I need advice on investments or high interest savings

[nonlinear]

i've received a substantial pay raise this year. i'm 29, have no kids, just a few bills, and i live fairly humbly so I have a lot of extra money that I want to invest. i'm not sure what the future holds for the next few years, so I don't want to put cash somewhere that I won't be able to access it in 5 years if i for some reason need it.

I have some money in mutual funds in the US market, however I've lost about 20% of that in the last year, so i'm hesitant putting cash in there right now. my mentor thinks now would be a good time to add money, but i'd like to wait until the market totally bottoms out before i do that.

I've been looking into the new tax-free savings accounts at both of my banks - RBC and PC. The thing is with these accounts, is that you can only put in $5000/year, and I will have more than that per year to invest. PC has the highest interest rate at 3.25% (i think), but that only works out to $162 interest for the year, assuming i had put in $5000 on 1 jan. so really, not a great way to make $.

can anyone offer suggestions on other options? what about a high interest savings account, like ING? are there monthly fees for such accounts? what about taxes on interest, etc.?

thanks :thumbsup:

[Amysicle]

http://www.ingdirect.ca/en/save-invest/taxfreesavingsaccounts/index.html It looks like if you put your money into a TFSA in the 5 year GIC form with ING Direct, you could get 4%.

TFSA are a Government of Canada initiative and they do have rules. http://tfsa.gc.ca/ So do your own research while talking to your bank to ensure you're making fully informed decisions.

From what I understand, you can put your money into a TFSA with any kind of investment vehicle that you can with RRSPs.

[nonlinear]

^^yea, i looked at GIC at RBC (higher interest) but i probably don't want to lock into the 5 year thing, since i will probably be moving to us or overseas for work in the next few years

so i would like somewhere where i can make cash but still take it out if i need to (or move it into stocks once the market becomes more favorable in the US).

any thoughts on investing in the US market right now? i mean, it will eventually go up... just don't know if i could handle putting it in and losing another 20% by next jan.

[ExtraSlow]

Both the Dow Jones and S&P 500 indexes have been trading roughly sideways for the last couple of months. To my simple brain that means that we must be near the bottom.

There are others around that have a more technical analysis of things.

[Redlyne_mr2]

I pulled out all my cash prior to the market crashing and transfered it into high interest savings account through Servus.. aka Community savings. I prefer having a savings account even if the gains aren't massive. if I ever really needed the money I could pull it out without hassles and having a savings account promotes me to save since it's soo easy just to drop extra money into it whenever I want. With mutual funds and other investments you have to go through a bunch of procedures add more funds. The gains arent huge but IMO if you want access to your money savings accounts are the only way to go.

[supe]

You should support animal rights

[Mibz]

If you need the money soon and want to continuously add to it then a high-interest savings account isn't a bad way to do it.

[rizfarmer]

don't put your money in a savings account. Try one of these if you want potential for CG while paying about twice of most high interest savings accounts

CM.PR.J
TD.PR.A
RY.PR.A
BNS.PR.J
BMO.PR.H

[nonlinear]

^^hey rizfarmer, what are those 'codes' or whatever hahah i'm an idiot :nut:

i'm guessing banks and accounts but it's kinda greek to me

[Amysicle]

Preferred shares in banks.

[nonlinear]

ok i don't even know what those are... i guess i'll have to go into my rbc branch and ask them about it

[yoda124]

the only safe haven to park your money is GOLD.A good alternative is buy the gold ETF on the TSX: symbol HGU.

[max_boost]

I wouldn't recommend something high risk like HGU. The 2X ETF's is going to scare the OP. Gold stocks could pull back and he's going to be thinking, WTF?!

Also, I would stay away from equities right now. It's still very volatile. There's another meltdown coming, wait until the rest of quarter 4's earnings come out. With the credit freeze, plunging DJI part 2 so just watch for it!

If you just want to protect the principle balance, something like a PC Financial or ING would work.

[Redlyne_mr2]

Originally posted by max_boost
I wouldn't recommend something high risk like HGU. The 2X ETF's is going to scare the OP. Gold stocks could pull back and he's going to be thinking, WTF?!

Also, I would stay away from equities right now. It's still very volatile. There's another meltdown coming, wait until the rest of quarter 4's earnings come out. With the credit freeze, plunging DJI part 2 so just watch for it!

If you just want to protect the principle balance, something like a PC Financial or ING would work.
:werd: :werd:

People don't listen until they loose money then it's all ears.

[roopi]

Originally posted by yoda124
the only safe haven to park your money is GOLD.A good alternative is buy the gold ETF on the TSX: symbol HGU.

HGU is not an ETF you would want to own as an investment. It uses 2x leverage and is very volitile. Gold is not a safe investment either but if you really felt it was you would be better off buying GLD on the NYSE.

[ChappedLips]

How long do you want to be invested?

You can't pick the bottom or the top. The DOW might take another big dump if it breaks the double bottom from November or it might hold.

Warren Buffet has already invested so now can't be that bad of a time. Diversify and you can catch the wave back up, spread your money over some companies that you really like, and different sectors.

Preferred shares usually don't have the same return as common shares but they are more secure and in the event of liquidation you will be paid before the common shareholders.

If you don't feel like researching then try out some mutual funds or ETF's (exchange traded funds).

More Risk = More Reward

Capital Gains are also taxed better than bank account interest. You aren't going to go anywhere with a 3% return until you are 65. I really think you can play it more aggressive because you are single and have a good job.
Don't invest what you can't afford to lose.

Good Luck

[ExtraSlow]

Some good, lower risk ETF's are the ishares series. They track the index, and they don't have the leverage or contango issues of the Horizon BetaPro ones (HOU, HOD, HGD etc. )
or if you want a more scientific approach, the Wisdomtree (US) and Claymore (CAN) ETF's have some theory behind them, and are still widely diversified and passive investments with low fees.

[Amysicle]

Originally posted by ChappedLips
More Risk = More Reward Well it seems more like:

More Reward = More Risk but
More Risk != More Reward

[Darkane]

Originally posted by Amysicle
Well it seems more like:

More Reward = More Risk but
More Risk != More Reward

Uhh wut? :confused:

[Amysicle]

Just saying that more reward usually takes more risk, but taking more risks doesn't necessarily mean there are more rewards.
Or if you're asking about the "!=", it's just means not equal to.

It's obvious, but people sure get pissed when the market tanks.

[rizfarmer]

You have a 5 year time frame. I posted up what I would do if I were you. Guaranteed return in dividends and Capital gains with your time frame, and preferential tax treatment.


You'll get 100 opinions on what to do, just read above.


Going to your bank may not be the best thing either unless you have a good account manager there. Most personal account reps will put you into a mutual fund even though you may say you want to be in equities.

[Legless_Marine2]

Originally posted by ExtraSlow
Both the Dow Jones and S&P 500 indexes have been trading roughly sideways for the last couple of months. To my simple brain that means that we must be near the bottom.


I'm with ExtraSlow. While we will only be able to call absolute bottom in hindsight, it appears we're close. I believe that the worst has passed (At least for Canadians)

It looks like your RRSPs have preserved your $$$ through a bad time, but that doesn't mean you have to keep them. Mutual funds are good at preserving wealth, but crappy at growing it... particularly when you take into account the 2% admin fees that most banks skim off of the top, yet fail to tell you about.

Instead, open a Self-Directed RRSP trading account, transfer your RRSPs over in kind, sell them, and then use the money to buy something on the stock market with higher growth potential.

Right now, half of the stock market is on sale. Teck Cominco (TCK.B) is on sale at 80% off, Cameco Uranium is on sale at 50% off. Uranium One (UUU) is on sale at 70% off. These are all stocks that have a high likelihood of returning to their 2007 levels as the economy recovers (2-3 years to most guesses).



Such examples abound. It's a rare opportunity - And if you're a young buck with excess cash, you're being given an incredible chance at making huge money.

[Canmorite]

Originally posted by rizfarmer
You have a 5 year time frame. I posted up what I would do if I were you. Guaranteed return in dividends and Capital gains with your time frame, and preferential tax treatment.


Careful throwing around that guaranteed word.

Preferred shares are safer then commons, but don't think they're completely sheltered from the market.

[Legless_Marine2]

Originally posted by ExtraSlow
Some good, lower risk ETF's are the ishares series. They track the index, and they don't have the leverage or contango issues of the Horizon BetaPro ones (HOU, HOD, HGD etc. )
or if you want a more scientific approach, the Wisdomtree (US) and Claymore (CAN) ETF's have some theory behind them, and are still widely diversified and passive investments with low fees.

I think discussion of ETFs may be outside of the OP's ability/comfort zone at this point. I think buying into some undervalued blue chips is probably the safest, yet most profitable step for him.

Although your advice on the HB ETFs is right on the money, should anyone try to steer him in that direction.

My $0.02.

[Legless_Marine2]

Originally posted by rizfarmer



Going to your bank may not be the best thing either unless you have a good account manager there. Most personal account reps will put you into a mutual fund even though you may say you want to be in equities.

True enough. Banks make big $$$ on RRSP mutual funds, and will try to sell them to you, and discourage Self-directed RRSPs, as it's lower profit for them.

For customers, RRSP mutual funds are a sweet spot, in that they combine both growth, security, and can be participated in without a lot of knowledge.... But if a person's willing to get more involved in their finances, there's a hell of a lot better to be done.

Learning about investing can be a huge "multiplier" on your wealth.

You may even want to pick up a copy of investing for dummies, or stock market investing for dummies.

[ExtraSlow]

Other books to read:
Armchair millionaire
Anything by Gordon Pape
Cash Rich Retirement

[Xtrema]

Originally posted by max_boost
I wouldn't recommend something high risk like HGU. The 2X ETF's is going to scare the OP. Gold stocks could pull back and he's going to be thinking, WTF?!

Also, I would stay away from equities right now. It's still very volatile. There's another meltdown coming, wait until the rest of quarter 4's earnings come out. With the credit freeze, plunging DJI part 2 so just watch for it!

If you just want to protect the principle balance, something like a PC Financial or ING would work.

:werd:

Wave 2 is about to hit. More banks will fail as credit card default are coming in. Plus we have not seen the effect of world wide government debts yet or decrease of consumer confidence.

[rizfarmer]

Originally posted by Canmorite


Careful throwing around that guaranteed word.

Preferred shares are safer then commons, but don't think they're completely sheltered from the market.

guaranteed is never the right word to use with invsetments but with any of the 5 banks in Canada, you are as close to guaranteed as it gets. If any of them ever go away against their will, then the world would most likely had come to an end.

[DJ_NAV]

open tfsa trading account.

[fluid]

seriously your best bet would not to invest in stocks, or anything with risk....just go with a high interest account or something....why do this? you just said you dont want to lose any more money, you cant invest in stocks and expect to make money....and you dont have a lot of experience in stocks, i dont think at least.
So if you want to be safe, go with the obvious choice.
just my input