Investment Options for a 17 year old Canadian

[going2ER]

My 17 year old daughter works at Tims and only spends her tips. She has paid for her grade 12 European tour trip and has some set aside for her first year at NSCC for next year, but would like to do something more productive with her other savings. Due to her age she can not start an RRSP, which was her first thought, nor open a TFSA which was my first thought. She is currently with PC financial and they are giving her 2.5% for new deposits that she puts into her savings, which is where she transfers all of her money once its deposited by work, but that ends the end of February. Is there anything out there for a 17 year old other than a savings account that may get 1%?

[RichMoose]

Unfortunately options are very limited until she turns 18. Regardless, I wouldn't start an RRSP at this point because she probably has a very low income and would be in the lowest tax bracket so it will actually cost her money from a tax perspective. She will likely stay low income for a while if she plans to go to college. The best thing for her to do right now is keep going with the "high interest" savings account. Once she turns 18, open a TFSA through Questrade and roll the money (up to $5500 limit) into the TFSA. If she saves more than what she can accumulate annually in the TFSA, open a regular investment account.

She's off to a great start though! If you haven't already, try and convince her to read the Wealthy Barber and Wealthy Barber Returns.

[Mr. Captain Cash]

I would agree with Tuxedo that once she turns 18 put her cash into a TFSA instead of an RRSP. She will most likely having little RRSP contribution room built up and more importantly from a tax perspective.

Which brokerage account you want to open for her to invest through moneysense has put a nice review together.

http://www.moneysense.ca/invest/canadas-best-discount-brokerages-2014

Tuxedo, funny you mentioned those two books as they were the first two I read when I started to get interested in investing.

Mr. Captain Cash

[going2ER]

Thanks for the replies. She already has over $5500 to save/invest so as soon as she is 18 she will max out her TFSA.

Although she is good with money she has no interest in reading about it. The only thing she seriously studied was a small chart I printed off for her that showed someone saving $700/month from age 21 to 35 and then someone saving $1200/month from about 30-45 and how the person who started earlier, but put in less per month had a lot more, I'm uncertain of the exact figures off hand. She just likes seeing her money grow.

Likely I will be the one to research and get any accounts set up for her, just nervous since it is not my own money.

[Mr. Captain Cash]

Going2ER,

The lack of interest makes sense as she is young and has little money to invest with right now. Her interest will pick up once she has more money to invest and is able to actually see her own results compared to results of others.

At least that has been the case with my girlfriend, once she invested her own money and could see the growth and dividend distributions she was a lot more interested about it than when hearing about my results.

Regardless, down the road your daughter will be very thankful you got her accounts set up and started in the right direction.

Great job,

Mr. Captain Cash