Investing and saving and such
So on a recent trip to the bank I somehow talked to a mutual fund adviser and long story short I set up a TFSA and bought some mutual funds (this was after all I wanted to do was remove the hold on ATM deposits lol)
I have been depositing a small amount of each pay (125) into the account that I am using as a savings/small investment.
Starting 2018 I would like to increase this amount to around 500 a pay and really go harder at it, I am in my late 20s and have no intention on starting a family for a couple years so I believe now is the time to do this.
I am currently looking to switch to the US Index fund at CIBC for this, does anyone here have any experience with mutual funds? I'm looking to diversify instead of just putting all my eggs into poker/bj/baccarat
How about Gold and Silver? I know the prices have been flat for a few years now but that is something that just seems a bit fun to me, I've always enjoyed collecting and actually have a few silver dollars from the Canadian Mint already that I got when I was 8.
I have been depositing a small amount of each pay (125) into the account that I am using as a savings/small investment.
Starting 2018 I would like to increase this amount to around 500 a pay and really go harder at it, I am in my late 20s and have no intention on starting a family for a couple years so I believe now is the time to do this.
I am currently looking to switch to the US Index fund at CIBC for this, does anyone here have any experience with mutual funds? I'm looking to diversify instead of just putting all my eggs into poker/bj/baccarat
How about Gold and Silver? I know the prices have been flat for a few years now but that is something that just seems a bit fun to me, I've always enjoyed collecting and actually have a few silver dollars from the Canadian Mint already that I got when I was 8.
Comments
What’s The Fee? (WTF!) – The Wealth Game
I would read all of his little articles .
Investment advice is not worth 35 times the DIY fee - MoneySense
I wish I had all this info when I was just starting out.
You can also use his t-Rex calculator to see how bad the fees are on the fund you just bought.
I assume you wouldn't mind me copying your post to the stock thread Mike?
Apparently the one I have in right now is at 2.25% but the one I am changing it to is only at 1.18% so that is a pretty big difference.
do 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
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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https://www.youtube.com/watch?v=i9gjsnpWc_g
ya but after that
Wow, thank you for that detailed write up.
I cannot seem to find the CIBC Canadian fund you spoke of, only the index.. which is fine.
https://www.cibc.com/en/personal-banking/investments/mutual-funds/managed-portfolio-services/managed-balanced-portfolio.html That is what I was put into when I first opened the account.
https://www.cibc.com/en/personal-banking/investments/mutual-funds/growth-funds/canadian-equity-fund.html
What you are in is a fund of funds. Perfect for the purely lazy bank guy so he doesn't actually have to do any work for you. It simply buys 11 different mutual funds for you. Yep ELEVEN. Charges you a higher fee of course for doing that for you. You can look up all the funds it holds and in what proportion and do it yourself for less. That is, IF you want your money spread into a ridiculous 11 different mutual funds. Keep in mind a mutual fund can easily hold hundreds of companies within the fund and then multiply that by 11. Unnecessary.
Every single fund in that portfolio is, of course, the active version, no index funds at all and fully 50% of the investment is in bond funds, which might be appropriate if you were 45+ and driving towards retirement.
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I will arrange buying a couple different ones soon. Even those index funds I have been looking at have been doing quite good the U.S Index and International Index are up 15-20% on the year I think that is a good return.
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I thought the loonie has actually had a big recovery this year and right now trading at 80 cents or so.. didn't it start the year in the mid to high 60s?
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This is fabulous advice!!!
This will make your life more +EV than all the poker advice on the internet..
I have a similar strategy, I just invest more of my portfolio in stocks.
I will take the advice i will
I'd also like to get into a bit of stocks but ill wait closer until the middle of the year, thinking of some local companies like Telus
1. Buying a single stock is extremely risky. You should have a basket of a minimum 10 stocks to spread your risk. At $10k you have just enough to buy two or three ETFs, which are like stocks but are similar to mutual funds, with much lower mer.
2. When buying stocks you have to consider your own fees. Brokerage accounts, especially with banks have higher minimum balances. If you can't meet the minimum, it is going to cost you upwards of $100 per year in account fees. Trading fees are usually around $10 per trade. Don't forget you eventually have to sell the stock. $20 total into a $1000 purchase is 2%. At that cost you might as well be in mutual funds because your costs will be lower. I usually figure on a minimum of $3k per purchase, working out to a cost of $20/3000 or .66%. If you use that to buy an ETF, which holds dozens or more companies, which has a low mer of say .2%, then your total cost is .86%. About the same as a low cost mutual fund.
So $10k would be just enough to create a portfolio of 3 ETFs, one bond, one Canadian market and one International market. Forget individual stocks until you have at least $30k. (10 stocks minimum at $3k minimum each)
This is what I would start with till you hit 10k-15k. Super low fees and a great mix of stocks (IMO)
Vanguard FTSE Canada Index ETF which charges annual fees of 0.05%. Like mutual funds, index ETFs hold a portfolio of stocks (or bonds) on behalf of investors.
Yes I will wait until my account grows to do more just fun and interesting.
The article isn't wrong, lot of overvaluation based on hype... It really has gotten out of hand over the past 2 months in particular.
That said, I'm still not seeing an end to the madness until legalization is sorted out, at the very least. Staying on this rocket ship for now!
You are still in your 20's. Take some risks.
What kind of risks?
Do you mean like the stocks in weed? Put a bunch into the crypto market? I like to invest in hobbys and wanted to get into craft beer as it is huge here in BC but there aren't much options
So more just saying, dont feel like you have to limit yourself to -only- super consistent low risk low return funds like the older folks. (Zing!)
Take a couple of shots in your hobby stocks and maybe some small cap companies (in any sector) that you feel are going to do well. Basically, if you take a huge loss at 30, you still have a ton of time to build back, whereas if you take a huge loss at 60 you cant really recover and as a result need to play it a lot safer.
Looking to start again...thinking if I want to contribute to a US Index or just buy a few of the big tech companies for long term.
I bought some crypyo in the Summer and even a little bit of precious metals for the lols.
how was the crypto swings?
Made a little...hit the mini run and sold a little.
Neat to have some but don't plan to buy anymore crypto right mow