29yo Diary; Hoping I'm on the right track
Page 1 of 7 123 ... LastLast
Results 1 to 10 of 62

Thread: 29yo Diary; Hoping I'm on the right track

  1. #1
    Member
    Join Date
    Jul 2013
    Location
    Toronto
    Posts
    30

    29yo Diary; Hoping I'm on the right track

    Long time lurker, I learned a lot on this forum. Here is my situation:
    - 29yo Engineer
    - Live with girlfriend; future plans (in the next 5 years): marriage, house, kids.

    Expenses (average monthly expenses over last year):
    - Rent: $600 (my half).
    - Bills: $370 (cell phone, hydro, gas, etc).
    - Groceries: $300
    - Gas: $140
    - Leisure/vacations: $650
    - Clothes: $100
    TOTAL: $2,160/month

    Main Income (pre-tax):
    - $70k + ~$10k overtime + ~$5k bonus
    Other Income (estimated, no tax):
    - Cashback on ~$50-60k travel expenses = $2k/year (TD First Class), Saved Per Diems = ~$2k/year.

    Investments:
    - Cash: $14,000 (USD + CAD)
    - TFSA: $22,150 (I think I have about $8k contribution room left). Consists of mostly TD e-Series, and stock.
    - RRSP: $23,000 (=$15k in TD Comfort Mutual Fund, $8k in work matched (2%) RBC Mutual fund. Both high MERs...)
    - TD Waterhouse Stocks: $41,100 (Energy, REIT, Banks)
    - Mutual Funds: $1,800 (TD Comfort from long time ago)
    - Pension: $550 (from part time job 12 years ago...)
    - Loan: $6200 (to girlfriend, interest free to help with student loans).
    TOTAL: $108,800

    Liabilities:
    - None.

    Thoughts:
    - I want to avoid putting too much in RRSP, to keep my options flexible when buying a house (max. $25k HBP).
    - I have a lot of cash, but that swings since I need to pay expenses for work before they are reimbursed at times.
    - Marriage means merging finances with girlfriend; she makes $43k, and has about $20k loans (including the $6200 loan from me).
    - I have much to do in optimizing my investments, add more to TFSA, get rid of high MER mutual funds.

    Any advice or comments would be much appreciated!


  2. #2
    Senior Member MoneyGal's Avatar
    Join Date
    Apr 2009
    Posts
    5,465
    Hey FP: nice work on the savings so far.

    One project that I think would be worth your time - figure out your current asset allocation, and your desired asset allocation. Hive off the short-term funds (for house downpayment) and figure out where you're going to hold them, then focus on an asset allocation for your longer-term holdings.

    Amalgamate your longer-term holdings as much as possible. That little $1.8K in "TD Comfort Funds" - is that an unreg account? Can you sell the funds and merge the cash into one of your other accounts, whether RRSP or TFSA?

    (My advice: don't think about or track the pension worth $550.)

    Then, once you have your desired asset allocation and your desired asset locations worked out and your accounts amalgamated as much as possible, implement your desired asset allocation across your accounts.

    Final step: set up automatic contributions to your accounts in accordance with your desired asset allocation. Voila! You have automated your savings.

  3. #3
    Senior Member My Own Advisor's Avatar
    Join Date
    Sep 2012
    Location
    Ottawa
    Posts
    4,916
    Nice work FinancialPanther. Good name for a long time lurker....

    I echo much of what MG wrote. She's pretty darn smart so follow her advice...

    As for investments, I'd keep focusing on the TFSA, maxing that out sooner than later and get your money working for you to buy that house if you want in a few years. TD e-series is a good way to play that.

    Regarding RRSP, get out high MER stuff as soon as you can and rid yourself of that small amount in TD Comfort Funds if you can/consolidate with TFSA or RRSP. Get a self-directed RRSP once you have over $25,000 in there to avoid account fees. Then, pick a few solid ETFs, XIU or XIC for Canada, or VTI for U.S. holdings and maybe an international ETF. Then, let it ride.

    Keep those CDN stocks unregistered. Capital gains and dividends are taxed favourably and should serve you well long term.

    Keep a chequing account for daily expenses and some savings. 4 accounts, all with a defined purpose and plan.

    Overall, you're doing very well. Kudos to you.
    Hidden Content - Working on a $1 million portfolio and $30k per year from it.

  4. Remove Advertisements
    CanadianMoneyForum.com
    Advertisements
     

  5. #4
    Member
    Join Date
    Jul 2013
    Location
    Toronto
    Posts
    30
    Thanks for the feedback.

    My immediate plans are to sell off all my high MER, Comfort Mutual Funds. Then max out my TFSA after I figure out exactly how much room I have left.

    MoneyGal: Can you expand on setting automatic contributions (I use TD)? Would this mean only using no-fee mutual funds (ie e-Series); I assume this does not mean buying individual stocks, since I'd be charged with commission every time.

    My Own Advisor: I'll have to look into some of those ETFs. I keep seeing those referenced on this forum, and the MERs seem nice and low.

    I'll also transfer my RBC RRSP in kind to my TD account (I hope I can do that), which should bring to my $25k no-fee threshold.

    Part of the reason for doing this diary is for the motivation to make these changes

    Some more info on stock holdings, I hold CM, WCP (up ~50%, TFSA), LNV (down ~30%), COS, CPG, REI.UN, AX.UN. Nothing is DRIPing now, I'll have to change that too.

  6. #5
    Senior Member
    Join Date
    Jun 2011
    Posts
    112
    I am extremely disapointed in myself for not thinking of "FinancialPanther" for my own user name. Get him Sheeba!

    Everything looks pretty good. My only suggestion right now is to set up an automatic withdrawal every paycheque to your TFSA or whatever saving mechanism you want to use. You'll never miss that money if it never hits your account.

  7. #6
    Senior Member
    Join Date
    Jul 2013
    Location
    GTA
    Posts
    122
    That's seriously impressive savings so far!

    We also have work-matched RBC RRSPs. The high MERs are a total drag, but the $30 per transaction fee to buy anything other than mutual funds would be worse. Get the most employer match you can and worry about the MERs once you hit their $50k threshold.

    One other thing - for rent, you put that your HALF is $600. If you make double what your girlfriend does it would be much more fair to split the expenses proportionally (i.e. 1/3 for her, 2/3 for you). It's going to be really hard for her to pay off her loans if she's paying for half of a lifestyle that's suited to a higher income. If/when you get married, her loans will be amalgamated into your finances anyway, so if you start setting up your finances a bit more fairly now (without actually joining them) then she'll be able to make a bigger dent in that number ahead of time and you'll both feel better about it.

  8. #7
    Member
    Join Date
    Jul 2013
    Location
    Toronto
    Posts
    30
    Quote Originally Posted by KrissyFair View Post
    That's seriously impressive savings so far!

    We also have work-matched RBC RRSPs. The high MERs are a total drag, but the $30 per transaction fee to buy anything other than mutual funds would be worse. Get the most employer match you can and worry about the MERs once you hit their $50k threshold.

    One other thing - for rent, you put that your HALF is $600. If you make double what your girlfriend does it would be much more fair to split the expenses proportionally (i.e. 1/3 for her, 2/3 for you). It's going to be really hard for her to pay off her loans if she's paying for half of a lifestyle that's suited to a higher income. If/when you get married, her loans will be amalgamated into your finances anyway, so if you start setting up your finances a bit more fairly now (without actually joining them) then she'll be able to make a bigger dent in that number ahead of time and you'll both feel better about it.
    I split the rent in half with my girlfriend, but I pay for the gas ($25/month), hydro ($45/month), and groceries ($300/month), and the bulk of entertainment, so I think it's pretty fair.

    Also, I just sold that $1,800 worth of mutual funds. My next step is to recover my CRA password and see how much TFSA contribution room I have, then transfer that cash in.

  9. #8
    Super Moderator
    Join Date
    Nov 2012
    Location
    Pacific
    Posts
    8,257
    I'm in a very similar situation to you personally, with age, income, and expenses

    I think you need more cash (in a high interest savings account, something like PC Financial at 1.35% or maybe a credit union at 1.7%).

    My advice is to hoard more cash, which you'll need in case of job loss. Your girlfriend doesn't have very high income, and she's got debt.

    Your 'investments' won't do you much good in case of job loss because economic conditions which kill your job may also kill your investments. Having to liquidate your stocks & funds during job loss will absolutely destroy your returns. Stock based investments have to remain invested for long periods (at least 10 years) to produce good returns.

    This is why you need more CASH. I would start by hoarding 1 years expenses (2160x12 = $26,000) and work on improving that hoard further up towards 2 years of expenses.

    As you build up that 2 year cushion, you can put some of it into GICs which will get you a higher interest rate. Having sufficient cash reserves lets you not only feel better and more confident about your job (since you're less desperate) but also lets you comfortably invest in stocks and higher risk things, knowing that you won't have to liquidate and tap into those things due to emergency.

  10. #9
    Member
    Join Date
    Jul 2013
    Location
    Toronto
    Posts
    30
    Quote Originally Posted by james4beach View Post
    I'm in a very similar situation to you personally, with age, income, and expenses

    I think you need more cash (in a high interest savings account, something like PC Financial at 1.35% or maybe a credit union at 1.7%).

    My advice is to hoard more cash, which you'll need in case of job loss. Your girlfriend doesn't have very high income, and she's got debt.

    Your 'investments' won't do you much good in case of job loss because economic conditions which kill your job may also kill your investments. Having to liquidate your stocks & funds during job loss will absolutely destroy your returns. Stock based investments have to remain invested for long periods (at least 10 years) to produce good returns.

    This is why you need more CASH. I would start by hoarding 1 years expenses (2160x12 = $26,000) and work on improving that hoard further up towards 2 years of expenses.

    As you build up that 2 year cushion, you can put some of it into GICs which will get you a higher interest rate. Having sufficient cash reserves lets you not only feel better and more confident about your job (since you're less desperate) but also lets you comfortably invest in stocks and higher risk things, knowing that you won't have to liquidate and tap into those things due to emergency.
    Hoard that much cash? I lose out on ~$3k of growth every year by doing that! Higher rate GICs? I see I can get a piddly 2.25% if I lock in my money for 5 years (where I would have to take a penalty if I lost my job in a year).

    I'm open for comments regarding this, but my feelings are that I can afford to take on more risk and grow my money through stocks and ETFs (maybe a small bond position) rather than savings accounts and GICs.

  11. #10
    Senior Member MoneyGal's Avatar
    Join Date
    Apr 2009
    Posts
    5,465
    There's no consensus on this board or generally that people need one year of living expenses held in cash. I don't hold any cash except accidentally.


Page 1 of 7 123 ... LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •