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Discussion Starter #1
Hello, I'm 23. I was injured at work and I have recieved $40,000. Realizing that this amount of money will not do much for me unless I invest it wisely, I turn to you all for your heartfelt advice. I would appreciate any of your ideas and thoughts.
 

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When do you think you'll need the money? Do you need it to supplement your income now, or to save for your retirement?
 

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Discussion Starter #3
I can afford to invest it for atleast the next two or three years, at which point I may use it to buy a home or use towards starting a business.
Currently it is just sitting there, shamefully it isn't even in a high interest saving account. Obviously i'm looking for huge risks here, but an intelligent way to invest it so that it grows to it's fullest potential.
 

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You need a portfolio that is relatively stable if you are likely to pull it out in that time frame. I don't particularly like bonds right now. What I would do in your situation is weight my portfolio towards a range of defensive stocks or their ETFs - utilities, consumer staples and health care, [EDIT: pipelines] and maybe some integrated telecommunications. Stuff people buy even in bad times.

BMO has a utilities ETF: ZUT that is worth considering. It holds 17 Canadian utilities stocks with equal weighting.

You could also consider buying directly the Canadian dividend aristocrats in the above listed sectors. For a small portfolio the trading fees could bite, but at least there would be no management fee on directly held stocks.

For the remainder of your portfolio you could include some low MER, low fee mutual funds like the TD e-series, that track the indices of Canada, US, and MSCI EAFE.
 

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I would recommend using your TFSA to shelter the investment. (assuming you have room left)

Edit: Sorry for clarification, use what u can of your TFSA to shelter the investment from taxes.
 

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2-3 years is a short horizon for equities. But the returns on fixed income are the pits right now, and bond fund values will fall as interest rates go up.

Perhaps a good bank CDN Dividend fund if you want to take a risk on conservative CDN equity.

Or maybe RBC Monthly Income Fund or TD Monthly Income. RBC is a little more conservative in its asset allocation (but it is not available in registered accounts)

You can only shelter part of it in TFSA because of the amount, but it would still be good strategy.
 

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I guess the question is how much money are you willing to lose? Most asset classes with some chance of making significant gains also carry high short-term risks. You may be best off just buying some GICs of various lengths.
 

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EMP.A looks interesting. This is a grocery store company, dividend aristocrat.

The beta is 0.05. The price variation over the past three years has been around $35 to $54, but out of step with the rest of the market. The price is variable (!your principal is not secure!) but when included in a portfolio that otherwise follows the market you will get some very good diversification of risk, about as good as bonds.

The dividend payout ratio is ~20%, meaning that if price gains follow earnings, you should expect about 80% of your gains to be capital gains which has a low tax rate. So this security is a good candidate for an unsheltered account.

Recent earnings are about 8% of today's price. The worst year of the past few was 2008, at 6.1%. Not a world beater, but very stable.
 
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