# Starting an investment later in life



## DesignerDee (Apr 10, 2013)

I am looking at retiring in a years time at age 56, with a pension (already passed the 35 year mark), which should be in the 49-50k range before taxes. Currently I have no debt, no mortgage, 25,5k in TFSA and 40k in RRSPS (which was an after thought or brain fart, I am not sure which). I have 500k currently sitting in an e-savings account doing practically nothing. I am thinking of putting it into some sort of conservative portfolio for drawing on it as needed. Should I do this through a bank, or an wealth management firm? And, is a conservative non-registered fund the way to go? Any thougths? No need for succession planning.


----------



## Oldroe (Sep 18, 2009)

You've made 55 years showing no interest in investing. GO SLOW, GO REALLY SLOW.

Look at laddered GIC (BANK) for now.

Stocks and etf's not yet. You need 1 year of hard study that last the rest of your life.

A wealth management would die and go to heaven if you walk thru the door, your not much better.


----------



## DesignerDee (Apr 10, 2013)

Thanks, I do plan to take it slow! I thought of doing that, even the interest rates on the GIC's look better than that of my e-sav account, but the bank tried to talk me out of that and was trying to get me into funds. Needless, I won't commit to anything for the time being. Looks like I have a lot of work ahead of me.


----------



## Oldroe (Sep 18, 2009)

The bank wants you in very high mer (Management expense ratio)funds. 2.5% or more.

Banks do what you tell them, It's your job to know.

They will make a big deal about you signing a risk assessment form. This is a legal document. And they will push for more risk (higher mer) more money for bank less for you.


----------



## purple.platypus (Dec 10, 2012)

If you go the GIC route, you're better off at the credit unions as far as interest rates go. In fact, I'd say you're better off there _period_, and better still at the online ones, barrring disaster (i.e. deposit insurance becoming relevant - as to which is better in that scenario, opinion differs).


----------



## DesignerDee (Apr 10, 2013)

The nearest credit union would be 40 km away - a drive well worth it then. I guess if things were simple, we all would be very well off.


----------



## kcowan (Jul 1, 2010)

Stay away from any advisors that gain from your choices. Remember that having a big chunk of money burning a hole in your pocket is better than having it dribble away 2.5% commissions every day. And if you drive to a CU, remember to get an added return for your massive amount and maybe some no charge services like a monthly email summarizing your returns for the month without any added fees. If they mention anything but GICs, return home again without giving them anything.


----------



## DesignerDee (Apr 10, 2013)

kcowan said:


> remember to get an added return for your massive amount and maybe some no charge services like a monthly email summarizing your returns for the month without any added fees. If they mention anything but GICs, return home again without giving them anything.


Thanks for the advice. I will remember this. Never thought of getting no charge services thrown in. I will have to remember it is me in the drivers seat!


----------



## Squash500 (May 16, 2009)

Just out of curiousity....what interest rate are you presently getting on your e-savings account? I would highly recommend you read this book entitled... Count on Yourself by Alison Griffiths. This book has helped me tremendously and I'm sure it will help you as well.


----------



## fraser (May 15, 2010)

Good luck to you.

First of all, in my experience, the banks are NOT your friends. Their main goal, in my experience, of their so called investment advisers is actually to sign you up for their mutual fund products-specifically the ones that have a high MER, ie management expense ratio. The banks are making out like bandits on these. More often than not their management fee is upwards of 2 percent per year, often more, ....not including the 'hidden fees' in their other admin charges. Bottom line...no matter how the market fares the bank takes 2 points or more of your money every year. Sweet deal for them, not so much for you. I guess this is why I have done so well with bank stocks!
The banks do have offerings with much lower MERS, .5 to .7 or so. Do not be afraid to specifically ask about these.

We no longer keep much liquid cash with the banks. The best eSavings rate that our bank gives us is 1.2 points. We can get 1.9 from on line accounts at Peoples Trust or Canada Direct (western canada bank). So, as I commented to my so called adviser at the bank....why should I take fifty percent less interest from you when with the click of a mouse I can increase my meager return.

We deal with a fee for service adviser. This is good for us and we are happy. We like to know the costs so that we can compare with the benefits. But it may not be good for others. 

Whatever you decide, understand the costs of an investment...front end fees, back end fees, MERs, etc. before committing yourself. Do not be in awe of these people....they are there to assist but just be aware that they are goaled on the type and the quantity of investment product that they sell you. And sell is the right word. Never be shy to maximize your returns on cash investments like esavings or GIC's.


----------



## Daniel A. (Mar 20, 2011)

Take a look at Canexus CUS on the tsx.

A good company I know well current price Dividend Yield over 6% .

I had a friend who passed away a couple of years ago invest in it he always told me the best investment he ever had.

My return is over 10% based on the price I paid.
It is a good company that has a solid market.


----------



## lonewolf (Jun 12, 2012)

purple.platypus said:


> If you go the GIC route, you're better off at the credit unions as far as interest rates go. In fact, I'd say you're better off there _period_, and better still at the online ones, barrring disaster (i.e. deposit insurance becoming relevant - as to which is better in that scenario, opinion differs).


Accellerate, achieva, Hubert, Maxa, Outlook financial Are online credit unions with the high GIC rates. How interest is paid does change. Sometimes can get monthly, For now I think they all offer annually & or compounded which are cashable with a reduced interest rate if cashed before maturity.

Google: globe & mail GIC rates to get a listing of a high number of posted GIC rates.


----------



## DesignerDee (Apr 10, 2013)

Squash500 said:


> Just out of curiousity....what interest rate are you presently getting on your e-savings account? I would highly recommend you read this book entitled... Count on Yourself by Alison Griffiths. This book has helped me tremendously and I'm sure it will help you as well.


I am currently getting 1.2 which seems to be around the standard. I will be certain to check out the book.


----------



## Squash500 (May 16, 2009)

DesignerDee said:


> I am currently getting 1.2 which seems to be around the standard. I will be certain to check out the book.


 Thanks for the information about the interest rate. The woman (Alison Griffiths) who wrote this book really knows her stuff. Just too repeat...I think this book will really help you.


----------



## DesignerDee (Apr 10, 2013)

Squash500 said:


> The woman (Alison Griffiths) who wrote this book really knows her stuff. Just too repeat...I think this book will really help you.


Started the book last night!


----------



## fraser (May 15, 2010)

1.2 percent seems to be the standard for the 'club', ie the chartered banks and those other institutions that they can control and or influence.

It is NOT a very good rate.

A number of institutions are offering esaving rates of 1.9/1.8. In addition to the credit unions mentioned above, People Trust and Canada Direct are currently offering 1.9. There are others.

The down side with some of the Manitoba based credit unions is that it will be a few months (according to Infinity) before they get their IT sorted out so that customers can transfer funds electroncially between their home bank and the credit union. The upside to the credit union is that they are not subject to CDIC insurance rules...ie their deposits are fully insured no matter the amount in each account.

We signed up for Peoples and Direct because the electronic transfer facilities exist today. We need this flexibilty.

If you have some cash sitting in an account, why accept 1.2 when you can get 1.9 simply by moving your computer mouse a little It does not sound like much but the yield is just under 60 percent better than what the banks currently offer.

Needless to say, funds in our esavings account are only a smaller percentage of our investment funds. |This percentage has changed over the years as we aged.


----------



## brad (May 22, 2009)

fraser said:


> 1.2 percent seems to be the standard for the 'club', ie the chartered banks and those other institutions that they can control and or influence.
> 
> It is NOT a very good rate.
> 
> A number of institutions are offering esaving rates of 1.9/1.8. In addition to the credit unions mentioned above, People Trust and Canada Direct are currently offering 1.9. There are others.


ING pays 2.5% for a five-year GIC. And I think you can even do better than that.


----------



## fraser (May 15, 2010)

That is a good rate. Unfortunatley I cannot take advantage as I require no fixed term length.


----------



## brad (May 22, 2009)

It's actually worth looking at the cancellation penalties -- many people take out CDs for their emergency fund, etc. and if they have to cash them in early they just pay the penalty. In some cases the penalty is so low that it's inconsequential and you still end up with a good rate even after subtracting the penalty.

But when you say you require no fixed term length, let's say you're saving for retirement (I view CDs as savings vehicles, not investing, because they don't really keep up with inflation), you would just set up a CD ladder in which eventually all of your CDs are for 5-year periods. 

The longer the term, the better your rate. But you run the risk that interest rates will rise during that period and you'd miss out on a better interest rate. A CD ladder gets around that problem (just Google the term to learn about it if you're not familiar with CD ladders).


----------



## fraser (May 15, 2010)

In many instances, including ING I think, your interest gets reduced to a half point if you redeem early. We are not holding cash as part of a retirement fund or ladder strategy. We do have a retirment fund however the cash is to take advantage of some specific investment opportunities, including the possible purchase of a home. So, we are quite happy with 1.9 for the next while.


----------



## Eclectic12 (Oct 20, 2010)

DesignerDee said:


> Thanks, I do plan to take it slow! ... Needless, I won't commit to anything for the time being. Looks like I have a lot of work ahead of me.


That's good. Understanding what the investment is, what it's features/risks are and what it is going to do for you are the building blocks of being able achieve one's goals while avoiding the huge mistakes.

Remember also that investing is no different than any other hobby or skill - learning at one's own pace what one can opens all sorts of doors and opportunities. Far too many seem to want to understand everything overnight then give up in frustration at an unrealistic goal and somehow seem to find the at best expensive advisor/investment or at worst, get taken in by the weasels.


For a good starting point, check out the "Eight with Weight: a Reading List for New Investors" sticky in the CMF Investing section. 

Cheers


----------



## Oldroe (Sep 18, 2009)

Remember every thing at banks are negotiable. 1.2 on 500k the bank doesn't want this going to a trust company.

So negotiate a better rate. You can get 1.9 what is the bank doing. Yes they will resist just keep moving up the ladder.


----------

