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Yup. Stick to your allocation rather than making hasty transaction decisions based on trying to time the market. Of course, it's silly for one's portfolio to be weighted 38% in a small, poorly diversified, resource extraction principality. My Canadian allocation is 15% and even that's probably too high.
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# ? Jan 28, 2015 18:07 |
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# ? May 21, 2024 04:50 |
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It is a bit tougher to stick to than I thought, and to resist trying to buy low, and not buy high (selling will have to wait another 30 years). Hindsight is a taunting bastard, I'm looking at you S&P 500 that is up 23% from last march. On that note, I put in another 10k to max out my employer match. I'm inclined to purchase more shares 1-2k worth each month, in some attempt at dollar cost averaging. But at the same time, I'm under the impression long term I should probably just turn it all into more shares now. Then I'll have the 9k match, so it is more like 19k cash I'll have in my RSP. Figures the markets just jumped up over the last week.
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# ? Jan 28, 2015 18:29 |
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tuyop posted:I need to put some money in an investment that will hopefully generate more return than a savings account but preserve the principal as much as possible in case I need to pay it back (it's a bursary with a service requirement that I might not want to fulfill). What are the risks of losing my contribution room if I put the money in my TFSA and buy a bond ETF? I mean, other than "not 0". I was in a similar type spot and threw the money in a 30-day GIC with Equity Bank, via my Questrade account (you need to call the brokerage desk to buy/sell the GICs). It was piddly, but it got me more interest than it would have sitting in my savings account for the same amount of time.
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# ? Jan 28, 2015 19:56 |
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I have two TFSAs and a savings account totalling about $10k. I can afford to put aside and additional $2-300 per month. Should I open an RRSP or put that money in to my existing accounts? PC Financial TFSA - Long-term savings/emergency fun Mackenzie TFSA - Split 65% in an "Mackenzie Canadian All Cap Dividend Fund Series A" and 34% in a "Mackenzie TFSA High Interest Cash Builder". I am seriously under-informed on what this account is actually doing. My financial advisor opened it for me. The amount I put in to this per month is 30% less than what goes in to my PC TFSA.
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# ? Jan 29, 2015 00:19 |
Ashley Madison posted:I have two TFSAs and a savings account totalling about $10k. I can afford to put aside and additional $2-300 per month. Should I open an RRSP or put that money in to my existing accounts? This person is We need to know your income to answer your registered account question. General wisdom is to save your RRSP room until you're near the top of your earning curve and contribute to your TFSA first.
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# ? Jan 29, 2015 00:55 |
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tuyop posted:This person is My net income in 2014 was $35k. I'm not anywhere near the top of the earning curve in my current job, but my rate of pay will increase slightly this year (tbd). Self-managing is one of my goals for 2015. I need to pick up the required reading from this thread
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# ? Jan 29, 2015 01:28 |
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I learned how to use questrade in 5 minutes from a moneygeek youtube video. It is very simple to do and took my financially skittish wife not much longer to learn. If you are not comfortable making a real trades right away they have a demo platform that lets you experiment with pretend tickers so you can practice whatever you want ( or at least everything you need to buy and hold ETFs).
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# ? Jan 29, 2015 02:16 |
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That is really good to know. Thanks a lot!
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# ? Jan 29, 2015 02:18 |
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Golluk posted:It is a bit tougher to stick to than I thought, and to resist trying to buy low, and not buy high (selling will have to wait another 30 years). Hindsight is a taunting bastard, I'm looking at you S&P 500 that is up 23% from last march.
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# ? Jan 29, 2015 02:21 |
So, I've just been glancing at my portfolio every few months and if it's supposed to be like, 50/50 stocks/bonds but it's sitting at 52.63/47.37, I just leave it. Should I be rebalancing those few shares if the 2.6% difference is like two shares because of portfolio size?
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# ? Jan 29, 2015 03:45 |
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cowofwar posted:Stick to your monthly contributions with your pre-determined distribution based on risk tolerance. But if an index goes on sale then by all means throw some extra money at it. When the TSX is at a yearly low then you could buy some extra index funds. I don't really have any monthly contributions planned for the coming year. With the match, and tax return, I'll pretty much have maxed out my RSP room for next year. I suppose I could try and get myself a year ahead (Contributing in Jan 2016 over my limit for the match, but have it a contribution for 2016 instead of 2015). 3/4 of the indexes I invest in are at or near 52 week highs. I honestly don't really know why either. The bit of economic news I get didn't sound great. But I guess that just tells me I shouldn't be trying to reason out and time my purchases.
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# ? Jan 29, 2015 03:48 |
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I've been reading The Four Pillars of Investing by William Bernstein, but he seems to dislike ETFs for some reason. What's wrong with buying into bond ETFs rather than your bog standard mutual funds?
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# ? Jan 29, 2015 05:00 |
Olive Branch posted:I've been reading The Four Pillars of Investing by William Bernstein, but he seems to dislike ETFs for some reason. What's wrong with buying into bond ETFs rather than your bog standard mutual funds? Can you post a quote that makes you think this? That was... Exactly the opposite conclusion that I took from that book. I mean, I think most of a chapter is almost romantically dedicated to passive mutual fund creators, of which ETFs are one kind.
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# ? Jan 29, 2015 05:09 |
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tuyop posted:Can you post a quote that makes you think this? That was... Exactly the opposite conclusion that I took from that book. I mean, I think most of a chapter is almost romantically dedicated to passive mutual fund creators, of which ETFs are one kind. William J. Bernstein posted:The criticism most frequently leveled at this book's original printing was the short shrift given ETFs. Indeed, since the book was first published in 2002, the popularity of these vehicles has grown to the point where they are seriously challenging more traditional "open-end" mutual funds. Nonetheless, I remain dubious; there is nothing really wrong with ETFs, but I continue to believe that most investors are better off with the older open-end fund format. I do so for four reasons. First, the commissions and spread costs incurred by trading ETFs quickly eat up their miniscule expense advantage. Many ETFs are in fact more expensive to own than the corresponding Vanguard or Fidelity funds. Second, the convenience of being able to trade ETFs throughout the day is in reality a disadvantage; unless you are able to predict intraday market moves--a fool's errand if there ever was one--you are faced with the often paralyzing choice of exactly when to buy or sell. Third, ETFs carry with them considerable institutional risks. Many ETFs have already been liquidated, and I do not trust most of the ETF providers to support these products over the very long term. Last, avoid bond ETFs at all costs. The so-called authorized participant process by which arbitrageurs minimize the discounts and premiums of these funds to their true net asset value does not work well with thinly traded corporate and municipal bonds. In late 2008, the discounts and premiums on many bond ETFs reached several percent for many of these funds, a problem that is not encountered with open-end funds.
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# ? Jan 29, 2015 06:06 |
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Olive Branch posted:but his adamant stance against ETFs is pretty worrying. Why is it worrying? There is no significant reason to prefer e.g. Vanguard mutual funds to Vanguard ETFs (and there's only a small number of ETFs that one should even be considering in the first place).
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# ? Jan 29, 2015 06:25 |
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I want to buy an S&P 500 ETF. Is VOO good enough?
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# ? Jan 29, 2015 06:32 |
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Why not VTI instead? (i.e., why just the S&P 500)
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# ? Jan 29, 2015 06:41 |
Olive Branch posted:Sure. I'm quoting from the 2010 version's post-script, after the crash of 2008. Bolding is mine. Yeah that's very strange. I'll have to reread to figure out his argument for open-ended mutual funds (which are...?) again, since I wasn't really seeing a difference the first time.
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# ? Jan 29, 2015 06:53 |
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tuyop posted:So, I've just been glancing at my portfolio every few months and if it's supposed to be like, 50/50 stocks/bonds but it's sitting at 52.63/47.37, I just leave it. Should I be rebalancing those few shares if the 2.6% difference is like two shares because of portfolio size? Also why so conservative? 50% bonds is very high.
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# ? Jan 29, 2015 07:52 |
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Kal Torak posted:The BoC hasn't cut rates since 2009. And in 2010 the BoC raised them 3 times and the banks all raised the prime rate the very next day. These evil telecoms and banks shouldn't be your enemy, they should be a part of your diversified investment strategy. tuyop posted:So, I've just been glancing at my portfolio every few months and if it's supposed to be like, 50/50 stocks/bonds but it's sitting at 52.63/47.37, I just leave it. Should I be rebalancing those few shares if the 2.6% difference is like two shares because of portfolio size? First why are you so deep into bonds? Otherwise you can just shift your new contributions more so into bonds to balance if you have ocd.
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# ? Jan 29, 2015 07:59 |
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blah_blah posted:Why is it worrying? There is no significant reason to prefer e.g. Vanguard mutual funds to Vanguard ETFs (and there's only a small number of ETFs that one should even be considering in the first place). EDIT: And his claim that he doesn't trust ETF providers to keep continuing them, as well as how bond ETFs are apparently a terrible idea.
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# ? Jan 29, 2015 08:01 |
cowofwar posted:Most people rebalance once a year with purchases. So if you had a 50/50 split and you normally put 5k a year in each, next year just adjust the contributions to bring it back to 50/50. No point eating fees just to make the numbers pretty. Just an example. I have an 80/20 split IRL.
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# ? Jan 29, 2015 14:18 |
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blah_blah posted:Why not VTI instead? (i.e., why just the S&P 500) Fair question Will look into that too. Thanks
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# ? Jan 29, 2015 15:52 |
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Olive Branch posted:EDIT: And his claim that he doesn't trust ETF providers to keep continuing them, as well as how bond ETFs are apparently a terrible idea. I had the same worry reading that excerpt from Four Pillars, so I looked around at what other people were saying. I think Rob Carrick makes a good argument for ETFs over bond mutual funds, and especially over the DIY approach. http://www.theglobeandmail.com/globe-investor/investment-ideas/article11875440.ece/BINARY/0511_gi_carrick+%282%29.pdf
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# ? Jan 29, 2015 17:03 |
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tuyop posted:I need to put some money in an investment that will hopefully generate more return than a savings account but preserve the principal as much as possible in case I need to pay it back (it's a bursary with a service requirement that I might not want to fulfill). What are the risks of losing my contribution room if I put the money in my TFSA and buy a bond ETF? I mean, other than "not 0". I'd put it in a GIC until you decide whether you're going to meet the requirement to keep it, then once you know, put it into your normal savings pool and invest it as you've done with your other money. Don't use your TFSA as if you have to return it you'll have wasted some of your contribution room for the year. Don't buy a bond fund as they're just as likely to go down as anything else if (for example) there's an indication that rates will start to go up. tuyop posted:So, I've just been glancing at my portfolio every few months and if it's supposed to be like, 50/50 stocks/bonds but it's sitting at 52.63/47.37, I just leave it. Should I be rebalancing those few shares if the 2.6% difference is like two shares because of portfolio size? I personally wouldn't bother, the trade fees for a lot that small are going to kill any benefit you might get. Just adjust with your next contribution by buying the one that's under-represented.
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# ? Jan 29, 2015 17:23 |
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I very briefly had a group RRSP with my previous employer before I got laid off. I'd like to move that to my Tangerine RRSP savings account so I can have everything in the same place and start up a proper index fund and be a bit more serious about the "investment" part of this RRSP thing. Who is responsible for these transfers, the group RRSP I'm transferring from, or the Tangerine account I'm transferring to? I suppose that in the latter case, I'll need to get account information for the group RRSP?
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# ? Jan 29, 2015 18:18 |
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Kalenn Istarion posted:Don't buy a bond fund as they're just as likely to go down as anything else if (for example) there's an indication that rates will start to go up. Can someone explain why this is the case? I thought rising interest rates would cool down equities and therefore create increased demand for bonds.
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# ? Jan 29, 2015 18:18 |
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Mantle posted:Can someone explain why this is the case? I thought rising interest rates would cool down equities and therefore create increased demand for bonds. If interest rates rise (quickly), portfolio managers might want to sell lower interest rate bonds at a discount in hopes of buying higher interest rate bonds. There is only so much money in a fund, and if you are tying up significant capital for low rates of return over a long period, you might see investors move their assets to another fund that is more aggressively managing their bonds.
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# ? Jan 29, 2015 18:46 |
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jm20 posted:If interest rates rise (quickly), portfolio managers might want to sell lower interest rate bonds at a discount in hopes of buying higher interest rate bonds. There is only so much money in a fund, and if you are tying up significant capital for low rates of return over a long period, you might see investors move their assets to another fund that is more aggressively managing their bonds. No They will go down because the underlying bonds will get cheaper as I will explain below. Edit: Relative aggressiveness of fixed income managers just determines broadly how far along the risk curve they position themselves. A riskier / more aggressive manager will own junk bonds in exchange for generally higher yields while a conservative manager will own IG bonds which have lower yields but order of magnitude lower risk of default Mantle posted:Can someone explain why this is the case? I thought rising interest rates would cool down equities and therefore create increased demand for bonds. Bond prices are negatively correlated to interest rates. For any given credit risk, the market will adjust the prices of bonds until they pay equivalent yield to maturity. For example, if a new issuer needs to offer 8% interest to sell the bond to new investors, and has a BBB credit rating, then why would other investors continue to own a bond with a nominal coupon of 6%? They would, if they could buy that 6% bond for a price that gives them an effective interest rate of 8%. The math behind this means discounting the bond principal and nominal coupon (interest) payments at the prevailing interest rates and I've shown it in this thread before so just look at my post history for the math. Short version, rates up = bond prices down Kalenn Istarion fucked around with this message at 18:55 on Jan 29, 2015 |
# ? Jan 29, 2015 18:53 |
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Kalenn Istarion posted:Short version, rates up = bond prices down If this is the case, is it possible for both equities and bonds to go down if interest rates are too high?
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# ? Jan 29, 2015 22:18 |
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Mantle posted:If this is the case, is it possible for both equities and bonds to go down if interest rates are too high? Yes, however the relationship between rates and equity prices is nowhere near the almost strict correlation that bond prices have. There are a whole bunch of factors that go into pricing equities that aren't as relevant for bonds.
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# ? Jan 29, 2015 23:46 |
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Then is it still safe to say that bonds are a hedge against declining equities? I guess the question I have is, if the Canadian economy is going to suck this year and next, Canadian equities are going down, right? But at the same time, if interest rates go up Canadian bonds will go down as well? Is this something that is likely to happen over the next 2 years?
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# ? Jan 30, 2015 00:29 |
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Jan posted:I very briefly had a group RRSP with my previous employer before I got laid off. I'd like to move that to my Tangerine RRSP savings account so I can have everything in the same place and start up a proper index fund and be a bit more serious about the "investment" part of this RRSP thing. Who is responsible for these transfers, the group RRSP I'm transferring from, or the Tangerine account I'm transferring to? I suppose that in the latter case, I'll need to get account information for the group RRSP? A word of caution- when transferring investments, a lot of the financial institutions really drag their feet. They're not exactly in a rush to help you take your money out of their accounts. Your new financial institution is excited to get the transfer moving, but your old FI- not so much. It can take a while for the transfer to be completed, and you might need to call the old bank a number of times to get things moving.
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# ? Jan 30, 2015 00:46 |
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Mantle posted:Then is it still safe to say that bonds are a hedge against declining equities? I guess the question I have is, if the Canadian economy is going to suck this year and next, Canadian equities are going down, right? But at the same time, if interest rates go up Canadian bonds will go down as well? Debt is generally not correlated to equity so in that sense it's definitely a hedge. Will it always move opposite to equity? No. This is hilariously over-simplifying it but, in general, equities will tend to be rising when rates are rising. Rates rise after all to counter inflation, which is usually driven by economic expansion, which is good for equity. However, this breaks all the loving time. A specific example of it breaking might be when rates get really astronomically high, and equity investors sell equities because of the inevitable cooling effect high rates will have on economic expansion.
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# ? Jan 30, 2015 01:25 |
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So I just picked up a TD E-Series account. Looking at the two TD U.S. Index Funds, one in $CA, one in $US. When our dollar is in the tank like this which should I be buying?
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# ? Jan 30, 2015 04:24 |
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Sassafras fucked around with this message at 23:04 on Feb 2, 2015 |
# ? Jan 30, 2015 04:31 |
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melon cat posted:Tangerine is responsible for the transfer. But, since they're a virtual bank you'll probably need to download and print out a form, complete it, then mail/fax it to one of their central administration offices. It looks like this is the form you need. Alright, that's about what I expected. I'm not too concerned about them dallying for the transfer, there's probably only one, maybe two paycheques' worth of contributions in there. It's more of a "while I'm at it" thing. The bigger issue is the fact that I've had my RRSP contributions in a savings account for 2 years now, telling myself "oh I'll move them somewhere else later". I guess it could be worse, the interest rate still beat inflation for that period.
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# ? Jan 30, 2015 04:52 |
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Franks Happy Place posted:The Canadian dollar had a bit of a bounce up this week, and since I think it's short-lived I decided to take the opportunity to put some of my TFSA fund into a U.S. dollar-denominated index. Just figured I'd take this opportunity to remind everyone that no matter what your diversification strategy (e.g. I'm personally avoiding bonds right now), it's almost never a bad idea to have some degree of currency diversification too!
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# ? Jan 30, 2015 05:33 |
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Your username and AV are rather fitting at the moment. But I agree, my US index fund has made my other funds gains look like a pittance with the dollars drop.
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# ? Jan 30, 2015 16:39 |
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# ? May 21, 2024 04:50 |
Tangerine accounts set up, payroll deposit moved, starting to switch all my automatic debits. They have already given me a $50 bonus (yay free money)! Appointment to set up my eSeries accounts is set for early next week. So now its time to start thinking about allocations! I have been thinking of 40% US, 20% Canadian stocks, 20% Canadian bonds, 20% foreign market. I have at least 20-25 years of work until retirement (probably longer though because I like what I do) so I don't have to worry yet about sheltering more of my cash from market volatility correct? And, should I set up the same ratios in both my RRSP and TFSA or somehow average the ratio across both types of accounts?
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# ? Jan 30, 2015 17:13 |