$130,000 Inheritance, what would a mustashian do?

[KMoney]

Hello everyone!
I am a Canadian reader of this blog and have been striving to increase my badassity. Up until recently that involved paying down my student loan (went back to school at the age of 28) as quickly as possible. However I just inherited $150,000 and immediately paid down the remainder of that loan. I am now debt free!
I am left with just over $130,000 and and trying to determine what exactly to do with this money. Here is some background:
- Currently I have no retirement savings. First thing I would like to do is max out my RRSP and TFSA contributions.
- I have an emergency fun of about $1,000, I would like to bump that up to $10,000.
- I live in Vancouver BC one of the most expensive cities to purchase property. I am a part of a rental co-op and as a result have an amazingly low rent (under $600) and live by myself downtown within walking/biking distance to work.
- I don't own a car, am single, and have no kids. Having a family would still be at least 5 years away.
- I am 33 years old and make $38,000/year. Now that I am debt free I am planning to save $450/month which is about 17% of my take home pay.
- The goal would be to eventually buy a place and of course to retire comfortably when I am ready.

Here is what I was thinking:
- Max out my TFSA and put at least $50,000 into an RRSP. Invest using the TD e-series index funds as described by the Frugal Toque. http://www.tdcanadatrust.com/products-services/investing/mutual-funds/td-eseries-funds.jsp
- Keep my $10,000 emergency fund in a high interest savings account which earns 1.05% interest.
- Invest the rest in a ladder GIC with the plan to eventually use it as a down payment?

Thoughts? What would you do with a blank slate and $130,000 to invest?

[Prairie Stash]

Basically the same plan.  TFSA, them RRSP.  Make sure you have the RRSP room first though, double check your Tax summary.  Earning $38K but taking time off for school might mean you don't have a lot of room, although given the amount you quoted I assume it wasn't just a random nice big number.

I'd take my extra cash and put it into Tangerine banking (formerly ING).  They pay 1.35% currently, which is my current floor for cash savings.  If a GIC or any product is below this it's not worth it for me. So I would also skip the 1 year GIC from most banks (RBC is 1.30%). I like having large amounts of cash separate from regular banking to avoid daily temptations.

Since you plan on saving 17% (shy of the 18% RRSP annual contribution room) and not knowing if you have a work pension there's one other detail.  Next year you can contribute $5500 to your TFSA again. I would consider moving the GIC money into your TFSA over time if you don't have a plan. Keep it in mind when designing the ladder.

Why would you buy a house if rent is so cheap? Until your life changes I wouldn't move.

[KMoney]

That is a fair point re the housing, I shouldn't count on wanting to move since I am happy where I am and I am not sure when I will want to start a family. I guess I just like knowing the money would be available down the road should I choose to buy in a few years.
Perhaps I should only keep some of the extra funds in a 5 year GIC to earn an even higher interest rate but move whatever I determine I would like access to in the short term to Tangerine. A quick trip to their website says they are offering an 2.5% interest rate on new deposits made before July 31st!!!

[aj_yooper]

Congratulations on being debt free!  And, lower expenses in a HCOLA area.  I like your plan to have $10K in emergency fund.  The housing down payment is understandable, but, with such an inexpensive housing option now, it looks less interesting to me.  So, you are now at $120K - house down payment money.  Say the down payment is $50K; then you have $70K to invest.

This is a little out of the box:

Max out your RRSP and take advantage of past years when you did not contribute.  So, you could do $24K+ and your TFSA for $5500 per year; do this once and a second partial year, at a cost of $30K+ per year.  Establish a budget with the inherited money for your expenses plus some from your job, avoiding lifestyle inflation. 

This way you load up your accounts and hopefully save on taxes.  I am in the US so take this for what it is.

Best wishes.

[Zikoris]

Shoutout from a fellow Vancouver housing co-op member, also downtown, similar age and income! As a side note, aren't the co-ops here great? Where else can you live in the downtown core of a major city for these prices??

Like the others, I would abandon the idea of buying (if you need a bigger, more family friendly place, a lot of the co-ops are pretty accommodating). Max the tax advantaged accounts, invest the rest.

The e-series are great once they're set up, but holy christ do you have to jump through some hoops to get them up and running - it took my boyfriend a solid month of meetings, phone calls, mailing things around, going to multiple branches to find someone semi-competent, and doling out complaints left and right to get the damn thing open. If you're going to go that route, steel yourself and make sure you know EVERYTHING about them so you can fix the employee's screw ups. Most employees have never even heard of them. Don't get suckered into opening a Waterhouse fee account - they'll try to get you to do that a bunch of times as well. Personally, while I'm a big fan of the funds and the low MERs, I keep my own investments elsewhere as I simply don't have the stomach to go through the crap my boyfriend did.