Invest or not invest?

[RFlush]

I have a question to those who might know the answer. I have been a non resident of Canada since the end of 2009. I have never contributed to any RRSP or TFSA. If I return to Canada let's say tomorrow and claim residency again, can I use the the past 5 years of zero contribution and add to my limit? Or it doesn't work like that. Sorry, I really don't have the slightest clue.
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[GS8]

I will be man enough to say that I don't really care for money but I accept its purpose and come to terms with how I need it to survive but I guess I'm not good at looking ahead as I'm too busy living in the present. I know that's dangerous but part of me doesn't even want to live into my 60s.

The main reason I started hording my money was due solely to the high cost of living in this part of the country. Wages don't rise to compensate so gradually you get further and further away from that line that keeps you in the financial safe zone.

BUT it looks like I should do a 180 and start thinking about this thoroughly. I don't even know what I want other than not to lose the money I worked for.

[SiRV]

Originally Posted by duc_evo_sp

Even with Real Estate, I can see that there will be a "BIG CORRECTION" aka "COLLAPSE" that will benefit the few and burn the majority.

Anyone reading this... or any other absurd article about housing crash in Vancouver, or stock market crash or end of the world type article... please take it with a grain of salt. These are all really just extremist opinions about what could potentially happen.

Stocks for example... there was a huge scare a few years ago (2011?) due to media hype - much like the media hype about RE in Vancouver. In 2011, the world was going to end, USA was going to shut down yada yada. The following years, if you invested in the US economy, your portfolio would have soared, especially with the 30% gains over the last year alone. Say the economy tanks in 2-3 years, so what, at least you collected the dividends and made money on the run up before getting hit with a correction.

Same thing goes for housing, you never know when a correction will come. It might come soon, it might come 10 years from now (it's 4 years from the 10 year anniversary of the major recession!). But do you really want to miss out on the next run up in property value - you could wait and totally get priced out of the market... but will the dip be enough to price you back in at that point?

[duc_evo_sp]

Originally Posted by SiRV

But do you really want to miss out on the next run up in property value - you could wait and totally get priced out of the market... but will the dip be enough to price you back in at that point?

I am guessing the SIRV is in Real Estate at the moment and has a biased opinion on RE. But something most if not all Canadians aren't aware of is why is the Canadian RE properties soaring.

Don't be swayed by being "priced out" of the market. What a ridiculous opinion. "IF you don't buy now, you'll never be able to get in." That's awful way of thinking.

[Carl Johnson]

Buy now or buy never. You gotta love these real estate agents. It's like asking a barber do you need a haircut. I don't have a crystal ball on where the Vancouver housing market is heading. But I do know that when a 2-bedroom 700 square feet condo is selling between 400k-500k in Burnaby this is grossly out of reach for most first time home buyer. The real blood bath will probably come when rates go up in a couple years but as with the high consumer debt and sluggish BC economy a lot of folks are already dumping.

[dasani604]

Not everyone has the time or the capability to educate and take time to invest for themselves. Hence, the reason there still is a lot of people who flock to big banks to have advisors do their investments.

If you're going to an advisor who only sells mutual funds, watch out for which one they put you into. A lot of them don't know what they're talking about and have no clue about the markets. I, myself, was a victim until I started to take the time to educate myself. Ask the advisor about index funds - if they steer you away from them, then you know there's something up.

[finbar]

Fee based financial advisors >>> commission based financial advisors.

Bob Brinker has helped with the learning curve without having a selling agenda.

[!LittleDragon]

I tend to keep most of my money invested with only $1000 in the bank to cover car and insurance payments. Why let it rot in there? If I need more than $1000, there's the line of credit that I can pay back with the next pay check or by cashing out some holdings.

I used to trade daily and did very well but now with a few business ventures on the side in addition to the full time job, I don't have time to do my market research every evening. Instead, I've been buying up dividend funds. Specifically, PGP, PHK, NCV and NCZ. I don't have to do squat and it brings me a steady monthly payout. PHK at it's current price yields 12% right now, that's 1% per month. Because their dividends are a fixed dollar amount, the principal can go up/down/left/right and I'll still get the same dividends. Reinvest the dividend and your payout the following month will be bigger.

What I do with the dividend every month depends on my mood but I never spend it. Sometimes I reinvest it into the same funds, sometimes I reinvest in a new fund I found, sometimes I buy some gold for insurance and sometimes I'll buy a stock if it's low and I feel like speculating.

As always, don't take my word for it regarding these funds... do your own due diligence before buying.

[GS8]

I'm going to do a lot of reading on this and see what works for me.

Thanks everyone for the provided links. I'm not in any rush to act soon and will take my time and baby step it.

[duc_evo_sp]

Little Dragon is a savy fellow.

[!LittleDragon]

Not really lol... I used to think I was a hot shot investor. I started at a time that you could've bought anything and turned it into gold. When the market started to go back to normal, I wasn't making as much and pretty soon was just breaking even. Thought it wasn't worth my time anymore, somehow I found the Wealthy Barber... great book.

People don't often talk about dividend investing because it's not as glamorous as stock trading and it's slow to build up that snowball effect. These days, I literally log on once a month to reinvest the dividend and to take some profit to put into funds that fell in share price. Much much less stressful and come tax time... dividend income is taxed at a lower rate than capital gains.

At the end of the day, the goal with this type of investing is to create a second steady stream of income.... instead of building up a million dollars and depleting it during retirement, that million dollars can bring you $10k a month to live on for the rest of your life.... and you still have your million!

[SiRV]

Excellent advice. Use caution with high dividend funds though as they tend to be fairly risky in the form of volatile share prices.
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[!LittleDragon]

Yes, of course do your research before investing in a fund. The reason I chose the funds I mentioned previously was because their dividends are relatively fixed. The two Pimco funds pay consistently 12c and 18c a share. Even when the share price was down below $5 in 2009. I would've loved to have picked up my shares back then, I'd own twice as much as I do now and my monthly dividend would be double.

You kind of get into a different mindset with this type of investing. When the share price goes down, you don't think "oh crap, I just lost a bunch of money". You'll see a lower share price and think "sweet, I can buy more shares than I normally would with my next dividend payment"

Share prices go up and down all the time but over the long run, it all averages out. It's not something I stress out about too much.

[SiRV]

Just did a quick glance at those funds, and from the looks of it, they look like they are primarily composed of bonds?

For tax purposes, are the monthly distributions taxed as 'dividend' or as 'interest' income?

[minoru_tanaka]

Originally Posted by duc_evo_sp

It looks like people agree about Financial Advisers being sketchy at best when it comes to investing.

But when it comes to RRSP's, most people can't find the flaws.

Even with Real Estate, I can see that there will be a "BIG CORRECTION" aka "COLLAPSE" that will benefit the few and burn the majority.

Are you pretending to mistaken REITs for RRSPs? hahah that's so funny

[sonick]

Good article going over pros/cons of TFSA vs RRSP:

RRSP or TFSA: Which one do you want fighting in your corner? | Financial Post

[tubbs]

troll failed.

[RFlush]

Originally Posted by tubbs

TFSA is for pansies
tax free? savings account?
it already sounds cheap
ETF is where its at.

You use your TFSA to invest in ETFs to save on your taxes.

[4444]

TFSAs and RRSPs are investing VEHICLES for taxation purposes. they are not investments.

a bank will offer you a TFSA investment - this is a terminology fuck up and will be a GIC in a TFSA.

I think the majority here are so clueless - as such, get an investment advisor - you'll be ahead of the game by investing something, even better if you invest something regularly.

to be honest i'm very knowledgeable, and i use an investment advisor as in the long run it's easier and will grow my wealth better - i just don't have the time to learn the trading platforms, rebalance my portfolios, etc. i've now just gotten to the stage of my life where i'd rather pay someone to do this for me and get better than market returns (if i don't get at or above market returns, i'll just manage it myself, in a broad world market & fixed income set of etfs)

[Carl Johnson]

Originally Posted by 4444

TFSAs and RRSPs are investing VEHICLES for taxation purposes. they are not investments.

a bank will offer you a TFSA investment - this is a terminology fuck up and will be a GIC in a TFSA.

I think the majority here are so clueless - as such, get an investment advisor - you'll be ahead of the game by investing something, even better if you invest something regularly.

to be honest i'm very knowledgeable, and i use an investment advisor as in the long run it's easier and will grow my wealth better - i just don't have the time to learn the trading platforms, rebalance my portfolios, etc. i've now just gotten to the stage of my life where i'd rather pay someone to do this for me and get better than market returns (if i don't get at or above market returns, i'll just manage it myself, in a broad world market & fixed income set of etfs)

how do you go about finding a financial planner? there are so many of them around it seems. i find it hard to trust other people with my money, so I rather just do it myself.

[Gucci Mane]

financial panther eh?



sorry had to go there.

[will068]

Originally Posted by tubbs

TFSA is for pansies
tax free? savings account?
it already sounds cheap
ETF is where its at.

[4444]

Originally Posted by Carl Johnson

how do you go about finding a financial planner? there are so many of them around it seems. i find it hard to trust other people with my money, so I rather just do it myself.

as with everything, you would hope someone you know uses one they trust.

word of mouth is their strongest tool.

if you have >$50K, pm me and i'll give you the name of my one, but he won't touch anyone with less than $50K (that's something that will happen as they grow their business / book)

[Jas29]

Anyone else do dividend investing. I was looking at PHK after !LittleDragon said it above but its a us mutual fund and canadiands can't invest in it atleast that's what TD told me
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[MelonBoy]

People are really ragging on bank advisers.. I think they are great to a certain extent.

Not all of them are out to just get your money and commission. I'm currently working in a bank and I know a few individuals who honestly tries to help there clients. On the flip side i've seen other just invest for commission and sell products the clients don't need.

I personally tell my friends/family/clients to see an advisor at your bank and create a relationship. Its all about getting to know the person whose going to be taking care of your money. At the same time don't just blindly invest in whatever he/she may tell you. Take the time, research the product he/she offers and make a decisions on what you believe. Also don't be afraid to get a second opinion from someone/somewhere else.

To add on to what 4444 said about "I think the majority here are so clueless - as such, get an investment advisor - you'll be ahead of the game by investing something, even better if you invest something regularly." This is VERY TRUE, I go through hundreds of accounts each week and let me tell you the majority 60%(if not more) of the people I help. Either have barely anything in a savings account or doesn't even have one opened!

Honestly, If you don't have a savings account opened yet or have very little. Instead of worrying about what to invest in, just start off by opening a regular standard account. Set up a auto-deposit and just put money aside without taking any of it out.

Back to OP post, Car parts are great but saving that extra few grand for a down payment or large investment in the future is even better!