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Advice on how to approach starting to invest with new job and new child, planning for future

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Deal Guru
Sep 2, 2008
12614 posts
2318 upvotes

Advice on how to approach starting to invest with new job and new child, planning for future

Hi all, looking for some advice on how to best start investing for the future.

Situation. I'm 33, just starting a new job which pays around 65K and can expect it to go up to 80-90K in a couple years. Income does fluctuate and depends on what shifts I get and how much overtime I choose to work. Income listed is minimum but could be higher if I want to go crazy on overtime but unlikely I would do that with young child, but it could go up and down. My wife, 29, works part time retail, doesn't earn much. Not sure if she will continue to work.

~220K left on mortgage for a Condo in Toronto (345K purchase)
First baby expected in November
Zero in my TFSA/RRSP/RESP
20K in savings account ready to start investing
Wife has 15K in tangerine investment TFSA

The only investing experience I have is using canadian couch potato method with eseries funds, but pulled all of that out to use for mortgage downpayment.

Looking to start again but thinking of questrade ETF. My first question is how to allocate funds between TFSA/RRSP/RESP, and should each of those registered accounts hold the same etfs in the same ratios?
16 replies
Sr. Member
User avatar
Jun 27, 2007
579 posts
112 upvotes
Toronto
slowtyper wrote: Hi all, looking for some advice on how to best start investing for the future.

Situation. I'm 33, just starting a new job which pays around 65K and can expect it to go up to 80-90K in a couple years. Income does fluctuate and depends on what shifts I get and how much overtime I choose to work. Income listed is minimum but could be higher if I want to go crazy on overtime but unlikely I would do that with young child, but it could go up and down. My wife, 29, works part time retail, doesn't earn much. Not sure if she will continue to work.

~220K left on mortgage for a Condo in Toronto (345K purchase)
First baby expected in November
Zero in my TFSA/RRSP/RESP
20K in savings account ready to start investing
Wife has 15K in tangerine investment TFSA

The only investing experience I have is using canadian couch potato method with eseries funds, but pulled all of that out to use for mortgage downpayment.

Looking to start again but thinking of questrade ETF. My first question is how to allocate funds between TFSA/RRSP/RESP, and should each of those registered accounts hold the same etfs in the same ratios?
Hi slowtyper,

We’re glad to hear you’re considering Questrade. If you have any questions about investing with us, please let us know.
Deal Addict
User avatar
Dec 8, 2010
2564 posts
992 upvotes
IMHO;

RESP: Put ~$2500 in a year to get full grant match (CESG). Do that for 14 years to get max grant. That should cover everything. Keep the asset allocations totally separate from your own. Switch to mostly fixed income year by year when your child is 10 or so (in my case, no bonds til 10, then +10% each year from then).

For your own, treat RRSP and TFSA as a single entity, remembering you have to pay tax on the RRSP so it is 'worth' less than the account value shows. I just do 80% for mine. So if you have $50k in an RRSP treat it as $40k! Then yeah, just follow CCP. Or even do the simplest - XWD, 100%, everywhere.
Deal Fanatic
Dec 6, 2006
5805 posts
1972 upvotes
Toronto
You have 20k cash and 0 in TFSA. So most obvious is all into TFSA, which is tax free and the most liquid if you dont have other emergency fund.

If you can afford to have some cash tied up, then put some into RESP to get the free government money now.

My 2c.
Deal Guru
Sep 2, 2008
12614 posts
2318 upvotes
daverobev wrote: IMHO;

RESP: Put ~$2500 in a year to get full grant match (CESG). Do that for 14 years to get max grant. That should cover everything. Keep the asset allocations totally separate from your own. Switch to mostly fixed income year by year when your child is 10 or so (in my case, no bonds til 10, then +10% each year from then).

For your own, treat RRSP and TFSA as a single entity, remembering you have to pay tax on the RRSP so it is 'worth' less than the account value shows. I just do 80% for mine. So if you have $50k in an RRSP treat it as $40k! Then yeah, just follow CCP. Or even do the simplest - XWD, 100%, everywhere.
Thank you for your thoughts. Could you elaborate on your resp suggestions and dumb it down a bit for me? I don't understand the last part where you say stick to fixed income mostly....

Thanks
Deal Fanatic
Jun 27, 2007
5507 posts
1956 upvotes
contribute small and often. unless ETF purchases are free, go with e-series or similar
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Deal Guru
Sep 2, 2008
12614 posts
2318 upvotes
daverobev wrote: IMHO;

RESP: Put ~$2500 in a year to get full grant match (CESG). Do that for 14 years to get max grant. That should cover everything. Keep the asset allocations totally separate from your own. Switch to mostly fixed income year by year when your child is 10 or so (in my case, no bonds til 10, then +10% each year from then).

For your own, treat RRSP and TFSA as a single entity, remembering you have to pay tax on the RRSP so it is 'worth' less than the account value shows. I just do 80% for mine. So if you have $50k in an RRSP treat it as $40k! Then yeah, just follow CCP. Or even do the simplest - XWD, 100%, everywhere.
do you use eseries funds for resp as the article suggests? How about for your TFSA/rrsp?
Deal Guru
Sep 2, 2008
12614 posts
2318 upvotes
Also since my income is variable year by year, does it make more sense to juggle rrsp/TFSA contributions at tax time? Or max TFSA first (wife account also)? I've never dealt with rrsp as I've never had savings that exceeded my TFSA before.
Deal Addict
Apr 21, 2014
2321 posts
1106 upvotes
Alberta
slowtyper wrote: Hi all, looking for some advice on how to best start investing for the future.

Situation. I'm 33, just starting a new job which pays around 65K and can expect it to go up to 80-90K in a couple years. Income does fluctuate and depends on what shifts I get and how much overtime I choose to work. Income listed is minimum but could be higher if I want to go crazy on overtime but unlikely I would do that with young child, but it could go up and down. My wife, 29, works part time retail, doesn't earn much. Not sure if she will continue to work.

~220K left on mortgage for a Condo in Toronto (345K purchase)
First baby expected in November
Zero in my TFSA/RRSP/RESP
20K in savings account ready to start investing
Wife has 15K in tangerine investment TFSA

The only investing experience I have is using canadian couch potato method with eseries funds, but pulled all of that out to use for mortgage downpayment.

Looking to start again but thinking of questrade ETF. My first question is how to allocate funds between TFSA/RRSP/RESP, and should each of those registered accounts hold the same etfs in the same ratios?
In my opinion it should be RRSP/Tisa first and then resp. Have to pay yourself first to make sure you are not poor in retirement.

In your situation considering your income will increase is to max TFSA first, and if all of a sudden in a year you work crazy overtime and are in a much higher tax bracket, you have January and February to pull out from TFSA and put into RRSP.
Deal Addict
User avatar
Dec 8, 2010
2564 posts
992 upvotes
slowtyper wrote: do you use eseries funds for resp as the article suggests? How about for your TFSA/rrsp?
No, Questrade. I don't see any downside to using them over TD, as ETF buys are free. Lower MER (generally, if you follow the true passive route), and more flexibility.
Sr. Member
May 26, 2010
575 posts
139 upvotes
slowtyper wrote: Looking to start again but thinking of questrade ETF. My first question is how to allocate funds between TFSA/RRSP/RESP, and should each of those registered accounts hold the same etfs in the same ratios?
Congratulations on the impending baby! We've recently been in a similar situation after our first born came along last year.

With my wife on drastic reduced hours from her self-employed job we've given out tax situation a lot more focus. For the first time in our lives (we're both 29) RRSPs have provided more appeal to us than they did previously (we'd previously almost maxed out both of our TFSAs).

Have a play around with on the internet and look at various Federal and Provincial credits and payments. You will likely find that a lot of them use net income as a eligibility factor. With us living in BC things that impact us are the Federal Canada Child Benefit and HST/GST Rebate and the Provincial BC Early Childhood Tax Benefit and Medical Services Premium. All of these are calculated based on net household income (which I think is absolutely ridiculous as the only reason that my net income is low these last 2 years is due to lump-summing my RRSP - but hey thats our tax code for you).

If you have some good contribution room built up for your RRSPs I'd suggest crunching the numbers for your income situation and provide as you may be able to supplement a tax refund with increased governmental payments at the same time as building a diversified portfolio.
Deal Addict
Sep 2, 2004
3138 posts
2300 upvotes
The general rule of thumb is if you expect your tax rate to be lower in retirement than it is today, if you are chooaimg between the two rrap makes more sense than tfsa. If your tax rate is lower today the tfsa has the advantage.

Also you cant create and contribute to an resp until the child is born (need their SIN).
Member
Dec 2, 2014
458 posts
186 upvotes
London, ON
What I do is put my extra income in my TFSA, invest it, and then move the "winners" over to the RRSP prior to the deadline. I routinely get about ~3k in returns by doing this (which I then reinvest and use it the following year), Also don't forget to claim your child as a dependent on your return...this was the first year I've done my taxes since having our son and I almost missed doing so.
Sr. Member
User avatar
Jun 27, 2007
579 posts
112 upvotes
Toronto
daverobev wrote: No, Questrade. I don't see any downside to using them over TD, as ETF buys are free. Lower MER (generally, if you follow the true passive route), and more flexibility.
Hi daverobev,

Thanks for the recommendation!

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