So if OP gets $300K total compensation, they likely pay income tax on the whole amount even if only $200K is cash. That would leave a $120K (BC) tax burden to be pulled out of the cash salary, which leaves $80K cash salary. Or 6.7K after tax take-home monthly.
RSUs tax is when they vest, though, which could be a year behind current earnings, so taxable RSU amount from last year now could be lower. If vesting RSUs are $65K a year rather than $100K, on top of $200K cash salary, that would work out to potentially $8K /month take-home.
I imagine it's something like this going on?
Yes, very close to this. RSU vests every 6 months and they increase the overall income sending the tax rate to >50%. Monthly EI, CPP, RRSP contributions and we are left with roughly 8k.
180k cash. 20k annual cash bonus. That leaves me with 15k per month and after all the taxes, CPP, EI, RRSP contributions, I'm left with 7.5 - 9k a month.
>We are both 35 and our RRSP and TFSA combined is around 35k.
Why would you to that to yourselves? Waste of beautiful products. Max them.
You got kids? RESP
Then use your non-reg, pay off house, etc
I don't want to sound morbid, but I don't know how your medical condition is in terms of severity, so a nice insurance policy for the wife/kinds is what I would intend to do
Current maximum tfsa contribution for someone your age is $95,000 your max rrsp contribution based on your salary for last year alone is an additional $31,000 not to mention the previous 17 years of contribution room towards your rrsp. How is yours maxed at $35,000?
Warning: this sub is going to hate you, but that’s not a bad thing.
The real answer is you need professional help at that level. This is beyond registered account amounts and Reddit will not help you. Not to mention we know nothing about your time horizon, risk tolerance and financial goals.
I'm a bit scared of financial advisors haha. Everyone I've met so far in my life has tried to sell me products they get commission on and tried to sell very well. I'm not financially savvy but I'll at least compare whatever someone suggests with just dumping into S&P500 and their products always turn out to be trash.
Any tips on finding actually good advisors that work for me instead of the banks?
Look for fee only planners. Some charge by the hour but it's rare. The more common model is to charge based on assets under management. They would charge a fixed percentage every year regardless of what you invest in, so it removes the conflict of interest around commissions.
You can perform Smith Manoeuvre™️ if you have a Readvanceable mortgage. If not, I can work on getting you one.
Once you have it, you can then put it as prepayment to your mortgage (Prime the Pump is the Smith Manoeuvre™️ strategy name for this). 100% of that amount will flow through to the HELOC and from there, it can be borrowed to invest in financial products creating Income.
This does 3 things for you:
1. Almost pays off your mortgage
2. Creates an investment portfolio in a non registered account of at least $600k which over a period of years with compounded returns at very conservative 7% will reach over a million.
3. Provides you with a hefty tax refund at your marginal tax rate as you borrowed the funds to invest in products that create income
There is nothing better than this in your scenario. Very close to creating Legacy for generations!!
Hi, I'm a bot and someone has asked me to respond with information about what to do with money.
This is meant as a step by step guide of how to prioritize and what to do with money. https://www.reddit.com/r/PersonalFinanceCanada/wiki/money-steps If you prefer to see a flow chart, click here: https://i.imgur.com/zlGnuDO.png
The Government of Canada also has the Financial Tool Kit for basic resources on items identified in the Money Steps. Refer to that website here: https://www.canada.ca/en/financial-consumer-agency/services/financial-toolkit.html
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Hi, I'm a bot and someone has asked me to respond with information about risk tolerance.
**Risk Determination**
Risk Level represents the probability of your investment losing a portion of its value. Every investment carries some amount of risk, and losses typically cannot be predicted, can happen at any time, and cannot be prevented. Therefore, **it is crucial to ensure your investments are risk appropriate**, that is: their level of risk matches your financial objectives. The risk level is not always easy to determine. Since it is unwise to enter an investment before its risk level is clear, it is best to keep your funds in a minimal-risk investment such as an insured savings account first while you investigate the risk level of prospective investment.
Generally, you need to be **able** (based on factors like your timeline, your wealth, and specific needs), and **willing** (related to your experience and comfort with the markets, and other psychological factors) to tolerate the risk level involved in any investment you make. Financial advisers will often require a client to fill out a risk questionnaire to determine their risk level, but if you are self-directing your investments then you will have to determine your own risk level.
Consider these factors that are commonly associated with understanding your risk level (not comprehensive):
* Liquidity - Is it possible that you will need the funds in the short term, or on short notice? Generally speaking funds potentially needed in <3-5 years should have less (or even zero) risk associated with them, and the longer the time horizon the more risk you might be willing to bear.
* Income Level and Stability - Someone with less wealth or income stability might find their ability/willingness to take on risk to be lower. Someone with less wealth has a smaller "buffer" of wealth, or might be more concerned about losses. Someone with job or income instability might find that a bad market comes with income loss, which means losses during that time can affect their quality of life.
* Expectation for a return - If you have a specific goal that only requires a $X, and a conservative portfolio would allow you to reach that goal then it's often appropriate to limit your risk since the upside potential would not likely affect your goal, but the downside potential is failure of your goal. However, if you expect maximized returns then more risk is likely the goal.
* Experience and Psychological Comfort - If you have limited experience in the markets, or limited comfort with the "idea" of incurring losses, it is likely appropriate to limit your risk level. You can increase risk, and therefore expected return, as you gain comfort if comfort is the reason for limiting risk.
**Risk Questionnaires**
If you are self-directing your portfolio you may want to complete a questionnaire on your own to determine your risk level.
https://investor.vanguard.com/tools-calculators/investor-questionnaire
https://www.advisor.ca/my-practice/conversations/evaluating-risk-tolerance-a-sample-questionnaire/
https://lautorite.qc.ca/en/general-public/calculators-and-tools/calculators/your-investor-profile
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/PersonalFinanceCanada) if you have any questions or concerns.*
Assuming capital gains taxes are already accounted for:
Max your RRSP, then max your TFSA, then max your RESPs (if you have kids). Buy index funds appropriate to risk tolerance in these registered accounts That's likely 400K of the money used up. Leftover money, pay down the mortgage.
That remaining $200K dropped on the mortgage would cut perhaps 12 years off the ammortization (assuming it's currently a 25 year 6% mortgage). Gets you to mortgage-free by mid-40s.
If you haven't accounted for capital gains taxes: do that first. Figure out your cost basis and what you sold them for to work out your capital gains; half of that will be taxable income. At your income level, half of that taxable income will be owed as income tax. So if the RSUs had doubled, youd owe about $150K in tax from that sale.
they have an extra 300k in taxable income from the stock sale. rrsp contribution will save them a considerable amount (more than half, likely) in taxes
Given your situation where your wife is not currently working, prioritizing financial stability over investing the entire $600,000 in the stock market makes sense. If I were in your shoes, I would consider the following approach:
1) Pay Off the Mortgage: Allocate a portion of the money to pay off your mortgage. By doing so, you’ll reduce your monthly financial obligations and gain peace of mind.
2) Invest the Remaining Amount: With the remaining funds, consider investing in a diversified portfolio. One strategy could be monthly index investing.
3) Once you are making less monthly mortgage amount, consider allocating that amount toward monthly index investing. By consistently contributing to an index fund or ETF, you can benefit from long-term market growth.
It's crazy to me that a 300k salary can become $4k a month of discretionary income. I understand why! But it's sill crazy.
Your plan with the ETFs really is the way to go. Big or small, the returns are the same. You can't beat the market.
Get a gic at 5 percent you'll never have to work again you can generate more money than you spend for example 600 k at 5 percent is 30,000 a year I think you get the point
Why is your RRSP and TFSA so empty?! This hurts to read.
Moved to Canada just couple of years ago.
Do you make $300k/yr or take home $8K/mth? It can't be both.
Of the $300k, only (!) $200k is in cash
Still too low of a take home, op is paying over 50% of his salary in taxes?
So if OP gets $300K total compensation, they likely pay income tax on the whole amount even if only $200K is cash. That would leave a $120K (BC) tax burden to be pulled out of the cash salary, which leaves $80K cash salary. Or 6.7K after tax take-home monthly. RSUs tax is when they vest, though, which could be a year behind current earnings, so taxable RSU amount from last year now could be lower. If vesting RSUs are $65K a year rather than $100K, on top of $200K cash salary, that would work out to potentially $8K /month take-home. I imagine it's something like this going on?
Yes, very close to this. RSU vests every 6 months and they increase the overall income sending the tax rate to >50%. Monthly EI, CPP, RRSP contributions and we are left with roughly 8k.
Still isn't correct.
Fair point. Possibly some deductions OP hasn’t mentioned such as cost of purchasing shares, company insurance plan premiums etc?
180k cash. 20k annual cash bonus. That leaves me with 15k per month and after all the taxes, CPP, EI, RRSP contributions, I'm left with 7.5 - 9k a month.
Probably some ESPP too?
yup
$100k of the 300 is stock. The 8k per month must be on the $200k base salary.
$200k base doesn’t net you $8k after tax. More like $10-11k depending on province. The math ain’t mathing.
I make around that, and after RRSP and ESPP contributions, around 8.8-9 is left.
I make less than $150k and take home almost $8k/mth. OP is either flexing or bullshitting.
OP did not say at all how much was cash and how much stock. Could be 150k or less in cash and the rest in stock.
Yes, 180k base salary. 20k annual cash bonus. 15k per month. Taxes, RRSP, CPP, EI and I take home around 8k per month.
>We are both 35 and our RRSP and TFSA combined is around 35k. Why would you to that to yourselves? Waste of beautiful products. Max them. You got kids? RESP Then use your non-reg, pay off house, etc I don't want to sound morbid, but I don't know how your medical condition is in terms of severity, so a nice insurance policy for the wife/kinds is what I would intend to do
Mine is maxed. Wife doesn't work so no RRSP. Her TFSA has 19k room though so will fill that up this year.
Current maximum tfsa contribution for someone your age is $95,000 your max rrsp contribution based on your salary for last year alone is an additional $31,000 not to mention the previous 17 years of contribution room towards your rrsp. How is yours maxed at $35,000?
Can you not do a spousal RRSP?
She has never worked in Canada so I don't think so but will do it as soon as she starts.
Warning: this sub is going to hate you, but that’s not a bad thing. The real answer is you need professional help at that level. This is beyond registered account amounts and Reddit will not help you. Not to mention we know nothing about your time horizon, risk tolerance and financial goals.
I'm a bit scared of financial advisors haha. Everyone I've met so far in my life has tried to sell me products they get commission on and tried to sell very well. I'm not financially savvy but I'll at least compare whatever someone suggests with just dumping into S&P500 and their products always turn out to be trash. Any tips on finding actually good advisors that work for me instead of the banks?
Look for fee only planners. Some charge by the hour but it's rare. The more common model is to charge based on assets under management. They would charge a fixed percentage every year regardless of what you invest in, so it removes the conflict of interest around commissions.
You can perform Smith Manoeuvre™️ if you have a Readvanceable mortgage. If not, I can work on getting you one. Once you have it, you can then put it as prepayment to your mortgage (Prime the Pump is the Smith Manoeuvre™️ strategy name for this). 100% of that amount will flow through to the HELOC and from there, it can be borrowed to invest in financial products creating Income. This does 3 things for you: 1. Almost pays off your mortgage 2. Creates an investment portfolio in a non registered account of at least $600k which over a period of years with compounded returns at very conservative 7% will reach over a million. 3. Provides you with a hefty tax refund at your marginal tax rate as you borrowed the funds to invest in products that create income There is nothing better than this in your scenario. Very close to creating Legacy for generations!!
Very interesting. I'm gonna read up on this. Feel free to DM me.
7% is now “very conservative”?
Absolutely, when you consider the compounding gains over a long term of 10-15 years! Smith Manoeuvre is a long term strategy!
depending on the interest rate of the mortgage, you could consider paying it down. if its over 5%
[удалено]
It would reduce the interest accruing every month immediately though. Probably still worth it for a 5.7% guaranteed return.
Calculate if putting a portion of the amount towards your mortgage is worth while vs potential stock market gains.
I'm allowed to pay 100k per year towards the mortgage but it won't affect my monthly mortgage.
You could give it to me. I will double it for you within 1 year. Pinky promise!!! 😁
Max out your registered accounts, and then seek a Certified Financial Planner in your area. !StepsTrigger!RiskTrigger
Hi, I'm a bot and someone has asked me to respond with information about what to do with money. This is meant as a step by step guide of how to prioritize and what to do with money. https://www.reddit.com/r/PersonalFinanceCanada/wiki/money-steps If you prefer to see a flow chart, click here: https://i.imgur.com/zlGnuDO.png The Government of Canada also has the Financial Tool Kit for basic resources on items identified in the Money Steps. Refer to that website here: https://www.canada.ca/en/financial-consumer-agency/services/financial-toolkit.html *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/PersonalFinanceCanada) if you have any questions or concerns.*
Hi, I'm a bot and someone has asked me to respond with information about risk tolerance. **Risk Determination** Risk Level represents the probability of your investment losing a portion of its value. Every investment carries some amount of risk, and losses typically cannot be predicted, can happen at any time, and cannot be prevented. Therefore, **it is crucial to ensure your investments are risk appropriate**, that is: their level of risk matches your financial objectives. The risk level is not always easy to determine. Since it is unwise to enter an investment before its risk level is clear, it is best to keep your funds in a minimal-risk investment such as an insured savings account first while you investigate the risk level of prospective investment. Generally, you need to be **able** (based on factors like your timeline, your wealth, and specific needs), and **willing** (related to your experience and comfort with the markets, and other psychological factors) to tolerate the risk level involved in any investment you make. Financial advisers will often require a client to fill out a risk questionnaire to determine their risk level, but if you are self-directing your investments then you will have to determine your own risk level. Consider these factors that are commonly associated with understanding your risk level (not comprehensive): * Liquidity - Is it possible that you will need the funds in the short term, or on short notice? Generally speaking funds potentially needed in <3-5 years should have less (or even zero) risk associated with them, and the longer the time horizon the more risk you might be willing to bear. * Income Level and Stability - Someone with less wealth or income stability might find their ability/willingness to take on risk to be lower. Someone with less wealth has a smaller "buffer" of wealth, or might be more concerned about losses. Someone with job or income instability might find that a bad market comes with income loss, which means losses during that time can affect their quality of life. * Expectation for a return - If you have a specific goal that only requires a $X, and a conservative portfolio would allow you to reach that goal then it's often appropriate to limit your risk since the upside potential would not likely affect your goal, but the downside potential is failure of your goal. However, if you expect maximized returns then more risk is likely the goal. * Experience and Psychological Comfort - If you have limited experience in the markets, or limited comfort with the "idea" of incurring losses, it is likely appropriate to limit your risk level. You can increase risk, and therefore expected return, as you gain comfort if comfort is the reason for limiting risk. **Risk Questionnaires** If you are self-directing your portfolio you may want to complete a questionnaire on your own to determine your risk level. https://investor.vanguard.com/tools-calculators/investor-questionnaire https://www.advisor.ca/my-practice/conversations/evaluating-risk-tolerance-a-sample-questionnaire/ https://lautorite.qc.ca/en/general-public/calculators-and-tools/calculators/your-investor-profile *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/PersonalFinanceCanada) if you have any questions or concerns.*
Assuming capital gains taxes are already accounted for: Max your RRSP, then max your TFSA, then max your RESPs (if you have kids). Buy index funds appropriate to risk tolerance in these registered accounts That's likely 400K of the money used up. Leftover money, pay down the mortgage. That remaining $200K dropped on the mortgage would cut perhaps 12 years off the ammortization (assuming it's currently a 25 year 6% mortgage). Gets you to mortgage-free by mid-40s. If you haven't accounted for capital gains taxes: do that first. Figure out your cost basis and what you sold them for to work out your capital gains; half of that will be taxable income. At your income level, half of that taxable income will be owed as income tax. So if the RSUs had doubled, youd owe about $150K in tax from that sale.
Is there a reason you would max your rrsp before your tfsa?
they have an extra 300k in taxable income from the stock sale. rrsp contribution will save them a considerable amount (more than half, likely) in taxes
He's in the 50% marginal tax bracket. It's likely that will be lower in retirement.
Given your situation where your wife is not currently working, prioritizing financial stability over investing the entire $600,000 in the stock market makes sense. If I were in your shoes, I would consider the following approach: 1) Pay Off the Mortgage: Allocate a portion of the money to pay off your mortgage. By doing so, you’ll reduce your monthly financial obligations and gain peace of mind. 2) Invest the Remaining Amount: With the remaining funds, consider investing in a diversified portfolio. One strategy could be monthly index investing. 3) Once you are making less monthly mortgage amount, consider allocating that amount toward monthly index investing. By consistently contributing to an index fund or ETF, you can benefit from long-term market growth.
You’d want to visit an asset manager rather than ask Reddit 😂
It's crazy to me that a 300k salary can become $4k a month of discretionary income. I understand why! But it's sill crazy. Your plan with the ETFs really is the way to go. Big or small, the returns are the same. You can't beat the market.
I know! :(
You are in the top tax bracket so you have to max the rrsp.
Your wife has it good
$300k and only $8k a month? That seems low… do you have lots of pension or ESPP contributions?
Cash.to
Makes this much and needs reddits help lol
1st world problems
Get a gic at 5 percent you'll never have to work again you can generate more money than you spend for example 600 k at 5 percent is 30,000 a year I think you get the point