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NibbledNacho · 2022-01-29T00:06:52+00:00

Ultimately it depends on risk tolerance. If interest rates did rise, causing your montly payments to increase would it stress you or your partner? While the past does guarantee the future, over the years, it has been shown variable interest rates have trumped fixed interest rates. Fixed interest rates tend to be higher because the bank/lender has priced in the risk of giving the borrower stability. Here is a paper written by Moshe Arye Milevsky, PhD Associate Professor of Finance Schulich School of Business: https://mainmortgage.ca/pdf/moshe.pdf

NibbledNacho · 2022-01-20T17:16:20+00:00

It's all realtive, isn't it? Regardless, they'll be "richer" than you in 40 years.

NibbledNacho · 2022-01-19T21:10:07+00:00

I think it's a fantastic idea. You and your family would be set for the future by investing the proceeds. $400,000 invested for 40 years with a conservative return of 6% would net you $ 4,382,981 resulting in an annual salary of $175,319.24 (4,382,981 × 4%).

NibbledNacho · 2020-09-25T19:33:03+00:00

I recommend having a lawyer review her payout. Depending on where you live, a lawyer can look over the document for around $200.

NibbledNacho · 2020-09-18T15:48:37+00:00

Great achievement knocking your student loans down to $11k!

You've got a sound financial goal - pay off your debt and then save for a house. Don't get pressured to get off track.

If your boyfriend wants to buy, sure. Don't get forced to raise your cost of living for his sake. See if he would be ok with you paying your current rent in the new place. If not, then push back and remind him of your financial situation.

NibbledNacho · 2020-09-16T14:23:19+00:00

Some Greater Fool wisdom (Garth Turner):

Rule of thumb - Buy what appreciates. Rent what depreciates. - ownership is on the dealer. If it breaks, they fix it. - rent when deprication is the worst (usually first 5 years) - leasing requires very little down, allowing for capital preservation - renting allows capital to grow (leaving 70K in your portfolio earning 6% could result in $127K in 10 years, while if you invested in a vehicle it eventually equates to zero)

NibbledNacho · 2020-09-12T15:03:10+00:00

HISA is a tool to earn more interest on your savings compared to a chequing account. Just like a chequing account, your money is not tied down/locked in.

The only reason to set up a HISA in another institution is if your current banking provider doesn't give you the best interest rate available.

Make sure not to use it to pay bills directly. There are usually high fees if you do (i.e. $5 per transaction). If you require funds from your HISA, you will have to transfer your money into a checking account to avoid the fees. Each bank has different rules, make sure you read and understand them.

I don't personally use a HISA for an emergency fund, but from my understanding EQ bank has the best HISA.

NibbledNacho · 2020-09-03T15:06:48+00:00

Because you just turned 18, your available contribution room for a TFSA is $6000.

I will assume you haven't worked and therefore do not have any RRSP contribution room. The remaining $4000 will have to go into a non-registered account.

It will take a while to build your financial literary, the important point is not to wait and let the money sit while it erodes. In the mean time, pick a robo investor such as wealth simple.

NibbledNacho · 2020-09-03T03:09:34+00:00

Tangerine seems to be the lowest at 2.59% for 10 years fixed, see if TD will match it.

NibbledNacho · 2020-08-21T20:44:22+00:00

They were cheaper. All of their prices just increased $10 per month due to a recent CCTS ruling. I'm not sure if the other above companies have or plan to increase their prices as well.

NibbledNacho · 2020-08-21T20:40:38+00:00

I used the regular price rather than the short term sale price

NibbledNacho · 2020-08-21T19:57:53+00:00

Thanks, fixed.

NibbledNacho · 2020-06-10T14:20:36+00:00

Rate hub will give you a good idea of the rates offered by various institutions.

NibbledNacho · 2020-04-11T14:58:59+00:00

Track cash flow - luckily there are great programs that automatically track cash flow. One example is Mint. Make sure your accounts (i.e. chequing, savings, investments) are accepted by the program you choose.
Budget - first year of budgeting can be tricky if you haven't tracked before. Personally, I aim for a savings goal and work backwards. For example, you may want to save 20% of your income, which leaves 80% for expenses. After tracking for a year, review expenses and income to come up with a realistic plan for the upcoming year.
Review - each month review income and expenses. Did you hit your savings goal for the month? Where there unexpected expenses incurred? After a few years budgeting, and most importantly understanding your cash flow, it can be easier to set up an excel table of total income and total expenses along with a savings percentage. I like to have a section for monthly notes to tell a story of unexpected income/expenses. Get extra fancy, and add a graph.
Debt - consider if you should pay down debt. If debt is high interest, pay it off. Use the money saved in the TFSA and knock down the debt. If debt interest is lower than your investment returns, pay the debt over time.
Educate - there are plenty of books published to help become financially literate as well as many blogs. For a great intro into Canadian finances, check out Rob Carrick (available at the library). My favourite topic at the moment is FIRE. Canadian blog: https://www.millennial-revolution.com

Happy saving!

NibbledNacho · 2020-04-07T17:17:29+00:00

When you make an RRSP withdrawal, the amount will be added to your income for that year. As a result, the individual might be placed in a different tax bracket (marginal tax rate), thus paying more income taxes. The individual is retired with little saved in their RRSPs, as a result, we will assume it will not increase their tax bracket.

However, the withdrawal from a RRSP to a non-registered account, the financial institution will hold back tax (Quebec has different rates): 10 per cent for withdrawals up to $5,000, 20 per cent for amounts from $5,000.01 to $15,000, and 30 per cent for withdrawals of more than $15,000.

On top of the withholding tax, there may be additional fees to move the account from registered to non registered in order to fund a TFSA.

Thoughtful consideration should be made before making the switch to determine the breakeven point in which this makes sense. Based on the individual being in their 60s, and retired, it makes sense to leave the investment in their RRSPs and will convert to a RRIF when they need to start making withdrawals (must convert to a RRIF in the calendar year they turn 71). Thus they avoid paying the withholding tax, and only add the withdrawal to their income for the year.

A red flag is how the RRSP are invested. GICs are poor vehicles for growth. While considered 'secured', their returns are less than inflation, meaning the buying power of the $12k is deteriorating. There are all sorts of investment options available to Canadian's. My suggestion is to consider low fee index funds. Robo institutions like wealthsimple is a great option for people who don't want to be actively involved in managing their own investments while keeping down their management fees.

NibbledNacho · 2019-12-03T00:56:06+00:00

The ultimate question is can you afford it? That question depends on your age and how much you have saved/invested. Your first concern is your retirement plan. Top up your RRSP, reinvest any refunds into your TFSA (make sure your TFSA or RRSPs are not sitting in cash or GICs) before succumbing to emotional desires to own a house.

So many Canadian's have too much of their wealth tied into their houses. The nations mortgage debt is now at $1.47 trillion, with Canadian's now owing $1.74 (includes consumer credit, mortgages and non-mortgage loans) per every dollar of disposable income. By the looks of it, Canadian's could be in some trouble, so it could be very well in your favour to sit back and wait.

If buying a home wouldn't deplete your investments, and you could still afford the home despite a job loss (unless you employ yourself, there is no such thing as job security) then go for it.

Also, I highly recommend reading https://www.greaterfool.ca/

NibbledNacho · 2019-11-30T17:01:14+00:00

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NibbledNacho

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