Topic: Entering the CF and YOUR Money....

[Sundborg]

Of course looking at the ups and down could make one drive to drinking, but myself, I like to see daily activity.  I also lke to keep an eye on other funds too.  I do agree that one should watch the 2-5 year growth rather than just a day to day basis.

Buying into the engergy will likely still make one money over time due to shortages of natural resouces and the rise of prices. If one were to buy some of the energy fund today, you will still gain the same amount in returns like someone who bought it previously at a lower cost if it were to go up the same %.  These gains, however, would be respective to your amount invested.

[Otto Fest]

I owned some of the energy fund long ago when Royal Trust still existed.  I made 40% in one year and bailed, but if I had the nerve to stay in would've seen it go up another 80%!  It did crash after that though...

I had been very lucky as I moved funds out of the Japaneses market just before the crash of 87.  I put the cash in the Bank of Montreal Mortgage fund and made a good return as the market lost 25% that year.  On the flip side, I had a chunk of change in Bre-X, and the lawsuit keeps going.

[Recruit Konyi]

I am starting bmq in a couple of weeks and wth my Fathers help I have been trying to outline what I am going to do with my money from the get go. My Dad is a self proclaimed financial advisor, mostly because he has 'been there and done it all'. Anyways, I don't have any idea how much money is taken off of my pay cheques for such things as room and board, taxes (what percentage), the CPP and the forces pension plan. If anyone can enlighten me it would be most helpful. Also any other deductions and vacation pay would also be appreciated. Thanks

[Rider Pride]

Don't worry about producing an actual budget until you are complete you training and at your first posting for atleast 3 months.

Reason I say this is because until your done training, you pay will vary depending on where you are. Once you are posted you can track you first 3 pay guides for all the pay and deductions more accurately.

Until then, plan to save $50-$200 a month, depending if you have any other debts/family who need you money as well.

I am starting bmq in a couple of weeks and wth my Fathers help I have been trying to outline what I am going to do with my money from the get go. My Dad is a self proclaimed financial advisor, mostly because he has 'been there and done it all'. Anyways, I don't have any idea how much money is taken off of my pay cheques for such things as room and board, taxes (what percentage), the CPP and the forces pension plan. If anyone can enlighten me it would be most helpful. Also any other deductions and vacation pay would also be appreciated. Thanks

To answer you question, the CF will do your deductions for you, taking of at the source. You need to be concerned about your net (take home) pay.

If you have an place to put the money, then bring the RRSP or investing acct number to Basic with you and ask your clerk to transfer money from your pay direct to your account, that way whatever pay you get into you spending acct is yours.

[Sundborg]

I am starting bmq in a couple of weeks and wth my Fathers help I have been trying to outline what I am going to do with my money from the get go. My Dad is a self proclaimed financial advisor, mostly because he has 'been there and done it all'. Anyways, I don't have any idea how much money is taken off of my pay cheques for such things as room and board, taxes (what percentage), the CPP and the forces pension plan. If anyone can enlighten me it would be most helpful. Also any other deductions and vacation pay would also be appreciated. Thanks

As a recruit on your first pay scale  you will be making around $600 each pay cheque, that is of course after all deductions have been taken off, including rations and quarters.  Once you are taken off rations after basic training sometime, you will be makeing around $750 each pay cheque.  Keep in mind this is all money in your pocket to spend.

[mkymk]

Unfortunately, it's such a huge topic and people have spent lifetimes discussing the art of investing. I've been an independent investor for the past 10 years. I have a degree in business and I've also completed the Canadian Securities Course. (This doesn't mean I'm smart though. There's so much to learn out there but I can think of a few key things.)

1) Diversify - this is key. Never put all your eggs in one basket (just look at Nortel)
2) Know your risk and adjust your portfolio accordingly. riskier investments usually have a higher return. Build a portfolio that suits you and only you! you'll have to know 3 categories of investments.
a) T-Bills (almost like cash); easily liquidated; lower risk; low return
b) Bonds; higher risk and higher return than T-Bills.
c) Stocks; highest risk of all, but highest return usually.
Most portfolio usually have a percentage of all 3 depending on your age and risk tolerance level. Those closer to retirement age usually holds much less stock than someone young who can afford the risk.
 3) If you are starting out, stick with mutual funds because they are diversified already, plus they allow you to invest smaller amounts.
4) when buying mutual funds, check the MER (Management Expense Ratio) on the fund, over time, your investment will suffer with a high MER.   MER is how the fund manager makes a living.   Lower MER means more money working for you.
4b) There's no reason why you should be buying a no No-Load fund. Buy from a competitor that offers No-Load funds.
5) I recommend index funds because it is extremely difficult to beat the market. Over time, index funds (TSE 300, Dow Jones, S&P 500) tend to perform better than most actively managed funds. Plus the MERs on index funds are much lower.   Another bonus is you can simply watch TV to see how your stocks are doing!!
6) invest regularly. Timing the market is another very difficult thing to do. Also, stick with a "buy and hold" strategy. You are investing for the long term.
7) don't buy individual stocks unless you are an expert and have a lot of "fun money". whatever information you see on stock quotes (like mergers and acquisitions) are 20+ mintues delayed plus commission on trading can be expensive if you're dealing with small amounts
Arm yourself with as much knowledge as you can (who's got the time right?). The more you understand, the more you'll be able to reach your investment goal.

[Otto Fest]

If I can throw out some last free advice -

1.  Pay yourself first  - 10%.  Put that 10% into RRSPs which will be a tax deduction, you'll get 30%+ back.

2.  If you are single put another 5% into unsheltered mutual funds.  Low fees/admin costs.  Look around.

3.  Watch for the dam*ed credit cards with the fine print!!!!

[Michael O'Leary]

3.  Watch for the dam*ed credit cards with the fine print!!!!

learn to use your credits cards sensibly while you ae young and have the disposable income to play with. Plan your expenses to pay them off completely whenever you can, in order to avoid any interest charges if possible. Remember that banks will happliy provide you credit to the point where you can only afford to pay the interest, and little more.
 

[Sundborg]

I've had a credit card for 4 months and have only used it 3 times.  If I have cash to pay for something in the bank, no point using the card.  I've only used to for purchases online using paypal or something over the phone.

Credit cards are good and bad.    There's no reason to use it unless you can pay it off, that's how I look at it.

[Freddy G]

I've had a credit card for 4 months and have only used it 3 times.   If I have cash to pay for something in the bank, no point using the card.  

Actually, the advice I've been given over and over and over and over is that when you start using credit, you should use it regularly and always pay off the card either completely as much as you can, or at least pay more than the minimum payment. That way, it establishes that you're responsible, etc, and you end up getting higher credit margins over time, and it basically just helps you build a better file.

But that's just what I've been told, might've been wrong.

[Griswald, DME]

I've been using my cradit card a few times this month and for the last few payments I've paid it all off, so it's all good.

My wife and I use our credit cards for anything and everything - but we don't use it for anything frivilous.  We pay off our credit card every month - we have had it for over two years and haven't paid one penny in interest.  We receive over $500/yr in travel credit (not air miles) we can use towards any vacation we choose.  If it wasn't for this bonus we would pay cash for everything.  I don't like the idea of paying 18% or more of my hard earned cash to some mega corporate banking institution.

[BernDawg]

I saw the light, perhaps a little too late, and have been paying $200 a month into mutuals for ten years.   It was a big chunk of pay especially when we were starting our family at the same time but, as my wife says, "I don't plan on eating catfood when we retire!"  We have managed to buy a starter home and will make a tidy profit on it when we get posted again but I started paying into the funds too late.  I have reached 20 yrs of service and even if I wanted to I can not yet retire although the funds are doing quite well.  Give early and give lots!  You are putting money into your own pocket in the long run.



  

[Island Ryhno]

My mother in law is one the best financial advisers in Canada and has been recognized as such, here are some of the things that I have learned from her, free of charge, otherwise it would cost about $100 dollars an hour  Pay down stupid debt, don't carry it with you i.e. credit cards at 18% if you do have to carry debt get a PLC (personal line of credit) which brings the interest rate down to between 4-8%. Don't lease, buy, think about it, if you get your vehicle on a 48 month buyout, you have a 4 year old perfectly good car, and can be car payment free for 2-3 yrs if you mantain your vehicle well, it adds up (say an average of $450 per month) Buy a house ASAP, it's the best investment anyone could ever make, it's called equity! RRSP's need to be started ASAP as well, doesn't matter if you can only afford to put $50 in a month for the first while, the secret is compound interest and the earlier the better. 

[schutz]

OK, I like how people are giving investing advice on here that are not financial advisors.

Personally I am a financial planner with an accounting degree, and many investment courses from institutions accross Canada.

RRSPs are decent investment tools, but not the greatest out there. The problems with RRSPs is that the government has control over them, and every penny coming out is taxed. To make it worth while, you have to throw the tax deduction into your RRSP as well. So lets say I put $8,000 per year into an RRSP, and get a tax savings of $3,200. Well, instead of using the $3,200, you should throw the $3,200 into your RRSP. So your real contribution would be $11,200. There's an even better way to work with RRSPs involving gross-up loans and such, but I won't get into that here. There is another investment tool out there that is far superior to RRSPs, but since this website can be viewed internationally, I cannot talk about it on here.

When dealing with investments, such as mutual funds, avoid companies like Clarica, Banks, Investors Group etc. because they have proprietary products (their own investments), and as a result they can only market those products, and usually they are inferior to other ones. So find a company/broker to deal with which is totally independent. Same goes with insurance products. term4sale.ca is a good website for comparing term insurance. Note that amongst the cheapest providers are: Transamerica, and Equitable Life, neither of which can be sold by Clarica advisors for example. I don't want to get into detail here either, because it is actually AGAINST THE LAW TO PROVIDE INVESTMENT/INSURANCE ADVICE IN AREAS THAT YOU ARE NOT LICENSED FOR!

Find a good advisor in your area and work with them. Don't go off of other peoples' advice out there, because are they financially independent? I think not. However, making some sort of investment is far better than none at all. Fortunately for those who stick it out and retire with a pension in the military are better off than the average civilian, but the general population is still in the dark when it comes to sophisticated investments.

Schutz

[schutz]

Real estate does not rise every year, it can fluctuate. Over the long term, without something to drive up the land values, values should match inflation over the long haul. Which means unless you buy in an area that later on becomes wanted, you really wont make any money.

Most people say to get into real estate, but that is based upon the consumer demand from the baby boomers in the late 70's early 80's. Where there were not enough current houses to satisfy the demand for the drastic increase in population. Thus inflation, and interest rates went through the roof at the time.

Schutz

[LongRange]

Question re: the pay scales: are the figures on there net or gross income?

Also, what percent is taken off for tax/CPP, that kind of thing.

If these questions sound a bit dense, remember, I'm 17 hopefully starting BMQ in the fall, so I don't have much experience with this kind of thing.

Cheers,

[Garbageman]

Find a good advisor in your area and work with them. Don't go off of other peoples' advice out there, because are they financially independent? I think not.

Isn't this a just a tad contradictory?  Or are financial advisors not "other people"?

Also, if a financial advisor really knows all, then why aren't they financially independent, and hence, retired?

Just a little food for thought.  I know financial advisors can be very helpful, but I believe all advice should be taken with a grain of salt.  I used to go to an independent advisor myself, until I discovered that they were making a commission off of every transaction, and, as a result, wanted me to switch up my portfolio every 5-6 months!

[Sundborg]

Question re: the pay scales: are the figures on there net or gross income?

They are gross figures of monthly income for 1 month.

[Redeye]

There are some advisors who engage in some dodgy ethical practices (the industry term is "churning"), but for the most part we aren't like that (incidentally, I'm a Certified Financial Planner myself).  I used to be skeptical of why anyone would deal with a commissioned advisor, but any time you go to hire a planner, ask how they get paid.  If they're not up front about their compensation, then don't do business with them.  Most CFPs will have you sign a letter of engagement that explains all of this.  Don't be afraid of commissioned planners, either.    Overall, you're paying for the service you get from them over time one way or another.

The firm I'm with rebates commissions we get if we switch a mutual fund investment that has deferred sales charges, for example.  If we made a decision we believe needs to be changed, we don't see that as a profit opportunity.  Some in the business don't do this, but I consider such a practice wholly unethical (and it could be grounds for disciplinary action if the advisor is a CFP licensee!)

In the end, financial planning is a business, the planner/advisor is looking to earn a living.  What you need to do in selecting one is ask questions - ask about what service they expect.  Ask for referrals.  Ask about what services they can provide, what they can't, and if they have referral agreements to help ensure all your bases are covered.  If you're just starting out, a bank isn't a bad place to go - because generally you can set up a simple savings plan, and the advisors are generally salaried - the advantage to you there is that if you don't have a lot to invest, a lot of advisors (unless they are charging you a fee) won't give you a lot of time - time is money, and they haven't got a lot to make on the deal.  A bank can help you get started and build up some equity, which then you can take to an independent advisor who can start to offer you more customized solutions.

If I were in the position of just being out of school, newly in the Forces and making money on a stable basis for the first time, that's what I'd do, knowing what I do.

I'm interested to see how good the SISIP FP's are, if they know their stuff well, I can't comment on them from any form of personal experience, though.

Isn't this a just a tad contradictory?   Or are financial advisors not "other people"?

Also, if a financial advisor really knows all, then why aren't they financially independent, and hence, retired?

Just a little food for thought.   I know financial advisors can be very helpful, but I believe all advice should be taken with a grain of salt.   I used to go to an independent advisor myself, until I discovered that they were making a commission off of every transaction, and, as a result, wanted me to switch up my portfolio every 5-6 months!

[GO!!!]

SISIP, like any other financial services company, has it's own proprietary products. They are from AIG - which just applied for bankruptcy protection. SISIP will not help you invest anywhere else.

Maybe someone else knows what happens to the investors now?? I believe deposits are covered, but not interest.

Avoid SISIP if you can, an independent financial advisor will serve you much better, even if they do charge nearly what a lawyer does!

[Basic Person]

is there a min age requirement for RRSP? I am 17 but would like to contribute as soon as I can 

[Redeye]

No minimum age, the sooner you start, generally speaking, the better.

[Gunner]

is there a min age requirement for RRSP? I am 17 but would like to contribute as soon as I can 

No minimum age for starting an RRSP however you must have filed income tax in previous years in order to generate contribution room.  Contribution room is based on your earned income for the previous year (ie RRSP deduction for 2005 is based on earned income in 2004).  You will note that financial planners encourage young people to file an income tax return even if they don't make much money as this provides contribtution room that can be carried forward for future use.

If you do contribute to an RRSP at a young age, you will want to be careful about claiming it as a deduction.  Generally speaking, young people (less than 18) do not make a lot of money during the year and they pay little if any tax.  You are allowed to carry forward RRSP deductions for future use and you will probably want to do this if you know that you are going to be making more money in the future.

As an example, I was deployed for much of 2004 and approximatley 5 months of my salary was tax free.  Although I made a large RRSP contribution for 2004, I carried about 30 per cent of it forward to 2005 when my taxable income will be much higher (as I will only have approximately 6 weeks of tax free income).  Depending on how much I contribute to RRSPs in 2005, I may wish to further carry over some my RRSP deduction to 2006 or later.

Cheers,

[Pte.(R) Feor, MR]

being the age that i am (19) this is some advice for us "youngn's" haha if your working part-time and still in highschool like what i was doing, your yearly income will probably float just undr $10,000. I here that RRSP'S are based on your LAST YEARS income tax?? we'll heres what i did haha just before i started my job i had told my employer to deduct an extra 75$ per pay, when i received my t-4 this year and after i did my taxes i got back over 1700$ hahaha so would that "benifit contribution purposes" for an rrsp?

and as a new recruit (reg force) starting bmq up in fall that $600, is that what you make monthly? or weekly??

im looking to start up an investment savings account, theres no fees, and has an interest rate of 2.5% i'm hoping to live on base too and pretty much bank my income, so at approx. $250/month for an investment savings account @ 2.5% is that a good deal?

Also i here GIC's, RRSP's, RSP's, Canadian Savings Bonds (or Premium bonds) <--- Actually i havn't heard to many people mentions Canadian Premium Savings Bonds? Whats the hurt of trying to invest in all of them??

[Gunner]

doing, your yearly income will probably float just undr $10,000. I here that RRSP'S are based on your LAST YEARS income tax?? we'll heres what i did haha just before i started my job i had told my employer to deduct an extra 75$ per pay, when i received my t-4 this year and after i did my taxes i got back over 1700$ hahaha so would that "benifit contribution purposes" for an rrsp?

Mike, two points on this statement: First RRSP contribution room is earned from your gross earning, hence, whether or not you have your employer save $75 a month or not it doesn't effect your RRSP contribution room (18% of your total gross income - before income tax, EI, CPP, etc).  Secondly, unless you are a very poor saver, I don't think your strategy is effective as you are in essence providing the government with a tax free loan and you are missing out on any interest or growth it may make.

im looking to start up an investment savings account, theres no fees, and has an interest rate of 2.5% i'm hoping to live on base too and pretty much bank my income, so at approx. $250/month for an investment savings account @ 2.5% is that a good deal?

Most planners recommend ING Direct or President's choice financial for high yield savings accounts.