# 24yo, sudden windfall of money



## qc_riderfan87 (Apr 30, 2011)

Profile:
24 years old, girlfriend, no children, sudden windfall of money, haven't settled into a career yet, want to further my education, see the world, learn about investing and one day manage my own portfolio.

Income:

- 25,000/yr (+5k every year for next 5 years)

Assets:
- car 1 – $20,000 (thinking about selling and re-investing)
- car 2 - $1,500

Debts:
- None!

Expenses:
~$1500 month

Cash:
~ $100,000
$5000 in savings account (emergency money)

Goals:
1.using investment income take a vacation with my family every year. (~$7,500/yr)
2.retire in 30 years with a net worth of ~1.8 million
3.buy a house some day

Plan:
- Max out TFSA.
- Aggressively max out RRSP from payroll deductions.
- Start RESP for my future kids.
- Play around with investment strategies, in questrade. ($1,000/yr)
-Utilize bluechip stocks, ETFs, Emerging markets, Dividend paying stocks/funds, and REITs, GICs.

Comments, questions, HELP? I'm a total noob but I've always had a keen interest in finance and investing.

I am thinking about consulting a financial advisor, just to help me draw up a plan but not to manage it. I'll pay only once thank you very much. 

What's the next step?


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## ramy98 (Sep 20, 2009)

I would just save the $$$ and forget about getting a financial advisor at this stage.


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

How much is the windfall, or is that the $100k in cash??


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## OhGreatGuru (May 24, 2009)

qc_riderfan87 said:


> ....
> 
> Plan:
> - Max out TFSA.
> ...


- Whatever you decide to invest in, part of it should go into TFSA (as much as you have room for) to shelter teh earnings from taxes.
- At you present income level it may not pay you to maximize RRSP contibutions. Read some of the theads on RRSPs for low income earners.
- I'm pretty sure you can't start RESP's before your children are born. But possibly you want to set aside some of your investment now so that you can put it into RESP later.


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## OhGreatGuru (May 24, 2009)

qc_riderfan87 said:


> ...
> 
> Goals:
> 1.using investment income take a vacation with my family every year. (~$7,500/yr)
> ...


If your windfall is the $100K cash, it isn't going to cover all your goals. Also your goals have conflicting investment horizons (30 years to retirement; a few years to a house?; immediate annual income for vacations)

I wouldn't spend your capital on annual vacations. Use it to secure your future (education; pensions; house) and pay for vacations with your earned income.

If you are planning to settle down with a family soon your best bet may be put to save most of it for a downpayment on a house.


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## Four Pillars (Apr 5, 2009)

Your income is too low for RRSP - just use TFSA. I'd say you need to be making over $40k to even think about RRSP.

Here are my thoughts on TFSA vs RRSP for retirement funds:

http://www.moneysmartsblog.com/tfsa-vs-rrsp-which-account-is-best-for-your-retirement-funds/

You can't start an RESP without a kid (and a SIN). 

I agree with OGG - $100k isn't anywhere near enough to fund all those goals and with your low income (no offense), it will be a challenge to not spend that cash.

If you take $7,500 from your portfolio every year - it probably won't last long.

My general suggestion is to try to live off your income and don't withdraw anything from the portfolio, until you have a specific goal for it - ie buying a house.


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## qc_riderfan87 (Apr 30, 2011)

Hello and thank you all for stopping in to help me, I appreciate it.

A little update for everyone:

I haven't recieved any money yet, but this week I'm expecting a cheque for $13K. Later this year, I expect to recieve 2 lump sums one for around 110K and the other for around 20k. 

Total of ~143K.

So 13K, that's a lot of money I'm thinking I'm going to go shopping and enjoy life, but do set $5000 aside for emergency fund. But what to do with the 13K?? Probaply a HISA but I thought maybe I can use it to secure a loan would that be a good idea? It could help build my credit?

Longer term, I guess it's not sustainable to take fancy vacations, buy a house, and save up for retirement. But if everything works out with my career life I should be able to live quite comfortably and still have that nest egg. It's just sometimes I worry about getting old and dieing and not being able to enjoy the money the same as if I was 24. I guess, I'm still discovering how risk averse I am. So I thought maybe keep some liquid, buy a house <50,000 (outright), put the rest in a income fund. And use 1000$ a year to practice investing. Does that sound feasible? Who knows maybe I will be able to flip the house and get something better in a few years.


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## Financial Cents (Jul 22, 2010)

Total of ~143K?

Wow, great.

My advice:

-Put most of it away (>80%) in secure, broad-market indexed ETF products including some short-term bonds to protect your capital.
-Max out that TFSA (see above).
-Don't worry too much about your RRSP - contribution room will be there for years and years to come.
-Use $5,000 for an emergency fund in a HISA.

Take $5,000 or so and have some fun with it. Travel, whatever. You're only 24 once.

Today, tomorrow and in the coming years: read, listen, learn and then apply. You have no rush. Learn how to be an investor instead of a trader. Just my opinion. Good luck


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## warp (Sep 4, 2010)

QUOTE:
Goals:
1.using investment income take a vacation with my family every year. (~$7,500/yr)
2.retire in 30 years with a net worth of ~1.8 million
3.buy a house some day



You have these all backwards.
heres some quick suggestions:

1) Max out TFSA without a doubt
2) Buying a house should come before worrying about retirement..( it will be part of your retirement assets)
3) as advised by others contribute to your RRSP after you are earning more than $40 K....contribute enought to get your taxable income at the lowest tax rate.

Be careful if you have a girlfriend ,to protect your assets..( this advice would be the same if you were a girl and had a boyfriend)
Make sure you get some legal advice before 'your assets" suddenely become "half her assets" after you break up a few years down the road.
I have seen this happen many times.

Read a few investment books about asset allocation.
Do NOT let any investment advisor sell you costly mutual funds.
Invest in low cost broad based index ETF's. ( stocks and bonds)
Keep a cash reserve in a HISA..( high Interest savings account, like ALLY)

Do not overtrade, keep taxes low...and most of all, save, save , save, and NEVER live beyond your means or try to impress anyone.
And NEVER carry credit crad debt.

Thats my 2 cents.

good luck


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

I suggest that for One Year keep all your Funds in the Bank, then pose the same question here, I HAVE $145,000 and???

http:/www.fiscalagents.com

This site will let you play with the numbers, and with the Mantra Time and Compounding, you have a great opportunity that if when you are 50, you are rightsized out the door, you won't have to worry.


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## qc_riderfan87 (Apr 30, 2011)

OK, so I had a nice surprise today. 

Cheques totaling 119K dollars. 

Is there any banks that have a 100,000 minimum for interest rate above 2.00% (ally). Otherwise I'm just going to have to figure out how to deposit 100,000 into an account at ally. 

Or. I'm going to have to visit all the banks.... anyway of phoning the banks and finding out if they can give me a better interest rate without showing them the cheques. 100,000 is a lot of cash so I think they should be bending over backwards to make me bank with them, right? I think 2.5% is reasonable expectation with this sum of money.


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## m3s (Apr 3, 2010)

When the banks see that cheque, they won't bend over backwards to offer interest, they'll point you to their mutual fund salespeople. Don't expect any special treatment, they see you as commission that is all

I think it's People's, AcceleRate and Ally that offer the 2%+ but it's menial anyways. I'd be looking to better employ that money after it cools off and you have time to learn about couch potato investing at least. $100k is too much for MER% fee mutual funds but that's not what the banks will say. Interest is not as tax efficient as Cdn dividends and capital gains etc


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## steve41 (Apr 18, 2009)

OK.... here is the 1st crack at a lifetime (retire at 60) plan....

Mr Twenty8-yo-guy

This plan assumes you stay single and rent, BTW.


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