Macke;407410 wrotedo you mean how much is in my tfsa? I just opened it a few weeks ago and right now there is 375 in there.. I've actually lost one cent actually right now lol, right before Christmas I was up 1.40 or so.
It says the average cost is at 376.66 though, I don't know what this really means in relation to me though
Despite what they say about the fees, you don't really have much choice until you get your account up to $10000 or so. Stick to mutual funds until then. I assume your account is restricted to CIBC funds.
Index funds are generally lower cost in terms of mer - the management expense ratio. You don't really 'pay' this fee, returns are always stated after fees have been deducted. The lower the mer the better though. Compare the CIBC Canadian fund mer 2% to the CIBC Canadian index fund mer around 1%. The index funds they hide way down at the bottom of the list because obviously they want you to buy the funds with higher fees. Cibc also really tries hard to hide the mer, it is not anywhere on their website. You have to download the fund fact sheet before you can find out the mer. Really terrible business practice.
Anyways looking at the returns of the two funds you can see that almost across the board the cdn index fund has better returns over each time frame compared to the cdn fund. The index fund is passively managed ie they just buy the companies in the same ratio as the tsx300 index, whereas the other fund is actively managed, for which they charge the higher fee. They will tell you that they can beat the market by actively making good decisions on what cdn companies to hold to justify the higher fee but as you can see they are actually doing worse after deducting their higher fees. If your bank tells you their active funds are better value than their index funds, they are lying.
Tldr active management is bullshit, no-one can beat the market in the long term. Stick with cheaper index funds. You can't beat the market with index funds but you won't do much worse and in the long term you will do better than with higher fee actively managed funds.
Take your $500 and spread amongst 3-4 funds. That is plenty. A simple portfolio would be
30% Canadian index fund $150
30% US index fund $150
30% International index fund $150
10% Canadian bond index fund $50
It's not perfect but it's simple enough and you won't go far wrong with that. Every Christmas rebalance to keep the 4 funds in the same ratio.
If your bank put you in anything else, you should sell the funds and switch to index funds. I'm guessing they probably did because they will make more money off you. If your bank put you in index funds then you have a good bank guy you can trust.
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