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so.....few savings questions.

Discussion in 'Reality Check' started by watcha, Mar 1, 2009.

  1. watcha

    watcha
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    Born Killer

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    ok so I'm trying to plan for the future a bit.
    I want to set up soem sort of savings to deposit about 20% of my net income a month(once I'm at a point that I have 20% to save)

    the conditions are I would like to always have access to the money without paying penalties on withdrawls. as "just in case" money.
    I don't like the idea of dropping it into a savings accoutn where it earns .0000001% yearly interest.

    1. would a mutual fund account work for this?
    2. how about just using a TFS account? whats the best rate you've found?
    3. RRSP's are an option?
    4. should I make an appointment with a financial planner instead?

    thanks RC you kill Me!
     
  2. dpwu32

    Trash elf

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    RRSP is out if you want access with no penalties.

    A TFSA is your next best bet tax wise. As for "rates" most of the major banks seem to offer about 2-3% for their "TFSA," when in reality you can hold almost anything you want in a TFSA (mutual funds, bonds, GIC's, savings accounts, stocks, etc).

    Depends a lot on your risk tolerance too.

    Your best bet might be to talk to a financial advisor, and they can assess your goals/risk tolerance/etc and give youa few options.
     
  3. Twopoops

    Hidey Ho

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    You can always save 20% of your income. It's just a matter of shifting around priorities/making lifestyle changes. The reason nobody does it is because it often involves taking a step down from what they are accustomed to.

    What is the real goal of this money? You say the goal of this money is "just in case" money, but 20% of net income into a safe investment is eventually going to be overkill. If the goal is to have a slush fund of 3-6 months expenses at all times, build it up and then redirect your contributions to something that perhaps has better returns over the long run. Again though, it depends on your goals, and risk tolerance.

    1. You could easily use a mutual fund account to meet your goals.

    2. TFSA's are a type of account that you are able to hold various products in. There is no "best rate". Like dpwu32 said, stocks, bonds, mutual funds, savings accounts, gic's, etc. can all be held in a TFSA. There is a $5,000 contribution limit per year. I don't know how much you make, but this could pose a problem depending on your income.

    3. RRSP's could be an option if one of your goals is actually for longer term money. RRSP's are similar to TFSA's in the sense that generally the same products can be held in either account. There are taxation issues which would not make RRSP's a good choice for short term money, but possibly a good choice for longer term money.

    4. Where do you live? I want to say Fredericton ...
     
  4. watcha

    watcha
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    Born Killer

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    yup Fredericton.
    I can't save 20% right now as I'm only covering my bills due to being out of work.
    but I'm working on a plan once I get back to work to increase my savings and pay down my debt.

    I'm trying to plan for my future now, have built myself a budget, and have been keeping to it over the last two months.

    this all came about from a new years resolution....lol
     
  5. Twopoops

    Hidey Ho

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    Well good for you. If you've been on the budget for 2 months and have stuck to it, it should be habit now.

    If you do want more info on anything, just pm me.
     
  6. Canuck

    Active Member

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    Is there any way to take advantage of the current interest rates, I see Prime is now 2.5%? I know that doesn't directly reflect lending rates but after reading some on investment loans etc... it seems like there could be a lot of opportunity here.

    As my investment knowledge is limited to RRSP contributions, can someone point me to some initial light reading? I have been planning to meet with a financial advisor soon, but I like to at least try and learn a few things before going in blind.
     
  7. Twopoops

    Hidey Ho

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    I'm an investment rep ..

    Rates for investment loans/lines of credit haven't changed that much in the past couple months. If anything, I'd say conditions are getting tougher. Although prime keeps dropping, lending institutions don't seem to be passing it on. Mind you, borrowing at 4-4.5% is still cheap. Also, the interest deductibility if you invest in a non-registered account is attractive.

    Are you looking for info on investment loans or just investments in general?
     

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