Hello! I posted this in another section but realized it may have been better to post here, so this is a repost.
Hello, we are a 30 year old couple with 2 young children. Newborn and 2 year old.
I have about 40k in a tfsa account and $7500 in a family resp. Iam able to save about 1200 a month to invest from the Child tax benefit.
I know I should keep up with the saving. I have a lot to learn so Iam just reading as much as I can at the moment but would like some advice or feedback.
We have no debt, house and car paid off. We're able to save 40% of our income. We are a low income family. Iv never opened a rrsp because iv always been in the low bracket in income.
I'm looking into CCP option 1: tangerine investment plan.
Or should I just invest my money with GICs? Seems like the only thing I really understand... are gics no good? Obviously you can tell I'm very new at this investing thing.
Thanks! Any help would be really appreciated. I feel so fortunate to have found this forum. I would love too continue staying at home and raising my children until they go to school.
Wow, Katie katie, you are doing awesome, I know we did not have that amount of cash flow to invest with kids the same age.
My two cents -- as you already have 40k, I would look at going into the CCP TD option. Just set it up with the CCP recommendations for now. Dollar cost averaging each month to the E-series funds have $0 trading commissions, which is great for low amounts. That is as easy as the GIC -- even easier, as you don't have to go to the bank. I do like the Questrade option, but it is a bit more work upfront to get to learning. So your choice on how much you want to jump start the investment education.
When you are ready to learn / do more, you can with the TD account, just slowly, one step at a time, and they have nice investment learning videos.
IMO you have been pretty smart about the differences between TFSA and RRSP's, and have saved quite a bit, so you will have no trouble learning the next steps.
With low income, first max out the TFSA, just like you have been doing. As Prairie Stash notes, between you and your husband, that is $11k per year of room, plus any room not yet maxed out. This may take most of your funds.
Next - you have an even split choice between RESP and RRSP's (your husband's RRSP or a spousal RRSP for you). If you invest in RRSP's then realize that the objective is to get the tax deferred growth right now. Defer claiming the amount on your tax return (just report it, but defer claiming the taxes back) until you have a higher marginal tax bracket, especially if you think your income will grow and you are under $70k per year right now. If you don't think income will grow, then claim it as you go.
RESPs -- Invest here once you have $90k in your retirement savings accounts -- compounding works best with time, and the last 5 years before withdrawal at retirement are dramatic to the impact on your retirement fund, so getting the money in early is very important. $90k is the amount that if you stop adding to it now, and don't draw for 35 years, will give you a post 65 retirement income (including average CPP and OAS for a couple) of $50k per year in today's money -- AFTER TAX. Pretty awesome, but needs a long time, tax deferred, to grow.
e.g. save for a modest retirement for yourself first, then ramp up the $'s into the RESP's after a few years.
Until you get to this level, just put $500 a year or so, per kid, into RESP, and it will be ready for your increased savings to it when they are 14 or so, and you have a better idea what you will do. (Need to have the RESP in place before age 16, for the most grant money). Be certain to claim any additional CLP, CESG, for low income families, if you are less than $45k per year, don't miss out on the free money!