Money Investing/Growing Advice

[MikeVic]

I'm starting to get a nice amount of money saved up (well, nice to me...), and I don't like it just sitting in my chequing account.

A savings account with my bank (CIBC) can at most give me 3.05% it seems (http://cibc.com/ca/rates/bank-acct-rates.html)... which doesn't seem like a lot.

This kind of financial stuff is most likely different in Canada and the U.S., so does anyone in Canada have ideas of what I can do?

[MikeVic]

INGdirect.ca seems to do 3.5%... but that seems low too. I would try to learn more about stocks and all that, but I know absolutely nothing right now.

[st.cronin]

I used to work as a stockbroker. You don't need to know much, if anything, to buy stocks. Just buy the stock of a company that makes a good product, a product that you personally like, whether its a brand of coffee or a laptop or shoes or whatever, and don't worry about all the technical stuff.

Most stocks that are publically traded are well-run companies, and if they are making a good product, in the long run, they will make money for you.

[JPhillips]

TIAA-CREF mutual funds have a good history and low fees.

[digamma]

What are you saving for?

What is your time horizon?

How much risk are you willing to accept?

[chesapeake]

Rookie investors are usually better off investing in a mutual fund that tracks one of the major stock indexes. Investing in a single stock or a few stocks significantly increases your risk. As you learn more about investing, you can look into more sector specific mutual funds or even individual stocks.

[MikeVic]

I don't have anything specific that I'm saving for yet. I don't own a house, so eventually I'd be buying one...

I'd like to see some nice change in a year or so.

I don't want a lot of risk. I have some money that I can experiment with, but if there's like a 50% chance of losing all my investment money, I don't want to take that chance.

[st.cronin]

If you go the stock route, you can put in an auto-sell order if the stock drops (or rises) to a certain price. So you can use, say, 90% of your investment as pure leverage, and not have to worry about ever losing it.

[Fidatelo]

If you can, buy the house now. You will not be able to earn enough interest on any investment to make up for the increase in housing costs over that period. I know too many people that sit on their hands for a year or two assuming that the market will cool, and all they do is watch their target house go up in price by 30%.

[Masked]

I'd like to see some nice change in a year or so.

I don't want a lot of risk. I have some money that I can experiment with, but if there's like a 50% chance of losing all my investment money, I don't want to take that chance.

These statements are mutually exclusive (depending on how you define nice change). You have to take on more risk to achieve greater gains (and of course the possibility of larger losses).

If you investment horizon is only one year, should stick with pretty safe investments like CDs or bond funds - no stocks. In the U.S., you would be looking at a ~5% return. If your horizon was longer, say 3-5 years, then an index fund which tracks a diversified group of stocks (e.g. S&P500 or whatever the equivalent for Canada is) would be the way to go. Over long periods, the stock market has returned ~10% a year.

[MikeVic]

I'm not really looking to buy a house right now, or in the next year or two. It was just the only thing I could think of that I would potentially be saving for.

I also had the thought that a bigger return means I have to accept a bigger risk. I'll have to look into mutual funds and the other options mentioned. Maybe a longer period (3-5 years) is also what I HAVE to do. Like I said earlier, I don't have any plans on a big purchase. My school and car are paid off... I'm just trying to generate more money.

[digamma]

These statements are mutually exclusive (depending on how you define nice change). You have to take on more risk to achieve greater gains (and of course the possibility of larger losses).

If you investment horizon is only one year, should stick with pretty safe investments like CDs or bond funds - no stocks. In the U.S., you would be looking at a ~5% return. If your horizon was longer, say 3-5 years, then an index fund which tracks a diversified group of stocks (e.g. S&P500 or whatever the equivalent for Canada is) would be the way to go. Over long periods, the stock market has returned ~10% a year.

Yeah, what Masked said--pretty much exactly what I was getting at with my questions earlier.

[Anthony]

If you can, buy the house now. You will not be able to earn enough interest on any investment to make up for the increase in housing costs over that period. I know too many people that sit on their hands for a year or two assuming that the market will cool, and all they do is watch their target house go up in price by 30%.

i don't know about Canada, but this isn't the case right now in the USA. housing market is in a cooldown, you have nothing to gain by buying now as opposed to 6 months from now.

[Fidatelo]

i don't know about Canada, but this isn't the case right now in the USA. housing market is in a cooldown, you have nothing to gain by buying now as opposed to 6 months from now.

Canada's economy is hot right now, and has been for several years. Furthermore, the Winnipeg housing market (where MikeVic lives) was severely depressed for 10-15 years, and has now been rising sharply for about 5 years straight, with no end in sight. This is not a bubble, as we still have one of the lowest-cost housing markets in the country. I can see the market eventually cooling and stabalizing, but there will not likely be any slippage, so unless you are betting that the market will cool in the next 12 months or so, you just can't save fast enough to make it worth holding off.

[MikeVic]

Canada's economy is hot right now, and has been for several years. Furthermore, the Winnipeg housing market (where MikeVic lives) was severely depressed for 10-15 years, and has now been rising sharply for about 5 years straight, with no end in sight. This is not a bubble, as we still have one of the lowest-cost housing markets in the country. I can see the market eventually cooling and stabalizing, but there will not likely be any slippage, so unless you are betting that the market will cool in the next 12 months or so, you just can't save fast enough to make it worth holding off.

Yeah, that's why I would want to buy a house... you can still get a really nice house for cheap compared to other places, but I just don't want that responsibility of owning a house right now.

I am scared about how much a house will cost when I'm ready to buy. :)

[Fidatelo]

This story is great: http://www.cbc.ca/news/story/2000/12/04/mb_housing120400.html

You can't buy a shack in Elmwood for less than 100k now. I wish I had been smart enough to buy back in '01 (I waited until '04).

[sabotai]

I'm almost to the point MikeVic is. I'm close to having paid off my credit card and student loans so will be able to actually invest some money soon. But I have no idea what I'm doing when it comes to presonal finance stuff. Been trying to educate myself on mutual funds, CDs, bonds, money market accouts, etc..

[Fighter of Foo]

All investors are usually better off investing in a mutual fund that tracks one of the major stock indexes.

Fixed :)

[Vinatieri for Prez]

Yeah, that's why I would want to buy a house... you can still get a really nice house for cheap compared to other places, but I just don't want that responsibility of owning a house right now.

I am scared about how much a house will cost when I'm ready to buy. :)

Buying a principal residence is the best investment you can ever make. Forget about not wanting responsibility. If you can make it work, buy now. Get in the market. If the Winnipeg market is as described, then this sounds like a safe investment and will bring you the best return out there. I repeat, get in the housing market as soon as you can comfortably (by that I mean you can weather a modest rate hike in a few years when your mortgage comes due for refinancing) afford the mortgage.

[Flasch186]

to ask a little more regarding SPY or QQQQ:

Are people concerned with a sell off in the market and its effect short term? what is a good maturity length on these stocks to be able to see some real growth? Is this better than say doing a Roth IRA? What is the downside of a Roth IRA with say 10K (which is what Im looking to invest next wk.)? Is there a better alternative with say a max risk of a 4 (on a scale of 1-10 [ I already own 3000 shares of Sirius Satellite radio to have some risk of about a 7]).

[JonInMiddleGA]

Forget about not wanting responsibility.

I don't believe that's an entirely realistic approach. While the investment itself may be sound financially, there's also what I'd call "the cost of worry".

I'm pretty sure there's probably an actual term for this, but what I'm getting at is that the monetary gain might not be worth the amount of grief it costs you. And everybody has a their own level for that.

Without hesitation I'd say home ownership has been the most consistent pain in the ass I've ever dealt with, a perpetual combination of aggravation & worry. And I think that has to at least be considered when making the decision to buy a house as an investment.

I'm not saying that it's never worth it, just saying that it isn't always worth it to everybody.

[Vinatieri for Prez]

Fair enough. But in a pure financial sense, it is can't miss (provided you can afford to hold long term).

[MikeVic]

Yeah, buying a house would be too much worry for me right now. I mean, i still live at home. I want to live in an apartment by myself for a bit first before buying a house. As much as I can take care of myself, there's still days where I'm glad I don't have to worry about making something to eat for supper, or finding time for laundry. :)

I like watching that Mad Money show, and I think I will start tracking stocks he recommends to buy and sell. See if over a period he's right or not.

If I'd want to buy mutual funds (and eventually stocks), is this something I can do online, and if so where do you guys recommend? Or can I do this through my bank? Meet in person, etc... phone in buys and sells...?

I've got about $5,000 I can do something with, and still have money in the bank. Plus as I said, I don't have any big purchases or big bills to pay (just some normal monthly things), so that $5000 will keep on growing.

[MikeVic]

Dola,

The reason I resurrected this thread was because I put some thought into the options given to me, and was sure that mutual funds seemed like the safest way to increase money. So i wanted to start doing that.

Then I started thinking about buying a stock for something I like, and couldn't think of anything. But I saw Gamestop metioned today, and thought I could buy a mutual fund for the (entertainment? Video game?) sector, or Gamestop itself. I like video games, and they always seem to be gaining more share in the entertainment business.

How do I find out about the sector-specific mutual funds?

[st.cronin]

Scottrade has pretty low fees, and you could probably call them up and ask them to find you a fund that meets that description.

[Logan]

Yeah, buying a house would be too much worry for me right now. I mean, i still live at home. I want to live in an apartment by myself for a bit first before buying a house. As much as I can take care of myself, there's still days where I'm glad I don't have to worry about making something to eat for supper, or finding time for laundry. :)

I like watching that Mad Money show, and I think I will start tracking stocks he recommends to buy and sell. See if over a period he's right or not.

If I'd want to buy mutual funds (and eventually stocks), is this something I can do online, and if so where do you guys recommend? Or can I do this through my bank? Meet in person, etc... phone in buys and sells...?

I've got about $5,000 I can do something with, and still have money in the bank. Plus as I said, I don't have any big purchases or big bills to pay (just some normal monthly things), so that $5000 will keep on growing.

Earlier you said you were hoping to have some "nice change" in about a year. If that timeframe is still accurate, you have to think about the rate of return you'll be earning on that small amount (in investment terms) with a riskier investment vs. a safe one. You can earn around 5% with an Emigrant online savings account, or similar banks, and that is 100% safe and completely liquid (as opposed to a CD, you could pull your money out at any time, or even add in as time goes on, without jeopardizing any of the interest you've earned as a penalty). That rate should be holding steady for the next year. Or you can take some risks with stocks/mutual funds and hope for a 10% return over the year, before fees.

You will be doubling your return...but with your principal amount, you will only be earning an extra $250 with the riskier proposition. Is that worth it to you? Or would you rather make your $250 and not have to worry about doing the research, paying fees, or potential losses?

If you're planning on keeping that money invested long-term, mutual funds/ETFs/stocks are the way to go. But from what you've decribed, I'd just stick it in one of the high-yield savings accounts and rest easy.

[NoSkillz]

Dola,

The reason I resurrected this thread was because I put some thought into the options given to me, and was sure that mutual funds seemed like the safest way to increase money. So i wanted to start doing that.

Then I started thinking about buying a stock for something I like, and couldn't think of anything. But I saw Gamestop metioned today, and thought I could buy a mutual fund for the (entertainment? Video game?) sector, or Gamestop itself. I like video games, and they always seem to be gaining more share in the entertainment business.

How do I find out about the sector-specific mutual funds?

I'm with TD Waterhouse and just started trading stocks about three months ago. TD is great - you can do all your trading online and trading mutual funds is no additional charge. If you are trading mutuals with them, you have access to their financial advisers for no additional fee.

I'm having an absolute blast right now but again, the market has been smoking hot in Canada over the past number of years and is due for a correction.

When that correction will take place is anyone's guess.

If you only have $5000 to invest, I'd suggest sticking with mutual funds as opposed to stocks. The stocks you'd be buying with that type of money would end up being entirely too risky (ie: penny stocks) for you based on your short-term expectations.

If you're looking for good sectors to invest in, I'd definitely recommend getting into a good 'minerals' fund. That market is just booming right now. You also can't go wrong with a solid Canadian Equity fund - most of these funds have a lot invested in the Toronto Stock Exchange and your gains in that fund will mirror how the exchange does.

I'd suggest waiting until you have about $25,000 saved up before venturing into the stock market itself. You can build a nice diversified portfolio with that amount of cash.

If you have any other questions, fire away.

[NoSkillz]

Dola,

Another smart option if you're looking to stay liquid and use the money within a year would be to put it into a Canadian money market fund.

Very safe but you'll only get about 5% out of it. Still, it's better than a savings account.

Just more food for thought.

[johnnyshaka]

MikeVic, if I were you I'd get into the real estate market ASAP. Even if you don't plan on moving out just yet, buy a property somewhere, anywhere because things are just crazy right now and there is no end in sight. Heck, do a deal with your folks (of course I don't know what kind of situation your family is in, financially) to buy a house and rent for a year or until you are ready to go it on your own and whether you decide to sell it then or just move in...either way, you are ahead of the game with some extra cash in your pocket (rental income or profit on the sale of the house).

I bought half of a duplex 5 years ago for $135,000 and I just checked mls.ca right now and somebody else in my neighbourhood with the exact same house is listing at $358,000!!!!!!!!! I checked about a month ago and they were listing at $320,000. That's nearly $40,000 in one bloody month. Yes, markets vary, but like fidatelo said, Winnipeg's is hot, too.

If you are looking to make money, real estate is the place to be.

A fun experiment...if you decide not to get into the housing market, pick an area of Winnipeg where you could afford to buy a house now and try and pick a pretty standard place for the area and write down the specs along with the price you think you'd have to pay now to buy it. Then, every month or two, check mls.ca to see what the same property in the same area is going for. After a year, I'm sure you'll be kicking yourself...but, it would still be intersting to see.

[CU Tiger]

Fair enough. But in a pure financial sense, it is can't miss (provided you can afford to hold long term).

Can't miss?
I am guessing you are under 30?
In the 80s many housing markets pulled back as much as 20% in a 1-2 year period. Parts of Florida have seen pull backs as much as 40% in the last 18 months.

I own 6 houses, and LOVE real estate, but PLEASE do not use the term cant miss.

Also if you arent financially prepared for home ownership it can bankrupt you. As a renter if the HVAC goes out you make a phone call as a landlord that could be a $10,000 problem.

homeownership is a GREAT thing but if you buy when you are ill prepared Murphy has a tendancy to move into your spare bedroom.

[CU Tiger]

Earlier you said you were hoping to have some "nice change" in about a year. If that timeframe is still accurate, you have to think about the rate of return you'll be earning on that small amount (in investment terms) with a riskier investment vs. a safe one. You can earn around 5% with an Emigrant online savings account, or similar banks, and that is 100% safe and completely liquid (as opposed to a CD, you could pull your money out at any time, or even add in as time goes on, without jeopardizing any of the interest you've earned as a penalty). That rate should be holding steady for the next year. Or you can take some risks with stocks/mutual funds and hope for a 10% return over the year, before fees.

You will be doubling your return...but with your principal amount, you will only be earning an extra $250 with the riskier proposition. Is that worth it to you? Or would you rather make your $250 and not have to worry about doing the research, paying fees, or potential losses?

If you're planning on keeping that money invested long-term, mutual funds/ETFs/stocks are the way to go. But from what you've decribed, I'd just stick it in one of the high-yield savings accounts and rest easy.

Dola

Ok to be fair, a great stock return could easily be 100-200% in a year.
Not likely but COULD BE.
Hell the S&P has AVERAGED 12.8% for 50 years.
12 is a good base line for safe investing.
I havehad 60 and 70 years (2002 comes to mind) but you cant bank on those.

[lynchjm24]

to ask a little more regarding SPY or QQQQ:

Are people concerned with a sell off in the market and its effect short term? what is a good maturity length on these stocks to be able to see some real growth? Is this better than say doing a Roth IRA? What is the downside of a Roth IRA with say 10K (which is what Im looking to invest next wk.)? Is there a better alternative with say a max risk of a 4 (on a scale of 1-10 [ I already own 3000 shares of Sirius Satellite radio to have some risk of about a 7]).

Roth IRAs are tremendous tools. You can only invest 4k a year though.

One word to anyone who wants to invest: Vanguard.

[Logan]

Dola

Ok to be fair, a great stock return could easily be 100-200% in a year.
Not likely but COULD BE.
Hell the S&P has AVERAGED 12.8% for 50 years.
12 is a good base line for safe investing.
I havehad 60 and 70 years (2002 comes to mind) but you cant bank on those.

My advice was based on the dogfighter wanting a lower risk option, and a short-term option. Coupling those together eliminates the probability of a huge return, especially for a beginning investor. Change either of those variables and options open up. He could speculate on a single stock with his $5000 and see it hit 5 digits or 0 digits by year end. I have a large portion of my retirement funds indexed to the S&P, and yes it's a nice way to go. And yes, the AVERAGE rate of return is 12+% but that is with plenty of years of +25%, +6%, -11%, +17%, -8%, etc. But again, take your "good base line" of 12% and he needs to still ask himself if the excess risk is worth the extra $350 over an online savings account.

That's really my whole point with this...many times people only look at their rate of return, and not necessarily what they're making on their principal and what the costs/benefits are with the investment choice.

[Vinatieri for Prez]

Can't miss?
I am guessing you are under 30?
In the 80s many housing markets pulled back as much as 20% in a 1-2 year period. Parts of Florida have seen pull backs as much as 40% in the last 18 months.

I own 6 houses, and LOVE real estate, but PLEASE do not use the term cant miss.

Also if you arent financially prepared for home ownership it can bankrupt you. As a renter if the HVAC goes out you make a phone call as a landlord that could be a $10,000 problem.

homeownership is a GREAT thing but if you buy when you are ill prepared Murphy has a tendancy to move into your spare bedroom.

No, I'm over 30. You missed the part when I said it is can't miss IF you can afford to hold the house long term.

[Flasch186]

SO I just called my accountant and explored the idea of, instead of investing in stocks etc., I should pay down my HELOC which, right now, is $17,000 at 11.25%. While the mo.pmt. is only ~$160 no matter my investments it's tough to make up for 11.25% walking out the door. I mentioned "tax write off" and he said its very limited and doesnt amount to much on that amount of $. Any add'l. advice from this trusted peanut gallery?

BTW upgrade today on GME....I hope this fall is big for Gamestop :)

[Fidatelo]

What is a HELOC? And 11.25%? Ouch, I'd definitely be paying that off as fast as possible (I'm very adverse to debt though, so my view may be conservative).

[Flasch186]

Home Equity Line of Credit (HELOC), when I bought my home I did an 80/10/10....80 is my first which is a 5yr. ARM to reset in Dec. of '09 (Ill refi before then), 10% is the HELOC (usually a higher rate so that's not necessarily a surprising rate for that), and 10% D.P.

[MikeVic]

I think you guys are right. I should go to my CIBC (bank) and schedule a meeting to discuss Canadian Money Market and mutual funds. I think for now, I'm in a position to just increase by a low-risk percentage. Then once I get more money saved up, try riskier options.

[MikeVic]

Dola,

I'm also someone that doesn't like debt... so I would pay off any debt I had before investing, Flasch. Paying 11.25% on $17,000 seems to be a lot.

[Vinatieri for Prez]

Flasch, unless you think you are going to get a return on your stocks that is better than 11.25%, then you ought to pay off the debt. In today's short term climate right now, I am not sure you can say that any stock/funds are guaranteed to get that. So, my advice is pay off the debt. As for a write off on the debt, you are also going to be charged income tax on any investment gain, so again unless you are fairly positive of a high return on the investement, pay off the debt.

[lynchjm24]

Flasch, unless you think you are going to get a return on your stocks that is better than 11.25%, then you ought to pay off the debt. In today's short term climate right now, I am not sure you can say that any stock/funds are guaranteed to get that. So, my advice is pay off the debt. As for a write off on the debt, you are also going to be charged income tax on any investment gain, so again unless you are fairly positive of a high return on the investement, pay off the debt.

You need to get better then 11.25. You need to get 11.25 after tax. Good luck with that.

[Marc Vaughan]

Can't miss?
I am guessing you are under 30?
In the 80s many housing markets pulled back as much as 20% in a 1-2 year period. Parts of Florida have seen pull backs as much as 40% in the last 18 months.
I own 6 houses, and LOVE real estate, but PLEASE do not use the term cant miss.

Out of interest as someone who's recently moved to florida and is currently watching the real-estate market tumble with interest .... whats your opinion on when it will 'bounce'?

Historic trends seem to indicate a 5 year fall period for housing traditionally within America (ie. when there's a decline it generally happens over a period of 5 years) - assuming the decline started in 2006 would you agree that now is a bad time to purchase property locally or do you think that the market will pick up much quicker than in the past? - if so do you think it'll remain flat or increase again towards its old valuations?

(in Brevard County where I live prices seem to be at least slowing in decline now, but I'm a great believer in showing respect for whats happened in the past ..)

[Flasch186]

well I got a nice bounce out of Gamestop after they reported earnings but this summer has been tumultuous. Im sticking with the plan of having Gamestop through Q1 of next yr. after they report earnings from the gift giving season and then re-evaluate if I shoudl take the money off of the table.

My other gamble, and it is much more of a reach is Sirius sattelite radio. I owned 1000 shares at 3.78 and lost a full buck on it. I hedged my bets buying 2000 more shares at 2.85 and have watched it dicker about as the FCC, FTC, and justice dept. figure out if they will allow the merger. I obviously am betting that they will and then Q1, Q2 they will begin to announce some of the synergies that they'll exploit and hope for profitablity by Q4 of next yr. We shall see. At 2.85 - 3.85 I figure the potential reward outweighs the risk.

[Radii]

As always, I recommend the intro articles at The Motley Fool:

http://www.fool.com/school/basics/basics01.htm

Especially seeing you mention not wanting tons of risk but wanting to maximize your return, read through the intro articles at the Fool, learn about the types of investments available to start to get an idea of the right level of risk/reward for you.


Personally, money that there is any chance at all that I'll need over the next couple years for me sits in an ING Direct savings account. Retirement money is sitting in an IRA at Fidelity in various Index Funds. I'm not debt free though and there's no way to reliably get a better return on investments that will earn me more than the interest on my debt, so that's what I'm focused on for the next two years or so.

[Chief Rum]

Out of interest as someone who's recently moved to florida and is currently watching the real-estate market tumble with interest .... whats your opinion on when it will 'bounce'?

Historic trends seem to indicate a 5 year fall period for housing traditionally within America (ie. when there's a decline it generally happens over a period of 5 years) - assuming the decline started in 2006 would you agree that now is a bad time to purchase property locally or do you think that the market will pick up much quicker than in the past? - if so do you think it'll remain flat or increase again towards its old valuations?

(in Brevard County where I live prices seem to be at least slowing in decline now, but I'm a great believer in showing respect for whats happened in the past ..)

You're in freakin' Florida now? What did I miss?

[Marc Vaughan]

You're in freakin' Florida now? What did I miss?

I moved over earlier this year - my wife's sister has had twins and she wants to help out as much as possible.

I'm still working at SI and strangely enough am currently back in England about to start working 'crunch' for the next release .....

[CU Tiger]

Out of interest as someone who's recently moved to florida and is currently watching the real-estate market tumble with interest .... whats your opinion on when it will 'bounce'?

Historic trends seem to indicate a 5 year fall period for housing traditionally within America (ie. when there's a decline it generally happens over a period of 5 years) - assuming the decline started in 2006 would you agree that now is a bad time to purchase property locally or do you think that the market will pick up much quicker than in the past? - if so do you think it'll remain flat or increase again towards its old valuations?

(in Brevard County where I live prices seem to be at least slowing in decline now, but I'm a great believer in showing respect for whats happened in the past ..)


Totally missed this post.
I really am not educateed enough to commeent on the Florida housing market. I only know what has happened through a good friend who after visiting us and helping clean a rental that had turned bad, decied landlording wwas fun and when he returned to Fl starting playing RE Mogul. Well 6 months later he was bragging about his millionaire status (02-03 west palm area) and 6 months ago he called to say he was prepariong for his bankruptcy procedures and was contemplating suicide.

I feel very in tune with the Upstate SC and Chralotte NC
housing markets, but I have lived here for 25 of my 30 years on earth. Theere is nothing to replace experience and immersion imo
.

[Flasch186]

Right now is a great time to buy a HOME in Florida, ESPECIALLY if they change the Real Estate Property taxes next year which they likely will (may not be good for Florida in the long run or specific areas).

It is way too turbulent a time to be looking at things from investment standpoints in Florida IMO so the home you buy better be your home. You can get a great deal right now. You wont see a ton of appreciation, if any in some markets and who knows, may even see another drop before December 31st BUT you wont see prices in this ballpark, in some areas, for many many years to come if ever, again.

[Chief Rum]

I moved over earlier this year - my wife's sister has had twins and she wants to help out as much as possible.

I'm still working at SI and strangely enough am currently back in England about to start working 'crunch' for the next release .....

Welcome to the US of A, the greatest country on Earth then! :smirk:

I'm sorry to say we don't show many Brighton games, though, over here.

[Fighter of Foo]

Q&A with Warren Buffett (http://www.getrichslowly.org/blog/2007/08/26/questions-and-answers-with-warren-buffett/)

[MikeVic]

I talked to a friend of mine last night, and he apparently just bought a house... he's kind of in a similar position as me, so that got me thinking about investing and house-buying again. I haven't had a chance to speak with a bank representative yet, but I wanted to try for this weekend.

I'm not in a house-owning mind-set yet, but I do want to start growing money. Maybe in a year I will start looking for a house. I don't really want to pay rent for an apartment if I can help it. Hopefully the bank person can steer me in the right direction. :)

[MikeVic]

Anyone ever use a financial consultant? I spoke to the friend that bought a house, and he said about a year ago he talked to one that helped save the money necessary, and that they take a certain percentage of money they helped you gain.

I'm talking with him through e-mail, so it's taking awhile to get responses back and forth... but I was wondering what you all know about consultants? Not worth it? Worth it?

[Flasch186]

i have no idea if theyre worth it or not but if you have any questions about real estate, and even more specifically need to know something about the new homes market Id be glad to give you some advice that you can bounce of even more people. I too am looking at buying a new home and selling/renting out my old house.

[MikeVic]

Well, I don't see myself buying a house until next summer at the earliest, but I want to start looking soon to see if it is feasible for myself.

I wouldn't be buying a new home, since the price would be way too high for my single income. :)

[Fidatelo]

Mike, not sure what areas you're looking at, but here's a rough guide based on friends who are looking or have just bought:

- nice home in a bad area: 100k
- crappy home in a decent area: 130k
- nice, but small, home in a decent area: 160k
- nice, mid-size home in a decent area: 200k

[MikeVic]

Mike, not sure what areas you're looking at, but here's a rough guide based on friends who are looking or have just bought:

- nice home in a bad area: 100k
- crappy home in a decent area: 130k
- nice, but small, home in a decent area: 160k
- nice, mid-size home in a decent area: 200k

Thanks, much appreciated. My friend paid 130K for his ok-looking home (just saw pictures, but it looks cozy) in an ok area.

[lordscarlet]

Mike, not sure what areas you're looking at, but here's a rough guide based on friends who are looking or have just bought:

- nice home in a bad area: 100k
- crappy home in a decent area: 130k
- nice, but small, home in a decent area: 160k
- nice, mid-size home in a decent area: 200k

:eek:

[MikeVic]

:eek:

Yeah, but we also seem to make less per year... although houses are still affordable here right now. :) A friend's brother bought a nice house in a nice area for around $220-240K a couple years ago.

[Kodos]

Are those Canadian or US dollars?

[lordscarlet]

Yeah, but we also seem to make less per year... although houses are still affordable here right now. :) A friend's brother bought a nice house in a nice area for around $220-240K a couple years ago.

I bought 650 sq ft for $320k a couple years ago. :)

[lordscarlet]

Are those Canadian or US dollars?

Wow. I didn't even think about that. That's like a $50k house.

[Flasch186]

Mike, not sure what areas you're looking at, but here's a rough guide based on friends who are looking or have just bought:

- nice home in a bad area: 100k
- crappy home in a decent area: 130k
- nice, but small, home in a decent area: 160k
- nice, mid-size home in a decent area: 200k

wow, not accurate for all municipalities or areas, at all.

[Fidatelo]

wow, not accurate for all municipalities or areas, at all.

Umm, MikeVic and I live in the same city...

[MikeVic]

Wow. I didn't even think about that. That's like a $50k house.

lol, I've seen some cheap listings around 100K, but I don't think I'd want those houses because of the area... need I remind you that Winnipeg is somewhere at the top in per-capita murders and car theft... I believe like top 5 or 10 in North America (Canada for sure, but I thought I heard the murder thing for all of North America).

[Fidatelo]

I think our U.S. American friends are also forgetting that the exchange rate isn't quite so bad up here anymore.

[MikeVic]

I think our U.S. American friends are also forgetting that the exchange rate isn't quite so bad up here anymore.

I think U.S. Americans will forever poke fun at the Canadian currency... I'm happy with it thought right now. :) I can go to Albertville and buy clothes for the next year or two at a big savings.

[Fidatelo]

Dola

Here's the scary thing: 7 years ago you could buy a really nice house in a nice area for about 120k. That same house now would be 275k. And in lots of places it would be like 500k or higher. I honestly don't understand how people afford houses in those places, even 275k seems like a king's ransom and my wife and I both have good jobs.

[Fidatelo]

I think U.S. Americans will forever poke fun at the Canadian currency... I'm happy with it thought right now. :) I can go to Albertville and buy clothes for the next year or two at a big savings.

Yep, I'm still waiting for companies to properly reflect the higher currency in our prices here.

[Fidatelo]

Awesome I totally ended up with the Dola on the wrong post. I'm blaming the timestamp bug.

[lordscarlet]

I think our U.S. American friends are also forgetting that the exchange rate isn't quite so bad up here anymore.

The joke is still funny to us, though. :)

[Vinatieri for Prez]

The joke is still funny to us, though. :)

Yup, pretty funny. Wait to you here the joke about the U.S. national basketball team winning games blindfolded and one arm tied behind their backs.

[Hammer]

Wow, cheapest house on the market where I live in the U.K. is in the region of $250,000. A decent one is $400,000 american dollars. Think I might retire over there!

edit: need I remind you that Winnipeg is somewhere at the top in per-capita murders and car theft

maybe not then :)

[k0ruptr]

become an expert in college football and make a lot of bets.

[JAG]

Anyone ever use a financial consultant? I spoke to the friend that bought a house, and he said about a year ago he talked to one that helped save the money necessary, and that they take a certain percentage of money they helped you gain.

I'm talking with him through e-mail, so it's taking awhile to get responses back and forth... but I was wondering what you all know about consultants? Not worth it? Worth it?

Hey Mike,

I asked the same question (sort of) as you did a few years back: http://www.operationsports.com/fofc/showthread.php?t=24400

There was a lot of great advice for me there. To give 'the rest of the story', in the end we did go with someone professionally and my wife and I are quite happy with the results and with him, still three years later. I don't fully know your financial situation, but our situation was more complicated than the average person and so it was a great help to us, to give us organization and direction. It also depends on what level of involvement you want, if you're looking for a financial plan to be put together (it sounds like this is where you might be) or actually want them to invest your money for you (in which case you will likely need a good-sized chunk). From what I read about your situation, I think you might be able to come up with a basic idea of what you need to do by following the info on some of the sites listed in the linked thread.

[MikeVic]

I have an appointment on Saturday with my bank. I'll take to the lady about my situation and what the best course would be. I'm thinking a house in a year or two is do-able. I was going to start an RRSP next year too (since my company matches after a year's employment).

I'll probably ask about mineral mutual funds and Canadian money market funds... a friend used something called an RSP, that can be used towards a mortgage too. So I hope the bank can help me out with a decision. :)

[Ryan S]

Wow, cheapest house on the market where I live in the U.K. is in the region of $250,000. A decent one is $400,000 american dollars. Think I might retire over there!

I have a friend who has just bought a two bedroom apartment on the outskirts of London for $650k. He tells me that the identical show flat a few miles closer to the city centre was going for around $850k.

[Vinatieri for Prez]

The best money advice I could give you is: Always bet on black.

I feel better now.

[MikeVic]

I ended up putting a few grand into a fixed 1-year thing. 4.3% at the end of a year, but I can't touch it until then.

I also put twice the amount into a mutual fund (that I'm hoping provided a 5-6% rate). I was told by the bank person that I can take this money out at any time if I wanted to put it towards a down payment for a house, and we also talked a bit about saving for a house.

She said to have about 20% ready for a down payment, in order to avoid some kind of percentage fee (forgot the name of it).

One thing that struck me though, was that she talked about RRSPs, and using that money as a down payment. So I said my company does matching after a year of employment, and I will open an RRSP then. She then said that most places like that need you to do the RRSP through the company, so you can't use the RRSP as leverage in things like mortgages and stuff. It's the downfall of RRSP matching by a company.

Does this sound right?

[MikeVic]

Dola,

I'll be reading more about index funds and stocks before I take a plunge into that!

[Radii]

I ended up putting a few grand into a fixed 1-year thing. 4.3% at the end of a year, but I can't touch it until then.

A CD? I'm assuming you know you won't need it during the next year so that's ok, but some online savings accounts(like ingdirect.com) do as good or better than any bank CD, so you may want to look at that more for near term safe investments.


She said to have about 20% ready for a down payment, in order to avoid some kind of percentage fee (forgot the name of it).


PMI, Private Mortgage Insurance, if you put less than 20% down you have to pay 'insurance' that covers the lender b/c you're more of a risk to default(I think that's the rationale at least)...


I dunno about RRSPs or other things Canadian :D

[Vinatieri for Prez]

Some additional Canadian stuff to help you out MV. The fee is mortgage insurance (not private but through Canadian Housing Mortgage Co (CHMC)), necessary for all high ratio loans.

I also agree on the bank CD. I don't like it. That 4.3% is no better than you could probably get for a one-month term deposit or even some high rate savings accounts at some banks. Shop around.

Finally, with the RRSP, all she is talking about is that you can "borrow" from your own RRSP for a down payment and still keep its tax-deferred status, provided you are a first time homebuyer and replenish that amount back into the RRSP over the next 15 years. So, yeah load up on that RRSP as much as you can and that way you can delay paying income tax on it until retirement even though you are using it now to buy a house. They're the Canadian version of an IRA. I don't know about the company RRSP thing though.

[damnMikeBrown]

Hell man, and I want to qualify that I'm drunk right now, but the company I work with has a no shit money market (no B.S. about it, no oh you owe us xxx) rate now of over 5%. Granted the rate drop of earlier this week has not yet really taken effect on money markets. CD's, yes, they've been mauled, but no money markets yet, however they are MUCH more adjustable from the issuers side.

[MikeVic]

The CHMC was exactly it. I recognize the name. The 1-year thing was actually called a GIC. Well, I guess you live and learn. :) 4.3% sounded alright so I took it. After a year I'll try out something else.

I want to find out about how company RRSPs work first before I start a bank RRSP. I guess the downside (besides risk) of mutual funds is that when you take the money out, yu're taxed on it as income... I should find out about how the company RRSP thing works.

[MikeVic]

So apparently the company I work for allows you to put YOUR contributions towards a mortgage (but not the amount they match with, which makes sense). This is apparently not common for companies to do, as they will usually not allow you to put money towards anything.

I'm thinking since that's so far away (after a year's employment), I'll start an RRSP with my bank... Nothing wrong with having that until next year, I think? Maybe put $100 a month towards it.

[MikeVic]

I have a question that I wanted people's opinions on... So it seems like RRSPs help you in that you can claim them on your taxes, and not pay tax on whatever you put in there. While mutual funds are not like that.

I was going to start an RRSP with my bank next weekend, and deposit around $75-100 biweekly into it. When I set up my mutual fund, I was asked if I would like to regularly deposit $50 biweekly into it too. I said I'd think about it, but am considering it right now too.

My question is do you think it's smart to deposit $100 into an RRSP, and $50 into a mutual fund biweekly? Or should I just put $150 into an RRSP and not the mutual fund (let it grow on its own), or not start an RRSP right now (and wait for my company's matching next year), and put $150 into my mutual fund?

[Fidatelo]

Your RRSP can contain mutual funds. If you don't plan to touch the money until you retire, go RRSP.

[MikeVic]

Your RRSP can contain mutual funds. If you don't plan to touch the money until you retire, go RRSP.

Hmm interesting. I don't plan to touch the money until I buy a house, and then use the RRSP money as a down payment. So that could work.

[Vinatieri for Prez]

Hmm interesting. I don't plan to touch the money until I buy a house, and then use the RRSP money as a down payment. So that could work.

Yup. That's the way to do it. I would suggest that you put everything into the RRSP, and forget about a separate broker account for mutual funds. If you're socking it away for the house, then go for it.

That's the purpose of an RRSP. It's not only tax deductible, but you're earning your 8-12% annual on it (with compounding interest), not 3-4% for a CD or term deposit.

[Flasch186]

BTW upgrade today on GME....I hope this fall is big for Gamestop :)

so far so good, and Sirius (SIRI) has had the fight back I needed. pretty happy thus far although im staring down the barrel of 2 new cars this fall. Used '07 models to get the new car loan rates, but its still the opposite direction that I like going.

[MikeVic]

Ok, so the mutual fund I put money into was doing good at first but not so great now. I'll keep it in for a few more months to see what happens (unless it does very poor).

I wanted to start an RRSP right now though (this weekend or next). I was told I could transfer any of that money to my company's RRSP once I'm eligible for that, in case the plan that allows you to use RRSP money towards a house only allows you to take from one RRSP (which I'm sure is the case).

I was talking to a co-worker and he mentioned that what he did was to just save up enough money for a down payment in some liquid account (even something like a chequing account), because he didn't want to have to pay back the RRSP. I'm thinking putting into an RRSP is better, if only because it's tax deductible.

Here's my bank's RRSP options (I think these are the only ones... only ones I could find):
http://cibc.com/ca/rates/rrsp-rates-group.html

I have no idea which one to put into. It seems like anything that gives a decent amount back (and even then, it's only ~4%) requires the money to be locked away for a period of time? Help please? :)

[Vinatieri for Prez]

Definitely go the RRSP route. I can't believe your buddy used a checking account. That gets like basically zero interest. He could have stayed just as liquid going with a high rate savings account or 30-day rollover term deposit.

[MikeVic]

Yeah, I figure any % is better than 0. I guess I should find an RRSP option with CIBC that just lets me take the money out whenever I want. Looks like a shitty %, but at least the money won't be counted towards my income either.

[MikeVic]

I'll be calling my bank tomorrow to see if I can talk to someone about RRSPs this weekend.

However, my mutual fund keeps dropping. I've lost over $200 on it now. I don't want to sell it because I'm hoping it goes up... it's had a decent history, but maybe I just bought high. Not sure if anyone's looked at my bank's site, but it seems like most of their mutual funds are pretty damn crappy in terms of return rate. Maybe I should start dabbling in an index fund.

[chrisj]

Mike, not sure what areas you're looking at, but here's a rough guide based on friends who are looking or have just bought:

- nice home in a bad area: 100k
- crappy home in a decent area: 130k
- nice, but small, home in a decent area: 160k
- nice, mid-size home in a decent area: 200k

Really?? Those are the prices in Winnipeg.

*quickly glances at the prices in Edmonton*

- nice home in a bad area: 350k
- crappy home in a decent area: 350k
- nice, but small, home in a decent area: 400k
- nice, mid-size home in a decent area: 500k

Makes me want to sell my condo and move to Winnipeg. I could live almost mortgage free!

[Logan]

Yeah, but those are in Canadian dollars!

(wishes it was still a year ago :()

[Flasch186]

I'll be calling my bank tomorrow to see if I can talk to someone about RRSPs this weekend.

However, my mutual fund keeps dropping. I've lost over $200 on it now. I don't want to sell it because I'm hoping it goes up... it's had a decent history, but maybe I just bought high. Not sure if anyone's looked at my bank's site, but it seems like most of their mutual funds are pretty damn crappy in terms of return rate. Maybe I should start dabbling in an index fund.

Thats what Im looking to do over the next month. Average my entry into some Index funds and spread the money 75/25 into ex-us. A little throughout as Im bullish for the next 10 years or so globally and I was thinking today, and I could be wrong and you need to do your own due diligence, that perhaps we're seeing a moment where the markets take a breather and then run up to 20,000DJI over the next 5-10 years. This could be an opportunity to get on the train we missed 15 years ago.....could also be the time to lose everything, hrmmmmm.

Been reading 2 books, The Intelligent Investor which in and of itself is a bear and The Little Book of Common Sense Investing, which promotes the idea of ETF's and diversification.

still playing SIRI for the merger though and plan on getting back into Gamestop when a few other trades settle....I see GME at 75+ next year. People cannot stop buying games, recession or no recession and each new platform game they sell can be sold for 200% profit when you average the tradein and turnaround!! There problem may actually be that their shelves aren't big enough!! Although when Im in the store I do NOT like seeing all of the used DVD's....reminds me of Blockbuster and that is NOT a good thing.

[Fidatelo]

Really?? Those are the prices in Winnipeg.

*quickly glances at the prices in Edmonton*

- nice home in a bad area: 350k
- crappy home in a decent area: 350k
- nice, but small, home in a decent area: 400k
- nice, mid-size home in a decent area: 500k

Makes me want to sell my condo and move to Winnipeg. I could live almost mortgage free!

There are definitely a lot of Albertans moving to Winnipeg for exactly the reason you state, they wipe out their mortgage and pocket some cash as well. Even after over 5 years of large increases the housing market in Winnipeg is still 'cheap' in comparison to most places in Canada (even Regina has a higher average house price).

[Cringer]

Anyone have experience with Municipal Bonds? 6.25% interest paid tax-exempt, 10 year term. I don't have the details about the repayment except the 10 years. Was just curious if this type of thing was any good or not? Would just dumping the money into an IRA or Mutual Fund be better (obviously much more long term then the MB)?

[Cringer]

Investing in a municipal bond with Lily Allen, yay or nay?

Perhaps I get some feed back now. ;)

[SportsDino]

You brought up a thread from 2007 to ask that? I know someone on here will probably give you a better low down on municipal bonds than I could, so I'll keep my trap shut.

Interesting to open the time capsule though, at the same time as this thread I was doom and glooming about how to start my own investments.

[Cringer]

Yeah, 2007. I did a search and this was near the top. I didn't feel like slapping it in the economy thread, and this is a newb thread and I am a newb, it felt right. :)

[Marc Vaughan]

Anyone have experience with Municipal Bonds? 6.25% interest paid tax-exempt, 10 year term. I don't have the details about the repayment except the 10 years. Was just curious if this type of thing was any good or not? Would just dumping the money into an IRA or Mutual Fund be better (obviously much more long term then the MB)?

My rather limited investments are split 50-50 between stocks and bonds pretty much right now, Municipal Bonds are generally solid as far as I'm aware (its where I have most of mine) but pay decent rates of interest.

(basically with them unless the city or local goverment goes bust you'll get your money - this is a pretty darn rare occurance)

[PilotMan]

Hey guys, I am thinking of doing some small (1-2k) investing on my own, does anyone have any experience with Scottrade or any of the other DIY discount brokers?

I have been leaning toward Scottrade, simply for price and simplicity, and I like the way the research is displayed on the site. Any other pros or cons for them or any others?

[PilotMan]

dola!

Finally got around toward opening my first investment accout. I went with Scottrade. I hope I can be successful. I have a feeling that there are some really good buying ops out there, but I am a bit of an optimist when it comes to that stuff.

[sterlingice]

I like watching that Mad Money show, and I think I will start tracking stocks he recommends to buy and sell. See if over a period he's right or not.

This thread is full of gems like this.

And it gives me a chance to post one of my favorite Daily Show clips of all time:

<embed style="display:block" src="http://media.mtvnservices.com/mgid:cms:video:thedailyshow.com:220288" type="application/x-shockwave-flash" wmode="window" allowfullscreen="true" flashvars="autoPlay=false" allowscriptaccess="always" allownetworking="all" bgcolor="#000000" height="247" width="288">

"While Kramer wasn't giving up on Bear at $69, in 11 days the stock market was more comfortable with it at (Jon looks at script for comic pause) 2"

SI