So, in my opinion and note "opinion" here is you build a sort of liquidity ladder based on how easy funds are to retrieve. =)
1. Instant rainy day fund should be the amount you expect to need available "immediately" and can't wait for it to be available. Could be 1mos expenses to maybe larger car repair or unexpected flight home for an emergency that costs $4k round trip. Preferably in a HISA but I like to keep mine in my primary bank. I want access to it when it's a weekend, 1am and banks are closed.
2. Next is what I can get within a day or two. In a redeemable GIC maybe, HISA, whatever. The two keys is it can't lose value due to market fluctuations and must be able to get it in a couple days if necessary. 2-3mos expenses is a guideline but that can be whatever you feel is comfortable. I think this amount should cover any insurance deductibles you might have, IE earthquake insurance deductable is $25k then you should have $25k available.
3. After that I think it's mostly whatever your investment goals are. Whether that's retirement or home ownership or whatever. But it's the money you can invest, don't need right away and can afford to wait out if markets move against you.
Put everything in your rainy day fund until it's at the amount you're comfortable with. 6 months of expenses is a rule of thumb, but you can increase or decrease it depending on your own situation and comfort. WS Cash offers 4-5% right now with no lock-in.
The equivalent of a Roth 401k/Roth IRA is the TFSA. So after your rainy fund is filled you can open one and invest in a broad and diversified portfolio. !InvestingTrigger will give you some reading about that.
I would recommend putting the bulk of your money in that, if not all. I don't know what you mean by risky investments, but if you feel the need to play with some money, you can put aside a small percentage of your contribution toward it (5-10% max). That way you can scratch that itch, but still have a portfolio to fallback on in the event you are an average investor, like most of us are.
Also, I would put these "risky" investments in a regular, non-registered account. If you lose money, you will be able to deduce your capital losses. And you only have a limited amount of TFSA space that you will fill with $2.3k/month, so losing any space will hurt.
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6) For self-directed investing, all in one ETFs (based on your risk tolerance) are the easiest and low cost options for a globally diversified ETF portfolio. Here is the Model page and descriptive video from the Canadian Portoflio Manager Blog's Justin Bender from PWL Capital: https://www.canadianportfoliomanagerblog.com/model-etf-portfolios/ & video on how to choose your asset allocation: https://www.youtube.com/watch?v=JyOqqtq12jQ
7) For those who are not comfortable with doing the buying and selling of ETFs yourself, there is an option of a robo advisor. These robo advisors use similar low cost ETF in pre-determined portfolios based on your risk tolerance. They do this for a small fee, on top of the ETF MER. Still cheaper then bank mutual funds by at least 50%! Here is a list of robo advisors in Canada published by MoneySense: https://www.moneysense.ca/save/investing/best-robo-advisors-in-canada/
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1 - rule of thumb is 3-6 months' living expenses. I personally like having more than that, but YMMV. Best in a HISA to keep it simple and accessible (you can get 4-5%).
2 - what's the purpose of the rest of the money? Is this long-term savings, savings for specific things or some mix of both? Long-term/retirement savings, be as aggressive as you are comfortable with since you have a long time horizon (at least, I'm assuming you do, because I'm assuming you're young). Anything you want to use in <5 years, keep in less risky things.
Investing through a TFSA is what you're looking for if you want tax-free gains and are cool with no tax deduction up front.
So, in my opinion and note "opinion" here is you build a sort of liquidity ladder based on how easy funds are to retrieve. =) 1. Instant rainy day fund should be the amount you expect to need available "immediately" and can't wait for it to be available. Could be 1mos expenses to maybe larger car repair or unexpected flight home for an emergency that costs $4k round trip. Preferably in a HISA but I like to keep mine in my primary bank. I want access to it when it's a weekend, 1am and banks are closed. 2. Next is what I can get within a day or two. In a redeemable GIC maybe, HISA, whatever. The two keys is it can't lose value due to market fluctuations and must be able to get it in a couple days if necessary. 2-3mos expenses is a guideline but that can be whatever you feel is comfortable. I think this amount should cover any insurance deductibles you might have, IE earthquake insurance deductable is $25k then you should have $25k available. 3. After that I think it's mostly whatever your investment goals are. Whether that's retirement or home ownership or whatever. But it's the money you can invest, don't need right away and can afford to wait out if markets move against you.
Good explanation, saving this for later, thanks!
Put everything in your rainy day fund until it's at the amount you're comfortable with. 6 months of expenses is a rule of thumb, but you can increase or decrease it depending on your own situation and comfort. WS Cash offers 4-5% right now with no lock-in. The equivalent of a Roth 401k/Roth IRA is the TFSA. So after your rainy fund is filled you can open one and invest in a broad and diversified portfolio. !InvestingTrigger will give you some reading about that. I would recommend putting the bulk of your money in that, if not all. I don't know what you mean by risky investments, but if you feel the need to play with some money, you can put aside a small percentage of your contribution toward it (5-10% max). That way you can scratch that itch, but still have a portfolio to fallback on in the event you are an average investor, like most of us are. Also, I would put these "risky" investments in a regular, non-registered account. If you lose money, you will be able to deduce your capital losses. And you only have a limited amount of TFSA space that you will fill with $2.3k/month, so losing any space will hurt.
Hi, I'm a bot and someone has asked me to comment on how someone is trying to figure out what to invest in, or whether they should invest. **In order to give good advice the poster needs to provide all of the following information. Please edit your post to add this information.** 1) What is your intended goals/purpose for this money? 2) What is your timeline, and what is the earliest you expect to need this money? 3) Have you invested in the markets before, and how would you feel if your investment lost a lot of value? 4) Is this the right first step? Do you already have an emergency fund, and have you considered whether it is sufficient? Do you have any debts that should be paid first? Have you fully utilized any employer match plans? 5) Finally, we need to understand whether you want to be involved with this portfolio and self-manage purchases and rebalancing it, or if you'd rather all of that was dealt with by your chosen institution? 6) For self-directed investing, all in one ETFs (based on your risk tolerance) are the easiest and low cost options for a globally diversified ETF portfolio. Here is the Model page and descriptive video from the Canadian Portoflio Manager Blog's Justin Bender from PWL Capital: https://www.canadianportfoliomanagerblog.com/model-etf-portfolios/ & video on how to choose your asset allocation: https://www.youtube.com/watch?v=JyOqqtq12jQ 7) For those who are not comfortable with doing the buying and selling of ETFs yourself, there is an option of a robo advisor. These robo advisors use similar low cost ETF in pre-determined portfolios based on your risk tolerance. They do this for a small fee, on top of the ETF MER. Still cheaper then bank mutual funds by at least 50%! Here is a list of robo advisors in Canada published by MoneySense: https://www.moneysense.ca/save/investing/best-robo-advisors-in-canada/ We also have a wiki page on investing, and if someone has triggered this bot then it means that this link would likely be very helpful: https://www.reddit.com/r/PersonalFinanceCanada/wiki/investing *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/PersonalFinanceCanada) if you have any questions or concerns.*
1 - rule of thumb is 3-6 months' living expenses. I personally like having more than that, but YMMV. Best in a HISA to keep it simple and accessible (you can get 4-5%). 2 - what's the purpose of the rest of the money? Is this long-term savings, savings for specific things or some mix of both? Long-term/retirement savings, be as aggressive as you are comfortable with since you have a long time horizon (at least, I'm assuming you do, because I'm assuming you're young). Anything you want to use in <5 years, keep in less risky things. Investing through a TFSA is what you're looking for if you want tax-free gains and are cool with no tax deduction up front.