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I just made $50K from selling my house.

I need some advice because I'm terribly bad at managing money and I'd like to invest a bit. My bank is harassing me – they want to sell me their product but I don't trust them.

Here's my current situation:

  1. Student - university, 60% done, $3000 debt.
  2. Freelancer - web developer, information security.
  3. Canadian.

I might be interested in buying another house after I'm done studying, which might be in 5 years. I am currently working enough to be able to study and pay education at the same time.

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    Do you have any plans for the $50K? e.g. to use it eventually to buy another house, or to pay for future education expenses? What might the time-frame be? We'd need to know about your plans and risk tolerance before a general approach could be suggested. – Chris W. Rea Jun 14 '13 at 13:47
  • I might be interested in buying another house after I'm done studying, which might be in 5 years. I am currently working enough to be able to study and pay education at the same time! Thanks – Francis Jun 14 '13 at 14:19
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It sounds like you want to lock-up your money in something relatively safe, and relatively hard to touch.

You may want to consider a GIC (TD has one I found in a quick search) - from what I see it's the closest thing to a US CD.

You won't get much back, but if you pick a 5-year term, you can't spend it* easily.

Other options might be to buy an ETF, or get into REITs - but that will depend on your risk comfort.

Also - to add from the comment Rick left - be sure to pay off any high-interest debts: especially if they're on a credit card, it will help you later on.


* easily .. you can withdraw, but there're generally penalties

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    Good answer. I'd add that paying off high-interest debt gives an instant, no-risk return. If that $3K of debt is on a credit card, that's the first place I'd put the money. – Rick Goldstein Jun 14 '13 at 17:56
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    Allong with this, [I will teach you to be rich also advices this but as a different name] I would suggest intentionally handicapping yourself each paycheck [automatically push over 100, etc towards savings before you can touch it] (savings, debit etc) – monksy Jun 19 '13 at 15:17
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I know an answer has been accepted, but you need an emergency fund, ideally enough to cover at least 3 months of after-tax basic living expenses. As a free-lancer, 6 months would be even better.

This isn't a fun way to tie up your money, but it is a prudent way. What if you lose your job, or decide you want to change your line of work? What if you're told a close family member has only months to live and you want to take significant time off unpaid? What if your car breaks down and you need a new one? What if your freelance business hits a dry patch for a few months? What if you want to move but can't sell your next house quickly?

I've known people who had these types of situations come up unexpectedly. Some were financially prepared and had the freedom to make the choices they wanted to make, others didn't and now have regrets.

Once you have a basic emergency fund in place, then go for investing with the rest of the money. Best of luck!

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First pay off all existing debt.
Then set up at least 6 month emergency fund. Freelancing exposes you to way more risks than employment.
Then buy GIC's to cover and match the maturity of your expected education fees.
Only 'play' with what is left. Don't over think it. Buy a low-cost (less than 0.5%) passive large-index mutual fund covering either the S&P or TSX.

  • I wouldn't pay off the debt if it's being subsidized. He doesn't say though. – user606723 Jul 16 '14 at 18:35

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