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  • Jan 20th, 2014 4:21 pm
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[OP]
Newbie
Oct 26, 2012
22 posts
8 upvotes
GLOUCESTER

Where to start...

Hello!

I have recently become enamored with the idea of saving money. I have read The Wealthy Barber Returns and am currently in the process of reading Millionaire Teacher. Some things are beginning to make sense (difference between RRSP and TFSA, smart spending habits, etc.), however the actual investing part still seems a little confusing.

Before I ask questions, I thought I would explain my situation quickly. I am a 22 year old male, graduated from University last April. I have an OSAP debt at about $14,000 (not too bad!) Currently teaching English in South Korea, making ~$2,000/month. I will be here one year (Dec. 2013 - Dec. 2014) OSAP payments are $158/month, which I will maintain while I'm in Korea. The rest will be paid off when I return, with the bulk of my earnings. I have You Need A Budget (YNAB) and have been sticking to it faithfully for almost a month now. I do not own a car, and my rent here is paid-for. I have the potential to save $1000-1200/month while I'm here. My only potential goal upon returning to Canada is going back to school. Other than that, I have no financial goals set in place (buying a home, car, home theater system, etc.)

So, I was thinking of opening an RRSP or TFSA when I return to Canada instead of now while I'm in Korea (I'm veering towards a TFSA because I like the freedom included with it, even though it uses after-tax dollars. I suppose it will depend on what kind of job I land when I return to Canada, in terms of salary and tax brackets.) That way, the bulk of my OSAP debt would be paid off and I could focus on saving money and investing. I've been parusing CanadianCouchPotato.com and am interested in their model portfolios. Specifically, their Global Couch Potato model using TD e-series index funds. Is this an okay choice? I've seen lots of talk about these e-series index funds but I can't say I truly understand what they are. I'm currently with Scotiabank, so would I close that account and open a new one with TD? Also, I have to keep in mind I won't be starting with much cash. I will essentially be starting from scratch.

Thank you for reading!! I heard about these forums while listening to Preet Banerjee's Mostly Money, Mostly Canadian podcast!


Pat

(p.s. does anyone know the best method to wire money from Korea to Canada? I will be wiring money from my Korean bank to Scotiabank, as OSAP will be making automatic withdrawals monthly. Looking for the method with the lowest fees!)
15 replies
Sr. Member
User avatar
Mar 13, 2012
858 posts
133 upvotes
Planet Earth
Sounds like you got things mostly figured out! Here a few suggestions for you:
  • Pay off the OSAP loan
  • Contribute whatever cash you have in the TFSA
  • If you get a job in the teaching profession - join the pension plan (or whatever they have to offer)
  • When you attain the TFSA limit start on the RRSP
  • You will need to open a TD investment account for e-series
  • On your last question about transferring funds - Probably best to post as a separate question - ScotiaBank may have a branch on Korea so check that.
Keep reading and being a financial learning sponge because time is on your side and you can plan things out for the long haul.
If at first you don't succeed, destroy all evidence that you even tried.
Sr. Member
Mar 27, 2009
543 posts
66 upvotes
In my opinion if you are in a low tax bracket tfsa is your friend. I would stay away from rrsps until you make over $45,000/year. Then I would do a combination 2/3 rrsp and 1/3 tfsa.
Sr. Member
Mar 27, 2009
543 posts
66 upvotes
"You will need to open a TD investment account for e-series"

Good point on the e series .

As a young investor having just read the wealthy barber, the eseries is a good way to learn the basics of trading and having a bit of hand in the pot so to speak rather than just giving the money to someone to do whatever they want with it.

Look up "couch potato investing with e series"
[OP]
Newbie
Oct 26, 2012
22 posts
8 upvotes
GLOUCESTER
I have been looking into the TD E-Series index investing. I'm probably going to start with it once I get back to Canada. I'm a little confused about which account to open with TD though. I've seen some people say you should open a Waterhouse account, as it makes everything simpler. Others say you should open a normal TD TFSA, and convert it to an e-series account through mailed-in paperwork. Does anyone know what's "better"?

Thank you for all the words everyone, you are all very helpful!
Jr. Member
Apr 26, 2010
129 posts
10 upvotes
Burnaby
PAlove wrote:
Jan 18th, 2014 9:10 pm
I have been looking into the TD E-Series index investing. I'm probably going to start with it once I get back to Canada. I'm a little confused about which account to open with TD though. I've seen some people say you should open a Waterhouse account, as it makes everything simpler. Others say you should open a normal TD TFSA, and convert it to an e-series account through mailed-in paperwork. Does anyone know what's "better"?

Thank you for all the words everyone, you are all very helpful!
It depends on the value of your assets. I believe TD Waterhouse has an annual fee if your household assets are under $25000.

Normal TD TFSA account has no such fees.
Deal Guru
Jun 26, 2011
11844 posts
2168 upvotes
Markham
Personally instead of stock piling a bunch of cash while in Korea with a 14K OSAP loan, I would try to find a way to get extra money applied to the loan so I pay less interest.
Sr. Member
Sep 21, 2006
545 posts
106 upvotes
RolandCouch wrote:
Jan 18th, 2014 9:41 pm
Personally instead of stock piling a bunch of cash while in Korea with a 14K OSAP loan, I would try to find a way to get extra money applied to the loan so I pay less interest.
+1 focus on the 5.5% osap loan.
Deal Expert
User avatar
Aug 18, 2005
18444 posts
3114 upvotes
GTA West
There is no place for a discussion on how to save until you have totally paid off OSAP. Devote your income to this first.
What if there were no hypothetical questions?
Sr. Member
Nov 6, 2013
559 posts
306 upvotes
First you pay off debt, then you create an emergency/general savings fund, then you invest.
[OP]
Newbie
Oct 26, 2012
22 posts
8 upvotes
GLOUCESTER
Yeah, you guys are right. I was so wrapped up in learning about investing I wasn't looking at my debt close enough.

I have a question regarding OSAP payments, maybe someone could help. I have automatic withdrawals set up now, but could I just send a lump sum over through online banking whenever I want? I can't seem to find any information on this. I don't see why this wouldn't work...
Deal Addict
Feb 20, 2008
2453 posts
384 upvotes
Where is this money going to come from? What's your plan when you're back in Canada later this year?
Member
Jun 2, 2007
371 posts
33 upvotes
Toronto
PAlove wrote:
Jan 20th, 2014 11:04 am
Yeah, you guys are right. I was so wrapped up in learning about investing I wasn't looking at my debt close enough.

I have a question regarding OSAP payments, maybe someone could help. I have automatic withdrawals set up now, but could I just send a lump sum over through online banking whenever I want? I can't seem to find any information on this. I don't see why this wouldn't work...
You can add them as a bill payee through your online banking. Just search "National Student Loans Service Centre" or whatever the name is and use your loan account number as the account number.
Member
Jun 10, 2010
336 posts
111 upvotes
PAlove wrote:
Jan 20th, 2014 11:04 am
I have a question regarding OSAP payments, maybe someone could help. I have automatic withdrawals set up now, but could I just send a lump sum over through online banking whenever I want? I can't seem to find any information on this. I don't see why this wouldn't work...
Should get a Canadian Tire mastercard to pay them. 1.58 a month in Canadian Tire money is better than nothing.
Jr. Member
Jan 14, 2009
172 posts
9 upvotes
PAlove wrote:
Jan 20th, 2014 11:04 am
Yeah, you guys are right. I was so wrapped up in learning about investing I wasn't looking at my debt close enough.

I have a question regarding OSAP payments, maybe someone could help. I have automatic withdrawals set up now, but could I just send a lump sum over through online banking whenever I want? I can't seem to find any information on this. I don't see why this wouldn't work...
yes, you can pay in full. OSAP doesn't care if you take 1 month or 1 year to pay as long as they get their money back. Interest earned is bonus for them, principal amount is what they are looking at. No penalty for full payment.

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