My brain is full, may I be excused?

1) I would not be working with $1,000 increments. They are just too small to be worth while. Let them sit in your checking account. You know when, in the year, some of your big bills come due (like Xmas, or car insurance). After those are dealt with evaluate your balance and move the excess (to what is needed for the emergency fund) into a savings vehicle.

2) Since I presume you are just starting out, you have to look forward in your life and decide what expenses you will have. New car, back to school, wedding, children, downpayment on home, etc. I don't believe in divvying up your savings into small separate piles of $$ for retirement, $$ for new car, etc. Attack the first need first. I cannot believe that you want nothing and have only retirement to save for.

3) Whether you 'invest' or keep the $$ in savings vehicles depends on the timing for what you want to do with it. Use savings accounts for emergency funds and GICs for things needed at a specific time. Invest for longer horizons.

4) Open a discount broker account and do the 'couch potatoe' --- buy a small few ETFs of the large indexes. Do any rebalancing with your subsequent contributions.

5) There is a huge misunderstanding about the importance of rates of return. It sounds like you are thinking "I should be earning more". But that is wrong when you are just starting out. It only matters once you already have a whack of capital. Consider the $1,000 per month you feel should be invested. Say it earns 8%. In one month it earns 8%/12mo*$1,000 = $6.70.

So you lost in one month the cost of one Starbucks coffee. It is your saving that is important, not the rate of return. See argument.

Our plan

After reading a bunch of books and blogs I can give you my basic plan

First I have got my RRSP contributions at about 14% of my salary which should give us a basic pension at 55 or a good one at 60. I was a bit late starting this.

Next we plan to have all of our 3 months emergency savings in my wifes TFSA interest account by next year.

Following that I'm planning to put my monthly savings (in the $100-$500 range depending on a few unknowns) into my TFSA TD e-funds until I have around $25,000+ which I believe to be the minimum I should do to minimise broker fees. It will then be transfered to some sort of ETF, rinse and repeat. I figured this amount based on
http://www.milliondollarjourney.com/reader-question-when-to-switch-to-etfs.htm

I'm hoping that is a better gain then just paying off my mortgage which is currently fixed at 5.1%

After 4 years when our student loans are paid off I'm kind of assuming I'm going to need that cash for increasingly demanding children.

What I was thinking my plan should be is that I should

1. Max out my TFSA
2. Find a better vehicle for my RSPs, but what?
3. Sign up for online trading, mostly likely a Cash account

Click to expand...

For a somewhat different perspective than has already been expressed:

If your intention is to build up a pool of emergency savings, then it might as well be in a TFSA. Leave the money in cash savings until you can purchase a cashable GIC (usually $5K in a registered acct.) in order to get a bit better rate whilst still maintaining access to the money. You also have the added advantage of being able to cash out early, without penalty, in order to take advantage of a better rate if it is available.

I don't know what you have in your RSP at present, but if you are just starting out, I would avoid a self-directed account until you have amassed enough assets to avoid the annual fees. The simplest way to begin saving for an RSP is to invest in a simple balanced fund through a regular investment plan. Any of the bank monthly income funds will work fine for this. While not as cheap as index funds or ETFs, their fees are still well below typical mutual funds. The regular investment plan is important IMO as it is a forced savings plan. If you want to save up specific amounts and then invest periodically, you will likely find this more difficult to do as there will always be a temptation to spend the surplus cash on something else. Beyond the balanced fund approach, if you are comfortable with doing everything electronically, then you could start a couch potato portfolio using TD e-Funds or one of the prepackaged managed portfolios that are constructed using e-Funds. In the initial stages of saving for retirement there will be little advantage to using ETFs in many cases, it could work out to be more expensive than using mutual funds.

If you are new to investing, opening an on-line cash account for trading would be the last thing that I would do. It's likely that the bulk of your savings potential will be used up in making contributions to your TFSA and RSP -- you had mentioned $1K/month. Keep reading and learning, with time you will be able to figure out what will work best for you and if you decide to trade in a cash account, you can practice to see if it is worthwhile before actually committing cash. In the meantime, you will be saving in a prudent fashion while continuing along with developing a sound DIY investment strategy.

Just to put a little more background to this. I'm really only "starting out" in the areas of RSPS, and wealth accumulation. I do have a house, and we don't have any large life changes coming up in the next 5 years, unless its marriage.

We budget out everything like insurance etc. separately and after all that is said and done I have that $800-$1,000 a month. Really this money is earmarked for wealth building and retirement saving, not so much for future purchases, etc.

I do agree with the liquidity of cash comments. We do keep some cash available at all times, but 1% or 1.80% isn't doing much for me. This monthly saving is all mine to do as I wish.

My partner has his RSPs covered by his employer, and I do not. I'm a contracted employee who has to contribute to her own RSPs with after tax dollars and no matching. He also does his own TFSA contributions.

I'm going to look into ETFs some more, and see what is available to me. I did also recently notice that ING offers mutual funds with a capped 1% MER.

I think the plan will be to just stockpile cash for the next couple of months. I've been seeing a lot of print about (a) correction(s) in October. I'm going to set my goal of having made a decision as to which alternate vehicle (aside from savings account) to use, assuming the market has something worth buying, for November 1st.