# Beginners advice - *How* do I start? Specifically TFSA



## GreedIsGood (Dec 4, 2013)

I need advice on how to invest using a TFSA. I've read all these articles about investment vehicles such as ETFs, mutual funds, stocks etc. but I can't find any articles on _how_ to purchase. A little about me:

23 y/o graduated 2012 with BBA, concentration in finance so I have some basic knowledge but no actual experience.

*Chequing account:* $7,000 (RBC)
*RRSP:* $6,500 (RBC, bought in November 2013 mutual funds with MER of 1.85% and 2.11%)
*TFSA:* $15,300 (PC Financial, This is just sitting in cash)
-- _How_ do I invest this??? Can I buy ETFs online or do I have to visit a branch in person? I was thinking about moving this to TD.
-- I hope to be fairly aggressive with the TFSA to take advantage of the benefits of tax-free.
*Debt:* None besides small monthly credit card purchases.

*Additional info:*
Contract job making $2,700 monthly, net.
Minimal expenses as I still live with parents.

In addition, what do you guys think of online discount brokers in my situation? I checked out the demo on Questrade and it seems like a game. It's just like any other simulator I've signed up for. If I were to start a portfolio online, how do I indicate this in a TFSA account?


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## wendi1 (Oct 2, 2013)

Well, first decide what broker you want to use - you will probably end up doing most of your trading online (I do). http://www.theglobeandmail.com/globe-investor/online-broker-rankings/15th-annual-online-brokerage-survey/article15499322/?page=all

Rob Carrick likes VB, but RBC Direct gets a "B" rating - I might use them just because of the convenience.

For VB, https://www.virtualbrokers.com/, then click on "Open an Account" in the upper right hand corner. At some point, they will ask you what kind of account you want.

If you decide to go RBC, stop by your branch, and tell them you want to open a TFSA in RBC Direct. I think you can do this on-line, too, but the bank has folks who can help.

Then, get your broker to transfer the TFSA money from PCF to your new account. DO NOT take it all out and give the broker a cheque. Ask the new broker to cover any transfer fees. Open an RSP account, too. You won't be happy with the high MER MFs for much longer.

After the transaction has cleared, buy your etfs. And relax!


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## Just a Guy (Mar 27, 2012)

Even simpler, is talk to your bank. They will set everything up for you. Most can even buy the stuff you want by your instructions, but it comes at a cost.

Of course, as Wendi indicated, you may want to do a little research first. If you plan to do the investing yourself, it's better to set up the accounts at a broker you want to work with as moving funds later can result in hassles and fees you don't want.

At this time of year, most local branches of banks have free seminars on how to set up things like this.


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## GreedIsGood (Dec 4, 2013)

Do you guys recommend the big banks such as RBC or TD? Or online such as VB or questrade? Which is better, convenience-wise or cost-wise?



wendi1 said:


> Then, get your broker to transfer the TFSA money from PCF to your new account. DO NOT take it all out and give the broker a cheque.


What do you mean by taking out a cheque? Why is this bad?


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## Synergy (Mar 18, 2013)

this may help you out a little - Canadian Online Discount Stock Brokerage Comparison 2014
http://www.milliondollarjourney.com/review-canadian-discount-brokerages.htm

I use TD.


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## wendi1 (Oct 2, 2013)

Read the review, Greedy - they all have their own little perks and downfalls - I use BMO, but VB or RBC Direct are fine. Everything is on-line these days, anyways.

If you remove your money from your TFSA account with PCF, your contribution room is increased by that amount, BUT NOT UNTIL JANUARY 1, 2015. If you try to re-deposit it into another account, you might accidently over-contribute. The Canadian Revenue Agency will find out (but not for a while), and then they will charge you massive penalties. This is just the way TFSAs were set up in the legislation.

This will not happen if you transfer it directly from one institution to another, but there will be a fee.


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## Potato (Apr 3, 2009)

GreedIsGood said:


> I've read all these articles about investment vehicles such as ETFs, mutual funds, stocks etc. but I can't find any articles on _how_ to purchase.


This is an extremely common issue and what motivated me to write a book addressing precisely that (check the signature).

Since I published it, Questrade has started offering free purchases for ETFs, which is a good option vs. the TD e-series I usually recommend people start with.


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## GreedIsGood (Dec 4, 2013)

wendi1 said:


> If you remove your money from your TFSA account with PCF, your contribution room is increased by that amount, BUT NOT UNTIL JANUARY 1, 2015. If you try to re-deposit it into another account, you might accidently over-contribute. The Canadian Revenue Agency will find out (but not for a while), and then they will charge you massive penalties. This is just the way TFSAs were set up in the legislation.
> 
> This will not happen if you transfer it directly from one institution to another, but there will be a fee.


I think I have enough room left. Correct me if I'm wrong, we can now contribute a total of $31,000? I've only made ~$15,000.

My choices would be RBC, TD, VB or Questrade. I guess if I have to pay a fee, then I must. Unless someone who has a TFSA with PCF can give me some advice?


Potato, I don't see anything in your signature.


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## Taraz (Nov 24, 2013)

GreedIsGood said:


> I think I have enough room left. Correct me if I'm wrong, we can now contribute a total of $31,000? I've only made ~$15,000.
> My choices would be RBC, TD, VB or Questrade. I guess if I have to pay a fee, then I must. Unless someone who has a TFSA with PCF can give me some advice?
> Potato, I don't see anything in your signature.


The total contribution room is $31k (assuming you've been over 18 and a Canadian citizen and over 18 since the program started).

If you contributed $15,000 so far, and made $300 interest, you could open up another account (at TD, PCF, wherever) and contribute $16k.

If you then have your TFSA transferred (directly, without breaking the magical TFSA bubble by withdrawing it via a cheque), you can have the entire $31,300 all in the same account. 

If you pierce the magic TFSA bubble (e.g., take out the $15,300) by removing it from your TFSA via cheque, it would be viewed as a withdrawl. That means you couldn't put the $15,300 back into a TFSA (not at PCF, not at TD, not anywhere) until January 1st of 2015. At that point you could deposit into another TFSA account.

You don't want to pay a fee to move it because:

(1) many institutions don't cause a fee and 
(2) if they charge a fee to the TFSA account, it's not a tax-deductable expense,
(3) why pay something you don't have to pay?


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## Potato (Apr 3, 2009)

GreedIsGood said:


> I don't see anything in your signature.


Weird... anyway, the link is Potato's Short Guide to DIY Investing.


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## Video_Frank (Aug 2, 2013)

Dan, aka Canadian Couch Potato, has written an excellent guide. It answers all of the questions you're asking. I highly recommend it.


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

The amount of money you have saved is impressive but...

OK if you're still living with your parents why are you concerning yourself with inveting right now? This is a good time to think about moving out on your own, esp since you graduated 2 yrs ago. You're not a university student anymore.

When you do so, you will find that you need your money for moving expenses, furniture, new car etc. You should also be saving a significant portion of those savings in cash to be used as an emergency fund, esp since you are on a contract job. Get your life started. Investing is a long term thing.


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## Cal (Jun 17, 2009)

It is amazing how much the branches will help you in this regard. Every transaction you make will generate profits for the bank.

P.S. Greed is not good. LOL, don't let emotions get involved in your transactions.


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## richard (Jun 20, 2013)

The "how" is pretty simple. You can just open an account and start buying ETFs, or you could use TD e-Series funds (maybe better for now if you're not adding at least $500/month). Once you've done that you're in the market and you'll start getting dividends. You can buy more shares any time in the same way. As for what to buy, Canadian Couch Potato has a good starter portfolio. 

Questrade will work, however sometimes I find that things don't happen unless I remind them several times and tell their agents what they need to do. If you don't mind taking the time to learn it's good since it won't cost you much to buy ETFs. RBC is great too, you just don't want to make too many trades with your portfolio size.


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## Potato (Apr 3, 2009)

richard said:


> The "how" is pretty simple.


Granted, I'm conflicted because I have a book to sell, but it's kind of like riding a bike: it is really simple... once you get past the first attempt. Before that it's terrifying and confusing, and few remember what it was like before they knew how and so it's really hard to explain to someone who doesn't know. Yeah, just enter your symbol, amount to buy, and password and you're done. Track ACB for taxes if it's non-registered. Pedals, handlebars, brakes, all there is to it. Maybe some gears to fiddle. That's Greek the first time around though.

Lots of people like Dan's book. It's a pretty decent book, but it has 0.7 pages out of 128 on _how _to actually buy an index fund (though even that was an improvement over the literature that existed previously). For many people they seem to get it based on that, or muddle through on their own and come out ok. But many more I know are just like GreedIsGood and find that the _how_ is lacking. Current thread notwithstanding, I'm terrible at self-promotion. I have virtually no visibility out there for my various consulting side businesses. Yet people still manage to find me -- they desperately _seek out anyone like me_ -- to help educate them and walk them through the process, to be their training wheels. Now it was worse before I published my book (and Dan published his I think the same month) because the great index investing books before that really focused on the _why _and didn't much cover the _what _(which Dan's book does in detail) let alone the _how_.

Anyway, that's a long, self-aggrandizing way of saying that we shouldn't be too dismissive of how daunting the mechanics of that first transaction can be. 

Back more directly to the topic, TD (because of e-series) and Questrade (because of commission-free ETFs) are likely the top two choices. I like TD if you're already a little shaky on the how as they have a more robust support network (their staff plus other users on forums like these), and you can make a more direct link to your chequing account (assuming you're open to switching banks for that, too). While you can do the TFSA shuffle of withdrawing and recontributing to move banks, you may have to pay a fee to move your RRSP from RBC, which may not be worth it.


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## Four Pillars (Apr 5, 2009)

Potato said:


> ... it's kind of like riding a bike: it is really simple... once you get past the first attempt. Before that it's terrifying and confusing, and few remember what it was like before they knew how and so it's really hard to explain to someone who doesn't know. Yeah, just enter your symbol, amount to buy, and password and you're done. Track ACB for taxes if it's non-registered. Pedals, handlebars, brakes, all there is to it. Maybe some gears to fiddle. That's Greek the first time around though.
> ...


Couldn't agree more.

I've read Potato's book as well as Dan's and they are both a great resource for anyone who is looking to get started. Very cheap too.


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## richard (Jun 20, 2013)

There are some details to be learned, but I think the way it's explained sometimes can make people think they don't understand it when they really do. There are a few steps to open an account and place a purchase order within that account. Once those two things are done that really is all it takes. A detailed walk-through can be useful so it's great that your book is available as a resource.


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## Four Pillars (Apr 5, 2009)

richard said:


> There are some details to be learned, but I think the way it's explained sometimes can make people think they don't understand it when they really do. There are a few steps to open an account and place a purchase order within that account. Once those two things are done that really is all it takes. A detailed walk-through can be useful so it's great that your book is available as a resource.


And purchase what? Does everyone already know that?


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## richard (Jun 20, 2013)

Four Pillars said:


> And purchase what? Does everyone already know that?


No, but if the OP asks we can certainly explain that so Potato doesn't have to rewrite his book in this thread  (my answer, above, was that referring to CCP is a perfectly fine starting point and covers several different types of accounts)


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## aB01 (Sep 11, 2013)

Here's a walkthrough for RBC, there is a also BMO Investorline walk-through I think.
There should also be some account transfer stuff there as well.
[Note, I haven't used it yet, will eventually though.]

http://financialcrooks.com/how-buy-equities-etf-rbc-direct-investing-account/


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## Four Pillars (Apr 5, 2009)

Here's one I did for Questrade explaining how to purchase stocks & ETFs. A lot of the basic info applies to all brokerages:

http://www.moneysmartsblog.com/how-to-buy-an-etf-or-stock-using-a-canadian-discount-brokerage/

It also links to my discount brokerage comparison if you still need one.


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## GreedIsGood (Dec 4, 2013)

Those links in the last two posts are what I'm looking for. Thanks!

I want to know _how_ to open an account that I manage on my own. Let's say I want to travel from Toronto to Vancouver by car. I don't need to hear things like Vancouver is really beautiful but rent is expensive. I want to know directions, "take the 401 west, then left turn on..." There are tons of resources on what to buy but not _how_ to buy. "Mutual funds are costly" but not "how do I open up an account and purchase a fund on my own?" I have mutual funds in my RRSP account but that was because I went to an RBC branch and the financial advisor set it up for me and even though FA's takes an interest into their client's financial situation, their first priority is making money for the bank. I would like to have full control of my own money and be financially literate. 

This will be my financial goal of 2014 (along with moving out of my parents' house).

How many of you have accounts with different banks? I bank with RBC but if I want to open an account with TD for investing, would that be too much of a hassle? Or should I just go with RBC Direct Investing?


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## Four Pillars (Apr 5, 2009)

I bank with CIBC and have a brokerage account at Questrade. Works fine for me.

I move money to Questrade using the bill pay function. Very easy.


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## Video_Frank (Aug 2, 2013)

Four Pillars said:


> Here's one I did for Questrade explaining how to purchase stocks & ETFs.


I was going to paste this link in - I didn't realize you wrote it. Thanks for that walkthrough, it's awesome. I had it open on one screen while I bought my first ETF's on the other screen and it make me feel confident. Great page, Mike, much appreciated.


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## Just a Guy (Mar 27, 2012)

GreedIsGood said:


> How many of you have accounts with different banks? I bank with RBC but if I want to open an account with TD for investing, would that be too much of a hassle? Or should I just go with RBC Direct Investing?


While it is generally easier, or better to bank at a single place (you can see all your different accounts at the same time, transfer easily, etc) it isn't that much more difficult to work with multiple banks. Once you complete a trade, you have a bit of time to do the reckoning. Transferring money between banks is usually pretty easy, your brokerage bank is more than willing to help you set it all up (it's in their best interest of course). Some banks could charge fees and stuff, but generally it's one minor step, and minor things you won't get the benefits of. Not a hassle by any means, especially if you're used to on-line banking.


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## canucked_up (Feb 23, 2014)

I use CIBC Investors Edge and Questrade. I'm not sure about other banks, but Investors Edge requires a minimum $ investment balance to cancel annual "administration fee?". Watch for that.


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

Since you are with RBC, perhaps you would like to stick with them? If you're already using their online banking, the integration with DI, their investment arm, is very good. I have been doing this and have been very pleased. Here's how to set up an account with them.

https://www.rbcdirectinvesting.com/template/apply/open-an-account.html

BUT, I would start with a practice account which you can also easily open via a link available in your online banking. This is a great way to learn the ropes and mechanics and investing while saving yourself costly mistakes. This will also get you familiar with the DI investing platform so you can decide if it's right for you.


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## Four Pillars (Apr 5, 2009)

Video_Frank said:


> I was going to paste this link in - I didn't realize you wrote it. Thanks for that walkthrough, it's awesome. I had it open on one screen while I bought my first ETF's on the other screen and it make me feel confident. Great page, Mike, much appreciated.


Thanks for the nice words Frank!


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## Eclectic12 (Oct 20, 2010)

aB01 said:


> ... There should also be some account transfer stuff there as well ... [/url]


You mean move accounts to another broker like this:
http://www.canadiancapitalist.com/h...sfer-your-account-from-one-broker-to-another/


Or just transferring money or investments into and/or out of the brokerage account?


Cheers


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