# 22 and relatively new.



## Reio92

I'm trying to figure out what's what still, didn't really have an interest in investing until last fall.
I have an RRSP that my employer matches up to 3% which I've had since I was 20, and have around $5500 in it right now, all mutual funds, glad I listened to my boss when he said it's a good idea. I just opened another RRSP with $5000 and will contribute $500 a month or so, and No TFSA as I'm a dual citizen.

Age :22
Gross income : $55000

Chequing account : $1000
Saving account : $24,500

Work RRSP : $5500
Personal RRSP : $5000
-----------------------------------
Rent -$500 month
Cell and car insurance -$ 220 month
Food -$4-500 month

Own a Civic worth around $5000 and sporting equipment worth around $2500, but that's basically my life at this point. Goal right now is to get my RRSP's on a good start at a young age, and start saving for a large down payment on a house in the next 5-7 yrs.


That's a basic idea of what's going on for me, with rough numbers.


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## Feruk

Why does being a dual citizen matter for TFSA? I'm a dual citizen and have one... Advice: Open TFSA, put money in, grow money here are you can take it out for a down payment with no tax consequences. $25K towards a down payment from your RRSP (through first time home buyer's plan) will help too.

No car payment, correct?
What's the money in your checking account invested in? If it's just sitting there, it loses value through inflation every year.


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## Nemo2

Feruk said:


> Why does being a dual citizen matter for TFSA?


Dual US/Canadian citizens may be subject to US taxes, even in TFSAs, as far as I know.


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## ashin1

why not use your rrsp account to fund a self directed investing account and start investing in the markets?


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## Taraz

As a dual citizen, can you invest in Roth IRA's instead? I'm told by a US friend that they're actually a better deal than TFSA's.


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## savvybuck

wow age 22 with a 55K income and 37K networth? you are gonna be a millionaire at 35 at this rate if you invest aggressively.

30 even if you find a partner who is as frugal as you.


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## Reio92

That's the plan, I should have stated that my personal non-work related RRSP is invested in a few stocks, I'm still relatively new to it so I'm reading books and forums like this as I go. I would like to open a TFSA, I would rather be putting my money into a TFSA instead of an RRSP at this stage in life, but from what I've been told and can gather from different sources, I shouldn't since the IRS will be looking for their chunk of the pie. I will look into the Roth IRA though, thanks for that tip. The money in my savings account pays 1% interest every year, which is basically nil. I'm trying to decide where to put it/what to do with it.


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## MasterCard

Have you thought about upgrading your job? E.g. making more through additional education/credentials/skills?
Alot of people, especially new grads, think that after finishing school you need to buy a house as soon as you can because the earlier you buy it the more price appreciation you will be able to realize. 
That's not necessarily true, and I feel like it puts young people on a misleading path...


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## Reio92

Well I'm actually in a trade, and I'll be completed my apprenticeship this fall, so I'll make at least 15G more next year, and eventually my annual income will more than double over the next 10 years. I do still think about going back to school eventually, but it's nice to be debt free at the same time. I'm in no rush to buy a house right now, I'm just trying to make it a little easier when I eventually do by starting to save right now. Hopefully I'm not kidding myself.


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## MasterCard

Reio92 said:


> Well I'm actually in a trade, and I'll be completed my apprenticeship this fall, s*o I'll make at least 15G more next year, and eventually my annual income will more than double over the next 10 years*. I do still think about going back to school eventually, but it's nice to be debt free at the same time. I'm in no rush to buy a house right now, I'm just trying to make it a little easier when I eventually do by starting to save right now. Hopefully I'm not kidding myself.


That's a big assumption...yeah, demand for tradesmen is high - but over time the demand will get filled, who knows immigration may be even easier.
Have you thought about starting your own contracting firm? Probably a better investment than a house?


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## Reio92

Not much to say, worked every single day in march, and it showed up on this month's pay cheque ( any money on top of monthly salary shows up in the next month), and of course got a tax refund...

checking account : $ 4,640
saving account : $ 24,488

Work RRSP : $ 5,908.70
Personal RRSP : $ 6,071.95

Total : $ 41,108.65


Deductions 
Rent : $500
Cell Bill : $ 78.65
Car insurance : $ 157.87
Credit Card : $ 496.96
Total $ 1233.48

41108.65-1233.48 = $39875.17 net as far as money goes.

Deductions are the bills from April, except for rent which is the rent due for May. Around $400 were added to Work RRSP, and I added 1000 to my own this month. Still a lot of money not working for me sitting in my savings account, need to work on that..


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## rossco12

I'm also a dual citizen, but I never received a SS number as part of the process, I would suspect you didn't either. This should prove helpful. The IRS has indicated that they won't show much interest in an account (TFSA) that holds under 50k. They can however, claim tax owed on any annual income over 94k. In order to renounce, you must backfile 7 years of returns (if applicable). It's an ugly situation but I max my TFSA every year, because I don't see how they can try to tax someone who doesn't have a Social Security number.


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## Reio92

That's the first time I've heard they won't show much interest in accounts under 50K, I'll be looking into that for sure. Thanks!. On the other hand, I do have an SS number unfortunately.


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## rossco12

http://www.moneysense.ca/taxes/cra-to-collect-and-share-canadian-bank-info-of-americans-with-irs


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## My Own Advisor

You're doing very well....

As for a game plan, as your salary grows, contribute and eventually max out the RRSP.  Look at maxing out TFSA, even if there are some tax complications; I wasn't aware a dual citizen would need to pay taxes from TFSA.... and if you have no SS #, how can they find you?

Anyhow, you continue to stay out of debt, pay yourself first, say 10%+ of the your net pay and over the next 20 years or so you'll be set.


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## Reio92

Been a long while

Savings account $ 33000.00
Checking account $ 0

Personal RRSP $ 8465.00
Work RRSP $ 7532.00

Total $48997.00

Have only been able to save about $ 8000 since May, have been splurging a bit more that usual this summer on the gf and what not.

Rent $ 825.00 ( moved into my own basement suit closer to town)
Cell Bill $ 65.00 avg. ( was able to talk Telus down a bit.)
Car Insurance $ 120.00 ( got lowered $40.00 per month back in June.)
Credit Card $ 0.0 right now.


Have had a good year so far, have 5 stocks in my personal RRSP, only 2 are doing better than when I first bought them in the spring, but hopefully it changes with time. Still have a large amount in my savings doing nothing, my plan is to do something with it this fall, still unsure of the best option. Pay will increase approximately $ 1000 per month after finishing my apprentice ship last month, so I'm planning to add more than the current $500 per month to my personal RRSP starting next month.


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## peterk

Congrats on the raise!


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## the-royal-mail

Can you clarify why you have both a savings and a chequing account?


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## lonewolf

savvybuck said:


> wow age 22 with a 55K income and 37K networth? you are gonna be a millionaire at 35 at this rate if you invest aggressively.
> 
> 30 even if you find a partner who is as frugal as you.


 Hi, Savvybuck no,no,no a big mistake is to count a liability as an asset. A liability takes money out of your pocket. An asset puts money into your pocket. The goal is to have more assets then liabilities. A car is a liability not an asset for it takes money out of ones pocket insurance, gas, repairs, maintenance.


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## Reio92

the-royal-mail said:


> Can you clarify why you have both a savings and a chequing account?


Ya, I put money into my checking account to pay for rent mostly. I have the savings account because it makes 1% interest per year, which is better than nothing. That's why I have both.


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## Reio92

Things aren't looking too bad these days, I've already made $ 2000 more than all of last year, and still have 2 more pay checks this year.

Savings account $ 34384.00
Checking account $ 0

Personel RRSP $ 9450.00
Work RRSP $ 8308.00

Total $ 52,142.00

Rent is still $ 825.00
Cell bill was $ 68.00
Car isurance $ 120.00
Credit Card $ 0
I splurged on a small table and 2 chairs at Ikea for $ 102.00 last month, I had nothing before.

And the large amount of cash in the savings account? I've decided I'm going to get rid of my American citizenship, I thought it over, and I have no use for it right now as far as working/ living down there goes, and don't plan to in the future. This will allow me to invest this money in a TFSA, and there will be many more complications I won't have to deal with down the road when my income increases, ect.


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## indexxx

Forgive me if you know all this already, but I wanted to share it:

It's great that your employer matches your RRSP contributions at work; an instant 100% return on your investment, plus tax deduction! One thing I would add there (if you've not already down this) is to review exactly what your investments are with your benefit provider; for example where I am we get matching also, and I made sure that I chose index funds instead of actively managed mutual funds to save the ridiculous MERs. (our company uses Great West Life for our group benefits provider). 

They can give you the prospectus book for all their fund offerings and you should be able to choose where your company RRSP goes. The difference between low index fund fees and mutual or segregated fund fees add up to a staggering amount over time due to compounding; paying 2.5% versus 0.5% will eat up almost 30% your returns over the life of the investment, because every year you have slightly less principal to compound. This is a great tool:

http://www.lifestylecalculators.com/mers-and-investment-returns/

You won't get the ultra-cheap index funds like you can find on the open markets, as insurance companies (I'm assuming your group providers is an ins co) don't offer them; they have their own products, but saving 2% or so in fees off the top makes an incredible difference.


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## Reio92

Haven't been around for over a year... Thanks for the advice.

Update

Savings account $49,729
Checking account $1,160

Personal RRSP $15,376
Work RRSP $16,076

Total $82,341


Things are going slow, but steady at the same time. My personal RRSP hasn't done great, looks like I've broke even or am slightly below what I have put into the account over 2 yrs. That being said, I'm seeing some of the dividends almost reaching $10 per stock every 3 months which is nice to see, and I've got a well diversified set of 14 stocks, so the price of oil hasn't had as bad of an effect as it could have had on my account. My Work RRSP is doing better, 20% return rate for the last yr and a 16% return for the last 3 yrs, I think it's because I hold 60% in American funds, and their economy seems to be doing well at this time. Made just over $69,000 last yr which is less than I had hoped to see, but at the same time I stuck to my 2 on 2 off schedule more the previous yrs, instead of the 3 on 1 off I used to do.


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## Reio92

Long time away, here's an update.

RRSP's:

Work RRSP $50,000 (All relatively high fee funds, but its free money from work and has done alright. Planning on using most of it for down payment in the future, and paying back into Questrade as a way to transfer the money out of work plan into my own.)

Personal RRSP (Edward Jones) $50,000 (2% is taken from dividends, but they drip partial shares which I haven't done the math on, but feel like it might be worth it at this point in the game.)

Questrade RRSP $6,250

Questrade TFSA $32,300 (Hold 2 Vanguard ETF's, will add a 3rd next time I deposit for more diversity)

HISA Scotia Bank $60,000 @ %2.05 (strictly Downpayment, so not in stock market)

~ $6000 chequing account, want to save up $15000 for a new-to-me-vehicle (honda civic is extremely cost efficient last 10 yrs but not comfortable for someone my height, have had enough of cramming into it.)

All of my investments are in Stocks and ETF full of stocks. If someone has some advice on Bonds ect, I don't have or know much about them, not sure If it's important to have any at this time in my life or not. Any advice appreciated.


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## Dilbert

So now I would guess you are 27-ish? Whatever, you’re doing very well. My thinking is that because of your age, would be to invest on the more risky side: I.E. blue chip equities and / or ETF’s. I’d steer clear of bonds. Besides, you do have some cash parked in a HISA.


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## Eclectic12

indexxx said:


> Forgive me if you know all this already, but I wanted to share it ... One thing I would add there (if you've not already down this) is to review exactly what your investments are with your benefit provider; for example where I am we get matching also, and I made sure that I chose index funds instead of actively managed mutual funds to save the ridiculous MERs. (our company uses Great West Life for our group benefits provider).
> 
> They can give you the prospectus book for all their fund offerings and you should be able to choose where your company RRSP goes.
> The difference between low index fund fees and mutual or segregated fund fees add up to a staggering amount over time due to compounding; paying 2.5% versus 0.5% will eat up almost 30% your returns over the life of the investment ...
> 
> You won't get the ultra-cheap index funds like you can find on the open markets, as insurance companies (I'm assuming your group providers is an ins co) don't offer them; they have their own products, but saving 2% or so in fees off the top makes an incredible difference.


The OP hasn't identified what their plan offers for funds.

OTOH, I was expecting my supplementary account to be running with MERs of 2.5% like days gone by and was pleasantly surprised to find that despite being insurance company funds, the MER is 0.5%, across the board. 


Cheers


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## nobleea

Reio92 said:


> Work RRSP $50,000 (All relatively high fee funds, but its free money from work and has done alright. Planning on using most of it for down payment in the future, and paying back into Questrade as a way to transfer the money out of work plan into my own.)


Check on the rules surrounding withdrawals from your work rrsp, even home buyers plan. Many will suspend matching contribution for X years whenever a withdrawal is made of any of the company's contributions.


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## Reio92

The funds in my work RRSP range from a low of just over 1% to 1.5%. I have chosen the 4 with highest returns in past preformance (mostly Large US bluechip centered funds) , I'm pretty pleased with it as far as free money goes, I do prefer having more control over it and with lower cost though of course.


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## Reio92

nobleea said:


> Check on the rules surrounding withdrawals from your work rrsp, even home buyers plan. Many will suspend matching contribution for X years whenever a withdrawal is made of any of the company's contributions.



Thanks for the heads up, this is the plan I have in mind, but I will talk to the HR lady and make sure it's actually possible.


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## james4beach

Reio92 said:


> All of my investments are in Stocks and ETF full of stocks. If someone has some advice on Bonds ect, I don't have or know much about them, not sure If it's important to have any at this time in my life or not. Any advice appreciated.


For context, I'm in my mid 30s and I do have significant fixed income (bonds and GICs), fully 50% of my portfolio. I've been investing for about 20 years, which includes two severe market crashes including one period that killed my small business. *I have not ever regretted holding a lot of fixed income.*

If I had been 100% invested in stocks, as you are, I would have been absolutely wiped out during that second market crash in 2007-2008. I would have simultaneously seen my net worth plummet, my cashflow from employment/business dry up, and a tough job market where it would have been hard to find new work. This would have forced me to liquidate stock holdings, permanently locking in extreme losses and severely hurting my returns going forward.

Instead, I luckily had significant fixed income holdings. Because bonds are much less risky than stocks, they simply don't fall to the same degree even in the worst case circumstances. I was able to tap into my fixed income holdings for cash that I needed, which got me through the rough period. The diversification of bonds (mixing stocks + bonds) also made my portfolio less volatile, and it has that effect in both good times and bad.

Others on this forum disagree with me but I think that even a young person like yourself should have a significant amount of bonds in your portfolio, at least 40%. The reason is that rough periods in the stock market can be really hard to navigate through when you're heavy in equities. For one, it's awfully scary. Secondly, you might actually need to access some of your savings, and selling depressed stocks is the single worst thing you can do.

Unfortunately all of this is hard to imagine until you experience it in real life, especially the prospect of simultaneous market crash & job loss, and just how badly an investor gets rattled by sharp losses, such as when the stock market is falling 3% or even 5% in a single day, repeatedly, day after day.

My argument is that a more conservative asset allocation (like 50% stocks, 50% bonds) reduces a lot of the volatility and reduces stress, which in turn helps you keep a level head and makes it easier to stay invested in stocks for the very long term. Note that the comparison isn't between a 50% stock portfolio and 100% stock portfolio (the latter definitely would perform better). But rather, the comparison is between a 50% stock portfolio which isn't stressful, and a 100% stock portfolio that results in a person freaking out and dumping, for losses, at the worst possible time, or being forced to sell stocks at a loss because they simply need the money.

_Very few_ people can actually maintain a 100% stock allocation over a span of decades. I wouldn't dream of it unless you have great job stability in a government-linked job, and a pension or some other back-stop. I have none of those things myself.

The conservative investment approach (like 50/50 allocation) will probably make it easier to be a consistent long term investor that sticks to a plan, which then leads to superior results over the long term. I have known several people with high stock allocations who have given up on investing completely. Basically, stock market losses during bear markets can be so painful that it scars a person for life, and they are permanently turned off stocks.

Here's an article: This Standard Piece of Investing Advice Is Too Risky: Advisers generally recommend an 80 percent allocation to stocks, but that’s way too much. It should be more like 35 percent.


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## Reio92

Ok, thanks for the input james4beach. That's is the simplified description of what bonds are that I needed. Probably in my best interest to look into this, especially if I'm planning on using some of my RRSP's towards a downpayment. Maybe that's what I will buy in my TFSA next time as well, kind of like an emergency cash reserve in a bad economy. 

My next question is, What types of bonds should I be researching? Are Bond ETF's covering an assortment of bonds to reduce risk like stock ETF's?


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## james4beach

Happy to help. And remember that others disagree on this position and some experts strongly believe that a young person shouldn't invest in bonds (fixed income). Arguments can be made for both approaches.

Yes absolutely take into account what the money is intended for. If you need to access the money in less than 10 years, a larger bond component is probably in your best interest.

In my opinion, either bond index ETFs or GICs are good ways to go (serving similar purposes). I hold both. A generic bond ETF such as XBB or VAB holds a diversified portfolio of many different types of bonds. I hold a lot of XBB. These are best held inside tax shelters due to the heavy taxation of interest income.

Another possibility is a 5 year GIC ladder which involves buying GICs over time. Compared to bond funds, GICs have some advantages such as generally higher yields and no price fluctuations (whereas XBB can in fact drop in value over the span of a few years). The down side is that GICs are locked in and cannot be redeemed before maturity, whereas you can liquidate a bond ETF at any time.


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## Reio92

bit of update, 

110,000 TFSA
130,000 in 2 personal rrsp accounts,
100,000 in work RRsp acount,
40,000 in high interest savings account.

I have not gotten into the real estate market yet, have been concentrating on maxing out TFSA and RRSP's last year which I was able to to. now 30yrs old. My job is stable but will be a significant pay cut this yr due to russia/ukraine conflict. I may have the opportunity to work in US this year for less money, but still a reasoanble amount. I am highly considering this, as it will be less stress, and I was suffering/ still am feeling burnout at my current position. 

My only consideration is that I have been able to make the max RRSP contributions last few years, which I think is great when young to get money working.

If I work in US, they have a company matching 401K program. I am also looking into the fact that if I work 10 yrs there, I will be able to draw max Social security in retirement.


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## KaeJS

Why so much in a HISA?

I'd go to the states if I were you, if you can.


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## Reio92

KaeJS said:


> Why so much in a HISA?
> 
> I'd go to the states if I were you, if you can.


I keep it there as primary down payment fund.


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## milhouse

Nice progress in building your RRSP and TFSA accounts.


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## Backer71

The fact that you are asking these questions at 22 means you will end up a millionaire. 
Good luck


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## KaeJS

Backer71 said:


> The fact that you are asking these questions at 22 means you will end up a millionaire.
> Good luck


OP is now 30.

But I see no reason they won't be a millionaire by 40.

Great job, OP.


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## Reio92

Update
Tfsa 87,000 (down 25000)
personal RRSP 126,000 (down 4000 from last post but have also contributed 4000 since)
Work RRSP 80000 (down lots)
un-registererd 25,000 (started this year)
HISA 30,000
401k 2000 usd

truck loan 8000 

crazy year watching investments tumble. Leaving put of course. Took the job stateside, trying to contribute 6000 usd to 401k before end of year because a 50 or 75% match to what ever I contribute ( up to federal limit) is the norm apparently at this company. Also if you don’t use your 401k room in a given year it does not roll over into next year, although there is a 20,500 usd limit ( just employee limit) which is quite a bit. Upgraded to a used truck which I decided to take a loan since investments are down, but have already put 4000 towards paying it down. Also had a 6000 dollar IRA tax bill for selling my tfsa investments at there high last year then buying them again, basically the tax on 40,000 . The cons of us citezenship.


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