Author Topic: Dedicated accounts or funds  (Read 2286 times)

Le Poisson

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Dedicated accounts or funds
« on: February 05, 2016, 02:23:15 PM »
I'm thinking about making a couple of dedicated accounts or funds that I want to keep separate from the family budget, but I am not sure what sort of vehicle to put them in or what type of investment to use. Wondering if anyone here has ideas.

Fund 1: Pay off the mortgage fund - this account will see about $200 per month in deposits which will accumulate for about 15 years before being used in a manner like unto Thor's mighty hammer to destroy the remaining bits of our mortgage.

Fund 2: Side Gig/Other income Fund - While our main savings vehicles (TFSA and RRSP's) will always get contributions from us, I would like to keep this "Business earnings" account separate from the family savings simply so I know when we are losing money in the business side of things. The idea would be to build this account until, and possibly into retirement.

We already both have TFSAs and RRSPs - I could see fund 2 going into an RRSP, but then if we needed to draw on it, things would get difficult. What suggestions do I hear?

Mmm_Donuts

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Re: Dedicated accounts or funds
« Reply #1 on: February 05, 2016, 02:29:04 PM »
What I do is keep funds separated virtually through YNAB. I keep anything that I need short term in a Tangerine account, but rather than creating multiple accounts in Tangerine (or at other banks), I track the "accounts" in different categories in my budget. It seems like the most minimal and simple way to keep track, as the money is all in one place (Tangerine), as is the info (YNAB).

If these are investment funds in various bank accounts, a similar technique would still work. The virtual tracking and separation happens in YNAB, like an online envelope system.

Le Poisson

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Re: Dedicated accounts or funds
« Reply #2 on: February 05, 2016, 02:32:49 PM »
What I do is keep funds separated virtually through YNAB. I keep anything that I need short term in a Tangerine account, but rather than creating multiple accounts in Tangerine (or at other banks), I track the "accounts" in different categories in my budget. It seems like the most minimal and simple way to keep track, as the money is all in one place (Tangerine), as is the info (YNAB).

If these are investment funds in various bank accounts, a similar technique would still work. The virtual tracking and separation happens in YNAB, like an online envelope system.

Thanks Enjoyer of fried pastry treats. Any investment vehicle suggestions?

protostache

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Re: Dedicated accounts or funds
« Reply #3 on: February 05, 2016, 02:41:52 PM »
I'm thinking about making a couple of dedicated accounts or funds that I want to keep separate from the family budget, but I am not sure what sort of vehicle to put them in or what type of investment to use. Wondering if anyone here has ideas.

Fund 1: Pay off the mortgage fund - this account will see about $200 per month in deposits which will accumulate for about 15 years before being used in a manner like unto Thor's mighty hammer to destroy the remaining bits of our mortgage.

Fund 2: Side Gig/Other income Fund - While our main savings vehicles (TFSA and RRSP's) will always get contributions from us, I would like to keep this "Business earnings" account separate from the family savings simply so I know when we are losing money in the business side of things. The idea would be to build this account until, and possibly into retirement.

We already both have TFSAs and RRSPs - I could see fund 2 going into an RRSP, but then if we needed to draw on it, things would get difficult. What suggestions do I hear?

We have Fund 1 invested in one of the Vanguard LifeStrategy funds, the 80% bond / 20% stock one. It's relatively stable compared to something like VTSAX but throws off more earnings than a savings account.

I don't understand what Fund 2's purpose is, but my business is our primary revenue source. I have separate checking and money market accounts for my business to firmly separate the business' income and expenses from our personal accounts. Business stuff cashflows through those accounts, and then once a month I run payroll and make a separate distribution payment, leaving enough behind to cover a few months of expenses. After it hits our personal accounts I don't track it separately.

MustacheAndaHalf

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Re: Dedicated accounts or funds
« Reply #4 on: February 05, 2016, 02:51:24 PM »
For money paying off debts in the next year, you don't want to involve stock or bond funds.  So you want multiple accounts so the family budget doesn't draw from the mortgage paying account - is that right?

You could open an online bank account (Ally, Discover, Capital One) and pay your mortgage from there.  Online savings accounts offer about 1% interest, where most big banks don't even reach 0.20% interest.  So you'd separate your money, and you could probably get a better interest rate.

Mmm_Donuts

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Re: Dedicated accounts or funds
« Reply #5 on: February 05, 2016, 02:57:22 PM »
Thanks Enjoyer of fried pastry treats. Any investment vehicle suggestions?

:)

Sorry if I misread. Personally I have a fairly low risk tolerance, so would be very hesitant to put Fund 1 or 2 in a registered vehicle. To me, the TFSA and RRSP are purely for long term investment, i.e. retirement in 20+ years. I would use GIC ladders for anything in the 10-15 year range for mortgage or business use.

However... since you're looking at a 15+ year horizon, the TFSA might be a good path to take... I would only use the TFSA for long term, growth-oriented etfs. Anything else like pref share etfs or GIC I would keep in a taxable account.

I too run a small business and track this separately using the technique above. It's hard to say if an RRSP would work for what you want to do, since I'm not really clear on why you would need to invest business income long term into retirement. Depending how much you might need, what your income is before retirement, etc, then this could work... i.e. if you don't have too high an income and would need to withdraw <$5k. Otherwise I would avoid putting myself in the position when I need to withdraw from the RRSP before retirement.