Adventures in Investing!
Before you start investing with money other then RRSP funds, you should be paying off any credit card debt or student loans first. Make sure you keep at least 3 months salary in a savings account for emergencies. If that seems like a lot of money, start saving $100-$300 a month in an emergency fund account. Once you reach your 3 month amount, or " safety bubble" as I like to call it, start allocating it to other areas. My wife likes allocating funds to Lulu Lemon or Victoria Secret, but I frown on that investment strategy. A lot of people wonder if you have some money left over, where should you put it? I like a balance between investing and paying off the mortgage. Using the $5000 limit on your TFSA is a good start for investing. Fill it up till you hit your yearly contribution limit, then any extra money you have left over should be used to pay down that dreaded mortgage. Paying down your mortgage is a guaranteed investment of 4-5%. Sounds good to me!
Next time I will talk more about different trading accounts and fees involved with them. Any comments or suggestions are appreciated!
2 comments:
Here is my order...
1) Before RRSPs, pay off credit card debt and/or other debts.
2) If # 1 is done, start putting down lump-sum mortgage payments on-top of regular payments.
3) If # 2 is done, start RRSPs slowly, but no need to max. them out. Increase RRSPs over time to the point where they (gov't) start giving you back money every year.
4) If # 3 is done, start your TFSA and ensure you maximize this account every year, if you can. If you struggle between RRSP and TFSA, go with TFSA.
5) If # 4 is done, start investing in dividend-paying stocks.
Keep on investing in # 5 for as long and as much as you can!
Any extra money always goes towards mortgage. What do you think of that strategy?
Yeah that's basically the same as mine. My company matches my RRSP contributions and reduces the amount of tax I pay all year. It's the majority of my investment portfolio and I actually don't put any extra money into them then I have to. I sold all my mutual funds and bought dividend paying stock.
I agree that paying down the mortgage is the best investment anyone can make. Maxing your TFSA first just gets it out of the way so that all extra money from the rest of the year can be allocated to lump sum payments.