Young investors | How can a teenager increase their salary

What to do with his first salaries, other than framing them or let them stop at a bank account? When you’re under 18, the possibilities are more limited. But there are.

Posted at 5:00 am

Isabelle Dube

Isabelle Dube
The Press

Free to invest … under parental supervision

When you’re a minor, you can’t exercise all of your rights, says Charles Rioux-Rousseau, senior financial planning analyst at RGP Wealth Management.

“The money is managed by a parent and when the child turns 18, the account is transferred directly to him. The parent does not hold the money. He is the guardian and manages the money on behalf of the child.»

When the child has $ 25,000 or more, the money must be administered by a family council or the Curateur public. Beginning in November 2022, the amount will increase to $ 40,000.

“After all, taking your first steps in investing, investing money, managing your budget, rather than spending it all, is interesting and inspiring,” Charles Rioux-Rousseau said in the interview on the phone.

There is no unlimited access to the entire planet

The grocery clerk addicted to video games dreams of cryptocurrency to buy a house in the metaverse? The TikTok cafe waitress enthusiast wants to invest in shares of her favorite hobby company? Impossible!

By law, young people under the age of 18 do not have access to any type of placements. They must adhere to the rule of assumed good investment.

“It’s just not a guaranteed investment,” the planner explains.


Charles Rioux-Rousseau, Senior Financial Planning Analyst at RGP Wealth Management

But it can’t be the risky investment we make with the brother -in -law in an unknown company. Neither cryptocurrency nor NFTs might be of interest to young people.

Charles Rioux-Rousseau, Senior Financial Planning Analyst at RGP Wealth Management

NFTs (non-fungible tokenor non-fungible tokens) are the trendy digital certificates that certify the authenticity of a virtual item such as artwork, tweets, and memes.

If we buy shares, they must be a Canadian company that has been listed on the stock exchange for more than three years, Charles Rioux-Rousseau specified. If they are bonds, they must be guaranteed by a Canadian government, municipality or school board or a Canadian public utility.

If you choose a mutual fund, 60% of its value should be in assumed safe investments. Funds may be allocated as follows: 30% bonds, 30% Canadian equities and the remaining 40% may be foreign equities.

Same rule for exchange-traded funds (ETFs): 60% must be in assumed safe investments and 40% in foreign securities.

TFSA was not offered before most

Young people under the age of 18 do not have access to the TFSA, but may have access to RRSPs. By filing their tax returns, they accumulate RRSP rights each year.

“Of course, 18% of $ 5,000 is not a lot, raises the planner. Since young people do not pay taxes, it is better to set aside the contribution room for later. »

The gold mine: the RESP

However, contributing to a Registered Education Savings Plan (RESP) is a good option. If the parents have already opened an account, the child can open a second where he or she is both the account holder and the beneficiary. “Again, the parent opens an account in his or her capacity as tutor on behalf of the child,” Charles Rioux-Rousseau underlined.

If parents never contribute the maximum, then there remains an interesting space to get government subsidies. Who can boast of having yields of 30% at present? It was a real gold mine when you were 14 years old.

The maximum that can be invested in the accounts per beneficiary is $ 36,000 to get a 20% subsidy from the Canadian government and 10% subsidy from the Quebec government. Amounts paid after $ 36,000 up to a maximum of $ 50,000 will not receive the subsidy.

“There are rules that must be followed for those who have not yet opened an RESP,” Charles Rioux-Rousseau pointed out. If you are 14 years old and your parents never contributed, you can contribute $ 5,000 to get the subsidies and then make a catch-up of $ 5,000 for the next year up to 17 years old. . »

The capital invested is not taxable upon withdrawal. Grants and investment income will be taxed in the child’s name.

Unregistered investments are prohibited for parents

In unregistered accounts, earnings will be taxed annually in the child’s name. “There is no need for an account where the child and the parent deposit money. Revenue sharing is so easy to do with our children, the planner argues. The child must have earned money, with supporting evidence. »

Whether in an RESP or in an unregistered account, investments must be assumed to be safe.

Invest to make an impact and get rich

Solenne Daigle, president of Quebec’s Responsible Investment Club, where young academics and professionals meet to discuss investments, observed that young investors want to make an impact on society by taking advantage of current issues.

In general, they want to have a moral axis in the way of investing while adapting to the technological transition, he explains.


Solenne Daigle, President of the Responsible Investment Club of Quebec

“Young people try to keep up with the trends. We are in a time of change, whether towards a low-carbon economy, technological support due to the pandemic or a food security crisis due to the war in Ukraine in particular. With these key issues, we wonder how we can make the most of them and where we can invest. »

What does investing mean for the long term?

When you invest your money, it’s usually long-term, Charles Rioux-Rousseau explains. But what does “lasting” mean in the mind of a 14 -year -old? The prom?

Investing part of your income at work to buy a car at age 18 can seem like a distant horizon when you’re just 14 years old. However, it’s not the same “long -term” as for the 25 -year -old young adult who invests his money for his retirement, the planner determined. “So that we can qualify the projects of these young people as medium term. »

In summary, we are not investing the money we want to withdraw in two months.

What projects can they dream of?

14 -year -old interviewed by The Press they said they saved 75% of their salary. By earning $ 120 net profit per week, the employee therefore accumulates $ 90 per week. Let’s see if it saves enough to carry out their plans.

For returns, we took the Quebec Institute for Financial Planning (IQPF) standards, i.e., 3.3% for a portfolio consisting of 50% equities, 45% fixed income and 5% cash.

Buying a used car at 18 for $ 8,000

  • The project is possible by putting in $ 36.46 per week for four years.
  • With an investment of $ 90 per week, in four years the investments reached $ 18,428.92.

Traveling to Asia at 20 with $ 10,000

  • The project is possible by putting in $ 30 per week for six years.
  • By investing $ 90 per week, in six years the investments have reached $ 28,580.69.

Buy a home at 30 with a down payment of $ 30,000

  • The project is possible by putting in $ 28 per week for 16 years.
  • By investing $ 90 per week, in 16 years those investments have reached $ 90,516.

Investment sectors that inflame young people

In the low-carbon transition, many opportunities, including in solar, wind, hydroelectricity or the Internet of Things have been used to regulate and support this energy consumption, Solenne Daigle raises. Companies active in these areas as well as those investing in water, veganism or contributing to vertical farming on a large or small scale are likely to turn to younger investors, as the president observed in within its Responsible Investment Club. Quebec.

How do I find placements?

“Even though mutual funds are considered the old way, they are easy to understand for a beginner, Solenne Daigle maintains. We understand that there is someone behind the fund who selects the assets, who oversees doing so. .Instead of analyzing a company on your own, you look at the general standard of what is appropriate or unsuitable for funding. »

I suggest the funds, as it is a great introduction to the stock market in the context of a pandemic and a world in unstable transition.

Solenne Daigle, President of the Responsible Investment Club of Quebec

“If we don’t have economic notions, we don’t understand why a company that makes a lot of money doesn’t perform in the stock market or vice versa,” he gives as an example. Solenne Daigle suggests stock market training on the CIRANO website (Bourstad stock market simulations). It is possible to register for free.

To find a mutual fund or exchange-traded fund, you need to go through either a financial institution or an online platform.

Are parents losing money?

In Quebec, dependent credit does not apply to school children.

At the federal level, there is value for dependents, but it is only available if the parent is unmarried and the child is under 18 years old.

In 2021, the qualifying dependent credit is $ 1,729, a non -refundable credit. “A single parent with a expectant child who could have earned $ 3,808 in 2021 would benefit from a non-refundable tax credit of $ 1,253, a reduction of $ 476 over the full amount,” explained Charles Rioux-Rousseau.

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