small windfall

D

destillat

Well-known member
Aug 29, 2001
2,805
69
48
mississauga
seriously...
i have recently come across a small windfall of $$$... about $20k...
and yes, that is after i have apportioned a chunk for play money...
bottom line, i don't want to blow all the money away, which is my first inclination!
i have been racking my brain for the past few months about how to best invest all or part of this money... i am thinking about some kind of part-time small business...
any serious suggestions?
 
You could put it all in an RRSP. It would move you into a way lower tax bracket and then you would get a really big tax return. Then you would have a nice big refund check and $20,000 in an RRSP.
 
Riley

Are you kidding Dear?

Its 20K.

Not 200K

If he has a mortgage at 20K in this fair city hes way ahead of everyone?

And if you think 20K is enough to pay off all debts and then tackle the mortgage..Yikes!!

And a High Interest Savings Account????? ING Direct???

HUMMphhh


I digress

He did say SERIOUS replies!!!
 
My only current debt is my mortgage.

I work full time, am comfortable and I'm just looking for something that is money-making, but also manageable on evenings and weekends. I don't want to kill myself because I enjoy my down-time.

I just don't want to blow this money. Yes, RSPs or savings is always an option, but I already have a regular RSP program. I'm 30, so I have plenty of time for that. I want to do something with this money that can get me a bit ahead of the game. I know there is risk involved, but if I don't do something with it I KNOW I will waste it on all poon (if you can call that a waste).
 
20k isn't that much of a windfall. I received a windfall around that amount a couple of years ago. All it's really enabled me to do is to post on terb all day and too annoy most of the members:) .
 
This might be a bit much to handle but you could put money down on an investment property and be a part time landlord.
 
333conan said:
You could put it all in an RRSP. It would move you into a way lower tax bracket and then you would get a really big tax return. Then you would have a nice big refund check and $20,000 in an RRSP.
Click to expand...


Good idea in theory. However unless you have some sort of financial knowledge you could wind up blowing most of the 20k through bad investments in your RRSP.

My advice through experience. Stick to basic etfs in your RRSP such as xfn, xdv, xiu , xbb etc. Throw in a couple thousand in a high interest savings account through your own personal discount brokerage account and you're good to go.

Don't let a financial advisor talk to you into something ridiculous such as DSC mutual funds. Good luck with everything! In fact if possible try to stay away from financial advisors period. Keep repeating after me. Bernie Madoff, Bernie Madoff!
 
destillat said:
My only current debt is my mortgage.

I work full time, am comfortable and I'm just looking for something that is money-making, but also manageable on evenings and weekends. I don't want to kill myself because I enjoy my down-time.

I just don't want to blow this money. Yes, RSPs or savings is always an option, but I already have a regular RSP program. I'm 30, so I have plenty of time for that. I want to do something with this money that can get me a bit ahead of the game. I know there is risk involved, but if I don't do something with it I KNOW I will waste it on all poon (if you can call that a waste).
Click to expand...

Maybe you can start buying etfs in a non-registered discount brokerage account? Since you already have your RRSP account under control.
 
I'm not trying to be rude but just honest. $20K is not really that much to work with and if you want it to be a lot or possibly a little you need to look into high risk or high effort endeavors. It does not sound like that is where you want to go though.

Since you already have set aside some for your favorite past time I woudl suggest that you determine your risk / reward level and then put it there and pretty much forget it for a while. Review it once every predefined time period (such as anually) and then rebalance if necessary. It sounds boring but that is what low effort is.
 
I assume you're being serious because you have a full time job, mortgage and investments. If that's the case, stop thinking of get-rich quick scenarios. Options:
1. Pay down mortgage to reduce debt.
2. Balance out your portfolio.

If you don't know what a portfolio is, go to a financial planner to help you understand where you are and where you're going.

My view is $20 K is not a lot of money when you're 55 and you need it to grow, but it's a very good amount if you going to invest it as part of a plan for the next 30 years.
 
squash500 said:
Good idea in theory. However unless you have some sort of financial knowledge you could wind up blowing most of the 20k through bad investments in your RRSP.

My advice through experience. Stick to basic etfs in your RRSP such as xfn, xdv, xiu , xbb etc. Throw in a couple thousand in a high interest savings account through your own personal discount brokerage account and you're good to go.

Don't let a financial advisor talk to you into something ridiculous such as DSC mutual funds. Good luck with everything! In fact if possible try to stay away from financial advisors period. Keep repeating after me. Bernie Madoff, Bernie Madoff!
Click to expand...
You are contradicting yourself, talking about an RRSP, and DSC funds. RRSP's are for long term (hence the word retirement), if going into a DSC fund at a 6 or 8 year scale, if he has that amount of time or more until retirement, what is the difference??
Going into a high interest savings account will only cause more harm at tax time.........100% interest income, and depending on the tax bracket that can be a fair bite. In an RRSP, mutual funds tax implications are much lower (capital gains & dividend income).
T-SWIPS are good for re-investing the distributions back into the fund or having them ETF'ed directly into your bank account.
 
ang said:
You are contradicting yourself, talking about an RRSP, and DSC funds. RRSP's are for long term (hence the word retirement), if going into a DSC fund at a 6 or 8 year scale, if he has that amount of time or more until retirement, what is the difference??
Going into a high interest savings account will only cause more harm at tax time.........100% interest income, and depending on the tax bracket that can be a fair bite. In an RRSP, mutual funds tax implications are much lower (capital gains & dividend income).
T-SWIPS are good for re-investing the distributions back into the fund or having them ETF'ed directly into your bank account.
Click to expand...

Ang, I agree that RRSP's are for the long term but you still don't want to blow up your rrsp account. Just because an rrsp is for retirement doesn't mean you should put a 100% equity component into your rrsp. The op is 30 years old with a steady job therefore his rrsp asset allocation should be approx 70% equities and 30% fixed income.

DSC funds only make the financial advisors rich. IMHO the op would be better off using ETFS to invest in both his rrsp and non-registered account. These etfs also have a synthetic drip feature where every three months more shares are automatically added into your account free of commissions.

The problem with mutual funds is that they are not pure. For example a canadian dividend mutual fund could have up to 50% 0f the securities of the fund invested in the united states. What good is that? With etfs WYSIWYG.

After reading a lot of financial books here's what the experts suggest. 1. first determine what your asset allocation will be. IE what percent of your portfolio will be in fixed income and what percent of your portfolio will be in equities.

2. Try and figure out your risk tolerance. If equities fell over 50% like they did last year would you be able to sleep at night or even worse sell these equity securities at firesale prices.

3. After figuring out parts 1 and 2 of the financial equation then you are finally ready to make the decision on what securities to actually invest in. These securities could range from individual stocks to bond etfs to investment savings accounts etc. There are literally thousands of choices out there.

In conclusion with DSC funds you are paying much higher fees then you need to. These high fees will wind up eating into your long term returns.
 
Listen to hairyfucker and Blue5658.

If you really want big returns you have to assume bigger risk which means you may not get the returns you want anyway. If you're OK with that risk, go for it , but make sure you're knowledgeable about what you're investing in or find someone who is.

High interest savings account? What is that, 2%, less? Better off to pay down some of your mortgage which is probably costing you more than any return you could get on a savings account.
 
Lou Siffer said:
Listen to hairyfucker and Blue5658.

If you really want big returns you have to assume bigger risk which means you may not get the returns you want anyway. If you're OK with that risk, go for it , but make sure you're knowledgeable about what you're investing in or find someone who is.

High interest savings account? What is that, 2%, less? Better off to pay down some of your mortgage which is probably costing you more than any return you could get on a savings account.
Click to expand...

You're right Lou. Maybe it's the best move for the op to take the 20k and pay down the mortgage.

All I was trying to point out through all my rambling to Ang:) is that mutual funds are becoming obsolete. ETF investing is the wave of the future!

You can still get great returns with ETFS without paying the exhorbitant fees that mutual funds charge.
 
Walk into a casino, find the closest roulette table that takes $20,000 outside wagers, and put it all on Red . You've either doubled your money, or it's gone.

Easy come, easy go.:D
 
Host a party. Invite a half dozen top-of-the-line SPs. And invite me :D
 
I wouldn't suggest RRSP's at this moment, despite the gains that you get off of them in the long term. Pay off your mortgage, don't even consider stashing that money away into a high interest savings account since the returns from those are minimal.
 
squash500 said:
Ang, I agree that RRSP's are for the long term but you still don't want to blow up your rrsp account. Just because an rrsp is for retirement doesn't mean you should put a 100% equity component into your rrsp. The op is 30 years old with a steady job therefore his rrsp asset allocation should be approx 70% equities and 30% fixed income.

DSC funds only make the financial advisors rich. IMHO the op would be better off using ETFS to invest in both his rrsp and non-registered account. These etfs also have a synthetic drip feature where every three months more shares are automatically added into your account free of commissions.

The problem with mutual funds is that they are not pure. For example a canadian dividend mutual fund could have up to 50% 0f the securities of the fund invested in the united states. What good is that? With etfs WYSIWYG.

After reading a lot of financial books here's what the experts suggest. 1. first determine what your asset allocation will be. IE what percent of your portfolio will be in fixed income and what percent of your portfolio will be in equities.

2. Try and figure out your risk tolerance. If equities fell over 50% like they did last year would you be able to sleep at night or even worse sell these equity securities at firesale prices.

3. After figuring out parts 1 and 2 of the financial equation then you are finally ready to make the decision on what securities to actually invest in. These securities could range from individual stocks to bond etfs to investment savings accounts etc. There are literally thousands of choices out there.

In conclusion with DSC funds you are paying much higher fees then you need to. These high fees will wind up eating into your long term returns.
Click to expand...
I wasn't suggesting putting all of it in RRSP's, but what people fail to understand is what they do throughout the year has a huge impact at the end of the year, if maxing out your RRSP each year, and if you are putting some in LSIF for a great tax credit, think of the refund (Look at the whole picture), now that you have that refund, then you can slowly put more down on your mortgage, or pay off other debt, start a savings (non-registered) account (why would you want to pay off your mortgage when % rates are so low). It's planning financially for the whole picture, not just "get rich quick".

Just my 2 cents worth
 
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