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Thread: Newbie investor with very basic questions

  1. #41
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    Quote Originally Posted by JackJac View Post
    I think the bold portion of your comment explains why many people choose to avoid the stock market. The volatility and unpredictability of the market can turn a healthy hobby into a stressful, obsessive addiction. I think it's fair to say that for most people, investing in themselves and their work will make them rich, and when they accumulated enough savings and near retirement they can turn to fixed-income vehicles such as annuities ...
    True ... the problem is that no one cares for your money like you do.

    Some went this dependable route just to lose millions having a "expert" take care of it for them in retirement. Others are in better shape in that the manager made good $$, the return isn't that great but the $$$ didn't disappear.


    Cheers


  2. #42
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    Quote Originally Posted by Eclectic12 View Post
    True ... the problem is that no one cares for your money like you do.

    Some went this dependable route just to lose millions having a "expert" take care of it for them in retirement. Others are in better shape in that the manager made good $$, the return isn't that great but the $$$ didn't disappear.


    Cheers
    Yep. I definitely think everyone should know about investments and how they work, etc. However, perhaps the stock market shouldn't be a focal point, what with it's unpredictability and healthy dose of luck and all.

  3. #43
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    ^^^

    Isn't "knowing about investments" supposed to include GICs, bonds, precious metals etc.?

    Or are you saying that part of the problem is that the few who want to learn are limiting themselves to the stock market?


    Cheers

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  5. #44
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    Quote Originally Posted by Eclectic12 View Post
    ^^^

    Isn't "knowing about investments" supposed to include GICs, bonds, precious metals etc.?

    Or are you saying that part of the problem is that the few who want to learn are limiting themselves to the stock market?


    Cheers
    Yes, I think there are other "investment" vehicles out there such as annuities, and the average joe would better off learning about those sorts of vehicles as opposed to getting lost in the unpredictable and stressful world of stock market investing. If one has a career that they enjoy and they are reasonably frugal, then turning to annuities as they approach retirement seems like wise move as opposed to spending your free time obsessing over market fluctuations and guessing the future.

  6. #45
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    I found the comment about investing being complicated shows another issue. Investing is only as complicated as you make it. For example, I give money to the bank and earn interest...not complicated. I buy a gic, again not complicated.

    Now, let's take it up a notch...

    I buy and use a product that I love, all my friends use the product as well, I find out the company is publically traded, I go to their website and read up on their financials, it looks like they are doing well, I buy some stock...not complicated.

    Of course you could also go to a broker and buy some convertible debentures in a company that bundles derivative mortgage backed securities with a moody AAA rating. Now, most people I know would have to look up about every second word of that investment strategy...meaning it's probably not a good investment for the average joe.

    My point is, there are simple ways to invest, that probably work quite well that anyone could do...if they wanted to. A good rule of thumb when it comes to investing is, if you don't understand what you are buying, don't buy it. Another is, where does the money come from and where does it go. If you don't know, then you don't know enough (and that included the money the broker makes not just the investments).

    If you take long enough to know those two things, you can probably be an investor who does quite well. It doesn't have to be complicated.
    I'm not JustAGuy (without spaces), or Donald, or <insert name here>.

  7. #46
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    Quote Originally Posted by Just a Guy View Post
    I found the comment about investing being complicated shows another issue. Investing is only as complicated as you make it. For example, I give money to the bank and earn interest...not complicated. I buy a gic, again not complicated.

    Now, let's take it up a notch...

    I buy and use a product that I love, all my friends use the product as well, I find out the company is publically traded, I go to their website and read up on their financials, it looks like they are doing well, I buy some stock...not complicated.

    Of course you could also go to a broker and buy some convertible debentures in a company that bundles derivative mortgage backed securities with a moody AAA rating. Now, most people I know would have to look up about every second word of that investment strategy...meaning it's probably not a good investment for the average joe.

    My point is, there are simple ways to invest, that probably work quite well that anyone could do...if they wanted to. A good rule of thumb when it comes to investing is, if you don't understand what you are buying, don't buy it. Another is, where does the money come from and where does it go. If you don't know, then you don't know enough (and that included the money the broker makes not just the investments).

    If you take long enough to know those two things, you can probably be an investor who does quite well. It doesn't have to be complicated.
    That seems like solid advice. I just have beef with the stock market and the diversified approach that seems to yield little more than HISAs in the long run. I'd rather have cash on hand than throw my money into the matrix, I mean market. Even blue chip stocks are a gamble. Who's to say these companies will be half as strong in the near future as they are now? There's a lot of competition out there and various trends on a mirco and macro level can really be game-changers. When it comes to the stock market -- truly, don't invest more than you can afford to lose. To me, that says it all right there.

    Just my 2 cents.

  8. #47
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    I should have also said keep an eye on what's happening in the world. If the company changes its product and you and your friends are unhappy, it's a good sign to get out of the stock. Again, not complicated.

    If rule 2 changes, re-evaluate the stock. Not complicated.

    Everyone always talks about blue chip companies, but how much do you know about them? IBM was everywhere in the 80's and 90's, what do they do today? What blue chip companies do you use? Bank stocks? Okay, which banks do people like, and which do they not like? Some have better reputations than others, but those reputations also change. So should your investments. If a company has a monopoly (utilities for example) then they are probably safe no matter what they do. If government opens up competition, then get out.
    I'm not JustAGuy (without spaces), or Donald, or <insert name here>.

  9. #48
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    Quote Originally Posted by Jimmy View Post
    Have done a lot of reading on investments,savings, good investment sites, books etc recently as a hobby and interest as am retired too now. FYI Here is a great site where you can plug in your asset mixes, time period and it will calculate the return % and SD%. ie a 25% = wt of TSX, S&P, CDN bonds and EAFE is ~ 5%, SD 10% from 2000-2016. The periodic table of investments tool is pretty neat too ( yearly returns of each category)

    I can't post links yet apparently but the site is Stingy Investor . com and under Tools select Asset mixer.

    Thanks agent99 for your input and Jimmy for the tool.

    I will likely go with couchpotato Portfolio Model 3 ETFs -> 40% BMO ETF Bonds, 60% (ETFs VCN and iShares Intl) limping in/investing the lumpsum over 1 yr.

    Does anyone have any input on what should be put in RRSP vs TFSA vs Regular Account?

    I will likely keep adding to the RRSP from my company that has a fairly low rate for Fidelity Balanced Mutual Fund, so it's the TFSA that's far from maxed out right now. I'm open to changing up the RRSP/Fidelity but feel more comfortable just leaving it.

    So I'm wondering of the 3 ETFs (BMO bond, VCN and iShares Intl), if there's a particular allocation of those 3 I should consider for my TSFA and Regular Investment account.

    Thank you for any advice!

  10. #49
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    Quote Originally Posted by sunshine88 View Post
    I will likely keep adding to the RRSP from my company that has a fairly low rate for Fidelity Balanced Mutual Fund, so it's the TFSA that's far from maxed out right now. I'm open to changing up the RRSP/Fidelity but feel more comfortable just leaving it.

    So I'm wondering of the 3 ETFs (BMO bond, VCN and iShares Intl), if there's a particular allocation of those 3 I should consider for my TSFA and Regular Investment account.
    If the Group RRSP through your company has low MER, I'd agree with just leaving it as is.

    There is no perfect answer for what goes in the TFSA vs non-reg account.
    1) The default would be to put the Bonds in the TFSA because the vast majority of the income generated by the bond ETF wll be interest/Other Income taxed at the full taxation rate.
    2) The default would be to put your VCN into your non-reg account so that you can take advantage of the eligigle dividend tax credit from dividends issued by Canadian corporations. The effective tax rate for eligigle dividends is considerably lower than your fully marginal tax rate.
    3) The Int'l (I assume XAW?) could be best to consider in your TFSA because most of its income would be taxed as Other Income (like Bond interest), but that ETF will also have foreign withholding taxes of circa 15% which are NOT recoverable as a Foreign Tax Credit on your income tax.
    4) There is a school of thought that suggests you put your highest performing asset into the TFSA because it will grow tax free.

  11. #50
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    Quote Originally Posted by sunshine88 View Post
    Thanks agent99 for your input and Jimmy for the tool.

    I will likely go with couchpotato Portfolio Model 3 ETFs -> 40% BMO ETF Bonds, 60% (ETFs VCN and iShares Intl) limping in/investing the lumpsum over 1 yr.

    Does anyone have any input on what should be put in RRSP vs TFSA vs Regular Account?

    I will likely keep adding to the RRSP from my company that has a fairly low rate for Fidelity Balanced Mutual Fund, so it's the TFSA that's far from maxed out right now. I'm open to changing up the RRSP/Fidelity but feel more comfortable just leaving it.

    So I'm wondering of the 3 ETFs (BMO bond, VCN and iShares Intl), if there's a particular allocation of those 3 I should consider for my TSFA and Regular Investment account.

    Thank you for any advice!
    That looks good. I'm not sure what the MERs are for the RRSP . ETF MERs can be as low .10%. There are also no transaction fees for RRSPs though they are minor for ETFs at $10/trade.

    Here are some great articles that lists what investments should go where in what priority. If the ETF MERs are less than the RRSP's, generally, keep it simple w Canadian ETF companies like you mentioned (ZAG, VCN, XAW etc) and generally go TFSA to the limit first.

    As from ^,
    Bond ETFs in the TFSA,then RRSP
    Stock ETFs (from BMO and Canadian companies) that pay dividends in the TFSA (no tax) then regular acct ( little tax)

    Briefly, returns in the RRSP get dinged as regular income on withdrawal, so at 22% or 25% etc or whatever your marginal tax rate is. Hence the taxes are better in the TFSA (none) and regular acct (returns are dividends and capital gains and taxed at a lower rate).


    http://www.taxtips.ca/personaltax/in...ntaccounts.htm
    https://www.theglobeandmail.com/glob...ticle22842779/

    Briefly, try and have your Intl ETF hold the stocks directly vs other ETFs of Intls stocks as it lowers withholding taxes See 'Worlds apart' in the article below. Ishares XAW is good from the couch potato articles

    http://canadiancouchpotato.com/2017/...date-for-2017/

    Here are the couch potato portfolios Option 3 is for ETFs

    http://canadiancouchpotato.com/model-portfolios-2/

    That is a lot for now. You may want to look at a currency hedged version of XAW too or similar to eliminate $ fluctuations entirely. To replace XAW, I use BMO's low volatility currency hedged funds for this ie add ZLH for US S&P 500 low volatility and ZLD for Intl ( rest of the world) . They have the least variable stocks in the larger indexes and are lower risk. Here are a few articles about them. They are likely similar in the long run, just less variable.

    http://www.moneysense.ca/columns/ins...-low-vol-etfs/
    http://canadiancouchpotato.com/2016/...tility-factor/

    Last edited by Jimmy; 2017-05-22 at 04:26 PM.

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