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OfflineThe5thElement
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RRSP'S ???? And investments
    #18876596 - 09/22/13 04:07 PM (10 years, 4 months ago)

When I was younger, about 7 years ago I received a large amount of money from an accident that happened to me when I was three. Since then I've paid for an education, well half an education.... bought a car, travelled a bit, and some other random things....

But now I'm 24 and I have about 6-7 grand to my name, if I'm lucky. I have my class one licence and a good job but really I wasted a lot of money in the past and if I had now what I did then I would have invested it into something. I may have gained some experiences but really kinda limited myself now with my options.


I was wondering if anyone has and or would suggest rrsp's ?

If I have the gist of it correct, pretty much they are something I buy, that can't be taxed and can grow interest.. I may be wrong.

If anyone has any suggestions on things to invest in I'm all ears, I'd really like to hear other peoples experiences good and bad with investments because I'd like to start looking in to it now, so that I can set my self up for later on in life. I don't want to be working my ass off like I am now for the rest of my life.


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OfflinePDU
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Re: RRSP'S ???? And investments [Re: The5thElement]
    #18878411 - 09/22/13 10:48 PM (10 years, 4 months ago)

Very broad question. I recommend that you research these various investment vehicles and learn what you can, while reading this forum and start learning/watching the markets somewhat.

I started an RRSP 2 years, and it's sitting around $4000 (i cashed out a few grand to buy silver.) It doesn't seem to grow much past the principle I invest, and is over all has very dismal returns. After learning more about investing, I realize that I am being taken to the cleaners with the MER (management expense ratio = the amount they charge me to manage my money.) It was a disappointing realization, because my stepfather sold me the RRSP. I have since learned that his ideas on investing (safe and conservative) differ from my own interests (take risks, reap greater reward.)

In the spring, when the precious metals were plummeting I got $5000 together (including taking a couple $1000's from the RRSP) and loaded up on physical silver.

Now, I just sold a motorcycle that I haven't rode in years, and have $3200 coming my way. I am going to start a mutual fund at ING direct which mimics the US/Canadian/far east indexes. The theory is that diversification of this sort limits liability (ie. if one company or sector suffers, your money is spread out across numerous others.)

Why ING? - This Link explains it well. As a whole, it is a wonderful website.

I am chosing ING, because I already bank with them. ING's fee's are low, and they do the leg work for me for a very minimum premium, rebalancing the portfolio several times throughout the year. There are also no buy/sell commissions, and I can set up "preauthorized payments" so I can contribute on a monthly basis. I also plan to set it up within my TFSA, so my earnings will be sheltered (aka, tax free - unlike interest accumulated on money in a savings account!) I will also be setting it up as a "DRIP" (Dividend reinvestment plan) - DRIP is the way to go, find a high yielding dividend stock (or mutual fund) and continually reinvest the dividends and with the power of compounding you will watch your principle multiply. (or, so they say.)

You could "buy" EFT's (exchange traded funds) that track the stock indexes of your choice, and save .5% interest/management fee's, or so by doing it yourself, starting an online brokerage account and finding and buying the funds you want, and actively managing them.

This would be beneficial for larger sums of money when fee's incurred would be much higher - but for less than $10,000, I have come to the conclusion that the ING mutual fund is the way to go. I am a major novice and don't feel quite ready to enter the world of online stock trading, yet.

It is a process of continual learning.

I will tell you though - save while you are young. Save and don't take it out, invest it wisely and let it grow. The power of compounding will make a modest sum, quite large, given enough years. Make it a habit - put away money every month, no matter what.

Also if you are making around $40,000/year you should make sure you learn about the tax benefits of contributing to an RRSP. If you are narrowly over that income level you will end up paying thousands in taxes that you could contribute to your RRSP and save for your future, instead.

Lastly - FYI - I am broke as a joke, make no money, work part time and can barely pay my rent. But i put away money!

Anyone can do it, just make it a priority.


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Edited by PDU (09/23/13 07:33 AM)


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OfflinePDU
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Re: RRSP'S ???? And investments [Re: PDU]
    #18879500 - 09/23/13 07:43 AM (10 years, 4 months ago)



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OfflineThe5thElement
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Re: RRSP'S ???? And investments [Re: PDU]
    #18880010 - 09/23/13 10:33 AM (10 years, 4 months ago)

Thanks very much for all this, I really appreciate it. It's going to be hard putting money aside seeing how I need a new vehicle badly, among other things as well. Either way I'll start doing some research and start saving now, thanks for the links and everything :thumbup:


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Re: RRSP'S ???? And investments [Re: The5thElement]
    #18883147 - 09/24/13 12:22 AM (10 years, 4 months ago)

TFSAs are better vehicles if you have no active taxable income. It is after tax income and any withdrawls are tax free.

RRSPs have the advantage of being tax deferred. That is they can grow tax free and are taxed when withdrawn. Any contribution into your RRSPs will reduce your taxable income by that amount, and your income tax bill will go down. But if you withdraw your RRSP investment in 5 years, or 35. That amount will be included in your taxable income at whatever income tax rate you are at.

I would look into broad ETFs or mutual funds with low MERs. You should think hard about your risk profile before investing.


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OfflineThe5thElement
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Re: RRSP'S ???? And investments [Re: Ahab McBathsalts]
    #18883321 - 09/24/13 01:57 AM (10 years, 4 months ago)

Thanks for the info, appreciate it.

What exactly do you mean by risk profile though?


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OfflinePDU
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Re: RRSP'S ???? And investments [Re: The5thElement]
    #18883856 - 09/24/13 08:18 AM (10 years, 4 months ago)

What is your tolerance for risk?

The ING mutual fund will ask you a few questions and your answers build a risk profile for you. It's basically asking "are you ok with very slow and steady growth, or do you want to risk losing it all and possibly see rapid growth."


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InvisibleAhab McBathsalts
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Re: RRSP'S ???? And investments [Re: The5thElement]
    #18886442 - 09/24/13 07:51 PM (10 years, 4 months ago)

http://www.investright.org/risk_test.aspx

This should give you an idea. I don't particularly like these questions, but it will give you a rough idea.

Also you should be thinking about time horizon. If you will use the money for a downpayment on a house, or retirement in 35+ years.
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/

Generally a shorter time horizon will imply less risk tolerance.

Ishares is a decent starting place for ETFs (Exchange Traded Funds)

XIU http://ca.ishares.com/product_info/fund/overview/XIU.htm
Is the TSX capped 60, which is generally heavy on Canadian oil, banks, and other resources. The TSX has underperformed in the most recent rally, with some of the blame because of poor Chinese demand, but it is a decent route.

CLU http://ca.ishares.com/product_info/fund/overview/CLU.htm
CBN http://ca.ishares.com/product_info/fund/overview/CBN.htm

Lots of choices out there, but take something large and balanced. Getting locked into something as narrow as Precious metals, gold, Oil, or China is a very risky play if you do not have extensive investment knowledge, and even then those narrow funds are designed to be a small part of a balanced portfolio and not the whole shabang.


--------------------
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OfflineThe5thElement
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Re: RRSP'S ???? And investments [Re: Ahab McBathsalts]
    #18893862 - 09/26/13 12:42 PM (10 years, 4 months ago)

Lots of information here, thanks guys.

I do have some family that have done pretty good with their own investments, probably be a good idea to talk to them as well I'm thinking :strokebeard:


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