Investing as a newbie!

[desertfox]

Allow me to introduce myself. I am new to Canada and on a work permit. I am very pleased to found out such a wonderful website that dedicated to helping consumers and a forum that you can asks, exchange ideas, tips and knowledge.

I would like to have a bright financial future for my family and I am hoping it's not too late. I am in my early forties. I have a good understanding about basic savings account and looking for a HISA but don't have any knowledge about investment.

My wife and I have already maxed out our TFSA for this year and already started our 2010 TFSA kickstart account with ING.

We have about 100k to start investing but don't know where to start. We don't have any debts. To remind you since we are new to investing we would like to try a secured guaranteed investment vehicle to start with. Any tips or replies would be greatly appreciated. Many thanks.

[desertfox]

I guess it's difficult if it's your 1st post as people might have second thought how genuine your inquiry is. Anyhow, I'm hoping someone who have been on similar situation before will share their experience.

I'll start by saying that I've read about GIC, is this the way to go? How about RRSP which I have come accross but don't know much more about it and how much contribution should I make? I am hoping someone could help me simplify my options? thanks.

[desertfox]

I guess it's difficult if it's your 1st post as people might have second thought how genuine your inquiry is. Anyhow, I'm hoping someone who have been on similar situation before will share their experience.

I'll start by saying that I've read about GIC, is this the way to go? How about RRSP which I have come accross too but don't know much more about it and how much contribution should I make? I am hoping someone could help me simplify my options? thanks.

[asdfvcx]

You probably want to start with a good book that covers the basics of personal finance, especially from a Canadian angle.

Two good books which are frequently recommended are Personal Finance for Canadians for Dummies and The Wealthy Barber. Neither is perfect, but both cover much of the basics of Canadian personal finance in an easy to understand method. Note that they both cover roughly the same topics, so you probably don't need to read both.


If you are sure you are looking for a secure investment, a GIC might be the way to go. But I'd highly suggest you do some reading first before you make any decisions.

[LondonTown]

You should also do some reading on what an RRSP is, because it doens't appear that you understand.

[peter_ross]

RFD is a great community. Almost, if not all, questions are answered promptly. However, your questions seem to be too basic (ie what is RRSP, GIC, etc).

Please go to Chapters (that is a local bookstore, in case you don't know, or public library) and grab yourself a book on personal finance.

There're many financial vehicles in Canada. Since you have 100K to invest, you can go to a local bank (in case you don't know, we have TD which stands for Toronto Dominion), CIBC which stands for Canadian Imperial Bank of Commerce, etc) and ask for a banker. In the no-obligation consultation, ask about what products they have. I am sure the banker will be more than happy to explain each and every product to you.

In my opinion, GIC pays way too low. It may not even beat inflation. Alternatively, you can look into CSB (Canada Savings Bonds) - but again, low interest but guaranteed principle. You are better off with a high interest savings account.

Hope this helps.

[desertfox]

Thank you guys for your replies. I have looked up the current rates of the different products and true that GIC and Canada savings bonds offer very poor interest rates. I have also looked at the RFD savings tables and I can see that the best one offers 2.1% from people's trust. There's also Ally bank that I saw on ad on TV and newspapers which offers 2% but not on RFD table. Is it safe to leave your savings on these banks?

We have also opened a chequing account with TD canada which requires a maintaining balance of $1000 monthly. We hold a secured credit card with them hence we have the chquing account. Due to friends recommendation we have recently opened a a no fee account with Presidents choice. Would it be safe to close our TD chequing account and move the money to a HISA? Would it not harm our credit report or our relationship with TD canada if we do that?

[desertfox]

You should also do some reading on what an RRSP is, because it doens't appear that you understand.

I would definitely look into it. thanks

[desertfox]

It does make sense why you guys suggest HISA than GIC for short term investment as the former has some accounts offer 2% whereas GIC rates are crappy at 1% or less. The two that caught my attention where people trust and ally. But as I've mentioned on my previous post, any reason why Ally not on the RFD table? Which one has proven track record? thanks.

[barking frog]

To remind you since we are new to investing we would like to try a secured guaranteed investment vehicle to start with.There is no such thing. All investments carry risk. Savings accounts, with their low returns, are risk-free and insured up to a certain amount.

However, you can limit your risk with different hedging strategies. This can easily become very advanced discussion. The markets have some of the most intelligent minds and deepest pockets working against you. Playing the game is serious business.

To start, you should state your goals and how much you can risk. This 100k, will it be the end of the world if you lose half of it? All of it?

[desertfox]

As I have said on my original post I don't know about investing and would initially looking to secure our capital investment of 100K. Probably we would be looking at RRSP and GIC. As someone who is new in this country I'm not even sure how much to contribute and as to when to start. I guess we have to visit financial planner to discuss our needs.

Once we would be comfortable with the investments that carry less risk we would eventually try other investments but we are taking a cautious approach to start with.

We have a chequing account with TD Canada (that has 1K each when we opened a secured credit card with them) but don't used this account as our main account chquing with HSBC. Should we close this account and move the money to a HISA? Would it be a safe move or it is unwise? If we close it would it have a detrimental effect on our credit rating? thanks.

[barking frog]

I think you misunderstand that savings and investments are not the same thing. I agree that it's best you see someone face to face regarding your questions and concerns.

[desertfox]

Should we close our chequing account with TD Canada and move the money to a HISA?

[desertfox]

I guess it will probably harm our credit score or relationship with TD canada if we close our chequing accounts, right?

[barking frog]

I don't believe chequing accounts affect credit, but I could be mistaken. In any event, you should have both a chequing account and a savings account; one is not a substitute for the other.

In your case you would probably want to keep the chequing account for day-to-day needs and then open up a savings account with whatever reputable bank is offering the best interest rate.

[desertfox]

Hi barking frog thanks for your replies. My main chequing is not with TD and basically this account was open when we opened when we applied for a secured credit card with them with it's link savings account. We haven't had any transaction on since we opening the account.

The 1k has been sitting there just to comply the minimum requirements so that we won't be charged any fees hence my question is it safe to close the chequing account (wife and I have separate) and move it to a HISA instead? I know it's not a huge amount but would like to work our little savings a little bit harder. So what banking people think we should do? thanks

[desertfox]

I'm considering investing this money in a GIC for 1 or 2yrs but not more than that as we are planning to buy house in 2 yrs time. Has anyone knows of better GIC rates of more than 2% for year or 4% in 2yrs?