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comment by madmatt112
madmatt112  ·  3168 days ago  ·  link  ·    ·  parent  ·  post: What % of your take home pay do you invest?

What sort of ideas have you had for investments?





BrainBurner  ·  3167 days ago  ·  link  ·  

Pretty rudimentary ideas: throwing some money into an S&P 500 index fund (probably vanguard), and starting a Roth IRA.

madmatt112  ·  3165 days ago  ·  link  ·  

BrainBurner, I love index funds - at this point in my investing career I'd have to invest (hehe) a ton of time and energy into value investing before I'd see returns that could be reasonably relied on to be an index fund... So for now that's all I roll with.

I'm in Canada so I've not learned what a Roth IRA or 401(k) are yet, but I'll get there :)

Quick ELI5 on the Roth? Is it a wrapper that grants tax benefits to whatever vehicle is inside of it?

BrainBurner  ·  3163 days ago  ·  link  ·  

Under a Roth IRA you're taxed when you contribute to the fund, but when you withdraw your funds it is untaxed. It makes sense for those who believe they'll be facing higher tax rates in the future; I'm young and expect to have substantial growth as a professional, so it makes sense. The yearly contribution max is $5,500 right now. Not sure what the average rate of return is.

madmatt112  ·  3162 days ago  ·  link  ·  

Interesting, the Roth sounds identical to the Canadian Tax-Free Savings Account (TFSA), which has a CAD$5,000 maximum yearly contribution, and exempts all earnings from tax.

However, more or less anything can be placed in the TFSA umbrella/wrapper/container - stocks, bonds, cash, bank accounts, ETFs, etc etc etc.

Also, that 5k/yr limit is retroactive to 2009, so I've got a good amount of contribution room waiting for me when it's time to invest. :D Thanks Government of Canada!