Investing

If I have $50k cash and RRSP room, what should I buy ?

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  • Feb 14th, 2016 2:05 am
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Deal Guru
Jun 7, 2005
10358 posts
1481 upvotes
Toronto

If I have $50k cash and RRSP room, what should I buy ?

Stock market is low now, is it a good timing to buy now ? But some experts are saying it is better to hold cash for this year as it could be a big fluctuation.

What about using it as a down payment for a condo ? But I don't have time to deal with tenants and related issue. I heard there are some companies whose manage the buy/sell, rental for you. But I am sure there is a big fee as there is no free lunch.

Honestly, I haven't been paying too much attention on investment, mainly because I am busy with kids and lazy :D But one of my new year resolutions is to spending more time on investment instead of spending time checking deals on RFD :D I am thinking if I can make money from investment, I probably don't have to spend too much time finding deals, saving $10-20 here and there :D

I heard something about dividend reinvestment plan (DRIP) and buying dividend funds from the book: Lazy Investors. I used to work for a company which had an option to buy company stock and it is DRIP account. I just joined and didn't pay attention to it at all. But after like 5 years, it does roll to a very reasonable amount. So, I am thinking if I should start something like that. I do have a TD self direct account. Just need to get myself started. Thanks in advance for any advice :)
15 replies
Deal Addict
Mar 22, 2010
4133 posts
2172 upvotes
What's your purpose of this investment? using it as down payment or is this something you can hold for 5 years? RRSP only allows up to $25K (that is if you haven't utilized your HBP yet). You mentioned that you have kids... RESP is also something to look into.

Anyway, it's risky to get into the market right now just because you think market is down and stocks are cheap. They may be heading new lows. Look into mutual funds like Mawer or Canadian Couch Potato (this place talks about TD Index, which is great place to start)
Deal Guru
Jun 7, 2005
10358 posts
1481 upvotes
Toronto
The purpose of this investment is to grow it instead of sitting it in the bank, collecting almost nothing interest. I haven't bought RRSP for a while, so I should have accumulated room for that (need to double check the amount though, like I said I haven't paid much attention to it as my current company also have pension plan which leaves only a few thousand $ room each year). Yes, I do have already have RESP for the kids.

You are right, I should start with the couch potato approach. A silly question, is a DRIP account can be setup with any stock & funds, and within the TD investment account ?


The crazy growing real estate market does look very tempting. Thus, I keep thinking about buying a condo. But my wife is saying where & which one to buy, do we have time to manage..........

You are right. Like I said, some investment experts said it is very risky at this moment even stock prices are low as it could go even lower.
rapashoo wrote: What's your purpose of this investment? using it as down payment or is this something you can hold for 5 years? RRSP only allows up to $25K (that is if you haven't utilized your HBP yet). You mentioned that you have kids... RESP is also something to look into.

Anyway, it's risky to get into the market right now just because you think market is down and stocks are cheap. They may be heading new lows. Look into mutual funds like Mawer or Canadian Couch Potato (this place talks about TD Index, which is great place to start)
Deal Fanatic
User avatar
Oct 9, 2008
5684 posts
2251 upvotes
Thornhill
Not to sound callous but it's your money, no sane person will take the time and effort to build your portfolio for you here or anywhere else unless there's some gain for them.

There are plenty of threads and posts here for others to gauge whether the posted strategy or specific equity falls inline with their own expectations.

One size usually does not fit all.
Deal Guru
Jun 7, 2005
10358 posts
1481 upvotes
Toronto
I understand there is no free lunch. Did ask someone to build my portfolio here ?? I am simply asking some advise to get myself starting on investment.

I have a friend who have a $1 million + portfolio. Like he told me, he does not mind paying 10% of his gain as the fee. I am into the same philosophy. But of course, I do not have that size of equity :)
Jeenyus1 wrote: Not to sound callous but it's your money, no sane person will take the time and effort to build your portfolio for you here or anywhere else unless there's some gain for them.

There are plenty of threads and posts here for others to gauge whether the posted strategy or specific equity falls inline with their own expectations.

One size usually does not fit all.
Deal Fanatic
Jun 3, 2009
5735 posts
1585 upvotes
Montreal
Since it's your RSP, I'd go with Maw104 or the CCP style.
Newbie
Dec 31, 2015
14 posts
1 upvote
Ottawa
Not sure what city you're in but in Ottawa that amount gets you a $200K townhome with 20% down that carries itself. The rent is $1300/mo and the property manager takes care of everything. There's zero involvement and no better return.
Sr. Member
Nov 28, 2010
979 posts
176 upvotes
Toronto
Always funny to see people seeking a financial advice on a public forum.
Sr. Member
Mar 15, 2011
559 posts
193 upvotes
Toronto
Since you said that you have no time since you are busy with family, best idea would be to put it in a fund that fits your risk tolerance and does its own rebalancing. Since you said its RRSP money, it does appear to be long term investment that you won't need for 10+ years.
Can't help on the real estate part.
Deal Addict
Apr 23, 2014
1191 posts
249 upvotes
yp_1 wrote: Always funny to see people seeking a financial advice on a public forum.
yes, but RFD has street cred
Sr. Member
User avatar
Nov 30, 2009
554 posts
130 upvotes
RBC's conservative mutual fund is down.... so probably stay away from that.
Deal Addict
User avatar
Dec 26, 2010
1736 posts
776 upvotes
Calgary
Buy Vanguard's VT. Don't touch. Proceed to focus on making more money. Repeat until retirement.
Indexer, non-yield chasing, low cost, broad based, as simple as possible investor.
Member
Jun 10, 2010
336 posts
111 upvotes
yp_1 wrote: Always funny to see people seeking a financial advice on a public forum.
What did you expect when you clicked into the investing subforum?
Deal Addict
Sep 20, 2014
1201 posts
435 upvotes
Calgary, AB
rdx wrote: Stock market is low now, is it a good timing to buy now ? But some experts are saying it is better to hold cash for this year as it could be a big fluctuation.

What about using it as a down payment for a condo ? But I don't have time to deal with tenants and related issue. I heard there are some companies whose manage the buy/sell, rental for you. But I am sure there is a big fee as there is no free lunch.

Honestly, I haven't been paying too much attention on investment, mainly because I am busy with kids and lazy :D But one of my new year resolutions is to spending more time on investment instead of spending time checking deals on RFD :D I am thinking if I can make money from investment, I probably don't have to spend too much time finding deals, saving $10-20 here and there :D

I heard something about dividend reinvestment plan (DRIP) and buying dividend funds from the book: Lazy Investors. I used to work for a company which had an option to buy company stock and it is DRIP account. I just joined and didn't pay attention to it at all. But after like 5 years, it does roll to a very reasonable amount. So, I am thinking if I should start something like that. I do have a TD self direct account. Just need to get myself started. Thanks in advance for any advice :)
First things first, ignore the "experts". Most don't have a clue as to what'll happen to the economy or equity markets and are throwing in a guess because they get paid to do so. If you and I were in their position, we'd be doing the same.

I cannot comment on real estate since that can vary widely on a regional basis (and I don't know yours). You'll be better served by doing the research yourself.

But I consider it helpful to determine what investment actually is:
"Investing is an activity of forecasting the yield over the life of the asset; speculation is the activity of forecasting the psychology of the market."

As such, it doesn't matter if you're buying a stock, a private business or a condo - your assessment should be based on the same factors. You should really be asking "how much rent will I get in a given year and how long will it take to breakeven on the price today?". Price appreciation should be a secondary consideration and will likely take care of itself if the purchase is an intelligent one.

The same principle applies to stocks. A stock is really just a really small piece of a business, call it ownership or partnership. When you buy a business, you ask the same questions as above - "in a given year, how much can this company earn, how sustainable these earnings are and relative to this price, how much can I buy it for?"

If this seems even slightly confusing then you, like the vast majority of people, will be better served by low-cost, no-load mutual or exchange traded funds (ETFs). This is the same as buying a piece of the market (and by extension, the general economy) and letting it appreciate. Simply buy a low-MER fund that tracks the S&P500 like Vanguard's offerings or the TD e-Series and just buy and hold. I would recommend buying every 6 months or so and just holding to keep the transaction costs down.

If you're not willing to do the heavy lifting involved with stocks then this is the best strategy. You'll have a satisfactory return in the next 5-10 years.
yp_1 wrote: Always funny to see people seeking a financial advice on a public forum.
And may I ask what's wrong with that? Especially since discussions and advice are pretty much the point of a public forum?

I have learned quite a bit just by visiting this forum and interacting with people. Far more than I would have if I had talked to my "financial advisor". Engaging in discussions on a public forum is just another way of obtaining information, nothing wrong with that.
Member
User avatar
Feb 12, 2016
447 posts
370 upvotes
I agree, there is alot of good advice on here. Way more than a salesman errr fin advisor will give you. Go buy some maw 104.

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