds.
capture em because guaranteed mediocrity - for the masses - sounds better than risking failure.
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Brad, professionally managed funds have to be treated far differently than a retail investor's. For example, I couldn't dream of doing what I do in my thread were I managing funds and my returns would surely be lower.
I think the statistic of index investing vs. stock picking is what it is because most retail investors are uneducated and uninterested in really taking the time and effort to learn about the market. I have a strong hunch that those that do this have a far greater likelihood of outperforming the market. The number of people that fall in this category are so small, however, that they barely influence the overall statistics.
Almost anyone who is really successful (in anything) probably had to work really hard to get there, perhaps with a little luck thrown in. If one is prepared to make the effort and enjoys learning about the topic, I wouldn't straight away recommend ETFs and steer them away from researching individual stocks.
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