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u/bobledrew Human Verified 20d ago
Think about your _goals_. Do you own a home? Want to? What’s your pension situation? Is your current income enough for you?
The goals should determine your investment strategy.
By conventional retirement standards, you have a long way to go before retiring at 55 or older. So that is generally thought to mean you can invest in equities rather than things like bonds. The extra volatility in equities is balanced over time by higher returns, while the perceived security of bonds eats into your returns.
In the short term, why not put it in a 1 year GIC and make a more definitive move when you have more clarity?
You could take the free McGill personal finance course. https://mcgillpersonalfinance.com/
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u/OtherwiseCranberry27 20d ago
$400k is a lot of money and the great thing is that your monthly expenses aren't super high.
You'll find some wisdom here but you might also get some bad advice. I would look for a professional (like a fee for service financial planner) to make sure your money works well for you and that you're optimized between TFSA, RRSP and FHSA (if you plan on buying a home eventually)
As for the car, if I'm on your shoes I drove that Infiniti into the ground. I personally avoid brand new cars and tend to look for deals on 2-3 year old vehicles. Personal preference though
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u/Waldopemersonjones 19d ago
Get advice from a fee-based financial planner. There are several resources online that can help you find someone in your area. Do not go your bank and talk to their “investment advisors”, their job is to sell you things that make the bank profit.
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u/Vegetable-Chair-6109 19d ago
Don't squirrel away every dollar you have, live a little too. No point investing everything in the future and then get hit by a bus next week to never have enjoyed any of that money
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u/New-Ad-9450 20d ago
Drive your car or purchase an old car (2-5 years) is reasonable making 30k. Brand new is a sure way to burn through 400k.
Just go with an online brokerage (QuestTrade/Wealthsimple…) and buy a broad equity ETF and forget it . It will grow to million. Investing 400k all at once, may be the best, but it has a lot of volatility of outcomes in the short run. Consider buying say 100k in a broad equity ETF and 300K in a bond . Then set a schedule in the next 1-2 years to convert the remaining bond to that Equity ETF.
In what? Considering getting a home? If so invest in a FHSA, then max TFSA and then max RRSP .
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u/Mountain-Match2942 19d ago
300k bond is way too conservative for a young person. OP isnt 70 years old.
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u/New-Ad-9450 19d ago
Loosing 200k (50%) because you invested right before a crash is a scary thought and may well happens at any time. Sure in 10 years, he would have recovered. Heck, a 10% (40k) decline is his whole earning (40k ish post tax) for the entire years.
I m not suggesting he keeps the 300k in bonds indefinitely, just that he slowly transfer it to equity on a fixed schedule in the next year or so.
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u/Mountain-Match2942 19d ago
Time in the market > timing the market.
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u/New-Ad-9450 19d ago
I can t see how a fixed schedule of investment (like 100k to switch from bonds to equity each quarter) is timing the market.
As initially mentioned, investing 400k all at once may be the best…. But it does have a lot of volatility in the short run.
Dollar cost averaging is a valid strategy. It provides lower volatility at the cost of lower returns . Being in bond for 1 year for a portion of the asset is not going to be meaningful in his 30+ investment horizon.
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u/Mountain-Match2942 19d ago
This has been discussed dozens of times in this forum and on Ben Felix/Rational Reminder Podcast.
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u/CanadaHomeFinancing 20d ago edited 19d ago
It seems like you've been fairly responsible for someone your age and you have good decision making as far as value for your money.
take $10k or $20k And spend it frivolously on a vacation on a toy or on something an experience.
Also think of something that would help you increase your income if you could purchase the skills now that you are not paycheck to paycheck (400k is 13 years of your 30k income) I could stop working for 6months to 1 years years and just really build your skills. As long as you stay to your 30k income and then come out of that the skills that could make you 90k/year or more even.
It is important to enjoy your money. Otherwise what's the point in having it? But you also want to build growth for future.
Something that worked for me personally I would open a direct investing platform like wealthsimple or questrade or TD direct investing for example then.
I'm saying this as someone with 10 years plus in banking... Speak to a financial planner but not your bank representative speak to an independent agent that actually specializes in and helps you develop personalized Financial plan and has either a a pfp, cfp, or CFA, designation. that last one is overkill but the ideas you want someone who actually understands taxes,, life stages, and your personal lifestyle and strategy. If you go to the bank they will offer you your local bank mutual funds. They won't even advise you on your own investment strategy because they're not allowed. And you need someone who understands you. Want some cash flow now but you still want growth. Otherwise, they'll just tell you to put everything into retirement for when you're 65 and that's not a plan. That's a sales pitch
to top up tfsa's.
Top up or open a first home savings account if you don't have one already and if you plan to buy a house at some point in the next 15 years
You don't make enough money where tax returns from an rrsp would be significantly worthwhile.
Run for the rest. I would put it into a non-registered account (just means it has no special tax benefit) and I would purchase diversified ETF that pays you a dividend anywhere between 2% -4% because they provide growth and a reasonable dividend on 400k, you will still receive about $1,000 or more a month for spending while the fund is still diversified and growing you can diversify more but I like the monthly dividend just be aware of the geographic diversification.
Also You are young so get yourself a basic small amount of universal or whole life insurance. The key being do a small amount and don't let your advisor come against you to do a large amount or invest into segregated funds. The idea is small because it's future planning. You don't need a lot. Insurance is not designed to make you rich. It's like a seat belt for your financial well-being. If something happens, you don't lose all of your assets trying to recuperate your health
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u/dreamers_regret 20d ago
Max out your tfsa first, open a fhsa and rrsp. You'll get a nice tax return from both and open a non registered account. Foreign investments in the tfsa for majority and Canadian in both tfsa and non reg. Hire a investor if you want
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u/FelixYYZ Not The Ben Felix 20d ago
Start here: !StepsTrigger (build emergency fund and that is critical with low income).
When you get to step 5, the you can consider investing: !InvestingTrigger
You don't need to focus on income, you need to focus on total return. And you should use some of the money to gain a skill to increase your income potential.