What to do with significant chunk of savings

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UnatcoAgent

UnatcoAgent

Diamond Member
Oct 25, 1999
5,462
1
0
As some of you may know, I operate my own graphic design studio, which has been picking up steam rapidly since pursuing it full-time. The result is I've had a large influx of cash which is currently sitting in a combination of ING and my savings / bank accounts.

I'm in Canada, I don't have any GIC's or RSP's yet (stupid, I know), I also rent both a studio and an apartment. No vehicle, thankfully no debt anymore.

The challenge I'm facing now, is where to invest my earnings, in a combination of retirement plans, short term savings, a house, etc.

I realize there are financial consultants specifically for this kind of thing, I will be seeing one at some point soon.

The question remains, what would you/ATOT do?
 
M

Mikey

Senior member
Jun 16, 2006
996
1
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Whoa.....how did i change the original post????????? wtf??? black magic????
 
UnatcoAgent

UnatcoAgent

Diamond Member
Oct 25, 1999
5,462
1
0
Originally posted by: Mikey
Dang, now i just did it wtih the 3rd post! wth? glitch much?
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This is getting a bit ridiculous. You also ate part of my sandwich.
 
M

Mikey

Senior member
Jun 16, 2006
996
1
0
Originally posted by: Sabot
Originally posted by: Mikey
Dang, now i just did it wtih the 3rd post! wth? glitch much?
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This is getting a bit ridiculous. You also ate part of my sandwich.
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I know...that's weird...I wasntt full, but now I am. Crazy!
 
R

racolvin

Golden Member
Jul 26, 2004
1,254
0
0
There are financial vehicles in place in the US that may or may not have an equivalent in Canada - I'm afraid I just don't know. Things like our SEP IRA is a nice place to stash money for retirement. Just to give you an idea:

* The SEP IRA is a retirement plan designed to benefit self employed individuals and small business owners. Sole proprietorships, S and C corporations, partnerships and LLCs qualify

* The SEP IRA has a maximum contribution limit of $46,000 for 2008 ($45,000 in 2007).

* Contributions to a SEP IRA are generally 100% tax deductible.

* Contributions to a SEP IRA are made exclusively by the employer. Employees do not contribute.

* Withdrawals from a SEP IRA are permitted after age 59 1/2 without penalty.


I would suggest contacting a Canadian financial adviser that would know more about what you can and can't do under your laws.
 
I

imported_Imp

Diamond Member
Dec 20, 2005
9,148
0
0
GICs are shit right now at ING. It hurts me to see my shortsightedness from a year ago come back to bite me in the ass now (i.e. 4.6% one year GICs expiring soon to be renewed at 2.7%-ish).

Depending on how much risk you can tolerate, now appears to be an ok time to buy stocks/mutual funds before (god willing) they rise again.

Try an ING Streetwise bond fund. You can open it online, and transfer money easily from your savings account. I've only put a very small amount into it to test the waters, but it's been doing ok. There's a 2% MER though (I still have no idea how this is eventually paid).

GIC's aren't a bad idea still, better than the crap sub-2% ING savings account. No risk to boot. Just make sure you don't need that money to be very liquid.
 
UnatcoAgent

UnatcoAgent

Diamond Member
Oct 25, 1999
5,462
1
0
Originally posted by: Imp
GICs are shit right now at ING. It hurts me to see my shortsightedness from a year ago come back to bite me in the ass now (i.e. 4.6% one year GICs expiring soon to be renewed at 2.7%-ish).

Depending on how much risk you can tolerate, now appears to be an ok time to buy stocks/mutual funds before (god willing) they rise again.

Try an ING Streetwise bond fund. You can open it online, and transfer money easily from your savings account. I've only put a very small amount into it to test the waters, but it's been doing ok. There's a 2% MER though (I still have no idea how this is eventually paid).

GIC's aren't a bad idea still, better than the crap sub-2% ING savings account. No risk to boot. Just make sure you don't need that money to be very liquid.
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Right, and they have the short-term GIC's as well, 3, 6 and 12 months I think? I guess they are a much lower ROI though. Thanks for the input Imp.
 
UnatcoAgent

UnatcoAgent

Diamond Member
Oct 25, 1999
5,462
1
0
Originally posted by: racolvin
There are financial vehicles in place in the US that may or may not have an equivalent in Canada - I'm afraid I just don't know. Things like our SEP IRA is a nice place to stash money for retirement. Just to give you an idea:

* The SEP IRA is a retirement plan designed to benefit self employed individuals and small business owners. Sole proprietorships, S and C corporations, partnerships and LLCs qualify

* The SEP IRA has a maximum contribution limit of $46,000 for 2008 ($45,000 in 2007).

* Contributions to a SEP IRA are generally 100% tax deductible.

* Contributions to a SEP IRA are made exclusively by the employer. Employees do not contribute.

* Withdrawals from a SEP IRA are permitted after age 59 1/2 without penalty.


I would suggest contacting a Canadian financial adviser that would know more about what you can and can't do under your laws.
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Great, thank you, I will look into this further.
 
Red Squirrel

Red Squirrel

No Lifer
May 24, 2003
70,574
13,804
126
www.anyf.ca
Try to buy a place to live in, and then buy the studio so you own it. That will help you keep even more money in the future (rather far future) As far as investing, I'm not really sure myself but easiest route is check with your bank to see what they have as far as "high interest" savings accounts. I currently make about 30 bucks a month off interest in my bank account.
 
yllus

yllus

Elite Member & Lifer
Aug 20, 2000
20,577
432
126
Get started on your RRSPs - the tax benefits you'll get in return are fantastic.

I'm in a similar situation and think my game plan is going to be to set up a TD e-Series Funds account, then purchasing the TD Canadian Index fund.

As you and I are woefully ignorant laymen when it comes to picking stocks, I think that a fairly safe index fund that invests in domestic companies is the way to go. Here's the article that started me down the path to this conclusion:

The best investment advice you'll never get

As Google?s historic August 2004 IPO approached, the company?s senior vice president, Jonathan Rosenberg, realized he was about to spawn hundreds of impetuous young multimillionaires. They would, he feared, become the prey of Wall Street brokers, financial advisers, and wealth managers, all offering their own get-even-richer investment schemes.

One by one, some of the most revered names in investment theory were brought in to school a class of brilliant engineers, programmers, and cybergeeks on the fine art of personal investing, something few of them had thought much about.

First to arrive was Stanford University?s William (Bill) Sharpe, 1990 Nobel Laureate economist and professor emeritus of finance at the Graduate School of Business. Sharpe drew a large and enthusiastic audience, which he could have wowed with a PowerPoint presentation on his ?gradient method for asset allocation optimization? or his ?returns-based style analysis for evaluating the performance of investment funds.?

But he spared the young geniuses all that complexity and offered a simple formula instead. ?Don?t try to beat the market,? he said. Put your savings into some indexed mutual funds, which will make you just as much money (if not more) at much less cost by following the market?s natural ebb and flow, and get on with building Google.

The following week it was Burton Malkiel, formerly dean of the Yale School of Management and now a professor of economics at Princeton and author of the classic A Random Walk Down Wall Street. The book, which you?d be unlikely to find on any broker?s bookshelf, suggests that a ?blindfolded monkey? will, in the long run, have as much luck picking a winning investment portfolio as a professional money manager.

Malkiel?s advice to the Google folks was in lockstep with Sharpe?s. Don?t try to beat the market, he said, and don?t believe anyone who tells you they can?not a stock broker, a friend with a hot stock tip, or a financial magazine article touting the latest mutual fund. Seasoned investment professionals have been hearing this anti-industry advice, and the praises of indexing, for years.

But to a class of 20-something quants who?d grown up listening to stories of tech stocks going through the roof and were eager to test their own ability to outpace the averages, the discouraging message came as a surprise. Still, they listened and pondered as they waited for the following week?s lesson from John Bogle.
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Index funds have the great benefit of having very low fees as compared to their human-managed siblings (mutual funds). I'm going with TD's e-Series Funds because they're the best deal in Canada.
 
S

snoopdoug1

Platinum Member
Jan 8, 2002
2,164
0
76
Originally posted by: yllus

Index funds have the great benefit of having very low fees as compared to their human-managed siblings (mutual funds). I'm going with TD's e-Series Funds because they're the best deal in Canada.
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No vanguard or fidelity in Canada?
 
yllus

yllus

Elite Member & Lifer
Aug 20, 2000
20,577
432
126
Originally posted by: snoopdoug1
Originally posted by: yllus

Index funds have the great benefit of having very low fees as compared to their human-managed siblings (mutual funds). I'm going with TD's e-Series Funds because they're the best deal in Canada.
Click to expand...

No vanguard or fidelity in Canada?
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No Vanguard or Fidelity index funds up here, unfortunately. The MERs on funds up here in Canada are disgustingly high.
 
speg

speg

Diamond Member
Apr 30, 2000
3,681
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76
www.speg.com
Go set up a TFSA right now!

I would go with a TFSA over a RSP if I was just getting started, though it is up for debate depending on how your numbers add up.

But it's a simple concept and will save you tons on taxes. Everything you earn in the TSFA (Tax Free Savings Account) is completely tax free!!! Tax free! TAX FREE! FU government no taxes for you! Woohooo!

This is the first year they are available so don't miss the boat - you can put up to $5,000 in them every year.

After that, you still have to decided which investments you want to make. Are you wanting to invest in individual companies? Buy stock. Do you want to go with safe-but boring returns? Buy bonds/GIC's.
I would stay away from mutual funds, because ETF's give you the same thing. iUnits offers tons of flavours for your choosing.
 
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