# I'm 22, and we need to write my money diary!



## HappyJanuary (Jan 27, 2011)

Hello All,

The state of my finances are a blank slate other than some savings accounts. Who wants to lay the first impression on it?

Me

- 22 years old
- CA student in Ottawa at local CA firm
- will be working for Deloitte in Toronto this September
- live at home with parents (why bother moving out, I'm gone in 8 months)
- no car


Finances

Salary til July:...........$39,000
Salary in Sept: .........$45,000

Savings account 1......$ 4,000
Savings account 2.......18,000
Trust account.............16,400
Receivable....................5,000 (from parents)
Future outlays.............(5,000) (courses, laptop, moving, living, etc.)
*Total.......................$38,400*

At the time of my move to Toronto, I'll have another $20,000 after-tax to invest.

- no debt
- no liabilities (paid parents rent for the year already)
- expenses are immaterial to any decisions, so I won't list them
- I'll be due for a tax refund of maybe $1,500, but let's ignore that 
- TFSA: $0 of a possible $15,000 as of 1/1/11
- RRSP: $0 of a possible $8,500 as of 1/1/1


Situation

That entire $38,400 needs to be invested (note that I already allowed for living expenses and planned cash outlays in that figure, covering up until my move to Toronto). The $20,000 in after-tax wages I'll have by the time of my move needs to go somewhere, too. 

I've determined a loose budget for next year (henceforth, "next year" = when I've started work for Deloitte in September) that allows for $1,000 a month of savings to be used however, but it's too hard to say what options I'll have available for investing (with respect to employer-offered plans). Therefore, let's ignore next year, as it has no impact on what to do with my current money.


Preferences

A return of 4% is my goal. Any higher is great, but unexpected.

I'm risk averse in general, however, I know that my age and lack of debt allow me to take calculated risks that otherwise would be strongly inadvisable.


Summary

I have $38,400 to invest now and $20,000 more to invest by the end of August. 

What to invest in? Where to put those investments? What books to read? Lend me your knowledge, gurus!


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## MoneyGal (Apr 24, 2009)

Just for fun, you might want to calculate the (imputed, discounted) value of your human capital - so you can create a holistic personal balance sheet. 

Here's a calculator you could use to run some numbers. (Scroll down to the "human capital" calculator, which will open in a new window.) 

Using your age of 22, a salary of $45K and a (conservative) growth rate assumption of 2% and a retirement age of 65, I calculate a total human capital value today of about $1.5M. 

If I adjust the growth rate to a (more probable) 5%, I get a value today of about $3M.


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## MoneyGal (Apr 24, 2009)

And - taking this one step further - if you want to know how to allocate your financial capital *given* your stable, bond-like human capital allocation (srlsy. Being a CA is about as bond-like as you can get), you can fool around with this calculator:

http://www.qwema.ca/calc/holistic.aspx

The general underlying theory is that if your human capital is bond-like, you can take a more risky approach to the allocation of your financial capital than you might otherwise. Similarly, if your human capital is risky (think investment banker), your financial capital allocation should probably be more bond-like. 

You can get a "correct" allocation taking your human capital into account using the first calculator I linked, and then the second one (above). 

Both of these calculators (and a bunch more) were developed to accompany the personal finance book "Your Money Milestones: A Guide to Making the 9 Most Important Financial Decisions of your Life."


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## steve41 (Apr 18, 2009)

If you want a more inclusive/complete planning tool which includes not just salary, but includes all other non-investment entities such as pension, loans, real estate, a future cash injection (inheritance say), differentiating investments as to their tax treatment (rrsp, nonreg, dividends, tfsa, insurance, resp, roc...), and at the same time incorporating the full effect of income tax over time; you could go to RRIFmetic and download the free demo.

Rather than simple parameters, you can describe your input data yearly, over time.... a salary which has a discrete profile (sabbatical, partial retirement), varying interest rates, etc. You can design a lifestyle profile as well (such as a special purchase, reduced income in retirement... )

It may be little 'industrial strength' for the casual user, but is well worth the effort.


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## HaroldCrump (Jun 10, 2009)

MoneyGal said:


> the personal finance book "Your Money Milestones: A Guide to Making the 9 Most Important Financial Decisions of your Life."


Which I am in the process of reading these days.
Currently on Chapter 2: What is the point of Saving Money Forever


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## MoneyGal (Apr 24, 2009)

Ask me anything about that book...I had a hand in virtually every page.


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## Four Pillars (Apr 5, 2009)

There are a lot of books worth reading. I would suggest Four Pillars of Investing and A Random Walk Down Wall Street.

As for which investments to buy - it depends on what type of investor you plan to be. Totally passive? Active stock picker?


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

HaroldCrump said:


> Currently on Chapter 2: What is the point of Saving Money Forever


Save save save!

You can never have too much money! Money = freedom. The more you have, the more freedom you have.


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## steve41 (Apr 18, 2009)

> Save save save!
> 
> You can never have too much money! Money = freedom. The more you have, the more freedom you have


 Oh come on! There is a balance. You could live a Kraft Dinner existence, die a millionaire and your rotten kids could inherit a gazillion dollars. Financial professionals would love you to "save save save", after all, the more you save, the higher their commission. Save conservatively, but make sure you enjoy life on the way to retirement. 

It is after tax lifestyle (beer and groceries) which matters, not just after retirement, but prior to retirement as well.


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## I'm Howard (Oct 13, 2010)

Royal Bank allows you to set your goals, detail your risk portfolio, then will set up a profile portfolio for you.

I would set up the following based upon your parameters.

MDY 15%

EWC 20%

XTR 10%

VWO 10%

XCB 20%

XRE 10%

GLD 5%

GIC I YEAR 10%

Max TFSA's

RRSP 's when your Income climbs.

Not sure what part of TO, but the Y&E will set you back about $1,100 for a 1 Bedroom, would not bother with car when you live downtown.


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## HappyJanuary (Jan 27, 2011)

Four Pillars said:


> There are a lot of books worth reading. I would suggest Four Pillars of Investing and A Random Walk Down Wall Street.
> 
> As for which investments to buy - it depends on what type of investor you plan to be. Totally passive? Active stock picker?


I'm one of those people who like to think they would be active, but I know I wouldn't be. No time to do so for the next few years at least.

This of course lead me to the couch potato strategy, but the idea of breaking even over the course of a decade (don't remember the numbers, but you get my point: the benefit of a portfolio emulating the financial markets over the last 5-10 years is worth diddly. Or am I incorrect?).


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## atrp2biz (Sep 22, 2010)

That's a lot of commissions for a small portfolio.


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## HappyJanuary (Jan 27, 2011)

I'm Howard said:


> Royal Bank allows you to set your goals, detail your risk portfolio, then will set up a profile portfolio for you.
> 
> I would set up the following based upon your parameters.
> 
> ...


1. I actually can't use Royal Bank because of independence issues. *sigh*

2. You're right about TO - I'll be downtown, so I won't get a car, and I've budgetd for rent upwards for $1300 whilst still incorporating my savings goals per month.


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## HaroldCrump (Jun 10, 2009)

MoneyGal has already alluded to the human capital factor, so research/read about that.
Regarding specific investments and vehicles, IMHO, don't think about RRSP right now.
Just keep building the room.
Your highest income years are in the future - that's when you can make RRSP contributions and get maximum bang for your buck.
However, I suggest start investing using a TFSA immediately.
4% is not hard to achieve at all.
GICs will give you 3% +
The other 1% can be easily gotten using mostly passive investments.
Once you max out your TFSA, the rest of it should stay in (or close to) cash.
This is your emergency fund and large expenses fund (like buying a car for work, etc.).

Also, IMHO, 4% return is rather conservative in your case.
Once you have built up your cash savings and have a steady income stream going, you can change your investments to target between 6% to 8% annualized.

Good job on starting early and best of luck.


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## HappyJanuary (Jan 27, 2011)

HaroldCrump said:


> MoneyGal has already alluded to the human capital factor, so research/read about that.
> Regarding specific investments and vehicles, IMHO, don't think about RRSP right now.
> Just keep building the room.
> Your highest income years are in the future - that's when you can make RRSP contributions and get maximum bang for your buck.
> ...


When people advise against contributing to an RRSP when you are in a lower tax bracket than you will be in the future, shouldn't they be saying to not use the deduction yet, instead?

I'll make the contributions now so that investments can grow tax free, but I'll carry forward the deductions to later years when I climb to a higher tax bracket. It's not like I'm not unable to invest in something else because I made the RRSP contribution - that would only be $9k of the $38k that I have available.

Thoughts?


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## steve41 (Apr 18, 2009)

Look. You are 22. Concentrate on building your career, education, business, family, raising kids, buying house. Once you hit 40, and your house is paid for, then worry about saving for retirement.


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

steve41 said:


> Oh come on! There is a balance. You could live a Kraft Dinner existence, die a millionaire and your rotten kids could inherit a gazillion dollars. Financial professionals would love you to "save save save", after all, the more you save, the higher their commission. Save conservatively, but make sure you enjoy life on the way to retirement.


Of course. Was there ever any doubt about this? That wasn't my intention. I'm far from being a millionaire, today or at retirement and my estate won't change anyone's life. I have a LOT of fun along the way. In fact, while other people at work are taking night courses and furthering their "career" I am out there enjoying life, going places, buying hobby items and ensuring I make the most out of my weekends and vacations.

The difference is that I do not WASTE my money. I do not keep up with the latest cell phones, computers, TVs and other communications and electronic entertainment services. My car is a late model, the fridge is stocked and I want for nothing. But I also manage to save as much money as possible for rainy day. Life has taught me that there could be another crisis right around the corner. Hope for the best, plan for the worst.

It's like Mel Lastman said in Blackout '03. "We might have a shortage of water. But we don't want you to stop drinking water. We want you to drink *LOTS* of water. But don't _waste_ it." (or something like that)


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## Plugging Along (Jan 3, 2011)

steve41 said:


> Look. You are 22. Concentrate on building your career, education, business, family, raising kids, buying house. Once you hit 40, and your house is paid for, then worry about saving for retirement.


I have to disagree with this. I think that people put off their retirement too late. If people start putting money aside as soon as they are out of school, and get in the habit they will be so much better off later on.

The problem with waiting until your 40 is at that time, you've already become accustomed to the lifestyle, and putting away extra will be harder. Plus, you will have to put much more away to get the same results. 

I started putting RRSP money aside when I got my first real career job. I was 'forced' into by family, and 'forced' my partner (now spouse) at the time to do the same. It was be the best decision we ever made. 

The OP has time on his side, and is being smart about money. I would put the money in the RRSP, not take the tax credit until the earnings are higher, but at least get into the discipline of saving 18% of their income. Then I would max out the TSFA for things like a house and family in the future. He will be way ahead of the game then. 

There is no reason why he still can't concentrate on his education, career, family (I assume he's not going to have kids right away). If does he does it right can do it all, still have his house paid for by 40 and have his retirement already 1/2 funded.


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## MoneyGal (Apr 24, 2009)

I'm with Plugging Along. I wasn't necessarily "saving for retirement" in my 20's - but I was single (for most of it) and didn't have a house (for most of it), and I saved a lot of money in those years when I had no real financial obligations. 

The rules have really changed in the last 40 years. People are marrying much later (if at all) and childbirth has moved dramatically later (viewed from the context of a woman's total expected fertile period, which is relatively short). Academics and experts refer to this as "delayed life transitions." 

One implication is that many of us will experience competing obligations which would, in earlier eras, have been sequenced completely differently. My parents had their kids in their early 20's and we were out of their house by the time they were in their early 40's. I'm in my early 40's and my oldest child turned 9 yesterday. (In addition, we all left home before we were 20 and while I don't know what the norm will be when my kids are 20, many 20-year-olds today are not leaving the family home.) 

My parents were able to put significant funds into paying down their mortgage and then saving for retirement when I will be thinking about funding kids' post-secondary education and still paying off their braces. 

The fact that I have the financial freedom I do I attribute in large measure to the saving habits I developed as a teenager and young adult. I was out of the house for good by 17 and have worked full-time starting at 18, but didn't have my first child (and thus leave the workforce for an extended period) until I was 34. 

Telling a young adult today to "forget about saving" (I realize that isn't exactly what you said, Steve) seems like advice from another era. If he *can* save now, he probably *should* save now - because if his life path is anything like his peers, his capacity to save will decreased, not increase, in his 30's and 40's - exactly when his parents' saving capacity ramped up.


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## steve41 (Apr 18, 2009)

All I am trying to explain is that for the average joe just out of school, his annual savings will be minuscule in those first couple of decades while he pays off his student loan, raises kids, buys a house and pays off the mortgage.

Once those elements are out of the way, and his career/salary has gotten into high gear, his annual savings allotment will take a quantum jump, and that by far, the bulk of his 'saving for retirement' activity will occur in the last 20-25 years of his working life. I see a lot of plans, and this seems to be the common pattern.


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## HaroldCrump (Jun 10, 2009)

I seem to recall we had a discussion here over a year ago (maybe two) about exactly what is _retirement_.
These days, IMO, there is no retirement.
It's not like the 1950s when you finish school at 21, go work for the govt. at 22, work for 35 years and "retire" with full pension.

Folks are switching jobs, going back to school, taking sabbaticals, leaves of absence, going back again, etc.
People are working well into their 70s and even 80s - either by choice (stay active, hobbies) or because they can't afford to "retire".
Folks that are financially independent i.e. don't need a job are still working because they like it or want to stay active or to participate in society, etc.

So don't think of it as "retirement savings", just "savings".
Savings that protect you, that give you options, that lead you towards financial freedom, etc.
How you invest the savings to get a RoR that works for you is another matter.


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## MoneyGal (Apr 24, 2009)

steve41 said:


> All I am trying to explain is that for the average joe just out of school, his annual savings will be minuscule in those first couple of decades while he pays off his student loan, raises kids, buys a house and pays off the mortgage.
> 
> Once those elements are out of the way, and his career/salary has gotten into high gear, his annual savings allotment will take a quantum jump, and that by far, the bulk of his 'saving for retirement' activity will occur in the last 20-25 years of his working life. I see a lot of plans, and this seems to be the common pattern.


We are going to have to agree to disagree. I think people should save when they can. He's a CA; his earnings will be well above average and there may well be a 10-year gap (or more) before he has children. I think the sequence of events you laid out (school, children, buy house, pay off mortgage) is not the norm any more. 

Have you not noticed the periodic posts from different young people (men, I think) who talk about needing to rein in their spending while they are single and earning in excess of $100K?


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## moneymusing (Apr 3, 2009)

It seems to be all things in moderation. A good friend of mine still in his 20s goes out of his way to not spend money and doesn't seem to live a particular interesting or fulfilling life, so then what's the point of living at all?

Saving is still important, and I believe that investing can be a hobby for those so inclined, but maybe take that that first bonus cheque and rent jet skis or something like that.

TFSA was mentioned. Certainly the best way to sock away money in your twenties, and with a fairly lucrative career ahead of you.

Good luck


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## steve41 (Apr 18, 2009)

This is probably a good time to explain the difference between financial planning and investment planning. Financial planning I refer to as 'cash flow planning'. Financial planning incorporates non-investment elements such as you describe.... a salary which wanders all over the map (disappears temporarily even, and maybe takes a dive but doesn't disappear completely), loan payments which cease all at once, selling the cottage at some future time, invoking a nice chunk of income and a major tax hit. CPP/OAS cropping up at some point.

I look at financial planning as the process of determining the "how much" and "when" (amount and timing) side of investing and investment planning as the "what" to invest in part.

As mentioned, the good old days when everything was sequentially laid out... job, marriage, house, retirement... are long gone.

In your lifetime, you may pop in and out of the 'saving' and 'de-saving' mode several times... it is a tricky prospect, keeping savings, de-savings and lifestyle in balance over your lifetime.


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## Plugging Along (Jan 3, 2011)

steve41 said:


> As mentioned, the good old days when everything was sequentially laid out... job, marriage, house, retirement... are long gone.
> 
> In your lifetime, you may pop in and out of the 'saving' and 'de-saving' mode several times... it is a tricky prospect, keeping savings, de-savings and lifestyle in balance over your lifetime.


The problem for many is that they have many times that they are in a desaving mode... as students, paying off student loans, getting married, having kids, raising kids, helping kids through school, paying off mortgage, retiring, etc. For some, there may not be alot of 'saving' modes. There seems to almost always be 'something' else, medical reasons, young enough to enjoy life, etc. 

I would say based on the OPs age, I'm assuming he isn't planning to have kids any time soon, that this is the best time be saving. This will give him the most options when he does move into the next life stage.


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## HappyJanuary (Jan 27, 2011)

(in case anyone doesn't know, I'm the OP)

For those of you suggesting RRSP or TFSA, but not the other, please note that I have enough money to max out each. Just wondering what type of investments should go in there.

Oh, and MoneyGal, you said this:



> *He's a CA*; his earnings will be well above average and *there may well be a 10-year gap (or more) before he has children*.


What are you trying to say?!


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## MoneyGal (Apr 24, 2009)

Nothing in particular...just that if you have kids when your peers do, you might well be in your mid-thirties before you become a parent (I am guessing at how old you are now). 

(Totally was not trying to say you're not a catch. )

oh! Just got what you were trying to say. It would not even occur to me that being a CA would make anything other than eminently...marryable.


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## HappyJanuary (Jan 27, 2011)

Can you answer my RRSP question? I see people advising against RRSP contributions because I'm in a lower tax bracket than I will be in a year or two - do the following things make this advice incorrect?

a) I plan to carry forward the deductions to further years; I will already be receiving a refund due to unused tuition credits.
b) I have enough money to maximize my RRSP and my TFSA, and have lots left over for other things.


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## MoneyGal (Apr 24, 2009)

I think what people are saying is to _optimize the value of the contributions_. 

Which means: make them, but carry forward the deduction to a future year in which the refund associated with the deduction will be higher. 

Which is what you are planning on doing, so it's all good.  (I like smileys.) (and CAs!)


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## steve41 (Apr 18, 2009)

Does anyone find this strange.... the laws of compound interest have long been put to bed.... it is pretty trivial algebra. The income tax algorithm, while it changes every year, is still a pretty unsophisticated calculation, after all, some people still do it manually. The rules of RRIF contribution and RRIF/LIF withdrawal limits are there for all to see.

Given all that, don't you find it kind of strange that with all the computer hot shots out there, no one has built a program or spreadsheet which demonstrates these types of scenarios (RRSP vs NonReg vs TFSA)? (well almost no one)

Just asking.


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## MoneyGal (Apr 24, 2009)

http://www.qwema.ca/calc/tax_milestone.aspx


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## steve41 (Apr 18, 2009)

I should have qualified that with.... "a program which embeds the entirety of the T1, its clawbacks, credits, surtaxes, full progressive (fed&prov) indexed tax brackets" As I said, the T1 is still done manually by many taxpayers. It is not rocket science.


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## Rico (Jan 27, 2011)

Hey HJ,

I think it's pretty clear that you should max out both the RRSP and TFSA to start. You could also "over-contribute" to your RRSP by $2000 without penalty (just mentioning it).

I had a thought about not claiming the RRSP deduction until you are in a higher income bracket. Here are the 2011 tax rates for reference (and I'm basing this on your specific situation):

_Fed.
15% on the first $41,544 of taxable income
22% on the next $41,544 of taxable income (on the portion of taxable income between $41,544 and $83,088)
26% on the next $45,712 of taxable income (on the portion of taxable income between $83,088 and $128,800)
29% of taxable income over $128,800

Ontario
2011 Tax Rates
first $37,774 5.05% 
over $37,774 up to $75,550 9.15%	
over $75,550 11.16%_

Using some rough numbers and combining the tax rates as they are now:
Right now at your salary level, you're taxed at 31.15% When your salary goes up to just over the $75000 mark, you'll be taxed at 35.15. 

You have $8500 to claim. If you claim now (8500*.3115) you get a 2647.75 refund. In several years, as you start to go over the $75000 salary level, you'll get 4% more (8500*.3515 = 2987.75; or $340 more) if you wait to claim the deduction. However, how many years will it take to get to that salary level? If you reinvest the 2647.75 refund over the time it takes to get to the higher bracket(s), could you not do better than the 4%, one-time refund difference of $340? Just something to consider (I'm not certain how fast your salary will climb).

My other comment is to consider finding how to become a bit more comfortable with some risk at least for some of your money. A 4% return is very conservative (nothing wrong with that) but without being greedy or stupid (read: overly high risk), you can have some of your money at moderate and higher risk and get double to triple that without too much exposure. You seem aware that you have the gift of time to ride out market fluctuations.

A last thought: Depending on mortgage rates, assuming you want to buy a property, and you keep the conservative outlook on returns you'd like, you might as well lock into GICs or other liquid savings for now then use that money as a larger down-payment on a house/condo, thus reducing the interest you pay (let's say the mortgage rate is around 4% - there's your expected "return" and you'd likely save on CMHC fees too).


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## HappyJanuary (Jan 27, 2011)

Very good post.

With regards to the RRSP-generated refund, I will already being received all of my taxes back for the 2010 year due to unused tuition credits, so no extra refund there. Carry forward to next year. At that point, whether I use the refund or not obviously depends on whatever my financial environment expectations are at that time. 

You say 8-12% can be achieved without too much exposure to risk - how is this possible? Perhaps over the long-run it is, but taking the last decade for a example, you surely aren't making that much if your portfolio emulates the market, right?


I'm a huge fan of large downpayments!


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## Rico (Jan 27, 2011)

HappyJanuary said:


> Very good post.
> 
> With regards to the RRSP-generated refund, I will already being received all of my taxes back for the 2010 year due to unused tuition credits, so no extra refund there. Carry forward to next year. At that point, whether I use the refund or not obviously depends on whatever my financial environment expectations are at that time.
> 
> ...


Considering tuition is a non-refundable tax credit whereas RRSPs reduce income . . . if you claim your RRSPs can the tuition credits not carry forward instead?

Also, it just occurred to me that you'll have moving expenses to claim for 2011 too (against the new income in TO).

As for the 8-12% and risk comments. Obviously many things can happen but many people want high double digit returns (and many achieve them for part of the time). I think most "moderate" risk portfolios would give 8-12% over the long term. Also, diversity of investments can mitigate risk to some extent too. There are lots of books that talk about age/goals/asset allocation.

I guess here's my food for thought on this: Even low risk still involves "risk". The last recession proved this. Being conservative seems like a good idea when you've just experienced/observed the market get thrashed. However, unless things really tank for a really long time, generally speaking you'll do fine over the long term (30-40 years).

I like big downpayments too. 

Oh, one other thought. Have you had any debt to repay over the last while? I'm asking in terms of your credit rating. Now, it you have a huge whack of cash that will obviously show the bank you are a saver. I just wonder about building credit?


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## steve41 (Apr 18, 2009)

> I think most "moderate" risk portfolios would give 8-12% over the long term. Also, diversity of investments can mitigate risk to some extent too. There are lots of books that talk about age/goals/asset allocation.


 I see a lot of plans built by financial planners, brokers, fee-only types... etc. For what it is worth, I haven't seen a 6% plan for years.


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## NLOIL (Jan 28, 2011)

*HappyJanuary*

"You say 8-12% can be achieved without too much exposure to risk - how is this possible? Perhaps over the long-run it is, but taking the last decade for a example, you surely aren't making that much if your portfolio emulates the market, right?"

Wrong. I would suggest you read ALOT about investing in quality dividend paying equities that have a solid history of increasing dividends....buying such companies when they are attractively valued, ie, purchase with patience during a cyclical bear market and achieving 8-12% returns year after year with reinvested dividends, ie, the beauty of compound interest, is very much a reality. Ofcourse, it all depends on what investing strategy you wish to pursue.....


*Currently Long*: FTS, BCE, PWF, GE, INTC, XOM, PFE, MDT, JNJ, ABT.

*On average, plus side of 10% anual dividend increases, reinvested and purchased at value.*


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## HappyJanuary (Jan 27, 2011)

I've been looking into possible investments, and I'm wondering where to put them. It seems to me that my TFSA should house investments with good returns because I won't be taxed on them, as compared to a RRSP where those good returns are eventually taxed; however, I've seen enough people saying that my intuition is wrong...

Can anyone help?


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## steve41 (Apr 18, 2009)

If you examine the RRSP as it was intended for, namely, a vehicle which will provide a constant source of income replacement during retirement, as a pension would provide say, then the RRSP is essentially the same as a TFSA... it is tax neutral.

For saving for a large contingency (cash call), it makes sense to save outside your RRSP. If you have no concern about funding retirement.... i.e. you are concerned about passing on a significant estate, the the RRSP may not be suitable. Since it is called an RRSP and not a RELSP (registered emergency lump sum plan) or an REBP (registered estate building plan) the RRSP seems to be the preferred way to provide for your retirement.


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

I personally prefer to invest in the TFSA and choose my investments in the same manner as in an RRSP. I don't need the refund generated by an RRSP contribution and love the idea that the TFSA is TAX FREE on withdrawal. Can't say that about an RRSP. Besides, you can always move the money from TFSA into RRSP later if you really need it to be there.


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## Four Pillars (Apr 5, 2009)

the-royal-mail said:


> ...
> love the idea that the TFSA is TAX FREE on withdrawal. Can't say that about an RRSP.


And you can't say that the TFSA contribution produces a tax refund.  As Steve has pointed out - this issue is a bit of a wash.




the-royal-mail said:


> Besides, you can always move the money from TFSA into RRSP later if you really need it to be there.


Couldn't agree more. Excellent point.


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