# What would you do in my situation? ( Young and saved money )



## kevinlk (Jul 9, 2009)

Hi,

I've chosen to write this topic in order to have an idea about what you would do in my situation. I've read most of the MDJ blog, as well as several other websites, but the more I read about it, the less confidence I have to actually do something. With the current economic crisis, this could easily turn into one-of-a-lifetime opportunity, and staying on the sidelines isn't a valid option.

Here is my background:

I recently turned 22 and am working in downtown Montreal at a job paying me 33k/year. I currently live in a 4 and a half appartment at 630/month and I'm renting a room in it. I'm single and don't have any kids.

Here are my assets: 36000$ in cash rotting in bank accounts, a car worth about 3000$ now. I don't have any RRSP, no TSFA ( Yeah, I really need to get one! ). I just started out a non-registered account at work, a stock offering at 2% matched by the company, which I took. The company doesn't pay dividends and the growth seems limited. In any case, that account has virtually nothing at the moment.

My liabilities are a student loan of 16000$ currently at 3.3% ( not locked ).

My budget averages out on the course of the year at around 400$/month free. It may be higher as I don't take into account tax returns, etc.

My goals in life : I don't have any particular goal at the moment. I would like to retire early, although I don't expect to have any expensive hobby during the course of my life ( although that may change, but knowing myself, it's unlikely ). I currently don't want kids until I'm maybe 27, and by then, I'll see if I want any or not.

I've looked to buy real estate in Montreal ( a condo where I could rent a room, a duplex or whatever ), but by the time I started looking them ( around the same time last year ), prices don't seem to have went down at all. I'm not the handy type of person also. I've looked into Reits, but with the real estate crash ( and from what I've read, the crash is likely not at the bottom yet ), I'm more or less afraid to see Reits with interesting yields ( 5+% ) go bottom-up.

I've looked into dividend stocks, mainly banks. But, with the RE and credit crisis worsening, is it safe to invest in them? I'm not afraid of them going bankrupt, but more like seeing them reduce dividends greatly, bringing the stock prices way down.

I've looked quickly bonds, but they're not really interesting due to very low yields. With the upcoming inflation that is likely coming, RRBs could be an option, but I would need to read more about them.

I've also looked in starting my own business over the Internet ( I have tons of free time at work (2-3 hours a day), but I haven't found anything that could work, most ideas I've had being already realized, and free to the general public.

That's pretty much a good summary of my situation right now. Knowing this, what would you do if you were me?

If you have questions, feel free to ask them, I'll try to answer them quickly enough.

P.S. FT, if you want to use this post for your blog as part of the reader's mail, feel free to do so. I enjoy reading the discussions there .


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## Cal (Jun 17, 2009)

I would go talk to your bank financial advisor, and at least 2 independant FA's, just to get a better idea of where they think you are at.

I wouldn't commit to working with any of them. Just get a better idea of their recommendations, and digest that for a bit of time, before you make your own informed decision.


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## el oro (Jun 16, 2009)

You sound a bit like me not too long ago so I'll tell you what I did and am doing.

I started out renting as well. Then a friend of mine asked me to buy a large house with them and split it 50/50. Now I've got a large house with a few rooms rented out and the rental income > mortgage payments by a few hundred or so per month. (I wouldn't have bought without rental income).

Imo, hyperinflation will solve the credit crisis. So, I've maxed out my TFSA, RRSP, and put the rest into an unregistered account and invested with inflation in mind. All accounts are self-directed.

I hope to have my own business one day as well. Right now I'm just keeping my eyes open for opportunities. I really hope I'm not working for someone else 10 years from now.

If you're not going to move your money, paying off your debts is better than leaving it in the bank. But I assume you want to.

And ditto what rookie said.


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## kevinlk (Jul 9, 2009)

I've thought about buying real estate with someone and rent it with someone. However, from what I've seen in Montreal, on a number of websites I've visited, real estate is still pretty expensive in Montreal : ( rent barely paying out mortgage, taxes, maintenance, etc ). Another problem is finding someone with who to buy something. Either they don't have enough money, they're not willing to commit themselves to living to a place, or don't want to rent rooms to others. I guess that's where a spouse could come in handy  .

I often look for new houses/condos on sale in case I see a bargain well located, but nothing satisfying so far.



About consulting a FA, I've been thinking about doing it, but I thought I would post here first, as I kind of know already a few people here ( Never posted, but I've read the forum/blogs a lot, so dealing with people that I've seen their opinions on various topics is more reassuring than seeing a FA ( especially the bank one ) who is more willing to sell you mutual funds than anything else. I think an independant FA would be the way to go for me.


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## ashby corner (Jun 15, 2009)

in all seroiusness, I think I'd pay off the student loan 100%. Then you're debt free.

Do like 1600 gold guy did, and "chip in" on a house. Even with a few friends. You have to live somewhere.


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## kevinlk (Jul 9, 2009)

The 16k debt is at 3.3% at the moment. I'm pretty sure that 16k can be put to better use ( of course, not rotting in the bank ) and provide a higher return than that. Any mortgage would have a higher rate than the one of my student loan, so it could be considered "good debt".


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## gwcanuck (Apr 27, 2009)

You didn't mention how much available RRSP room you have.

Here's what I'd do:
1 - top up RRSP with your $36k cash.
2 - take the tax refund plus whatever other cash it takes and pay off the student loan.
3 - take $5k and open your TFSA.
4 - continue with your employer's plan, their matching money is a 2% bonus. If they have a payroll RRSP plan and you like the fund choices, setup regular RRSP deductions there. Otherwise setup with your bank or a planner.
5 - setup automatic deductions so that you're setting aside 15% of your gross pay. Put the money into equity/bond+cash using 110-age as the % going to equity. In your case that would be around 90% equity.

Keep an eye on the value of your employer's stock. If it exceeds 10% of your assets, sell some.

Follow the advice from others and interview a few planners. Pick one and use them.

Won't be long and your net worth will take off. You are asking the right questions and seem like a financially astute 22 year old. Good luck.


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## Taxsaver (Jun 7, 2009)

ashby corner said:


> in all seroiusness, I think I'd pay off the student loan 100%. Then you're debt free.
> 
> Do like 1600 gold guy did, and "chip in" on a house. Even with a few friends. You have to live somewhere.


I love the "Chip in" idea for a house! Thanks. I've already started talking about it to various people. As you save up money, you may buy one of the co-owner's part in the house. Eventually, the whole house may be yours.

But what happens when one can no longer pay for his part of the mortgage???


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## steve41 (Apr 18, 2009)

I've seen a lot of financial plans. Individuals almost always start planning/saving later in their working life. The reasons are... 

Early on you are involved in acquiring a home and mortgage and busy paying down student debt. Finally, when you run a financial plan, few people take note of the fact that salaries don't rise with inflation, they increase at a much higher rate (career advancement) You will have much more discretionary cash in your later career.

My advice is to not sweat the fact that in your mid-30s you still have not accumulated much of a nest egg. You will be making it up in the latter part of you career.

Just my two cents.


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## stephenheath (Apr 3, 2009)

Mostly I agree with gwcanucks post except for three things.

1) I personally would put the $5k into your TFSA first, which is entirely an opinion thing, but my reasoning is (a) that at retirement, I'd rather draw from a TFSA than a RRIF, and (b) until then, it's accessible for anything like buying a house or having as an emergency fund.

2) I realize it's not likely that you have 36k of contribution room, since 33k/year gives you 6k/year of RRSP room, so you'd have to have been making that much since you were 16. That said, you don't want to put more in in a single year than you get tax breaks from. Let's say at $12k income you pay no taxes... then the most you would want to put in a single year would be $21k, with the remainder going in the next year. Other than that little technicality, I agree with gwcanuck on maxxing out the RRSP.

3) Again, this point is purely opinion, but I personally wouldn't even keep 10% of your portfolio in your company's assets if you can sell the stock (ie, no vesting rules). Sure, the match (which I'm assuming you mean is 100% match up to 2% of your salary, not a 2% match of your purchases, which would be useless considering the risk vs. reward) is nice, but I've had two close friends build up good chunks of company stock... and those paid dividends and/or grew a bit... only to have the company go bankrupt and in both cases, they lost their nest egg AND their salary at the same time, which is a brutal double-hit. In this case, you aren't even getting dividends or growth potential, so why hold the stocks? Get the match and cash out.


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## MoneyGal (Apr 24, 2009)

SH: you can put as much into your RRSP as you have contribution room (plus a $2000 overcontribution). 

This is different from taking the deduction. 

Generally speaking, if you have the room and the funds, put the contribution in - and then take only the deduction which is most tax-efficient (i.e., brings you down one tax bracket).


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## MoneyGal (Apr 24, 2009)

And I totally (TOTALLY) agree with the recommendation to get the company stock and cash it out immediately. 

For me, it's all about hedging personal risk. You already have a lot of exposure to that company (through your salary) - instead of taking on *more* exposure, look for a negatively-correlated asset (or that's what I would do). 

(Note Rickson: I did not say "diversify".)

Sometimes I think people get taken aback when the company's share price drops AND they lose their jobs. Hey - those things are actually correlated.


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## Cal (Jun 17, 2009)

You might want to check out www.greaterfool.ca for the pessimists side of Real Estate prices. You seem to have the same opinion.

If you want the optimists opinion of RE just call a local RE agent. They will always give you lots of reasons to buy a house.


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## kevinlk (Jul 9, 2009)

Thanks everyone for the help!

I'll have to verify if I can take the company stocks out right away
with no penalties. Doesn't make much sense to keep that company stock, especially since it's a low growth with no dividends. Keeps the risk away from company trouble hitting both salary/stocks.

As for RRSP room contribution, I've started this job one year and a half ago, and had several low-paying jobs before. I think I would have around 15k contribution room that I should fill out. I would have to fill out 5k to the TFSA and invest the rest in non-registered portfolio with investments less taxed than what would be in the registered portfolios ( if I remember correctly from my reading on MDJ, that would be dividends stocks ).

As for investing, what would you suggest? As a broker, I've seen Questrade on MDJ, but there's been so many complaints about them that I don't think they're a valid option for worry-free investing. If I could avoid the big banks with their 29$/trade fees, that would be good too. I've seen a few other brokers, like Scotia E-trade, Credential Direct, Qtrade and TradeFreedom that both offer RRSP and TFSA and has no maintenance fees for less than an 100k account. I've seen the reviews, but I'm still kind of undecided. Knowing the amount I have to invest and that I'm not looking into heavy trading, would you have any preference ( by personnal preference, or other ) in a particular broker?

As for the stocks, with the money I have, as well as the company knowledge I have ( which is limited ), I'm assuming I'm better off to buy an ETF than actual stocks, in order to diversify and minimize risks. Any suggestion for low risk/mid reward etfs? I'm definately not looking for a grand slam, and the investment will probably be there until I find a good opportunity in the real estate market and/or people willing to invest in a shared propriety, which may or may not take a while.

Again, thanks everyone for the help .


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## kevinlk (Jul 9, 2009)

rookie888 said:


> You might want to check out www.greaterfool.ca for the pessimists side of Real Estate prices. You seem to have the same opinion.
> 
> If you want the optimists opinion of RE just call a local RE agent. They will always give you lots of reasons to buy a house.


Thanks for the link, I haven't seen that site before.

Yeah, I'm not really optimistic with RE, I more or less think there will be more delinquancies because of the higher % of the jobless population, and it keeps going up. People who buys now are using very low interest rates, but with the most likely future inflation, are those who didn't lock their interest rate able to afford the payments, which would then make even more delinquancies. Ultimately, with the baby-boomers more or less soon retiring, they'll either go in retirement houses, live elsewhere ( Florida mobile homes are dirt cheap, as seen from another thread here ), or ultimately die, leaving a lot more houses on the market. That's what I think will happen in mid-term ( 10-20 years ). But meh, I'm no expert, that's just my opinion .


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## FrugalTrader (Oct 13, 2008)

Kevin,

Congrats on the big savings. Now it's time to put it to work! If it were me, I would take some cash and pay off the student debt. I'm hesitant to suggest the RRSP as you are in the lowest tax bracket in Quebec. However, if you expect higher income in the future, you could deposit the money in an RRSP account and claim the tax deduction _*later*_ during a higher income year. 

As well, since you plan to purchasing real estate in the future, you can take advantage of the RRSP Home buyers plan.

If you plan to invest, then opening a TFSA will make the most sense as your gains will be tax sheltered. If you want to invest for the long term, you may want to look at some indexing strategies with ETF's.

Hope this helps!


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## Dave (Apr 5, 2009)

FrugalTrader said:


> However, if you expect higher income in the future, you could deposit the money in an RRSP account and claim the tax deduction _*later*_ during a higher income year.



I know that it will sound like a stupid question, but how can you use a deduction later ? For eg, if you make a 10K RRSP contribution, the broker sends you one tax receipt for 10K. So if you claim only 5K, will they believe you later that you are claiming the reminder of an unused deduction ?

Dave (also no RRSP)


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## MoneyGal (Apr 24, 2009)

CRA knows that you made the contribution, but they don't require you to take the tax deduction in any given year. 

You complete a Schedule 7 to record the contribution and carry it forward to a future year.


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## FrugalTrader (Oct 13, 2008)

MoneyGal said:


> CRA knows that you made the contribution, but they don't require you to take the tax deduction in any given year.
> 
> You complete a Schedule 7 to record the contribution and carry it forward to a future year.


+1 Thanks for the detailed explanation MoneyGal.


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## stephenheath (Apr 3, 2009)

MoneyGal: Good catch, thanks, I had forgotten all about the opportunity to do that! The main thing I was thinking of was not taking the deduction when you are already at zero taxes... the tax man won't be nice and point out you're losing out 

And Kevin, personally I use Qtrade, although I've only used it for stocks, not mutual funds, bonds or GIC's yet. It actually does have a yearly fee if your RRSP is less than $15k, but there is no fee for the TFSA or your regular accounts. It's not $29 per trade like the banks, but it's not as cheap as questrade either... it's $19 per trade until you have over $100,000 in assets, and then it drops to $9.99 like the others. That said, if you aren't going to do too many trades I'd still think about using them because their customer service is EXCELLENT and they are very patient with newbie questions. I've never called without someone answering the phone and being able to help me (no lousy nested voicemail menus), and email questions are answered fairly promptly (generally within the hour). Since I only do 5-6 trades per year at the moment, I consider that $50 a cheap price for great service, and in a few years I'll be over the $100k mark and get the low prices anyway. (Well, if my stocks would ever stop dropping in value I will be  ).


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## OhGreatGuru (May 24, 2009)

rookie888 said:


> I would go talk to your bank financial advisor, and at least 2 independant FA's, just to get a better idea of where they think you are at.
> 
> I wouldn't commit to working with any of them. Just get a better idea of their recommendations, and digest that for a bit of time, before you make your own informed decision.


A couple of quick thoughts: Bank "financial advisors" are generally only capable of advising you on which of their mutual funds you should buy, and some of them aren't too good at that. But it can't hurt to ask. Independent FAs don't give out detailed advice for free - that's how they earn their living. And it's hard to justify paying one on an income of $33k/yr.


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## OhGreatGuru (May 24, 2009)

stephenheath said:


> Mostly I agree with gwcanucks post except for three things.
> 
> 3) Again, this point is purely opinion, but I personally wouldn't even keep 10% of your portfolio in your company's assets if you can sell the stock (ie, no vesting rules). Sure, the match (which I'm assuming you mean is 100% match up to 2% of your salary, not a 2% match of your purchases, which would be useless considering the risk vs. reward) is nice, but I've had two close friends build up good chunks of company stock... and those paid dividends and/or grew a bit... only to have the company go bankrupt and in both cases, they lost their nest egg AND their salary at the same time, which is a brutal double-hit. In this case, you aren't even getting dividends or growth potential, so why hold the stocks? Get the match and cash out.


I agree - don't invest in the company you work for, unless you are allowed to promptly flip the stock and invest it elsewhere. It's bad risk management. There are thousands of Nortel employees who made that mistake, and lost both their jobs and their portfolios.


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## OhGreatGuru (May 24, 2009)

FrugalTrader said:


> Kevin,
> 
> If it were me, I would take some cash and pay off the student debt. I'm hesitant to suggest the RRSP as you are in the lowest tax bracket in Quebec. However, if you expect higher income in the future, you could deposit the money in an RRSP account and claim the tax deduction _*later*_ during a higher income year.
> 
> ...


I agree. 3.3% on the student loan may look cheap, but it is more than you can earn on any guaranteed, fixed income investment at the moment, which is what you need to compare it to (not to what long-term returns are on the stock market). OP has demonstrated good fiscal management to have saved $36K so soon after college, on his income, and with $16K student loans. My advice would be to pay the student loans first.

Open a TFSA immediately with $5k.

There are a number of threads discussing pros & cons of investing in RRSPs when you are in lowest tax bracket. Read them & think it over. But if you can spare the cash it is probably your safest & best investment, next to paying down debt.


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## Germack (Apr 4, 2009)

Pay down your debts (student loan), spend less than you earn, invest your savings in a low cost diversified portfolio (ETFs, TD e-series index funds, Reits etc) and stick to the plan. Do not try to time the market or put all your eggs into one basket and control your emotions. 

If you follow these steps you will do great. Investing your money is quite easy


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## kevinlk (Jul 9, 2009)

stephenheath said:


> And Kevin, personally I use Qtrade, although I've only used it for stocks, not mutual funds, bonds or GIC's yet. It actually does have a yearly fee if your RRSP is less than $15k, but there is no fee for the TFSA or your regular accounts. It's not $29 per trade like the banks, but it's not as cheap as questrade either... it's $19 per trade until you have over $100,000 in assets, and then it drops to $9.99 like the others. That said, if you aren't going to do too many trades I'd still think about using them because their customer service is EXCELLENT and they are very patient with newbie questions. I've never called without someone answering the phone and being able to help me (no lousy nested voicemail menus), and email questions are answered fairly promptly (generally within the hour). Since I only do 5-6 trades per year at the moment, I consider that $50 a cheap price for great service, and in a few years I'll be over the $100k mark and get the low prices anyway. (Well, if my stocks would ever stop dropping in value I will be  ).



Thanks! I'll definately take a look at Qtrade.



Frugaltrader said:


> I'm hesitant to suggest the RRSP as you are in the lowest tax bracket in Quebec. However, if you expect higher income in the future, you could deposit the money in an RRSP account and claim the tax deduction later during a higher income year.


I agree with you that I could claim the tax deduction later. The good news is that I've been told today that I'm probably going to be offered a promotion soon that would bump me up to the 38-39k salary ( easily in the 40ks with "forced overtime" ( pager ) ). 




Seems like a general consensus would be to pay off the student loan. I'll look to fill up a TFSA, pay off the student loan and use the rest for a RRSP, while keeping some cash on hand.

As per Stephen, Qtrade seems to be a worry-free broker with excellent customer service. Sure, it's a bit more expensive, but if it's worry-free, that's quite worth the price.

As for investments, ETFs seem to be the option of choice by many, I'll do some research to see in which one I should put my money in.

Thanks everyone!


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## specialk (Jul 14, 2009)

1)Write a cheque and pay off the loan asap! So many people pay too much attention to the mathematics and completely overlook risk, peace of mind, and your monthly cashflow being tied up in your monthly payment.
2)With your remainder 20,000 decide how much of that you feel comfortable with leaving in separate account for an emergency fund. 3-6 months worth of expenses is recommended. Maybe you are comfortable with leaving the whole 20,000. My guess is 10,000 give or take would be plenty in your case.
3)Anything left over you set aside towards a down payment on a house. You can put that in a tfsa if you want to, your choice.
4)Begin setting aside 15 percent of your take home (not gross) in long term savings through a tfsa first, then spill over into an rrsp if you have more money.

Your rent is perfect for your income right now, just hang in there and don't be in a hurry to get into a real estate situation with friends, it is a recipe for disaster. It always sounds good in theory, but most of these cases fail in the long run and ruin friendships and relationships. 
I would do all of this stuff first before thinking about investing, although it is ok to at least get the match from work, but don't go beyond that.


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## junkyardbottles (Apr 3, 2009)

+1 on paying off the loan. It's not a "good" loan so I am not sure why you'd keep it. 3.3% interest is a fair bit...

+1 on 5K in TFSA. 

I wouldn't recommend putting any RRSP - your tax bracket is so low and you're just starting out. You're better off investing in canadian companies with dividends (favorable tax rate)...


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## kevinlk (Jul 9, 2009)

Hey everyone, just thought I would join in to give a small update, as I know that it can be sometimes interesting to re-visit old cases.

I currently remain a single person living with no kid (and not planning for any in the future, unless I get a change of mind). Since then, my pay has increased from 33k to 44k, which ends up being more or less 50k with on-call pager primes and overtime. I still live in the same apartment, which has since then increased form 630$/month to 710$/month, from which I still rent a room to halve the price. I decided to not buy any real estate so far, for the simple reason that from an economical perspective, it doesn't make too much sense at the current prices for condos/houses. The mortgage, as well as taxes, fees and repairs will far excess what I currently pay in rent, and I don't yearn for more.

I've managed, through savings, to increase my assets to 100k, from the 36k amount three and a half years ago. It would have been more, but I had to pay out around 12k for dental/gum work earlier this year, which I'll be able to put into my income tax report next year. The student loan wasn't paid and now stands at 12k, with the monthly payments, for the reason that I preferred to fill out the TFSA and RRSP and invest the money instead. As I can currently save more than what I can put in in a TFSA and RRSP, I'll have to see whether I want to put the additional money within a non-tax protected account or on the loan. Investments are mostly within blue chip dividend payers, as I've been steering away from bonds due to the very low interest-rate environment we see at this time.

I haven't touched the company stocks, which grew over time to 10k part due to growth and part due to contributions. I don't include the 10k within the 100k assets but more as a bonus to what I have. It may not be a bad idea to cash out those stocks for the sake of having a capital gain, as I'll be having a lot of tax credits this year due to the 8k in the RRSP and the 12k dental work. Definitely something I'll be looking over the next few days/weeks.

Otherwise, goals haven't been set up yet. I'll soon have saved enough for a theorical retirement at 65, so I'll have the option to save more to retire earlier or look for other projects, or even take a year off (especially if my job is outsourced) for the sake of seeing if I can find unorthodox jobs to enjoy.

In any case, options are open and I want to thank FT again for starting MJD, which was a great inspiration to start a financial life on a great foot!


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## Sampson (Apr 3, 2009)

Congrats on the accomplishment. Saving $64,000 in three years on your salary is a fantastic achievement.


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## jamesbe (May 8, 2010)

Congrats! It seems like a no brainer to pay off the student loan though as it is like paying yourself the interest immediately.


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## SkyFall (Jun 19, 2012)

Sorry noob here, why everyone is telling him to put only 5k in TFSA? He is 22 right? which mean he has room for 20k and in less then 2 months he will have room for 25k...

EDITED: NEVERMIND I didn't see it was from 2009 LOL :tongue-new:


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## kevinlk (Jul 9, 2009)

SkyFall said:


> Sorry noob here, why everyone is telling him to put only 5k in TFSA? He is 22 right? which mean he have room for 20k and in less then 2 months he will have room for 25k...


Hi Skyfall,

The original post dates from 2009, hence why the 5k contribution. I wanted to provide an update to everyone as I believe it is interesting to read back on people a while later, to see what happened, etc. Since then, I have maxed my TFSA and am maxing the RRSP as well on a yearly basis.

To everyone else: Thanks for the encouragement!


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## kcowan (Jul 1, 2010)

Well done Kevin!
You are well on your way and doing all the right things.

If you want to diversify your stock holding (don't know how they have done), consider ETFs. You can buy TD eSeries without an investment account and I think other banks offer similar programs (BMO?). Can you sell your shares without big costs?


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## FrugalTrader (Oct 13, 2008)

@Kevin, congrats on the continued improvement in your finances, you are well under way. If I were to offer a piece of advice, I would suggest that you invest in yourself to improve your career track. Are there any education opportunities that you can leverage for your current career?


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## kevinlk (Jul 9, 2009)

To Kcowan: I can sell my company shares any time. I consider doing that shortly. As for buying stocks, ETFs are a good way to go when one doesn't have the knowledge to do stock-picking.

To FT: From the position I have now, the next step would be into management, which, from there, is more a connection/experience path than one through education. What would be more worthwhile at this moment would be to explore different business ideas with the amount of free time I get from work, as, with a successful business, sky is the limit!


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## Butters (Apr 20, 2012)

I havent read all the replies, but
remember that 25k of RRSPs can be used towards a new house

When you do retire, if you have a government pension or something else, is there really a huge need for RRSPs?
Money in TFSA is liquid and can be used whenever


*If I were you*

Open a TFSA in 2012, put 5k in
Jan 1st 2013 put another 5k in

I would keep it liquid in a savings account that you can easily take out (but remember you can't put it back in)
Or you can get a little more complicated with stocks, I like sit and hold, go with 5k TD bank stocks 1 time purchase, get the dividends 

I'd definitely use home buyers with RRSPs and put a large sum (up to 25k) 90 days before buying a house
And spread it out over your tax years, say 10k for 2012
and 14.5k for 2013 (assume the other .5k interest)

Maybe look at buying a house in 2013 or 2014 or 2015 no rush take your time and ensure you want to live there, or have someone to rent to for 5 years, something CHEAP ON TAXES (ie not the biggest and nicest neighbourhood)

Pay off the entire student loan to be simple
Unless you know you can make more than 3.3%

Extra money, let it sit in your savings accounts, or play the stocks if you wish

Just don't spend money because you have it... be patient, every dollar now, will be worth 2 when you're older!
When you want to buy a house, and you put a 50k cheque down, that will stand out huge on your offer


*edit also, keep adding money into your company, if they are matching you it's free money
and it sounds like you can take it out


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## rikk (May 28, 2012)

stephenheath said:


> MoneyGal: Good catch, thanks, I had forgotten all about the opportunity to do that! The main thing I was thinking of was not taking the deduction when you are already at zero taxes... the tax man won't be nice and point out you're losing out
> 
> And Kevin, personally I use Qtrade, although I've only used it for stocks, not mutual funds, bonds or GIC's yet. It actually does have a yearly fee if your RRSP is less than $15k, but there is no fee for the TFSA or your regular accounts. It's not $29 per trade like the banks, but it's not as cheap as questrade either... it's $19 per trade until you have over $100,000 in assets, and then it drops to $9.99 like the others. That said, if you aren't going to do too many trades I'd still think about using them because their customer service is EXCELLENT and they are very patient with newbie questions. I've never called without someone answering the phone and being able to help me (no lousy nested voicemail menus), and email questions are answered fairly promptly (generally within the hour). Since I only do 5-6 trades per year at the moment, I consider that $50 a cheap price for great service, and in a few years I'll be over the $100k mark and get the low prices anyway. (Well, if my stocks would ever stop dropping in value I will be  ).


Hi stephenheath ... I use Qtrade too ... >$50K (not $100K) and trades are $9.95 (not including that e.g. TSX fee) ... more info here ... https://www.qtrade.ca/investor/en/aboutus/services/fees.jsp ... but you have to tell them you've got more than $50K ... you might do that.


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## kevinlk (Jul 9, 2009)

To Shea:

I currently don't have any planned government pension or company pension. Nevertheless, at the moment, I am maxing both my TFSA and RRSP.

While my original post had myself showing interest in real estate, that interest waned over time as I have a hard time justifying the cost now, if I compare to the 710$/month of rent I have (which is halved, since I have a roommate). Taxes and condo fees (if it would be a condo) would make up what I pay already, and the current low interest rate doesn't bode well for future real estate appreciation once interest rates start crawling up (Could be worthwhile, if prices go down, to buy something outright, but that remains to be seen in the next 5, 10 years). My current place is close to public transportation, which means that commute is not a current hassle.

Company currently match a 3% of the salary toward company stocks, which I've been fully maxing since the beginning. Free money shouldn't be wasted! (Why 10% of the employees don't use that offer is beyond me, as there is NO vesting time at all to cash out the stocks). I plan on selling my own stocks, which doesn't pay any dividend (But increased by a large % since I started working), which will more or less cover the full remaining amount of my student loan, making me completely debt-free (although, personally, the debt doesn't prevent me from sleeping, it will just be a nice thing done) .

Regarding the Stock broker, I went with Disnat, with which I managed to get trades at 9.95$ each, instead of the usual 29$.


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## SkyFall (Jun 19, 2012)

SheaButters said:


> I havent read all the replies, but
> remember that 25k of RRSPs can be used towards a new house
> 
> When you do retire, if you have a government pension or something else, is there really a huge need for RRSPs?
> ...


why not 20k now in TFSA and another 5k January 1?


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