What are good Monthly Income Funds? [Canada]
@sharam - big question.  I am going to answer part of it, but not as directly as you might like. You mention 4-6 cents per unit per month, but fail to give a unit price, so it is hard to tell how much return you are really looking for. Given the amount you have to invest, depending on your time horizon, you will do much better outside of mutual funds.  Many funds in this category have fees in the 2% range.  You actually have enough money to have a diversified portfolio on your own, without recourse to funds. If you want to use a fund-like product, I encourage you to look at well established ETFs (Exchange Traded Funds).  They are basically like mutual funds that trade on the open stock market.  One good example in this category is iShares XDV Good Luck
The formula you're looking for is  Thus, from 3% p.a. you get ca. 0.247% per month. However, as you see 0.25% is a good approximation (generally, small rates give good approximation). "If you aren't already contributing the maximum allowable amount, by all means do so. If you are already contributing the maximum, it doesn't matter that much when you make those contributions. Making fixed monthly contributions is done mostly for budgeting reasons. Most of us can't predict fund performance well enough to optimize our contributions (by which I mean, contributing more early if you think the market is going up, but waiting if you think it will go down, following the ""buy low"" strategy). As for employer matching, check with your company to see how they compute matches. They may match contributions for the year, even if those matching funds are only paid up to a maximum per paycheck. (For example, if you contribute 200% of the match for the first 6 months, then contribute nothing for the remaining 6 months, you may still receive the same matching funds per pay period as if you were contributing 100% throughout the year.)" "Most online ""high yield"" savings accounts are paying just above 1%.  That would be 1.05% for American Express personal savings, or 1.15% for Synchrony Bank‎ (currently). Depending on the length of the season, you might want to work in some CD's.  Six months CDs can be had at 1.2%, and 9 month at 1.25%.  So if you know you won't need some of your earnings for 9 months, you could earn 1.25% on your money. However, I would proceed with caution on anything other than the high yield savings account.  With your one friend having such a low emergency fund, there is very little room for error.  Perhaps until that amount is built up into something significant, it is just best to stick with the online savings. Of course, one solution would be to find a way to create income during the off season.  That will go a long way into helping one build wealth." Assuming this will be a taxable account (since you want to pull income off of it, although this will lower wealth growth), you could open a brokerage account at some place like Vanguard (free on their ETFs) and look at tax efficient index fund ETFs (such as total stock market or their 500 fund), including  some international (foreign tax credit is nice in taxable) and muni funds for the (tax advantaged) income, although CDs are likely better for the income at this point. There are two parts in this 1042-S form. The income/dividends go into the Canada T5 form. There will be credit if 1042-S has held money already, so use T2209 to report too. "I've never invested in penny stocks. My #1 investing rule, buy what you know and use.  People get burned because they hear about the next big thing, go invest! to just end up losing everything because they have no clue in what they're investing in. From what I've found, until you have minimum of $5k to invest, put everything in a single investment. The reason for this, as others have mentioned, is that commissions eat up just about all your profits.  My opinion, don't put it in a bond, returns are garbage right now - however they are ""safe"". Because this is $1000 we're talking about and not your life savings, put it in a equity like a stock to try and maximize your return. I aim for 15% returns on stocks and can generally achieve 10-15% consistently. The problem is when you get greedy and keep thinking it will go above once you're at 10-15%. Sell it. Sell it right away :) If it drops down -15% you have to be willing to accept that risk. The nice thing is that you can wait it out. I try to put a 3 month time frame on things I buy to make money.  Once you start getting a more sizable chunk of money to play around with you should start to diversify. In Canada at least, once you have a trading account with a decent size investment the commissions get reduced to like $10 a trade. With your consistent 10% returns and additional savings you'll start to build up your portfolio. Keep at it and best of luck!" There are some great answers on this site similar to what you asked, with either a non-jurisdictional or a US-centric focus. I would read those answers as well to give yourself more points of view on early investing. There are a few differences between Canada and the US from an investing perspective that you should also then consider, namely tax rules, healthcare, and education. I'll get Healthcare and Education out of the way quickly. Just note the difference in perspective in Canada of having government healthcare; putting money into health-savings plans or focusing on insurance as a workplace benefit is not a key motivating factor, but more a 'nice-to-have'. For education, it is more common in Canada for a student to either pay for school while working summer / part-time jobs, or at least taking on manageable levels of debt [because it is typically not quite as expensive as private colleges in the US]. There is still somewhat of a culture of saving for your child's education here, but it is not as much of a necessity as it may be in the US. From an investing perspective, I will quickly note some common [though not universal] general advice, before getting Canadian specific. I have blatantly stolen the meat of this section from Ben Miller's great answer here: Oversimplify it for me: the correct order of investing Once you have a solid financial footing, some peculiarities of Canadian investing are below. For all the tax-specific plans I'm about to mention, note that the banks do a very good job here of tricking you into believing they are complex, and that you need your hand to be held. I have gotten some criminally bad tax advice from banking reps, so at the risk of sounding prejudiced, I recommend that you learn everything you can beforehand, and only go into your bank when you already know the right answer. The 'account types' themselves just involve a few pages of paperwork to open, and the banks will often do that for free. They make up their fees in offering investment types that earn them management fees once the accounts are created. Be sure to separate the investments (stocks vs bonds etc.) vs the investment vehicles. Canada has 'Tax Free Savings Accounts', where you can contribute a certain amount of money every year, and invest in just about anything you want, from bonds to stocks to mutual funds. Any Income you earn in this account is completely tax free. You can withdraw these investments any time you want, but you can't re-contribute until January 1st of next year. ie: you invest $5k today in stocks held in a TFSA, and they grow to $6k. You withdraw $6k in July. No tax is involved. On January 1st next year, you can re-contribute a new $6K, and also any additional amounts added to your total limit annually. TFSA's are good for short-term liquid investments. If you don't know for sure when you'll need the money, putting it in a TFSA saves you some tax, but doesn't commit you to any specific plan of action. Registered Retirement Savings Plans allow you to contribute money based on your employment income accrued over your lifetime in Canada. The contributions are deducted from your taxable income in the year you make them. When you withdraw money from your RRSP, the amount you withdraw gets added as additional income in that year. ie: you invest $5k today in stocks held in an RRSP, and get a $5k deduction from your taxable income this year. The investments grow to $6k. You withdraw $6k next year. Your taxable income increases by $6k [note that if the investments were held 'normally' {outside of an RRSP}, you would have a taxable gain of only 50% of the total gain; but withdrawing the amount from your RRSP makes the gain 100% taxable]. On January 1st next year, you CANNOT recontribute this amount. Once withdrawn, it cannot be recontributed [except for below items]. RRSP's are good for long-term investing for retirement. There are a few factors at play here: (1) you get an immediate tax deduction, thus increasing the original size of investment by deferring tax to the withdrawal date; (2) your investments compound tax-free [you only pay tax at the end when you withdraw, not annually on earnings]; and (3) many people expect that they will have a lower tax-rate when they retire, than they do today. Some warnings about RRSP's: (1) They are less liquid than TFSA's; you can't put money in, take it out, and put it in again. In general, when you take it out, it's out, and therefore useless unless you leave it in for a long time; (2) Income gets re-characterized to be fully taxable [no dividend tax credits, no reduced capital gains tax rate]; and (3) There is no guarantee that your tax rate on retirement will be less than today. If you contribute only when your tax rate is in the top bracket, then this is a good bet, but even still, in 30 years, tax rates might rise by 20% [who knows?], meaning you could end up paying more tax on the back-end, than you saved in the short term. Home Buyer Plan RRSP withdrawals My single favourite piece of advice for young Canadians is this: if you contribute to an RRSP at least 3 months before you make a down payment on your first house, you can withdraw up to $25k from your RRSP without paying tax! to use for the down payment. Then over the next ~10 years, you need to recontribute money back to your RRSP, and you will ultimately be taxed when you finally take the money out at retirement. This means that contributing up to 25k to an RRSP can multiply your savings available for a down payment, by the amount of your tax rate. So if you make ~60k, you'll save ~35% on your 25k deposited, turning your down payment into $33,750. Getting immediate access to the tax savings while also having access to the cash for a downpayment, makes the Home Buyer Plan a solid way to make the most out of your RRSP, as long as one of your near-term goals is to own your own home. Registered Pension Plans are even less liquid than RRSPs. Tax-wise, they basically work the same: you get a deduction in the year you contribute, and are taxed when you withdraw. The big difference is that there are rules on when you are allowed to withdraw: only in retirement [barring specific circumstances]. Typically your employer's matching program (if you have one) will be inside of an RPP. Note that RPP's and RRSP's reduce your taxes on your employment paycheques immediately, if you contribute through a work program. That means you get the tax savings during the year, instead of all at once a year later on April 30th. *Note that I have attempted at all times to keep my advice current with applicable tax legislation, but I do not guarantee accuracy. Research these things yourself because I may have missed something relevant to your situation, I may be just plain wrong, and tax law may have changed since I wrote this to when you read it. "I think the real problem here is dealing with the variable income. The envelope solution suggests the problem is that your brother doesn't have the discipline to avoid spending all his money immediately, but maybe that's not it. Maybe he could regulate his expenses just fine, but with such a variable income, he can't settle into a ""normal"" spending pattern. Without any savings, any budget would have to be based on the worst possible income for a month. This isn't a great: it means a poor quality of life. And what do you do with the extra money in the better-than-worst months? While it's easy to say ""plan for the worst, then when it's better, save that money"", that's just not going to happen. No one will want to live at their worst-case standard of living all the time. Someone would have to be a real miser to have the discipline to not use that extra money for something. You can say to save it for emergencies or unexpected events, but there's always a way to rationalize spending it. ""I'm a musician, so this new guitar is a necessary business expense!"" Or maybe the car is broken. Surely this is a necessary expense! But, do you buy a $1000 car or a $20000 car? There's always a way to rationalize what's necessary, but it doesn't change financial reality. With a highly variable income, he will need some cash saved up to fill in the bad months, which is replenished in the good months. For success, you need a reasonable plan for making that happen: one that includes provisions for spending it other than ""please try not to spend it"". I would suggest tracking income accurately for several months. Then you will have a real number (not a guess) of what an average month is. Then, you can budget on that. You will also have real numbers that allow you to calculate how long the bad stretches are, and thus determine how much cash reserve is necessary to make the odds of going broke in a bad period unlikely. Having that, you can make a budget based on average income, which should have some allowance for enjoying life. Of course initially the cash reserve doesn't exist, but knowing exactly what will happen when it does provides a good motivation for building the reserve rather than spending it today. Knowing that the budget includes rules for spending the reserves reduces the incentive to cheat. Of course, the eventual budget should also include provisions for long term savings for retirement, medical expenses, car maintenance, etc. You can do the envelope thing if that's helpful. The point here is to solve the problem of the variable income, so you can have an average income that doesn't result in a budget that delivers a soul crushing decrease in quality of living." I think small sums invested regularly over long-term can do good for you, things to consider:  I would go with an index fund and contribute there there regularly. Disclaimer: I am not Canadian and have no experience with their laws and regulations. There really aren't any safe short term investment options at the moment (with interest rates being close to zero). So, just put the money aside you will need for the car and the computer, maybe on a callable savings account to make at least a few Dollars. Do not take out any loans, it is very unlikely you will earn more than the cost of the loan. You didn't say how much will be left but, unfortunately, it really is not much to go on anyway. Considering that you seem to have enough income to cover your expenses, you could transfer the rest to your RRSP, invest and just forget about it. I suggest to follow this rule of thumb: the growth portion of your portfolio, which for you means equities, should be directly related to the number of years you won't need to touch these funds. 1 year, 0 equity. 2 years, 10%, 3 years, 20%, and so on. What's not in equities, you could put in short term bonds, meaning an average duration of about 3 years. Needless to say, single stocks/bonds are out of question, ideally you can find 2 ETFs, one for stocks and one for bonds, respectively. However, if there is any possibility you did not mention that you could suddenly depend on this money, you have to keep your equity exposure, and thus your potential earnings, low. Just a humble thought: i really don't know your specific situation, my apologies if I'm out of line. Often disability means that you are not capable of doing one particular thing anymore, i.e. work physically. Just maybe you would still be capable to do some other type of work, maybe even from the comfort of your home, that would allow you to generate a certain income (and also keep you busy).  I hope this helps. Good luck. How's your savings and emergency fund? Everyone should have an emergency fund that will last them 6 months, and the goal should be two years' worth.  This should be in an easily accessible account, such as a savings or money market account at your bank (you could consider CDs, but unless you're laddering them there will be penalties to get at the money). Once you've got 6 months' worth saved, the next thing to focus on is a tax advantaged retirement account.  Only when you've maxed out your contributions (and the tax benefits) should you consider other investments.  After all, those tax benefits are free money from Uncle Sam :) "Defined benefit pensions are generally seen as valuable, and hard to replace by investing on your own. So my default assumption would be to keep that pension, unless you think there's a significant risk the pension fund will become insolvent, in which case the earlier you can get out the better. Obviously, you need to look at the numbers. What is a realistic return you could get by investing that 115K? To compare like with like, what ""real"" investment returns (after subtracting inflation) are needed for it to provide you with $10800 income/year after age 60? Also, consider that the defined benefit insulates you from multiple kinds of risk: Remember that most of your assets are outside the pension and subject to all these risks already. Do you want to add to that risk by taking this money out of your pension? One intermediate strategy to look at - again for the purposes of comparison - is to take the money now, invest it for 10 years without withdrawing anything, then buy an annuity at age 60. If you're single, Canadian annuity rates for age 60 appear to be between 4-5% without index linking - it may not even be possible to get an index-linked annuity. Even without the index-linking you'd need to grow the $115K to about $240K in 10 years, implying taking enough risks to get a return of 7.6% per year, and you wouldn't have index-linking so your income would gradually drop in real terms." First--and I'm only repeating what has been said already--roboadvisors are a great way to avoid paying high MERs and still not have to do much yourself. The Canadian Couch Potato method is great IF you are disciplined and spend the time every few months to regularly re-balance your portfolio. However, any savings you gain in low MERs is going to very likely be lost if you aren't re-balancing or if you aren't patient and disciplined in your investing. For that reason, the Couch Potato way isn't appropriate for 97% of the general population in my opinion. But if you are reading this, you probably already aren't a member of the general population. For myself, life seems always too busy and I've got a kid on the way. I see a huge value in using a robo-advisor (or alternatively Tangerine) and saving time in my day. The next question, which robo-advisor is best? I did a bunch of research here and my conclusion is that they are all fairly similar. My final three came down to Wealthbar/Wealthsimple/NestWeatlh. Price structures vary, but minus a few dollars here or there, there isn't a lot of difference in costs. What made WealthSimple stick out was that they provide some options for US citizens that help me prevent tax headaches. They also got back to me by email with really detailed answers when I had questions, which was really appreciated. Their site and monthly updates are minimalist and intuitive to navigate. Great user experience all around (I do web design myself). My gut feeling is that they have their act together and will stick around as a company for a long while. "I would say yes: it's worth building additional retirement savings on top of a defined benefit pension plan (plans that pay set annual income).  Here are a couple of reasons: Don't put all your eggs in one basket.  While OTPP is probably in good shape, things can and do happen to pension plans.  While there is a provincial system in place to guarantee some of your pension income ($1000/mo) if your plan goes bust, your benefits are not 100% guaranteed. Defined benefit pension plans are designed to provide recurring annual income, like your paycheck when you are employed.  You can't ""take more out"" from your defined benefit pension plan when an emergency comes up.  Whereas, your RRSP (and eventually RRIF, in retirement) are accounts from which you can take out extra in any given year, if necessary. That being said, Canada Revenue Agency (CRA) won't let you save as much in your RRSP as other people who don't have pension plans: Normally, individuals in Canada are entitled to save 18% of their earned income, up to a limit ($21000 in 2009) in an RRSP each year.  However, to level the playing field, individuals who are in a pension plan get a ""Pension Adjustment"" (PA) number on their T4 which reduces their available RRSP contribution room.  Otherwise, they'd be able to tax-shelter more income for retirement than others. So, I would suggest if you have the RRSP room, consider using it.  I'd also suggest you look at a Tax Free Savings Account (TFSA), especially if you don't have much RRSP room due to the pension adjustment.  If you're not sure whether to use an RRSP or a TFSA, consider both." "The primary tax-sheltered investing vehicles in Canada include: The RRSP. You can contribute up to 18% of your prior year's earned income, up to a limit ($24,930 in 2015, plus past unused contribution allowance) and receive an income tax deduction for your contributions. In an RRSP, investments grow on a tax-deferred basis. No tax is due until you begin withdrawals. When you withdraw funds, the withdrawn amount will be taxed at marginal income tax rates in effect at that time. The RRSP is similar to the U.S. ""traditional"" IRA, being an individual account with pre-tax contributions, tax-deferred growth, and ordinary tax rates applied to withdrawals. Yet, RRSPs have contribution limits higher than IRAs; higher, even, than U.S. 401(k) employee contribution limits. But, the RRSP is dissimilar to the IRA and 401(k) since an individual's annual contribution allowance isn't use-it-or-lose-it—unused allowance accumulates. The TFSA. Once you turn 18, you can put in up to $5,500 each year, irrespective of earned income. Like the RRSP, contribution room accumulates. If you were 18 in 2009 (when TFSAs were introduced) you'd be able to contribute $36,500 if you'd never contributed to one before. Unlike the RRSP, contributions to a TFSA are made on an after-tax basis and you pay no tax when you withdraw money. The post-tax nature of the TFSA and completely tax-free withdrawals makes them comparable to Roth-type accounts in the U.S.; i.e. while you won't get a tax deduction for contributing, you won't pay tax on earnings when withdrawn. Yet, unlike U.S. Roth-type accounts, you are not required to use the TFSA strictly for retirement savings—there is no penalty for pre-retirement withdrawal of TFSA funds. There are also employer-sponsored defined benefit (DB) and defined contribution (DC) retirement pension plans. Generally, employees who participate in these kinds of plans have their annual RRSP contribution limits reduced. I won't comment on these kinds of plans other than to say they exist and if your employer has one, check it out—many employees lose out on free money by not participating. The under-appreciated RESP. Typically used for education savings. A lifetime $50,000 contribution limit per beneficiary, and you can put that all in at once if you're not concerned about maximizing grants (see below). No tax deduction for contributions, but investments grow on a tax-deferred basis. Original contributions can be withdrawn tax-free. Qualified educational withdrawals of earnings are taxed as regular income in the hands of the beneficiary. An RESP beneficiary is typically a child, and in a child's case the Canadian federal government provides matching grant money (called CESG) of 20% on the first $2500 contributed each year, up to age 18, to a lifetime maximum of $7200 per beneficiary. Grant money is subject to additional conditions for withdrawal. While RESPs are typically used to save for a child's future education, there's nothing stopping an adult from opening an RESP for himself. If you've never had one, you can deposit $50,000 of after-tax money to grow on a tax-deferred basis for up to 36 years ... as far as I understand. An adult RESP will not qualify for CESG. Moreover, if you use the RESP strictly as a tax shelter and don't make qualified educational withdrawals when the time comes, your original contributions still come out free of tax but you'll pay ordinary income tax plus 20% additional tax on the earnings portion. That's the ""catch""*. *However, if at that time you have accumulated sufficient RRSP contribution room, you may move up to $50,000 of your RESP earnings into your RRSP without any tax consequences (i.e. also avoiding the 20% additional tax) at time of transfer. Perhaps there's something above you haven't considered. Still, be sure to do your own due diligence and to consult a qualified, experienced, and conflict-free financial advisor for advice particular to your own situation."