Right now… I am majoring in Finance in my Junior year, so it was fun to read this case study. If Kevin does everything right with the advice hes been given, he should be real well off financially at age 27 when he wants that child, hehe.

Till then,

Jean

Saif, if you have no debt and cash on hand, I would open a TFSA and learn how to invest for the long term. You have an advantage with your long investment time line.

Once it is paid off, he is unlikely to be able to borrow a similarly large amount to invest with so little credit history.

Given his young age, the low rate and the state of the market, he could easily invest the 16k instead and simply pay the interest. This is what I did.

Given his low salary, TFSA is clearly better than the RRSP. He can even withdraw money for a house from the TFSA and pay it back whenever (or not), unlike the RRSP. The salary will grow over time and then he can start contributing to a RRSP.

He might want to think about getting a condo so that he can live it up close to downtown for awhile.

All the Best

Be happy with the cash you have. However, know that you’re only in your 20’s once, so if I had that cash, I’d just live it up, but not on debt. You have your life to make good money, and if you can make 36K cash 1 yr out of school, you will probably have $1mil in cash by age 30.

Best,

RB

With all due respect, Tim, the suggestion of an insurance salesman to buy insurance is hardly unbiased.

Pay off student debt entirely. It is non-deductible debt. That leaves you with 20k of savings. Place the remainder in an RRSP savings/1yr GIC. The reasons for this is that you can pull out the 20k to put toward a house/condo when you find one you like. Also putting 20k into your RRSP in one shot will give you a $5,127 tax refund which you can then put into your TFSA if you wish.

Lastly if you are comfortable with debt you can take out a personal loan to purchase stock. The difference is that loan is tax deductible and the intrest is treated identically as an RRSP. Figure per 10k at $350/mth total payment whihc includes $75 interest per month.

By doing the above you are left with the flexibility to buy a house and are ok if you lose you job in the short term. Your emergency fund is your house fund, which ever comes first.

I contracted Type I (insulin dependant) diabetes when I was 24 years old. I am now 28 years old. Only a very distant relative actually had the disease that I didn’t even know existed … so it was very unexpected. Fortunately my dad had the foresight to buy me guaranteed life insurance with 3 opportunities to increase it in my lifetime when I was still a child. Otherwise, I would most likely not be eligible for personal life insurance.

I would like to go into business for myself now but I won’t be able to obtain medical insurance so support the $500+/month cost for my diabetes supplies let alone disability insurance. I haven’t actually called around and gotten quotes to find everything out (I need to do this) but I’m sure it won’t be pretty and very depressing when I do. This means I need to work in the public sector and obtain group insurance to have any sort of security through insurance.

Investing in insurance young may seem like a lot of wasted money and it may end up that way … but if you happen to contract something horrible now or later the amount of additional stress and worry you will save yourself will be HUGE.

I would say that your best bet it to put cash on a 6+ complex building. (that sells around 400k) There would be alot more money to make (reinvest in the mortgage than a condo.

What the heck does your beef with RBC have to do with the topic of this thread?

@ Kevin,

Congrats on being where you are at at the age of 22. Continue to read and educate yourself on investing. Don’t worry that you are missing out on stuff. Once you know what action you want to take, then take it. Keep up the saving mode. That will serve you well for your future. Just make sure that whoever you hook up with in the future is also similar to you from a financial perspective. If you find someone that like to spend or overspend, that will cause problems in the relationship.

Since you are not a handy person, then learn who other people rely on for services. You may want to buy a condo, since a lot of the maintenance may be already included in your monthly condo fees.

Good luck in your financial future :)

My question is – does Kevin have a degree? If he doesn’t he should get a BA or BS since he has lots of free time – this will help boost his income.

If he does have a degree and only earns $33k a year -then he should definitely look for another job that has more benefits and will help improve his skills.