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
mhoran answered the headline question, but you asked - Could someone shed some light on and differentiate between a retirement account and alternative savings plans? Retirement accounts can contain nearly anything that one would consider an investment. (yes, there are exception, not the topic for today). So when one says they have an S&P fund or ETF, and some company issued Bonds, etc, these may or may not be held in a retirement account.  In the US, when we say 'retirement account,' it means a bit more than just an account earmarked for that goal. It's an account, 401(k), 403(b), IRA, etc, that has a special tax status. Money can go in pre-tax, and be withdrawn at retirement when you are in a lower tax bracket. The Roth flavor of 401(k) or IRA lets you deposit post-tax money, and 'never' pay tax on it again, if withdrawn under specific conditions.  In 2013, a single earner pays 25% federal tax on taxable earnings over $36K. But a retiree with exactly $46K in gross income (who then has $10K in standard deduction plus exemption) has a tax of $4950, less than 11% average rate on that withdrawal. This is the effect of the deductions, 10% and 15% brackets.  As with your other question, there's a lot to be said about this topic, no one can answer in one post. That said, the second benefit of the retirement account is the mental partitioning. I have retirement money, not to be touched, emergency money used for the broken down car or appliance replacement, and other funds it doesn't feel bad to tap for spending, vacations, etc. Nothing a good spreadsheet can't handle, but a good way to keep things physically separate as well.   (I answered as if you are in US, but the answer works if you rename the retirement accounts, eg, Canada has similar tax structure to the US.) We've been in this situation for about 10 years now.  We don't have to send money back to Canada very often, but when we do, we typically just write a US$ check/cheque and send it to a relative back home to cash for us.  We've found that the Canadian banks are much more familiar with US currency than vice versa, and typically have better exchange rates than many of the other options.  That said, we haven't done an exhaustive search for the best deal. If you haven't left Canada yet, you might consider opening up a US funds account at the same bank as your Canadian funds account if the bank will allow you to transfer money between the accounts.  I haven't priced out that option, so I don't know what the exchange rate would look like there. Also, you didn't ask about this, but if you have any RRSP accounts in Canada, make sure they're with a broker that is licensed to accept trades from US-based customers.  Otherwise, you won't be able to move your money around to different investments within the RRSP. Once you're resident in the US, you will no longer be able to open any new accounts in Canada, but you will be able to maintain the ones you already have. I think we would be good with paying around $1200 monthly mortgage fees (with all other property fees included like tax etc.) You probably can't get a $250k house for $1,200 a month including taxes and insurance.  Even at a 4% rate and 20% down, your mortgage payment alone will be $954, and with taxes and insurance on top of that you're going to be over $1,200.  You might get a lower rate but even a drop to 3% only lowers the payment $90/month. Getting a cheaper house (which also reduces taxes and insurance) is the best option financially. What to do with the $15k that I have? If you didn't have a mortgage I'd say to keep 3-6 months of living expenses in an emergency fund, so I wouldn't deplete that just to get a mortgage. You're either going to be  Since 1) the mortgage payment would be tight and 2) you aren't able to save for a down payment, my recommendation is for you to rent until you can make a 20% down payment and have monthly payment that is 25% of your take-home pay or less.  Which means either your income goes up (which you indicate is a possibility) or you look for less house.  Ideally that would be on a 15-year note, since you build equity (and reduce interest) much more quickly than a 3-year note, but you can get the same effect by making extra principal payments. Also, very few people stay in their house for 30 years - 5 years is generally considered the cutoff point between renting and buying.  Since you're looking at a 10-year horizon it makes sense to buy a house once you can afford it. I can answer Scenario #3. If you are purchasing a property with buy-to-let intentions […] can you use the   rental income exclusively to fund the mortgage repayments? Yes – this is exactly how buy-to-let mortgage applications are evaluated. Lenders generally expect you to fund the mortgage payments with rent. They look for the anticipated monthly rent income to cover a minimum of 125% of the monthly mortgage payment. This is to make sure you can allow for vacant periods, maintenance, compliance with rules and regulations, and still be in profit (i.e. generate a positive yield on your investment). However, buy-to-let (BTL) mortgage lenders also generally expect you to own your own home to begin with. It's up to them, but rare is the lender who will provide a buy-to-let mortgage to a non-owner-occupier. This is because of point 2 above. The lender doesn't want you to end up living in the property because then you'll need to repay the loan capital, since you'll always need somewhere to live. This makes the economics of BTL unfavourable. They look at your application as a business proposal: quite different to a residential mortgage application, which is what your question seems to be addressing. Bottom line: You're right about scenario #3 but it sounds like you're trying to afford a home first, whereas BTL is best viewed as an investment for someone who already has their main residence under ownership (mortgaged or otherwise). As for Scenarios #1 and #2 I can't offer first hand answers but I think Aakash M. and Steve Melnikoff have covered it. "You do not have to pay tax on any earnings inside a TFSA. Quoting Wikipedia's article, ""Investment income, including capital gains and dividends, earned in a TFSA is not taxed, even when withdrawn."" This is backed up by the official TFSA government site, http://www.tfsa.gc.ca/, which states, ""Investment income earned in a TFSA is tax-free."" This makes the TFSA an appropriate vehicle to store investments which produce dividends. For example, if you invest $5500 and receive a total of $500 in dividends this year, you will not pay tax on that $500, either in this tax year or even subsequently, when you withdraw money out of your TFSA. Of course, TFSAs aren't meant to be used for regular withdrawals. If you are planning on investing $5500 this year and withdrawing the dividends, I'd urge you to be careful and consider if this is actually the best sort of savings vehicle for you. But that's really just a general warning, nothing specific to dividends. It is possible to do this. Indeed, withdrawing $500 in dividends this year will increase your available contribution room in the next tax year (not in this tax year). For example, you contribute $5500 at the beginning of this year. By the end of November, you have accumulated $500 in dividends. You withdraw these in December. In the following tax year, you can recontribute this $500 in addition to the standard $5500 contribution room. So, you could contribute $6000. Just be careful with your calculations; I messed mine up and ended up paying a rather substantial penalty for my overcontribution." For most people, you don't want individual bonds. Unless you are investing very significant amounts of money, you are best off with bond funds (or ETFs). Here in Canada, I chose TDB909, a mutual fund which seeks to roughly track the DEX Universe Bond index. See the Canadian Couch Potato's recommended funds. Now, you live in the U.S. so would most likely want to look at a similar bond fund tracking U.S. bonds. You won't care much about Canadian bonds. In fact, you probably don't want to consider foreign bonds at all, due to currency risk. Most recommendations say you want to stick to your home country for your bond investments. Some people suggest investing in junk bonds, as these are likely to pay a higher rate of return, though with an increased risk of default. You could also do fancy stuff with bond maturities, too. But in general, if you are just looking at an 80/20 split, if you are just looking for fairly simple investments, you really shouldn't. Go for a bond fund that just mirrors a big, low-risk bond index in your home country. I mean, that's the implication when someone recommends a 60/40 split or an 80/20 split. Should you go with a bond mutual fund or with a bond ETF? That's a separate question, and the answer will likely be the same as for stock mutual funds vs stock ETFs, so I'll mostly ignore the question and just say stick with mutual funds unless you are investing at least $50,000 in bonds. If you need the money in the short-term, you want to invest in something fairly safe.  These include saving accounts, CDs, and money market funds from someplace like Vanguard.  The last two might give you a slightly better return than the local branch of a national bank. "General advice is to keep 6 months worth of income liquid -- in your case, you might want to leave 1 year liquid since, even though your income is stable now, it is not static (i.e., you're not drawing salary from an employer).   The rest of it?  If you don't plan on using it for any big purchases in the next 5 or so years, invest it.  If you don't, you will probably lose money in the long term due to inflation (how's that for a risk? :).  There are plenty of options for the risk averse, many of which handily beat inflation, though without knowing your country of residence, it's hard to say.  In all likelihood, though, you'll want to invest in index funds -- such as ETFs -- that basically track industries, rather than individual companies.  This is basically free portfolio diversity -- they lose money only when an entire sector loses value.  Though even with funds of this type, you still want to ensure you purchase multiple different funds that track different industries.  Don't just toss all of your funds into an IT index, for example.   Before buying, just look at the history of the fund and make sure it has had a general upward trajectory since 2008 (I've bought a few ETFs that remained static...not what we're looking for in an investment!).  If the brokerage account you choose doesn't offer commission free trades on any of the funds you want (personally, I use Schwab and their ETF portfolio), try to ""buy in bulk.""  That way you're not spending so much on trades.   There are other considerations (many indexed funds have high management costs, but if you go with ETFs, they don't, and there's the question of dividends, etc), but that is getting into the weeds as far as investing knowledge is concerned.   Beyond that, just keep in mind it'll take 1-2 weeks for you to see that money if you need it, and there's obviously no guarantee it'll be there if you do need it for an emergency."