Author Topic: 21 y/o, need advice  (Read 462 times)

lgn15

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21 y/o, need advice
« on: April 19, 2018, 12:12:48 PM »
Hi,

I'm 21. I have saved up $15,000 CAD from my job, because I live at home with almost no expenses. I opened a TFSA in a direct investing account at RBC. This is the account I would like to use for an investment. Wondering if there's any one index fund I can put everything into, and see returns in 1-2 years. I am risk averse.

Thanks!

Heckler

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lgn15

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Re: 21 y/o, need advice
« Reply #2 on: April 19, 2018, 12:53:14 PM »
I cannot buy this at RBC

RWD

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Re: 21 y/o, need advice
« Reply #3 on: April 19, 2018, 12:58:01 PM »
I cannot buy this at RBC

What funds are available? Typically you should look for the lowest expense ratio total market index funds.

Beard N Bones

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Re: 21 y/o, need advice
« Reply #4 on: April 19, 2018, 01:10:11 PM »
I think @lgn15 has pointed you in the right direction.

My questions to you would be:
1. Why are you risk adverse at the age of 21?
2. Why are you concerned about your returns 1-2 years down the road? Are you going to be FI/retired in 2 years?

lgn15

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Re: 21 y/o, need advice
« Reply #5 on: April 19, 2018, 02:17:32 PM »
I think @lgn15 has pointed you in the right direction.

My questions to you would be:
1. Why are you risk adverse at the age of 21?
2. Why are you concerned about your returns 1-2 years down the road? Are you going to be FI/retired in 2 years?

My life situation, can't afford to lose for the short term and I may likely need the money in 1-2 years, so trying to make the most of it.

lgn15

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Re: 21 y/o, need advice
« Reply #6 on: April 19, 2018, 02:18:28 PM »
I cannot buy this at RBC

What funds are available? Typically you should look for the lowest expense ratio total market index funds.
:( I don't know what that means, total index funds with the lowest fees? I was advised to buy global bond funds, does that fit?

RWD

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Re: 21 y/o, need advice
« Reply #7 on: April 19, 2018, 02:32:52 PM »
I cannot buy this at RBC
What funds are available? Typically you should look for the lowest expense ratio total market index funds.
:( I don't know what that means, total index funds with the lowest fees? I was advised to buy global bond funds, does that fit?
Yes, Total Stock Market Index Fund, Total International Stock Index Fund, Total Bond Market Index Fund, etc. You should be looking for fees under roughly 0.15%, preferably closer to 0.05%. At age 21 you should have minimal, if any, bond fund exposure.

These links may help:
http://jlcollinsnh.com/2013/05/02/stocks-part-xvii-what-if-you-cant-buy-vtsax-or-even-vanguard/
https://www.bogleheads.org/wiki/Asset_allocation
https://www.bogleheads.org/wiki/Investment_policy_statement

lgn15

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Re: 21 y/o, need advice
« Reply #8 on: April 19, 2018, 02:38:27 PM »
I cannot buy this at RBC
What funds are available? Typically you should look for the lowest expense ratio total market index funds.
:( I don't know what that means, total index funds with the lowest fees? I was advised to buy global bond funds, does that fit?
Yes, Total Stock Market Index Fund, Total International Stock Index Fund, Total Bond Market Index Fund, etc. You should be looking for fees under roughly 0.15%, preferably closer to 0.05%. At age 21 you should have minimal, if any, bond fund exposure.

These links may help:
http://jlcollinsnh.com/2013/05/02/stocks-part-xvii-what-if-you-cant-buy-vtsax-or-even-vanguard/
https://www.bogleheads.org/wiki/Asset_allocation
https://www.bogleheads.org/wiki/Investment_policy_statement

Well, I'm looking at what RBC offers and nothing with an MER under .28%

haflander

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Re: 21 y/o, need advice
« Reply #9 on: April 19, 2018, 02:49:04 PM »
I think @lgn15 has pointed you in the right direction.

My questions to you would be:
1. Why are you risk adverse at the age of 21?
2. Why are you concerned about your returns 1-2 years down the road? Are you going to be FI/retired in 2 years?

My life situation, can't afford to lose for the short term and I may likely need the money in 1-2 years, so trying to make the most of it.

I know about 1% as much as the stock experts around here. However, considering the bolded above, shouldn't we be steering OP AWAY from the stock market, including index funds, completely? If you're risk averse and need the money in 1-2 years, then the highest guaranteed rates I've seen are goverment I bonds, around 2.5%; these are what I plan to use in the future for my house down payment savings. I want to use I bonds for my DP because Idk when exactly I'll have enough saved to buy a house (idk whether house prices in my area will be affected by the next recession).

EDITED to add: sorry, I forgot you're in Canada. Maybe Canada has some similar government options available? Others can chime in.
« Last Edit: April 19, 2018, 02:51:46 PM by haflander »

lgn15

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Re: 21 y/o, need advice
« Reply #10 on: April 19, 2018, 02:59:13 PM »
I think @lgn15 has pointed you in the right direction.

My questions to you would be:
1. Why are you risk adverse at the age of 21?
2. Why are you concerned about your returns 1-2 years down the road? Are you going to be FI/retired in 2 years?

My life situation, can't afford to lose for the short term and I may likely need the money in 1-2 years, so trying to make the most of it.

I know about 1% as much as the stock experts around here. However, considering the bolded above, shouldn't we be steering OP AWAY from the stock market, including index funds, completely? If you're risk averse and need the money in 1-2 years, then the highest guaranteed rates I've seen are goverment I bonds, around 2.5%; these are what I plan to use in the future for my house down payment savings. I want to use I bonds for my DP because Idk when exactly I'll have enough saved to buy a house (idk whether house prices in my area will be affected by the next recession).

EDITED to add: sorry, I forgot you're in Canada. Maybe Canada has some similar government options available? Others can chime in.
Pls see the attached pic. This is what I found RBC offered for a bond, if I understand correctly it returns 10%? matures in 2020 so great for me. is this safe? it is provincial

haflander

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Re: 21 y/o, need advice
« Reply #11 on: April 19, 2018, 03:20:40 PM »
Sorry but I don’t think it returns 10%. It looks like you get a 10% DISCOUNT, meaning you only have to pay 90% of the original price. The interest is 1.912% semiannually (twice a year or once every six months). If my math is correct, by Feb 3, 2020, (three 6-month periods, unfortunately it's too late to get four), you’d end up with 15,860 if you invested all of the 15,000. That’s not including the 10% discount, so you’d actually get a little more. Wait for someone else to confirm or correct my math, though.

It’s VERY DIFFICULT to get a guaranteed rate of return over 3% if we’re talking about investments in a short time period (as opposed to money you’d SAVE by paying off a debt that you owe, like a car or student loan of 5%).

Good job for asking these questions at your age!

lgn15

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Re: 21 y/o, need advice
« Reply #12 on: April 19, 2018, 03:28:53 PM »
Sorry but I don’t think it returns 10%. It looks like you get a 10% DISCOUNT, meaning you only have to pay 90% of the original price. The interest is 1.912% semiannually (twice a year or once every six months). If my math is correct, by Feb 3, 2020, (three 6-month periods, unfortunately it's too late to get four), you’d end up with 15,860 if you invested all of the 15,000. That’s not including the 10% discount, so you’d actually get a little more. Wait for someone else to confirm or correct my math, though.

It’s VERY DIFFICULT to get a guaranteed rate of return over 3% if we’re talking about investments in a short time period (as opposed to money you’d SAVE by paying off a debt that you owe, like a car or student loan of 5%).

Good job for asking these questions at your age!
Thanks :)

Heckler

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Re: 21 y/o, need advice
« Reply #13 on: April 19, 2018, 05:27:40 PM »
To be ultrasafe, buy a GIC in your TFSA or use a savings account TFSA.  Both will return a paltry ~1%.  The GIC is likely locked in for a given time, but a savings account is cashable any time. 


https://www.rbcdirectinvesting.com/investment-choices/gics.html


Heckler

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Re: 21 y/o, need advice
« Reply #14 on: April 19, 2018, 05:34:59 PM »
A cashable anytime savings TFSA would be with RBC (not RBCDI), and give you 0.85% tax free

http://www.rbcroyalbank.com/rates/rsp.html

:woot: ??

Heckler

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Prairie Stash

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Re: 21 y/o, need advice
« Reply #16 on: April 24, 2018, 04:44:17 PM »
I get it, OP is at RBC the bank which has terrible options, like the lack of vanguard funds.

@lgn15 you need to be at RBC Direct Investing. Its owned by RBC (the bank) but is for people who want to buy ETF and stocks themselves. RBC Direct is the trading platform, I can buy VCNS at RBC direct but not at RBC bank.

You need to set up a new account, it takes 10 minutes. Its all free. Until then you can't buy an ETF or a lot of the lower fee products.

PM if you need more information, I have plenty of experience with RBC and RBC Direct.