# Recent Grad - where do I go from here?



## twowheeled (Jan 15, 2011)

I finished my degree in December and started working immediately, I have been pretty frugal over the last 8 months and have paid off all my debt. I've also maxed out my RRSP contribution to the tune of about $20k. My TFSA is also topped out as well. I have another $8k in emergency funds that is sitting in a savings account. 

Now I have hit a wall and not sure where to move forward from here. As a newbie to investing, putting money into tax sheltered savings was simple and a no-brainer. But everything is maxed for now and I don't know where to turn next. My income is about $10k per month after taxes. I currently rent a room for $800/mo which is my largest expense. I own my vehicle, insurance is paid off for the year and gas is minimal since I have a company vehicle to commute with. 

I like the stress free aspect of renting and I do not want to buy a house yet. But pretty soon I will have money flowing in that frankly I do not know what to do with. In my position (mainly age, income, and job security) I would like to be very aggressive with my investing. But speaking to my bank, the financial advisor said he would not be able to fit me into any of their recommended portfolios and I would be better off with a self-directed account. I don't think I have the knowledge to do this on my own, but at the same time I do not want to hold any bonds, GIC's, or dividend paying investments. I want to put money into stocks with the potential of big growth. I can stomach a lot of risk, but don't want any of that risk to be a result of an uninformed or uneducated investment. I need some advice!


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

I will be very interested to read some of the responses to this one. But first, congratulations! You have done EXCEPTIONALLY well. I graduated quite a few years ago and when I was at your stage I was paying back student loan debt and moving, nowhere near what you have accomplished. That is truly an impressive accomplishment you have.

Here's my suggestion since you asked. If you are capable of getting the sort of education that will give you a salary of $10K per month, you are clearly a bright individual. That means that learning your own brokerage and investing skill might actually be a worthwhile thing to do. Perhaps if you do some research right here in CMF you'll be able to read up on some of the brokerages (such as itrade and TDW that seem quite reputable) that would be worthy of your time.

Do you need a beautiful house? Probably not, but with your income level and the friends and circles you will likely be travelling in in the future, a home purchase might be something really worthwhile of your consideration, perhaps as a medium term goal? If you pick a house in an area you like, perhaps one of your savings goals could be to save at least 20% downpayment. For example, 20% of $500K (just an example) would be $100K. Maybe set that as one of your goals? That could be a very worthwhile thing for you to do.

Again, thanks for posting this inspirational post and for having done so very well at such an early stage. Hopefully your parents are very proud of you.


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## ddkay (Nov 20, 2010)

Welcome to the Wild West. To be completely honest with you, if you go self-directed, just jump in. It's all trial and error. There are never guaranteed outcomes, kind of like exercise, nutrition, etc. You'll figure out your mistakes and true risk tolerance pretty quickly.


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## Maybe Later (Feb 19, 2011)

Impressive start.

I also second the read, read, read strategy. I found that reading the archives of some of the personal finance blogs a great way to get ideas and book suggestions. 

Also, you've invested in yourself and your greatest asset is your earning potential. You have literally millions of dollars in earnings to come over the next few decades. Check out your employer's benefit package, assuming you're not self-employed, and see if you need to supplement it through disability, critical illness or other insurance. Some bonehead could T-bone you in an intersection on a Saturday night and if it kept you from your chosen profession it would be a shame.


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## twowheeled (Jan 15, 2011)

Good idea, I will have re-read through my benefits. 

To be honest, I work long hours and I have so much to deal with at work that I just don't want the headache of managing my own investments. I would just like to hand part of my paycheck to a financial advisor each month and have them make those decisions for me. The TFSA I have is through questrade where I am holding a couple of stocks and an ETF. That was so much work and research and the gains so far have not been very optimistic. I wish I had more time and attention to focus on this area, but I just got a promotion at work and I want to focus on getting that down pat.


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## andrewf (Mar 1, 2010)

If you don't have the time or inclination to do a lot of research, set up a pre-approved chequing program to buy units in a balanced growth mutual fund or ETF. You can also go with a retirement date fund.

I'm frankly shocked that your bank told you to bugger off when you offered to invest many thousands in high fee mutual funds.


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## ddkay (Nov 20, 2010)

A financial adviser is not typically going to advise you to put money in stocks with explosive growth.

Unless your financial adviser is someone like this: The 1% Club: the story behind Weizhen Tang—Toronto’s Bernie Madoff


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## cash (Mar 5, 2011)

What recent grad job will allow you to net 10k/month?

I would recommend using a coach potato strategy for investing. After it's set-up, it will be low cost and low maintenance.

http://canadiancouchpotato.com


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## twowheeled (Jan 15, 2011)

I am already following the couch potato stratergy in my RRSP, but I'm looking for much more aggresive growth than an index fund provides. Like I said I am not looking for balanced or conservative growth.


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## zylon (Oct 27, 2010)

Think precious metals.

CEF.A (Toronto) 50% gold; 50% silver

or producers (all Toronto listed)

AEM
AGI
ELD
FR
SLW
YRI

or a PM mutual fund from RBC or Sentry.

Don't confuse volatility with risk.

The above securities are highly volatile,
but extremely low risk.

In my opinion.


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## Sampson (Apr 3, 2009)

andrewf said:


> I'm frankly shocked that your bank told you to bugger off when you offered to invest many thousands in high fee mutual funds.


Me too. A bank mutual fund pedler with a conscience?



twowheeled said:


> I am already following the couch potato stratergy in my RRSP, but I'm looking for much more aggresive growth than an index fund provides.


Nothing inherently not 'aggressive growth' in index funds. Just shift you allocations towards equities higher, and in particular, shift towards small cap, emerging markets, and other higher risk asset classes. Just remember that the amount of risk (or standard deviation in your portfolio) is not linearly related to portfolio return. This means that even if you add more risk to your portfolio, you may not get a proportionate payoff.

Also, don't equate individual stocks to higher returns, this is most often not the case.

Heavier weighting and alternative investments (ala Yale Endowment Model) is one of few academically supported portfolio models that can boost returns.

All this aside, if you plan or even if you don't plan (because things change quickly) to buy a house within 5 years, it would be good to squirrel away some cash - forget about returns for this portion, and don't be afraid to strike if opportunity arises.

Welcome to the forum!


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## MoneyGal (Apr 24, 2009)

andrewf said:


> I'm frankly shocked that your bank told you to bugger off when you offered to invest many thousands in high fee mutual funds.


I'm not, and I doubt it has anything to do with the banker's "conscience." 

"Hi, I want explosive growth, but I have no real investing experience, I'm unhappy with the gains I've seen on the stocks I've selected to date, and I want to put pretty much no time into researching or managing this portfolio myself. I want you to make all the decisions but remember, I'm looking for _very aggressive returns_." 

This is not intended as any kind of slur on the original poster. I'm pointing out that it's pretty much an impossible situation for a retail MF banker. They aren't set up to do this, not at all; and the risk is all on them in this scenario.


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## MoneyGal (Apr 24, 2009)

p.s. One of my brothers is a senior analyst with a major bank in the E&P oil and gas sector, and I have some focus on junior producers in my own portfolio. 

I keep typing out and erasing sentences here - what I want to say is that investing in this sector is not ideal for someone who is (a) using a retail bank advisor (who has no special knowledge of any particular sector, and uses retail MFs) and (b) is not going to put in the time to learn this sector well enough to be satisfied with their investing choices. 

In addition, this kind of investing pretty much necessitates frequent trading and a very close eye. Although the OP is saying he wants the kind of growth that is available from investing in this or other small-cap sectors, he isn't set up to get that either from himself or an advisor at this point, from what he's written.


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## Sampson (Apr 3, 2009)

I'm happy you posted about advisors not just blindly peddling high cost funds MG. We often blindly paint them all with the same brush here.

Re: small caps, I was rather suggesting OP continue using ETFs but look into those covering indices tracking small caps.


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## MoneyGal (Apr 24, 2009)

twowheeled said:


> I am already following the couch potato stratergy in my RRSP, but *I'm looking for much more aggresive growth than an index fund provides*. Like I said I am not looking for balanced or conservative growth.


I know. I was responding to his point that I bolded above. A small-cap or sector index fund would probably be his best bet. He didn't specify that he doesn't want "any" index funds, or just a couch potato strategy.


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

It almost sounds like the OP is in some sort of twilight zone of investing. On the surface it might look like he is a prime candidate for retail mutual funds, but when you read his comments it seems he needs the kind of performance typically seen by those who take an active role in managing their investments.

IMO it has to be one or the other. There doesn't seem to be any middle ground choices available to the OP.


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## MoneyGal (Apr 24, 2009)

There are A LOT of people in that "twilight zone." I'm just pointing out a mismatch between what is offered from a retail MF bank advisor and what the OP wants. 

He needs (1) more investable assets and (2) to find a stockbrocker who has an investing style which matches his. 

Or to DIY. 

Or to find a broker who is willing to take him on as a "prospect" because he is a rapid accumulator.


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## FrugalTrader (Oct 13, 2008)

+1 to the small cap index idea for added potential for growth (but with added volatility).


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## Four Pillars (Apr 5, 2009)

It sounds like what the OP wants (or thinks he wants) is a hedge fund - preferably one that uses a lot of leverage.

Not sure if he has enough money to invest in one however.

Another option is to just use leverage himself. Borrowing to invest is a perfect way to add risk to whatever investments you want to buy.


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## HaroldCrump (Jun 10, 2009)

What kind of returns is the OP expecting?

Small cap index ETFs don't have high returns since the wide diversification works against the investor in this case.
Vanguard's VB has an annual return of 5.4% in nearly 8 years.
The Canadian XCS has a return of -0.42% in about 4 years.

There may be specialized actively managed funds out there that are able to do better purely because of the skills of a specific manager, however, don't expect that from your friendly neighbourhood bank's small cap fund.


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## twowheeled (Jan 15, 2011)

Bumping this one because I still need some help.

Situation is the same... right now my investments are as follows:

21k in RRSP, set up in low mer index funds (couch potato method)
2k in TFSA in a high interest savings account
14K in TFSA in stocks. About 3.5 in a ETF that's done poorly, and the balance in my company stock that has done very well.
5.5k in company stock outside of tax sheltered accounts
20K in cash after recently selling off stocks. 

Without guidance, I admittedly made a few rash decisions and some speculating. I put most of my money into stocks. I wanted some fast gains. The company stock has is up about 30% in the last month and I've also made about 13% from buying/selling AGU. It feels as though these were lucky picks with a lot of stomach for risk a few weeks ago. I don't think this luck is going to last if I keep investing (speculating) this way. The problem is I'm still looking for the free lunch... big gains in a short period. At this point is it worth it to pay an hourly fee for a financial advisor to set up a portfolio for me to contribute to on a more regular basis?


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## humble_pie (Jun 7, 2009)

wheeled your account - something less than 60/70k was it not - is not really large enough to attract a first-rate advisor. Perhaps as MG has suggested, a junior advisor who'd be interested in speculating the account along with you.

but then, you could probably do whatever he suggested yourself, with probably less fuss & bother. Certainly less commish. You have been outstandingly successful so far.

another suggestion involving less personal work, which comes in a) or b) versions:

a) hire argonaut;

b) follow argonaut's recommendations in this forum; he is focused on small accounts w aggressive appetites like yours & he does a first-rate job imho.

looking more closely at argo's picks, you will note that he holds about 5 securities in the good-old-stuff category - ie carefully selected blue chips paying sound dividends - plus a rather astonishing amount of gold plus he flails away, quite successfully, at short-term option buying.


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## twowheeled (Jan 15, 2011)

Update to my situation: I've decided to sell off my stocks and realize my gains, take a little seat on the sidelines for awhile, and wait for things to settle down a bit on the global scene. Overall I think I did pretty well with an average return of 15% since I started back in Feb of this year. Now I am mulling over the idea of real estate a little more, thinking about getting a rental property that I can declare as my principal residence and sock away some equity in.


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## Sherlock (Apr 18, 2010)

It's my opinion that you shouldn't try to time the markets like that. You can never predict what the markets will do, and by sitting on the sidelines when you're expecting a crash you could actually be missing out on massive gains. The best thing is to have a balanced portfolio and stay invested all the time. A small portion in cash (HISA) is ok, and fits into the description of a balanced portfolio.


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## Oilers82 (Jan 17, 2011)

I think OP is quite educated and probably knows the low likelihood of beating the market (hence the original couchpotato strategy employed). But I get the sense that he has a desire to try to go high-risk, high-reward at this point in his life and try to be one of the 10% that does beat the market indices.

Agreed with the others, your amounts are not high enough for hedge funds. Best is to do your own research and invest accordingly. You've done well so far!


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