I’m 24 right now, Canadian, and will be working on my Ph.D. for the next, oh, 2.5-3 years. I just found out that I won another fellowship, so my income, which is slightly more than sufficient right now, will increase by $10k/year until September 2007. My goal is to keep my spending low and have a good chunk of money that can go towards a down payment on some property after I finish (or at least have a good chunk of money to work with while I look for a postdoc or prof position).
So I’d like to squirrel it away in low- to medium-risk investments, a lot of which I’ll probably put towards an RRSP as I can take some out for free to make a down payment (something that I consider to be a very good investment if done carefully). But really, I don’t know squat about investment. Can anyone help? Thanks!
Go to your bank. Ask them the same question; say you want low and medium risk mix, preferably index funds. There’s nothing you will hear on this board your bank can’t tell you twice as well, and you should develop a relationship with your bank.
I would like to recommend that you talk to several banks (some are better than others in terms of employees). As mentioned a relationship with a bank is very good to have.
Your fellowship earnings aren’t eligible for an RRSP, as my wife knows all too well…
But you’re 24-- putting money into a low or medium risk investment is kinda stupid, since you’re at the age when you can afford to risk money on a high-risk payoff.
Boy, I gotta tell you, that’s the worst advice I’ve ever heard in my life.
Being able to “Afford” a high risk investment doesn’t change the fact that investing in solid, low-risk stuff is a good way to plan your retirement. Sure wish I’d started at 24 with the same enthusiasm I’m doing it now. High risk investments are fine if you have extra money after you’ve saved some low risk stuff. Put it away, and never touch it until you need it.
I’ve known many people who got wealthy on investments. The great majority of them got wealthy by buying blue chip stuff for a long time, not by taking high risks.
You must have missed this part of the OP: “My goal is to keep my spending low and have a good chunk of money that can go towards a down payment on some property…”
His time frame is relatively short, so low risk investments are what’s appropriate. Unless, of course, he can get into Plastics
Putting money into your RRSP just so you can take it out a couple years later to make a down payment on a house is stupid. Legally it’s an option, but then you’re stuck making house payments, and you have to repay your RRSP in a few years.
If housing in Canada actually is in a bubble, as a couple articles I’ve read in Macleans and the Globe& Snail indicate, then renting is actually the superior choice.
If Adwin really does have an unexpected windfall coming in short term, as a 24-year-old it’s better to look ahead to long-term growth, and take that money and do something with it other than plunk it down in a GIC or savings bond that’s barely keeping pace with inflation.
Since he’s also in the process of earning a PhD, he can anticipate his annual income will jump into the six-figure range by his 30s, so he’s really not going to have any problems with a mortgage in a couple years-- especially if housing prices collapse.
Given all that, saving for a short term payoff is short-sighted, and he should be thinking in terms of a volatile investment with a long-term strategy.
