Dear Barb: I am a thirty-six-year-old single woman and I am just starting to think about investing for retirement. I am also planning to save for a house that, God willing, I intend to purchase in the next five to ten years. I know I am a bit late in doing all this. I want to do it right, so that I do not waste any more time and money on trivial get-rich-quick schemes, of which I have fallen victim to in the past. What kind of investment advice would you give someone like me?
SN – Elliot Lake
Hi SN, what a great question. It is never too late to start saving for retirement. There are several things you can do to get started. However, I am limited in how much information I can provide.
I suggest you begin by preparing a budget. For the next couple of months record your actual spending habits and compare this to your budget. This information will help you to determine how much you will be able to comfortably save. Once you have established a monthly amount that you will be able to contribute to a Registered Retirement Savings Plan (RRSP), you can plan for your future.
You said your goal is to buy a house within the next five to ten years. You may be able to get your down payment out of your RRSP account by using the Home Buyer’s Plan. This money will have to be paid back into your RRSP within a 15-year period. This means that each year you will have to repay 1/15th of the total amount you withdrew until the full amount is paid back.
Of course, to be able to do this you will have to have saved enough in your RRSP. Once you determine how much you want to spend for a house, you can set a goal to have the required amount saved in your RRSP in time for when you are ready to purchase your home. You do not mention whether you have already begun contributing to an RRSP.
To be able to qualify for the Home Buyer’s Plan, you have to be a first-time homebuyer. As well, there are other conditions you need to meet in order to take advantage of this plan. You can find additional information about the Home Buyer’s Plan and RRSPs through the Canada Revenue Agency website located at http://www.cra-arc.gc.ca
Mostly importantly, I would suggest you meet with someone knowledgeable in these matters, such as a Certified Financial Advisor. Most banks offer the services of a qualified Financial Advisor free of change to their clients. As well, you can find an independent Financial Advisor in your area through the Financial Advisors Association of Canada website located at http://www.advocis.ca.
Make sure the person you choose is a Certified Financial Planner, which means they have a CFP designation. The CFP designation is an internationally recognized standard for financial planners. There will likely be a fee for this service. When meeting with a CFA, you can discuss your goals, both short and long term. CFAs are able to work out projections and build scenarios to give you an idea of where you will be in five years and if you will be able to meet your long-term goals.
Best of luck in the future.
E-mail your questions to firstname.lastname@example.org. Some submissions may be edited for length or to protect confidentiality: your real name and location will never be printed. This column is for entertainment only. The author is not a professional counsellor and this column is not intended to take the place of professional advice.