# Investment advice for a complete newbie aspiring investor



## Getafix (Dec 29, 2014)

Hi guys!

First post here, i've been lurking for a while trying to educate myself about investing. I am new to Canada and have never traded before and i want to start. Seeing Oil stocks at a low seems to be a good point to get into it. 

Since i have a bank account with TD, i was thinking of opening up a direct investing account with them. I've also read about e-series accounts but i think they are for buying mutual funds and not individual stocks? So just wondering if TD direct investing is a good place to start. It will be easy for me since i already have an account with them and i can easily transfer the funds and trade online. 

Finally i also wanted to ask what kind of account i should open up with them. Is a TFSA the best option? Since i've never opened one i assume i can add the funds from the preceding qualifying years as well. 

Once i've opened up the account i will probably be back to get some advice on which stocks to buy. The idea is to buy and hold on to O&G stocks since (imo) they're bound to go up eventually. So i'm willing to wait it out and hold as long as needed. Then to diversify i will probably invest in some mutual funds as well. 

I'm thinking of starting off with $5000 to begin with then will gradually add more once i get the hang of it. I have around $50k savings lying around and can manage to save a couple of grand every month. This site is a great resource and i hope i can go on to become a seasoned investor! Thanks.


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## 1980z28 (Mar 4, 2010)

Reading all the related posts will be a great start

Welcome and enjoy


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## Fraser19 (Aug 23, 2013)

You can open a TD direct investing account and hold the E-series funds and stocks in it. That is what I have for a TFSA.

To start I would just put some cash into the index funds and keep reading for a while. Getting into stocks at the very beginning of investing has a lot of dangerous aspects to it.


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## Getafix (Dec 29, 2014)

I know individual stocks can be risky but opportunities like these don't come along very often. I have some disposable income lying around and wouldn't hurt to take a gamble on O&G stocks. 

Unless everyone starts buying electric cars or we come up with a replacement for oil prices are sure to go back up. Like I said I'm willing to hold on to them. So i feel it's just a matter of time before prices recover. 

As far as e-series is concerned. Is the only advantage lower trading costs?

Suppose I want to spread my investment over 10 different companies and play the wait and see game. Do I still need to open a e-series account. Or will a direct investing account suffice.


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## Fraser19 (Aug 23, 2013)

Getafix said:


> I know individual stocks can be risky but opportunities like these don't come along vert often. I have some disposable income lying around and wouldn't hurt to take a gamble on O&G stocks.
> 
> Unless everyone starts buying electric cars or we come up with a replacement for oil prices are sure to go back up. Like I said I'm willing to hold on to them. So i feel it's just a matter of time before prices recover.
> 
> ...


Just tell them you want to be able to hold stocks and the Eseries in the same account.

The advantage with E series is there is no trading cost as long as you hold the fund for longer than 30 days. And it is already spread over multiple companies.

If you really want to jump straight into stock while they are down, that is up to you. However I would recommend that you only buy the best of the best right now. I occasionally buy stocks and I have found that the index funds perform better when things are good and sink less than when things are bad. There is a reason why only a very small percentage of my portfolio is individual stocks.

Or you could do the EFT way, which is more or less the same but with lower fees, but you can still have the satisfaction of pressing the buy button and paying 9.99 in commission.


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## indexxx (Oct 31, 2011)

E-series are a great product, can't really go wrong with them. I have my TD account set up to pay right into my RRSP every two weeks.

I always recommend reading The Wealthy Barber Returns to those looking for good, easy to understand advice for Canadian investors. There are many excellent books and I know you'll get a few recommendations, but it's a book that gives a good overall perspective of the pitfalls and advantages of different investing approaches. It's a fun read also.


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## leeder (Jan 28, 2012)

Troubling things from the above posts (for me anyway):
"Newbie aspiring investor..."
"thinking of opening a direct investing account..."
"what kind of account i should open..."
"be back to get some advice on which stocks to buy."
"buy O&G stocks since they're bound to go up... Then to diversify i will probably invest in some mutual funds as well."
"wouldn't hurt to take a gamble..."

I highly recommend doing some reading on investments first before you start investing. The books stickied in the investing section of this forum are a great start. This forum allows people to share ideas and opinions on stocks and investing. However, as an investor, you should take all opinions (whether it is here or water cooler talk) with skepticism and do your own research on the stock (e.g., looking at new articles, annual reports, etc.). There's no guarantee with anything. Certain oil and gas stocks will eventually rebound; however, some highly leveraged O&G stocks may go bankrupt.

TD e-Series index funds are a great place to start for new investors, as one fund provides instant diversification into all sectors (i.e., TD Canadian index would contain exposure to financials, energy, materials, etc. in the Canadian market). When you invest in TD Canadian, US, and international index funds, they provide you global diversification. There's no trading commissions with these funds, and the management expense ratios are fairly low.


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## My Own Advisor (Sep 24, 2012)

Welcome Getafix.

Congrats on getting your plan together...but....I largely agree with what leeder said. I mean, once you've done some reading, and get a plan together, you'll "know" what to do, the plan will tell you so.

Third and most importantly from my perspective, I'm a big believer in:

1. understanding yourself, your emotional attachments to money, your goals, your objectives first,
2. creating a financial plan to align with your goals and objectives second, _and then _
3. getting the accounts and products last to fulfill those goals and objectives.

There are dangers including wasted money if you don't follow that recipe. That's me, based on my experience and the experiences of others who have tried your approach and suffered some setbacks because of it.

Again, good luck


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## GreedIsGood (Dec 4, 2013)

leeder said:


> Troubling things from the above posts (for me anyway):
> "Newbie aspiring investor..."
> "thinking of opening a direct investing account..."
> "what kind of account i should open..."
> ...


This is exactly what I thought as well. The use of the word "gamble" caught my attention. OP doesn't want to invest. S/he wants to speculate. "$50k savings lying around...", "...but opportunities like these don't come along very often".

But having said that, do what you want. It's your money.


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## Getafix (Dec 29, 2014)

Thanks for the input guys. Don't read too much into my words guys i realize the risks and that is why i'm here doing my due diligence. "A fool and his money are soon parted".

The very fact that i've managed to save up $50k should show that i'm serious about my money. Like i've mentioned already, i'm a new immigrant who's only been in Canada for two months. I got lucky enough to land a job as soon as i landed which takes care of my expenses here, just a family of three so we don't need much. I've got some investments back home that generate a steady source of income for me.

I guess i should define my financial goals, the plan is to invest these savings over a period of 5 years (after which i might need to reinvest it into a business). So i need to find a relatively safe way to do it, one that can give me some good returns. Liquidity is a big factor since i could end up needing the funds sooner, hence G.I.C's and fixed term deposits are out of the question. 

I'm primarily an entrepreneur and willing to take risks. I've started up a few businesses and had some fail and some take off, they all taught me a lot of valuable lessons though. So i was approaching the O&G stocks in the same fashion, high risk high reward. I'm not foolish enough to put all of my money into it, but i am willing to 'gamble' and use some disposable income on it just to see how it plays out. It's better than hitting myself a year later for having the chance and missing on it. 

The rest of the cash i will only invest once i've gotten the hang of things and will spread it over multiple things to even out the risk. Anyway the first part is to open up a trading account which i'm hoping to do on my day off this week. 

So let's assume you guys had $5k to play around with and willing to take a lot of risk on. Would you take a gamble on the current oil situation and buy some stocks? If so which companies do you think are strong enough to get through this crisis?


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## gladaki (Feb 23, 2014)

My Own Advisor said:


> Welcome Getafix.
> 
> Congrats on getting your plan together...but....I largely agree with what leeder said. I mean, once you've done some reading, and get a plan together, you'll "know" what to do, the plan will tell you so.
> 
> ...


I have question for you. On your blog you talk both about indexing and Dividend investing. Hows your portfolio divided in index and Dividend investing ? 
Is there any point of moving to dividend investing if some one has less than 10k in index funds and usually have lower amount say 500$ each month for investing.

Thanks


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## MRT (Apr 8, 2013)

count me in with the others who find this troubling (to be overly dramatic)...

getafix (interesting name, given the topic lol), 'due diligence' is not completed by participating in an online forum, for starters. don't fool yourself into believing that you have 'done' anything by soliciting a few tips from strangers before you throw money into the market.

You admit to knowing very little, yet are prepared to deploy some 'play money' before you have educated yourself and developed an overall investing strategy? You contradict yourself by saying that you may need the money in 5yrs to invest in a business, so preservation of capital and liquidity are key...but then say you are ready to potentially throw away 10%. Deploying funds to 'see how it plays out' is indeed gambling...so at least you are using the right terminology; however, if you genuinely believe it is 'better' to gamble now than regret not gambling later, then you are already committing a cardinal sin of investing: letting emotions get in the way of sound decision-making. You are speculating, not investing...because there is no sound reasoning behind your strategy other than a desire to not 'miss the boat'.

I echo the suggestions to read and self-educate before acting...it means the difference between investing and speculating. I highly recommend William Bernstein's "Four Pillars of Investing" - while it needs updating for the most recent years following the crash, the sections on the history of markets, discussion of risk and particularly the psychology of investing, are indispensable, IMHO. 

I think you are putting the buggy before the horse here...but it sounds like you have made your decision already to 'gamble' and are just looking for tips on how to do it, so...good luck.


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## My Own Advisor (Sep 24, 2012)

I started off in mutual funds...then moved to dividend investing....now I'm trying to diversify the portfolio more using indexed products. I will keep my stocks though. I've learned to appreciate indexing simply makes much more sense for long-term total returns and to manage risk better.

_Is there any point of moving to dividend investing if some one has less than 10k in index funds and usually have lower amount say 500$ each month for investing?_

It depends on your goals and objectives gladaki, any investors' goals and objectives for that matter. Just because an investor has $5,000 to invest, or $10K, doesn't mean they cannot invest in individual stocks. They can, there are simply risks putting too much money or eggs into any given basket. Only that investor can make the call what they are comfortable with. If they need professional help to make those decisions, so be it and even better.

I'll also answer it this way based on what I wrote above:

1. understanding yourself, your emotional attachments to money, your goals, your objectives first,
Dividend investing works in part for me because dividends are very tangible, I see the money go into my bank account. It helps me with the emotional part of investing and not panic when things don't seem to go my way. Other investors might not need this psychological benefit but it's working for me.

2. creating a financial plan to align with your goals and objectives second,
My plan with my wife is not 100% written down, but it's close. Part of that written plan includes living off our dividend income (and distribution income from indexed ETFs) and not touching the capital. It was essential for us to figure out what we needed from our investments, what we needed them to do and why. Your mileage may vary.

3. getting the accounts and products last to fulfill those goals and objectives.
This is where I've done some stock selection, based on a number of criteria and tried as best as I can, to hold these companies hell or high-water. This might not be the approach others have or will take.

My goal is to eventually have a blend of about 50/50 dividend stocks to indexed assets, in addition to some form of cash wedge.
http://www.myownadvisor.ca/cash-wedge-opening-investment-taps/


@MRT,
"I think you are putting the buggy before the horse here...but it sounds like you have made your decision already to 'gamble' and are just looking for tips on how to do it, so...good luck."

100% agree.


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## leeder (Jan 28, 2012)

Getafix said:


> I guess i should define my financial goals, the plan is to invest these savings over a period of 5 years (after which i might need to reinvest it into a business). So i need to find a relatively safe way to do it, one that can give me some good returns. Liquidity is a big factor since i could end up needing the funds sooner, hence G.I.C's and fixed term deposits are out of the question.


Firstly, there's no guarantee that one can identify "good returns" over that short period of 5 years without lots of research and conviction. Indeed, while many people would think oil prices are currently low, no one knows how much lower it will go. It can return to $80 US/bbl or it can go down to $30 or $40 US/bbl (or lower... who knows). Oil is a volatile commodity. Not to mention, since the lows of mid-December, share prices of some oil companies have rebounded to a higher price levels as investors/traders have already priced in an anticipated bounce back in oil prices.

Secondly, there are contradictions in your information in that you might require the capital to reinvest into a business in 5 years, the amount you're putting in is disposable income, you want to find a relatively safe way, and you want to generate good returns. Is the $5,000 not part of the capital you require in 5 years? That is, are you investing that $5,000 for long-term purposes, such as retirement? If it's for retirement (or other long-term purposes), then equities are the way to go and I would encourage you to look into the TD e-Series. Something like the TD Canadian Index would contain a high proportion of energy content if you're really into energy stocks. On the other hand, if the $5,000 is part of the capital you might require in 5 years, then your goal should be to preserve your capital. If GICs and fixed term deposits are out of the question, then I would put it in a high interest savings account where it is easily accessible.

Finally, I do acknowledge that you are willing to take risks. However, the name of this investing 'game' is to minimize as much risk as possible. That requires a thoughtful, laid out investment and financial plan. Otherwise, you're essentially building a tower with an unsteady base (or buggy before the horse, whichever expression you prefer ).


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## Getafix (Dec 29, 2014)

MRT said:


> You admit to knowing very little, yet are prepared to deploy some 'play money' before you have educated yourself and developed an overall investing strategy? You contradict yourself by saying that you may need the money in 5yrs to invest in a business, so preservation of capital and liquidity are key...but then say you are ready to potentially throw away 10%. Deploying funds to 'see how it plays out' is indeed gambling...so at least you are using the right terminology; however, if you genuinely believe it is 'better' to gamble now than regret not gambling later, then you are already committing a cardinal sin of investing: letting emotions get in the way of sound decision-making. You are speculating, not investing...because there is no sound reasoning behind your strategy other than a desire to not 'miss the boat'.


As i said at the beginning of the thread i manage to save every month so this 50k will hopefully double in a few years. So in the grand scheme of things 5k wouldn't be such a big amount to 'gamble'. However your and everyone else's advice has made me realize that perhaps i should educate myself more before jumping into something. I might miss out on some opportunities right now but at least i won't develop any bad habits which might be hard to break later on. Thanks for the recommendations.


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## Getafix (Dec 29, 2014)

leeder said:


> Secondly, there are contradictions in your information in that you might require the capital to reinvest into a business in 5 years, the amount you're putting in is disposable income, you want to find a relatively safe way, and you want to generate good returns. Is the $5,000 not part of the capital you require in 5 years? That is, are you investing that $5,000 for long-term purposes, such as retirement? If it's for retirement (or other long-term purposes), then equities are the way to go and I would encourage you to look into the TD e-Series. Something like the TD Canadian Index would contain a high proportion of energy content if you're really into energy stocks. On the other hand, if the $5,000 is part of the capital you might require in 5 years, then your goal should be to preserve your capital. If GICs and fixed term deposits are out of the question, then I would put it in a high interest savings account where it is easily accessible.


I should have elaborated more, the 5k is indeed disposable as i was willing to part with it to serve as a learning experience. As i mentioned in my previous post i manage to save a few grand every month so the 50k will keep growing. This is the amount that i want to preserve for a possible future reinvestment in a business.

Like i said since i am new to this whole thing and come from a country where cash is king, i really don't have an idea of which path to take. I could split the savings i have right now and keep half in liquid investments and the rest as you recommended in equities like the TD Canadian Index. 

I'm taking all of this in and already learning that it's not easy as i thought it would be. So i really appreciate everyone's advice! I should have mentioned that i'm 34 years old so not really thinking that far ahead about retirement as yet. For the moment my goals are to start a business in the near future and save up for a house as well. So (assuming most of you guys are older than me) if you were starting out at this point how would you handle your investments.

Btw can you recommend any high interest savings account or cashable short-term GIC's?


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## leeder (Jan 28, 2012)

Getafix said:


> I should have elaborated more, the 5k is indeed disposable as i was willing to part with it to serve as a learning experience. As i mentioned in my previous post i manage to save a few grand every month so the 50k will keep growing. This is the amount that i want to preserve for a possible future reinvestment in a business.


Maybe it's the frugal side in me talking... money is hard earned. I don't like to term any money as "disposable" or "gamble" because it almost makes it sound like you are willing to throw cash into the garbage without regard of its value. To some, $5k is a lot of money. It's certainly enough to invest in the TFSA.

If you insist on investing the $5k, my recommendation is not to look at specific sectors (e.g., energy or financial sectors). Because you are a newbie investor who has obviously not looked into the valuations or fundamentals of companies or any annual reports, you risk losing all your money. 

I would suggest splitting your money into index funds, such as the TD e-Series. TD e-Series consist of four different funds -- Canadian, US, International (Europe, Australasia and Far East), and Canadian bonds. Investing in the index funds would provide you with the average returns of the stock market (and Canadian bond market for the Canadian bond fund). These funds track major indices (e.g., Canadian index would track S&P TSX composite; US index would track S&P 500, etc.). While you won't outperform the stock market by investing in index funds, you minimize the risk of losing all your money in case companies you invest in goes under. 

From what I read, you intend to keep $50k as cash and cash equivalents (e.g., GICs) as you want to reinvest in some business. You have $5k remaining money that you want to invest for the long term. I suggest investing it into the e-Series equity index funds (Cdn, US, and Int'l). Many people would split the investment evenly between the three. But it's really up to you as to what you're comfortable with.

Like I mentioned before, I would highly, HIGHLY suggest you get some basic investing knowledge if you are to continue your investment journey. The books stickied in the Investing forum are a great list. Try to keep investing as simple and boring as possible and have an investment plan before doing anything rash.



Getafix said:


> Btw can you recommend any high interest savings account or cashable short-term GIC's?


Check out http://www.ratesupermarket.ca/.

Good luck!


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## lonewolf (Jun 12, 2012)

markets sky high, over valued every way it is slice & diced, everyone on the long side of market. My advise is do not call going long this market investing, maybe replace investing with speculation or perhaps better yet gambling


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## Getafix (Dec 29, 2014)

Hey guys, so i i took everyone's advice and decided to read a little bit more and educate myself before taking the plunge. I've decided to follow Leeder's advice and use up $3k towards TD e-series index funds. The remaining $2k i want to invest into energy ETF's. 

The two i'm leaning towards are the Vanguard Energy ETF (NYSEARCA:VDE) and iShares S&P TSX Capped Energy Index Fund(TSE:XEG). So i'm planning on investing $1000 in each, this way i can get into oil stocks and cover both Canadian and U.S companies. 

Do you guys think this is a good way to start?


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## Pluto (Sep 12, 2013)

Getafix said:


> Hey guys, so i i took everyone's advice and decided to read a little bit more and educate myself before taking the plunge. I've decided to follow Leeder's advice and use up $3k towards TD e-series index funds. The remaining $2k i want to invest into energy ETF's.
> 
> The two i'm leaning towards are the Vanguard Energy ETF (NYSEARCA:VDE) and iShares S&P TSX Capped Energy Index Fund(TSE:XEG). So i'm planning on investing $1000 in each, this way i can get into oil stocks and cover both Canadian and U.S companies.
> 
> Do you guys think this is a good way to start?


In my opinion its not bad. With your oil and gas etf idea it looks like you are a budding contrarian. that's good. Years from now when the oil price has recovered and your energy etf has gone up don't forget to sell before the next oil collapse. 

As far as stocks go outside of the oil sector, I think we are poised for a bear market. I think this bull market has pretty much topped out. It reminds me of just before the '87 crash. My opinion on that is not popular, which indicates to me I'm on the right track. You might consider holding back on putting too much in stocks until the bull ends, and the next bear market matures. That way you can get some quality stocks at better prices.


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## Getafix (Dec 29, 2014)

Thanks for the advice, i can even hold off on the other stocks for now and let this $2k serve as a learning experience. 

As for the other savings i guess i will put them in a TD high interest savings account for now and maybe look for some short term cashable GIC's.


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## axelis (Jan 13, 2015)

Pluto said:


> I think this bull market has pretty much topped out. It reminds me of just before the '87 crash. My opinion on that is not popular, which indicates to me I'm on the right track.


Interesting thought...


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## Pluto (Sep 12, 2013)

Getafix said:


> Thanks for the advice, i can even hold off on the other stocks for now and let this $2k serve as a learning experience.
> 
> As for the other savings i guess i will put them in a TD high interest savings account for now and maybe look for some short term cashable GIC's.


You might consider some short term bond etf in your trading account. More convenient. For example, xsb. It doesn't fluctuate much, so any losses/gains will be small. Then when you want the $ for a stock, you just sell what you need for the stock.


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