So I did have a nice chat with my neighbourhood banker last night. It was refreshing to sit in that office and not feel like Oliver asking for another bowl of gruel (AKA: a bank loan).
After talking things over I did setup two different accounts, one is a RRSP and the other is a TFSA. The RRSP is for retirement and the TFSA is my Long-Term Savings account.
The RRSP and TFSA accounts are with the investment arm of the bank. As I understand it there are a few different options available to me in each account. So I may mix it up a bit and put a bulk amount in a monthly GIC and another amount in a High Interest Savings Account or Mutual Fund.
I was concerned with regards to the TFSA, as we have all heard about the $5000.00 or $10,000.00 cap on it. I thought, what was the point of that, as I want to save more money than that. Well, what that refers to (as I understand it) is that since the inception of this program each person can put a maximum amount of the $5000.00 or $10,000.00 (whatever the actual cap is) into it. So, for me that means the cap is up around $50,000.00 . . . I’m good with that.
The TFSA is a Tax Free Savings Account, but what does that mean and how does it work? Well, in a nutshell you don’t get a tax break for putting money into it, like you do with an RRSP. What you do get a tax break on is any money that the money in it makes. So that $50.00 you make over ten years on your $50,000.00 is tax free, woo hoo.
I am not expecting to make much on this, as the rates are down near 0.75%, but at least the money is safe and it is out of my hands. Taking care of the principle as I save up to pay bills off is what is important for me.
It will apparently take a few days to get this setup, so by Friday or perhaps Monday I should receive a notice that the accounts are setup. Then I will be able to begin my foray into the world of investing, albeit conservatively and with baby steps.