# New Member, Financial Snapshot, Suggestions?



## KaeJS (Sep 28, 2010)

Hey guys, (and ladies, of course)

I just wanted to introduce myself and get some feedback (positive and negative) on my financial position. Hopefully I'll stick around and become a regular participant on these forums. 

I am 20 years old, have two cars and currently live at home rent free (for now). I took two years of college and dropped out because I hated it. I may go back later depending on how I feel. My numbers look like this:

Chequing Account: $250
Savings Account: $3,000
Canada Savings Bond: $2,000
TFSA (Monthly Income Mutual Fund): $10,000 Maxed. 
RRSP (Balanced "Market Mocking" Mutual Fund): $8500 ($2000 over my contribution limit)
Stock Trading Account: $5500

Visa: $0
All other debt: None, $0. 

I work two jobs in order to make about $4,000/month net pay. 
My expenses are roughly $700 per month, but I usually round it so $1,000 to be safe. This allows me to "save" $3,000 a month. 

My only goal is to save for the rest of 2010 in order to max out my TFSA with 2011's $5k contribution room, and keep my RRSP maxed out as well. 

My goal after that is probably to purchase a house. I cannot live rent free for much longer and would like to avoid paying rent as much as possible. I would also like (and yes, I know this is difficult) to be able to put down 25% of the value of the home so I can escape CMHC fees. 

Going back to school may be something I do in the future, but this would not be for at least one year. 

Although they have not performed exceptionally well, my mutual funds have covered their MER's and kept up with more than inflation. Can't complain with today's market...

My stock trading account has been fairly stable and I have not made any real money off of it. This may be due to the fact I've only been trading for 6 months  but hopefully I will get better.

Let me know if you have any thoughts, suggestions, criticizims or questions. I'd love to hear your opinions!


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## Cal (Jun 17, 2009)

If you went back to school what would you take?

Why do you have 2 cars?

Good work thus far....my advice stay at home until you get your 25% down if you want a property.


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

You are doing very well on a financial basis. I know you came here for financial advice, but at your age you should be fully immersed in some sort of education or solid trades training that you enjoy. Colleges have exploratory general arts programs for people who may not know what they want. IMHO your focus would be well spent in improving your human capital. You have a long life ahead of you and now is the time to lay the foundation to make things as easy for yourself as possible. 

From the $ side, keep managing your money as you have been doing and you won't have any troubles due to mismanagement. Good luck.


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## KaeJS (Sep 28, 2010)

Cal, I have a 4x4 for the winters, and my car for the summers. I only keep one insured for each of the seasons. 

As for school, I originally went for Finance (go figure!) but the material was just horribly boring, repetitive, and to be honest; easier than highschool with 2x the BS. I even did the Investment Funds in Canada certificate (IFIC) in Toronto outside of school and was successful. The problem is that I don't feel there are many jobs (and by this, I mean jobs paying 50k and over) that you can get with a college diploma in finance and a small outside certificate. Of course, I could do an MBA like Royal suggested and spend about 3-4 years and $30-40k. But I don't feel that's what I want to do. I also don't have much faith that I will get a higher paying job that would make up more than had I just worked for those 3-4 years and saved my money from tuition expenses.

I would gladly do a trade, but once again, I don't want to be in school longer than I need to. I cannot stand school. Never have been able to. But I don't want to settle for a salary less than 50k. 

My plan was to start out as a Teller in the banking world, grab outside certificates in order to sell securities, and eventually advise people and become a PFP or CFP and work my way up slowly within a bank. Problem? Most of these occupations are based largely on commissions. That's scary to me. I rather have a salary. 

Money and Cars is what I'm interested in. Hence; owning two cars and being on this forum 

If I went back to school, I would have no idea what I would go back for. Probably something to do with Finance again.


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## Sampson (Apr 3, 2009)

Just because the market has been having some mood swings lately, why do you need to buy a mutual fund that makes fun of it?


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## Spidey (May 11, 2009)

I have to echo most of the previous replies. A university education will likely be your best investment and studies show that it will pay off in spades over your life. I'm currently in my 50s and my biggest regret is not going to university. I would also question the need for 2 cars -- automobile associations typically estimate the cost of a compact car at about $8500 per year. Even if you're getting by with much less than that, it's still probably an unnecessary expense. 

On the positive side, as others have said, you're doing remarkably well for your age and obviously have the potential to save money which is an admirable quality, especially for a young person.


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## Oldroe (Sep 18, 2009)

Keep searching changing jobs try different things. When you find it get the education to be payed appropriately.

If cars are it for you learn how to make money.


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

KaeJS said:


> I would gladly do a trade, but once again, I don't want to be in school longer than I need to. I cannot stand school. Never have been able to. But I don't want to settle for a salary less than 50k.


It sounds to me like you want to have your cake and eat it too.

I went to college for several years and got a diploma as well as several additional credits for related courses that were not part of my diploma program. When I was your age I was struggling to know where to direct my education. My starting salary after graduation? $35K. And that was following intense competition with many other graduates in the same position as me! Today? Much more. The formal education, as difficult and challenging as it was, was and is the foundation for my salary scale. I've had to work hard for every dollar and continue to do so today.

At this point you'll be lucky to pull in $10 an hour in a retail sales job. Most people your age are lucky to get minimum wage. For you to pick a salary of $50K out of thin air with no formal education or training...well, I can only wish you well friend.


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## ashby corner (Jun 15, 2009)

*edumacation.*

dude.

go back to school. You are obviously very driven, and are responsible, and are doing well financially.

I like the idea of working at a bank as a teller--do that and go to school PART TIME. Chip away at it. Most people hate school--I certainly do, but without it, I wouldn't make nearly the salary that I do now.

The other thing to consider is that certain employers will contribute to your education (the usual rule of thumb is that a company will have 2% gross salary/employee in their education reimbursement fund).

Other than that, keep doing what you're doing. Working two jobs will get to you eventually (I did that for many years, during summers, and when I needed a new roof...crap happens).

good luck.


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## dilbert789 (Apr 20, 2010)

I'm also with the idea of going back to school. If by going to school you set yourself back $50,000 from where you could have been by just working, you'll probably make that back in 5-10 years after finishing school. Since you'll be working for 30+ years, it's a great return on investment.

If you can get a very conservative $5000 more a year with University/college than without, that 50k is made back in 10years. In reality you'll probably be more in the range of 10k more, and your top possible salary is probably quite a bit higher also.


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## MoneyGal (Apr 24, 2009)

Hmmm. We can actually look at the education payoff slightly more rigourously. Here's a calculator (developed by the company I work for) which allows you to estimate the payoff associated from investing in your human capital, given a number of (explicit) assumptions. (It is the second calculator in the list.)

(There are some behind-the-scene assumptions too, which, if anyone is interested, I can delve into.)


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

MG:

I LOVE IT!

(OT for a moment: Cost of raising a child today: $295,826. Holy crap.)

I'm going to spend more time looking at the other calculators, but this is pretty cool stuff. I like to think with this type of information, including education payoff, people would be lead to making better decisions. In your experience, has that occured?


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## MoneyGal (Apr 24, 2009)

Well, all the calculators there are fun.

(disclaimer: the rent or buy calculator link is not working. We developed a calculator for Industry Canada, which is where that link used to lead, and it seems they've taken it down. I'm trying to find out whether they've moved it, or possibly replaced it with a much BETTER rent-or-buy calculator we developed earlier this year which included a standard deviation calculation for mortgage RATES, plus a "break or keep?" mortgage calculator.)


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

Yeah I was just going to mention that - it gives a 404 error.

Anyway, knowledge is power.


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## Montrealer (Sep 13, 2010)

My advice to you is to go back to school! It's key for long term wealth and success. Even though you might want to go into business or open up a business, education and a foundation is key for anyone and everyone at your age.

It seems like financially at your age, your pretty well off and the fact that you have ZERO debt is key and keep it that way! I started working when I was 13 years old, but I always went to school and all the way until University. 

Just remember, don't get too greedy with the $4000.00 your making per month right now! Work hard in school, complete a course or get a degree and you can make more than that at an easy going job with FULL benefits. 

Good luck and all the best!


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## KaeJS (Sep 28, 2010)

Yeah, I think you are all correct.

I should go back to school.


I have done 2 out of 3 years for a Finance Diploma. Do you think I should continue and finish that off, or should I start fresh in University and do a B.Comm in Finance?

Some people think I should do both...... but thats more time and money.

What do you all think?


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

Glad to hear you've heeded our advice. You have everything to gain.

If one year is all you need to get that diploma, do it! At your age one year is a flash in the pan and then you'll have the diploma! There is no harm having more, rather than less. Within reason of course. 

Use the next year wisely to try and figure out exactly what you really want to do, talk to the counsellers at college and use the time to try and find yourself. Then after that see about uni.


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## Henry (Jul 12, 2009)

*How about Econ?*

Hi KaeJS,

Congratulations on the 4k net monthly salary. You are doing better financially than most recent college graduates.

I was wondering if you are interested in Econ. Studying economics is broader than pure finance. I find that many financial models like CAPM and MPT are based upon traditional economics models. The training that I had through economics allowed me to analyze the models more thoroughly than an accountant or a BComm. 

If you want to have a more stable job in finance, have you considered pursuing the Chartered Financial Analyst (CFA) designation? Most CFAs work on the institutional side instead of the retail side. Most CFPs or PFPs as you mentioned work at the retail side. Institutional side consists of a high base salary + commissions/bonuses. You can look at the CFA designation through here: www.cfainstitute.org . CFA designation can help you out in the long run.

Henry


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## andrewf (Mar 1, 2010)

"At your age one year is a flash in the pan and then you'll have the diploma! There is no harm having more, rather than less. Within reason of course."

Not to be pedantic, but a year is nothing to fritter away. The tuition and year of forgone wages need to be weighed against the discounted returns on the extra education. You should probably use a pretty high discount rate, as it is pretty uncertain to what extent the extra qualification translates to higher income. It could be that the discounted additional income would be worth enough to offset ~$5-10k tuition and $48k after-tax income.

There are diminishing returns, and from a purely financial perspective, extra school rapidly becomes uneconomic.


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## KaeJS (Sep 28, 2010)

Henry said:


> If you want to have a more stable job in finance, have you considered pursuing the Chartered Financial Analyst (CFA) designation?
> Henry


I've actually looked into becoming a CFA before. Yes, they make a ton of money. However, I'm not sure thats something I would have the motivation to persue. By the time I get the education, the "red tape" job experience, and then write the exams..... it would probably take me 12 years...

I was thinking a B.Comm in Finance and then do an MBA. The only problem with this is that everyone and their grandmother has an MBA. I wouldn't exactly stand out from the crowd.

I would love to be a CFA, but thats a lot of devotion/responsibility that I'm not sure I can handle at the moment...


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## Square Root (Jan 30, 2010)

Becoming a Chartered Accountant might also be a good route to take if you have a disposition towards finance or accounting. Need a university degree to get started then a difficult exam. But they pay and train you as you go along.


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## Henry (Jul 12, 2009)

I do not think CFA actually requires 12 years.

The best case scenario is that you will be able to take level 1 when you are 22 due to the prerequisite requirement of 4 years of post secondary education or work experience or a mixture of the two. 

If you pass level 1, you can take level 2 when you are 23. 

If you pass level 2, you can take level 3 when you are 24. 

If you pass level 3, you get your CFA Charterholder and you can put CFA behind your name on business cards. 

In your case, the best case scenario is that it will only take 4 years to get CFA Charterholder. Remember that CFA is considered similar to a graduate degree in finance. The cost of CFA exams is about 1k USD for each level, which is significantly less than any graduate degree. There is flexibility, because there are no classes to attend. I find that Elan guides are very good and are reasonable priced (http://www.elanguides.com/). The exams come with the textbooks, so there might be no need for additional preparation material.

You do have one advantage over regular university graduates for CFA Charterholder. CFA Charterholder requires 4 years of full time work experience. You would be gaining your full time work experience, when everyone else is still stuck at school. Technically, you can get your CFA Charterholder 2 years earlier than university graduates that started university the same time as you did.

It is an interesting scenario. If you do take this route, it is definitely one that is rarely taken.


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## KaeJS (Sep 28, 2010)

Henry,

First of all, thank you for taking the time to write that detailed post. 

I researched the CFA pre-requisites and you are correct. 

This has been taken directly from the CFA Ins. Website:

"Meet the entrance requirements: 
Have a bachelor's (or equivalent) degree
- or be in the final year of your bachelor's degree program at the time of registration
- or have four years of qualified, professional work experience
*-* *or have a combination of work and college experience that totals at least four years (Note: Summer, part-time, and internship positions do not qualify) *"​
This would mean that I already "technically" have 2 years of qualified post secondary. I am currently working full time now. If I continue to work full time until September 2011 (which I plan to do) and then go back and finish my finance diploma next year. This _should_ qualify me for the CFA with 3 years of full-time post secondary, 1 year of work experience, a finance diploma and an IFIC Certificate.

Correct?

This way, I would not have to go to University in order to be a CFA Charterholder. Granted, I would probably have to study my brains out to pass those CFA exams, but I feel like I would have enough intellect to pull it off...

However, you have to wonder what "Qualified, professional work experience" means. By professional, what are their standards?

Anyhow, if my one year of work did not qualify, I could always take a 1 year college course for economics (or something similar) and just grab an extra certificate...


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## Larry6417 (Jan 27, 2010)

If you wanted to be a bit more scientific, you could use the calculator MoneyGal provided and plug in the salary numbers provided here. See www.livingin-canada.com/work-salaries-wages-canada.html

However, there's at least one benefit of more education not captured in the salary figures: job security. Those with less education are more likely to be fired in recessions than those with more education; this has been especially true in this last recession. Therefore, over your lifetime (if you don't pursue more education) you are likely to be unemployed more often. Obviously, your lifetime earnings would be affected.

Have you considered talking to firms/professionals in the fields that interest you? You could ask them for their suggestions about a career path or what's in-demand.


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## Henry (Jul 12, 2009)

KaeJS:

I think a 3 yr diploma and 1 yr of full time work experience will count toward the prerequisite of taking CFA level 1 exam.

According to my understanding, being a bank teller or csr will count as professional experience. Anything that has a title of manager should count as professional experience. However, that is just hearsay on my part. It is probably the best to contact CFA Institute regarding to this question.

I think fulfilling the 4 years of finance work experience to receive CFA Charterholder may have more stringent requirement. However, I heard that being a bank teller full time count as finance work experience.


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## KaeJS (Sep 28, 2010)

Just lost my job of 3 years.

There goes $1900/month.

I'm a little upset about losing that money.

But, I have to tell all of you -- I've never been so happy in the past 3 years, than I am right now. That was the worst job I've ever had in my life.  HUGE weight off my shoulders.

And with that note, I'll only be able to save $1000ish/month... but hey, thank the stock market for passive income, right, folks?


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

That's quite the stamina to stick with a crap job for 3 years.

Hopefully you'll be able to get some good education under your belt so you can have some better bounceback potential and better weather this type of storm through your life. I think we're agreed on that. 

Glad you are still saving your money - that's so important, to be prepared.


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## ashby corner (Jun 15, 2009)

I'm all for planning and looking ahead, but looking at CFAs and CAs and MBAs might be a bit premature.

I'd finish 'something' (Bcomm in whatever or diploma at a good college) with a VIEW to doing something else.

And you are right: everybody and their dog have an MBA. It's more of a marathon than a sprint, and it does do one thing career wise: it ages you. Potential employers will often look at a person with 10 years experience and an MBA the same way they would look at somebody with 20 years experience. (and yes, I am one of those dogs).

I have a good friend who has a Bcomm, MBA, and CFA, and makes a friggin' FORTUNE. Fortune I tell ya. I have other friends who just scraped thru highschool who are also doing very well for themselves.

One never knows....


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