[froogal]

This is my first post, so please be easy on me :smile:

I'm 40 yrs old novice investor, looking to build a simple portfolio of 2-3 etfs, my financials are as follows:

- I have $300K in personal savings
- I have $150K deferred income in my corporation (50/50 USD and CAD)
- I own $130K of my primary residence principal and I owe $420K in mortgage at 3.39%

I don't have any investment at the moment, I have $90K of carry forward between RRSP and TFSA, and I do have an RDSP for my son.

My question is, how should I prioritize the following:

- Investing in registered/Tax free accounts (and in what order for RRSP, TFSA, RDSP and RESP)
- Investing in a corporate account
- Investing in a personal non registered account
- Paying off my mortgage

Thank you all for your insights!

 

[lonewolf :)]

I would stay in cash, gold goes below 1000 start scaling in for long term hold. If real estate was not bubbled up would say pay off mortgage. Real estate price drop so you owe more on your house then the market value might just want to walk away? It is just not the time to invest. Anything that reduces expenses such as new weather stripping for windows or buying a bike to reduce transportation costs would consider. Buying of stocks, bonds, real estate is just not prudent @ this time in the cycles.

 

[Spudd]

I would max out the RRSP and TFSA before investing in non-registered.

I don't know much about RESP's and RDSP's but I know for the RESP you will want to contribute enough to get the govt match, assuming you expect your children to go to higher education. I honestly know nothing at all about RDSP.

Personally, I would pay down the mortgage after that, just because it's low-risk and I hate owing people money.

 

[Jimmy]

Good pts above.

Equity/Fixed income Split: I would go w 60-70% Equity/rest FI

Equity ETFs

You should treat the equity in your business as part of the equity % of your holdings and the equity in your house as fixed income . So if you have $580 total investments. say 60% = $348,000 for equity.
Business - $150,000
ETFs - $198,000
Split in 1/3 to Cdn, US and Intl
Max out your RRSP,RESP etc first to reduce taxes then TFSA. You may want to pay the mortgage w the remainder at 3.39%. Equities may only return 5-6% after tax going forward.

Fixed Income
40% so $232,000. i would call the house more a fixed income asset risk wise than an equity
House $130,000
Pay mortgage - $102,000

I would pay down the mortgage vs buying any bond investments. It is costing you 3.39% which is more than you would make in any bond fund especially in a non reg account.

 

[froogal]

Thank you all for the valuable insights.
@Jimmy I like the idea of treating mortgage payment as a fixed income, makes total sense to me, even though lonewolf's point about the risk of owning more in my house than the market value is a concern for sure.

What's your take on lonewolf's comment that "Buying of stocks, bonds, real estate is just not prudent @ this time in the cycles", do you think someone that holds no investment at the moment should wait for a bear market?

 

[like_to_retire]

..... do you think someone that holds no investment at the moment should wait for a bear market?

No, that's market timing and it doesn't work. The smartest minds in the world have tried it and it's a failure. Decide on your asset alloactions first and then invest in the appropriate accounts to make it work.

I like the idea of treating mortgage payment as a fixed income....

A mortgage is equivalent to a 100% guaranteed tax-free investment. Best to pay it off if you can't beat the rate with taxable fixed income.

I would max out the RRSP and TFSA before investing in non-registered.

I don't know much about RESP's and RDSP's but I know for the RESP you will want to contribute enough to get the govt match, assuming you expect your children to go to higher education. I honestly know nothing at all about RDSP.

Personally, I would pay down the mortgage after that, just because it's low-risk and I hate owing people money.

Great advice.

ltr

 

[Koogie]

I would max out the RRSP and TFSA before investing in non-registered.

+2 Except I would reverse the order and do TFSA first.

 

[Jimmy]

Thank you all for the valuable insights.
@Jimmy I like the idea of treating mortgage payment as a fixed income, makes total sense to me, even though lonewolf's point about the risk of owning more in my house than the market value is a concern for sure.

What's your take on lonewolf's comment that "Buying of stocks, bonds, real estate is just not prudent @ this time in the cycles", do you think someone that holds no investment at the moment should wait for a bear market?

I wouldn't worry about house risk at all. Maybe a little for buyers right now but even still if you are holding for 10+ yrs as most are you should be ok House appreciation is ~ 4-5%/yr through history. We have very strict laws and credit reqmts in Canada so you wont see anything like the US situation here.

You can't time the market so you can invest at anytime. It is always fairly priced too imo. They raised interest rates in the US yesterday for ex and the S&P didn't move tells you how efficient it is.

Maybe see a financial advisor to get some advice on buying your etfs over a period of say 1-2 yrs, in monthly or quarterly installments to smooth the cost base out if there are any small swings.