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Discussion Starter #1
Hey guys, (and ladies, of course)

I just wanted to introduce myself and get some feedback (positive and negative) on my financial position. Hopefully I'll stick around and become a regular participant on these forums.

I am 20 years old, have two cars and currently live at home rent free (for now). I took two years of college and dropped out because I hated it. I may go back later depending on how I feel. My numbers look like this:

Chequing Account: $250
Savings Account: $3,000
Canada Savings Bond: $2,000
TFSA (Monthly Income Mutual Fund): $10,000 Maxed.
RRSP (Balanced "Market Mocking" Mutual Fund): $8500 ($2000 over my contribution limit)
Stock Trading Account: $5500

Visa: $0
All other debt: None, $0.

I work two jobs in order to make about $4,000/month net pay.
My expenses are roughly $700 per month, but I usually round it so $1,000 to be safe. This allows me to "save" $3,000 a month.

My only goal is to save for the rest of 2010 in order to max out my TFSA with 2011's $5k contribution room, and keep my RRSP maxed out as well.

My goal after that is probably to purchase a house. I cannot live rent free for much longer and would like to avoid paying rent as much as possible. I would also like (and yes, I know this is difficult) to be able to put down 25% of the value of the home so I can escape CMHC fees.

Going back to school may be something I do in the future, but this would not be for at least one year.

Although they have not performed exceptionally well, my mutual funds have covered their MER's and kept up with more than inflation. Can't complain with today's market...

My stock trading account has been fairly stable and I have not made any real money off of it. This may be due to the fact I've only been trading for 6 months :p but hopefully I will get better.

Let me know if you have any thoughts, suggestions, criticizims or questions. I'd love to hear your opinions!
 

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If you went back to school what would you take?

Why do you have 2 cars?

Good work thus far....my advice stay at home until you get your 25% down if you want a property.
 

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You are doing very well on a financial basis. I know you came here for financial advice, but at your age you should be fully immersed in some sort of education or solid trades training that you enjoy. Colleges have exploratory general arts programs for people who may not know what they want. IMHO your focus would be well spent in improving your human capital. You have a long life ahead of you and now is the time to lay the foundation to make things as easy for yourself as possible.

From the $ side, keep managing your money as you have been doing and you won't have any troubles due to mismanagement. Good luck.
 

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Discussion Starter #4
Cal, I have a 4x4 for the winters, and my car for the summers. I only keep one insured for each of the seasons.

As for school, I originally went for Finance (go figure!) but the material was just horribly boring, repetitive, and to be honest; easier than highschool with 2x the BS. I even did the Investment Funds in Canada certificate (IFIC) in Toronto outside of school and was successful. The problem is that I don't feel there are many jobs (and by this, I mean jobs paying 50k and over) that you can get with a college diploma in finance and a small outside certificate. Of course, I could do an MBA like Royal suggested and spend about 3-4 years and $30-40k. But I don't feel that's what I want to do. I also don't have much faith that I will get a higher paying job that would make up more than had I just worked for those 3-4 years and saved my money from tuition expenses.

I would gladly do a trade, but once again, I don't want to be in school longer than I need to. I cannot stand school. Never have been able to. But I don't want to settle for a salary less than 50k.

My plan was to start out as a Teller in the banking world, grab outside certificates in order to sell securities, and eventually advise people and become a PFP or CFP and work my way up slowly within a bank. Problem? Most of these occupations are based largely on commissions. That's scary to me. I rather have a salary.

Money and Cars is what I'm interested in. Hence; owning two cars and being on this forum :p

If I went back to school, I would have no idea what I would go back for. Probably something to do with Finance again.
 

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Just because the market has been having some mood swings lately, why do you need to buy a mutual fund that makes fun of it?
 

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I have to echo most of the previous replies. A university education will likely be your best investment and studies show that it will pay off in spades over your life. I'm currently in my 50s and my biggest regret is not going to university. I would also question the need for 2 cars -- automobile associations typically estimate the cost of a compact car at about $8500 per year. Even if you're getting by with much less than that, it's still probably an unnecessary expense.

On the positive side, as others have said, you're doing remarkably well for your age and obviously have the potential to save money which is an admirable quality, especially for a young person.
 

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Keep searching changing jobs try different things. When you find it get the education to be payed appropriately.

If cars are it for you learn how to make money.
 

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I would gladly do a trade, but once again, I don't want to be in school longer than I need to. I cannot stand school. Never have been able to. But I don't want to settle for a salary less than 50k.
It sounds to me like you want to have your cake and eat it too.

I went to college for several years and got a diploma as well as several additional credits for related courses that were not part of my diploma program. When I was your age I was struggling to know where to direct my education. My starting salary after graduation? $35K. And that was following intense competition with many other graduates in the same position as me! Today? Much more. The formal education, as difficult and challenging as it was, was and is the foundation for my salary scale. I've had to work hard for every dollar and continue to do so today.

At this point you'll be lucky to pull in $10 an hour in a retail sales job. Most people your age are lucky to get minimum wage. For you to pick a salary of $50K out of thin air with no formal education or training...well, I can only wish you well friend.
 

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edumacation.

dude.

go back to school. You are obviously very driven, and are responsible, and are doing well financially.

I like the idea of working at a bank as a teller--do that and go to school PART TIME. Chip away at it. Most people hate school--I certainly do, but without it, I wouldn't make nearly the salary that I do now.

The other thing to consider is that certain employers will contribute to your education (the usual rule of thumb is that a company will have 2% gross salary/employee in their education reimbursement fund).

Other than that, keep doing what you're doing. Working two jobs will get to you eventually (I did that for many years, during summers, and when I needed a new roof...crap happens).

good luck.
 

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I'm also with the idea of going back to school. If by going to school you set yourself back $50,000 from where you could have been by just working, you'll probably make that back in 5-10 years after finishing school. Since you'll be working for 30+ years, it's a great return on investment.

If you can get a very conservative $5000 more a year with University/college than without, that 50k is made back in 10years. In reality you'll probably be more in the range of 10k more, and your top possible salary is probably quite a bit higher also.
 

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Hmmm. We can actually look at the education payoff slightly more rigourously. Here's a calculator (developed by the company I work for) which allows you to estimate the payoff associated from investing in your human capital, given a number of (explicit) assumptions. (It is the second calculator in the list.)

(There are some behind-the-scene assumptions too, which, if anyone is interested, I can delve into.)
 

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MG:

I LOVE IT!

(OT for a moment: Cost of raising a child today: $295,826. Holy crap.)

I'm going to spend more time looking at the other calculators, but this is pretty cool stuff. I like to think with this type of information, including education payoff, people would be lead to making better decisions. In your experience, has that occured?
 

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Well, all the calculators there are fun.

(disclaimer: the rent or buy calculator link is not working. We developed a calculator for Industry Canada, which is where that link used to lead, and it seems they've taken it down. I'm trying to find out whether they've moved it, or possibly replaced it with a much BETTER rent-or-buy calculator we developed earlier this year which included a standard deviation calculation for mortgage RATES, plus a "break or keep?" mortgage calculator.)
 

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My advice to you is to go back to school! It's key for long term wealth and success. Even though you might want to go into business or open up a business, education and a foundation is key for anyone and everyone at your age.

It seems like financially at your age, your pretty well off and the fact that you have ZERO debt is key and keep it that way! I started working when I was 13 years old, but I always went to school and all the way until University.

Just remember, don't get too greedy with the $4000.00 your making per month right now! Work hard in school, complete a course or get a degree and you can make more than that at an easy going job with FULL benefits.

Good luck and all the best!
 

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Discussion Starter #16
Yeah, I think you are all correct.

I should go back to school.


I have done 2 out of 3 years for a Finance Diploma. Do you think I should continue and finish that off, or should I start fresh in University and do a B.Comm in Finance?

Some people think I should do both...... but thats more time and money.

What do you all think?
 

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Glad to hear you've heeded our advice. You have everything to gain.

If one year is all you need to get that diploma, do it! At your age one year is a flash in the pan and then you'll have the diploma! There is no harm having more, rather than less. Within reason of course. ;)

Use the next year wisely to try and figure out exactly what you really want to do, talk to the counsellers at college and use the time to try and find yourself. Then after that see about uni.
 

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How about Econ?

Hi KaeJS,

Congratulations on the 4k net monthly salary. You are doing better financially than most recent college graduates.

I was wondering if you are interested in Econ. Studying economics is broader than pure finance. I find that many financial models like CAPM and MPT are based upon traditional economics models. The training that I had through economics allowed me to analyze the models more thoroughly than an accountant or a BComm.

If you want to have a more stable job in finance, have you considered pursuing the Chartered Financial Analyst (CFA) designation? Most CFAs work on the institutional side instead of the retail side. Most CFPs or PFPs as you mentioned work at the retail side. Institutional side consists of a high base salary + commissions/bonuses. You can look at the CFA designation through here: www.cfainstitute.org . CFA designation can help you out in the long run.

Henry
 

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"At your age one year is a flash in the pan and then you'll have the diploma! There is no harm having more, rather than less. Within reason of course."

Not to be pedantic, but a year is nothing to fritter away. The tuition and year of forgone wages need to be weighed against the discounted returns on the extra education. You should probably use a pretty high discount rate, as it is pretty uncertain to what extent the extra qualification translates to higher income. It could be that the discounted additional income would be worth enough to offset ~$5-10k tuition and $48k after-tax income.

There are diminishing returns, and from a purely financial perspective, extra school rapidly becomes uneconomic.
 

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Discussion Starter #20
If you want to have a more stable job in finance, have you considered pursuing the Chartered Financial Analyst (CFA) designation?
Henry
I've actually looked into becoming a CFA before. Yes, they make a ton of money. However, I'm not sure thats something I would have the motivation to persue. By the time I get the education, the "red tape" job experience, and then write the exams..... it would probably take me 12 years...

I was thinking a B.Comm in Finance and then do an MBA. The only problem with this is that everyone and their grandmother has an MBA. I wouldn't exactly stand out from the crowd.

I would love to be a CFA, but thats a lot of devotion/responsibility that I'm not sure I can handle at the moment...
 
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