Help with trying to start contributing to one of the tax break "Saskatchewan" funds

[greenhawk]

I was just wondering if anyone could help me with a financial conundrum:

I'd like to sock away a modest amount of cash in either SaskWorks or Golden Opportunities (I am a Saskatchewan resident, and would love to see a tax credit like the one they're offering!), but from what I can tell all the "big 5" banks will charge me a heck of a commission (25/qtr I think with my home bank, RBC) just to handle it for me with their investment divisions.

All I really want to do is put away a bit now (not enough to warrant any real commission fees) and then ramp it up with increases in income, but I just don't know where to go to have them set it up so that it'll be a direct withdrawl from my bank account each month -- and the funds themselves say "go find someone else to do it, that's not us!".

Any advice?

[OhGreatGuru]

You aren't "socking away ... cash". You are trying to buy units of a Labour-Sponsored Venture Capital Mutual Fund. I won't comment on whether or not such funds are a good investment.

From the SaskWorks web page:
Shares in the SaskWorks Venture Fund may be purchased through a licensed Investment Advisor or via a self-directed investing account. If you do not currently work with an advisor, please contact the fund at (306) 791-4813 or saskworks@saskworks.ca to locate one in your area.

What part of this didn't you understand? You either need to buy them through an investment advisor who will charge you fees in some form; or you need to have a self-directed investment account, (like RBC Direct Investing) which also charges fees for transactions (and possibly annual fees depending on the account size), but usually less than an advisor charges.

SaskWorks is not a retail financial institution - they can't sell you their mutual funds directly. And there is no reason why a bank should purchase 3rd party mutual funds on your behalf without charging a fee. If you don't understand this I suggest you stick to savings accounts and GICs.

[Four Pillars]

Here's my opinion on labour-sponsored funds:

http://www.moneysmartsblog.com/inves...x-breaks-lsif/

and

http://www.moneysmartsblog.com/three...ting-mistakes/

[MoneyGal]

UGH. NO THANKS for the memories on that one, FP. (Luckily, I have donuts from that new fried-chicken-and-donut place in your neighbourhood to console me.)

[Four Pillars]

UGH. NO THANKS for the memories on that one, FP. (Luckily, I have donuts from that new fried-chicken-and-donut place in your neighbourhood to console me.)

Fried chicken and donuts - what will they think of next?

Reminds of when I first moved here, I noticed a failed business with a "Coffee & Springroll" sign out front, which I thought was a funny combo.

[Ohmsford]

I was just wondering if anyone could help me with a financial conundrum:

I'd like to sock away a modest amount of cash in either SaskWorks or Golden Opportunities (I am a Saskatchewan resident, and would love to see a tax credit like the one they're offering!), but from what I can tell all the "big 5" banks will charge me a heck of a commission (25/qtr I think with my home bank, RBC) just to handle it for me with their investment divisions.

All I really want to do is put away a bit now (not enough to warrant any real commission fees) and then ramp it up with increases in income, but I just don't know where to go to have them set it up so that it'll be a direct withdrawl from my bank account each month -- and the funds themselves say "go find someone else to do it, that's not us!".

Any advice?

I've got a bit of the Golden Opportunities fund myself and I purchased it using Scotia iTrade. It traded as a normal mutual fund, and mutual funds through Scotia iTrade are commission free if you hold for 90 days (not a problem with the Golden Opportunities 7 year tax stipulation). I'm sure you could also look at a company such as Edward Jones, I originally started with a broker through Edward Jones just in mutual funds and I wasn't charged any fees for the initial investment or the pre-authorized monthly investment plan I set up.

If you have a self directed account through a company like Scotia iTrade, Quest Trade, or similar, the mutual fund code for the Golden Opportunities fund I have is GOF501, but I believe their are two? (not sure) different Golden Opportunities funds and the SaskWorks is different as well.

The tax break is pretty nice when its done inside an RRSP. Since it is such a long term investment to qualify for the tax breaks, just seemed right for me to do it in an RRSP. I made my Golden Opportunities contribution in one investment, and was going to continue that trend yearly, rather then monthly contributions (I have since moved out of Sask so thats not an option) to make it easier to track that 7 year investment timeline. If I was contributing monthly, then after 7 years every month I would be able to sell off a few (however I made that falls in the 7 years old) but I would not be able to change it completely. It would really complicate things, especially in a TFSA or Cash account where you might end up selling a few off early, and then owing that tax money back to the government. Something to keep in mind.

Oh, and Hi, its my first post

[cardhu]

If I was contributing monthly, then after 7 years every month I would be able to sell off a few

… assuming, of course, that the fund hadn’t suspended redemptions in the meantime … lots of LSVC funds have done just that … very few of these funds are actually profitable for the investor … in most cases, the losses outweigh the tax breaks.

[MoneyGal]

I'm sure you could also look at a company such as Edward Jones, I originally started with a broker through Edward Jones just in mutual funds and I wasn't charged any fees for the initial investment or the pre-authorized monthly investment plan I set up.

You weren't charged any VISIBLE fees. Just like that nice man at the car dealership didn't charge you any fees to sell you that car.

[Ohmsford]

You weren't charged any VISIBLE fees. Just like that nice man at the car dealership didn't charge you any fees to sell you that car.

I completely understand the concept of fees with mutual funds, and I know that the MER of venture capital funds is typically atrociously high, I believe GOF501 is around 6.5%.

Sounds like the OP is asking about the trading commissions involved, not the MER. I'm trying to give him/her some information that they asked for, not the trading advice that venture capital funds are bad.

Maybe it's a prairie thing, Saskatchewan has been doing quite well for the last few years, and wanting to invest directly into Saskatchewan through a venture capital fund gives you some diversification rather then picking a couple of the big Sask equities like Cameco or PotashCorp.

[Square Root]

Generally there is a reason you get a tax break to buy these funds. They are usually poor investments with high fees as Cardhu said. i wouldn't ever consider them myself.