# Been one year in Canada, Age 18, $2500/m



## mentalist (May 11, 2018)

Hey there, I'm 19 years old and have been in Canada for just over a year now. I have two sources of income as of now.

1. Video editing. (Part time)
2. Working as a cook. (full time)

Right now I don't have any rent or other big expenses so I pretty much save most of it. Eventually I'm gonna be renting a place tho.

I average around $2500/month. I'm looking to invest in index funds. The 500 S&P specifically and put more than 60% of my income in there and maybe do some real estate investing.

What do you think of this? what would you have done if you were in my position?

My goal is to get back anywhere from around $20k to $30k a year to cover all my necessary expenses thru my investments.

I'd love to hear some thought or ideas.

Thank you.


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## james4beach (Nov 15, 2012)

Welcome to the forum, and welcome to Canada! It's great to see young investors here (we don't have many).

You're savings $2500/month? That's really amazing... congrats! You're way ahead of the game.

One thing to consider is that stock investments are really meant for very long time horizons. Money you invest into stocks (S&P 500 or a mix of global indices) should be left alone, not touched for decades. Therefore, it's important to estimate your upcoming short-term costs, and store that money into savings accounts or GICs instead of stocks.

Do you plan to go to university, college or a trade school? If so, you should estimate your upcoming costs, including rent, tuition, and everything. Macleans has some numbers on this. Let's say you're going into 4 year university program that will cost about 9 K a year, for a total of 36 K. If you can't estimate precisely, just go with rough average.

Whatever this amount of $ that you expect to spend in the next few years, I'd say to accumulate that in high interest savings accounts and GICs. Others may disagree with me on this, but I'd argue any money you put into stock indexes should be left alone for 20+ years... not tapped into 5 years from now.


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## james4beach (Nov 15, 2012)

Adding something: if your parents will be paying your education costs (or for whatever reason you don't expect you'll have any costs), then I'd say that the rule of thumb is to keep 1 or 2 years worth of living expenses in high interest savings accounts.

Since you're so young, there is more uncertainty in your life and I recommend keeping 2 years of living expenses in savings accounts. After you have established that amount, then it makes sense to invest in aggressive things like stocks because you know that you won't have to sell your stocks to pay living expenses.


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## peterk (May 16, 2010)

Hi mentalist, 
How is it that you don't have any expenses to pay, including rent?

It's great you can save money and want to invest, you got the right mindset for success. But this....


mentalist said:


> My goal is to get back anywhere from around $20k to $30k a year to cover all my necessary expenses thru my investments.


...is crazy.

Stop wasting your valuable youth thinking about this. You are *NINETEEN* years old, brand new to a new country, apparently living somewhere for free, almost broke, and talking about wanting to live on S&P 500 investment income?!?

*Go do other things* only a 19 year old can do, go get educated in something valuable, and don't mess up your mind/body too badly doing stupid crap.

If you spend your youth mostly focusing on boring things like money, planning for years down the road, and thinking that things will be better in the future when [insert blank] is accomplished, you are going to regret it. I am not some old man telling you this, I'm 30. 30 is not the new 20. You're going to be old _*soon.*_

"Life is what happens to you while you're busy making other plans" - John Lennon


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## rl1983 (Jun 17, 2015)

Come on Peter isn't 60 the new 18?


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## Jerm (Jun 2, 2016)

You will never secure a reasonable passive income from investments working as a cook. 

Lets say your situation doesn't change, you continue to live rent free (which you won't), and continue to invest 60% of your income

$2500/mo x 60% = $1500/mo x 12mo = *$18000 per year saved*

Depending on whether you're looking to live exclusively off the dividends from the S&P 500 or whether you're going to assume a SWR of 4% you'll need between $500,000 and $1,000,000 invested in order to achieve a passive income of $20,000 to $30,000 per year.

This will take you approximately 20-30 years to achieve assuming you can live rent free and you're satisfied working as a cook (nights and weekends presumably) while keeping your expenses below $12,000 per year.

This is no way to live and anyone with a shred of ambition would want more for themselves than to spend the prime of their lives living in those conditions. 

The single best shot you have for yourself is to invest in an education. You'll sacrifice 2-4 years of your life and some earning potential in the short term but assuming you pick a good trade/profession you'll find yourself in a much better position to achieve financial independence. You'll also give yourself the opportunity to have some hobbies, do some travelling, start a family, and all the other things that make life worth living.


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## james4beach (Nov 15, 2012)

Strongly agree on pursuing an education. When you're 19 it can look like there is more money to be made working immediately instead of going into school. You may even be "ahead" for the next few years versus someone who is in school -- no question there, in the short term.

However by the time someone is in their 30s the picture changes. Those with good educations (generally) will start earning dramatically higher incomes.


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