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tuyop
Sep 15, 2006

Every second that we're not growing BASIL is a second wasted

Fun Shoe

A security is just a stock or bond. I think there are some weird other stuff like options, too. Don't worry about that stuff.

The risks that you've brought up are actually pretty reasonable, some of them are even likely to happen once or twice in your lifetime.

However, having someone to hide your money behind a curtain does nothing to mitigate those risks. The reason that investments make money is due to the risks that the investors bear. No risk, no money (return). The situation that you're in now is that you're still bearing risk, since it is impossible to avoid*, but someone else is taking most of, or a huge portion of, your return.

The problems are: Nobody can beat the market, it is impossible. People who try to beat the market are expensive and exist just to make your money their money. The market is risky, regardless of whether you invest in it or not.

The solution is pretty straightforward: Go to a discount brokerage like Questrade or TDW. Open an RRSP, TFSA, and a non-sheltered account if you'd like. Transfer your money to them and buy ETFs (which are passively (run by a computer) managed, usually-indexed (which means they just try to match the market), mutual fund stocks) using a distribution from Canadian Couch Potato. Every quarter or once a year or so, some of your funds will have done well and gotten out of whack with your distribution. You have to sell those happy funds and buy more of your sad funds - this is how you buy low and sell high.

*(even if you bought gold bars and stacked them under your bed, there is still a huge amount of risk because of the volatility of gold, if you stacked cash, inflation will eat shitloads of it. There is no risk-free lunch here)

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Lobok
Jul 13, 2006

Say Watt?

Lexicon posted:

PSA: TD is offering a free $100 if you open and automate mutual funds savings by Nov 1st.

http://www.tdcanadatrust.com/products-services/banking/accounts/account-services/automate-your-savings.jsp

A great opportunity to start e-series savings. The branch won't make it e-series for you, but you can send in a form later to convert over to that, and for now focus on getting the bonus.

I assume this automation won't work with transfers from accounts outside of TD correct? I don't have any chequing or savings accounts with TD anymore, just a line of credit.

While we're on the subject, is there a quick 1-2-3 explanation of exactly what one would ask for in setting up these accounts? You have to make a full-on appointment with one of the investment managers at a branch so I don't want them to give me some spiel that distracts me from getting the very simple thing I want. I want to have the e-series TFSA that this thread mentions time and again, which I will have to do the final conversion of myself through the mail-in forms.

Lexicon
Jul 29, 2003

I had a beer with Stephen Harper once and now I like him.

Lobok posted:

I assume this automation won't work with transfers from accounts outside of TD correct? I don't have any chequing or savings accounts with TD anymore, just a line of credit.

I don't see why it wouldn't - my automation is set up from ING Chequing, though this was in place long before a bonus was offered. They shouldn't care, in theory, where the money comes from - their objective is getting people to buy mutual funds.

Lobok posted:

While we're on the subject, is there a quick 1-2-3 explanation of exactly what one would ask for in setting up these accounts? You have to make a full-on appointment with one of the investment managers at a branch so I don't want them to give me some spiel that distracts me from getting the very simple thing I want. I want to have the e-series TFSA that this thread mentions time and again, which I will have to do the final conversion of myself through the mail-in forms.

Just go in, open some subset or all of { RRSP, TFSA, non-registered } regular mutual fund accounts. Listen to the bullshit. Tell them you are planning for the long term, but stick with something conservative for now while you "learn about the markets". Get the accounts open, hopefully score the bonus, then fill in the paperwork to transition them over to e-series. Don't mention e-series in the branch - you're there as a good, little docile mutual-fund-investing Canadian. Once all that business is done, you can get your e-series allocation right, and set the automation for those going forward.

Lexicon
Jul 29, 2003

I had a beer with Stephen Harper once and now I like him.

tuyop posted:

A security is just a stock or bond. I think there are some weird other stuff like options, too. Don't worry about that stuff.

The risks that you've brought up are actually pretty reasonable, some of them are even likely to happen once or twice in your lifetime.

However, having someone to hide your money behind a curtain does nothing to mitigate those risks. The reason that investments make money is due to the risks that the investors bear. No risk, no money (return). The situation that you're in now is that you're still bearing risk, since it is impossible to avoid*, but someone else is taking most of, or a huge portion of, your return.

The problems are: Nobody can beat the market, it is impossible. People who try to beat the market are expensive and exist just to make your money their money. The market is risky, regardless of whether you invest in it or not.

The solution is pretty straightforward: Go to a discount brokerage like Questrade or TDW. Open an RRSP, TFSA, and a non-sheltered account if you'd like. Transfer your money to them and buy ETFs (which are passively (run by a computer) managed, usually-indexed (which means they just try to match the market), mutual fund stocks) using a distribution from Canadian Couch Potato. Every quarter or once a year or so, some of your funds will have done well and gotten out of whack with your distribution. You have to sell those happy funds and buy more of your sad funds - this is how you buy low and sell high.

*(even if you bought gold bars and stacked them under your bed, there is still a huge amount of risk because of the volatility of gold, if you stacked cash, inflation will eat shitloads of it. There is no risk-free lunch here)

Everyone, especially you Baronjutter, should internalize this post. Print it and put it on your goddamn wall.

cowofwar
Jul 30, 2002

by Athanatos

Lobok posted:

I assume this automation won't work with transfers from accounts outside of TD correct? I don't have any chequing or savings accounts with TD anymore, just a line of credit.

While we're on the subject, is there a quick 1-2-3 explanation of exactly what one would ask for in setting up these accounts? You have to make a full-on appointment with one of the investment managers at a branch so I don't want them to give me some spiel that distracts me from getting the very simple thing I want. I want to have the e-series TFSA that this thread mentions time and again, which I will have to do the final conversion of myself through the mail-in forms.
Download the forms to open a mutual funds account and then conversion form. Fill them out, go to the bank and open a mutual funds account then drop off the conversion form once you have your account information.

Saltin
Aug 20, 2003
Don't touch

cowofwar posted:

Download the forms to open a mutual funds account and then conversion form. Fill them out, go to the bank and open a mutual funds account then drop off the conversion form once you have your account information.

It is this simple.

Saltin fucked around with this message at 17:34 on Oct 30, 2013

acetcx
Jul 21, 2011
If you are truly terrified of investing then my recommendation is to take a look at the ING Direct mutual funds. There are four funds. Each fund has four components - Canadian bonds, Canadian stocks, US stocks, and international stocks - but in different proportions as listed below.

Streetwise Balanced Income Portfolio - 70%/10%/10%/10% - very conservative
Streetwise Balanced Portfolio - 40%/20%/20%/20% - fairly balanced
Streetwise Balanced Growth Portfolio - 25%/25%/25%/25% - fairly balanced
Streetwise Equity Growth Portfolio - 0%/50%/25%/25% - very aggressive

ING Direct handles the rebalancing for you so you just need to pick one of the funds, put a bunch of money in it, and do nothing else. It's extremely easy to get started and they support automatic contributions.

The downside to the ING Direct funds is that they have an MER of 1.07% which is higher than you would pay by following the same strategy using TD e-Series funds (approximately 0.4%) or ETF's (varies). The upside is how easy they make everything.

If it seems too complicated or too terrifying to get started then start here. You don't have to stick with it forever, eventually you'll become more confident and maybe switch to TD e-Series or ETF's or whatever. But it's important to start somewhere and paying 1.07% for a few years is a small price to pay if you're suffering from indecision.

Disclaimer: I started with ING Direct funds myself, then switched to a combination of TD e-Series and ETF's after a couple of years.

slidebite
Nov 6, 2005

Good egg
:colbert:

As I mentioned earlier, I am trying to find articles to help convince Mrs. Slidebite that the managed funds are really no better, and in fact worse, then indexed funds.
I found this very recent article which I thought might be interest here.

http://business.financialpost.com/2013/10/11/active-mutual-fund-managers-take-another-beating/

quote:

Advocates of active investment management over passive index investing must be cringing at the latest results of the S&P Dow Jones Indices vs. Active Funds (SPIVA) Canada Scorecard.

SPIVA Canada, which compares the performance of actively managed Canadian mutual funds against their relevant S&P indexes, has become the de facto scorekeeper in the active-versus-indexing debate.

Based on asset-weighted returns for the five years from 2008 to 2012, it is a clean sweep for the indexes. The majority of actively managed funds failed to outperform their comparative indexes in all seven fund categories.

In the three critical categories, Canadian, U.S. and international equities, a staggering 89.7%, 94.4% and 88.9% of the actively managed funds respectively failed to beat their comparative indexes. The best showing was in the Canadian small and mid-cap category, but even here 78.7% of the funds underperformed the index.

What is really dismaying is the massive return shortfall by actively managed funds. Active managers, on average, underperformed their comparative indexes by a shocking 2.85% a year across the seven categories.

Proponents of active management criticize the SPIVA Scorecard on the basis it compares apples with oranges. They argue actively managed mutual funds are real funds with actual costs including management, sales tax, administration and trading.

Indexes, on the other hand, are not investable and simply represent the calculated performance of a particular basket of securities selected according to the rules of the index without any cost deductions.

The advent of exchange-traded funds, which seek to replicate the returns of a particular index, net of costs, has eviscerated this criticism. Since the total cost of broad-market ETFs is typically 0.15% to 0.6% a year, you don’t have to be a math wizard to conclude that Canadian investors generally are way ahead using index-based ETFs over actively managed mutual funds.

Upping a losing tactic just adds to a losing proposition

A recent U.S. report, A Case for Index Fund Portfolios, has taken this analysis one step further. Using historic performance data, it delved in-depth into the question of how index fund portfolios have fared versus comparable portfolios of actively managed mutual funds.

The authors compared the returns of a 60/40 equity/bond portfolio comprised of three index funds managed by Vanguard Group Inc. to 5,000 portfolio combinations randomly drawn from all the actively managed funds available to U.S. investors. Over the 16-year period from 1997 to 2012, the index fund portfolio outperformed 82.9% of the actively managed portfolios.

In other words, active management was a losing proposition more than four out of five times.

Making matters worse, the penalty for losing was much greater than the premium for winning. The median performance of the losing actively managed portfolios was -1.25% a year while the median outperformance of the small number of winning portfolios was only 0.52% annually.

The study also analyzed the results of a broadly diversified, multi-asset class portfolio comprised of 10 index funds for the 10 years from 2003 to 2012. The same picture emerges.

The index fund portfolio’s returns bested those of 90% of the actively managed portfolios. The losing actively managed portfolios suffered a 0.93% annual shortfall while the few winners eked out only a 0.29% outperformance annually.

The study looked at whether adding more actively managed funds to the actively managed portfolios changed their results. No such luck: the proportion of losing actively managed portfolios just increases as more active managers are added. Upping a losing tactic just adds to a losing proposition.

With evidence-based results like these, it’s no wonder more investors, particularly affluent ones, are incorporating indexed solutions such as ETFs into their portfolios.

slidebite fucked around with this message at 20:20 on Oct 30, 2013

tuyop
Sep 15, 2006

Every second that we're not growing BASIL is a second wasted

Fun Shoe
Your point that starting to do the wrong thing is better than doing nothing is valid.

I think it's important to point but that the MER on those ING funds is just a portion of the costs related to active management. You also have to deal with the hidden costs of spreads, commissions, capital gains, and so on. These costs vary and can go up to something absurd like 10%, especially in good market years.

slidebite
Nov 6, 2005

Good egg
:colbert:

Would this be a good thread to talk about Canadian credit cards? That other credit card thread seems to be mostly American from the brief browse I took.

Clipperton
Dec 20, 2011
Grimey Drawer
Me and Mrs Clipperton would like to open TFSAs, and we're trying to figure out how much money we're allowed to put in them.

She's a Canadian citizen but we've been living outside Canada since 2007, and she's only been a resident of Canada since July 2012 so I'm assuming her contribution room is $10,500 ($5000 for 2012 + $5500 for 2013).

I've been a resident since December last year BUT I only became eligible for a TFSA (ie got a SIN) in 2013. So is my contribution room $5500, or $10,500, or what?

Kal Torak
Jul 17, 2003

When Giles sends me on a mission, he says "please". And afterwards I get a cookie.

Clipperton posted:

Me and Mrs Clipperton would like to open TFSAs, and we're trying to figure out how much money we're allowed to put in them.

She's a Canadian citizen but we've been living outside Canada since 2007, and she's only been a resident of Canada since July 2012 so I'm assuming her contribution room is $10,500 ($5000 for 2012 + $5500 for 2013).

I've been a resident since December last year BUT I only became eligible for a TFSA (ie got a SIN) in 2013. So is my contribution room $5500, or $10,500, or what?

You are correct, your wife would have contribution room of $10,500 and you would have $5,500.
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/lgbl-eng.html

Clipperton
Dec 20, 2011
Grimey Drawer

Kal Torak posted:

You are correct, your wife would have contribution room of $10,500 and you would have $5,500.
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/lgbl-eng.html

Thank you! Also:

tuyop posted:

I think it's important to point but that the MER on those ING funds is just a portion of the costs related to active management. You also have to deal with the hidden costs of spreads, commissions, capital gains, and so on. These costs vary and can go up to something absurd like 10%, especially in good market years.

Do you mean by this that ING Streetwise funds have costs in addition to the 1.07% MER? I read the Canadian Couch Potato paper on them and I don't remember anything like that. Sorry, I have a fingernail grip on all this poo poo so there's probably something hugely obvious I'm missing.

Lexicon
Jul 29, 2003

I had a beer with Stephen Harper once and now I like him.

slidebite posted:

Would this be a good thread to talk about Canadian credit cards? That other credit card thread seems to be mostly American from the brief browse I took.

Of course. I have the MBNA Smart Cash World card, which was pretty lucrative on cash-back until TD bought them over and tightened the screws. I also have the Chase Amazon which has fantastic forex rates - they charge the mid-market rate on foreign currencies - which is practically unheard of in Canada.

If anyone has any recommendations for replacing the first one, I'd be all ears. My criteria is pretty much:
- decent cashback or points rate since I pay practically everything by credit card (yes, this is probably inflationary and bad for merchants - but that's the world we live in, unfortunately)
- rental car insurance coverage
- no annual fee, unless the reward payout strongly justifies it

Squibbles
Aug 24, 2000

Mwaha ha HA ha!
I have the aspire world mastercard that gives 2% toward travel purchases. It's a flat 2% on everything but the redemption is a little annoying. It's in tiers until you hit about $600 at which point you can redeem for exact points -> dollars conversion. Below that point you have to pay a set number of points for a dollar range (like X points for anything between $200-$350 where X is $350 worth of points).

It has car insurance plus some travel insurance stuff like trip delay, lost luggage and trip cancellation.

The down side is the fee is $120/year but all but $20 of that is covered by a yearly 10,000 points bonus.

The only annoyance I've had with it is that it seems like a lot of places are now splitting their fees apart. Like when you buy a plane ticket they divide each way of the trip into separate charges on the card which screws you over when you want to redeem flights.

You can use the travel redemption for anything that they deem travel related though so hotel stays, car rental and I remember some people used to even be able to get their toronto bus passes covered somehow since the price bands for that worked out and a transit pass was considered travel.

Kal Torak
Jul 17, 2003

When Giles sends me on a mission, he says "please". And afterwards I get a cookie.

Squibbles posted:

I have the aspire world mastercard that gives 2% toward travel purchases. It's a flat 2% on everything but the redemption is a little annoying. It's in tiers until you hit about $600 at which point you can redeem for exact points -> dollars conversion. Below that point you have to pay a set number of points for a dollar range (like X points for anything between $200-$350 where X is $350 worth of points).

It has car insurance plus some travel insurance stuff like trip delay, lost luggage and trip cancellation.

The down side is the fee is $120/year but all but $20 of that is covered by a yearly 10,000 points bonus.

The only annoyance I've had with it is that it seems like a lot of places are now splitting their fees apart. Like when you buy a plane ticket they divide each way of the trip into separate charges on the card which screws you over when you want to redeem flights.

You can use the travel redemption for anything that they deem travel related though so hotel stays, car rental and I remember some people used to even be able to get their toronto bus passes covered somehow since the price bands for that worked out and a transit pass was considered travel.

I have this one as well and love it. I accumulate points at a ridiculous rate (maybe I just spend too much) and redeeming is super easy. Wouldn't even consider switching cards.

Lexicon
Jul 29, 2003

I had a beer with Stephen Harper once and now I like him.
I'm surprised to hear that the Aspire Travel World is good... Capital One is a notoriously skeezy company. After being a customer of theirs briefly when I lived in the USA for a while (long story - no credit in a new country means you get to deal with the bottom of barrel operators until establishing non-zero credit history), I don't think I could in good conscience sign up for it.

Demon_Corsair
Mar 22, 2004

Goodbye stealing souls, hello stealing booty.
I would definitely love to find out about some better credit cards. Right now I have a RBC Visa with 1% cashback with a $20 annual fee. So I'm definitely going to be switching to that mbna world card.

Assuming nothing better pops up.

Baronjutter
Dec 31, 2007

"Tiny Trains"

So like where do I actually go to get started? What building do I walk into? Who do I talk to? What do I say/ask? How do I handle my tax-free savings accounts and all that? There seems to be a billion options and ways to go about this all. I don't need a billion options, I need 1-2 options or just being told exactly step by step what to do. Like "Go to your credit union, ask for this form, fill it out, make sure to tick box 85B".

Demon_Corsair
Mar 22, 2004

Goodbye stealing souls, hello stealing booty.
I just learned that apparently if you open a TD Waterhouse Cooper Self Directed RRSP or TFSA they automatically have access to the e-series funds. So that may be a good place to start.

I'm starting with chump change though, so I have only looked at Index mutual funds. I don't really know anything about EFTs, which are the better way to invest if you have more then $50,000.

tuyop
Sep 15, 2006

Every second that we're not growing BASIL is a second wasted

Fun Shoe

Clipperton posted:

Thank you! Also:


Do you mean by this that ING Streetwise funds have costs in addition to the 1.07% MER? I read the Canadian Couch Potato paper on them and I don't remember anything like that. Sorry, I have a fingernail grip on all this poo poo so there's probably something hugely obvious I'm missing.

Without doing a ton of research on my part, and assuming that that is an actively-managed fund (judging by the MER, it is), then yes. I mean that. Whenever you buy or sell a stock, including if you are a fund manager, you have to deal with the following costs, among some others (I don't remember the exact list):

Broker commission. This is a fee charged by whatever broker you use.
Stock spread. This is the difference between the bid price (what you buy a stock for) and the ask price (what you sell a stock for). These can be quite steep, and the last time I bought ETFs, the XRB (which is a Canadian inflation-protected bond index fund) spread was like 16 cents on a 23-dollar share. This is set by the market maker and pays for their costs and brokerages and funds sometimes take some of this too. This means that every time you – or, in this case, your broker – buy and sell a stock, you lose a bit of your gains to the spread.
Capital gains taxes. If your fund manager sells a stock that is now worth more than it was when he bought it, in some cases he/she may incur capital gains taxes, these are obviously passed on to you, the investor.
Impact costs. In the case of very large funds, the act of buying a security actually drives its costs up irrespective of that company's earnings, dividend yield, or whatever. This cost means that your fund's holdings can quickly become inflated and any small edge that was gained by actual analysis are eaten up quite quickly. This is a HUGE problem.

Obviously, this makes active management insanely complicated and expensive, for literally no benefit and very often high costs as the average fund manager fails to beat the market (read: their respective index) the vast majority of the time.

Baronjutter posted:

So like where do I actually go to get started? What building do I walk into? Who do I talk to? What do I say/ask? How do I handle my tax-free savings accounts and all that? There seems to be a billion options and ways to go about this all. I don't need a billion options, I need 1-2 options or just being told exactly step by step what to do. Like "Go to your credit union, ask for this form, fill it out, make sure to tick box 85B".

Here is what I would do/what I did:

1. Save $1000 in your chequing account.
2. Go to Questrade.com. Click Open an Account. There are two links, one in the right-hand corner at the top, one in the main bar/banner thing.
3. Fill in the forms. For a TFSA, these forms can be downloaded and digitally signed, it's very quick and painless and there's a handy checklist of required IDs and docs on the page. If you have a scanner or digital camera or cell phone, you can use it to send photos of the required IDs to Questrade.
4. Once all this is complete, some time may pass. Your TFSA will be available is a billable account in your online banking client. Pay a "bill" to this account of the $1000 that you have saved.
5. Some time will pass again, like two days, and then you'll have 1k in your QT TFSA available to invest.
6. Now you have to deal with the trading platform and data package. The Questrade essential platform is the free option you use to actually buy and sell securities. The data package is the thing that, as far as I can tell, dictates how promptly your streams are updated. In both cases Questrade tries to upsell you on the non-free versions of this but the free one is the default and if you get stuck, they're very prompt at answering emails and their IM client is great in my experience. They'll tell you what buttons to push to get the free options.
7. In the client, buy some ETFs, they're commission-free at Questrade. I recommend watching Questrade's youtube videos on this so that you don't mess up. It's like a max of 20 minutes of education.

You can track your market gains or whatever using mint.com more or less reliably. When you want to use your savings, you will have to pay a $25 transaction fee to withdraw the funds.

tuyop fucked around with this message at 23:15 on Oct 30, 2013

Baronjutter
Dec 31, 2007

"Tiny Trains"

tuyop posted:

Without doing a ton of research on my part, and assuming that that is an actively-managed fund (judging by the MER, it is), then yes. I mean that. Whenever you buy or sell a stock, including if you are a fund manager, you have to deal with the following costs, among some others (I don't remember the exact list):

Broker commission. This is a fee charged by whatever broker you use.
Stock spread. This is the difference between the bid price (what you buy a stock for) and the ask price (what you sell a stock for). These can be quite steep, and the last time I bought ETFs, the XRB (which is a Canadian inflation-protected bond index fund) spread was like 16 cents on a 23-dollar share. This is set by the market maker and pays for their costs and brokerages and funds sometimes take some of this too. This means that every time you – or, in this case, your broker – buy and sell a stock, you lose a bit of your gains to the spread.
Capital gains taxes. If your fund manager sells a stock that is now worth more than it was when he bought it, in some cases he/she may incur capital gains taxes, these are obviously passed on to you, the investor.
Impact costs. In the case of very large funds, the act of buying a security actually drives its costs up irrespective of that company's earnings, dividend yield, or whatever. This cost means that your fund's holdings can quickly become inflated and any small edge that was gained by actual analysis are eaten up quite quickly. This is a HUGE problem.

Obviously, this makes active management insanely complicated and expensive, for literally no benefit and very often high costs as the average fund manager fails to beat the market (read: their respective index) the vast majority of the time.


Here is what I would do/what I did:

1. Save $1000 in your chequing account.
2. Go to Questrade.com. Click Open an Account. There are two links, one in the right-hand corner at the top, one in the main bar/banner thing.
3. Fill in the forms. For a TFSA, these forms can be downloaded and digitally signed, it's very quick and painless and there's a handy checklist of required IDs and docs on the page. If you have a scanner or digital camera or cell phone, you can use it to send photos of the required IDs to Questrade.
4. Once all this is complete, some time may pass. Your TFSA will be available is a billable account in your online banking client. Pay a "bill" to this account of the $1000 that you have saved.
5. Some time will pass again, like two days, and then you'll have 1k in your QT TFSA available to invest.
6. Now you have to deal with the trading platform and data package. The Questrade essential platform is the free option you use to actually buy and sell securities. The data package is the thing that, as far as I can tell, dictates how promptly your streams are updated. In both cases Questrade tries to upsell you on the non-free versions of this but the free one is the default and if you get stuck, they're very prompt at answering emails and their IM client is great in my experience. They'll tell you what buttons to push to get the free options.
7. In the client, buy some ETFs, they're commission-free at Questrade. I recommend watching Questrade's youtube videos on this so that you don't mess up. It's like a max of 20 minutes of education.

You can track your market gains or whatever using mint.com more or less reliably. When you want to use your savings, you will have to pay a $25 transaction fee to withdraw the funds.

And I use couch potato to figure out which "ETF" things to buy? And I buy 4 of them? And then every quarter or year or so I check what couch potato recommends and switch my gains around?

Clipperton
Dec 20, 2011
Grimey Drawer

tuyop posted:

Without doing a ton of research on my part, and assuming that that is an actively-managed fund (judging by the MER, it is), then yes. I mean that. Whenever you buy or sell a stock, including if you are a fund manager, you have to deal with the following costs, among some others (I don't remember the exact list):

As far as I know (and I'm mainly going by the CCP paper I linked in my last post here), it's not an actively-managed fund, though:

quote:

The Streetwise Portfolios are a family of index mutual funds launched in 2008 and sold online exclusively by ING DIRECT.

And then later:

quote:

Moreover, in terms of overall costs—including trading commissions and administrative fees—the Streetwise Portfolios may even come out ahead. This is because the 1.07% MER is the only cost associated with the ING DIRECT funds. By contrast, ETF investors typically pay a commission of $10 to $30 for every transaction. Most discount brokerages also charge an annual fee on RRSPs below a certain minimum ($100 plus tax for accounts under $25,000 is common). Some even charge inactivity fees when clients don’t make enough trades. These additional costs can easily wipe out any potential savings from using ETFs with a lower MER.

Bolding is all mine. Again, I don't pretend to know jack poo poo about any of this, just trying to figure it all out.

HookShot
Dec 26, 2005
Right now I have three credit cards.

I have a TD Infinite Travel card which has no annual fee because I have a select service account (or whatever the hell they're calling it). I love the fact that I can book things straight through Expedia with it, that I don't have to pay an annual fee, but the points accumulation rate is pretty low. I use this card basically to book hotels. I use it for a lot of payments that I know are going to be regular forever, since I'm keeping this card, whereas all my others I churn for points.

I also have an Amex gold business charge card, because I want the points. I transfer my points to Aeroplan. It's a good card, they make it easy to pay it off, and the transfers to Aeroplan are instant. First year is free, I'm cancelling in month 11. This is the card I use day to day except at places that don't take Amex and at small businesses because I do feel bad and use my Visa instead.

I have an Aerogold Visa for the same reason. Also no annual fee for the first year. CIBC's customer service sucks though and it's my least favourite. This is my backup card when places don't take Amex.

In two months I'm getting one of the different Amex cards for even more points, but between the referral bonus on the Amex and the bonus on the CIBC and the few grand I've spent on both cards I've already got a free flight to Europe available to me.

HookShot fucked around with this message at 23:34 on Oct 30, 2013

cowofwar
Jul 30, 2002

by Athanatos
I have the MBNA smart cash world mastercard which is pretty good. Pure cash back.

I also have an RBC Visa that I use less often but it gives me 1 point per dollar spent and I can convert it in to cash at around 1 point per dollar and deposit it in to my RBC TFSA.

Neither have fees.

Apparently the Scotiabank cashback one is also good if you have a high enough income.

chang with a k
Sep 11, 2006
I ran into some trouble initially trying to open a Self-Directed TFSA online through TD, using CIBC to transfer my funds.

In the end, phone support just told me to go to a branch and open the accounts that way. So all I did was go to a local TD branch, told them I wanted to open a chequing account and TD Waterhouse Self-Directed TFSA (and RRSP; note: RRSP accounts have annual fees). I had to meet with a TD financial advisor and answer a few questions about my employment, assets owned, etc., sign some papers, but the accounts were basically open by the end of the meeting. Depositing the cheque from CIBC to my TD account took a few days, but after that, everything's very easily managed through TD's online banking. I transferred the cash from my chequing account into the investment accounts, and bought the eSeries as mutual funds using their codes (TDB9xx). The orders took maybe a day to go through.

I went with the model global couch potato portfolio: Canadian, US, and International equities, and Canadian bonds, except with a different distribution, leaning more heavily on equities than bonds. Pretty, pretty, pretty good returns so far.

Baronjutter, I'd recommend reading the MoneySense Guide to the Perfect Portfolio. It's pretty good if you're new to this, and will discuss index investing in more detail. It's better than trying to piece together all the blog posts and poo poo on the couch potato website and on here, anyway.

tuyop
Sep 15, 2006

Every second that we're not growing BASIL is a second wasted

Fun Shoe

Clipperton posted:

As far as I know (and I'm mainly going by the CCP paper I linked in my last post here), it's not an actively-managed fund, though:


And then later:


Bolding is all mine. Again, I don't pretend to know jack poo poo about any of this, just trying to figure it all out.

Fair enough. I'd think long and hard on the costs of that additional like .7% MER compared to the utility you get from having it all with ING, especially since their stuff on fees doesn't apply to many discount brokerages. I just ran that through a quick calculator (1k initial investment, 20k annual contribution), and over ten years that difference in MER accounts for $7 700 in additional fees, which is about 3.6% of your principal, so it's not insignificant.

everyone posted:

Credit card stuff

We use two credit cards, the MBNA Platinum and a PC Financial "World" Mastercard.

I think the PC one is redundant though because the MBNA also gives 2% back for groceries.

I've heard that there are better travel cards but I have no time or motivation to work out the % return and actual utility for the 900

slidebite
Nov 6, 2005

Good egg
:colbert:

tuyop posted:

We use two credit cards, the MBNA Platinum and a PC Financial "World" Mastercard.

I've got a PC Financial MC too, have for years. They sent me a "Black" one a few years back for some reason when nobody had one. Something about me being "valued" or something like that. :jerkbag: It's still PC Points which, to be honest, mean little to me now as I hardly shop at Loblaw stores. It does have nice perks though that I can get a human being immediately when I call, decent insurance and that kind of thing, but that's about it.

I also have a Costco AMEX which I pretty much only use there (Costco, Costco liquor and Costco gas), RBC Gold Visa and an MBNA Plat Mastercard that, the only reason I have is because it's my oldest account from the mid 90s.

I actually like my Costco Amex because I actually use the cash back for Costco, but only about 1/2 the stores even take Amex... so my defacto card is the PC Mastercard.

I'd love to migrate to something else that gives decent cash back.

I am not a fee guy. Every account I have is no fee and CC companies make a ton of money, I hate paying extra just on principal if nothing else. Interest rates mean little to me as I never carry a balance unless I gently caress up and don't pay it off in time.

Edit:
I have Mrs. Slidebite willing to try some ETFs. We've got a non-insignificant amount that is setting in a high interest savings acct right now (PCF) but I want it to grow a bit more but not be super risky. I already have a fair amount of GICs in my RRSP and LIRA, along with several other mutual funds which I think are pretty broadly spread (along with several individual equities). I am going to probably transition most/all of the Mutual funds to ETFs as time allows (bought low load).

That being said, I don't want a super-risky ETF, I am thinking of a dividend paying one like:
https://www.vanguardcanada.ca/individual/etfs/etfs-detail-overview.htm?portId=9560

My thoughts are being that it's largely the big dividend stocks, bank, oil companies, insurance companies, it's probably a "reasonable" choice.

Thoughts?

slidebite fucked around with this message at 03:28 on Oct 31, 2013

Kal Torak
Jul 17, 2003

When Giles sends me on a mission, he says "please". And afterwards I get a cookie.

cowofwar posted:

Apparently the Scotiabank cashback one is also good if you have a high enough income.

Scotia Momentum Infinite. 4% on groceries and gas, 2% drug store, 1% on everything else. Not bad but I get most of my groceries and gas at Costco so not worth it for me. You do need income of 60K (or 100K household) to apply.

slidebite posted:

That being said, I don't want a super-risky ETF, I am thinking of a dividend paying one like:
https://www.vanguardcanada.ca/individual/etfs/etfs-detail-overview.htm?portId=9560

My thoughts are being that it's largely the big dividend stocks, bank, oil companies, insurance companies, it's probably a "reasonable" choice.

Thoughts?

I'd say you are bang on. Those seem about as safe as you can get in the Canadian market. Just my opinion.

Kal Torak fucked around with this message at 03:36 on Oct 31, 2013

cowofwar
Jul 30, 2002

by Athanatos
Careful about frequent purchases of ETFs as unless you have a questrade account these transactions will incur fees.

slidebite
Nov 6, 2005

Good egg
:colbert:

Kal Torak posted:

I'd say you are bang on. Those seem about as safe as you can get in the Canadian market. Just my opinion.
At least I'm not a total idiot :downs:

quote:

Scotia Momentum Infinite. 4% on groceries and gas, 2% drug store, 1% on everything else.
I like the sounds of that.

cowofwar posted:

Careful about frequent purchases of ETFs as unless you have a questrade account these transactions will incur fees.
Not sure if you're talking about me or just generalities, but I'm not a big trader. I have my non-reg account I'd probably just put it all in the 1 ETF and sit on it.

As for the others I'll use my broker (the guy who bought them for me) to tell me when I can get out of them without penalty and go from there. I'll probably just end up buying ETFs that closest mirror the existing fund I am in. As it is with me, I have a "decent" amount of diversification. I am more focused on Canada, but also have some decent US and "emerging markets" and east exposure.

tuyop
Sep 15, 2006

Every second that we're not growing BASIL is a second wasted

Fun Shoe

slidebite posted:

Not sure if you're talking about me or just generalities, but I'm not a big trader. I have my non-reg account I'd probably just put it all in the 1 ETF and sit on it.

If you're looking for a 50/50 bond/stock split, your fees can really eat up any gains you make during an annual rebalancing because bonds typically don't have very high returns. So if you invest, say, 10k in bonds and they return 5% in a year, and then you pay $50 in commissions, your net return is only going to be 4.5%.

This .5% is not insignificant, as I hope I showed in my last post. This is a good reason not to play unless/until you have a lot to invest because at least the fees are flat rate.

slidebite
Nov 6, 2005

Good egg
:colbert:

Fair point. I keep all my equities (with a couple of exceptions) in my TFSA which has 100 trades/year, which is about 90+ trades more than I do. I keep my bonds (and a couple bond funds) and GICs in my RRSPs/LIRA which I really don't touch at all, other than when the GICs mature I roll them to 3 year.

I do pay a fee in my non-reg account which is where this ETF would go, even if it's $50 it's OK by me for the $$$ I'm looking at. If I buy more than a few, I 100% agree, fees will certainly add up and I'll be looking for a low-cost house.

I plan on treating it like my mutual funds...really not touching them unless they really under perform.

Lexicon
Jul 29, 2003

I had a beer with Stephen Harper once and now I like him.

slidebite posted:

I plan on treating it like my mutual funds...really not touching them unless they really under perform.

Danger Will Robinson. You're free to buy and sell as you please - but this sort of timing intention is what leads to most investors, professional and amateur alike, not beating the market.

If you follow an indexing strategy, you don't allow this sort of thinking to influence your purchasing, and in fact, you'll be buying underperforming securities come rebalance time (as they are 'on sale'!).

slidebite
Nov 6, 2005

Good egg
:colbert:

I understand where you are coming from and I chose my words poorly. I have and do ride out the funds and try to "buy low". I don't even know why I said I'd only sell if "under perform" ... I guess if I saw something concerning I might, but I wouldn't do it haphazardly.

I guess what I am saying is I don't babysit my portfolio. I bought much of my equities at 09 on a whim, I just don't really sell them. In fact, I don't know when I last sold any of my mutual funds. As with equities, I have sold some but only when they get stupid. For example, I bought Tek @ about $7 or so, and did sell several at around $35ish.

But thanks for the catch, you are right and I don't sell without thinking through. Buying when others are selling is probably a fairly good strategy. :)

That's what I get for posting after a long day without thinking much first :(

Lexicon
Jul 29, 2003

I had a beer with Stephen Harper once and now I like him.

Kal Torak posted:

I'd say you are bang on. Those seem about as safe as you can get in the Canadian market. Just my opinion.

I respectfully disagree. I'd go with VCN. Covers more companies, more diversified, and is more representative of the entire market. Half the MER. The dividend focus seems like a gimmick unless this is more of a short term (sub 2 year) play.

slidebite
Nov 6, 2005

Good egg
:colbert:

Lexicon posted:

I respectfully disagree. I'd go with VCN. Covers more companies, more diversified, and is more representative of the entire market. Half the MER. The dividend focus seems like a gimmick unless this is more of a short term (sub 2 year) play.
I respectfully ... agree. I didn't see that one earlier somehow.

https://www.vanguardcanada.ca/individual/etfs/etfs-detail-overview.htm?portId=9561

I'll take a better look at it tomorrow. Thanks for bringing it up :)
You're a good egg Lexicon.
Edit: Can you right off buying/selling/transaction fees in a non tax sheltered account? I know you can management fees.

slidebite fucked around with this message at 05:11 on Oct 31, 2013

Kashwashwa
Jul 11, 2006
You'll do fine no matter what. That's my motto.
I changed my TFSA from ING cash account to Questrade so I could buy ETF's. I've made 2.6% profit in 2 weeks. I guess the markets are doing quite well in general.

Anyway, one suggestion - when using Questrade, be sure that you change your CAD to USD if you want to buy a vanguard ETF. I just made a purchase of a Vanguard ETF and noticed I owed Questrade a substantial amount.

If you're looking for a canadian alternative to the Vanguard VTI, iShares XUS.TO is very close.

Kal Torak
Jul 17, 2003

When Giles sends me on a mission, he says "please". And afterwards I get a cookie.

Kashwashwa posted:

Anyway, one suggestion - when using Questrade, be sure that you change your CAD to USD if you want to buy a vanguard ETF. I just made a purchase of a Vanguard ETF and noticed I owed Questrade a substantial amount.


This is only true if you are buying an ETF on a US exchange. If you buy the previously mentioned VCN or VDY, you would not have this problem.

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Kashwashwa
Jul 11, 2006
You'll do fine no matter what. That's my motto.

Kal Torak posted:

This is only true if you are buying an ETF on a US exchange. If you buy the previously mentioned VCN or VDY, you would not have this problem.

Aha - good to know

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