# Short Term Big Money Stint - Young Investor



## james1711 (May 16, 2012)

Hello to the forum. I have been reading this forum for around 2 years now but have just recently made an account. 

Background - 

22 years old 
2 years of University completed in Business( Accounting/Finance ) 

I completed 2 years of my schooling at Simon Fraser ( B.C). Because of family issues I decided that it would be best for me to get out of province and on my own and work for some time. My intention is to work for 8 months to a 1 year and then return and finish my bachelor's. I want to do my concentration in accounting and/or finance. 

I have moved to Alberta and have been hired on for an entry level rig position with Precision Drilling . I come to the board for advice as I want to make the most of the money that I will be making. I will be making roughly $7,000-8,000 month gross. The big question is what to do with all this money ..... 

In the past I have proven myself to be extremely frugal and have lived on <$1,000/ month while living on my own. The budget that I have laid out for myself for the next year has me spending $800/month. This is doable and realistic especially as I will only be paying rent of $200/month. 

Let's assume I end this year with roughly $65,000-70,000 in the bank. 

I currently have both a TFSA and a unregistered account with Questrade. I plan to open up an RRSP account with them also ( advised ? ) 

I have contributed a total of $3,000 to my TFSA in the past. I have no RRSP's. 


Current financial position- 

Assets 
$3,000 in TFSA in Canadian Div Fund ( CDZ ) 
$1,000 Cash 
2002 Honda Civic 

Liabilities - none 


Goals - I plan to work part time during school and as such hardly need to touch this money; in this sense my time frame is long term. I would describe myself as having moderate to high tolerance for risk ( I guess you really never know though until it happens..). I think I could stomach losing 10-20% of my portfolio in the short term in exchange for greater returns in the long run. 

I would ideally like to achieve 5-8% /year in total returns. 

I like the idea of re-creating the broader market by buying 1or 2 stocks from each sector. Is this enough money to do this efficiently ? or am I better of going with ETFs ? 

I'm excited to see the market taking a tumble right now .... I'm hoping that it continues a slide and stays there for me so I can get in nice and low. 

I have also contemplated buying a home ( as an investment ) if we were to see a >20% correction in Canadian housing. Thoughts? 

Basically the plan as of now is to wait till I have about $10,000 and then buy some blue chip stock, wait till I have another $10,000 and buy another, but in a different sector. I would also like to have some sort of Bond allocation which I plan to achieve through an ETF. I would also like to have some sort of physical metals position but I'm not sure if it would be best to do this through a gold/silver ETF or if to buy the actually physical gold/silver. 

Anyways, this post really isn't that coherent, I have some more specific questions that I might later ask in dedicated threads. This is mainly to introduce myself and get peoples opinions from a really broad perspective without so much of the specifics. 

Thanks,

James


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## Spudd (Oct 11, 2011)

Don't forget about taxes. If you're grossing ~100k you'll pay about 30k in taxes (that's about what I gross and pay, with 8k RRSP contributions annually), leaving you 70k. Minus 10k for your spending, and you're looking at 60k max. I don't know what your RRSP limit is, but it's probably a good idea to max it so you minimize the tax hit on the 100k, plus if you won't need the money then it will have a good long time to grow until you retire. Also, max the TFSA. This will be great because you can take out the money if you need it to supplement your part-time work when you're back at school.

Most brokerages don't start giving you low fees until you have 50k with them, so if I were you, I'd start off just using TD e-series index funds. Once you have a larger nest-egg you can get into the individual stocks game. 

Also, figure out how much you need for an emergency fund and potential school buffer, and keep that in a high-interest savings account since you want it to be readily available, and not destroyed by any potential stock market crashes.


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## kcowan (Jul 1, 2010)

I agree with e- investment at any TD Bank branch. Also you can probably get an added small CRA deduction for the move to Alberta to find work.

I would stay out of real estate until you know more about your future. No one knows what will happen to real estate values in the next few years.


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## james1711 (May 16, 2012)

kcowan said:


> Also you can probably get an added small CRA deduction for the move to Alberta to find work.


This is interesting. I had no idea. I will have to look into this. 

Thanks.


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## KaeJS (Sep 28, 2010)

Hi, can I just ask a question?

Hopefully yourself or others can pitch in.

How easy is it to just "get a job" in Alberta making that kind of money?

I'm tired of this Ontario crap. I'll get my hands dirty and do some hard physical labour all day for a year if I'm going to get $70k.

I used to work 105 hour weeks. Now I work 37.5 hours per week making only $35k and I'm bored and broke as hell.

Would it be possible for someone like myself to do the same thing you have done?


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## MoneyGal (Apr 24, 2009)

james1711 said:


> This is interesting. I had no idea. I will have to look into this.
> 
> Thanks.


Here you go! If you move more than 40 km away to get a new job, your eligible moving expenses are deductible from the income you earn at the new location: 

http://www.cra-arc.gc.ca/tx/ndvdls/...tng/ddctns/lns206-236/219/menu-eng.html?=slnk


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## Zoombie (Jan 10, 2012)

Welcome to Alberta son. Your calculations look optimistic, the way I see it:
New Pickup Truck $50 000 (at least!) + lift ($3500)
Weekend slush fund ($900 /month)
+Gas money (going to be quite alot more than for your civic)

You'll still end up nicely ahead, but not as much as you may be planning for. And thats IF you can hack it as a rig hand for a year.


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## sharbit (Apr 26, 2012)

KaeJS said:


> How easy is it to just "get a job" in Alberta making that kind of money?


This kind of depends on your skill set and how many hours you're willing to work. However, there's a bit of a labour crunch right now too so I'd imagine it wouldnt be too dificult to land a 70k job in northern Alberta. Start applying and find out! Worst case you can just say no.


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## james1711 (May 16, 2012)

MoneyGal said:


> Here you go! If you move more than 40 km away to get a new job, your eligible moving expenses are deductible from the income you earn at the new location:
> 
> http://www.cra-arc.gc.ca/tx/ndvdls/...tng/ddctns/lns206-236/219/menu-eng.html?=slnk



Thanks. Any idea how much it would be safe to "stretch" moving expenses ?


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## james1711 (May 16, 2012)

KaeJS said:


> Hi, can I just ask a question?
> 
> Hopefully yourself or others can pitch in.
> 
> ...


I'm in Cold Lake. I would say that it really depends on what skills you have. The highest paying jobs are in the trades as well as in engineering. Then again, the money flows, and ALL sectors are hiring. It actually quite incredible to see the number of signs reading "hiring" or "help needed"; they are practically everywhere. This includes the gas stations, grocery stores, clothing stores, construction companies, drilling companies, car dealerships, bars and restaurants, etc. I'm sure that you could also find a higher paying white collar job for whatever skill set you have. 

Also, keep in mind that my hourly rate is really nothing that amazing. What causes you to earn so much is the number of overtime hours you log each day ( up to 5 ). I'm going to be working roughly 200 - 250 hours /month. In other words - you earn lots not just because you are highly paid, but also largely because you can work many many hours.

For specifics of getting onto a rig look at this website - http://www.caodc.ca/ - this pretty much has all the information you need to know. Most companies like to see that you are actually already in town to know that you are serious. If you are, I would recommend getting your tickets ( H2S and First Aid ) and then moving here. You also need to have a class 5 drivers license with a clean record. Are you physically strong ? The company actually sent me through a "100lbs physical" at a physiotherapist office as part of my pre-employment testing. You have to repeatedly walk about 40 feet back and forth carrying a 100lbs bucket, each time you reach one end you must put it down and pick it back up. This is not easy. I would say that easily 40% of the health male, working age population would not be able to pass this test. Prepare if you think you might have troubles.


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## rd_aaron (Jun 24, 2011)

KaeJS said:


> Hi, can I just ask a question?
> 
> Hopefully yourself or others can pitch in.
> 
> ...


$70k would be pretty low for a rig worker. I know people who were making over $100k a few years out of high school working on the rigs. Crappy lifestyle though. If you really wanted to make the move I can't see it being too hard to land a job somewhere. The turnover rate is pretty high.


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## londoncalling (Sep 17, 2011)

Lot's of money to be made in Alberta and Saskatchewan right now. IMO, almost anybody that wants to work out here can find a job with little effort. Kaejs, I think you are a dedicated hard working individual and would be able to land a job out here. As mentioned above, applying for a job and being offered it doesn't mean you have to take it.


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## marina628 (Dec 14, 2010)

You can earn $80,000+ working security in Fort Mcmurray and not get your hands dirty.Some companies give monthly living allowances on top of salary too.


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## ddkay (Nov 20, 2010)

Seems like tech scene uniformly sucks across Canada, friends of mine went to Calgary for 2 years and were just moving from one temp contract to another with big oil and gas cos before getting home sick and coming back to TO. Should have applied for security or a rig operator I guess.


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## ddkay (Nov 20, 2010)

KaeJS: http://www.rigtech.ca/live/Rig_Technicians/Trade_Basics


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## riseofamillionaire (Feb 23, 2012)

Spudd said:


> Don't forget about taxes. If you're grossing ~100k you'll pay about 30k in taxes (that's about what I gross and pay, with 8k RRSP contributions annually), leaving you 70k. Minus 10k for your spending, and you're looking at 60k max. I don't know what your RRSP limit is, but it's probably a good idea to max it so you minimize the tax hit on the 100k, plus if you won't need the money then it will have a good long time to grow until you retire. Also, max the TFSA. This will be great because you can take out the money if you need it to supplement your part-time work when you're back at school.
> 
> Most brokerages don't start giving you low fees until you have 50k with them, so if I were you, I'd start off just using TD e-series index funds. Once you have a larger nest-egg you can get into the individual stocks game.
> 
> Also, figure out how much you need for an emergency fund and potential school buffer, and keep that in a high-interest savings account since you want it to be readily available, and not destroyed by any potential stock market crashes.


I agree with this. Also deduct those moving expenses from taxes.


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## KaeJS (Sep 28, 2010)

Wow.

Thanks to everyone for all the information, kind words and to ddkay for that website.

I will definitely look into this some more and conduct further research.

I used to work 105 hours/week about 1.5 years ago. I loved it. Lots of money and no time to spend it. After a while, you just get used to the lifestyle. I get so entranced in "going to work everyday" that even the slightest bit of fun afterwards is enticing and exciting all over again. It's a real step in the right direction. It helps you appreciate things much more, also, sort of like a "reset" if you know what I mean. I get a sense of accomplishment from it, anyway. Now that I work 37.5 hours a week, I feel like garbage. Always bored and poor and I feel like (I know) my contribution to society is minimal, at best.

Long Hours, Lots of Hours, Getting Dirty and Physical Labour doesn't scare me. *Small paycheques do.*

But for now, it is time to go out for some Korean Food in downtown TO. :wink:


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## Barwelle (Feb 23, 2011)

Zoombie said:


> Welcome to Alberta son. Your calculations look optimistic, the way I see it:
> New Pickup Truck $50 000 (at least!) + lift ($3500)
> Weekend slush fund ($900 /month)
> +Gas money (going to be quite alot more than for your civic)


Don't forget the truck nuts. ($50?)

Might as well throw some stacks on there too.


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

I've also noticed those trucks do not include turn signals.


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## Tragically2112 (Jan 18, 2012)

KaeJS said:


> Wow.
> 
> Thanks to everyone for all the information, kind words and to ddkay for that website.
> 
> ...


If you can learn to drive a big (semi) truck then frac'in is a pretty good job. Most companies will give you driver training and some will pay for your test. There is some, but not too much physical labour. Can be long hours but everyday is different. Lots of driving from small town to small town. Working outside in the cold and mud. Hotels/Camps almost every night during the winter and busy seasons in shitty little towns. You have a guaranteed base salary plus bonus for every 'job' you do. Basically the salary is to keep people around during spring break up when there is not much work. 

If one were to move to Alberta to frac I would suggest Grande Prairie if your goal is only money. You can easily start making 70 to 100k if you are a decent worker. You probably would make a bit less in Red Deer but you're close to Calgary & Edmonton and you also don't have to live in GP.  

The company I work for will actually fly you from anywhere in Canada and you work like 26 days on and fly you home for 13 days off. If you do this then your salary is usually a little bit lower. I assume most companies offer this too though.


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## jet powder (May 29, 2012)

Work long hours of over time so the fine from working to much over time can be paid. It seams the goverment does not to collect all the money they could from the possible fines.


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## nxtime1 (Jul 2, 2012)

*Not a fan of RRSP*

Where it is the common low income plan to buy into the RRSP, I would give it some careful though and research. Having had teck stock in the 80's and lost a lot of my RRSP "secure" investment and then again with the mortgage crisis, I have yet to see a real increase. On top of that you cant get it back out till you retire unless you pay a huge tax hit. Even with the up front tax hit, you may well do a lot better to find some solid real estate investments. Suggest, in the US.
I wish I had done that back in the day.
That having said, that too takes some research. A more moderate and less time consuming plan would be to partner with a company with a good reputation. You will likely be looking at between 10-20% REI. I have never seen that on my RRSPs not when I consider all the losses.
Good luck in your future.


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## Lephturn (Aug 31, 2009)

nxtime1 said:


> Where it is the common low income plan to buy into the RRSP, I would give it some careful though and research. Having had teck stock in the 80's and lost a lot of my RRSP "secure" investment and then again with the mortgage crisis, I have yet to see a real increase. On top of that you cant get it back out till you retire unless you pay a huge tax hit. Even with the up front tax hit, you may well do a lot better to find some solid real estate investments. Suggest, in the US.
> I wish I had done that back in the day.
> That having said, that too takes some research. A more moderate and less time consuming plan would be to partner with a company with a good reputation. You will likely be looking at between 10-20% REI. I have never seen that on my RRSPs not when I consider all the losses.
> Good luck in your future.


You are confusing the tax benefits of an RRSP with the investments inside of that account. RRSPs are a tax deferral - so if you have higher income now than you plan to have in retirement, an RRSP makes sense. If you have low income now and plan to have higher income during retirement, then it may not make sense. Given that it extremely difficult to project that far in advance, for most people with 10 years or more before retirement, RRSPs make a great deal of sense. Depending on your tax bracket, an up-front 30-50% gain on that money due to not paying tax on it is a very good return. If you have $ 100K in an RRSP and in 10 years it is now worth $ 80K what is your return? It is NOT negative - you had let's say an immediate 30% return due to the tax deduction so you are still up by $ 10k. To put $ 100k into real estate you would need to have earned $ 143 K and then paid the $ 43K in taxes on it first.

Now setting aside the tax deferral that RRSPs provide - you are claiming that an investment portfolio of for example ETFs will underperform real estate investing. I'm not sure I'd bet on that - and there are other serious drawbacks to real estate investing. One big one is that you can't put in small amounts as you save it like you can in something like ETFs. Another huge issue with real estate is that it is not liquid. Equities and ETFs are extremely liquid - basically the other end of the spectrum from real estate. Real estate investing also has high startup and transaction costs compared to tiny costs for ETFs and equities. I am not saying REI is bad - just that you need to be aware of all of the properties of a real estate investment and not just anecdotal returns.

If you can get 10-20% return consistently by real estate investing then good for you - you do that. It should definitely not be the ONLY asset class you are investing in. For most people their home ties up such a large part of their overall investments in real estate already that it probably does not make sense to concentrate even more in that one asset class - especially given the liquidity and expense issues with real estate.


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## KaeJS (Sep 28, 2010)

*James,*

I am interested, how is this all working out for you?

Has everything gone as planned/worked as you thought it would? Is it profitable?

Thank you.


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