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Lost and in need of help with my finances

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Newbie
Aug 18, 2015
56 posts
2 upvotes
Westmount, QC

Lost and in need of help with my finances

Hello Everyone,




Thank you!
31 replies
Deal Addict
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Dec 14, 2007
3105 posts
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eric91 wrote: Hello Everyone,

A lot of you seem very knowledgable in terms of finances so thought id explain my situation here and see what you all think. I thank you in advance for any of your responses. Long story short, I am a student with a $30000 student loan (which is in interest-free status for a few more years as i am still a student). I have about $65000 in my bank which i saved up through working various jobs. Using that money, i have maxed out my TD TFSA. However the money is just sitting there with no current investment. Currently i live with my parents who are considered low income earners and don't make a lot of money.

Now my question to you guys is what should i do with the money i have. I was thinking of partnering with my sister (who also has about 65000 in the bank, again just sitting there) to put a down payment (130K together) on a house to move into since interest rates seem to be a bit lower right now. My parents will help pitch in whatever they can for the monthly mortgage payment and my sister and I will take care of the rest of the payment by working part time throughout school. What do you guys think about that? If thats not a good idea i want to invest my money somehow instead of it just sitting around. Only problem is i don't know much about investing so if you guys can help lead me in the right direction i'd greatly appreciate it. In terms of risks, I'm willing to take some risk but not a whole lot. Would prefer something with a relatively low risk profile. However for now please give me ANY thoughts and how you would approach this situation if you were in my shoes.

Thank you!
I'm sure you really love your sister... but buying a house with her is a really bad idea. It rarely ends well and you never know when one party needs out ( marriage, kids, new life, moving, etc. ). Interest rates are low... you're right. But that means that house prices are artificially high as people can borrow more from the bank. Don't think of a house as an investment. It's a place to live, first and foremost. Owning a home comes with a lot of unexpected costs as well. You also give up flexibility. This is VERY important for you right now as you're a student. You don't know where you'll end ( I assume ) when it comes to work. Having the flexibility to move to Toronto or San Francisco for a 6 month higher-paying salary is hard to do when you own.

If you don't like your job and want to quit, a mortgage may make that idea unpalatable. If you want to go on 6 month trip to Europe, having a mortgage is a major hinderance to that as well. Put simply, a house gives you an asset, but it also means you become an indentured servant of the bank.

1st, a home is #1 a place to live.
2nd, take a look at what that same place will rent for. Especially if it's a condo with limited income potential.
3rd, Either find a good investor, or if you have time open up an account with a self-service brokerage
4th, Start simple like the portfolio at canadiancouchpotato.com
5th, Get that TFSA out of the hands of the bank and invest it properly. It's just a bucket. It's not a savings account.
6th, Don't invest more than 20% in Canadian Assets. Canada's highly dependent on oil and real estate and likely entering a period of instability, while the US, Europe and Japan already went through a low cycle. There are ETFs that are held in CA$ but carry US or Int'l assets.

You should have been getting returns of 6% – 7% for the past few years as the US economy went from super low after the GFC to firing on all cylinders.
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Jul 30, 2007
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without a full time job and given you are a student, lender may not give you a mortgage unless it's co-signed by your parents and that still is uncertain whether they will give it to you.

If somehow you are qualified for a mortgage, you will need to work on a housing budget to see what the housing expenses would be like and then compared to your sources of income.
Deal Expert
Mar 25, 2005
22706 posts
3696 upvotes
eric91 wrote: Hello Everyone,

A lot of you seem very knowledgable in terms of finances so thought id explain my situation here and see what you all think. I thank you in advance for any of your responses. Long story short, I am a student with a $30000 student loan (which is in interest-free status for a few more years as i am still a student). I have about $65000 in my bank which i saved up through working various jobs. Using that money, i have maxed out my TD TFSA. However the money is just sitting there with no current investment. Currently i live with my parents who are considered low income earners and don't make a lot of money.

Now my question to you guys is what should i do with the money i have. I was thinking of partnering with my sister (who also has about 65000 in the bank, again just sitting there) to put a down payment (130K together) on a house to move into since interest rates seem to be a bit lower right now. My parents will help pitch in whatever they can for the monthly mortgage payment and my sister and I will take care of the rest of the payment by working part time throughout school. What do you guys think about that? If thats not a good idea i want to invest my money somehow instead of it just sitting around. Only problem is i don't know much about investing so if you guys can help lead me in the right direction i'd greatly appreciate it. In terms of risks, I'm willing to take some risk but not a whole lot. Would prefer something with a relatively low risk profile. However for now please give me ANY thoughts and how you would approach this situation if you were in my shoes.

Thank you!
More important question is why do you have $30k in free loans and $65k in liquid assets? Something is broken.
Deal Guru
User avatar
Dec 3, 2004
10943 posts
430 upvotes
Markham/Mississauga
Owning a home comes with the following:

1) property taxes
2) maintenance like keeping your lawn in check, checking up on the paint and bricks outside of your home after every winter takes a beating (Quebec province mostly gets harsher winters than say Ontario)
3) paying for utilities like electricity, water, gas, internet, home phone
4) A type of mortgage insurance, usually a life insurance should something happen to you or your sister and there's no one to pay off the mortgage, unless, your parents are willing to pay the rest of the mortgage should you pass away unexpectedly or if your sister is willing to take that burden and vice versa. And sure, she can sell the place but that takes awhile and not a guaranteed within a certain time frame.

You get the picture... lots of things to consider before owning a home.

Get that money from that TFSA into an investment fund right away. You want to earn at least on average more than 3% yearly to beat inflation. A moderate to balanced risk fund will do that, it would certainly fit within your risk tolerance based on what you said.

I'd love to help you out as a personal finance professional but I see you're in Quebec province - then I'd ask your friends and family about their portfolio and who they trust with their money. It's a great thing that you've taken an interest in your own financial future as a student, most people don't care and just blow it on expensive cars and vacations, or don't even give a damn until it's too late! :)
Newbie
Aug 18, 2015
56 posts
2 upvotes
Westmount, QC
atomiton wrote: I'm sure you really love your sister... but buying a house with her is a really bad idea. It rarely ends well and you never know when one party needs out ( marriage, kids, new life, moving, etc. ). Interest rates are low... you're right. But that means that house prices are artificially high as people can borrow more from the bank. Don't think of a house as an investment. It's a place to live, first and foremost. Owning a home comes with a lot of unexpected costs as well. You also give up flexibility. This is VERY important for you right now as you're a student. You don't know where you'll end ( I assume ) when it comes to work. Having the flexibility to move to Toronto or San Francisco for a 6 month higher-paying salary is hard to do when you own.

If you don't like your job and want to quit, a mortgage may make that idea unpalatable. If you want to go on 6 month trip to Europe, having a mortgage is a major hinderance to that as well. Put simply, a house gives you an asset, but it also means you become an indentured servant of the bank.

1st, a home is #1 a place to live.
2nd, take a look at what that same place will rent for. Especially if it's a condo with limited income potential.
3rd, Either find a good investor, or if you have time open up an account with a self-service brokerage
4th, Start simple like the portfolio at canadiancouchpotato.com
5th, Get that TFSA out of the hands of the bank and invest it properly. It's just a bucket. It's not a savings account.
6th, Don't invest more than 20% in Canadian Assets. Canada's highly dependent on oil and real estate and likely entering a period of instability, while the US, Europe and Japan already went through a low cycle. There are ETFs that are held in CA$ but carry US or Int'l assets.

You should have been getting returns of 6% – 7% for the past few years as the US economy went from super low after the GFC to firing on all cylinders.
Thanks a lot for your post. That money has been sitting there for about 5 years now so no idea how much money I could have made if I invested properly. Only problem is I am a student from a science background and thus had zero exposure to the financial side of things. So I'm pretty clueless as to how to even start to invest properly. Any websites you know of that I can start learning? Maybe it is time to seek some help from an investor. When me and my sister talk casually we agreed that if either one of us ever wanted out, we would sell and hope to make some money off of it and go our own way. Plus our family is currently renting and ideally would like to own a house in the near future. If this was the case would it be a good idea? Also you said "Get that TFSA out of the hands of the bank and invest it properly. It's just a bucket. It's not a savings account." How would I go about doing that, can you elaborate?
Deal Addict
Mar 8, 2013
2950 posts
1611 upvotes
eric91 wrote: Hello Everyone,

A lot of you seem very knowledgable in terms of finances so thought id explain my situation here and see what you all think. I thank you in advance for any of your responses. Long story short, I am a student with a $30000 student loan (which is in interest-free status for a few more years as i am still a student). I have about $65000 in my bank which i saved up through working various jobs. Using that money, i have maxed out my TD TFSA. However the money is just sitting there with no current investment. Currently i live with my parents who are considered low income earners and don't make a lot of money.

Now my question to you guys is what should i do with the money i have. I was thinking of partnering with my sister (who also has about 65000 in the bank, again just sitting there) to put a down payment (130K together) on a house to move into since interest rates seem to be a bit lower right now. My parents will help pitch in whatever they can for the monthly mortgage payment and my sister and I will take care of the rest of the payment by working part time throughout school. What do you guys think about that? If thats not a good idea i want to invest my money somehow instead of it just sitting around. Only problem is i don't know much about investing so if you guys can help lead me in the right direction i'd greatly appreciate it. In terms of risks, I'm willing to take some risk but not a whole lot. Would prefer something with a relatively low risk profile. However for now please give me ANY thoughts and how you would approach this situation if you were in my shoes.

Thank you!
You are in a really good situation. $65,000 in the bank, only $30,000 obligations in the future. Decide on what you want to do with your life, and move to the place that best allows you to do that. Don't get tied down with a house and mortgage and concentrate on your career.
Deal Guru
May 29, 2006
10930 posts
3663 upvotes
how do you get a student loan with assets? did you fail to report those assets? better hope you don't get audited.
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Dec 3, 2004
10943 posts
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Markham/Mississauga
eric91 wrote: Also you said "Get that TFSA out of the hands of the bank and invest it properly. It's just a bucket. It's not a savings account." How would I go about doing that, can you elaborate?
He means to invest it. You can still keep it inside a TFSA which allows your investments to grow tax free, even when you withdraw it. There's a $5500 limit per year as to how much you can contribute to a TFSA. The limit has been increased to $10,000 for 2015.
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Jun 10, 2008
1206 posts
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atomiton wrote: You should have been getting returns of 6% – 7% for the past few years as the US economy went from super low after the GFC to firing on all cylinders.
If his TFSA is at 65K compared to the max contribution which is at 41K, it looks like he is already getting way more than 6-7%

Edit: Never mind, I misread.... thought all of his 65K was in TFSA
Newbie
Aug 18, 2015
56 posts
2 upvotes
Westmount, QC
barricuda wrote: If his TFSA is at 65K compared to the max contribution which is at 41K, it looks like he is already getting way more than 6-7%

Edit: Never mind, I misread.... thought all of his 65K was in TFSA
Sorry I meant 41k (Max contribution) in my TFSA and the rest in a regular chequing account. Total including the TFSA and regular chequing account = 65K
Deal Guru
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Dec 3, 2004
10943 posts
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Markham/Mississauga
barricuda wrote: If his TFSA is at 65K compared to the max contribution which is at 41K, it looks like he is already getting way more than 6-7%
I'm not sure if the entire $65K is sitting on the TFSA, because his contribution room (not counting this year) would have only been $5000 from 2009-2012, then $5500 from 2013-2014, dating back to 2009 when the TFSA program started.
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Jun 10, 2008
1206 posts
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CSAgent wrote: I'm not sure if the entire $65K is sitting on the TFSA, because his contribution room (not counting this year) would have only been $5000 from 2009-2012, then $5500 from 2013-2014, dating back to 2009 when the TFSA program started.
Yeah, I re-read the OP and he never mentioned that the entire 65K in is TFSA... If he had invested it every year, it very well could have been at 65K or even more today... he's clearly mentioned that it is not in any investment though
Newbie
Aug 18, 2015
56 posts
2 upvotes
Westmount, QC
CSAgent wrote: Owning a home comes with the following:

1) property taxes
2) maintenance like keeping your lawn in check, checking up on the paint and bricks outside of your home after every winter takes a beating (Quebec province mostly gets harsher winters than say Ontario)
3) paying for utilities like electricity, water, gas, internet, home phone
4) A type of mortgage insurance, usually a life insurance should something happen to you or your sister and there's no one to pay off the mortgage, unless, your parents are willing to pay the rest of the mortgage should you pass away unexpectedly or if your sister is willing to take that burden and vice versa. And sure, she can sell the place but that takes awhile and not a guaranteed within a certain time frame.

You get the picture... lots of things to consider before owning a home.

Get that money from that TFSA into an investment fund right away. You want to earn at least on average more than 3% yearly to beat inflation. A moderate to balanced risk fund will do that, it would certainly fit within your risk tolerance based on what you said.

I'd love to help you out as a personal finance professional but I see you're in Quebec province - then I'd ask your friends and family about their portfolio and who they trust with their money. It's a great thing that you've taken an interest in your own financial future as a student, most people don't care and just blow it on expensive cars and vacations, or don't even give a damn until it's too late! :)
You said "Get that money from that TFSA into an investment fund right away. You want to earn at least on average more than 3% yearly to beat inflation. A moderate to balanced risk fund will do that, it would certainly fit within your risk tolerance based on what you said"

Can you provide some examples as to where I can look for a fund like this. Don't mean to sound stupid but I really am clueless. I get what your saying but don't know how to do it. Really wish I took some finance courses in undergrad haha.
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Jun 10, 2008
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eric91 wrote: You said "Get that money from that TFSA into an investment fund right away. You want to earn at least on average more than 3% yearly to beat inflation. A moderate to balanced risk fund will do that, it would certainly fit within your risk tolerance based on what you said"

Can you provide some examples as to where I can look for a fund like this. Don't mean to sound stupid but I really am clueless. I get what your saying but don't know how to do it. Really wish I took some finance courses in undergrad haha.
google Canadian Couch Potato... they have good articles and how tos for basic investing... you are already with TD and a popular investment product are the TD e-Series funds
Newbie
Aug 18, 2015
56 posts
2 upvotes
Westmount, QC
rocking23nf wrote: how do you get a student loan with assets? did you fail to report those assets? better hope you don't get audited.
The loan was from when I was an undergraduate student. No job no money at the time. Then I took some years off from school to work and now I'm going into a post graduate degree program. Considering my assets I am not eligible for osap now however I believe I would be able to freeze the interests on my loan while I'm in school.
Newbie
Aug 18, 2015
56 posts
2 upvotes
Westmount, QC
barricuda wrote: google Canadian Couch Potato... they have good articles and how tos for basic investing... you are already with TD and a popular investment product are the TD e-Series funds
Awesome I will do that today. I've been reading other threads and a lot of people mention TD e-series for starters. Anyone else here have any experience with these?
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Dec 14, 2007
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eric91 wrote: Thanks a lot for your post. That money has been sitting there for about 5 years now so no idea how much money I could have made if I invested properly.
Conservatively, 5–6% if properly diversified. Assuming you started with $65,000 5 years ago and invested it all after the GFC when investments 'went on sale', $65,000 would be worth $83,418 compounded monthly @ 5%. Saying that is one thing... but in 2009 people were all selling. The smart ones, of course, see that as an indicator to buy. For example, do you see low oil prices as a loss... or as a sale?
Only problem is I am a student from a science background and thus had zero exposure to the financial side of things. So I'm pretty clueless as to how to even start to invest properly. Any websites you know of that I can start learning?
Me too. Computer science. I actually didn't complete Accounting 101. Was too foreign and boring. But yes, there are a few sites. Canadian Couch Potato is pretty good at explaining what ETFs are good for and how MERs will hurt you ( google/bing it ). Mr Money Mustache is a great site about frugality. greaterfool.ca offers an interesting perspective on real estate.
Maybe it is time to seek some help from an investor.
When me and my sister talk casually we agreed that if either one of us ever wanted out, we would sell and hope to make some money off of it and go our own way.
What if you're in a down market and you're going to lose some money after real estate fees? What if one of you doesn't want to root up their life? What if you can't agree on a selling price? How do you determine who pays for the repairs, the property tax, the maintenance, the big decisions... what if one of you gets a significant other who wants you to sell the place? Move elsewhere? move in? kick the sibling out? Unless you're married or common-law, buying a house together is a risky endeavour. A pure investment is different ( buying to renovate and sell, for example ), but there aren't many doing that in this down market.

I would sooner offer my sibling to pay interest on the money that they loan me to get a down payment than go in with them. It doesn't matter how close you two are. I'm from a very close trusting family.
Plus our family is currently renting and ideally would like to own a house in the near future. If this was the case would it be a good idea?
Right now, it's a risky time to buy. If you did the math, how much is your family paying in rent? How much would that same place sell for? Chances are, the property owners are currently subsidizing your family's rent... whether they realize or not.
Also you said "Get that TFSA out of the hands of the bank and invest it properly. It's just a bucket. It's not a savings account." How would I go about doing that, can you elaborate?
Open an account with Questrade ( or other discount brokerage ). Open a TFSA for now. Grab the model portfolio from Canadian Couch Potato and buy the funds based on the weightings. It's intimidating at first. You'll be buying 4-6 funds.

As for it not being a savings account, well the banks want people to think the TFSA is just a place to save for a rainy day and not the "mediocre" interest counted as income. However, you could hold anything in a TFSA. You could hold $40,000 worth of AAPL Stock. If it goes up in value to $50,000 then the $10k gain is non-taxable as income. The TFSA is the single greatest INVESTMENT vehicle you can have to save for retirement. RRSP is #2, because it is useful in fewer areas ( if you're earning high income, if you're contributing into a spousal plan and she doesn't work ).

And LAST of all. Pay off your student loan before you pay interest. That doesn't mean you should pay it all off now, but unless you have a crazy cheap interest rate and can guarantee your investments will earn more than that low interest, debt is a good thing to get rid of.
Newbie
Aug 18, 2015
56 posts
2 upvotes
Westmount, QC
atomiton wrote: Conservatively, 5–6% if properly diversified. Assuming you started with $65,000 5 years ago and invested it all after the GFC when investments 'went on sale', $65,000 would be worth $83,418 compounded monthly @ 5%. Saying that is one thing... but in 2009 people were all selling. The smart ones, of course, see that as an indicator to buy. For example, do you see low oil prices as a loss... or as a sale?



Me too. Computer science. I actually didn't complete Accounting 101. Was too foreign and boring. But yes, there are a few sites. Canadian Couch Potato is pretty good at explaining what ETFs are good for and how MERs will hurt you ( google/bing it ). Mr Money Mustache is a great site about frugality. greaterfool.ca offers an interesting perspective on real estate.




What if you're in a down market and you're going to lose some money after real estate fees? What if one of you doesn't want to root up their life? What if you can't agree on a selling price? How do you determine who pays for the repairs, the property tax, the maintenance, the big decisions... what if one of you gets a significant other who wants you to sell the place? Move elsewhere? move in? kick the sibling out? Unless you're married or common-law, buying a house together is a risky endeavour. A pure investment is different ( buying to renovate and sell, for example ), but there aren't many doing that in this down market.

I would sooner offer my sibling to pay interest on the money that they loan me to get a down payment than go in with them. It doesn't matter how close you two are. I'm from a very close trusting family.


Right now, it's a risky time to buy. If you did the math, how much is your family paying in rent? How much would that same place sell for? Chances are, the property owners are currently subsidizing your family's rent... whether they realize or not.


Open an account with Questrade ( or other discount brokerage ). Open a TFSA for now. Grab the model portfolio from Canadian Couch Potato and buy the funds based on the weightings. It's intimidating at first. You'll be buying 4-6 funds.

As for it not being a savings account, well the banks want people to think the TFSA is just a place to save for a rainy day and not the "mediocre" interest counted as income. However, you could hold anything in a TFSA. You could hold $40,000 worth of AAPL Stock. If it goes up in value to $50,000 then the $10k gain is non-taxable as income. The TFSA is the single greatest INVESTMENT vehicle you can have to save for retirement. RRSP is #2, because it is useful in fewer areas ( if you're earning high income, if you're contributing into a spousal plan and she doesn't work ).

And LAST of all. Pay off your student loan before you pay interest. That doesn't mean you should pay it all off now, but unless you have a crazy cheap interest rate and can guarantee your investments will earn more than that low interest, debt is a good thing to get rid of.
Wow great post! I get what you mean in regards to buying a house with a family member. Before posting here today I was pretty sure it was a great idea but not hearing from all of you I got second thoughts. I will check out the sites you recommended. You mentioned "model portfolio" from couch potato. I'm assuming it's like a starter kit? Tell you which funds to purchase etc? Also your thoughts on the TD e-series? Now that you mentioned AAPL, is there any stocks out there that consistently makes you money on the long run? would it be smart to buy stocks in big companies like Google and Apple
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Dec 14, 2007
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eric91 wrote: Awesome I will do that today. I've been reading other threads and a lot of people mention TD e-series for starters. Anyone else here have any experience with these?
They're pretty good. Low MER and fairly easy to balance. I've never had them as I'm with PC Financial since back when they were offering 4% interest on savings :cheesygri :cheesygri :cheesygri

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