RRSP contribution

Some more good news on the investing front recently. At work my employer has extended RRSP matching to 5%, up from 4%. It was advertised in advance and I signed up for it from day one.

As I've written before 100% employer matching is an incredibly good deal for the employee. I basically get a 100% return on whatever of my own money I put in due to the matching, plus the extra income tax refund, plus whatever the investment funds can yield.

Of course this does cause a decrease in my take home pay so I'll have to absorb that into my monthly budgets. Still it's definitely worth doing. I wish I had reached this point about 15 years ago but it's good to get there now. Who knows maybe someday I'll retire.

I had mentioned in the past about doing some alternative type business investments. Those haven't quite materialized yet but I'm still on the lookout and I've still got some ideas.

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Speaking of money. I had a strange experience recently my TD Visa was declined at chapters. Well that was weird, and embarrassing. I checked online and as I thought no recent purchases and full $2500 balance available. I thought it might be about playstation network or something. I called customer service and it turned out the old GM card was replaced with a drivers reward card. Somehow they didn't mail me a new card and GM cards are no longer being accepted. New one in the mail so that should be straightened out again.

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I went to the new swimming pool in Halifax this weekend. The Canada Games Centre is very nice. The big yellow slide is now open and that was fun. For unknown reason the blue straight down inside slide is still not open so that was a bit disappointing. I wonder what the story is on that. Still a nice visit but I'm not used to swimming and my eyes are a bit sore from the chlorine.

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So I have a new phone number. Well at least I'm not at my parent's phone number and haven't been in well let's say a few years. My dad said he was awakened at 3:45 this morning a garbled drunken phone call someone whose name he couldn't make out looking for me. I'm glad he declined to give my current number or I would have probably been awakened then too. Anyway if you don't have my current number just type in my name on facebook and I'm right there. Oh well I wonder who it was. He probably regrets it today.

RRSP contribution

Some good news at work recently. The matching RRSP has been increased from 3% to 4% of salary.

I signed up immediately and went from 3% to now 4%. As noted before this is a great deal. For every $1 I put into the RRSP my employer throws in $1. Then I get a tax refund on the contribution. Plus whatever the RRSP investments are able to get.

So for every dollar I spend my personal wealth increases by about $2.50. That's a great deal for me. So with 4% out of paycheque going to RRSP and 4% matching I'm now saving around 8% of my pay. That's not bad. Still I'm interested in other investments outside of RRSP some higher risk or non traditional ventures perhaps.

With the matching I revisited my investments allocation on Manulife. I decided again to adjust it to a bit more conservative. Since I'm getting 100% anyway on investment because of employer matching there's a case for preserving that gain. Plus I might be more willing to take risks in non registered schemes.

Becoming an investor again

My six month probation review period is coming up at the end of this month. I hope I can clear it. It's pretty crazy what's going on in the financial world these days. Every job I've had I've been a bit nervous around the end of probation time.

Anyway one of the things we have to do for post probation is fill out a form around the RRSP payroll deductions. My employer has a generous program where they will 100% match your RRSP payroll deductions up to 3% of your gross pay. The deductions go to a group RRSP managed by Manulife. A simple calculation shows how lucrative this is to the employee.

money out of your pocket    $1.00
employer 100% match         $1.00
group RRSP 2% gain          $0.04
income tax credit 50%       $0.50
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total                       $2.54

As you can see for every dollar the employee spends out of his own pocket his personal wealth increases by $2.54. That's a sensational 154% return.

So given that obviously I should be putting in the max 3%. However my plan is to start at 1% for now and reevaluate after 6 months with the intent to increase it to 3%. One step at a time. It's nice to finally be in a position where I can set aside even the token 1% of my gross pay. It's been a while and it feels good. The last time I did any investing was 1999 I think with some mutual funds. Those investments were later withdrawn and wiped out with nothing to show for them.

Although it is more profitable to minpay the debts and put any extra money into this I want to still focus on eliminating the consumer debts and just getting them out of my life, hopefully forever. It's just a personal emotional thing about wanting them gone and never to come back.

I had an opportunity like this before. Back at xwave in 2001 they introduced 100% matching as well. Unfortunately at that time that was in the dark period financially and I couldn't even think about participating. It makes me sad to think about the past, the missed opportunities. How things could have turned out if better choices had been made along the way.

As part of the registration I did the online retirement calculator. It turns out that if I retire in 25 years [which is gross, so depressing] at age 65 then I'll have a projected income of around $23,000 a year. That's not very good. Enough to live by myself in the city. I'd probably have to go carless [assuming I'm even capable of driving at that age]. I should target increasing it to at least $30K a year which would be more comfortable and I could still drive at that income level. Now assuming I even live 25 more years it's far from certain I can be employable that long. I wouldn't want to ask an actuary the probability that I'll be actually able to work full time up to age 65.

As part of the registration I had to do an investing profile. They said I was a 'balanced' investor. That pleased me in some way. Now I don't know or really want to know much about investing. I know the Fundamental Theorem of Investing by the great man David Sklansky. But I'm not sure how to apply it to my own investments. Of course being balanced seems good, per the Nash equilibrium. But again I'm not sure how to apply it. So I just give money to the "experts" [who the great thinker NNT has debunked] to manage, and hope for generally positive variance. If I had any meaningful wealth it might not be horrible to be 80-90%+ in Canada Savings bonds from here on out. But I guess I don't have that problem right now.

I had to pick the allocation for the balanced strategy as part of the registration. I may not have got it right [since I was basically guessing]. This is what I went with. I should probably go over it and check somewhere if I have the funds and percentages right for my time frame and objectives.

2001 - ML Conservative AA a4   15%
2002 - ML Moderate AA a4       25%
2003 - ML Balanced AA a4       35%
2004 - ML Growth AA a4         15%
2005 - ML Aggressive AA a4     10%