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Chunk of money, saving more for a year, what to do? (Canada)

bombardierbombardier Moderator Mod Emeritus
edited June 2007 in Help / Advice Forum
I basically am going to be working for another year from now and have a decent sum saved up so far in a basic chequing account (over $5k). I don't plan on making any large purchases and don't really need to. I'll be at home and don't have many expenses (PAX is paid for already) so I'll basically be building up some savings.

What are some good investment options in Canada I can use so the money isn't just sitting there stagnating? I have not contributed any RSPs (which I don't fully understand still) because I was told it would not be of any tax benefit to me at this point.

bombardier on

Posts

  • Katchem_ashKatchem_ash __BANNED USERS regular
    edited June 2007
    bombardier wrote: »
    I basically am going to be working for another year from now and have a decent sum saved up so far in a basic chequing account (over $5k). I don't plan on making any large purchases and don't really need to. I'll be at home and don't have many expenses (PAX is paid for already) so I'll basically be building up some savings.

    What are some good investment options in Canada I can use so the money isn't just sitting there stagnating?

    Mutal Funds, aggressive if you want and feel lucky, otherwise, I would recommend it on stocks of precious materials ala Gold, Sliver and such.

    Katchem_ash on
  • bombardierbombardier Moderator Mod Emeritus
    edited June 2007
    I already have a small sum with AIC that I've been putting $20 a month into for numerous years now. I guess I could put more into that, but maybe I should look at other ones?

    Edit: I really couldn't tell you more than that. This was a long time ago that I last dealt with any kind of savings beyond dumping it into the chequing account. Where would you go to learn about gold/silver investing?

    bombardier on
  • an_altan_alt Registered User regular
    edited June 2007
    There are so many mutual funds out there that you have a huge range of aggressiveness. Picking precious metals is definitely more risky than a conservative portfolio. You can put the money into mutual funds now and register them when you have more income (the first R in RRSP) to get a tax break. To get started, find an investment broker you think you can trust and get his advice.

    A simpler option is just to get an ING direct (or similar) savings account that pays actual interest.

    As a general rule, the more money you can put away earlier in your life (even if it's not a huge amount) the better.

    Edit: seeing the above post, go talk to your investment broker. Since he's getting a commission, he'll think you should invest more. He's still right. Pretty much any mutual fund company or bank will have a wide range of options from which to choose. Another good thing is that it's harder to take money out of a fund than an account. It helps one avoid doing stupid things with money.

    an_alt on
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  • anableanable North TexasRegistered User regular
    edited June 2007
    ING is pretty awesome, though it's still a standard savings account which makes it easy to grab the money for immediate gratification. I would recommend some type of Canadian 401K (government sponsored retirement savings account).

    anable on
  • ThanatosThanatos Registered User regular
    edited June 2007
    anable wrote: »
    ING is pretty awesome, though it's still a standard savings account which makes it easy to grab the money for immediate gratification. I would recommend some type of Canadian 401K (government sponsored retirement savings account).
    If he wants the money in a year, he doesn't want to stick it in a retirement fund.

    Mutual funds are generally good long-term investments, as are stocks (precious metals are ridiculously risky, and most people think the bottom is going to fall out of the gold market at some point in the near future).

    Since you're planning on using it in a year, I would go with something more dependable, and less risky, like a savings/money-market account (shop around for a good rate) or a CD (I'm assuming these exist in Canada).

    If you decide to go with something a little more risky, I'd suggest an index fund, as those are about the least-risky stock investment you can make.

    The main issue with stocks/mutual funds is that over the course of a year, they can bounce all over the place, from making you 20%, to losing you 50%. If, after a year, you decide to sell, you could be at any of those points, and could actually lose money. If you were talking over the course of five years, or maybe even three years, stocks/mutual funds would be where you want to go. Over twenty years, I'd be recommending a very risky, very aggressive, small-capital stock portfolio. However, with a short-term investment like that, unless you don't mind losing money, I'd go with something a lot more conservative.

    Thanatos on
  • bombardierbombardier Moderator Mod Emeritus
    edited June 2007
    Well I'm open to anything that's not high risk. Since I'm still going to be working, by this time next year I will conservatively have another $10k sitting around. I won't need to get at all of it next summer, but enough to travel a bit, so some long term stuff for later later isn't out of the question either.

    I think a CD is the same as a GIC (guaranteed investment certificate) here.

    bombardier on
  • HiravaxisHiravaxis Registered User regular
    edited June 2007
    Get a ING account and put all of your extra savings there as a holding ground. ING is great because you get pretty good interest with great liquidity.

    Next I would plan out however much you thought you'd be able to save until you go traveling next summer..
    You said 10K?
    Figure out how much you'll spend on that trip...
    Subtract that number from 10K.. that's the amount you should put into long term investments (things like mutual funds and stocks).

    I'd go with an Index fund.. The index tends to grow quite smoothly and at a fair rate.. giving you good ROI and low risk.. Relatively IMO.
    Now, as was stated above, once start making more money, you can register these investments as RRSPs.

    The remainder (what you're using for your trip) should go into your ING account or some other savings bond (with a higher interest rate) that has a term ending before your trip. You want to be able to access your money without encountering any penalties.. This is a plus for ING.

    Hiravaxis on
  • EntriechEntriech ? ? ? ? ? Ontario, CanadaRegistered User regular
    edited June 2007
    I'm of the opinion that if you're anticipating using the money in the next one to two years, it's best to go with a GIC. You're not going to make a lot over the standard high interest savings account rates, but it's something. Better than investing in something riskier, and being forced into selling off at a bad time. IMO, risky is fine when you're younger, with cash you can let sit for a long period of time and won't need. Otherwise trend towards safe investments.

    Entriech on
  • SatanIsMyMotorSatanIsMyMotor Fuck Warren Ellis Registered User regular
    edited June 2007
    You want to start investing in an RRSP and some GICs. I made a good chunk of cash out of my GICs a while back.

    SatanIsMyMotor on
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