# TD mutual fund



## happyhappy (Nov 19, 2014)

Hello, everyone
Im a uni student and have about $10,000 assets in my bank
I do not have income
I would like to do some investment but I don't know too much about it
My main purpose is my asset would not be depreciated
I was recommented by a TD stuff, she said I can put $50 twice a month into the TD mutual fund.
Would it be risky?
Actually is it something about buying shares??
Sorry, I have no idea about it!!!
Can anyone answer my question? Thanks!!!


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## Ag Driver (Dec 13, 2012)

Unfortunately, you will get more questions then answers at this point.

What are your short term goals with your savings? Long term goals? Are you planning on using your savings for a down payment on a house? Are you planing on using your savings to pay for university debt? Do you have any debt? There are many contributing factors that need to be addressed before a recommendation can be made. 

Right off the hop I will say that your classic mutual fund is typically not recommended due to high MER's/Management Expense Ratios. THis is an operating expense divided by the value of assets less the operating expense. In short, there are cheaper alternatives out there then investing in mutual funds .... but this all depends on what your plans and goals are with your money!


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## gardner (Feb 13, 2014)

My instinct would be to put in a Presidents Choice, Tangerine or Oaken GIC ladder. This would be a series of term deposits of $2,000 each, at 1, 2, 3, 4, 5 year terms. You should be able to earn 2.5% or so on average -- this is about $250 a year on your $10K, so not a ton of money -- but the deposits would be guaranteed and insured. The money would come available 2K each year and you could re-invest or use for something else.

TD term deposits and GICs are not remotely competitive, unfortunately, so you'd have to go to one of the high interest paying guys.


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

1. do not go by payments, go by the amount of money. They try and sell you on these things by suggesting "low" monthly payments so you do not miss the money. Not a good idea IMO. Better to make the decision to invest based upon the overall amount.

2. do not lock in to RRSP, since as a student you will need your money in the years ahead.

3. I like the GIC ladder suggested above, that would make sense for you because it gives you access to your cash anytime. 

4. Check your own bank's TFSA cash balance and HISA interest rates, as this may be the most flexible for you (and easier than fussing with GIC ladders) - if you have $10,000 you could simply put that into TFSA cash balance

5. do not talk to advisor until you have decided what to do (don't let them sell you on something)

6. mutual funds have high fees 2-3% per year, it is recommended to stay away from these

7. keep us updated, listen, ask questions


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## Eclectic12 (Oct 20, 2010)

happyhappy said:


> ... My main purpose is my asset would not be depreciated


If the main purpose is to avoid depreciation ... then I'd say put put it into a TFSA in a HISA, which will pay tax free anywhere from 1.3% to 3%. Then you will have no worries and can learn about investing. Once you understand some of the other options (ex. GIC ladder), the cash will be readily available to move into whatever makes sense.

Depending on when you think you need the money ... you might be able to do something like put most into a GIC or HISA and what you would earn interest into something that is equity based, say an ETF. That way, worst case you end up with no growth and the same amount back. Best case is the equity grows at better than the interest so that there ends up being more.




happyhappy said:


> ... I was recommented by a TD stuff, she said I can put $50 twice a month into the TD mutual fund. Would it be risky?
> Actually is it something about buying shares??


Depends on the what the specific MF and what it holds.

For example, if it's TDB8150 ... it's really a savings account that is repackaged into MF units. Last I checked, interest was 1.3%, paid monthly as additional MF units. If the MF holds Canadian & US company shares, then likely it will be moderately risky compared to one that holds Asian or Chinese company shares.

There's thousands of MFs where without at minimum knowing what the MF invests in and what the time frame the money will be needed, it is probably safe to assume it's risky but that won't be known for sure.


Don't forget that part of the "risk" is when the money is needed. Shares in my RRSP that won't be touched for twenty plus years that are down 15% aren't a big deal to me. If I planned to pay off a debt with these shares in early Dec and they were down 15% - that's a different situation.




happyhappy said:


> ... Sorry, I have no idea about it!!!


That's why I'd recommend the HISA (preferably in a TFSA) as it will preserve the money and let you start learning so that you can balance the risk/potential rewards. If you don't know the risks, likely you will make a bad choice.

Also ... check out your library for a general book on investing, something like "Investing for Canadians for Dummies".
http://www.amazon.ca/Investing-Canadians-Dummies-Third-Edition/dp/0470160292


It does not mean you have to invest on your own but it will give you a better understanding of the possibilities and risks.


Cheers


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## Guban (Jul 5, 2011)

I agree with Eclectic. Go with a TFSA if you can. (Not sure how long you've been resident in Canada)

Make sure that if you do invest in mutual funds that the Know Your Client Form you fill out accurately describes that you "have no idea about it" and that you don't want to see the value of your investments drop. This should get you into very conservative mutual funds, if at all.

The other thing you should definitely do is to learn lots more about investing. Reading and contributing to the Canadian Money Forum is a great start!


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## humble_pie (Jun 7, 2009)

hi happy2

when i was a kid & played outside all day with my neighbourhood gang, the way kids used to do before the internet, one of our good friends from the next street over was named Happy. In his case, the name was so accurate.

folks here are giving you excellent suggestions, imho. Won't you please pay particular attention to Eclectic (just above); he says you could place your hard-earned savings in a HISA account or short-term GIC for a year or 2 while you study about financial markets & get yourself up to speed.

there's a small reading list for new investors called Eight with Weight. It's a sticky at the top of this section. The titles can be borrowed from most libraries. I imagine you'd probably want to begin with Eclectic's numero uno suggestion, Investing for Dummies?

the bank lady is just doing her job & trying to sell you bank product. It's likely that the mutual fund she hopes to sell to you does contain some common stock. This concept - owning some quality common stocks in one form or another - will be fine later on, after you've had a chance to gain some basic knowledge, when you will know better how to manage the risk.

in the best of all ethical worlds, the bank lady would be sitting you down & asking you to save your $$ carefully in a safe place, such as a HISA account or a short-term GIC (again, exactly as Eclectic mentions), for the time being. She'd be encouraging you to study, suggesting reading material, just as cmf members are doing.

another useful learning resource are the finance websites of media such as the globe & mail & the financial post inside the national post. One thing you'll notice right off the bat is how the articles tend to contradict each other. Don't worry about this; there are indeed different schools of investing & all of the good ones do work reasonably well. What you'd be looking for in newspapers is exposure to a range of different approaches to investing.

lastly, you can hang here, of course. Ask whatever questions you'd like. The forum has plenty of young members. Which reminds me, you should be keeping at least some of your lovely $10,000 savings inside a TFSA each:


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## donald (Apr 18, 2011)

I get how the tfsa is a superior choice here but.....
I like the idea of "locking" it in a rsp(I did this and it worked well towards building my capital)
Problem with the tfsa is it is reliant on you controlling yourself
Being young is tough(20s)there is always something lurking around the corner,trips/cars/girls/sports,school bills,the new hot tech toys etc
If you don't have discipline the tfsa can be rather tempting
What I love about the rsp is once its in there it's like a vault "without" a "key" metaphorically 
Note:I might think a bit different than what is "right" of course tfsa is superior but it can be a double edge sword.


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## none (Jan 15, 2013)

^ What are you talking about? I'm taking a big chunk of cash out of my RRSP this year and I'm just 41.

Learning self control is important. For example, sticking to the potato when things look bad and not cashing out is fundamental in it's success. Self control is important.

RRSP is a tax deferment vehicle. That is all.


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## donald (Apr 18, 2011)

Self control like maturity usually develops 'later'
I don't know the OP None,i am just pointing out I think there is value in a rsp because it has a safety valve Ie:it's hard to access without jumping through hoops
Maybe next year the op and his uni friends decide to go party in mexico for 2 weeks and 'you only live once' takes over
Or the OP falls in love with a girl and all of a sudden starts spending his hard earned dough on her because his other head is doing the thinking.
OP is 20 none,and by the way relax!count to 10 backards or something it was my viewpoint.
Op can do whatever the hell he wants


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## My Own Advisor (Sep 24, 2012)

Agreed with a number of comments already, specifically....

put your hard-earned savings inside a High Interest (do they exist???) Savings Account or simply park the money inside a TFSA while you read up on the world of investing.

Two books I'd highly recommend:
-Millionaire Teacher by Andrew Hallam
http://www.myownadvisor.ca/my-favou...naire-teacher-and-free-book-giveaway-part-33/

and 
-Stop Over-Thinking Your Money by Preet Banerjee.
http://www.myownadvisor.ca/stop-thinking-money-book-review/

I don't have any free books to giveaway (any longer, sorry) but these books are WELL worth the money.

Many of your questions will be answered in these books and the good news is, you'll have lots more, detailed questions, after you finish them. This is a good thing.


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## Eclectic12 (Oct 20, 2010)

donald said:


> I get how the tfsa is a superior choice here but.....
> I like the idea of "locking" it in a rsp(I did this and it worked well towards building my capital)
> 
> Problem with the tfsa is it is reliant on you controlling yourself...


That's where knowing yourself can help.

That said, lots of people overcome the temptation simply by having money automatically transferred to a separate account.
Just not seeing it in their main account seems to be enough.

There is reportedly no income yet the $10K is targeted for investment, so there is a suggestion that discipline might not be an issue.
The OP can comment or not as desired.


For the RRSP options - if the OP truly does not have income (and won't for a while), it may be a long wait before there's any benefit tax wise.
Looking into other ways of achieving the same thing might be better.


Happy2 (as well as other novices) should keep in mind that the type of account (taxable, the tax free TFSA or the tax deferred RRSP) does not change the risk of the investment itself. Or another way of putting it, regardless of the container, the investment will act the same (i.e. go up, stay the same or go down). The container can change what one ends up having, after taxes.

There are other considerations to the registered accounts (i.e. TFSA & RRSP) which using a HISA avoids. I suspect there's enough info for the OP to digest so I'll skip the details for now.


Cheers


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## HaroldCrump (Jun 10, 2009)

I'd also add _The Wealthy Barber Returns_ by David Chilton.
A nice, easy read full of common sense advice.

For more advanced reading, refer to the _Eight with Weight_ list referenced by humble_pie above.
It was compiled by forum members humble_pie and Toronto.Gal.


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## humble_pie (Jun 7, 2009)

someone who is young enough to be a college undergraduate yet who has had the backbone to save up $10,000 has already got enough discipline to stay the course, imho.

in addition, a youth with no income & probably little prospect of taxable income in the near future should not be chucking his saved dollars into rrsps imho. He can push his rrsp contribution room forward to future years, when presumably he will have salaried income high enough to make good use of an RRSP contribution deduction.

in the meantime he can utilize Guban's Gambit, which essentially means parking dollars earmarked for future RRSP contributions in present-day TFSAs, until the day comes when such dollars can actually be put to proper tax use in RRSP.

donald you must have been a real handful to raise? _pauvre mamacita donaldo._


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## none (Jan 15, 2013)

donald said:


> Self control like maturity usually develops 'later'
> 
> Maybe next year the op and his uni friends decide to go party in mexico for 2 weeks and 'you only live once' takes over
> Or the OP falls in love with a girl and all of a sudden starts spending his hard earned dough on her because his other head is doing the thinking.


These actually sound like a much better way to spend the money of a 20 year than some boring index investing. You only live once! Live is too short to live exclusively for when you're old and moldy.


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## donald (Apr 18, 2011)

Humble,why are you always a 'palin'?
My main point was op,just make sure to treat your tfsa as a long term acct if your motive is to long term invest
That is all
discipline and lack or earned income is a fair point,can't comment on that,again my main point was on has a built in safety feature the other does not
carry on then.....i will trot back to my abode bare foot humble.


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## Eclectic12 (Oct 20, 2010)

none said:


> These actually sound like a much better way to spend the money of a 20 year than some boring index investing. You only live once! Live is too short to live exclusively for when you're old and moldy.


True ... but at the same time, going to the other extreme - one does not need to blow through $10K to enjoy a couple of weeks in Mexico.
Balance is a good thing ...

Cheers


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## jsun (Feb 13, 2014)

Hello!

I dont mean to thread jack but I am in a simliar position as OP, and instead of starting a new thread i hope i can get some answers here
I am sort of in the same boat; I am recent grad (1 yr) and has a pretty steady job
I have already started a TFSA eseries account (approx 1 yr ago), and began in a couch potato strategy with a PPP setup.
Just like the OP, i have about $10,000 that i would like to invest somewhere.

My short term goals will to keep saving and have enough for a down payment on a piece of property (either renting it out to generate a source of income OR moving into it, pending on life situations)
Long term goals would be to generate more cash, and make my money work for itself.

Question is not what do i do from here? What can i put my money into? What advice can you guys give me?

Any input is greatly appreciated!


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## Guban (Jul 5, 2011)

@jsun,
Not sure what you mean by "short term". Are you referring to two years, or six? If close to the former, you should seriously think about not taking too many risks. See Eclectic's post #5. If you have the room, putting it in your TFSA would be good. If you are looking more at the latter, think about your risk tolerance, and think more about equities. Adding to your eseries funds in your TFSA may be appropriate. 

As an alternative to your TFSA, you may also think about your RRSP. If your job is good enough, and you are out of tuition/education credit amounts then the tax deduction may be attractive to get you to think about a withdraw under the home buyer's plan. Note that you'd have to live there, not just rent it out for this option to work for you.


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## indexxx (Oct 31, 2011)

Ask your TD person to get you into the e-Series index funds for that $50 a month. It's a good place to start. They make less commission on these funds (which helps YOU earn more...) so they would not usually bring them up, but if you ask they'll tell you.


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## jsun (Feb 13, 2014)

@Guban 
Short term is about 2-3 years. I was thinking about adding into my eseries but wanted to see what other options others recommend.
Do you think it will be smart to invest the money i have now into my eseries, then whatever income i earn within these next few years (still keeping my PPP and maybe upping the amount a little) and have a look into equities?


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## Spudd (Oct 11, 2011)

If you need the money for a down payment, it's best to put it in a high interest savings account. If the market crashes between now and your purchase date and you lose half your downpayment, you won't be happy about having put it in e-series/stocks.


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