Hey guys,

I'm really new to saving money (properly) and investing it. I would like to save, so that I could have some backup for the future. It could be a down payment for a house, finicial security, or retirement etc, car.


After next summer I will be done school and have about 10-15k, so I want to put it in the best place where its going to make the most money. I dont want the banks to hose me, or some financial advisor telling me to do somthing that makes his company the most money.

I've heard of RRSP? But apparently you cant take your money out unless a certain time is up.
How much money can you actually make with RRSP? Is there a better way to invest your money?

 

RRSP is good for your retirement planning.......
Real Estate is one of the best investments out there.
I have been doing it for awhile now and have tried lots of other methods, this works the best.

Amkard
PS..Thats where I got my rotary hobby money and some...

 

Best investment. Sell / get rid of the rx7 as soon as you can. There is nothing good about it if you care about money

 

I agree. Ive watched all my friends spend all their money on these cars only to see the motors blow over and over again, fix the car and spend more money. I have sold all my Rx-7's and now I'm looking in the future a way I can make some money instead of loosing it all on these dam cars.

This time I'm looking to take my money and invest it so I can have somthing to show for it, not rotor housings and jackstands. I dont want to bring up the financial disaster (FD) or finicial crises (FC) in this thread, I'm jsut looking for the best thing to do with my money come next year.

I want to buy a house buy the time I'm thirty, and I don't see why saving a little bit now could help. I just have no clue where to save or put money for a long term or benificial benifit because I'm used to loosing it on cars.

 

If I were you, I'd buy a house as soon as possible. Failing that, I'd invest in an RRSP and then use the RRSP to buy a house when the time comes.

 

Do all the banks have the same interest rates on RRSP? Where is the best place to go?

 

There are lots of RRSP options, you should really go into a couple of banks and sit down and chat with them. If you're confused after that then ask around some more.
You can remove the money out of your RRSP to put a down payment on a home provided it is your first home and you agree to pay it back to the RRSP over 15 years.

It is great that you are thinking about saving early rather than too late like the most of us.

 

Hey,

Have not talked to you for some time. Hows the car?


Ian

 

Energy and uranium stocks.



As well, medical device companies.

I had a GREAT last few years

 

I would highly advise not going to the banks - go to an independent broker who can give you a range of investment options. The banks generally offer lower rates of return, and of course their staff will advise to select an investment product their institution sells - same goes for Primerica, Clarica/Sunlife, Investors Group and other "tied" companies where the agents can only sell from in-house products.
Deal with someone who will take the time to ask you questions and understand your goals and needs before dispensing advice. Make sure you understand what you are investing in - a good agent will present options, and help you understand the differences. Segregated funds (seg funds) are often a better choice than mutual funds, as the principal is protected, gains can be locked in (in other words, added to the protected principal amount), they offer creditor protection, and unlike GIC's your funds aren't locked in, amongst other features.
Real estate is an excellent idea, beginning with your own home - no sense paying someone else's mortgage with rent money. Beyond that, investment real estate is a bit riskier, although with the potential for big gains over time. You should understand the market and risks - eg a rental home can appreciate significantly over time, while your renters pay the mortgage, but will require maintenance, and could also cost you a lot to repair if you get bad renters.

 

As far as RRSP's go if you are looking to buy a house I suggest you put $20,000 into an RRSP right away. Under the first time Home Buyers Plan (I assume you qualify) you are allowed to take a one time only tax free $20,000 withdrawl from your RRSP to use as your down payment. You then have 15 years to replace the money - meaning that you can pay 1/15th a year for the next 15 years. If you don't make a contribution to your RRSP that is designated for the Home Buyers Plan they will add the amount to your income and tax you on it (ie: 20,000 / 15 = 1333.33 added to your T4 which will result in approx $400 in taxes you will have to pay). The money in your RRSP has to be in for at least 6 months before it's withdrawn for the Home Buyers Plan. What some people do is take out a loan for $20,000, put it into their RRSP and then pull it out 6 months later when they buy a house. The bonus is that come tax time you will get around a $6000 tax return due to the contribution to your RRSP. So when you are sitting with $26000 cash you can decide to do whatever you want with it. I was told by my mortgage broker that even though the funds were withdrawn under the Home Buyers Plan (HBP) you don't actually have to use them all for a down payment on a house. You can instead put $10K down on a place and use the rest for new furniture or to pay off debt. The HBP is a one time only thing. If you have already owned your own house/condo you no longer qualify for the program - even if you never used the plan before.

Now as for RRSP's as in investment or going with a banks plan I used to be a big believer in RRSP's. I have a self directed one that I invest through. However, with the capital gains tax laws it's much better to have your money invested outside of your RRSP as you the tax rate is much lower. RRSP's are a bet that in the future you will pay a lower tax rate in the future and who knows what is going happen down the road. If taxes go up or the gov't suddenly decides that all your RRSP monies have to be in place until your 60 you loose a lot of flexibility and money. I would NEVER let the bank or anyone else manage my money for me. You'll be taking all the risk for minimal gains. The only ones who make gauranteed money is the bank with their fees.

My suggestion is that if you are only talking about 10-15 K put it in a self directed RRSP and invest it wisely. When the time comes to buy a house pull it all out and use as I described above. If you are looking to earn some cash for a rainy day invest outside your RRSP. I started with a 10K loan 7 years ago and turned it into over $100K by investing in what I know. I'm sure that I'm not the only one. Take some investment courses. Learn how it all works before starting out. One rule that works for me is to never risk more than you are willing to lose. If all you have is 15K don't risk 10K of it on a new tech start up, etc. because you could lose it all. Maybe put 3-5K into it instead and if you lose it all you still have 10K left to recover with. If it takes off you might curse and swear that you didn't put more in but with high risk stuff it's best to play it smart. If the investment is more stable - like say Imperial Oil, etc - you can risk more money comfortably but understand that the gains will be smaller. Invest in what you know. NEVER listen to your broker only. My broker and my friends brokers have lost us more money combined than we have on our own and all the broker is out is the threat of losing your business. Think of them as salesmen who "push" a stock for their brokerage house. I got screwed once on Stelco because my broker was pushing it while another arm of the same brokerage house was dumping it. Making smart decisions and have a balanced portfolio is the answer.

One last thing, you can pull money out of your RRSP any time you want. You just have to pay the tax on it.

 

My plan is to invest some money buy the end of summer, and I would like it to help me buy a house in the future.

After reading your post, I can see theres alot more to investing, and I'm interested in takinga course, however, I'm still finishing school and another course would be an overload!

I may talk to a broker that my friend deals with, hes a RRSP broker and he comes form a private bank.

What I worry about most in the future, is comming up with the down payment of a house. From what I understand 10-20k Is needed and I have the perfect opertunity right now to help this in the future.

Thanks for your help guys, and congrats to your sucess (10k=100000k wow)
-Mike.

 

Wow a financial planning post in an rx-7 forum. Almost blasphemy

Glad to see that you're thinking about saving money. I actually just came off a 1 year co-op term that paid very well and I'm regretting not investing my money better.
Now only if you could convince Dominic to stop wasting money on his FD and stop thinking with his pants....

 

I tell him every day..leave it stock!