Author Topic: Is it too late for me? (I am Canadian)  (Read 3680 times)

TVVIN

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Is it too late for me? (I am Canadian)
« on: January 22, 2018, 07:35:42 PM »
Due to certain circumstances I have been delaying a lot of events in my life. Even with a University degree it is still hard to land a high salary job. I have been working a few odd jobs trying to survive and have started working at TD. I will be 30 years old in a few months and I really should start investing for my future. I have been reading a lot on the forum but most of it seems to pertain to people from the US so therefore I am seeking some guidance to retire early (if possible) for an individual residing in Canada.

Background:
Status: Single
Country: Canada
Salary: $42,000+ (Have been promoted and salary will increase)
TD High interest savings account: $140,000...
Debt: $0
TFSA: $0...
RRSP: $0...
TD Pension: $0...
I think my tolerance is moderately aggressive. 

I found out today I could enrol in the TD pension plan so I selected an additional option for the “Top up” plan and elected for 3%. The representative said it was for people who wanted to retire early (hopefully it is worthwhile?).

So for the pension distribution I selected:
TD Canadian Bonds index fund:10%
TD Canadian Index Fund:   40%   
TD US Index Fund:      25%
TD International Index Fund:25%

I am unsure about tax treatments so please share your thoughts for these funds/distribution breakdowns. Please mention if a certain fund should not be in a pension.

As for the $140,000, I was thinking of opening a TD Direct investing account and selecting Vanguard funds. Since my salary is low I guess maxing out the TFSA would be my first priority. I would like to inquire recommendations on what type of Vanguard funds/distribution percentages can be in a TFSA which is optimizing tax treatments for a Canadian.

With the remainder of the savings what should I do with it?

Much appreciated.






DavidAnnArbor

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Re: Is it too late for me? (I am Canadian)
« Reply #1 on: January 22, 2018, 07:40:30 PM »
That pension allocation looks really good, and I would do the same with your cash, though keep some cash as your emergency fund.

tyir

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Re: Is it too late for me? (I am Canadian)
« Reply #2 on: January 22, 2018, 09:21:24 PM »
Check out canadiancouchpotato.com
for example: http://canadiancouchpotato.com/model-portfolios-2/

Beard N Bones

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Re: Is it too late for me? (I am Canadian)
« Reply #3 on: January 23, 2018, 05:29:49 AM »

So for the pension distribution I selected:
TD Canadian Bonds index fund:10%
TD Canadian Index Fund:   40%   
TD US Index Fund:      25%
TD International Index Fund:25%

That is a high % allocated in the Canadian market. I have 25% Canada in my own portfolio and I feel that's on the high end.
Quote

I am unsure about tax treatments so please share your thoughts for these funds/distribution breakdowns. Please mention if a certain fund should not be in a pension.

As for the $140,000, I was thinking of opening a TD Direct investing account and selecting Vanguard funds. Since my salary is low I guess maxing out the TFSA would be my first priority. I would like to inquire recommendations on what type of Vanguard funds/distribution percentages can be in a TFSA which is optimizing tax treatments for a Canadian.
Yes, max out your TFSA first since you're income tax is low. Here are 2 awesome articles that should shed light on taxation and allocation as Canadians.
http://www.canadianportfoliomanagerblog.com/wp-content/uploads/2016/01/PWL-Model-ETF-Portfolios-Broad-Market-Bonds-20151231.pdf?850eac
http://canadiancouchpotato.com/2010/03/05/put-your-assets-in-their-place/

TVVIN

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Re: Is it too late for me? (I am Canadian)
« Reply #4 on: January 23, 2018, 05:33:24 AM »
Thank you for the help so far. In terms of brokerage account would the TD Direct investing account be the most cost efficient brokerage?

plainjane

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Re: Is it too late for me? (I am Canadian)
« Reply #5 on: January 23, 2018, 07:19:01 AM »
In terms of brokerage account would the TD Direct investing account be the most cost efficient brokerage?

It depends - if you're working at TD, you might have a better deal on TD Direct Investing than the general public.

Couch Potato suggests Questrade, which charges very little if you are buying ETFs like Vanguard.

Beard N Bones

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Re: Is it too late for me? (I am Canadian)
« Reply #6 on: January 23, 2018, 07:54:02 AM »
In terms of brokerage account would the TD Direct investing account be the most cost efficient brokerage?

It depends - if you're working at TD, you might have a better deal on TD Direct Investing than the general public.

Couch Potato suggests Questrade, which charges very little if you are buying ETFs like Vanguard.

I'll +1 that.
I use TD for RESPs.  I am happy with the e-series index funds they have (as mentioned on Canadian Couch Potato).  However, if I would do it again, I would use Questrade exclusively.  It was a real hassle setting up the RESP at the nearest TD branch.  And making purchases online with TD is not as easy as it should be.  The online user interface for TD Easy Web is not good at all compared to other online brokerages.  Getting set up with Questrade is easy.  Investing with them is easy. 
Here is a good comparison of online brokerages: http://www.moneysense.ca/save/investing/canadas-best-online-brokerages-2017/

BTDretire

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Re: Is it too late for me? (I am Canadian)
« Reply #7 on: January 23, 2018, 09:05:11 AM »
As I've said on several, "is it to late" threads, whatever age you retire at, would you rather retire having $0 savings or 'only' have $500,000 in assets? $500,000 isn't $1,000,000 but it's still a lot of money.
 I was in my late 40s before I really started to see the snowball getting bigger.
 It's not to late!

Lews Therin

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Re: Is it too late for me? (I am Canadian)
« Reply #8 on: January 23, 2018, 09:19:44 AM »
140k, Fill up your TFSA right away, it`s an easy first step.

Use your TFSA to invest (either with TD if they offer competitive pricing to National Bank or Questrade (Both have extremely low fees)

Start looking at your marginal rate of taxes (what % your next dollar of income would be taxed at) and start making a plan for when you will be contributing to RRSP. If your salary will only be going up by 2k, 4k, it`s not worth waiting very long to start using some RRSP.

Take the rest of the 140k - TFSA - (Small emergency fund) and invest in an unregistered investment account. This will be the money you will use for the next multiple years to transfer into your RRSPs, instead of having it sit and do nothing.

Ask for all the information on the pension plan: What exactly is it? How long do you have to contribute? What is the expenses fees of the accounts.
For yourself: Start reading blogs like canadian couch potato; therichmoose.com, or the two MMM canadian investing posts by FrugalTuque.

140k is an excellent start for savings, as it should boost your income by 6-8k per year.

I`d also recommend posting a case study, if you want to figure out exactly where you are and get more info. (Read the How-to write a case study on the forum`s home page)

Jrr85

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Re: Is it too late for me? (I am Canadian)
« Reply #9 on: January 23, 2018, 09:39:15 AM »
Due to certain circumstances I have been delaying a lot of events in my life. Even with a University degree it is still hard to land a high salary job. I have been working a few odd jobs trying to survive and have started working at TD. I will be 30 years old in a few months and I really should start investing for my future. I have been reading a lot on the forum but most of it seems to pertain to people from the US so therefore I am seeking some guidance to retire early (if possible) for an individual residing in Canada.

Background:
Status: Single
Country: Canada
Salary: $42,000+ (Have been promoted and salary will increase)
TD High interest savings account: $140,000...
Debt: $0
TFSA: $0...
RRSP: $0...
TD Pension: $0...
I think my tolerance is moderately aggressive. 


$140k  (~$112k USD?) net worth would put you somewhere just north of the 50th percentile in networth.  The median net worth of a 30 year old in the U.S. is less than $10k I think.  I would suspect $112k in net worth at age 30 is probably pretty close to average even on this forum(?), although admittedly $42k in income at 30 might be somewhat lower than average.  So no, you are not late or even behind if you were really worried about that.
   


Retire-Canada

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Re: Is it too late for me? (I am Canadian)
« Reply #10 on: January 23, 2018, 11:05:05 AM »
Your post title says "Is it too late for me?" You need to provide some more information if you want this question answered.

How much do you spend a year not including taxes & savings? Is this an amount you can live off of when you are retired?

Prairie Stash

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Re: Is it too late for me? (I am Canadian)
« Reply #11 on: January 23, 2018, 11:38:58 AM »
At 30 with $140,000.

If you visit the rule of 72 (time it takes money to double is 72/rate), assuming 7% returns after inflation (1950-2009 the S&P returned 7% after inflation including dividends).  At age 60 it will be 1,120,000 which yields about $45k/year (inflation adjusted already by using real returns). On top of that you'll get CPP of about $10k/year. At age 60 you'll have more money than you do today. These are rough numbers to illustrate the power of time.

The point is that a stash of $140k at age 30 is enough to retire on at age 60, if its invested. How much younger you retire is up to you and how much you save vs. spend.

Welcome to the forum.

BTDretire

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Re: Is it too late for me? (I am Canadian)
« Reply #12 on: January 23, 2018, 01:18:19 PM »
At 30 with $140,000.

If you visit the rule of 72 (time it takes money to double is 72/rate), assuming 7% returns after inflation (1950-2009 the S&P returned 7% after inflation including dividends).  At age 60 it will be 1,120,000 which yields about $45k/year (inflation adjusted already by using real returns). On top of that you'll get CPP of about $10k/year. At age 60 you'll have more money than you do today. These are rough numbers to illustrate the power of time.

The point is that a stash of $140k at age 30 is enough to retire on at age 60, if its invested. How much younger you retire is up to you and how much you save vs. spend.

Welcome to the forum.
Gee Prairie, I wanted to argue with you, but I ran $140,000 at 10% for 30 years and got $2,443,000.
I ran 4% of 2,443,000 and got $97,720. Then I ran $40,000 at 3% for inflation for 30 years and got $97,090.
 The magic of compound interest!

JAYSLOL

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Re: Is it too late for me? (I am Canadian)
« Reply #13 on: January 23, 2018, 03:25:51 PM »
I would say it's not too late, not even close to too late.  Consider posting a full case study with your income/debt/spending all laid out as well as your goals for retirement.  I'm a few years older than you, with similar income and just got started saving a couple years ago.  Read as much as you can here as well as Canadian Couch Potato and you will be well on your way. 

bluebelle

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Re: Is it too late for me? (I am Canadian)
« Reply #14 on: January 23, 2018, 03:40:59 PM »
Since you're working at TD - check to see if you're eligible for the stock purchase plan.  If it's anything like RBC's, there's a 50% match up, you purchase $1 of stock, they throw in 50 cents worth, of CANADIAN BANK STOCK (hard to go wrong there).  When I was an RBC employee, I always bought the max of 10% each pay.  You may want to cash out each year or every so often so you don't become over-weighted in your company stock.  But if it's offered to you, it's a smoking deal, and don't leave that money on the table.

TVVIN

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Re: Is it too late for me? (I am Canadian)
« Reply #15 on: January 24, 2018, 07:32:55 AM »
Thank you for the help everyone. I have decided to open a questrade account for my TFSA since TD direct investing charges $9.95 for EFTs per trade. For questrade would I need to set up a DRIP after I invest in some funds or is it automatically completed for you?

Retire-Canada

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Re: Is it too late for me? (I am Canadian)
« Reply #16 on: January 24, 2018, 08:00:58 AM »
For questrade would I need to set up a DRIP after I invest in some funds or is it automatically completed for you?

Since ETF buys are free at QT I let the dividends settle in my account and then I use them to buy what ETFs I want depending how my actual AA has drifted from my desired AA. Even with only one ETF in an account QT DRIP will only buy whole shares of an ETF so there isn't really any difference between DIY and DRIP unless you simply want to ignore your QT account for a long long time and know the dividends are getting put to work.

Lews Therin

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Re: Is it too late for me? (I am Canadian)
« Reply #17 on: January 24, 2018, 09:22:43 AM »
TVVIN: since you have more than 100k you can transfer over to Questrade, you can use someone`s referral number and get 250$ in free money (they get 25$)

Pick your favorite blogger or check if you know somebody that has it, since 250$ is a nice welcome!

I second R-C, I also don`t drip in order to both keep the cost basis of my positions simple, and it allows me to re-invest in whichever has lowered (rebalancing)

Prairie Stash

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Re: Is it too late for me? (I am Canadian)
« Reply #18 on: January 24, 2018, 10:14:00 AM »
Thank you for the help everyone. I have decided to open a questrade account for my TFSA since TD direct investing charges $9.95 for EFTs per trade. For questrade would I need to set up a DRIP after I invest in some funds or is it automatically completed for you?
Set up the Non-Registered (NR) account at the same time. You Should have all three; RRSP, TFSA, and NR. Do NOT set up the DRIP on the NR, its a mess to calculate ACB (Adjusted Cost Basis) afterwards, this makes tax time a pain. Its okay to have DRIP in RRSP and TFSA, if I recall correctly its a check box on the sign up page to get DRIP.

Also find some threads about the NR account. Most Canadians don't understand how awesome they are or how to use them correctly. The most common mistake is putting money into an RRSP and delaying the claim, its always better to put money into a NR account if you're delaying claiming the RRSP credits (exception: if its done for a company match). This sort of information is useless outside this forum, most people don't have enough saved for it to matter. ;)

TVVIN

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Re: Is it too late for me? (I am Canadian)
« Reply #19 on: January 25, 2018, 07:15:03 AM »
I am extremely great full for the encouragement to not hesitate anymore and all the help. I have maxed my TFSA with the funds I had in mind.

Questions: My employer matches a certain amount for the share ownership plan, I am still debating to open a GRSP but I would to need open a wealth account and pay a stock or an ETF trading fee. Should I keep the share ownership plan in a Non registered and just leave it as TD stock or open an RRSP with questrade?

My Aunt is asking me to claim the value of the GRSP from the share ownership plan and keep carrying over the RRSP available contribution room to defer taxes (since I had $0 in RRSP I have a lot of unused RRSP room) Should I do that or max the RRSP at questrade?

RichMoose

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Re: Is it too late for me? (I am Canadian)
« Reply #20 on: January 25, 2018, 11:00:34 AM »
I am extremely great full for the encouragement to not hesitate anymore and all the help. I have maxed my TFSA with the funds I had in mind.

Questions: My employer matches a certain amount for the share ownership plan, I am still debating to open a GRSP but I would to need open a wealth account and pay a stock or an ETF trading fee. Should I keep the share ownership plan in a Non registered and just leave it as TD stock or open an RRSP with questrade?

My Aunt is asking me to claim the value of the GRSP from the share ownership plan and keep carrying over the RRSP available contribution room to defer taxes (since I had $0 in RRSP I have a lot of unused RRSP room) Should I do that or max the RRSP at questrade?

Generally you want to invest as much as you can to take advantage of the maximum match offered by the employer. This includes any type of Employee Share Purchase Plan and Group RSP. But don't invest a penny more than that in the plan. You don't want to get too loaded up on any single stock, or have all your RRSPs in a higher-free group plan.

I'm not sure how your ESPP works, but often these are only available in NR accounts.

Take advantage of the plan matches first, then worry about any remaining RRSP contributions in February of next year as tax time comes. This gives you time to figure out what your taxable income will be. Depending on your income/spending/saving situation, you generally don't want your RRSP contributions to bump your taxable income below the upper limit of first tax bracket (around $46,000). At that point you are better off investing in a NR account and deferring any RRSP contributions to future higher income years.

That said, I would still open the accounts at Questrade and keep the option open so you don't have to file paperwork and forms next February in a panic before the "RRSP deadline".

Don't forget, you can always invest in your NR account in the meantime and transfer any positions with capital gains to your RRSP later when it's convenient to take the tax break. (Don't transfer at a loss as for some weird reason it makes the loss non-deductible).

Acastus

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Re: Is it too late for me? (I am Canadian)
« Reply #21 on: January 29, 2018, 11:15:42 AM »
Try looking for a job down here in Trumpland. Your pay will probably increase 20% in the number and another 20% when you consider the exchange rate. Fewer state benefits, of course.