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Wouldn't it just be the daily rate the institution uses? I'd probably go under a few bucks just to make sure I didn't over-contribute to be safe.
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Dec 19, 2013 21:46
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What do you folks use to calculate your internal rate of return on your investments? I'm with questrade, so I have to do it myself. Feeling quite good about myself this week, I managed to rope in 6 people to sign up for ING Direct's (Tangerine soon) $50 promo for new account holders too, so I'm pushing even more money into my taxable account than I was expecting to. I'm okay with buying software (I think my dad has Quicken actually) to calculate it as well..
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Dec 23, 2013 00:51
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rhazes posted:What do you folks use to calculate your internal rate of return on your investments? I'm with questrade, so I have to do it myself. Feeling quite good about myself this week, I managed to rope in 6 people to sign up for ING Direct's (Tangerine soon) $50 promo for new account holders too, so I'm pushing even more money into my taxable account than I was expecting to. I'm okay with buying software (I think my dad has Quicken actually) to calculate it as well.. The only software you need is a calculator. A. Figure out the amount that you put into the account. B. Figure out its present value. Subtract A. From B., that's your gross return. Divide A by that amount and that's your rate of return. I'm pretty sure that's how you do it, anyway.
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Dec 23, 2013 00:59
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tuyop posted:The only software you need is a calculator. When you are constantly adding money into an account, it will have a different return since it hasn't had the same increase necessarily as money that was in it initially. I'd like to know my actual return. Obviously if you have $100k and it grows to $110k, you have earned 10%. But if you then add $100k more right after, giving you $210k, has your overall return shrunk to 5%?
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Dec 23, 2013 01:32
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rhazes posted:When you are constantly adding money into an account, it will have a different return since it hasn't had the same increase necessarily as money that was in it initially. I'd like to know my actual return. Obviously if you have $100k and it grows to $110k, you have earned 10%. But if you then add $100k more right after, giving you $210k, has your overall return shrunk to 5%? Does it matter? Average your rate of return over years, not weeks. I mean that seems like a really deep rabbit hole to me. You could look at every stock or ETF you bought and find the return on each one but why?
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Dec 23, 2013 01:36
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rhazes posted:When you are constantly adding money into an account, it will have a different return since it hasn't had the same increase necessarily as money that was in it initially. I'd like to know my actual return. Obviously if you have $100k and it grows to $110k, you have earned 10%. But if you then add $100k more right after, giving you $210k, has your overall return shrunk to 5%? I've a spreadsheet that I built a while ago that achieves this. IRR stuff is built right into Excel. I'll post it later on (on phone right now).
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Dec 23, 2013 03:05
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tuyop posted:Does it matter? Average your rate of return over years, not weeks. I'm from a science background. I want to have hard numbers showing that I am outperforming a one-fund ING streetwise portfolio or a mutual fund, without making up a phony google finance portfolio to compare all the time, adding faux contributions, etc.- not rely on my intuition and feeling. I'm not interested in thinking I am doing better than the others, I am interested in knowing how well I am measuring up. I think my background helps me realize my failings as a human in terms of pattern-recognition and has really helped sell me on passive index-based investing, because even if I outperformed the market I'd like to think I'd be able to recognize it was due to luck. I actually had my portfolio in some strange stuff earlier this year (CMW and had a huge equities overweighting to VEE) but I got extremely lucky and got rid of CMW and added more assets to reduce my emerging markets exposure which was way overweighted and had a decent (speculative) return from these dumb/lucky choices. Lexicon posted:I've a spreadsheet that I built a while ago that achieves this. IRR stuff is built right into Excel. I'll post it later on (on phone right now). Cool, I'd love to have it.
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Dec 23, 2013 04:19
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rhazes posted:Cool, I'd love to have it. I recently switched from Excel in a VM to Numbers on OS X, and discovered much to my chagrin that it does not support the XIRR function yet. So basically I had to recreate my example in Google Docs, and then download as an xlsx. I'm presuming this will work, but I haven't actually run it on Excel as I don't have a copy to hand. Here's a file showing two irregularly timed "deposits" and then a final balance with the corresponding IRR calculated. Excel's XIRR is exactly what you need for this. https://dl.dropboxusercontent.com/u/2406195/XIRR%20Example.xlsx
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Dec 23, 2013 04:59
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This internal rate of return discussion has been giving me fond recollections of a Corporate Finance course I once took. If you're at all mathematically inclined (this is something of a prerequisite, otherwise you'll have a bad time IMO), you'll be hard pressed to find a course that'll give you more long-lasting 'life value' than an introductory finance course.
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Dec 23, 2013 06:19
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Thanks! It was a bit messed, though. The negative (current) value has to be at the bottom of the list for it to work. It's fixed here, for anyone who wants to use it. https://dl.dropboxusercontent.com/u/64444407/XIRR%20Example_fix.xlsx
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Dec 23, 2013 06:21
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rhazes posted:Thanks! It was a bit messed, though. The negative (current) value has to be at the bottom of the list for it to work. It's fixed here, for anyone who wants to use it. Weird, really? That doesn't make sense to me, because in cash flow analysis, 'contributions' are negative, followed by a positive 'payoff'. Just to be clear, is this the result you got: 
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Dec 23, 2013 06:27
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Lexicon posted:Weird, really? That doesn't make sense to me, because in cash flow analysis, 'contributions' are negative, followed by a positive 'payoff'. Yes it is. Oh, and I think the issue is the chronology, not the negative signs, because my 'fixed' version still works when I flip the signs. I imagine I could have just changed the excel formula to start at the bottom of the column and go to the top too.. And, my TFSA's IRR for 2013 is 26.42%! (I only finally switched from an ING Savings account TFSA which I used previously/last year into a TFSA at Questrade this year, and maxed it in a few large deposits over the year) rhazes fucked around with this message at 08:01 on Dec 23, 2013 |
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Dec 23, 2013 07:55
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rhazes posted:I'm from a science background. I want to have hard numbers showing that I am outperforming a one-fund ING streetwise portfolio or a mutual fund, You almost certainly can't conclude this (that your specific portfolio outperforms some particular combination of funds) with high confidence, given a time frame of even 5 or 10 years -- the variance is simply too large over a time frame as short as that.
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Dec 23, 2013 09:34
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blah_blah posted:You almost certainly can't conclude this (that your specific portfolio outperforms some particular combination of funds) with high confidence, given a time frame of even 5 or 10 years -- the variance is simply too large over a time frame as short as that. Oh, well certainly. I just want to be able to know it's return compared to a say, a actively managed fund with a very similar asset distribution in terms of equities/bonds, US/Canadian/Emerging/EAFE, etc. And no I don't expect that huge return in the future- I attribute that to the fortunate time I added funds.
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Dec 23, 2013 15:20
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Okay, here's a question for those who know better. I want to setup an investment TFSA for both myself and my wife. My look is long term to supplement a pension, so all I'll be doing is buying/re-balancing/forgetting. I currently have about 11k in a TFSA and am able to save 2k/month for the next couple years. At that rate I'll be able to max my TFSA out next year plus throw 10k into my wife's account. Per our budget, we'll be able to max contributions in 2016 and (hopefully) onward. I'm not sure if I should pursue ETFs or An investment TSFA with TD seems like the simplest to use, but getting an account open will be a huge pain because I need to physically travel to a TD location. Questrade seems more complicated to use but a lot easier to get started with. On one hand I have the opportunity cost of waiting to get a TD account versus the brokerage fees associated with making small transactions on a monthly basis. I don't know to even begin to model it or figure out which would be better. Any advice, goons? Are there other (reasonably priced) option I neglected to consider? I've called a couple different banks but they obviously pimp their own wares, and there aren't any Canadian-savvy financial advisers where I live.  e. terminology Guest2553 fucked around with this message at 06:52 on Jan 4, 2014 |
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Dec 28, 2013 03:00
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Don't buy ETFs unless your transaction costs are $0 (unlikely in Canada aside from Questrade). You're likely better off with low MER funds. Even better is a TD e-funds account. Funds are better suited for frequent contributions. ETFs are better suited for infrequent $5,000+ purchases.
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Dec 28, 2013 04:01
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Sounds like Questrade is perfect for you. Free ETF purchases and you don't have to actually go to a branch. Edit: as for setup and ease of use, I find the scanning and electronic signing of documents much less obnoxious than speaking to a tuyop fucked around with this message at 04:18 on Dec 28, 2013 |
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Dec 28, 2013 04:15
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Thanks. Looks like I'll do the questrade thing over the next week or so. Gonna PM you some questions, tuyop. EDIT: Actually I'll just ask everyone since it's probably good information: what are all the fees associated with buying, owning, and selling ETFs with questrade? Their site talks about MER, ECN&SEC/ATS costs, administrative fees and 'standard commission rates' (but doesn't actually say what that standard commission rate is). Am I missing anything? Guest2553 fucked around with this message at 05:53 on Dec 28, 2013 |
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Dec 28, 2013 04:38
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Guest2553 posted:Thanks. Looks like I'll do the questrade thing over the next week or so. Gonna PM you some questions, tuyop. You can buy any ETF for free with Questrade. You will be charged a commission somewhere between 4.95 and 9.95 when you sell depending on the number of shares/units. Any ETF you buy will likely have two fees. One is the MER, one is the management fee. You won't actually see this fee, it is reflected in the price of the ETF. If you go the website for the ETF, it will provide you with the MER and management fee percentage. For instance, the most popular ETF in Canada is the iShares S&P/TSX 60 Index Fund (XIU). The MER is 0.18% and the management fee is 0.15%. You can find that info here: http://ca.ishares.com/product_info/fund/overview/XIU.htm?fundSearch=true&qt=XIU This MER is extremely low and you will find most ETF's have a much higher fee than that. Hope that helps. Kal Torak fucked around with this message at 18:32 on Dec 28, 2013 |
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Dec 28, 2013 06:18
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Be aware: ETFs and index mutual funds are not really opposite concepts - and you're talking as if they are. They have different properties regarding transaction costs, but in terms of the sorts of underlying investments... ETFs are generally a big superset of what's available with something like TD e-series.
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Dec 28, 2013 06:24
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I (think I) get the difference between the two Lexicon, it's just that for the low volume I'll be doing (TFSA investing almost exclusively for the next few years) I don't have a whole lot of flexibility while out of country. It'll probably be a while until I'll be able to do anything other than investing with a registered account since I'm saving for my wife as well as myself. I also didn't realize that MER and management fees were two separate entities, thanks for that link Kal Torak. As far as calculating total costs is concerned, is it standard to only consider the MER since the management fee is reflected in the price of the ETF? Or am I interpreting what you said horribly wrong? For those as ignorant as I am, I found a spreadsheet at CCP that'll gauge how much fees you'll spend on ETFs vs e-Series index funds vs RBC funds. I appreciate the info all around, thanks again.
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Dec 28, 2013 07:47
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Guest2553 posted:I (think I) get the difference between the two Lexicon, it's just that for the low volume I'll be doing (TFSA investing almost exclusively for the next few years) I don't have a whole lot of flexibility while out of country. It'll probably be a while until I'll be able to do anything other than investing with a registered account since I'm saving for my wife as well as myself. Both of the fees I mentioned are reflected in the price. I believe the MER encompasses the management fee which is why it's really the only number you consider. Sorry, re-reading my post, I was not clear on that and probably just confused you further. Any ETF is going to have this fee. If I were you, I would try to determine what kind of ETF(s) I want to own and then check out BMO, iShares, Horizons and Vanguard to see which products they offer. Many of them offer similar products with slightly different MER. Select the lowest cost product that meets the definition of what you are looking for. Kal Torak fucked around with this message at 18:51 on Dec 28, 2013 |
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Dec 28, 2013 18:18
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My philosophy on ETFs vs low cost mutual funds (e-series) is basically this: people should treat the latter as a nice introduction, as they have low (zero) transaction costs and are great for dollar cost averaging through the year. Ultimately though, the aim should be to move onto ETFs at a sufficient portfolio size. They are cheaper at scale, more sophisticated (e.g. Currency hedging or not), and provide access to asset classes unavailable with cheap MFs (e.g. REITs, which I'm a fan of).
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Dec 28, 2013 21:49
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Slightly related... Any of you folks ever use a credit card extended warranty perk? I am not a believer in paying for extended warranties, HOWEVER I have had real lovely luck with dishwashers. I made an exception last time and it paid for itself. I'm going to buy a new one today and the wife and I were probably going to get a warranty, but then I thought about the CC protections. Decent alternative?
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Dec 31, 2013 16:39
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slidebite posted:Slightly related... I used one for my point and shoot camera. It was a bit of a pain but it did work. Make sure you read the terms though. Mine says "doubles the manufacturer's warranty* *up to one year" So basically extends the warranty by a year. They also wanted me to send them a copy of the original mfg warranty, proof of purchase, credit card statement showing the purchase AND you had to get a repair estimate from a repair shop (can't remember if it had to be dealer/mfg authorized or not). Then after they get all that they'll approve it, then you can get it repaired, then they mail you a check some time later for the cost of the repair. I was able to cut some corners on all that and it still went through, like I had to google around to find the canon warranty on their site rather than the one that comes in the box. I didn't have the original receipt but I think the CC statement plus a screenshot of my confirmation email from dell that I had ordered it or something like that was ok. A bit of a pain of a process, not sure if the in-store style extended warranty is easier though. Plus you're out of pocket the repair cost until they reimburse you.
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Dec 31, 2013 20:51
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Never used it myself but I know people who have and like it. As mentioned the burden of proof with CC companies is lower than with storefronts/manufacturers, and I'm told that they'll fix or replaced items stolen or neglected. I generally make larger purchases on credit to get the protection but never had to use it (yet). e. typo Guest2553 fucked around with this message at 06:20 on Jan 1, 2014 |
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Dec 31, 2013 21:09
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slidebite posted:Slightly related... Otherwise, Squibbles already said it- the credit card will double the existing warranty up to an additional year. You'll need to find out what the existing warranty covers versus what the retailer's extended warranty will cover. Because if it turns out that the existing warranty is crap, the credit card will simply add up to an additional year of... well, crap. But on the flip side, the extended warranty may only offer limited protection. tl;dr version- it depends on where your buying the dishwasher from, what the existing warranty covers, and what the store's extended warranty covers.
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Jan 1, 2014 05:36
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Reading through this entire thread... I don't know if it's been corrected yet but I did not see it on the first page of posts. There is no penalty for "early" withdrawing of RRSPs, aside from it possibly being a bad idea depending on your other income that year. The "withholding tax" is not a penalty: it is them simply taking the tax early, just like your employer withholds income tax on your salary. If this ends up being more (or less) tax than is appropriate (calculated as if the money withdrawn from RRSP is standard income), then this is all fixed come tax time. Example: You are 25 and you lose your job at the end of 2013 and have no income in 2014. In mid-2014, you withdraw $5000 from your RRSP and pay "withholding tax" of 5% or 10% or whatever it is. You earn no other income in 2014. Your tax refund for the 2014 tax year (received in early 2015) will refund those taxes, because the government guessed wrong and took extra (it turned out that you are under the $9000 allowance, under which you pay 0% tax rate). Example: You have $100k of income and want to buy a boat or some poo poo so you pull $5000 from your RRSP like a dumbass. 5% or 10% or whatever is withheld. During tax season next year, you will actually owe even more tax, because that $5000 should have been taxed at your marginal rate which is like 38% or some poo poo so you're going to get a tax bill for ~$1500.
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Jan 1, 2014 20:59
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After some research, I've decided to transfer my $10k TFSA from ING to TDWaterhouse, following a version of CCP, with a focus on the TD e-series funds. What fees can I expect from TDW during this process? For example does TDW charge their exorbitant 29$ fee for purchasing e-series funds? Is there an annual fee at TDW for parking my TFSA there? Also, I've heard that TDW forces a minimum purchase of $1000 per fund. Is this true? And if so, would I be better served at the 10k level by using TD itself (instead of TDW)? Jolarix fucked around with this message at 21:32 on Jan 1, 2014 |
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Jan 1, 2014 21:07
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Sassafras fucked around with this message at 07:27 on Jan 10, 2014 |
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Jan 1, 2014 22:20
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I'm finally smartening up about my finances. For the first few years of my career, I've been the typical sucker following the recommendations of my financial advisor guy, and am in a pile of stupid 2%+ MER mutual funds. Based on everything I've read in this thread and various blogs, it seems pretty cut and dry that it is a mistake to go with actively managed funds. If that is true, then please confirm by agreeing with all of the following mostly identical statements: 1) Every last person in the entire world who is invested in an actively managed mutual fund has made a mistake, and should invest in index funds / ETFs instead. 2) If I know of a human who is invested in an actively managed mutual fund, I should with 100% confidence advise them to get out of that mutual fund and invest in index funds / ETFs instead, with no other knowledge about their situation or goals. 3) There are exactly zero people in the world for whom it is makes sense to be in an actively managed mutual fund. 4) People who appear to be doing well on mutual funds are just the lucky outliers - same as someone who wins a hand in Blackjack at a casino is lucky for now, but the game is against them and they're making an irrational financial decision by playing that game. This includes that guy earlier in the thread who said he's happy because his mutual funds are up 10% YTD - he is just lucky and should get out if he hasn't already. 5) The entire actively managed mutual fund market is basically a scam on people who don't know better, and has no reason to exist. Anyway. What is the best way to now get out of this situation? Is my financial advisor guy going to flip poo poo when I say that I want to move everything to ETFs / index funds? This will basically destroy any income he's getting from me. Should I tell him I no longer need his services? In that case, how do I get everything out from the accounts he's created? Or do I just go and get control of them? Or do I already have control of them and just don't know it?
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Jan 1, 2014 23:03
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Vehementi posted:I'm finally smartening up about my finances. For the first few years of my career, I've been the typical sucker following the recommendations of my financial advisor guy, and am in a pile of stupid 2%+ MER mutual funds. 1. Yes, but only if everywhere else has a similar financial system to North America in the whole active-passive fund dynamic. 2. Yes, in a way. I would direct interested people to the same sources that convinced you and let them internalize that and get motivated on their own terms. 3. See 1. And the population for which it makes sense to invest at all is very limited in the whole world, most people would do well just to save for a margin of independence and find happiness and security whatever way they can. 4. Yes. The only game to play is the market's game by mercilessly rebalancing and dispassionately allocating your assets. 5. The reason is to consolidate wealth away from customers into funds and managers. The industry does not exist to benefit the customers. As for how to fix it now, I'd say you should open a discount brokerage account first and then get in contact with that brokerage and explain your situation. They can probably help grease the wheels of the transfer behind the scenes.
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Jan 1, 2014 23:20
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If I'm forced to use RBC Direct Investing for now (no e-series), how well regarded are Vanguard ETFs? Ex: Vanguard FTSE Canada Index ETF Mng Fee: .09 % MER: .10 %
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Jan 2, 2014 02:02
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^^^ I'm just starting to look at those - what's the deal with the two fees listed? Do those get added together to form the real MER?tuyop posted:3. See 1. And the population for which it makes sense to invest at all is very limited in the whole world, most people would do well just to save for a margin of independence and find happiness and security whatever way they can. Thanks. Yeah, I wouldn't literally harass individual people and tell them to move to index funds / ETFs as that is a poor way of convincing people of things; it was just a thought experiment about whether that would be righteous. My work offers a RPP (DCPP) that I contribute the optimal matched amount to for the free money. Is my understanding correct: if I leave the company early, I turn it into a LIRA/LRSP then a LRIF, in order to get income out of it. Is there a minimum age restriction on LRIF? What little I'm reading about it says the company determines what the retirement age for the DCPP was, and that would put the restriction on the LRIF. But that sounds wonky. Is that the case? Regarding marriage benefits, I'm reading back in the thread about getting access to my spouse's unused TFSA / RRSP contribution room. I was unable to find information about doing this - all I could dig up is spousal RRSP, which contributes (using my room) to a RRSP in spouse's name, so both spouse and I can withdraw from RRSPs at a lower marginal tax rate than we would if I otherwise withdrew it all from my own. Is there something more here? Fun fact: I accidentally didn't pay off the entire credit card balance on my american express the other month (I typed $522 when I owed $552), and was hit by a $8 interest bill for that month, which is incredibly more than the (552-522 = $30) x 19% /12months I was expecting. It turns out that if you don't pay the entire balance, the interest is on the entire balance and not just what was unpaid. Never knew this since this is the first time I've ever not paid the entire balance, and I just assumed it worked somewhat in my favour, but of course it does not. Vehementi fucked around with this message at 02:07 on Jan 2, 2014 |
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Jan 2, 2014 02:04
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Vehementi posted:^^^ I'm just starting to look at those - what's the deal with the two fees listed? Do those get added together to form the real MER? I'm not sure the difference. That's from Vanguard's own online comparison table tool. It shows both fees for any fund you can throw at it. Example: RBC Canadian Equity Class Adv Mng Fee: 1.75 % MER: 2.06 % Using the above metrics, it seems Vanguard's ETFs even outshine the TD e-series in some respects. Or am I missing something?
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Jan 2, 2014 02:09
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Jolarix posted:I'm not sure the difference. That's from Vanguard's own online comparison table tool. It shows both fees for any fund you can throw at it.
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Jan 2, 2014 02:11
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Jolarix posted:I'm not sure the difference. That's from Vanguard's own online comparison table tool. It shows both fees for any fund you can throw at it. That's a great tool. Goddamn I need to get out of Desjardins Mutual Fund: Mngt fee: 1.86% MER: 2.28%
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Jan 2, 2014 02:18
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Vehementi posted:^^^ I'm just starting to look at those - what's the deal with the two fees listed? Do those get added together to form the real MER? Yes, the management fee is included in MER.
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Jan 2, 2014 04:11
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Vehementi posted:Is my financial advisor guy going to flip poo poo when I say that I want to move everything to ETFs / index funds? This will basically destroy any income he's getting from me. Should I tell him I no longer need his services? In that case, how do I get everything out from the accounts he's created? Or do I just go and get control of them? Or do I already have control of them and just don't know it? You need to carefully read the fine print of whatever investments you're in. Some mutual funds have a poison pill trailing fee clause that generates penalty 'fees' if you withdraw before X years have elapsed. That aside - don't worry about the advisor. You're taking your business elsewhere - end of story. For registered accounts (TFSA, RRSP) - you're going to want to have the new institution initiate the transfer, so it doesn't count as a withdrawal, etc.
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Jan 2, 2014 05:15
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I'm about to start paying off my student loans in March, but I'd like to start investing for retirement as well. My current short-term goals are: 1) Have a $5000 emergency fund by March 1 (currently at $3059.62) 2) Have an additional $1000 saved to be put in a TFSA Since a majority of my earnings will be going to paying off my student loans, am I correct in thinking I should be starting off with mutual funds? I know the MER is generally lower on ETFs, but I don't think I have enough capital to jump straight into them. I think I read somewhere that you shouldn't start doing ETFs until you have ~$10k to invest. I expect to be putting ~$200-$500 a month towards retirement. Also, if I go the mutual fund route, I should be going with TDW e-series, correct? I am, however, in the process of opening a Questrade account, anyway.
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Jan 2, 2014 05:22
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