# What would you do with 250k inheritance?



## Getafix (Dec 29, 2014)

Hey guys,

So my family has sold off some property back home & i am due to receive my share from the sale. With the savings i have currently, i will have close to 250k. I have currently maxed out both mine & my wife's TFSA & have zero debt. I'm currently employed but do not really make that much (40k) so i'm thinking of using this money to generate enough income so i can quit my job & live comfortably. 

Which brings me to the question of what the wisest use of this capital would be. I'm mainly interested in purchasing a business, so that both my wife & i could run it. Investing in real estate could also be an option, since we've only been in Canada for a year we're still renting. 

The two businesses that are appealing to me the most at the moment are either a Automotive service franchise or a Child Day Care franchise. We are willing to relocate if we find the right business opportunity, which is why i though i should look for a business first then maybe later buy a house. 

We live within our means, so if i can generate close to the income i'm making currently by investing in real-estate i could also consider that. I have no experience in that department though, so hopefully people here can guide me better. 

There are also times where i think maybe i should just put down the whole amount into 2-3 Oil companies & wait it out & see! Only half-serious here but who knows maybe that could be a way to make a decent return & enjoy dividends while i wait! 

Anway, thanks for your advice look forward to your recommendations!


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## fatcat (Nov 11, 2009)

if you pick the right franchise by doing your homework that will offer the greatest upside potential but the most work that will never really slow down much

investing in a mix of dividend and growth stocks offer a more modest return in the short run but requires far, far less work

real estate requires a huge amount of work to get right and it is easy to lose your shirt unless you are careful but offers very good returns once you get up to speed and your workload can gradually start to scale back once you get properties in place

i would invest it ... you are debt free and have a job, if you reinvest your returns you will see a nice and growing nest egg 

but it's a big question, the right answer depends on your interests, good luck


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## Getafix (Dec 29, 2014)

A few months ago, i would've invested it without a second thought. With the current state of affairs though, i'm slightly hesitant to invest it. Except in a sector that is already beaten down to death & has nowhere to go but up which is why i suggested oil. Even that is quite a gamble. 

I should also mention that currently my living expense (all-inclusive) is around $1500. Maybe i could buy a small condo outright on cash, as i can find one in Kitchener for around $165'000 & invest the rest until i figure out what to do with it. That would still leave me with around a 100k to invest & in the meantime it would cut down my $1500 cost to maybe half (condo fees, property tax, utilities). This way i'm saving an additional $750/month. I'm quite confused as it's a major decision & it's money that i won't ever get again so i want to spend it wisely.

I should also mention why i'm interested in an auto-repair franchise. Imo, it quite a recession proof business, as during down times people hang on to their car's for longer & hence they need more work. I have family who started out with one franchise in Detroit & over a decade grew it to 5 & have made a lot of money out of them.


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## tygrus (Mar 13, 2012)

Let me give you a little tip. That money will only throw off a $1000 a month, not enough to live but enough to give you heartache when the markets start rolling.

With that amount of cash, its wise to invest in yourself. Don't waste money on those franchises. You cna make your own for pennies.

Take that money and buy a good long term home if you can, not a condo. Condos are bad investments because you don't own the land. Now fix up a little back yard garage and take in a few cars by word of mouth and do it right at home. You only need a couple cars a week to turn some cash assuming you are mechanically inclined. I know tons of people who do this part time right at their own home. And then your wife can take a few neighborhood kids in the house as a day care. Don't buy a day care, thats a scam. 

Once you have a paid for home, you don't need a lot of money to survive. Few thousand a month goes a long way with no expenses. I can't get you retired with that bit of money, but I can get you more freedom and working from home on your own terms.


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## Getafix (Dec 29, 2014)

That's the idea, to be able to spend more time as a family & work on my own terms. That's why being self-employed is so appealing to me, especially if it's a business we can both run together. 

Thanks for letting me know about condo's, the only reason i suggested one is that they're cheap, a house would cost me twice as much. Is it better to buy a house then, even if that means getting a mortgage? Are you better of paying higher property taxes instead of condo-fees?

I know at the most i can make only 5% yield on that investment which is why it's not that appealing to me. Unless i go for a crazy bet on CPG & make 13% until the inevitable dividend cut.


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## Getafix (Dec 29, 2014)

Here are some figures from one of the auto franchises i'm considering:

Required liquid capital: $100k

Expected sales: Average store 2013: 1.3 million. Top 10 stores: 2.5 million. Top 20 stores: 2 million.

Royalty: 6% of retail sales, 3% of tire sales, 2.5% of total retail sales for advertising/marketing.

Working hours: Opening hours are 8-6, so managers can expect 50+ hours a week.

The breakup of the $100k capital required is:
$25k for franchise fee. 
$75k for inventory (mostly tires).

Another $125k is required for equipment, which can also be leased.
A $50k credit bond which can be acquired for 2% per year if you don't want to give cash.

So a grand total of around $275k depending on locations. 

This was all the information given to me in a preliminary meeting, to get actual cash flow figures i would need to sign a non-disclosure agreement with them.

There are several new available locations (currently vacant) that belong to the company and can be leased from them, they're mostly properties where they bought out ex-operators. However i told them that i would be interested in a location that's already operating, of which there are a few options (Kitchener, Milton, Niagara etc).


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## wendi1 (Oct 2, 2013)

I had to make a similar decision a couple of years ago. I decided that income properties were overpriced for the risk, I wasn't really interested in any of the franchises (you need a big pool of inexpensive and reliable labour, or you end up making the frappuchinos yourself), and my housing was fine as it was.

I put it into a balanced bundle of ETFs and GICs, and retired. Taking music lessons, on the board of directors for an amateur theatre organization, and gardening.

It's a great problem to have, isn't it?  Enjoy!


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## tygrus (Mar 13, 2012)

GAF, if you could stomach working for another few years you could probably be in a better scenario to retire on. If you could double those TFSAs again in 8 years, and invest the 250k and drip it until then, you could be further ahead than if you retire now.


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## CalgaryPotato (Mar 7, 2015)

You should try to get in touch with some other owners of the franchises to see if your expectations are realistic. I'm thinking 50 hours a week as the owner/manager of an automotive shop sounds highly optimistic.


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## GPM (Jan 23, 2015)

It sounds like you know what you're doing with business. I like the idea of being an owner. I owned my own till the end. Best thing I ever did. Incredible amount of work though, but fun! (Edit - Calgary potatoes is right - think 60 hours up to 80, especially at the start, and get a great accountant and lawyer-the accountant for cash flows and business plan in first five years and then for books after- don't be cheap on this, they are worth their weight in gold - chartered accountant in your case). Look no further than Landlord Rescue (berubeland on here for why she up hates condo- rental professional). I like the idea of the home daycare and auto service. My experience - totally non mechanic but a great user of their services - is the home model. The fellow around the corner from me works from a van and home. Regular maintainence and boosts, no transmissions breaks etc. Internet advertising only, no overhead, busy. A franchise in this might be worth the expense at start up, like Jim's law care. Everyone gets their advertising from each other's trucks, builds clients, and drops franchise. The auto shop is a tough go. The independents are disappearing fast-can't keep up with the slee outlets as everything computerized etc. I know two fellow with a shop. Best in town and everyone knows it but still struggling. However, you know the business. As far as daycare, go home. My daughter was at a home day care. Happiest house on the planet. Cash only. Rubbed off on family. Very strict pickup and drop off, screened families, and she was IN DEMAND. Family feeling for child and you become friends. My son did a professional daycare "early childhood education" here). Lots of fun. Not as personal but still good experience, as the head liked our, kid and us. However, even with five ece teachers she can't sell now at retirement. Last word and I don't want to be a Debbie Downer, but their is risk - 90% of businesses fail in first five years, next 90% in second five years. That's 99% in first 10 years. However, then you're flying. The wealthiest people I know are private owners. If you know your business, go for it. I broke away and never looked back.


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## blin10 (Jun 27, 2011)

i would buy dividend stocks yielding on average 4% and making me $833 monthly for a loooong time


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## Getafix (Dec 29, 2014)

Thanks guys, please keep the opinions coming. It is indeed a nice problem to have but another dilemma is i will get the money in U.S $, so now i also have to figure out when the best time is to convert it to CAD $! 

Btw, i'm only 35 so it's too early for me to consider retirement. I am happy working for another ten years, it's just that my current job is not very fulfilling & i'm also in an industry (hospitality) with very little chances of career enhancement.

As for working longer than 50 hr's/week, that's not an issue as there's two of us. So we can easily handle even an 80hr week between us. I will of course meet existing franchise owners to determine if the auto franchise is worth pursuing. 

Those people that favor investing in dividend stocks, would you invest in the U.S market or Canadian? I know i will lose 15% of dividend income investing in U.S stocks, but i have lost faith in the Canadian market. I will make an excel sheet with potential stocks that i could buy & see what overall yield i can possibly get. $1000/month won't be much, but if i can DRIP them & continue working for another year or two hopefully the compound effect will grow the initial amount nicely.


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## gardner (Feb 13, 2014)

Getafix said:


> would you invest in the U.S market or Canadian? I know i will lose 15% of dividend income investing in U.S stocks


I like to hang on to fairly large blocks of $US and keep that in the US market and $US denominated investments.

There are Canadian dividend payers that pay in $US -- AGU and POT are the ones I hold, and these pay eligible dividends and can be traded in $US. No withholding tax.
You can buy and hold dividend paying UK stocks on the US market and they have no withholding tax in US or UK -- things like GSK.
Investing directly in the US market via VTI is very popular. Not huge dividend yields at ~1.8% and 15% withheld, but generally considered a solid broad-based investment. Outside your TFSA you will get CRA credit for the foreign tax paid to the IRS, so you do get the withholding tax back in a way.
If you have RRSP or TFSA room, you can put $US in there in-kind. Tangerine will still pay 2% on $US in a 5 year GIC.

If/when it comes time to trade large blocks of $US for $CA, you will need and want a brokerage account with $US and $CA sections. Read up on "norbert gambit" which is the means to do $CAN$US currency trades without getting killed on the FX rates. Best just go ahead and set up the accounts ASAP so that when the money flows in you're ready to do something with it.


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## CrashTestSnoopy (Jan 21, 2015)

+1 to what gardner said. If you converted all that to CAD, you'd be kicking yourself when you need to invest later on stocks listed on the nasdaq or nyse. I've done norbert's gambit more times I can count and wish all of my money would have just magically been in USD to invest with. 

This is what I'd do taking into consideration your dissatisfaction with your current job. 

1) Don't quit your job yet and don't buy another business (there's a reason the business is up for sale + you don't have experience to prevent burning all that money faster than lighting it up)
2) Look for the *right* house with a mortgage both of you can afford comfortably (in the GTA or just outside is also fine).
3) Find out how much the down payment will be and convert only that in CAD.
4) Invest the rest with a mix of index funds, and stocks (always research first and if you don't understand all of it, don't buy). 
5) Once the house is closed and you're settled in, think about what you'd like to do and change careers / start your own business.

I emphasized *right* house because you can also shoot yourself in the foot quite hard and fast if you don't research properly. Same for stocks. I would say this whole process would probably take about a year to execute properly. Spending is easy cause everyone wants your money.


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## Getafix (Dec 29, 2014)

Oh yeah i know what a Norbet Gambit is & i've done it in the past. I wouldn't want to change my money over right now with the current state the loonie is in. If oil starts shooting back up, i might do it then as that will probably be the best time.

IMO, buying a house before a business isn't really that great of an idea. I don't know where i might find a good opportunity for a business, so tying myself down before i find one wouldn't make sense. 

As far as experience goes, i don't have any in Canada (only been here a short while) but i've started several businesses back home. My family has also been in the hospitality business for 3 generations & i've helped run them before coming here. So it's not like this is my first foray into a business.


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## CrashTestSnoopy (Jan 21, 2015)

Mortgages aren't death sentences. Here in Canada, real estate appreciates in value and you can sell anytime. Look at the homes in North York 5 years ago, crappy properties were going for 500k. Now they go for 1m+
Anyway, I've said all I needed to say, that post was really for my younger self. All the best.


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## blin10 (Jun 27, 2011)

Getafix said:


> Btw, i'm only 35 so it's too early for me to consider retirement. I am happy working for another ten years, it's just that my current job is not very fulfilling & i'm also in an industry (hospitality) with very little chances of career enhancement.


250k is not much these day, you'll be working way more than 10 years


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## Getafix (Dec 29, 2014)

CrashTestSnoopy said:


> Mortgages aren't death sentences. Here in Canada, real estate appreciates in value and you can sell anytime. Look at the homes in North York 5 years ago, crappy properties were going for 500k. Now they go for 1m+
> Anyway, I've said all I needed to say, that post was really for my younger self. All the best.


That is not what i meant & i agree with you. It's just that i don't want to commit myself to one location & then be stuck with a long commute if i end up buying a business someplace far away.


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## Getafix (Dec 29, 2014)

blin10 said:


> 250k is not much these day, you'll be working way more than 10 years


I agree, that's why i said i would be happy to, who knows what happens after that time span i'm not looking that far ahead at the moment. I am fortunate enough to have a decent share in the family business so long term i am not worried at all. I just want to be able to take advantage of the next few years & make good use of them & put this money to good use.


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## none (Jan 15, 2013)

I think the best thing to do is put that money away in a well diversified portfolio and revisit it in 20 years (balanced yearly). That's it.

250K is only worth about 10-15K per year.


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## Getafix (Dec 29, 2014)

See that's the whole point, investing it means maybe a 5-6% return at the most. Whereas, opening a business with that money, even if i have to borrow some capital, can generate much better returns. I agree that it's not without risk & i understand why most people are hesitant to do it.


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## jaybee (Nov 28, 2014)

@none I would also invest it, and add money to it regularly since the OP has no debt. However, it sounds like the poster has some entrepreneurial experience, and wants to go down that road again. I can't offer much advice in that area. 

Congrats though! Great problem to have!


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## tkirk62 (Jul 1, 2015)

Invest the money in a diversified portfolio and keep renting. 

I'm willing to bet that the benefit of keeping your money in the market longer will beat the benefit of more monthly cash flow by having less housing costs. 

That money returning 5% will return $12,500 the first year. That beats the savings you will get by buying a property of some sort instead of continuing to rent. Plus that 5% will compound, while your housing savings will not.


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## hboy43 (May 10, 2009)

Hi:

I would argue that starting a business is always riskier that investing in a basket of stocks. This is why a private business must be expected to return 20% PA or better.

Now considering that oil and some other selected areas have been kneecapped of late, I would argue that 20% PA returns are lurking in the stock market for no work and less risk than a business. I understand that less risk than a business means that most folks will still find these stocks too risky, but you are not most folks, you are willing to play in the risk sphere. 

I have been eating my own cooking here and have added to a bunch of positions.

hboy43


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## tkirk62 (Jul 1, 2015)

Also, if you are willing to borrow money to start a business, you should be willing to borrow money to invest in stocks, which can increase your returns more to the point you want them to be.


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## jaybee (Nov 28, 2014)

tkirk62 said:


> Also, if you are willing to borrow money to start a business, you should be willing to borrow money to invest in stocks, which can increase your returns more to the point you want them to be.


What if OP's talents are in running small businesses, not investing in the markets? That has to be considered in his\her decision.


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## Getafix (Dec 29, 2014)

tkirk62 said:


> Invest the money in a diversified portfolio and keep renting.
> 
> I'm willing to bet that the benefit of keeping your money in the market longer will beat the benefit of more monthly cash flow by having less housing costs.
> 
> That money returning 5% will return $12,500 the first year. That beats the savings you will get by buying a property of some sort instead of continuing to rent. Plus that 5% will compound, while your housing savings will not.


Hmm interesting, so at least one of my doubts is cleared. I still come out ahead by putting everything in the market, rather than putting it in a house.


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## Getafix (Dec 29, 2014)

hboy43 said:


> Hi:
> 
> I would argue that starting a business is always riskier that investing in a basket of stocks. This is why a private business must be expected to return 20% PA or better.
> 
> ...


Exactly, the only thing that's enticing to me at the moment is the oil stocks. They've already been kneecapped as you say & there's not much further downside & the upside potential is huge. Add to that the nice dividend yields as well. I don't think it's any more dangerous than investing in a business. I might not get anything back from the business if it fails, the stocks will keep pumping out the yield & will eventually recover (if i pick the safest one's). Would it be extremely stupid to plunk a major part of the cash down on oil stocks?!

As for picking stocks, i only started investing in march-april, which as it turns out was the peak of the TSX. So most of my picks are down but i guess that's the same with most of the people, even if i had invested in the index i would still be down.


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## jaybee (Nov 28, 2014)

@Getafix. Buying a house in Canada right now probably isn't the smartest thing to do at the moment. You've run businesses before, so buying franchise or something of that nature might work out for you. Or as others have suggested...investing it in a balanced portfolio. If you choose the latter, make sure that you've done a tonne of research and\or hire a highly recommended fee only advisor.


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## Getafix (Dec 29, 2014)

Yeah you never know if the housing bubble will finally burst with the current state of the economy. Even if i do buy, it would never be in the G.T.A, so the effects won't probably be as severe as the major cities might face.


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## livewell (Dec 1, 2013)

Getafix said:


> Oh yeah i know what a Norbet Gambit is & i've done it in the past. I wouldn't want to change my money over right now with the current state the loonie is in. If oil starts shooting back up, i might do it then as that will probably be the best time.


...??? I don't understand this. The current rate is close to the historical low for $Can so if you want some or all of this money in $CAN now is the time to transfer out of $US not when the oil price picks up and the $CAN picks up as well. Could/will the $CAN go lower, maybe but historical trading range suggest the upside for the loonie is greater than the downside today. At some point you need to pick a time to convert.

FWIW I would go with a mix of equity into home, and investment in a dividend stock portfolio. My reasoning is that 20 years from now the likelihood of a diversified portfolio being worthless (Or even worth less in real terms than it is now) is very very low - the possibility of a business or franchise failing and dramatically losing value is not in-significant. But thats just me I can see the risk/reward think of being a business owner


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## Getafix (Dec 29, 2014)

Yeah i meant that the start of an oil recovery would signal a bottom for the loonie. It's pretty close to a bottom though, so depending on what i decide on i might only exchange as much as i need & keep the rest as U.S $. 

I also agree with you, a diversified portfolio over time will always be safer than a business. An under-performing dividend portfolio is still better than a failed business. However, high risk = high reward.

I appreciate all the responses, as i feel the more opinions i get the better decision i will end up making.


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## tkirk62 (Jul 1, 2015)

Yes it would be crazy to plunk a huge amount of money in only oil stocks now. Many have cut their dividends and some more probably will. The yields are by no means guaranteed. The safest ones (the Suncors and CNQs) will survive but do not offer exceptional yields or incredible upsides as their prices have held up well. Investing in a few, even overweighting them for the time being could work out well, but there is no reason not to buy a bank or two (also beat up), maybe a US index fund, a utility, a telecom, etc. BALANCED portfolio. Include some CPG or similar name for a high current yield and upside potential but as part of a balanced portfolio.


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## james4beach (Nov 15, 2012)

I hate to be the bear-er of bad news, but here a couple observations to add

1) You can't retire and stop working with 250k. It's simply not enough. You will have to keep working.

2) It's a fallacy that you can just buy something with dividends and get an ongoing 5% yield. In reality, those dividends may get cut, and the capital can erode

3) Oil stocks are beaten up but it's dangerous to assume "they can only go up". They could go down more. And if you're unlucky with the company you pick, they can go bankrupt and the stock can go to $0 -- and you could lose everything. You must be very careful speculating in beaten-down stocks.

4) This "dividend portfolio" stuff sounds a lot better than it actually is. People make it sound like the portfolio will generate a stable ongoing income/growth. In reality it's no different than an average stock portfolio (like a TSX index fund). Whether it pays dividends or not is a moot point. It's stocks and there's risk... the performance can range from very negative to very positive.

You may have read somewhere about what sounded like a reliable/guaranteed 5% profit in stocks. This is just plain misleading. There are no guarantees in stocks. Look up the term "total return", this is the sum of dividends and price increase. The total return in a period as short as one or two years can vary wildly. For instance it may pay you out 5% in dividends while the stock price plunges -20%. Have you come out ahead? Definitely not... that's a -15% total return.


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## james4beach (Nov 15, 2012)

The common belief is that over the long term (20+ years), stocks return on average 4% to 8% per year. That's if you stay invested long term in a broad index like the TSX Composite or S&P 500. And I agree with this ... stay invested long term, in the index, and that's likely what will happen.

But in the short term -- the next few years -- who knows. There is NO stock you can buy that will assure you a 5% total return over the next few years. There is NO stock that will reliably grow your total investment at all in just a handful of years. Dividends or not, it doesn't matter. I'm really concerned that you're being given misleading information.

I can give you a couple examples. Many Canadians bought these and considered them as providing steady growth at X% due to the "dividends". But look what happened to the prices. These charts show total returns, including dividends, so this is the ACTUAL gain or loss in your total investment.

Here is a utilities index fund. The one year return is about zero, even though it paid out steady dividends.

Here is a preferred shares fund. The one year return is -11% despite what people would describe as 'high quality stocks paying reliable and high dividends'

Now imagine you had put your 250k into preferred shares, tempted by this message that all you have to do is invest in dividends, and you'll make 5% a year. In reality, your 250k would have shrank to 222k meaning you would have LOST $28,000 in the attempt to "make a reliable 5% dividend"

My message: do NOT get caught up on yield. Be realistic about what you're getting into. Equities can have large % losses too, there is no guaranteed profit or income. If you make 20k income but lost 100k capital, you have not come out ahead.


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## livewell (Dec 1, 2013)

james4beach said:


> The common belief is that over the long term (20+ years), stocks return on average 4% to 8% per year. That's if you stay invested long term in a broad index like the TSX Composite or S&P 500. And I agree with this ... stay invested long term, in the index, and that's likely what will happen.
> 
> But in the short term -- the next few years -- who knows. .....
> 
> ...


You start off correct - long term you will be successful in diversified portfolio, short term who knows. The key is to have a long term window, nearly everyone 60 and younger can have a long term 20-30 year investing window. 
Your later statement is wrong you will only have lost $28,000 if you sell those shares in a down period. Again long term is the key.

Here is a very interesting chart







It shows the 30 year return from investing in the S&P in any given year, and even if you invested at the worst possible time in the past 100 years (The 1929 crash) the return would still be ~6% per year! The full article is http://awealthofcommonsense.com/price-insensitive-buyers-at-prior-market-peaks/


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## carverman (Nov 8, 2010)

tygrus said:


> Let me give you a little tip. That money will only throw off a $1000 a month, not enough to live but enough to give you heartache when the markets start rolling.
> 
> With that amount of cash, its wise to invest in yourself. * Don't waste money on those franchises.* You can *make your own for pennies*.


.............................................................................................................................................................???? ^^^
Good advice, unless he wants to spend most of his inheritance on a franchise and then pay the franchiser a percentage of his profits each month, plus the rent, plus business taxes, plus business insurance and he would need a licensed mechanic ( at least one), to do any repairs. In Ontario, you can't work on someone elses car legally unless you have a class A mechanics licence. 

There are a lot of other expenses as well in setting it up, before you can make your first dollar from auto repairs..and $250K isn't going too far these days in the repair garage business.

Maybe get a food cart licence from the city, and see how far you can go with that and invest the balance of the inheritance WISELY. 



> Now fix up a little back yard garage and take in a few cars by word of mouth and do it right at home. You only need a couple cars a week to turn some cash assuming you are mechanically inclined.


Caveat here...IF you are not a experienced mechanic and have knowledge of critical repairs of most models (such as brakes for example), you are placing yourself in great danger of being sued if something goes wrong with the vehicle where it can be traced back to your repair.

Sure you can say, " I can give you a better deal on the brake job", and perhaps get the job done with the right tools, BUT if the owner gets into a collision, they could be suspicious of your brake job, and without garage liability insurance (expensive), licensed mechanic repair, you are definitely opening up yourself to a serious and expensive lawsuit having to hire expensive lawyers.

You can certainly do the brake work on your own vehicle (if you know how), but as long as it's your own vehicle.
The second point is that IF your home insurance finds out you are running any kind of business from your premises (it's called curbsiding in auto speak)..watch out. You risk having your rates skyrocket or home insurance cancelled.

Same with a day care. Day cares need liability insurance these days, because children can be injured in your home in many ways and if it's someone else's child and you are being paid for daycare, your are totally responsible for anything that happens to that child while on your property.. and if the day care is registered they will inspect the daycare randomly.



> I know tons of people who do this part time right at their own home. And then your wife can take a few neighborhood kids in the house as a day care. Don't buy a day care, thats a scam.


Yes, there are many that do..and get away with it.until something serious happens. About 5 years ago, a 2 yr old child drowned in a neighbour's pool while on a playdate with
another child. Neither day care provider had insurance or registered. Very expensive lawsuit resulted. 



> The number of children in the home led to a charge against Lapierre under the Ontario Day Nurseries Act. *An unlicenced home daycare provider can never have more than five children in her home, in addition to their own children.* Licensed home daycare providers can only have five children, including their own children, in the home.
> 
> 
> > struggles to recruit people for licensed centres because licensed centres must pay between $6 and $12 a day per child in administration fees and must also submit to inspections,


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## 1980z28 (Mar 4, 2010)

I have worked for auto repair shop for 37 years as a mechanic

I have lived the closing of 3 shops

I now work for a garage that is part of the oil industry and there in talk of slow down

Most things look good on paper,talk to a couple of owners for some real feedback


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## carverman (Nov 8, 2010)

1980z28 said:


> I have worked for auto repair shop for 37 years as a mechanic
> 
> I have lived the closing of 3 shops
> 
> ...


A few garages in my area have either ceased operation completely, or downsized to the point where there is only one mechanic on duty and that could be the owner. 

If you go with the idea that most people keep their cars longer because of the economy or for other reasons, these garage owners would see a long line of vehicles at their door, but that is not the case.

The cost of repairs these days + 13% tax makes some owners rethink after given an estimate.
If it's a major repair costing thousands, more than likely the "old clunker" ..that 10 -15 year old family daily driver goes to the scrap dealer,and they go shopping for a new vehicle with deferred payments, 0% interest and the assurance that the old clunker isn't going to let them down next week or month, when something else goes on it.


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## jollybear (Jun 28, 2015)

^+1............I`m co-owner of an independent used car dealership in Manitoba with a service department. WITHOUT A DOUBT finding good reliable mechanics that are willing to work in an automotive service shop other than a large franchise dealerships is next to impossible! What ends up happening? Most owners end up running their business during the day (dealing with day to day operations which includes babysitting incompetent employees) and turning wrenches at night to keep their customers happy and the service work pumping out the door. Most shop owners I know are master mechanics themselves and work a minimum of 60 hours/week just to make a go of it. I totally agree with 1980Z28......talk to a couple of shop owners first!!!


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## carverman (Nov 8, 2010)

Speaking of franchise..lets take Midas...a well known franchise that does exhaust and brakes... up to $424K (maybe even more) before you can apply a air wrench to the first customers car. 

http://midasfranchise.com/research-midas/what-are-the-startup-costs/


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## tygrus (Mar 13, 2012)

GAF, can you afford to lose any amount of this money? If you have never owned a business before or invested thats going to happen more than once at least in the short term. Every investor has watched their portfolio lose value for no good reason and only by staying very diverse and patient were they able to get it back. Same goes for business owners. Eventually you are going to have a slow year or even a bad year and you will have to tap your equity to stay afloat. Take it from someone who is invested and has a business, it will happen.


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## My Own Advisor (Sep 24, 2012)

fatcat said:


> investing in a mix of dividend and growth stocks offer a more modest return in the short run but requires far, far less work
> 
> i would invest it ... you are debt free and have a job, if you reinvest your returns you will see a nice and growing nest egg
> 
> but it's a big question, the right answer depends on your interests, good luck


+1 for investing it. In another 10-15 years that $250k will be double - that $500k will likely earn about $20k per year from the dividends and distributions and you don't need to touch the capital either.


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## james4beach (Nov 15, 2012)

My Own Advisor said:


> +1 for investing it. In another 10-15 years that $250k will be double - that $500k will likely earn about $20k per year from the dividends and distributions and you don't need to touch the capital either.


So it sounds like you're suggesting that the OP put 250k in an entirely equities portfolio. Am I reading that right?

As he is a first time investor I'd suggest that he pursues a 50/50 equity and fixed income portfolio (say half in GIC ladder, half in index ETFs). The reason I say this is that first time investors get really surprised by market volatility.

To be able to get those good 5% to 6% stock market returns, you have to stay invested for a long time, and you have to make sure that you don't exit early. So start with low equity exposure, get used to market volatility over the years, and gradually increase your equity exposure. This way you won't get freaked out and pull your investments.


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## My Own Advisor (Sep 24, 2012)

No issues with 50/50 split, likely a good call for many reasons, and as you say, as you learn more, gradually increase equities over time.


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## sags (May 15, 2010)

It wouldn't work for everybody, but I would buy 1 Class A share of Berkshire Hathaway.

Berkshire gives a diversified portfolio of public and private companies, across a broad spectrum of investments. They even have a little Canadian content.

Continue working.............leave the Berkshire share to build over 30 years............and retire in comfort.

And you get to go to Omaha to a general meeting with Warren Buffet and Charlie Munger every year and collect a gift bag


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## gardner (Feb 13, 2014)

sags said:


> 1 Class A share of Berkshire Hathaway


But no prospects of generating income either. No dividend and with only one share, no ability to sell down other than by totally liquidating your holdings; no way to DCA in or out or spread income across tax years.

At least go with BRK.B


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## Getafix (Dec 29, 2014)

Thanks for the replies guys, too many replies to quote & reply to individually so i'll try & reply to the two major opinions.

RE: Business
I've mentioned this before & this won't be my first business, in the past few years i've stared four from scratch in fact. Lost money on a few & sold some for a profit, so i definitely know the risks & what i'm getting in to. None of these were in Canada though, which is why i want my first one in Canada to be a franchise as they will help out with everything.

As far as an Auto service franchise is concerned, i have mentioned already that i am interested in buying an existing one. This way i will have some years of revenue/profits etc to analyse before i decide on which one to get. As far as talking to other franchise owners is concerned, that's all part of the process. Someone mentioned lack of professional mechanics, this franchise has their own training center where they train mechanics & franchisee's. Besides, labor only makes 1/3rd of their total revenue, 1/3rd is made from tires & 1/3rd from parts.


RE: Stocks
As far as investing in stocks & assuming 5% yield. Some members are under the impression that i'll be investing for the first time. Though i am new at it, i have been doing for half a year now & trading in a bearish market has certainly taught me a great deal. So i'm not that naive & have realistic expectations. If i do decide to opt out of a business i will probably use a little of the amount for a downpayment on a house & invest the rest in a diversified portfolio (mostly in the U.S/International market).


P.S. I don't know where people are getting this from, but i have no illusions of retiring, nor am i interested in it for a long time hopefully. I just said i would like to quit my job, if i can manage to generate the same income from my own business. Which at 40k isn't a lot, so as long as i make as much & get to be my own boss, i will be happy.


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## atrp2biz (Sep 22, 2010)

gardner said:


> But no prospects of generating income either. No dividend and with only one share, no ability to sell down other than by totally liquidating your holdings; no way to DCA in or out or spread income across tax years.
> 
> At least go with BRK.B


'A' class shares are convertible to 1500 'B' class shares at any time. Can't go the other way though.


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## gardner (Feb 13, 2014)

Getafix said:


> P.S. I don't know where people are getting this from, but i have no illusions of retiring


I don't know about the others who assumed "retirement", but I read:



Getafix said:


> i'm thinking of using this money to generate enough income so i can quit my job & live comfortably.


...which, on the face of it, sounds a good deal like retirement.


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## Getafix (Dec 29, 2014)

Yeah i should've elaborated a little more, "quit my job & live comfortably off my business income".

English isn't my mother tongue


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## Getafix (Dec 29, 2014)

So i was bored & had some time to kill on my day off so i came up with this Canadian dividend portfolio. I tried to diversify into all the sectors, so except for Tech most of the sectors are covered. It's a little overweight in oil, as i feel it's due for a recovery soon. 

Let me know what you guys think of the companies & what changes you would make. I would obviously have to do my due diligence & explore them in depth to see which one's are fairly valued should i choose to invest. For the moment these are just stocks that have been on my radar & some of them i already own in my TFSA. Total yield is coming out to 4.68% which is pretty decent i think.


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## agent99 (Sep 11, 2013)

Getafix said:


> Here are some figures from one of the auto franchises i'm considering:
> 
> Expected sales: Average store 2013: 1.3 million. Top 10 stores: 2.5 million. Top 20 stores: 2 million.
> 
> Royalty: 6% of retail sales, 3% of tire sales, 2.5% of total retail sales for advertising/marketing.


We ran our own business at one time. We had sales of about same as your average store. Our margins were on average in the 10-15% range. By the time we paid staff and ourselves, we lost money. Be very careful about throwing your money that way. 

As someone suggested, put it into home equity. Otherwise invest it in cash equivalents at say 3% and wait until markets settle down and you feel more confident about investing. Then buy a couple of balanced funds . Over the long term you should be able to earn 6% real return (6% over inflation). Let that money grow for your retirement.


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## tkirk62 (Jul 1, 2015)

You have two grocery stores, which I don't think provides much diversification within the consumer sector. If you wanted one, I also would say Loblaw's is better, because they have the pharmacy exposure with Shopper's. I would switch out Metro for Loblaw's and Empire for Cineplex, which yields more and is in a different category than groceries.

Baytex could be in trouble. Without looking into it deeply, I wouldn't consider it. You are taking your high oil risk with CPG, so maybe switch out Baytex for Suncor. It is safe enough to survive and even thrive in this environment, and should recover nicely along with the rest of the Energy sector if oil prices ever increase. I think Crescent Point is the better risk, so you could move half of the Baytex allocation to CPG and half to Suncor.

If you believe in an oil recovery, CWB would be a good bet to make in the financial allocation. consider adding some money to it. Won't go too wrong with Royal and TD though. 

You could get healthcare-ish exposure from names like Extendicare, Chartwell Senior's, Medical Facilities, etc. Prism isn't the only company with a good dividend. It does look interesting though.

I keep thinking Magna will slow down, and I'm always wrong so I don't know what to tell you about it. I would look int oa railroad. CNR or maybe UNP (Union Pacific). UNP in particular seems like a good stock right now.

One REIT I really like is BTB.UN. IT has a very high yield, is very cheap right now and gives some exposure to Quebec, an area not many people are really invested in.

Both telecoms are good choices ad should do well.

You utilities are solid. Emera is super safe, Algonquin I haven't looked into much but lots of people seem to like it. One utility name a lot of people don't really consider is ECI. It isn't a power generator like the others and it's different business provides it with growth opportunities unique from the regular utility names. 

I have never really looked at SIS but it seems interesting. Thanks for bringing it to my attention.


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## tygrus (Mar 13, 2012)

Why wouldn't you just buy 2or 3 ETFs?


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## AltaRed (Jun 8, 2009)

tygrus said:


> Why wouldn't you just buy 2or 3 ETFs?


+1


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## humble_pie (Jun 7, 2009)

tygrus said:


> Why wouldn't you just buy 2or 3 ETFs?



why? why not?

because Fix seems to be a bit of a storyteller, my take is that he's pulling our leg(s).

it wasn't very long ago that Fix was moving to BC to work in the hospitality industry. He had many folks on here working hard to offer job suggestions, housing, quality-of-life, even school suggestions since at that time he said he had a toddler.

but in the end, he didn't move.

forward a few months & now Fix is planning to buy an automotive service shop, although there's no evidence he's ever wrenched a wrench much in the past. Many more suggestions, all very serious & helpful. But maybe, instead, he'll buy a day care business. More suggestions. Or maybe both businesses. A good idea because evidently his wife will be working both of them.

but then again, maybe Fix could invest $250k in a brand new investment portfolio of securities. Behold, here is his proposed list of possible new stock purchases _& what does everybody think about that? detailed replies to help me choose, please & thank you_


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## Getafix (Dec 29, 2014)

Wow seriously? Do you really think i have that much spare time? Yes i have a four year old son, which is in no way relevant to buying a business, so i didn't mention it in this thread. I still want to move to BC, but as i said at that time, no good offers came up so i stayed here in Waterloo. Who knows, if i don't find anything here i might still move, but this time i'll look for a business instead of a job. Six months ago i had no idea my family would sell this property & i would inherit this money. 

I don't really give a crap what you think, but i am offended you would call me a story-teller. 

As far as buying an automotive business is concerned i have been interested in it since i came to Canada last year:
http://forums.redflagdeals.com/thin...service-franchise-suggestions-needed-1620155/

If you want, once all my payments clear i will gladly post my bank balance here & rub it in your face.


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## humble_pie (Jun 7, 2009)

it's the Secret Life of Walter Mitty

next time i'm bored i think i'll do the same

_hello a kind-hearted great-uncle has left me $250k plus a stern warning to quit scribbling nonsense & smarten up with the inherited $$ before it's too late, because it'll be my last chance.

i mean he barked that out in his Will, can u imagine.

me i love wild northern canadian berries. I've been thinking to buy cheap land up north - up there in the muskeg with the bears & the black flies - i'd grow blueberries, blackberries, raspberries, cloudberries, saskatoon berries.

jams, jellies, syrups, pies. If i were smart i'd figure out how to flash freeze em in designer ziplocs & fly em out to gourmet wild food purveyors & chic restaurants via a little float plane like the kind AgDriver flies.

so whaddya'll think about that?
_


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## AltaRed (Jun 8, 2009)

I digress but I sometimes find the best way to get a really good fix on the character traits/personality of a member, especially those that seem to be erratic, is by reviewing a quick summary of the last 100 or so posts by that member. Fortunately, most brands of forum software make that pretty easy. Understanding a member makes for better crafted responses (or non-responses).


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## Getafix (Dec 29, 2014)

Humble_pie, 

I know that i shouldn't let it get to me but for some reason your post has just pissed me off. Just to prove you wrong, here's a screen shot of my bank account back home. The first of my inheritance payments has come through & the remaining two will clear by the end of next month. FYI currency is PKR so roughly 1 CAD=77.5 PKR.

You can see that there's around 63k CAD in there, if you want further proof i'll post a pic of my TD balance as well where i have over 80k+ invested across my cash & registered accounts. So i currently have over 140-150k already & will have over 250k by the end of next month. 



Furthermore, if i am wasting everyone's time here why would i be emailing brokers about different business opportunities here in my city:



And i'm such a troll that i've also gone & trolled the franchisor's:



And this is in case you thought i was bullshitting about moving to BC:



I hope this is enough to shut you up. If not please feel free to call me out on whatever you think i might be making up or have made up in the past.

Maybe you want to see my immigration documents? Who knows, i'm such a good story-teller, maybe i made up this whole story about being in Canada?! What about my birth certificate, maybe i'm an alien!



EDIT: I took off the links as i posted them in anger. I don't have anything to prove if you don't believe me stay out of this thread.


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## Getafix (Dec 29, 2014)

AltaRed said:


> I digress but I sometimes find the best way to get a really good fix on the character traits/personality of a member, especially those that seem to be erratic, is by reviewing a quick summary of the last 100 or so posts by that member. Fortunately, most brands of forum software make that pretty easy. Understanding a member makes for better crafted responses (or non-responses).


Feel free to go through any of my past posts & find one where i am trolling.


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## Getafix (Dec 29, 2014)

tkirk62 said:


> You have two grocery stores, which I don't think provides much diversification within the consumer sector. If you wanted one, I also would say Loblaw's is better, because they have the pharmacy exposure with Shopper's. I would switch out Metro for Loblaw's and Empire for Cineplex, which yields more and is in a different category than groceries.
> 
> Baytex could be in trouble. Without looking into it deeply, I wouldn't consider it. You are taking your high oil risk with CPG, so maybe switch out Baytex for Suncor. It is safe enough to survive and even thrive in this environment, and should recover nicely along with the rest of the Energy sector if oil prices ever increase. I think Crescent Point is the better risk, so you could move half of the Baytex allocation to CPG and half to Suncor.
> 
> ...


Thanks, i meant to reply to your post but H.P's post just riled me up! I actually had CGX in there but for some reason i forgot they give out a monthly dividend, so when i looked at the yield on my excel sheet (which was wrong) i took it out. 

I like Suncor but it's barely taken a hit, so there's not as much margin for recovery as the others. What are your thoughts on Husky?

It's hard to find dividend paying companies in health-care, will have another look at the one's you mentioned.

True, i had overlooked Railways, thanks for the recommendation will check it out.

BTB seems interesting & it wasn't on my radar, thanks for the tip!


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## Getafix (Dec 29, 2014)

tygrus said:


> Why wouldn't you just buy 2or 3 ETFs?


Are there any ETF's that will give the same diversification & also give out a 5% yield?


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## AltaRed (Jun 8, 2009)

Getafix said:


> Are there any ETF's that will give the same diversification & also give out a 5% yield?


5% yield is too high for ETFs based on equity market indices. That is simply because few robust, blue chip stocks for the buy and hold investor yield in excess of 5% over the long term and it would take many of them in an ETF for the ETF to yield that much. XDV is one of the closest at 4.25% or so (before MER). I don't think I own a single stock (other than perhaps a REIT) that yields in excess of 5%.


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## Getafix (Dec 29, 2014)

Thanks, i didn't think there were. To be honest my made up portfolio probably wouldn't make up 5% as well if it wasn't for the depressed oil stocks. You know the funny thing, my bank back home in Pakistan is currently paying me 5% interest in my savings account. It's also paid out monthly on the previous month's balance, which got me thinking should i even be bothering with taking a risk with this money when i'm already making that much just letting it sit in a savings account?

On the flip-side, the rate of inflation back home is pretty high & currency fluctuation also comes into play. Though since i've been here the PKR has gained against the Loonie & held steady against the dollar. 

Anyway, i'm keeping my research going but investing in the stock market is less appealing to me. It's not un-common to find businesses that claim to have a ROI of 2-2.5 years. Now finding one that's actually making what they're claiming to is the challenge. So why bother with a measly 5% return when i could potentially make 30-50%. I'm taking a bigger risk but enough due diligence & who knows. I certainly don't know any people that got rich saving a couple of grand every month, i do know a lot of people that got wealthy from starting or buying businesses though.


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## humble_pie (Jun 7, 2009)

fix do please stop being foolish. I am *not* going to look at your links in post No. 61; but if they contain any kind of personal information may i suggest that you delete them as rapidly as possible.

moving on, why would you be offended over the word storyteller? you've launched 4 different stories in something like 4 months, 5 if one includes toying with the idea of buying a house (an idea you promptly contradicted by saying you might move, therefore would not tie yourself down to a house purchase.)

others in this thread have underscored serious issues such as: need for licensed mechanics; difficulty finding, hiring & retaining qualified mechanics; auto shop owner should be a mechanic himself who is willing & able to repair cars on night shift; requirements for heavy insurance; current closures & cutbacks in automotive industry due to worsening recession; possible need for capital over & above $250k.

similar kinds of concerns apply to accredited professional day-care services.

the best suggestions in this thread are coming from readers who suggest that you invest your small legacy in a well-balanced ETF portfolio but continue with employment for at least another decade, meanwhile saving more $$ & allowing your portfolio to grow. Eventually, with fairly low levels of risk, you would indeed have enough to retire comfortably.

the need to support a young & growing family of dependents should be enough to cause any parent to create a financial plan wisely, calmly & rationally. This process does not include randomly popping strings of disparate ideas through anonymous internat chat boards.

also, in your case & actually thinking of the responsibilities involved in parenting a child, i'm somewhat concerned by the day-trading, since you mention you have only a few months' experience investing in north american stock markets.


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## Getafix (Dec 29, 2014)

I take offense because it implies that i am a liar & am doing this for some sort of kicks. What 4 stories have i started? Try and put yourself in my shoes, i am a recently landed immigrant who has to adjust to life in a new country. Obviously i'm going to explore my options, why should i be content with a 40k job when i know i'm capable of much more? I still haven't settled in, i don't own a house, i can pack my bags tomorrow & move to a new location. 

I respect your opinion & you're a senior member here but don't label me a troll just because i've started two different topics. I'm still confused as to which path to take, that doesn't make me a 'story-teller'.

As for being irresponsible with money, yes i admit i have been a little over-eager & made some foolish investment choices especially since i'm new to it. I don't like to disclose my whole life story on a forum, but like i said earlier i am not too concerned about my future wealth or assets, as i'm lucky to have a share in the family business. So i will eventually inherit even more, maybe that security is part of the reason why i'm inclined to take on more risk than the average person. 

As far as all the criticisms/problems mentioned in running an auto-franchise, most of those problems are non-issue's. The capital break-up i have already mentioned in a previous post, i can start with as little as 100k. Owner doesn't have to be a mechanic with this franchise, nor is there a problem with finding licensed mechanics, i've already mentioned this in previous posts. Obviously i will do my due-diligence when buying a business & am not going to just foolishly hand over my money. 

Having said that, an auto-franchise is not the be all and end all of business. At the end of the day the aim is to make money, i am open to any business that generates a decent cash flow & that i'm capable of running. So i will continue to explore my options, in the meantime i have a job that is paying the bills so i'm not digging into my savings.


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## humble_pie (Jun 7, 2009)

my goodness, i can see we have different ideas about the meaning of storyteller!

stories are usually good things. There are story stocks, storybook marriages, storybook lives, heroes who are celebrated in song & story.

like life, stories also have twists, turns, nuances, deeper meanings & sometimes a pinch of angel dust.

you mention you feel confused & confusion is the sense i get from your posts. There are 5 options going, all within weeks. Move to BC, buy an auto service franchise, set up a day care centre, buy a house, invest in stocks. Not a mixture of all 5, but a revolving selection of one, no maybe another, now another, then it's back to the 2nd option, then onto the 4th, then back to the 2nd again, then jump to the 5th ... now you have introduced a 6th choice (aka storyboard # 6) which is to leave the inherited funds where they presently are, in an asian bank ...

me i would have found it helpful if you had eliminated some preliminary options first, then asked the forum about 2 or at the most 3 clearly-defined choices.

btw no one ever used the "L" word or the "T" word. It was yourself who dialed the dialogue down.

i for one am deeply sympathetic to persons who feel ill at ease in their jobs, for one reason or another. This is a hugely important issue, it's been successfully discussed many times over in the forum, many persons do feel under-challenged or under-compensated or under-appreciated at work.


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## Getafix (Dec 29, 2014)

I admit not being able to decide on a clear path or decision is a big weakness of mine. It's one that drives my wife quite mad as well, because she knows i'll flip-flop between one thing & the next. This is the exact reason why i started this thread, thinking hearing other people's opinions might help me make up my mind.

As for all the options, i never brought up BC here. You reminded me of it & that was back in march when we were suffering from winter blue's, something which we were experiencing for the first time in our lives. In fact, even now, thinking that summer is almost over i have a certain sense of dread.

So really the only options that i brought up were what you have mentioned 1) Business, 2) Real Estate, 3) Stocks. Towards which i have received various responses, majority being towards stocks, then real estate or perhaps a mixture of both. I still largely remain convinced that business is the right option for me. 

Finally yes i do feel under-challenged at work, mainly because i took a step backwards when coming here. I went from managing hundreds of staff & multiple businesses at one time, to looking after one business as an Assistant General Manager. I keep doing it because it pays the bills but i'm certainly not happy with it. I was content to keep on doing it for a while but now fate has ended up giving me a small gift. Which can maybe help open up a few more doors if i play my cards right.


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## janus10 (Nov 7, 2013)

Getafix said:


> Besides, labor only makes 1/3rd of their total revenue, 1/3rd is made from tires....


It's interesting that when you first mentioned tires I had a strong reaction. Now that you've mentioned it a second time, I'll volunteer my own opinion.

First, who cares how much they contribute to revenue - how much do they contribute to profit? My local service centre used to be a Goodyear location but has been independently owned for probably a decade now. They have 5 service bays and their office is filled with tired and rims. I not only give these guys all of our service business, I'd have no problem recommending them.

But, I will not buy tires from them. Ever.

Tires are a commodity. With (apparently) low margins. There is a well known business that only deals with tires and rims. They are always busy with business and, based on the exotic cars in the parking lot, do not cater to only those who can't afford a lot.

Their price, out the door to me, is less than my service centre can buy them. In today's Internet age, with any commodity, there will be an increasing shift to the provider who has the best value and can fulfill orders quickly. 

When it comes to tires, I know of people who will even drive to the U.S. if they are close to the border and buy them there if the economics make sense. Or, buy and ship them and have a local shop install and balance them.

Now, I may be an outlier, because there are times when my service centre will quote me the price for a part and I'll source it myself in the U.S. if I happen to be travelling there because it's half the cost.

Maybe your city doesn't have a lot of competition in a Bricks and Mortar way, but at least when it comes to tires, I'd be thinking very hard about what happens if people increasingly find a cheaper supplier when they aren't desperate because of a flat.

On the positive side, I never see the owner of the service centre anymore. Either he is off tending to other business, or he is doing well enough to let one of his mechanics run the place. It's lost some of the personal touch (his wife would call a day after service to ask how the experience was) but the manager is a good, down to earth guy who never takes advantage of us. Every service experience that has left that impression has only got our money once.

Good luck with the decision on how to best utilize the money.


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## Getafix (Dec 29, 2014)

Thanks for the post, it proves what i'm saying that not every shop is a mom & pop place with the owner wrenching himself. Big places that generate a million plus in sales & have 5-6 bays, can afford to have enough mechanics that do all the technical work for them. This leaves the owner to focus on the management side.

Anyway to answer your question, tires are indeed the lowest margin item. Here's the break-up of gross-profits:
Tires 20%
Labor 55%
Parts 40%
Overall Gross Profit 38%

I have not compared their retail prices to shops that are just selling tires but i imagine it would be competitive. Since they're a Canadian chain with over 70+ outlets they can buy in bulk & get better prices. They even have their own tire brand, just to give you an idea of their size.


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## AltaRed (Jun 8, 2009)

Getafix said:


> So really the only options that i brought up were what you have mentioned 1) Business, 2) Real Estate, 3) Stocks. Towards which i have received various responses, majority being towards stocks, then real estate or perhaps a mixture of both. I still largely remain convinced that business is the right option for me.


I thiink you are mixing things in your various posts. Your financial plan leading to a robust retirement is separate from the way you make the money to fund it. It is not Business vs Real Estate vs Stocks. You decide how you are going to make the money which right now is your salary (but could be different goiing forward) and it is those earnings which are then divided into your expenses for everyday living, and your savings (towards your retirement plan).


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## jollybear (Jun 28, 2015)

Getafix said:


> Thanks for the post, it proves what i'm saying that not every shop is a mom & pop place with the owner wrenching himself. Big places that generate a million plus in sales & have 5-6 bays, can afford to have enough mechanics that do all the technical work for them. This leaves the owner to focus on the management side.
> 
> Anyway to answer your question, tires are indeed the lowest margin item. Here's the break-up of gross-profits:
> Tires 20%
> ...


In response to your first paragraph........that may be true BUT I guarantee you that 99% of those shop owners have the mechanical ability to step in the first time there is an issue, and with your plan of hiring newly trained auto mechanics from the franchise training center, that will be on day one! Most automotive repairs have a twist and never go as planned......it takes years of experience to be able to decide the most effective route of solving mechanical problems and to know most "tricks of the trade" For example: What happens when you sell a simple job such as a tune-up and your junior mechanic breaks a spark plug off in the cylinder head because he was unaware that could happen if he torqued on it too hard. Who removes (or for that matter, has the proper tools) to remove it before you`re paying for a $4000 engine rebuild? That`s just one example of the multitude of issues mechanical shops face everyday. 

The fact that you`re not a licenced mechanic and are not currently in the profession is another massive red flag. It sounds like you have some mechanical ability from reading your previous posts on this thread so I`d suggest working in the automotive trade in Canada to get a feel for it and see first hand the equipment, experience and actual investment it takes to be successful.

The issues with owning a franchise and the fact you`re planning on investing (and storing) 75k in tire inventory further cement my opinion. Save your 75k......you'll spend it day one on basic diagnostic equipment and a few tools your junior techs won`t have the funds to buy.


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## Getafix (Dec 29, 2014)

I agree with the possible complications, i've been a big car nut since i was a kid & have owned & repaired my fair share of lemon's. Just to clarify this franchise does very routine maintenance, stuff like oil changes, brakes, tune-up, shocks, alignment & cooling. Rest of the stuff is selling parts like tires, wheels, batteries etc. So there's very little chances of major screw up's when you're doing routine maintenance like that. If they're trained properly they will definitely know how to use a torque wrench. 

Also as i already mentioned if i do buy one, i will go for an existing franchise that has been operating for a few years. Not only does this help give an idea of the revenue being generated but it also means they have a solid team in place to carry out their daily tasks. I would also have to go through a few weeks of training at their center. 

Of course every business comes with it's own unique challenges & i'm sure there will be plenty with this one. It's not rocket science at the end of the day though. As for having to buy equipment, i already mentioned that you lease $125k worth of equipment from the company. It's not like those independents where each mechanic has to bring his own set of tools.


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## LBCfan (Jan 13, 2011)

Getafix said:


> ....Just to clarify this franchise does very routine maintenance, stuff like oil changes, brakes, *tune-up,* shocks, alignment & cooling. .....
> 
> .....
> Of course every business comes with it's own unique challenges & i'm sure there will be plenty with this one. It's not rocket science at the end of the day though. As for having to buy equipment, i already mentioned that you lease $125k worth of equipment from the company. It's not like those independents where each mechanic has to bring his own set of tools.


Thoughts:
Tune up: like spark plugs in a Ford 4.6 or 5.4? Yep just about 2 minutes/cyl but we'll charge a flat 2 hr. How can that business model fail?

$125K of tools is a starter set. Does it include a pair of pliers? I bet I have $10K of tools in my garage. No electronics. No specialized stuff. A good hoist is $10K (did you say 5 bays)? To deal with modern cars I think you'd need some expensive stuff. How much do you think the alignment tools cost? 

Ya, it's not rocket science at the end of the day. However, if you are meeting the customer, you'd better know more about cars than she does. Do you?


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## jollybear (Jun 28, 2015)

Well said LBCfan! What could possibly go wrong the first time a BMW or Mercedes rolls into the shop with a check engine light on and has a slight misfire??? That`s just basic tune-up stuff correct? Your customer will want it fixed because it`s already at your shop getting winter/summer tires switched. Then what??? Getafix if you think there is anything "basic" about suspension work, brake jobs or tune-ups on today's advanced vehicles you are sadly mistaken!

As I said before, I co-own a dealership with over 100 pre-owned vehicles that has a shop to service/recondition our own vehicles as well as customers. I live this business daily and have done so for 3 decades. I wouldn`t consider trying to step into a franchise automotive service/parts business with big overhead in your current situation. There are many safer and more efficient ways of investing 250k even if you want to stay in the automotive field i.e mobile tire service, paintless dent repair, mobile automotive key cutting to name a few. 

I applaud your entrepreneurial spirit and wish you the best!


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## 1980z28 (Mar 4, 2010)

I can tell you parts are marked up much more than 40%

I have 2 tool boxes empty is about 13k
After filling with snap on and mac maybe another 35k,after 37 years doing this,apprentices have to get large credit

Just saying


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## Financialplannerdude (Apr 30, 2015)

Not sure if you’re interested but I was in the same position as yourself a few years back. Came into a large inheritance and being as I’ve always fancied myself a bit of a trader decided to try my hand at the market. Put a bit into penny stocks and the remainder into Canadian dividend stocks. Promptly lost half my investment in penny stocks! For CDN stocks I was a reader of Canadian Money Saver and I liked David Stanely’s Beating the TSX so decided to go that way. The problem I found is that it’s a great investing philosophy but a lousy trading one. There simply aren’t enough good quality stocks out there and rebalancing is a real pain. 

I did take a serious look south of the border as at this time Garth Turner was screaming, to much derision I should add, to sell Canada and buy America. The problem is and was that the US market is just so massive that honestly hard to know where to even begin (didn’t know about non hedged ETFs back then). In the end I sold everything (talk of a coming crash) and put a chuck of it into German real estate (a story for another thread) and the balance into REITs. 

Around the same time my Wife’s LIRA was sitting there not doing much (in a long term bond that was sitting on a fat capital gain due to falling interest rates) so, again, being a big fan of Garth Turner decided to follow his advice and move it all into a balanced portfolio - as it’s her money I tend to be much more conservative than I might have been if it were my money. I split her money 4 ways bond, Canada US and Rest of the world. I did make one concession in that I choose XEI (dividend ETF) over a broad market ETF. 

If I could do it all again here’s what I’d do differently. 


1. don’t trade - trading is for losers
2. don’t chase yield - got burnt on FAP nearly burnt on Penngrowth)
3. Take half and buy quality dividend growth stocks (there are perhaps no more than a dozen of those in Canada) 
4. The rest, into a into a balanced portfolio rebalancing as needed.

During bull markets (2012 - 2014) you’ll kick yourself for not buying more stocks, during a correction like we’re in now you’ll be thankful that you’re so well diversified. 

Just my 2 cents


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## Getafix (Dec 29, 2014)

Sorry guys been caught up with work & didn't have time to check in. I appreciate people playing the devil's advocate with regards to my idea. I have to admit i'm a little less enthused about the prospects now. Considering the fact that people who are already in this trade are advising against it. 

With the current state of the global markets i can't bring myself to plunk down a quarter of a million on equities either. Especially since my existing portfolio is taking such a beating. I am hoping that all these global events play themselves out so i can be a little more confident, there's way too much uncertainty for me right now. 

So i think i'm going to take some more time & weigh out my options a little more. I am continuing to look for businesses that are in my area of expertise (hospitality/retail) but 250k isn't enough capital for the businesses that interest me. Will keep you guys posted if something interesting comes up.


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## Getafix (Dec 29, 2014)

So it took a while but i finally have the inheritance funds in my account back home. I wanted to know if i'm obliged to inform my bank or CRA before a large wire transfer comes in to my account ($100k U.S)? Thought i would ask here instead of starting a new thread.


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## Taraz (Nov 24, 2013)

Getafix said:


> So my family has sold off some property back home & i am due to receive my share from the sale. With the savings i have currently, i will have close to 250k. I have currently maxed out both mine & my wife's TFSA & have zero debt. I'm currently employed but do not really make that much (40k) so i'm thinking of using this money to generate enough income so i can quit my job & live comfortably.


If you're not a mechanic, I think it would be a bad idea to open an automotive repair franchise. If that's what you want to do for a living (be a mechanic), and you have some experience, why not spend a small amount of the money on school and/or an apprenticeship to become a mechanic, then invest the rest? You'll make a lot more money and have a lot less stress. 

Don't put all of the money into the market at once - just ease in buying $20 k or so per month. That way you'll spread out the risk a bit. You can buy index funds / ETFs if you don't have the right mindset to deal with the stress of single stocks.


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## Getafix (Dec 29, 2014)

Well it wasn't an automotive repair franchise, it was just tire sales & regular maintenance like oil changes, brakes etc. Anyway as i mentioned in my previous post i've already been talked out of it by members on CMF that are from this industry. I'm still looking around for other opportunities, although not as actively as i landed a new job around 2.5 months ago which has kept me pretty busy and content for the moment.

At the moment i want to get all the funds together, then i'll try and figure out the best way to invest the money. Which is why i wanted to know if i'm legally obliged to report the incoming bank transfer to the relevant authorities?


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## LBCfan (Jan 13, 2011)

You are not expected to explain any deposits proactively. Your bank may be required to report them. Those who get the reports can usually figure it out. Ie. Joe deposited a 6 digit cheque, it came from a lawyer's trust account. Might be a inheritance but most likely Joe is a vile drug dealer. Sorry, no sarcasm font available when needed.


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## Karlhungus (Oct 4, 2013)

You say you want to spend more time with your family, I agree with other posters, this small business idea will get you working 70+ hours per week and much less time with the family. I would also advise a passive investing approach, Canadian Couch Potato or something of the sort. Everyone wants to retire at some point, and you have a good head start if you invest wisely. 

You want to quit your job and live comfortably, I would say dont try to hit a homerun with a business idea. Just stick with your job, cut spending, increase income and continue to invest. Read money mustache. He advocates that you need minimum 25x your annual spending to be able to retire. Lets call it 30x to be safe. Whats your annual spending? IF you can get it down to 30k, you'll need $900,000 assuming a 4% withdrawl rate and you're good to go. With the 250k inheritance plus your other investments I'd say you got a pretty good head start. You could probably do it in 10 years or less.


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## lonewolf (Jun 12, 2012)

james4beach said:


> The common belief is that over the long term (20+ years), stocks return on average 4% to 8% per year. That's if you stay invested long term in a broad index like the TSX Composite or S&P 500. And I agree with this ... stay invested long term, in the index, and that's likely what will happen.
> 
> But in the short term -- the next few years -- who knows. There is NO stock you can buy that will assure you a 5% total return over the next few years. QUOTE]
> 
> The common belief in 1980 was for gold to rally do to inflation. The believe was right, there was inflation but not enough inflation to keep up with market expectations so gold declined for well over a decade


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## indexxx (Oct 31, 2011)

I'd probably do something random and impetuous for fun and karma- just to make someone's day! Like, you know, giving five grand to a stranger with the funniest icon on some forum...


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## Karen (Jul 24, 2010)

CrashTestSnoopy said:


> Mortgages aren't death sentences. Here in Canada, real estate appreciates in value and you can sell anytime. Look at the homes in North York 5 years ago, crappy properties were going for 500k. Now they go for 1m+...


It always amuses me when I read comments like this; obviously, many young Canadians never lived through the several real estate crashes that have occurred during my adult years. For example, in the early 1980s, when I was divorced, my house, that I had paid $180,000 for a few years earlier, was sold for $120,000. The way property values have been doing nothing but increasing in recent years, it's easy for young people to think that trend will inevitably continue, but let me assure me, one of these days they will get a sad surprise.


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## Karen (Jul 24, 2010)

Getafix said:


> ... another dilemma is i will get the money in U.S $, so now i also have to figure out when the best time is to convert it to CAD $!


I recently inherited $30,000 U.S. from my aunt, who died at 90 in Oregon. I converted it to Canadian dollars in blocks of $5000 every time the Canadian dollar dropped below 75 cents, so my $30,000 inheritance ended up being nearly $39,000 Canadian. I was delighted with that!


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