# I think I am Ready to Start Investing :)



## marshymell0 (Nov 29, 2013)

Hi,

Background info:
I am 24 and have been working full time at a stable job for one year now, passed probation
My Goal: Save up for a downpayment for a house probably in about 5 years

Current Financial standing:
I do not have any debts (aka student fees, car also fully paid for) and am currently renting $800/month as my only real expense and of course groceries

My income is about 60K/yr 
I have a TSFA account (almost maxed) at about 23-24K (all my finaces are currently with RBC)
I will be looking to open an RRSP account for this year, which according to my taxes I can put about $12K in
So I basically have $35K to "invest" (23K TSFA and 12K RRSP)

I've read as a general rule that I should not be looking into ETFs on the Couch Potato site until I have at least 50K to invest, and to start with index funds and then once I "build that up" to at least 50K to start looking at ETFs. I have also read about percent splits between equitys (Canadian/US/International) and also having some bonds as well.


I actually have a meeting with a ScotiaBank advisor this weekend that a family friend recommended and set me up with. I am planning to open an account with TD as well (it seems from the forums a lot of people like their index funds) so I will have 3 banks (BNS, TD, RBC) to "split" my assets over..

So, as a next step, is going to ScotiaBank and just asking them what index funds and bonds they offer and research them (their splits) and come up with a "portfoilio" the proper way to go about this, then going to TD and RBC to do the same thing?

Also, knowing my long term goal of a downpayment (and also I heard about the First Time Homebuyers using my RRSP contribution which I look to use)....am I REALLY in a position to "start investing" with risks, or should I wait until I build up even more savings by working a bit more

Thanks in advance for any guidance!


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## MoneyGal (Apr 24, 2009)

The Scotia advisor is not going to recommend index funds to you, nor individual bonds. They are going to recommend actively-managed proprietary mutual funds. That advisor's job is to sell those funds.


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## marina628 (Dec 14, 2010)

I would choose one bank to deal with because the fees will be less once you reach $50,000 ,TD e-series TDB900 ,TDB902 ,TDB911 good place to start.


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## Four Pillars (Apr 5, 2009)

Pick one bank or one discount brokerage - not three.

If you are going to use the money in five years, then I would avoid equity investments - stick with something safer.


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## Rusty O'Toole (Feb 1, 2012)

I have an account with Scotia ITrade and they offer more than 50 popular ETFs commission free. You could start an account with a few hundred $$$$$ bucks and buy the ETFs each month out of savings, or however you like to do it. There is no reason to wait till you have $50,000 or some ridiculous amount.

Other brokerages offer similar deals and investment plans for the small investor.

There is a method of investing called Dollar Cost Averaging which means, buying the same $$$$ worth of an investment each month. When it is cheap you get more shares for your money, when it is expensive you get less. The result is over a period of a few years, you have a lower average cost per share because you bought more when they were cheap.

The point is, you can start investing without large amounts of money and without some big elaborate plan. Start off small, keep learning and getting experience and you will get the hang of it.

I'm very leary of investment advice from banks. I used to believe they knew what they were talking about but found out different.

Do you know banks are one of the poorest paying places to work? What does that say about bank employees ability to make shrewd financial decisions? They learn to sell what the bank tells them to sell, which is usually more profitable for the bank than for you.


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## Taraz (Nov 24, 2013)

If you _have_ to buy a house in 5 years, I wouldn't put it in the stock market. If you're flexible (i.e., if you can delay your house purchase a few years based on how your stocks are doing, without anyone getting upset), then go for it. 

I agree with the above comments; the investment advisor I talked to at TD wasn't particularly knowledgeable, and they want you to actively manage a large number of stocks so _they _make more money. Indexed mutual funds (not necessarily ETFs) with a low MER are probably your best bet for the timeline and amounts that you're describing.


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## wendi1 (Oct 2, 2013)

I was never very impressed by bankers investment advice, either. You will need a lot more money before the smart folks will be willing to take you on. 

Agree about the house, as well - down payments should be kept in a HISA or GIC if you are going to buy a house within 5 years. I would max out my TFSA and get $25K in my RSP before going to the stock market. 

No advantage to 3 separate banks - interview them all, if you have the time, but pick one. An index fund is an index fund, the only real difference is the MERs. The really cheap MERs come from Vanguard (though TD has some e-funds which are quite cheap, as well - I think these are only sold on-line, your banker might not even know about them).

At your age, you want to minimize costs - make sure there is no annual fee on your accounts, or that they waive them. Make sure that purchases of ETFs or indexed mutual funds are low-cost ($10 is fair) or free. And make sure they sell low-cost ETFs or indexed mutual funds. You're in no hurry, remember - saving up your house down payment will take some time.

And save, save, save!


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## Oldroe (Sep 18, 2009)

You only deal with banks when you are telling them what to do.

The 1st person you talk to is just a sales person as you get more investments you can move up to more qualified people, but you still will have to learn the word "NO" and "WHY".

You really need to study investing before you start placing your money.


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## AltaRed (Jun 8, 2009)

As mentioned by others, if you are seriously thinking about a house in 5 years, you need to protect capital, and in the meantime, get the best rates you can on your savings such as High Interest Savings, and potentially some GICs with 2, 3, 4 years maturity within RRSP and TFSA accounts. The major banks do not offer the best rates for High Interest Savings or GICS. For that you need to go to places like Canadian Direct Financial, Peoples Trust, etc. Peruse http://www.highinterestsavings.ca/ for a number of options (they pretty much all offer TFSA and RRSP accounts).

IF you are set on starting your investing career now, then either go to one of the bank discount brokerages where you can get better rates on GICs from a variety of institutions than with the banks (which offer only their own), and access to higher interest rates with their own ISA offerings (typically 1.25%). If you wish to start with mutual funds, then the TD eFunds are the most cost effective. With RBC Direct Investing, you can purchase their D series of RBC funds which typically offer MERs 0.25-0.50% less than the standard A series of mutual funds that are sold by the banks. In other words, the banks are not really the place to go for investment advice or investment portfolios.


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## My Own Advisor (Sep 24, 2012)

_I've read as a general rule that I should not be looking into ETFs on the Couch Potato site until I have at least 50K to invest, and to start with index funds and then once I "build that up" to at least 50K to start looking at ETFs. I have also read about percent splits between equitys (Canadian/US/International) and also having some bonds as well._

If under $50k to invest, then yes, look at ETFs later.

_
I actually have a meeting with a ScotiaBank advisor this weekend that a family friend recommended and set me up with. I am planning to open an account with TD as well (it seems from the forums a lot of people like their index funds) so I will have 3 banks (BNS, TD, RBC) to "split" my assets over.._

Avoid buying the bank's products and more importantly, you don't need 3 banks to "split" assets over unless you're going to own stock in BNS, TD, RBC


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## Siwash (Sep 1, 2013)

I ain't no expert, but I'd skip the meeting with the bank guy… you can do this yourself and make better decisions if you research a bit and use this forum! I'd recommend "Millionaire Teacher" as a first read.


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## Siwash (Sep 1, 2013)

I'll add don't rush to buy a house… it's an overrated "investment"

Right now, renting is cheaper and will be for a while… but in 5 years you should be able to take advantage of a looming correction.


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## Butters (Apr 20, 2012)

You can buy EFT for free from some brokers
Questrade is good
build up using EFT, then when you get 50k you can buy single stocks

dont go crazy as you need 25k rrsp for home buyers and your other cash for your 20% down


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## blin10 (Jun 27, 2011)

Siwash said:


> I'll add don't rush to buy a house… it's an overrated "investment"
> 
> Right now, renting is cheaper and will be for a while… *but in 5 years you should be able to take advantage of a looming correction.*


how do you know that ? I heard same thing for the past 10 years from various people, hmm


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## the-royal-mail (Dec 11, 2009)

Before all of this, you need to save up an emergency fund, held in cash like GIC or HISA. Plan on 6-12 months living expenses unaided. Only after you have that cash saved should you then proceed to save for your house DP or investment savings. what you are proposing now is to invest every penny you've saved and then to take that money and sink it into RE in 5 years, without having a penny for emergencies that will crop up. Apologies if I've misunderstood your intent; feel free to clarify.


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## Oldroe (Sep 18, 2009)

When and if this house correction every happens it will take a few years to see a flood of repossessed houses.

The people that put minimum down payments have known for 3-5 years that losing their house is likely. So you get a bunch of run down property's to look at. And the banks don't loses money easily, they prices these repo at what they have in them. So maybe 5-7% off there original purchase price. It's no deal.

Any of these repo property's that had 25% down and people lost back to the bank are all bought up by re estate agents and people with like connections.

How do I know this. We bought our current house in 1993. The hangover from the house correction was still going. We looked at 250 property's (drive by) that were repo's. Most still had the white sheriffs paper on the door. Just from the road they were run down junk that need lot's of work (not what we where looking for).

We bought a house that I valued at 145k and were (un heard of at time) bid up to 154k. Because large lot and mint shape. Still a better deal than painting lip stick on you know.


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## Siwash (Sep 1, 2013)

blin10 said:


> how do you know that ? I heard same thing for the past 10 years from various people, hmm


House corrections have always happened… why is it different now? Ask my dad who bought two "investment properties" in 89… Interest rates were higher then, yes.. but debt was way lower 20+ years ago… he didn't have debt and bought them outright and still got burned… debt is going to kill us this time 'round.. IMHO.. aren't we at 163% for every $1 earned?

Another way to look at it is this way; house prices have at least tripled in the GTA over a 12 or 13 year period. Can you see a tripling of prices again over the next decade or so? Have wages tripled over this period? They've barely kept up with inflation… I had a wage freeze (actually a tiny reduction to be exact). Will wages rise much to keep up?Doubtful… so we're falling further behind.. at some point, a rate increase will happen… and even a point or more will have a HUGE impact… I know people who are living pay check to pay check carrying big mortgages and credit card debt… it'll take a modest percentage of the pop. who've bitten off more than they can chew to screw this up… 

So what has fuelled the prices increases? Debt, not wage increase.

I don't know about you, but I think this is a _potential_ disaster waiting to happen.. the longer it goes on, the worse the fall will be… How long can we continue at this rate? 

At the very least, the OP won't have to worry about huge gains as we've seen.. flattening out is probable.. correction? I wouldn't rule it out.. it's happened just about everywhere else..


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## Siwash (Sep 1, 2013)

Oldroe said:


> When and if this house correction every happens it will take a few years to see a flood of repossessed houses.
> 
> The people that put minimum down payments have known for 3-5 years that losing their house is likely. So you get a bunch of run down property's to look at. And the banks don't loses money easily, they prices these repo at what they have in them. So maybe 5-7% off there original purchase price. It's no deal.
> 
> ...


Well, not sure where you lived at the time, but where I grew up, there were quality homes that sat, and sat, and sat.. An agent called up my parents at the time (I was in my late teens in the early 90s), and literally begged them to buy a 1 acre lot on a very prestigious street for $375K.. probably could have got them down to $350.. that was 1994. It was a fine property - basically turn key… the agent knew my folks had cash (while tons of others were going belly up, their business thrived) so she would call them every month! They really regret that decision today. 

So there were lots of solid properties that couldn't sell.. not all repos…


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## Oldroe (Sep 18, 2009)

If you sell a payed off property's in a correction you lose.

I couldn't give a hoot what our house is worth day tomorrow or in 5 years. That everybody else owes $163 for every dollar is another thing I couldn't give a hoot about. I like that because when every thing goes in the dumper I will be buying.


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## the_apprentice (Jan 31, 2013)

Although the facts may point towards a correction, I just don't see it happening. I see the economy more likely to crash before we see a housing market correction. The demand for housing could fall or stagnate, yet prices will remain. There are several people on the sidelines waiting (even those who may not be able to afford it) who would leverage a property at a discount in a heartbeat. I just don't see a correction happening...

As for the OP, you could put a down payment on a property as your first option. Buy a place you'd like to live in (pre-construction will give you some time to save) and if it doesn't work out you would always try to rent or sell it (worst case scenario). Secondly, start investing in some Mutual Funds, ETF's, and in one or two stocks. By diversifying and investing using different outlets, you can determine which results work best for YOU; which gave you the best returns and which were too risky or not risky enough.

You're off to a great start though.


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## Siwash (Sep 1, 2013)

If the economy crashes (ergo layoffs, less spending) how can this not affect housing???

I don't care what happens to housing as we are renting and will continue to do so for quite some time.. it's way cheaper than owning… ad we've started to invest our cash and save like crazy..


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## the_apprentice (Jan 31, 2013)

Anything can happen, agreed. I just don't see a significant housing correction on the way (my opinion). I bookmarked this thread and look to discuss this topic further in the future.


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## Oldroe (Sep 18, 2009)

It will affected housing. It will be a buyers markets. The selection will be all run down fixer up property's that just need a ton of money.

Nobody will be selling quality payed off property's unless they lose their job.

If I was to buy a house today 25% down and aggressively reduce my mortgage until the this interest rate hike that will make this correction happen and wait another 2-3 years for it to really set in. I will be still sitting on a propriety 50% payed off. You will still be renting and still begging banks for a mortgage.


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## londoncalling (Sep 17, 2011)

Siwash said:


> I'll add don't rush to buy a house… it's an overrated "investment"
> 
> Right now, renting is cheaper and will be for a while… but in 5 years you should be able to take advantage of a looming correction.


Depends on where you live... Vancity and TO yes. Other places maybe, maybe not.


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## Siwash (Sep 1, 2013)

Oldroe said:


> It will affected housing. It will be a buyers markets. The selection will be all run down fixer up property's that just need a ton of money.
> 
> Nobody will be selling quality payed off property's unless they lose their job.
> 
> If I was to buy a house today 25% down and aggressively reduce my mortgage until the this interest rate hike that will make this correction happen and wait another 2-3 years for it to really set in. I will be still sitting on a propriety 50% payed off. You will still be renting and still begging banks for a mortgage.


What about people in their 60s and 70s (there's TONS of them!) who'll need to exit out of big, family detached homes? They will add to the supply and it'll be a good number.. My parents are an example. Empty nesters clinging to a 3300 sqft home… they're selling soon and likely going to rent.. many will go into retirement homes or sadly, pass on over the next decade. 

This is a BIG cohort we don't talk about much when it comes to the impact on the detached housing market. I just think that some folks think hat if they don't get in today, that's it! they'll be shut out!

I have banks begging me to buy a mortgage. My wife and I are tenured teachers at the top of the pay scale. I have more job security than 95% of Cdns. I am not too concerned about obtaining a mortgage..

Now here's another way to look at this; would you rather pay 2.5% rate on a $750K home or 4% on a $600K home? What would you rather have? A lower rate or lower capital cost? 

I know what I'd choose…


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## Siwash (Sep 1, 2013)

londoncalling said:


> Depends on where you live... Vancity and TO yes. Other places maybe, maybe not.


I live in the GTA and my rent is cheaper than any home I'd like to buy… not going to spend 600K to live in a shitty cheap town box


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## Oldroe (Sep 18, 2009)

Your parents property will not be available when you buy in a correction. The market will be flooded with lost rental property's and houses that people new they were losing for 3-5 years and they are junk.

People like your parents will not the sell in a down market. They will hang on harder.

You will wait it out and get 1million property for 900k, it will be in such bad shape you will spent 50k on structure and 25k to redecorate.

The person that puts 250k down and pays 250k off a million dollar property will have 500k equity and you will have zero, unless you have 500k in gic that's available in very short term.

If you have 500k in stocks (even bank stocks) they will not give you a mortgage in a down market. You will be told your equity is to risky at this time.

The person with 500k equity will tell the bank in a down market what they are going to buy they also will negotiate a better interest rate.

Your jobs will help you a bit but not much.

The other thing about these rent for life and invest with me people is they like getting rich on people that listen and don't think.


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## Siwash (Sep 1, 2013)

Oldroe said:


> Your parents property will not be available when you buy in a correction. The market will be flooded with lost rental property's and houses that people new they were losing for 3-5 years and they are junk.
> 
> People like your parents will not the sell in a down market. They will hang on harder.
> 
> ...


We have reasons for not buying today and the primary one is the inflated market, which we feel will work itself out… I don't get your reasoning to be honest. You agree that a slowdown or correction is possible, if not probable.. but you think there won't be any decent properties available? There a re numerous beautiful homes in our area that have not sold. They've been on the market 6, 7, 8 months sitting at 700, 800 to 1 mill. If credit dries up in a down-trending market, why would there be great demand for them? 

And why would I "have zero" if I've invested my cash? Even with the 3% I'm making on TFSAs and 2.2 on GIC will keep us ahead if market flattens.

BTW, I am highly suspicious of the price and sales gains CREA puts out… They de-list then re-list properties then claim it sold in 40 days (after they dropped the pcie $100,000K ) after the house sat for 5 months.. we see it all the time where we live… Not sure if you follow the MLS at all, but we see double and triple listings of homes all the time.. Can you explain this? Well, apparently when one of the two properties sell, it counts as two sales in their stats.

http://beta.realtor.ca/propertyDetails.aspx?PropertyId=13780908

http://beta.realtor.ca/propertyDetails.aspx?PropertyId=13779748

http://beta.realtor.ca/propertyDetails.aspx?PropertyId=13785071

http://beta.realtor.ca/propertyDetails.aspx?PropertyId=13735703

If you look carefully, these are the same two homes each listed twice with different MLS numbers… they've been doing this routinely across the GTA for a few years now, padding their stats. No one audits CREA. We take their info as gospel… so as sales reports continue to go up, people on the sidelines think, "Geez I better jump in too before it gets even more expensive…" 

We shopped for a year, and we saw homes sit and prices sink or they just came off the market.. this market is no where as hot as many think it is, save for a few neighbourhoods like Leslieville, High Park, etc… most of us don't live there.. 

I'll pass and take my "chances" on some further price gain…


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## Oldroe (Sep 18, 2009)

If you have houses in your neighborhood with for sales signs on them that have sat for 8 months.

1/They are over priced.

2/ These are property's like mine or your parents that don't need to be sold.

And if you get a re estate correction. Most likely they still won't need to be sold and will be taken off the market.

If you really have looked at houses in your neighborhood pick out the rental property's. These are the ones you will be looking at in a re estate correction only in worst shape.

I'm just warning you that a 20% correction doesn't mean you will buy your dream house at a 20% discount. Just won't happen.

We listed our house in March 1992 and sold in Nov. 1992. MLS listing. So our little house in Oshawa was mint but 2 bedroom and small lot, we were selling against 100's and 100's of repos.

I was surprised that the owner of the re estate agent didn't buy our house for only 1 reason our house got traffic. It would be list in every re estate paper 4-5 times every week. It was describe as "Mint","Doll House","Beautifully decorated". We had 5 -10 showings every week. The owner of the re state office our agent never ounce asked us to reduce the price.

When we finally sold we reduced the price to about 10% above market and sold about 8%. We got 8% because we didn't need to sell. Then it took us to March 1993 to find a mint house to replace and we got bid up from 145k to 154k. We seen the house when the guy was beating the sign in the ground. Turns out to be a well know re estate agents mothers house. She and the brother had put apartment in the basement and rented both. That lasted 2 months and the main floor tenant moved out. The brother want out.

We viewed the house before the agents knew it was on the market. We but our 145k offer in the night before agents viewed. 3 more offers were put in on the day of the agents viewing. Because we were first we had 1 shot at 154.5 k and we took it.

I looked at 100's of property's in the biggest re estate correction and found nothing but junk.

Wish you the best.


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## marina628 (Dec 14, 2010)

Siwash said:


> BTW, I am highly suspicious of the price and sales gains CREA puts out… They de-list then re-list properties then claim it sold in 40 days (after they dropped the pcie $100,000K ) after the house sat for 5 months.. we see it all the time where we live… Not sure if you follow the MLS at all, but we see double and triple listings of homes all the time.. Can you explain this? Well, apparently when one of the two properties sell, it counts as two sales in their stats.
> 
> http://beta.realtor.ca/propertyDetails.aspx?PropertyId=13780908
> 
> ...


Real Estate agents normally list as a new listing when there is a price change for a couple reasons.They dont want the listing to get stale because agents will pull newest listings first by nature and if at all possible they don't want to show the price reduction.


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## marshymell0 (Nov 29, 2013)

the-royal-mail said:


> Before all of this, you need to save up an emergency fund, held in cash like GIC or HISA. Plan on 6-12 months living expenses unaided. Only after you have that cash saved should you then proceed to save for your house DP or investment savings. what you are proposing now is to invest every penny you've saved and then to take that money and sink it into RE in 5 years, without having a penny for emergencies that will crop up. Apologies if I've misunderstood your intent; feel free to clarify.


Hello all!

Thanks so much for all the advice and input..

For clarity, I do not "only have" that RRSP and TSFA amount (35K) in my bank account right now, I have more money in my savings/cheqing account where my direct payroll deposits go into. So sorry for the confusion. So basically I have set aside 35K (roughly the max amount I can invest without having to deal with taxes). 

I did end up meeting with the advisor, and of course, she tried to steer me away from the index funds, and towards some MFs! I did not chose to invest in any of them of course, I saw it more as a information gathering exercise. I said I would do some research into what MFs (I did see a few with around 1% MER) I would look into investing and perhaps opening an Scotia iTrade account too. By the way for interst her “reasoning” by the way for picking a professionally managed fund (with HIGH MERS of course, 2.25%) was that this would be my first time “investing” and she would recommend professional managers and if I were to pick an index fund and the markets go down, I would have “professionals” that would help me at least “break even” and not lose as much! I am not really sure how exactly she can promise that though!

Thanks all for the clarification regarding the banks index funds. It seems the general concensus is that it is too early to start investing...I agreed as well I just thought investing in index funds was the way to start as I didn't feel prepared to start trading ETFs yet .I was planning on a 40 Fixed Income / 60 Equity split (25 Cdn, 20 US, 15 International) but it appears that although each bank has their own "index fund" there is no real difference between them, just the MER. So it sounds I have gone about this backwards and should look to invest the 40% Fixed Income part first and which bank I end up choosing actually depends on the Fixed Income part of my investment! 

I guess my next step then is to look into bonds/GICs


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