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Thread: Investing/saving

  1. #1
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    Default Investing/saving

    Just landed the job I applied for some months ago, first salaried job with benefits, paid vacation etc.

    Looking for some ideas on how to save/invest, with this bump my wife and I will be living a little more comfortably and have some left to invest for the first time ever.

    Thanks for all the replies
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    Default Re: Investing/saving

    I have a portfolio setup with a financial advisor since 2013, even through I went through an Accounting program and love playing with money (investing, gambling, stock), it's just less headache and worry knowing someone who's up to speed is handling things.

    I think what works well for people is having automatic withdrawal on your account to the investments a comfortable amount. That way you don't see the money to think Oh I got this much extra lets go buy all these things!

    It's rewarding when you start seeing what you made... make even more for you!
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    Default Re: Investing/saving

    First, make a budget. You don't know how much you have to save until you know how much room left over there is at the end of the paycheck. Make sure to have an emergency fund in there as a line item.

    Second, figure out what your longer-term goals are, and make sure you've got that in the budget.

    Third, getting the money flowing in sooner is important. People like to look at rate of return, but starting earlier means you have more time to build.

    When it comes to actual investment advice:
    If your employer has a retirement plan with a matching benefit, that will generally be the best option for returns, as even a 20% match is a guaranteed rate of return that is excellent.
    I tend to prefer index funds for their low fees. I've been licensed to sell mutual funds and insurance in the past, but realized that selling mutual funds isn't a good fit for a guy who prefers index funds.
    I agree with the automatic deduction advice given above. You can't spend money that is automatically invested for you.
    Make sure that you have no outstanding tax issues - throwing this in due to having been blindsided by this before.
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    Default Re: Investing/saving

    Checking with your company to see if they have an RSP match program is the most critical.

    On the whole budget thing, yes, but honestly you should include savings as a line item or "expense" in your budget. Don't treat it as something optional for leftovers, treat it as an every month thing.

    Personally, I think using a robo-investor with Wealthsimple or Questtrade would be a better option than paying the significantly higher fees that comes with having a financial advisor, but for actual investing everyone really has their own preferences and those preferences need to work for them.

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    Default Re: Investing/saving

    I'm not sure if there's an equivalent in the US, but I started with investments into a TFSA (Tax Free Savings Account) which was limited to $5000 annual contribution (now up to $6000). It was all I could even handle at the time paying off student loans and such. So I max that out first then move to the open account.

    As Stevegamer mentioned you definitely want an emergency fund available. You don't want to have to pull money out of investments quickly.
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    Default Re: Investing/saving

    Quote Originally Posted by stevegamer View Post
    First, make a budget. You don't know how much you have to save until you know how much room left over there is at the end of the paycheck. Make sure to have an emergency fund in there as a line item.

    Second, figure out what your longer-term goals are, and make sure you've got that in the budget.

    Third, getting the money flowing in sooner is important. People like to look at rate of return, but starting earlier means you have more time to build.

    When it comes to actual investment advice:
    If your employer has a retirement plan with a matching benefit, that will generally be the best option for returns, as even a 20% match is a guaranteed rate of return that is excellent.
    I tend to prefer index funds for their low fees. I've been licensed to sell mutual funds and insurance in the past, but realized that selling mutual funds isn't a good fit for a guy who prefers index funds.
    I agree with the automatic deduction advice given above. You can't spend money that is automatically invested for you.
    Make sure that you have no outstanding tax issues - throwing this in due to having been blindsided by this before.
    This is all great. Employer matching is free money. I'm all about index funds. Almost zero humans can consistently "beat the market" so there's no sense in paying fees to the hundreds of thousands who say they can. Indexes outperform most individual pickers over the course of time.

    One other thing, it is important to invest, but if you have outstanding high interest debts, like a credit card balance or something, put more towards paying them off than investing for the future. Paying interest at 18% and realizing returns at 5% is not a winning game.

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    Default Re: Investing/saving

    Quote Originally Posted by Invictus View Post
    I'm not sure if there's an equivalent in the US, but I started with investments into a TFSA (Tax Free Savings Account) which was limited to $5000 annual contribution (now up to $6000). It was all I could even handle at the time paying off student loans and such. So I max that out first then move to the open account.

    As Stevegamer mentioned you definitely want an emergency fund available. You don't want to have to pull money out of investments quickly.
    We have various IRA (Individual Retirement Account) options that are either tax deferred with pre-tax dollars or tax-free with post tax dollars, plus retirement account options that are named after the IRS code section (401k, 403b, etc)

    I'm too old to be into the roboinvestor scene. I basically use Vanguard & Fidelity to handle things, as that's where I consolidated company retirement accounts at.
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    Default Re: Investing/saving

    One thing I should've mentioned is to do a debt analysis and a cashflow analysis. You want to know what debt you have, and how much the balances and minimum payments are on it. You also want to see paying off a smaller loan in full increases your cashflow.

    There are reasons to prefer paying down highest interest loans first or lowest balance amounts first. The latter is especially useful if your monthly budget is tight, and there's a debt that is small that you put the extra money into paying off to remove it entirely in say 6 months. Doing that helps with the psychological issues regarding a tight budget, so that you can have a healthier relationship with your financial situation.
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    Default Re: Investing/saving

    whats the most you can put into a Tax free saving account at once ? (ontario canada)

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    Default Re: Investing/saving

    Quote Originally Posted by butch View Post
    whats the most you can put into a Tax free saving account at once ? (ontario canada)
    There's limits. Not sure what they are for new people starting new TFSA's but probably over $70K lump sum. Then when you've hit that max number it's like $5-6K per year allowed. Changes yearly.

    One main thing I learned early on when I started to earn is to PAY YOURSELF. Yes you have bills, entertainment etc... but always set aside $100-200 bucks a week or bi-weekly into a savings account (now TFSA). Make sure you truly make a commitment to pay yourself some amount of money after all the handouts are done.
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    Default Re: Investing/saving

    Quote Originally Posted by Feenom View Post
    There's limits. Not sure what they are for new people starting new TFSA's but probably over $70K lump sum. Then when you've hit that max number it's like $5-6K per year allowed. Changes yearly.

    One main thing I learned early on when I started to earn is to PAY YOURSELF. Yes you have bills, entertainment etc... but always set aside $100-200 bucks a week or bi-weekly into a savings account (now TFSA). Make sure you truly make a commitment to pay yourself some amount of money after all the handouts are done.
    perfect ; and what type of returns can you expect from 70 k ?

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    Default Re: Investing/saving

    Looked it up:

    The annual TFSA dollar limit for the years 2009 to 2012 was $5,000.
    The annual TFSA dollar limit for the years 2013 and 2014 was $5,500.
    The annual TFSA dollar limit for the year 2015 was $10,000.
    The annual TFSA dollar limit for the years 2016 to 2018 was $5,500.
    The annual TFSA dollar limit for the year 2019 and 2020 is $6,000.

    If my math is correct it's $64K and this year could be another $6K so $70K. Now returns on that depends on what you do. GIC gives you nothing so depending on your risk ratio with mutual funds it could be 4-10%. Market is getting better so talk to a financial advisor or your bank to get biggest bang for your buck.

    Just as a FYI, back when my sons were born we put $10K(2002) into an RESP. In 2019 cashed it out and was worth $25K. I think I put another $6K in the account over the years (really slacked off, if I put more Gov't would have given more grants). So 16K investment yielded a $25K total. Not bad I guess, could of had more but was paying myself first to pay them.

    OH and congrats on the job Clutch.
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    Default Re: Investing/saving

    Quote Originally Posted by senryu View Post
    This is all great. Employer matching is free money. I'm all about index funds. Almost zero humans can consistently "beat the market" so there's no sense in paying fees to the hundreds of thousands who say they can. Indexes outperform most individual pickers over the course of time.

    One other thing, it is important to invest, but if you have outstanding high interest debts, like a credit card balance or something, put more towards paying them off than investing for the future. Paying interest at 18% and realizing returns at 5% is not a winning game.
    This is extremely important to understand. If you have credit card debt, that's your first priority before investing. You'll almost never see returns higher than the amount of interest they charge you on credit cards. Compound interest is amazing when you're investing, but it's also just as dangerous if you have CC debt.

    Other than that, like some have mentioned, you need to create a budget. A lot of the time after getting a new job/raise/promotion, people unknowingly go through "lifestyle creep". The once-a-month dinners out turn to 2 or 3. Maybe you subscribe to a couple more services like Apple music, Netflix, or other services that you once couldn't afford but now feel like you can. Sometimes it actually leads to you having a higher debt-income ratio than before. Creating a budget will help you narrow down where your money is actually going, and allow you to see unnecessary spending on things. Once you've done that, like rataylor said, put your investing/savings on a line in your budget as a monthly expense, and set an automatic withdrawal so it comes out on the same day as if it were your mortgage or car insurance. I do the 1st of the month just because its easy, but after your first pay or second pay (if you get paid bi-weekly) are good options as well.

  14. #14
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    Default Re: Investing/saving

    To add:
    I believe your TFSA contribution limit starts from when you turn 18 (not when you open an account). (Each years contribution limit has been already provided here in previous post).

    So by Butch's profile I can see that he is 22 So:
    Turned 18 in 2017:
    2017: 5.5k
    2018: 5.5k
    2019,2020: 2x 6k
    2021: I'll assume 6k
    29k limit.
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    Default Re: Investing/saving

    Invictus is correct on the TFSA contribution limit.

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