# Don't know what to do with a large amount of money



## cynbad (Feb 20, 2012)

I'm 38 years old with no children, no debt, rent an apartment in a city, make about $60,000 annually with no pension, have my TFSA maxed out, $80,000 in RRSPs, and about $124,000 sitting in the bank. $112,000 of that money is from the recent sale of an inherited property. I just split from my partner, who managed my money in Scotia itrade. It's nearing the end of February and I'm wondering if I should max out my RRSP contributions (about $27,000) and then put the rest of the inheritance money (70,000) in a high interest savings account until I figure things out. I've read articles about investing in real estate, but I like where I live for now. Also, I have no idea how to go about investing my RRSPs. I want someone to sit down with me at the computer and show me a few things in itrade. So, what would you do if you were in my position? Thank you in advance for any advice offered.


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## Causalien (Apr 4, 2009)

uhhh. 
Call iTrade and ask them to teach you?


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## FrugalTrader (Oct 13, 2008)

cynbad, I think you are right. I would leave the cash sitting in a high interest savings account until you decide what to do next. If you want to do it yourself, then I would suggest to start reading through the forum to figure out the best strategy for you. If you have no interest in DIY, then perhaps a fee based financial planner could help?


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## the-royal-mail (Dec 11, 2009)

I would start with some GICs or HISA for now until you figure things out. 1% of the sort of money you have is pretty good. Just be careful if you go to the bank as they'll be anxious to have you buy mutual funds with that money. RE is in a bubble (IMO) right now and is at a high and for someone in your situation owning property is a large responsibility. Remember there is nothing wrong with cash in the bank. Another thing you could do is tier your savings as explained in my sig file. Then put the rest in GICs for now.


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## Montrealer (Sep 13, 2010)

cynbad said:


> I'm 38 years old with no children, no debt, rent an apartment in a city, make about $60,000 annually with no pension, have my TFSA maxed out, $80,000 in RRSPs, and about $124,000 sitting in the bank. $112,000 of that money is from the recent sale of an inherited property. I just split from my partner, who managed my money in Scotia itrade. It's nearing the end of February and I'm wondering if I should max out my RRSP contributions (about $27,000) and then put the rest of the inheritance money (70,000) in a high interest savings account until I figure things out. I've read articles about investing in real estate, but I like where I live for now. Also, I have no idea how to go about investing my RRSPs. I want someone to sit down with me at the computer and show me a few things in itrade. So, what would you do if you were in my position? Thank you in advance for any advice offered.


Congrats and it seems like your in good shape going forward.

I would definately max out my RRSP's since your TFSA is already maxed out and as for the $70,000.00, I would look into a mutual fund or GIC, the reason I say that is because these days the interest rates on HISA (high interest savings accounts) are very low and only around 1.5%. That is only about $1050.00 in interest (before compounding) per year, on $70,000.00!!! Not enough.

Look carefully and study some GIC's and mutual funds, certain energy funds, REIT's and even balanced funds have performed very well over the past five years etc.

All the best!


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## MoneyGal (Apr 24, 2009)

I have a copy of "It's Not Rocket Science: Plain-English Advice for Managing your Investments" by Tom Bradley (co-founder of Steadyhand Investment Funds) that I could throw in the mail for you...PM me with your details if you want it.


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## MrMatt (Dec 21, 2011)

HISA until you figure things out is good.

The obvious, pay off all your debt etc is a good one.

You can contribute a big chunk to your RRSP, but you can carry forward the deduction for a while.

Why not just extend your RRSP strategy to unregistered investments?


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## Sasquatch (Jan 28, 2012)

I just put our TFSAs and regular savings @ 3% and 2% respectively into HISAs with Canadian Direct Financial in Edmonton.
Gonna leave it there until things improve


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## officematt (Oct 16, 2011)

Until things improve? Are you kidding?

Whatever you do, don't do it yourself, as it is clear you don't have that background or knowledge. Don't trade penny stocks. Don't chase profits. Don't listen to most people here....they will lead you down the garden path no matter what their intent is. Trust yourself, but most of all, educate yourself. Time is on your side, but only if you act now.


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## Sasquatch (Jan 28, 2012)

No, I'm dead serious 

Interest rates are so low at present, they can only go up.

I'm not willing to take the risk of non guaranteed investments and I don't have to since we are quite comfortable in our retirement as it is.

I'm good and I can wait


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## cynbad (Feb 20, 2012)

Thank you for your helpful advice. I'm meeting with a friend of mine on Tuesday who is a financial planner and he's going to help me re-balance my itrade portfolio. Special thanks to MoneyGal for the offer of the book. I have Personal Finance for Dummies so I'm going to read that for now.


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## AltaRed (Jun 8, 2009)

My best advice is: 1) avoid commission based sales staff and that includes financial planners in banks and all the full service brokerages, and 2) costs matter so stay away from actively managed mutual funds of any stripe/name.

Your friend who is a financial planner should be able to help you go in the direction of low cost index mutual funds; or ETFs by iShares Canada, Vanguard Canada, etc. 

Scotia iTrade allows you to buy a number of ETFs without commission but be careful of these offerings. Many of these 'commission free' offerings are slice and dice specialty funds and do not have the lowest MERs and will cost you more over the long run than a $10 commission to buy broad based index ETFs. I have had a Scotia iTrade account for years.


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## stephenheath (Apr 3, 2009)

officematt said:


> Until things improve? Are you kidding?
> 
> Whatever you do, don't do it yourself, as it is clear you don't have that background or knowledge. Don't trade penny stocks. Don't chase profits. Don't listen to most people here....they will lead you down the garden path no matter what their intent is. Trust yourself, but most of all, educate yourself. Time is on your side, but only if you act now.


I don't think it's so much other posters leading you down the garden path, but you need to know your goals in life and investing first. Then see how people's posts can support your goals. Right now you'll get the gardenpath feeling because there are posters here trying to retire at 45, 20 year olds starting out early to let time work for them, buy and holders, goldbugs, posters focused on making money by daytrading, people like Sasquatch already set for retirement whether retired or not, and people who are behind the curve trying to catch up... all those different goals and risk tolerances means a lot of different advice, that's useful to those with similar goals and risk tolerances. You need to learn enough to know what advice suits you and your goals.


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## the-royal-mail (Dec 11, 2009)

*be careful with "financial advisors"*



cynbad said:


> Thank you for your helpful advice. I'm meeting with a friend of mine on Tuesday who is a financial planner and he's going to help me re-balance my itrade portfolio.


This is a bit of a *red flag*. Tell us more about this friend. Does he work at a bank? This is their busy RRSP season and it looks to me like they've been booking tons of meetings with customers to get everyone signed up to more MFs, even if it means selling people loans (double positive for the bank).

Hopefully your friend isn't one of these advisers who will simply put you in high-MER "balanced funds" or the like.


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## uptoolate (Oct 9, 2011)

+1 on RM's post. Don't go rushing in to things. 

Except for maybe the RRSP contribution which you should consider to get the biggest bang for your buck as the deadline is Wednesday. You could make a donation large enough to get you down to the next lowest tax bracket or you could put the entire amount in (up to your max room) but still consider not using the entire amount for against last year's income. The RRSP amount can be in cash until you decide where to put it. Last week, Canadian Capitalist pointed out ATL5000 which is like a high interest savings account that has no holding period restrictions. 

Generally folks here will advise TD e-series mutual funds because of their rock bottom MERs or index ETFs if your holdings are large enough or you are making significant lump sum contributions. Whatever you do, do not buy any Deferred Sales Charge (DSC) mutual funds or mutual funds with high MERs. 

Just my 2 cents. Good luck.


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## larry81 (Nov 22, 2010)

the-royal-mail said:


> This is a bit of a *red flag*. Tell us more about this friend. Does he work at a bank? This is their busy RRSP season and it looks to me like they've been booking tons of meetings with customers to get everyone signed up to more MFs, even if it means selling people loans (double positive for the bank).
> 
> Hopefully your friend isn't one of these advisers who will simply put you in high-MER "balanced funds" or the like.


Dont mix friend and "advice about money management".

In fact, i suggest you run as far as you can


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## AltaRed (Jun 8, 2009)

larry81 said:


> Dont mix friend and "advice about money management".
> 
> In fact, i suggest you run as far as you can


Not necessarily. Cynbad has not defined who this "friend" is. What we have heard is this "friend" is a financial planner who was going to help re-structure Cynbad's Scotia iTrade account. How can there be a vested financial interest here?

If this "friend" is doing this gratis without a personal financial interest of his/her own, that advice can be good. That said, my previous post still applies: 1) stay away from commissioned anyone, 2) costs, i.e. MERs, matter.


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## cynbad (Feb 20, 2012)

Thank you for your concern. He is a colleague who I've worked with part-time for about 5 years. His partner was the manager of the company for about 10 years prior to that. He is a certified financial planner who is not working in the business right now. Tonight, we are going to discuss my goals and a plan. I will not let him have access to anything until we discuss matters at length. I looked up rates for fee only financial planners and we are going to negotiate proper compensation for him. 

I am going to open a HISA with People's Trust at 2.1% as I already have my TFSA with them at 3%. It's the best rate I can find at the moment.

Thanks again.


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## donaldmc (Feb 27, 2012)

I think you should speak to an money adviser or accountant. That's awful, if you can't find an alternative to it. I think others have a great advice, just give it a try.


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## humble_pie (Jun 7, 2009)

cynbad i'm just writing to encourage you, i think you are doing everything A-OK.

contributing to the rrsp, making sure the tfsa is maxed, placing new funds in safe short-term products while one learns, seeking the advice of someone whom you believe is well-qualified, being prepared to compensate him, being prepared to discard his advice if it turns out to be unsuitable or consists of referrals to his friends in the financial business ... all these are excellent moves.

what no one has mentioned so far is how much fun & interest awaits you. It means global headlines flying through your front door & taking on human proportions & jumping into your pocketbook every morning. Mrs vanier, a demure canadian blueblood, arrested in mexico for conspiring to smuggle ghaddafi's youngest son into puerto vallarta ? and only weeks later snc lavalin share price crashes ? & the ankle-bone's connected to the leg-bone & the leg-bone's connected to the knee-bone ...

ps i'm loving officematt. "Don't listen to most people here, they will lead you down the garden path," he says. But actually, most folks here have made highly appropriate suggestions.

wishing you great success with the Next Chapter.


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## peterk (May 16, 2010)

Good take home message from Stephenheath - Educate yourself.

Although I don't know if I agree that most of the advice here is bad. I also don't like that he's lumped buy and holders in with day traders 

Also don't be fearful of your friend's advice. It's the common response online to "avoid friend advisers" but from what you've described you have a genuine friend who is opening up to help you and not try and misguide you into mutual funds. I wish I had such a friend.

/Rant

Just an RRSP warning: I went into the bank last week (BMO). It is a yearly ritual, where they assume I am no longer a student on January 1st, and start charging me $9.95/month for the _privilege_ of having a chequing account... She refunds me my service fees and then asks "Would you like to buy some RRSPs?"

First of all, thank you for assuming that I am SO stupid I won't understand that "buying some RRSPs" isn't even a valid sentence in the financial world. What is that like a test or something? Say "would you like to buy some RRSPs?" and if the person doesn't give you a quizzical look like you're a moron you know you got a sucker on the line?

Second, _she is looking_ at my accounts - As far as BMO is concerned, I have $26 in chequing, $10 in savings, a $500 Mastercard bill, no income, and I just came all the way down to the bank to tell them that I am an active student and to refund the precious few services charge dollars that I need to survive. But yes, of course, I'd like to buy some RRSPs....

I told her "Ha! I'm a poor student! Do I look like I've got the money for that?" She and the next teller over gave a chuckle as if to say "ohh haha you caught us trying to screw you over, good for you!"

Anyway - KAEj can you do something about these shifty employees/policies? Are you CEO yet? 

/End Rant


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## the-royal-mail (Dec 11, 2009)

Loved your rant, peterk.

Good thing you were a student. If you were in the workforce, they would have gone a step further and try to press an "RRSP loan" into your hands. Even CBC this week has had a few stories (my friend calls this financial po-n) about today's RRSP deadline.

I'll be glad when it's over, so I can get back to my regular banking.


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