My parents cottage costs about $8,000 per year – this includes everything including satellite tv, bills etc. If you are only using a similar cottage for 4 weeks per year…well you can do the math.

Another alternative is shared owning – I know someone who bought a 1/10 share of a cottage – the admin is run by some company. I think he pays $2500 per year for 5 weeks which are spread around the year and there is no work to do.

The other drawback of a cottage is that it limits your holidays so you won`t be able to go to other areas or countries as much.

For what it is worth kids change everything. Your cash flow may change drastically for a long period of time, especially if one of you is going to be a stay-at-home parent for 5-7 years to raise the kids until they start school.

Try adjusting your budget to survive on a single income and see how your wants vs needs may have to change. It hit me harder than I thought it would, especially keeping a mortgage and car payment as the only debt. Everything can scale if you work at it hard enough.

Please do not misunderstand me. I was NOT suggesting that you ever BUY options as a speculation. I strongly advise my readers against buying options or using them for gambling.

I was suggesting ONLY conservative – risk reducing – option strategies, such as the collar. Buy whatever assets you want, but protect them – or at least that’s my message.

Best of luck to you.

Here’s an example of how a collar works:
http://tinyurl.com/lwxo4x

Congratulations on taking the plunge into DIY investing. Since you are just starting out I would advise you stick with the basics (equities and fixed income) for now.

You’ve chosen one of the most challenging times in quite a while (in my lifetime, anyways) to invest. Government fixed income is offering paltry rates of return, and carry a significant risk of loss should inflation rear its head. Meanwhile equities, after the current rally, are arguably quite expensive.

Given this challenging investment environment, you’d be well served to consider what Kannucker mentioned about paying down your mortgage and other debts. If your mortgage rate is 5%, you can earn a guaranteed 5% by paying down the principal. In my opinion you’d be hard pressed to earn that in a conservative, balanced portfolio under these circumstances. Best of all, there’s no fees (provided you have a mortgage that allows this sort of thing)! It’s good to hear you’ve paid down your student loans; that’s a very smart move.

If you are still dead set on investing additional funds, you could sitll contribute to RRSPs and use the tax refund to pay down your mortgage principal.

Re: balancing, as CC said, you can either rebalance by actively selling an existing position to buy another, or by ensuring all your fresh contributions go the underweight share until you’ve reached your target allocation. If your regular contributions are a small percentage (say <1%) of your total portfolio, and your allocation is out of whack by say 10% or more, you may want to go with option number 1. Don’t get hung up on maintaining a perfect allocation at all times; to do so would entail daily buy and sell transactions that would very quickly erode your investment capital.

It’s difficult for me to give portfolio advice without knowing the size of your portfolio. For the vast majority of folks your age, it makes more sense to buy diversified bond funds then individual bonds. In this environment, be very cautious of inflation down the road. I’d advise you stick to bonds/bond funds with a short maturities – they are less volatile than long bond funds. If you want to juice your returns, consider including high grade, short-term corporate bonds. Most government paper is yielding little at the moment. Ishares has some good bond funds.

I’d also go the passive route (ETFs) with equities. Pick a global equity allocation, and use ETFs to make it happen. I generally advise about 1/3 each to Can, US, and World. I wouldn’t put more than half in any category. In Canada, Ishares has some nice products for this purpose. I also like TD’s low fee offerings here, too. You seem to be concerned about the $US (as am I). Currency hedged ETFs are available that give exposure to the US and MSCI for a relatively low MER (however note the hedging is in addition to the MER).

As you’re both working and looking to start a family, I’d stock with 100% passive investing for now. Even if you have the inclination, in all likelihood you won’t have the time to keep abreast of individual securities.

Make a wise plan, be disciplined to stick to it, and spend an hour or two roughly once a quarter or six months to review performance, rebalance, and consider any changes to your plan.

If that’s the case, you then need to decide on your bonds/equity split. At your age you should probably be 30-40% bonds, but obviously the timing isn’t fantastic right now to do that. I am a DIY passive investor but allow myself to provide some rationale into my approach. At your age I would increase my bond exposure to 20%, leave 80% in equities to capture as much of the upside as possible, and invest any new money into bonds until either it reaches its target or a specified amount of time has passed (ie give 2 years for equity recovery then rebalance).