$5000 to invest...

I just finished paying off the student loan and now I've got $5000 to invest + the ability to contribute $250-300/month (~3000/year) continuing into the future…

I was thinking purchasing a 5-year RRSP GIC, deducting it from my income tax, and investing my tax return in a TFSA. Is this a reasonable course of action?? I seriously no nothing about this kind of stuff.

also, any reason not to invest out of province? if i go to Manitoba, 5-year rates are 3% vs 2.2% if i stick with my current daily banking institution.

I haven't really given any thought to future big purchases and no i don't want to fuck around with stocks or mutual funds or that kind of shit

I'm 25 + make ~$50,000/year, max rrsp contribution is ~$14,000

Thanks!

Couch potato investing. Google it.

Lego

If you have a long term horizon, invest in equities through your RRSP. If you have time and want to put in the effort to learn about the market, then try your hand at a self directed account through a discount brokerage. If you don't have the patience, buy into a mutual fund with a good return history (10%+ compounded returns over 10 years + is a good rule). Past performance is not an indication of future performance, but it is an indicator of a good strategy, and those usually pay off.

-source, I'm the CFO at a small mutual fund in Vancouver.

what about a smaller amount through an RRSP (for tax return purposes), and the same investment in equities through a TFSA, so as to not have to pay taxes on them later in life, when it is possible that the personal tax rate could be higher for our generation when cashing out RRSP's….

just saying….

GIC's at current interest rates are a bit of a joke. I have one of those escalating 3 year term deposits that gets 3% in the 3rd year. Woohoo… Why? Because I had little money to invest before, it was as easy as a trip to the bank, and I cared more about not owing money on my tax return. Now that I will actually have money more thought is going into it.

- source: an armchair investor who's had no money until this year, but vowed to do the right thing when he finally had it….

what about a smaller amount through an RRSP (for tax return purposes), and the same investment in equities through a TFSA, so as to not have to pay taxes on them later in life, when it is possible that the personal tax rate could be higher for our generation when cashing out RRSP's….

just saying….

That's a good option too.

The ideal mix is up to the individual. RRSP and TFSA accounts should be used as a tool to minimize the tax burden in the long term. It really depends on what your financial needs are, now vs future, short vs long term investing.

I personally try to max my RRSP (and tax refund amount) annually and use the refund to either buy more RRSP or put in TFSA, it's depended on the year. I've convinced myself that the tax system in BC will look more favourably on individuals in the future over today and therefore will result in me paying fewer taxes after retirement. I also intend on earning less in retirement than I earn today, as my mortgage will be done and will likely have non dependent adult children.

here is a decent article discussing the RRSP/TFSA decision: http://www.thestar.com/business/personal_finance/2013/02/17/tfsa_or_rrsp_try_these_five_tests.html

edit: there is also the matter of time value of money, opportunity cost and the PV concept, whereby the tax refund you receive today will then start earning you money, that is money that you would not have otherwise had available to earn income/capital gains/interest. Simply put, having a higher refund will allow you to use more after tax dollars to earn tax free gains in RRSP refund is put into TFSA.

My advice is terrible, but I would buy a new bike. ;-)

Sent from my Galaxy Nexus using Tapatalk

Not sure how helpful anyone can be if you want to invest, but "don't want to fuck around with stocks or mutual funds."

I think you might be more in need of tax advice.

My advice is terrible, but I would buy a new bike. ;-)

Sent from my Galaxy Nexus using Tapatalk

Yes, health and wellness is likely the best investment one could make.

I should add, before you do anything or ask any more questions especially at your age with your earnings this is absolutely mandatory reading:

http://www.mrmoneymustache.com

I just finished paying off the student loan and now I've got $5000 to invest + the ability to contribute $250-300/month (~3000/year) continuing into the future…

I was thinking purchasing a 5-year RRSP GIC, deducting it from my income tax, and investing my tax return in a TFSA. Is this a reasonable course of action?? I seriously no nothing about this kind of stuff.

also, any reason not to invest out of province? if i go to Manitoba, 5-year rates are 3% vs 2.2% if i stick with my current daily banking institution.

I haven't really given any thought to future big purchases and no i don't want to fuck around with stocks or mutual funds or that kind of shit

I'm 25 + make ~$50,000/year, max rrsp contribution is ~$14,000

Thanks!

It's great to read about someone who a) paid off there student loan, and b) is thinking ahead. :)

In some ways, RRSP and TFSA are the same (tax free growth, contribution limit that accumulates), but the TFSA allows you to withdraw without penalty. If you haven't put money into your TFSA, you should have some room in there beyond this years $5.5K, so put the money in there. This gives you better access to the money if you need it. If there isn't enough room, or it you fill it up in the future, move money to your RRSP.

However, if you're pretty sure you won't need the money, do your suggestion of RRSP for the write-off and the extra cash back into a TFSA (or next year's RRSP).

My advice is terrible, but I would buy a new bike. ;-)

Im with this guy. You're young, have some fun with it. Travel, day of heli, moto, etc…

Im with this guy. You're young, have some fun with it. Travel, day of heli, moto, etc…

or epic road trip. different kinds of investing bro.

or epic road trip. different kinds of investing bro.

i'm with Adam, pack your bike and a surfboard and drive down to Baja california.