Golden Girl Finance
Hilary Brock
Posts (10)

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Q&A: How to start investing when you have little money

November 23rd, 2011 by

I just recently graduated from law school and I want to start investing my money (even though my salary as a student is low!). I have no idea where to start. Please help!

Asked by A., Etobicoke, ON


Congratulations on starting this new phase of your life! You are in the optimal time to start building wealth and laying a foundation for your future.

To start, I would suggest opening a Tax Free Savings Account (TFSA). You are allowed to invest $5,000 annually. If you contributed in 2011, you are able to contribute $5,500 after January 1st, 2012 (this number is indexed to inflation and rounded to the nearest $500 - thus the increase in 2012). The great news: your investments can grow tax free in this account. If you had to dip into your TFSA account, there wouldn't be any penalties - only a commission to sell your investment holdings.

Alternatively, if you opened an RRSP and had to withdraw from it, you would have to pay a minimum 10% deregistration penalty and a commission. So, it might be prudent to look at the TFSA in the short term. When you become a full-time lawyer and get paid a higher salary, I would then suggest putting money into an RRSP to get the tax deduction and keep it in that account for long-term growth.

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Q&A: Buying U.S. rental property

August 18th, 2011 by

We are seriously considering buying a rental property in Florida as an investment and have about $100,000 to use for this plan. We are both in our mid-50s and are empty-nesters. What are your thoughts on investing money in Florida right now?

Asked by Janice, Newmarket, ON


I can relate! Given that I personally just purchased a house in Bradenton this past January, I believe this is a good time to take advantage of the opportunity to purchase and rent in Florida. A few things that my spouse and I considered when we contemplated our purchase:

  1. The favorable Canadian exchange rate.
  2. The long slump in Florida's real estate market that now shows favourable signs of recovery.
  3. Choosing a property with a good location, very close to all amenities - i.e. golf, tennis, marinas, cycling trails and beaches. (A good location means you can ask top dollar from seasonal renters.)
  4. Choosing a rental agency that we trusted and that was affordable.
  5. Taking advantage of low-ball pricing on bank-owned property or 'short sale' property still available in Florida, though this does involve a few extra steps with financing. (We personally decided to avoid this complication.)

In summary, in our case, we may own this property for a minimum of ten years or even longer, but we hope we will have caught the real estate market on the "uptick" and have also arranged our financing so that the rental income more than covers our mortgage. As with everything in life and investing, there is risk, but we're confident our investment will pay off in the long-term.

As for yourselves or anyone considering purchasing property in the U.S., I suggest you talk to your financial advisor(s) and do your research. I wish you luck in finding your own property!

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Q&A: Which term deposit to choose?

February 28th, 2011 by

I am looking into putting some money into term deposits. There are a number of options with respect to how the interest can be paid: monthly, semi-annually, annually, or at maturity. Does it make a difference which one I choose?

Asked by Anonymous


Term deposits are secure investments that generally offer a higher rate of interest than a savings account. Term deposits are available in a number of currencies, a variety of term lengths, and have several redemption options. For example, Canadian dollar term deposits are offered at competitive interest rates and are redeemable prior to maturity with an interest penalty. They are available in a wide range of term lengths, from 30 days to 5 years.

Let's look at this further as it pertains to your question...

If you choose a one-year term and request a monthly interest payment, you would receive a rate of .875%. However, if you chose to receive your interest payment at the 1-year maturity date instead, you would receive a higher interest rate of 1%. In short, the bank rewards the investor who keeps her money invested for longer periods.

Lastly, one thing to be aware of is that rates are subject to change without notice, so stay on top of it and maintain communication with your banker or financial advisor.

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Q&A: Where should I invest my TFSA money?

February 24th, 2011 by

When I first opened up a Tax-Free Savings Account (TFSA), I was under the wrong impression that it had to sit in a savings account only, earning a very small amount of interest. Now I realize I can invest it in other ways! I have $10,000 saved right now and am looking to take the next step and invest it somewhere else, but don't know what to do. I do a monthly contribution toward my RRSPs already. Where should I invest the TFSA money?

Asked by Anonymous


Without knowing your exact financial situation, my general suggestion would be that it's best to invest in "bluechip" growth stocks that pay a handsome dividend. The whole advantage of the TFSA account is that it is "tax free"; therefore, the biggest bang for your buck would be to have tax-free capital appreciation and dividends.

It would be wise to not treat the TFSA like a normal savings account with multiple withdrawals; that would defeat the purpose of the underlying investment.

I would also suggest that you still contribute to your RRSP for an immediate tax deduction. However, if you are in a position to receive an income tax refund, perhaps that refund could go into your TFSA.

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Q&A: RRSP or TFSA - which one is better for me?

February 24th, 2011 by

I have a question about RRSPs. I bought into an RRSP last year to help with income tax, but also for my retirement. I am 56 years old, got hurt on the job (now on CPP Disability) and am now comparing RRSPs to TFSAs. I heard that I am better off to save money through the TFSA than to buy into RRSPs because you can access your money in a TFSA without being taxed. So, should I save that way instead (since I don't bring in an income anymore) and what about the RRSPs I have now? Should I move some of that money over to a TFSA?

Asked by Loonie, Cambridge, ON


Sorry to hear about your injury on the job. To answer your question, since you are injured and unable to generate work income, the TFSA account would be the route to follow.

With respect to withdrawing the funds from your RRSP, unfortunately, if you withdraw money from your RRSP to fund the TFSA, you will be taxed on that withdrawal if your overall income extends beyond the basic personal amount. You should talk to your accountant or a financial advisor about the likelihood of this happening and to what degree you would be taxed.

Should you remain unable to work, your best option moving forward is likely to save up the allowed $5,000 per year for the TFSA, provided your cash flow income permits doing so. You should also note that since the TFSA originated in 2009, you are able to contribute $15,000 for the 3 qualifying years since its inception.

In general, the best type of investment vehicle for a TFSA, once you have funds accumulated, would be "bluechip" equities with upside growth and strong potential. This way, you won't get taxed on any capital appreciation or dividend income when withdrawn.

I wish you luck and suggest you discuss your individual and family financial needs with your accountant, financial advisor, or other trusted professional.