Newb Question on what to do with 50k

[turboturist]

I have +/- 50k and there are a few options I am pondering and cant seem to make a decision. So I will list the couple and see what some peeps think are good ideas or bad or maybe have some others.

First I want to say the only dept we have is about 30K owing on our truck at a 900 bones a month payment and our house.

1. Put the 50k in some form of RRSP or GIC, with the tax benefits. Get the income tax back and pay the truck off and possibly do some work around the house for renos.

2. Pay off the truck now and put what is left on RRSP or GIC and still get a decent tax return and do the renos on the house. ( i have already put about 30k in RRSPs this year though work.

3. Do the renos and get some of the things done we want done and put the balance on the truck loan.

4. Buy a chunk of property by some lakes in mid BC, and keep for future use before the prices are out reach. And keep blugging away with payment on the truck and house.

5. Leave it sit for a rainy day?

Any help will be appriciated.
Thanks.

[Spyder122]

4. Can't go wrong with Real Estate.

[YYZgeddylee]

none of the above.

paying off debt is not a bad idea,
depending on the interest rate.

GIC's are about equal to saving it for a rainy day
or keeping it under your mattress. None of these
will keep up with inflation (you lose money).

I would recommend doing lots of research,
find an instrument that can earn you
a good dividend or possibly real estate.
If you're a gambler and are willing to invest
time in research, the stock market offers
some incredible opportunities to blow up that
50k into a monster sum, but the risk is also
very high right now.

[ironwill]

Personally we went with #4 right now, bought at a lower price, now holding it for future........Just hope the realestate market comes back up again.....
We bought in the kootenays also, now have a family living there long term, so far, so good.....SO FAR.....

[physique]

if u look at relaty in a whole, it does the same thing every 5 years. up for 5 years, down for 5 years. it always comes back at a higher price though after its been down.

its by far your best investment opportunity. but paying off your debt isnt a bad idea either.

[O-Train]

VEGAS BABY VEGAS!

I would pay stuff off because I hate owing money.

[warlock]

I have +/- 50k and there are a few options I am pondering and cant seem to make a decision. So I will list the couple and see what some peeps think are good ideas or bad or maybe have some others.

First I want to say the only dept we have is about 30K owing on our truck at a 900 bones a month payment and our house.

1. Put the 50k in some form of RRSP or GIC, with the tax benefits. Get the income tax back and pay the truck off and possibly do some work around the house for renos.

2. Pay off the truck now and put what is left on RRSP or GIC and still get a decent tax return and do the renos on the house. ( i have already put about 30k in RRSPs this year though work.

3. Do the renos and get some of the things done we want done and put the balance on the truck loan.

4. Buy a chunk of property by some lakes in mid BC, and keep for future use before the prices are out reach. And keep blugging away with payment on the truck and house.

5. Leave it sit for a rainy day?

Any help will be appriciated.
Thanks.

downpayment on some property in Rio

rent it year round and it will pay itself

[turboturist]

downpayment on some property in Rio

rent it year round and it will pay itself

Good idea but it scares the shit out of me.... owning property in a foreign country. We dont live there yet, and may not ever, so I hesitate big time with that.

[CanadianIron]

Buy a condo, rent it out, use rent to make payments. Get rich.

[natenator]

Buy a condo, rent it out, use rent to make payments. Get rich.
If only it were that simple...

[waderow]

I would put it into realestate as a revenue property. interest rate is low. get a condo or something thats a fix er up. fix it up. rent it. you wont make any money off of the thing for a while, but it will make for a nice little nest egg later in life

[pseclint]

stockmarket, got a guy that will gauentee somewhere around a min of 6% to 8% on your investment or they dont get paid.... so far he has been giving his guys a return of 15%.... worry free money

[kawikaratekid]

^Ponzi Scheme^ eventually someone won't make money and he will "lose" his job. Than someone else will get hired and make the same guarantee and "lose" his job. Nothing is ever guaranteed in the stock market.

[kawikaratekid]

Pay off debt - the interest that you're losing every year could be applied to your rrsp's or fixing up your house.

Buying property is great because it will go up, it always goes up! You may have to wait it out a little but you'll make money for sure!

Fixing up the house isn't bad either. Depending on the area you live in it may bring significant returns. Talk to someone in real estate to see what will give you the best return.

[CanadianIron]

If only it were that simple...

It actually is, you just need to make sure the rent is higher than the morgage payment amount.

Its easy to talk about, just hard to do. My brother currently owns a house and townhouse. He bought his house with savings and was able to keep his townhouse and get 2 morgages, the rent he collects on his townhouse is more than double the morgage payment amount and once its payed off he should be able to pay down his house in less than half the amortization.

It works, you just have to do it. Its way to easy to blow money on cars/food/cloths.

[Bowlcut]

The ROI of real estate is terribly low.
If you put all 50k into an RRSP you can take the tax refund and put it into a TFSA.

Canadian equities will outperform GIC's by far, and why take a mortgage when there is going to be a bear market in fixed income?

A 200k mortgage on a 250k condo will have a monthly payment of ~$1000 at 3% interest. Add in condo fees, property taxes, plus capital expenditure to maintain the place and you may be looking at an additional $250-$600 a month depending on property taxes. So lets just assume your monthly expenses are $1200 for the moment. How much are you going to to be able to get in rent?
Are you willing to swallow interest rate risk because the only way you can get anything lower than 5% will be variable or fixed for a short time span?
My cousin managed to get 5% fixed at ten years, but that is with ATB and having his dad cosign for him.


Who every thinks property always goes up has no clue what they are talking about and have not been reading the news for the past 3 years. Same goes for those who think stocks always go up, but commodity based equities are going to be the best place to put money at the moment.

[CanadianIron]

I suppose it depends where the OP lives. I know housing prices have crashed in other parts of the country, but with all the foreign invaders it doesnt seem like it will ever happen in Vancouver. I think as long as our economy is the shits, and we see more of this inflation with prices going up etc, the prices of new homes will stay high, I just cant see how prices would go down, that would require things to get cheaper. Does that ever happen?

I had a 180K morgage on my last condo and the monthly payments were $1100 w/ strata and tax. People in my building were renting for $1400-1600. Even if you broke even, you still have someone else making your payments and at the end of the day you can always sell and get your money back. If I wasnt married w/ kids I'd move into a cheap apartment with a roomie and rent out a second condo or buy a place and rent out the second room to a friend or something.

[natenator]

I suppose it depends where the OP lives. I know housing prices have crashed in other parts of the country, but with all the foreign invaders it doesnt seem like it will ever happen in Vancouver. I think as long as our economy is the shits, and we see more of this inflation with prices going up etc, the prices of new homes will stay high, I just cant see how prices would go down, that would require things to get cheaper. Does that ever happen?

I had a 180K morgage on my last condo and the monthly payments were $1100 w/ strata and tax. People in my building were renting for $1400-1600. Even if you broke even, you still have someone else making your payments and at the end of the day you can always sell and get your money back. If I wasnt married w/ kids I'd move into a cheap apartment with a roomie and rent out a second condo or buy a place and rent out the second room to a friend or something.
It already is happening a bit in Vancouver. Wait til the olympics are over and see how fast the housing market takes a shit.

The boom in Vancouver was in part due to the Olympics. Just wait...

[#8]

get advice from a professional investor.

find a hedge fund manager with a good reputation.

[CanadianIron]

It already is happening a bit in Vancouver. Wait til the olympics are over and see how fast the housing market takes a shit.

The boom in Vancouver was in part due to the Olympics. Just wait...

Vancouver has an almost 100% occupancy rate as is, the cost of labour, lumber, concrete, fuel etc would all have to go down to lower building costs. Prices wont drop more than 10% and even if they do, they'll be up again in a few years. I'd put money on that, infact I have 400K on that... :(

[natenator]

Vancouver has an almost 100% occupancy rate as is, the cost of labour, lumber, concrete, fuel etc would all have to go down to lower building costs. Prices wont drop more than 10% and even if they do, they'll be up again in a few years. I'd put money on that, infact I have 400K on that... :(
Those in the mid 80s bet the same thing and lost.

You are delusional. You should learn some economic history...

[Bowlcut]

You folks need to consider the opportunity cost of his money. Say TT gets a 5% annual return on his home when his stocks would be earning him 10%?

Beginning of 1970 the Dow was 800. Average US home was $17k. At the end of 2000 (no 2010 census data yet) average home price was $120k. These numbers have not be adjusted for inflation. Beginning of 2000 the Dow was at 11,500. That is an increase of 1400% without reinvestment of dividends. Return on the home was 700% excluding the thousands of dollars to maintain the property, so in likely fact equities would have return much greater than twice that of buying a house.

The Post was reporting Canadian home values are between 15-35% more than they should be. The reality home prices are only high because of historically record low mortgage rates, and the real estate market is going to suffer when rates revert to their historical trends or higher.

A bear market in bonds means that rates are going to go higher, and with the huge deficits coming within the next decade in the USA the choice will be for outright default of debt or inflation. Either way will send interest rates much higher.

[t-bone]

Those in the mid 80s bet the same thing and lost.

You are delusional. You should learn some economic history...

in vancouver in i think 81 homes dropped by as much as 50% and i think there was another 30% drop in mid 90's. I think in the case of the 90's it took til 2002 to get back to the normal prices. Also its foolish to use current mortgage rates to calculate future home investment earnings.

[CanadianIron]

Those in the mid 80s bet the same thing and lost.

You are delusional. You should learn some economic history...

You're short sighted, Im not suggesting the OP buys a place and looks for quick coin, inflation only works one way. Housing prices will ALWAYS increase over a long enough period of time.

A lot of people would argue that putting your cash into something tangable is the safest way to invest your money, whether it be gold or a house. Its unlikely housing prices will double again like they did in the last 10 years, but its even more unlikely that they'd go down a significant amount.

http://www.bearishnews.com/wp-content/uploads/2009/09/us-inflation-since-1913.jpg

[pseclint]

^Ponzi Scheme^ eventually someone won't make money and he will "lose" his job. Than someone else will get hired and make the same guarantee and "lose" his job. Nothing is ever guaranteed in the stock market.

yea im pretty sure its not........ guy is an investing genius.... can get you in contact with him if you dont believe me

[waderow]

The ROI of real estate is terribly low.
If you put all 50k into an RRSP you can take the tax refund and put it into a TFSA.

Canadian equities will outperform GIC's by far, and why take a mortgage when there is going to be a bear market in fixed income?

A 200k mortgage on a 250k condo will have a monthly payment of ~$1000 at 3% interest. Add in condo fees, property taxes, plus capital expenditure to maintain the place and you may be looking at an additional $250-$600 a month depending on property taxes. So lets just assume your monthly expenses are $1200 for the moment. How much are you going to to be able to get in rent?
Are you willing to swallow interest rate risk because the only way you can get anything lower than 5% will be variable or fixed for a short time span?
My cousin managed to get 5% fixed at ten years, but that is with ATB and having his dad cosign for him.


Who every thinks property always goes up has no clue what they are talking about and have not been reading the news for the past 3 years. Same goes for those who think stocks always go up, but commodity based equities are going to be the best place to put money at the moment.

bro in law has four 150K condos and is getting 1200 per month each for rent. It is a good deal. Most of the self made millionaires I know are real estate and revenue property millionaires

[waderow]

Those in the mid 80s bet the same thing and lost.

You are delusional. You should learn some economic history...

Trudeau is dead. And one day I will take a deuce on his grave.
We will never see the 80's again, or at least Alberta wont I guess.

[natenator]

Trudeau is dead. And one day I will take a deuce on his grave.
We will never see the 80's again, or at least Alberta wont I guess.
You're right, you won't in Alberta and I doubt we will see the likes of the 80's again but we WILL see dramatic increases in mortgage rates.

Vancouver is poised for a large spike in interest rates. I know about 10 people who bought real estate when the Olympics were announced in Vancouver and have since sold off in the last year. These are real estate people and they predict the market evening out once the Olympics are over.

Renting property can be very rewarding but it also has its risks as we've seen just with a few stories on this board. But like everything, no risk... no reward.

[waderow]

You're right, you won't in Alberta and I doubt we will see the likes of the 80's again but we WILL see dramatic increases in mortgage rates.

Vancouver is poised for a large spike in interest rates. I know about 10 people who bought real estate when the Olympics were announced in Vancouver and have since sold off in the last year. These are real estate people and they predict the market evening out once the Olympics are over.

Renting property can be very rewarding but it also has its risks as we've seen just with a few stories on this board. But like everything, no risk... no reward.

dramatic increases....yes..... but to what was considered normal 10 years ago. Not back to the 80's

i can see 6-7%? What do you see it going to?

And I agree with you.... you cant be mortgaged ot the nuts to do this. You need lots of equity.

[natenator]

dramatic increases....yes..... but to what was considered normal 10 years ago. Not back to the 80's

i can see 6-7%? What do you see it going to?

And I agree with you.... you cant be mortgaged ot the nuts to do this. You need lots of equity.
I can see it going to 6%-8% but that is a big problem. There are people who have mortages with rates of 3-4% who can barely afford their current mortgages. They are ****ed once rates go up.

I know 3 people who bought $400K town homes because the bank said they could so they did. They always complain about how broke they are but hey, at least they have a house, for now...

Many people buy to the max of what their bank says they can afford. They do not plan interest rate increases, job losses, etc.

[Bowlcut]

bro in law has four 150K condos and is getting 1200 per month each for rent. It is a good deal. Most of the self made millionaires I know are real estate and revenue property millionaires

Real estate had some great returns in the past, but I doubt it is going to have the same return within the next decade. The Canadian real estate market (and the rest of the western world for that matter), is entirely dependent on mortgage credit. If we had to pay cash like people in Asian countries do then we would not see the elevated home prices that we have now. I genuinely believe that a spike in rates is coming, and that the bear market in bonds will probably last a decade.

Commodities, especially agricultural ones, are going to be the best investment. If the global economy gets better then demand will pick up and so will prices. When this illusory recovery is exposed as a sham then governments will print more money and prices will go up. Americans should be worried more about wealth preservation, and I think many Canadians need to consider that too. Without a pipeline to Kitimat all of that heavy crude will only find a market in the USA.

[ironwill]

It actually is, you just need to make sure the rent is higher than the morgage payment amount.

Its easy to talk about, just hard to do. My brother currently owns a house and townhouse. He bought his house with savings and was able to keep his townhouse and get 2 morgages, the rent he collects on his townhouse is more than double the morgage payment amount and once its payed off he should be able to pay down his house in less than half the amortization.

It works, you just have to do it. Its way to easy to blow money on cars/food/cloths.

dont forget when rent is higher than mtge amnt, the tax man cometh.......
Its good to have a mortgage when renting as the interest is a write off, the renos are a write off, etc......But if you are making to much profit, you may pay at end of yr......

Best scenario, get a decent family on welfare that are good people, yet dont have a good income and you're set.......sounds like an oxymoron, but from what ive heard, its the best scenario, always have your rent and utilities paid for, if they piss you off, you call welfare, done deal big wheel....lol

[clicker666]

If you have 50k you don't need, and a mortgage, put it on the mortgage.

I doubt you will find an investment that will guarantee you the return that paying off that beastie early will provide.

[sobr]

There's a lot of bad advice in this thread. For what it's worth, I'd recommend sitting down with an advisor to discuss your complete financial picture. There's a LOT more to the decision than what's been laid out here. $50k is worth the time and effort to properly plan this out.

[turboturist]

There's a lot of bad advice in this thread. For what it's worth, I'd recommend sitting down with an advisor to discuss your complete financial picture. There's a LOT more to the decision than what's been laid out here. $50k is worth the time and effort to properly plan this out.

Is there any one or certain companies you would recommend? Nice to see you around again man.

[sobr]

Is there any one or certain companies you would recommend? Nice to see you around again man.

This question is like asking - is there one exercise that will give me abs and 20+ inch arms. Your best bet is to find a good financial advisor or buy a broad index ETF.

[guest]

Udachu.

[pseclint]

Udachu.

bahahha those were the days

[lunkhead]

From my perspective, it's a slam dunk.

1. Pay off ALL your debt-- a guaranteed return on your $. Car loan debt is bad debt and should be got rid of ASAP. Loans for investment purposes (leverage) can be "good" debt if used carefully and are often tax deductible to boot.
2. take the remaining funds and put them in a cash equivalent account such that if you were to lose your job or get temporarily disabled for 3-6 months, you could survive = emergency fund. Make sure that you don't dip into it for goodies.
3. the cash that you were using to pay off your truck loan now goes into your RRSP and a TFSA (if you have enough left over after maximizing your RRSP) each month or each quarter, whatever you choose. How you invest that in your RRSP depends on your age, risk tolerance, investment knowledge etc. For most people who are bored by investing, automatically buying a broad based ETF or index fund in regular intervals for dollar cost averaging is the best strategy. Most people are terrible at timing the market so if you buy regularly over the long term, you do well.

One comment about real estate. It's highly illiquid and usually highly leveraged. The leverage is why some people can make a lot money is a short period of time; however, this is the exception to the rule even with very experienced investors. If you make a smart, well informed investment over a 10-30 year time horizon you will probably have a pretty good inflation hedge and that's all that you should expect. If you're very lucky and the market booms just before you sell, all the better.

[thecut]

avoid playing the stock market is the only advice i feel comfortable to give, im a professional trader and i just see, even other pro traders getting burnt, it will be the quickest 50 grand you ever spent

[cyberfitnessguru]

Yes, you can go wrong with real estate.

If you dont know what to do with it, do nothing.

When your ready, the money will be ready for you.

[s.tranger]

i would say pay off your debt right away, then you'll have more cash flow. then worry about what to do with it.