# TFSA investing account



## dauphin (Apr 4, 2009)

Hi. I was trying to look for a thread in regards to this but couldn't seem to find any. Last year, I put all $5k into an interest account (PC Financial), but due to lowered interest rates, was not satisfied at the end of this year with their rates for the TFSA, so decided to pull all my money out on Dec. 31. I would like to open an investing account to put all 10K (+interest) somewhere this year. I don't have 100k in any account and so probably have to pay higher fees for trading. Any suggestions for where to open a REPUTABLE TFSA account with minimal trading costs (and I'm not just talking cheapest trading possible, but cheapest trading for the least hassle)?

I would also like to do DRIPs, but have no experience in this. Do I just ask the trading account company I decide to go with?

Thanks for your time.


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## mario 1 (Nov 6, 2009)

Questrade is probably your best bet, as far as pricing goes.
A penny a share – for a commission as low as $4.95 per trade and never more than $9.95
No trade activity thresholds
No minimum balances to qualify.

As to the service you'd have to get that info from someone who uses their product, but they get good ratings generally.
As for the DRIP , as long as you own at least one share you just sign the company-specific enrolment form.
I don't use DRIPs myself, maybe someone else can give you more specific instructions.


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## dauphin (Apr 4, 2009)

mario 1 said:


> Questrade is probably your best bet, as far as pricing goes.
> A penny a share – for a commission as low as $4.95 per trade and never more than $9.95
> No trade activity thresholds
> No minimum balances to qualify.
> ...


Thanks for the quick reply Mario, but I guess I was looking for more than what I could see in the sticky at the top for choosing a broker. I had quite a few issues with Questrade including complications on even setting up my account properly. Are there other brokers out there that I can put $10k into a TFSA account and have low trading premiums? Anything special about TFSA that they may give lower premiums that people have found?

Thanks!


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## ssimps (Dec 8, 2009)

For itrade you would need 50K (across accounts) to get 9.99 trades. I found setup easy. You would need to have about 40K in another account to get the 9.99 fee, otherwise it jumps to 19.99, which is no longer a 'discount' fee IMO.


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## jshah (Dec 29, 2009)

dauphin said:


> I would like to open an investing account to put all 10K (+interest)


If you are not tranferring your TFSA to other institution , how would you put interest as your limit is 10K and interest will make you cross your limit. Am I missing something here ?


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## leslie (May 25, 2009)

There is another thread ongoing at the present time regarding "which broker should I use".


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## fersure (Apr 19, 2009)

I'll vouch for Credential Direct if you are not planning to be an active trader. Although the trading fees are higher than some of the discount brokers ($19.99), there are no inactivity fees. Also, there is no commissions on mutual funds, and if you prefer, you can set up pre-authorized cash contributions and DRIPS for claymore/bmo etfs. (I understand from another thread that many of the other on-line brokers were refusing to set up PACCs for etfs, which is an easy and cheap way to dollar cost average. A monthly/quarterly PACC may be useful if you don't have the full amount for a TFSA as of January 1).


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## dauphin (Apr 4, 2009)

jshah said:


> If you are not tranferring your TFSA to other institution , how would you put interest as your limit is 10K and interest will make you cross your limit. Am I missing something here ?


My understanding of what I've read (unless I'm mistaken) is that ANY money withdrawn from the TFSA adds onto your contribution room for the next year. So if I build interest on $5k to say $5250 and withdraw it all, the next year I can contribute $10250 back into my TFSA.


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## ssimps (Dec 8, 2009)

dauphin said:


> My understanding of what I've read (unless I'm mistaken) is that ANY money withdrawn from the TFSA adds onto your contribution room for the next year. So if I build interest on $5k to say $5250 and withdraw it all, the next year I can contribute $10250 back into my TFSA.


That is my understanding too.


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## mario 1 (Nov 6, 2009)

dauphin said:


> Thanks for the quick reply Mario, but I guess I was looking for more than what I could see in the sticky at the top for choosing a broker. I had quite a few issues with Questrade including complications on even setting up my account properly. Are there other brokers out there that I can put $10k into a TFSA account and have low trading premiums? Anything special about TFSA that they may give lower premiums that people have found?
> 
> Thanks!


CIBC does offer a special rate for TFSA accounts, $6.99 per trade, but it's
only until June 30/2010. If you make more than 50 trades they have a good pricing package. 

With your low dollar amount and probable low trading volume it will be hard to 
find low trading fees other than QT.
Also be careful, some places will hit you with low activity fees if you don't
have enough money or trade often.
If I were in your shoes I would try to work out my problems with QT, they 
seem to be the best fit for your situation.

I'm currently with both CIBC and Itrade, and previously with BMO.
I've had plenty of issues with all 3 , you'll probably have some issue 
no matter who you chose.


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## Cal (Jun 17, 2009)

For the DRIP, just tellthe broker afer the trade has been processed, that you would like to set up a synthetic drip. Then assuming that you have enough shares of the stock, and the dividend (monthly/quarterly) is enough to purchase 1 whole share, they will use the dividends to purchase whole shares only. Extra dividend $ will be kept in the account as cash as a broker will only get you whole shares.

www.dripinvesting.org for more on dripping


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## bakhlawa (Jan 7, 2010)

I too am conidering Credential Direct for a TFSA account starting off with a Pre-Authorized Cash Contribution (PACC) for the Claymore CDZ ETF. If i sign up with this will I be able to avoid Credential commissions? Would others recommend Credential Direct for a TFSA brokerage account?


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## fersure (Apr 19, 2009)

bakhlawa said:


> I too am conidering Credential Direct for a TFSA account starting off with a Pre-Authorized Cash Contribution (PACC) for the Claymore CDZ ETF. If i sign up with this will I be able to avoid Credential commissions? Would others recommend Credential Direct for a TFSA brokerage account?


You would still need to pay the $19 commission to purchase at least one share cdz. However, there won't be any additional trading charges once you register for the PACC.


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## Toronto.gal (Jan 8, 2010)

dauphin said:


> *1ab.* I would like to open an investing account to put all 10K (+interest) somewhere this year. I don't have 100k in any account and so probably have to pay higher fees for trading. Any suggestions for where to open a REPUTABLE TFSA account with minimal trading costs (and I'm not just talking cheapest trading possible, but cheapest trading for the least hassle)?
> 
> *2.*I would also like to do DRIPs, but have no experience in this. Do I just ask the trading account company I decide to go with? Thanks for your time.


Hello dauphin:

*1a.* as Mario said, CIBC charges $6.95 per trade until June 30/10 for *registered TFSA* trading, so for example, if you just wanted to buy & hold a few stocks long term, this would be a good option, say you bought 5 stocks, it would cost you $34.75. To my knowledge, no charges or minimum balances apply to this account as remember it is considered a government account. Please someone correct me if I am wrong.

*1b.* CIBC's Investor's Edge Advantage Account gives you 50 trades for $395/year, ie: $7.90 per trade & if you exceed your 50 trades in the same year, additional trades are just $6.95, I believe the lowest in the industry. They do charge a $60 yearly administration fee for balances under $10K. 

I'm not sure what problems Mario has had, but I bank with CIBC and I have had no problems with the system itself, except with CSR's.

From their website:

"Value. Pay from $7.90 down to as low as $6.95 per online equity trade when you purchase the annual trade package. (Option trades are an additional $1.25 per contract.)

Simplicity. All fees are in Canadian dollars, even if you trade U.S. equities or options.

Convenience. No monthly or quarterly quota to meet. Just one low price for an annual package of 50 online equity and option trades executed anytime during the calendar year. (The initial fee of $395 and trade count are pro-rated depending on the date of enrolment. After you exceed your annual trade count, your price per trade drops to $6.95.)"

*2.* With respect to your 2nd question, there are 2 types of DRIP programs: *i) the one offered directly by the companies* you're purchasing stock from and *ii) the one offered by your broker.* The 2nd one is initially more convenient, but the 1st one is a much better option and I'll explain why, it may seem complicated at first, but it isn't.

The one offered by the broker (referred to as a synthetic drip) is only available in whole numbers, meaning that they won't reinvest partial shares for you. For example if your dividend payment for a Royal Bank stock was $30/quarter, but a Royal Bank share costs $60, the bank would not reinvest your dividend as it would not have enough funds to buy a whole share, so the $30 would just sit in your account.

But if you deal with the companies directly, then they would reinvest your partial shares. For example, using the same example above, they would buy 1/2 a Royal Bank share for you with your $30 dividend. If your quarterly dividend was $90, the broker would reinvest 1 share, ie: $60, whereas the company would reinvest your full dividends and purchase 1.5 shares on your behalf - 1 share at $60 and 1/2 share at $30 for a total of $90.

However, in order to DRIP directly with the companies you'll invest in, you must first purchase a certificate, which cost $50 + tax, but this is a one time fee, this certificate essentially transfers the shares to YOUR name & after this, you don't have to pay commissions again, so for example, if in addition to reinvesting your dividends, you wanted to buy additional Royal Bank stock 4 times in a year, at $7.95 per trade, you would be paying $31.80 a year in commissions, but with the certificate, you would bypass such costs & could continue purchasing additional stocks every year without any commission fee (of course this could be subject to change in the future I suppose, but I don't think anytime soon). Banks/brokers won't advertise this fact because obviously they don't want to miss out on commissions & want you to keep buying from them rather than directly from the company. Your broker will issue this certificate to you, but only at your request & it takes about 2 weeks to get (not the 6 weeks they will tell you over the phone).

Another advantage is that companies offer a discount on the dividend reinvestments, most are 3%, but I believe some pay as high as 5%, this discount however, does not apply to ASP or SPP purchases (additional stock purchase), which you can also do without paying commissions by buying directly from the company. For example, in addition to reinvesting my dividends, I also purchase BMO shares monthly directly though the company, if I did this through my CIBC broker, I would be paying $7.95 x 12 months for a total commission of $95.40 & if you wanted to do this with 10 of your companies, the commission would be a whopping $954, so as you can see, the $50 certificate/per company is well worth the money!. 

One other advantage is the dollar cost averaging. There are disadvantages too, and that would be the real time factor.

One last thing, as you're interested in Drip's, make sure you buy a stock that pays dividends as NOT all do. 

Here are some links that might be useful:

http://cdndrips.blogspot.com/
http://sites.google.com/site/cdndrips/canadiandriplist
http://dripinvesting.org/

I hope I have not confused you!

Good luck & happy investing, but remember to do your homework & be cautious. Rule of thumb: don't invest in something you don't understand.


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## Four Pillars (Apr 5, 2009)

I have an orange key for ING accounts in case anyone is interested.

Basically if the key is used then the new account holder gets $25 and I get $25. Once you have an account then you can sign up for an orange key of your own.


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## bean438 (Jul 18, 2009)

Thought I would mention Credential will syntheticaly drip CDN companies only at this time. 

Don't pay 50 bucks for a certificate. Drip. Org has people buying/selling/trading certificates all the time. 

You can even enter group buys which cost share price/ commision divided by number of peopl + 10 dollar courtesy fee.


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## ssimps (Dec 8, 2009)

>> Quoting Toronto.gal:
>> CIBC's non-registered Investor's Edge 
>> Advantage account gives you 50 trades for $395/year

My understanding is that because of the way this is structured, you can also write off the $395 when it comes to tax time; it can be considered an adviser fee. So it makes it even more cost effective. You need to plan on doing 50 trades in the year though.


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## Y&T2010 (Dec 29, 2009)

Why wouldn't people use Questrade for their Tax Free Trading Account? Are there mixed reviews on them?

I am considering using Questrade for my TFSA for 2010.

I know that their webtrader screen is a bit "budget" looking, but you really can't go wrong with $4.95 trades..

Does the CIBC Trading account cost 395 for an 50 trades of unlimited value?
For example, if I was interested in buying 8000 shares of a venture stock, will I be paying the $7, or is it $7 per 1000 shares like what Questrade does?

If it's the former, then it would really be a good deal!


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## high octane (Jul 21, 2009)

Y&T2010 said:


> Why wouldn't people use Questrade for their Tax Free Trading Account? Are there mixed reviews on them?
> 
> I am considering using Questrade for my TFSA for 2010.
> 
> I know that their webtrader screen is a bit "budget" looking, but you really can't go wrong with $4.95 trades..


Exactly. I've had no complications signing up and trading but I'm the kind of person who reads and learns a few things when it comes to something like trading stocks

But I can see why people are used to the expensive big banks and their gimmicks




Y&T2010 said:


> Does the CIBC Trading account cost 395 for an 50 trades of unlimited value?
> For example, if I was interested in buying 8000 shares of a venture stock, will I be paying the $7, or is it $7 per 1000 shares like what Questrade does?
> 
> If it's the former, then it would really be a good deal!


Where do you get Questrade charges $7 per 1000 shares?? It's 1 penny/share min $4.95 max $9.95

So CIBC is cheaper is you buy 700 or more shares, and trade over 50 times a year


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## Toronto.gal (Jan 8, 2010)

Though the $7.90 trading fee is for up to 1,000 shares, I don't think the $395 annual fee limits you to 50,000 shares a year, in fact, I think you can buy a million shares with the same price.

Not sure what other institutions do, but with the CIBC structure, you can also purchase the same stock as often as you like within the same day, but only get charged for 1 trade & the same applies to selling a stock. 

I believe CIBC has the lowest trading fee of all brokerages, but it only benefits active traders, if you're not doing the 50, you can't carry over to the next year. 

You can also pro-rate, so for example, if you were to join in October, you would get 10 shares for $79 or thereabouts.


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## Y&T2010 (Dec 29, 2009)

high octane said:


> Exactly. I've had no complications signing up and trading but I'm the kind of person who reads and learns a few things when it comes to something like trading stocks
> 
> But I can see why people are used to the expensive big banks and their gimmicks
> 
> ...


Hmm sorry, for some reason I thought I was charged about $20 commission when I bout about 8700 shares of this venture stock. I guess they just broke it up in "clumps" and I assumed that they charged me commission with each 'segment'. I just looked closely and they actually didn't.

Wow. I think I love questrade even more now!! =)


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## mario 1 (Nov 6, 2009)

Y&T2010 said:


> Why wouldn't people use Questrade for their Tax Free Trading Account? Are there mixed reviews on them?
> 
> I am considering using Questrade for my TFSA for 2010.
> 
> ...


I believe CIBC is unlimited value , unlimited quantity.
Of course I could be more sure if they did not have a restriction
on my account. An account I opened in early November but some 
bank clerk never sent in the documentation. Despite having redone
the documents and having another clerk send it in it's still restricted.
I used to have an account with them and the experience was not all that good but that was years ago. The price was to good to pass up so I
want to give them another try, so far the experience has not been satisfactory.


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## Shnoot (Mar 21, 2010)

Toronto.gal said:


> CIBC's Investor's Edge Advantage Account gives you 50 trades for $395/year, ie: $7.90 per trade & if you exceed your 50 trades in the same year, additional trades are just $6.95



This is interesting, but how would one handle this in terms of taxes?

Would you just divide the number of trades for the year by 395 and use that number as the commission/fee per trade in your ACB (for buys) and disposition expenses?

Thanks.


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## peterk (May 16, 2010)

Just bringing back an old thread here.
I'd like to open a TFSA with Qtrade but I can't seem to find the answer to what the exchange rate is for buying NYSE stocks. I'll be starting out in canadian dollars.
The only thing I can find is http://www.questrade.com/pricing/exchange_ecn_fees.aspx but I'm not sure if this is what I'm even looking for. I just wanna know if they charge some ridiculous 2% extra on the exchange rate like a bank/credit card would do. 

I know any dividends from US equities will have tax withheld by the US government, and that I can get back half of that by sending in some sort of form.
Is there any other catches/snags that I need to be made aware of for buying US vs. Canadian stock?
thanks!


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## humble_pie (Jun 7, 2009)

1) i would believe that every broker including the one you name is charging close to 2% - actual percentage is usually slightly less - as a fee for a foreign exchange conversion. The only way to avoid such fees is to practice a trading strategy that cannot be accomplished in registered accounts, as they do not permit shorting. The strategy is complex & is not for beginning traders.

2) an investor does not "get back" any part of any foreign withholding tax. The most he can do is earn a foreign tax credit on his canadian income tax return.

3) however, US witholding taxes held back from US dividends in TFSAs are not eligible for this foreign tax credit (since the dividend itself is tax-free.) In general, US dividend payors should be held in RRSPs, where there is no withholding. Or held in non-registered, where investor/taxpayer can claim the credit.


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## peterk (May 16, 2010)

Ok so I would be looking at ~2% loss in buying, 2% loss in selling, and (from what I've read) 15% of dividend earnings withheld? - This is starting to sound like a bad deal!
Using and RRSP is out of the question at the moment. I'm a university student and don't make enough after education credits to be taxed significantly (most years not at all) so it would be pretty wasteful of my RRSP contribution room.


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## humble_pie (Jun 7, 2009)

i think it's more like 2% round trip. Most brokers have better rates than banks. Keep in mind also that unless your broker permits registered accounts in USD - both rrsp & tfsa - then each & every US dividend will be converted into CAD @ the going fee.

in short, US dividend payors in tfsas are not an attractive proposition.

even in non-registered accounts, US div payors are not particularly attractive to a non-tax-paying student investor, because there is no taxable income against which the claim for foreign tax credit can be made.

turning back to the tfsa, there are canadian hi-payors that could go into a tfsa. I have crescent point (div around 7%) & fort chicago (div just under 10%; co has said will not change after it becomes a corporation.) I have held dundee reit in the past but do not have an up-do-date opinion.

i think it's great you are building your tfsa. You will see people forecasting that these will be modified or even cancelled, although no doubt existing tfsas will be grandfathered. As it happens i tend to think along these lines. So i believe that young people contributing to a tfsa now are going to end up with a significantly valuable asset.


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## peterk (May 16, 2010)

Thank you very much HP. I just took a look at those stocks you mentioned. I'm not in particular looking for a high dividend stock, just that I would like to know what happens to foreign dividends at least. The US one I am considering is Exxon, which has a 3% yield.
I have also been looking at Imperial Oil here on the TSX. It seems they make a ridiculously high return, also Exxon has been upping their share in the company, now being the majority shareholder.

I have a few questions about those stocks you mention. Please don't take anything as a "grilling". I really am a naive newbie investor and I don't really know what I'm talking about yet.
Crescent point, they seem to have a hugely sporatic income - going into the red last year and in 2007. While they seem to have a steadily growing revenue it looks like it's a result of increasing infrastructure with money gained from issuing more shares, all the while keeping the dividend/share payout the same. Does that not seem a bit unsustainable?
Fort Chicago has a pretty steady income, but they don't seem to show any strong signs of growth. with a ROE of 5% last year and 8% in 2008, and a 60% debt load to boot! It seems like perhaps they've stalled out in growth?
I would certainly love to hear your take on it! It sometimes feels like I'm all alone and have to form these opinions on what I've been trying to learn independently, and I have no basis to see if I'm right or wrong or crazy! I wish there was a test about reading financial statements I could take so I atleast know if failing horribly or not.


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## humble_pie (Jun 7, 2009)

failing ? certainly not. I think you are doing wonderfully well. Perhaps just a tiny tad too hard on yourself. Please don't forget that you have the whole rest of your life before you. There will always be opportunities.

fort chicago has almost no growth potential. It's just a dull boring gas transmission company, but some of those contracts go out decades into the future, so it's fairly recession-proof.

i erred in saying it's in my tfsa. It's in my rsp. Sorry about that. Makes much more sense in an rsp. It's there as a no-brainer low-maintenance item quietly generating a steady 10% return year after year ...

re crescent point, one has to search out the whole story & history of the light sweet crude bakken field. CPG is the bakken, they got there first, years ago, and acquired the bulk of the land. More recently they've bought promising properties in alberta. One could write a book. They've been highy innovative with technology, the latest wrinkle is water flooding in the existing wells to increase production. You won't find an analyst who doesn't like cpg. Blockbuster story, brilliant technology, smart management, debt under control, constant expansion, generous & stable dividend. The worst you'll hear an analyst saying is that stock is already fully priced. On the other hand, many point to the company's record of innovation & expansion as the harbinger of growth that's yet to come.

a picturesque detail: scott saxberg, the entrepreneurial founder & star of the cpg story, was laughed down to his socks a decade or two ago as he stubbornly acquired the bakken properties & pursued his dream that the previously-impossible-to-drill deep shale could be fractured by horizontal drilling. The big oil establishment in calgary poked endless fun at saxberg, hooting from the petroleum club that he was wasting his life. Now the shoe is on the other foot.

suggestion to a young investor: you should take all this with a great deal of skepticism. I do own cpg shares, and I do respect this company. But i also have a fairly complex option strategy built on top of the underlying which enhances the return, so someone who is not going to do that would undoubtedly have a different perspective.


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## peterk (May 16, 2010)

Thanks again! See, I don't know the "details" about companies like you described. And I'm guessing that's where I'm going to get caught up. It's one thing to spend 5 minutes "analyzing" some financial chart, I can do that, but it seems like you know the whole history of the company!
I'm not trying to find easy answers, just helpful nudges. If I were looking at CPG, like I just did, I would see a rather erratic financial statement and probably pass on it, but then I'd be totally overlooking other information about it's operation or holdings that make it unique or leading in a market. How would I even go about finding a company like that?

This is why my gut was to go with something like exxon. Since I don't know enough to perhaps be able to understand all the intricacies and politics and of a company and inter company relationships, it just seems too risky to get into a medium cap company without understanding it fully. While Exxon is one of the biggest companies in the world, leads its industry, has very strong earnings, it's price ratios are all a bit better than the competitors, oil prices are currently down a bit, and it seems like BP has been dragging all the other oil majors down with it this month so now Exxon is currently at a 4 year low.

Am I getting myself into trouble here with this (above) kind of reasoning? I would love to have a complete understanding of how every kind of company inner workings and what's important and what's not, but I now see that that that's going to likely take me years to learn properly.
I'd like to get my feet wet. I figure I should learn how to invest now, while I've still got 2 years of school left and all I have to lose is a couple thousand bucks of beer money, so by the time I'm working and actually have money to save, I'll know what to do with it.

But on the other hand maybe I should should keep reading for 2 years and go buy some GICs for now...

Edit: Just read up on this options thing you were talking about. It sounds very sneaky and excellent! In fact, I believe this is similar what I proposed to my dad when I was 12 and we put some of my money in a mutual fund. Only I wanted to retroactively have more of my money in (less of his) from the time of investment, if the fund did go up


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