The right stuff

It’s a big scary world. But most people, wisely, live small.

After all, you can’t change Trump, monetary policy or the ozone layer. But you can look after your family, your own future and your joy. So focus first on what matters. The poodles in the comments section can yap about the other stuff.

So let’s chat with Lisa. She has good news.

“I have been a long time (12 years!) reader of your blog and I now have some money to invest,” she tells me. “ I am inheriting a lump sum of $135,000. I am extremely fortunate!”

Here’s the story so far.

My husband and I are not big earners as we make a combined $100,000. We have been married for 6 years and only started investing in 2020. We live cheaply and usually save one income and live off of the rest. Our rent is $1650 and about to go down. I am not interested in buying a house!  Our grand total in investments is about $240,000 without this new amount. It’s amazing what 5 years of joint investing can do!

So where do we go from here? I have analysis paralysis. Should I max out my RRSP? It only has $12,000. I want to top up my TFSA for sure as it has $85,000 in it already. I have a FHSA maxed out and a RESP maxed out for my 1 year old. Any advice would be appreciated!

Wow. Zero to a quarter million in less than five years on a household income south of a hundred grand, while having a kid. Impressive. Hopefully this blog helped guide and inspire more than it confused and bloviated – and that the money squirrelled away is nicely B&D.

Now, about the windfall. First, my sympathy if this money’s coming because someone close and important has passed. Often inheritance is a gift tinged with regret, sadness and sometimes guilt. But it’s a gift nonetheless, kind and valued. You are blessed.

So, Lisa, the first thing to mull over is this: whose money will it be? Yours alone? Or your family’s?

The feminists, female investment advisors, your mom and probably Oprah will all tell you to maintain ownership because inherited bucks are not considered to be family assets, unless you deem them so. The reasons are simple. Your alley cat husband may wander off and leave you, so this is insurance. You might want an account of your own to spend as you wish on personal pleasures. It’s yours. You don’t like sharing. Or you’re greedy.

All bogus. You got married. You and he have co-mingled your lives, finances and assets. You have a dog and a kid together. You need each other. You’re an economic unit. For true matrimonial success there is no ‘mine’ and ‘yours’. It is all ours.

A solid family portfolio should contain not only registered accounts (two RRSPs, two TFSAs and an RESP for Squirt) but also a non-registered joint account. That will be an important arrow in your retirement quiver later in life, plus offer some income-splitting potential. As well, if anything happens to one of you, a joint non-reg account becomes the instant property of the other spouse, with immediate access to capital.

What to do when the cash rolls in?

Don’t fret over the RRSP since your income is relatively low, the tax savings of a contribution will be negligible and you will be taking after-tax money and making it taxable. Bad idea. The RRSP room is never lost and can be used later when you earn more, for a bigger tax break.

Topping up the TFSA makes more sense, so do it. Then top his up. Next year you can take eight grand out and contribute to the FHSA, getting a tax deduction yet not losing the TFSA room. Eventually if you don’t buy real estate, that can be rolled into your RRSP.

There should be some money left for sticking in that new joint non-registered account as well. You’re young, so ensure a solid equity component. Do not be deterred by macroeconomic or geopolitical events. Forget Trump, the loonies taking out seven-figure mortgages, the billionaires and oligarchs trying to bend the world and the relentless societal siren-song of real estate FOMO.

Your rent is cheap. You sound happy. You have a job, a spouse and a baby. Plus common sense, perspective, swelling investments, and now a major gift. Your life is content. And you just spread a little here.

About the picture: “This is my Valentine,” writes Kim.  “Ashley-Bell is only four but she has an icing sugar-dipped snout.  She is a fast learner and does Bang Bang to perfection, making sure her head is right down.  It was super fun teaching her that for her owners as a surprise.  She loves to walk the vineyards, but lately they are all getting fenced up, so we do parks now.  This is her in West Kelowna.”

To be in touch or send a picture of your beast, email to ‘[email protected]’.

Source: https://www.greaterfool.ca/2025/02/26/the-right-stuff-2/