Personal Finance

Where to save 'extra' money/invest?

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  • Oct 17th, 2016 2:35 pm
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[OP]
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Oct 24, 2004
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Where to save 'extra' money/invest?

I'm trying to figure out where to put my 'extra' money.

I'm a 37 year old single male living in Toronto and make $130K.
I have $250K mortgage left on my $750K (current market price) home @ 2.03% variable rate - no other debts.
I used to pay down my mortgage but because interest rates are so low, I've now been putting the extra money into my TFSA mutual funds accounts (7%+) and/or in a HISA account (2.5-3%) - getting a higher return, and having access to the funds just in case I need them.

I'm not planning any big purchases anytime soon.

Am I on the right track, or should I be looking at different options to save/pay down my debt?

Much appreciated.
Last edited by newt_101 on Oct 16th, 2016 4:57 pm, edited 1 time in total.
11 replies
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Aug 8, 2012
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Sounds good to me.

Are you also doing RRSP? Could be better than TFSA for some of your high income dollars if you expect to make less in retirement.

If you are maxing TFSA already you should consider some RRSP investing as well.
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[OP]
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Oct 24, 2004
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ace604 wrote: Sounds good to me.

Are you also doing RRSP? Could be better than TFSA for some of your high income dollars if you expect to make less in retirement.

If you are maxing TFSA already you should consider some RRSP investing as well.
Thanks for the suggestions.
I've been working in the public sector for over 15 years, so I have a pension plan though my various past/present municipal/provincial/federal employers.
I used RRSPs for the first-time homebuyers plan, but haven't contributed since 2001.

Should I still be considering the RRSPs? My TFSA is not far from being maxed out.
[OP]
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Thoughts?
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Jun 17, 2013
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Pay down the mortgage. Debt is almost always your best place for your money.

That said, you could temporarily put money in a TFSA at 3-5%. Then work out how much RRSP to do at the end of the year for best return, and put that on the mortgage as well.
[OP]
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neverhaveiever wrote: Pay down the mortgage. Debt is almost always your best place for your money.

That said, you could temporarily put money in a TFSA at 3-5%. Then work out how much RRSP to do at the end of the year for best return, and put that on the mortgage as well.
Do you mean calculate how much RRSP I should contribute and then instead instead of putting it into my RRSP put it in my mortgage instead?
Would that help come tax time? I haven't heard of this method before.

Is there an article/online calculator that would help with this? I've seen some in the past, but because of my work pension the figures they come up with don't add up to the right amount to contribute.
Sauerkraut wrote:
newt_101 wrote: Thoughts?
No kids and no spouse?? You should be bathing in Champagne in your gold plated bath every day.
I'm single. Perhaps the bubbly and luxury would come if I wasn't a homeowner in central Toronto.
What I make is equivalent to a working-class couple, and in the big city it's comfortable but not fancy by any means.
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Aug 22, 2011
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Not to sound harsh, but you're in a high tax bracket with disposeable income and haven't contributed to your RRSP since 2001?
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vkizzle wrote: Not to sound harsh, but you're in a high tax bracket with disposeable income and haven't contributed to your RRSP since 2001?
My thought as well. At 130k I would have contributed the RRSP every year. Assume his average salary over 15 years is 100k, he would have 270k of RRSP contribution room.

I don't know how much OP has in liquid cash, but if I were you I may contribute until your taxable income hits exactly $90,563 (ref: http://www.taxtips.ca/taxrates/on.htm) then contribute the TFSA with that the tax refund.
[OP]
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vkizzle wrote: Not to sound harsh, but you're in a high tax bracket with disposeable income and haven't contributed to your RRSP since 2001?
I have gone from $90 to $130K over the last 6 months.
As I mentioned, I haven't contributed as I was maxing out my TFSA, paying down my mortgage and I have had pensions from work.
ryan10075 wrote: I don't know how much OP has in liquid cash, but if I were you I may contribute until your taxable income hits exactly $90,563 (ref: http://www.taxtips.ca/taxrates/on.htm) then contribute the TFSA with that the tax refund.
I have $80K in savings (TFSA/HISA), and $20K in RRSPs.
Would I be able to save money when it comes to paying down my mortgage each year, instead of putting it into RRSP contributions?
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May 17, 2012
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i'd contribute to the rrsp then use the tax refund to pay down the mortgage (or put it in the TFSA)
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Nov 26, 2015
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newt_101 wrote:
vkizzle wrote: Not to sound harsh, but you're in a high tax bracket with disposeable income and haven't contributed to your RRSP since 2001?
I have gone from $90 to $130K over the last 6 months.
As I mentioned, I haven't contributed as I was maxing out my TFSA, paying down my mortgage and I have had pensions from work.
ryan10075 wrote: I don't know how much OP has in liquid cash, but if I were you I may contribute until your taxable income hits exactly $90,563 (ref: http://www.taxtips.ca/taxrates/on.htm) then contribute the TFSA with that the tax refund.
I have $80K in savings (TFSA/HISA), and $20K in RRSPs.
Would I be able to save money when it comes to paying down my mortgage each year, instead of putting it into RRSP contributions?
You said you yet to maximize TFSA but there is 80k in savings. So I bet you have around 40K - 50K in non-registered account.

I think I would first contribute this amount into the RRSP until the taxable income reduces to $90,563 and get the tax refund first (you will get 43.41% of that money back).

You said you are not far off from maximizing the TFSA, so I would maximize TFSA next. Assume you still have 5k room and 6k room next year, it may take 11k away from your tax refund.

For the remaining money, you can use it to pay off the mortgage or do investment, your choice. 2% mortgage payment equals around 3.5 - 4% return in non-registered investment pre-tax. I think I may do some investment and also pay off the mortgage because nobody knows how the interest rate will go in the future.
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Feb 8, 2011
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esoxhntr wrote: i'd contribute to the rrsp then use the tax refund to pay down the mortgage (or put it in the TFSA)
This is spot on advice and exactly what I would be doing too.

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