# Investing $10000 / month ?



## DrMatt (Dec 11, 2011)

Hypothetically speaking... If you had $10,000 to invest every month starting in January of 2014, and will have a 15 year time horizon (until your desired retirement age), where would you put your money?

1. Professionally managed brockerage account (e.g. ScotiaMcLeod),
2. Personal online trading account (where you'd invest in stocks and bonds and sell options... In which you have about five years experience.),
3. Start a real estate investment company (with a sibling partner who has ~10years experience), or
4. Something else entirely??????


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## dogleg (Feb 5, 2010)

I don't pretend to be an expert but I would suggest you look at people who are rich and figure out how they got that way. If they did it in the market my guess is they bought commodities ie Buffet et al . My mini- Bible on investments is Phil Town's 'Payback Time'. I think he has things figured out with a built-in safety net. His anchor is strong growth , dividend rich companies and I would add commodities to the mix. Risk ? Of course, but with proper research you can limit a lot of it . Anyway that's my two cents. Good luck. BTW if you are going to depend on a broker /advisor then be prepared to watch him get rich on your dime.


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## leoc2 (Dec 28, 2010)

Do it yourself. Open up an Ally HISA (or similar). Deposit your $1K each month. After 6 months (or so) invest your savings in your discount broker. Repeat this cycle.

During the first 6 months read all you can about investing. Figure out your risk tolerance. Decide between active or passive investing (see canadian couch potato). Decide on asset allocation. This board is great but it takes time to figure which investors posting here matches your investing profile. 

Welcome aboard!


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## peterk (May 16, 2010)

Why hypothetical Dr. Matt? Do YOU have 5 years experience in market investing, does the person you're asking for? If so, why the generic funds/stocks/real estate questions?

You need to give us a lot more info to produce any meaningful answer. And you need to realize that any answer given is just another amateur opinion on the internet. It could be the advice of a multimillionaire investment genius, a 14 year old kid who's taking statistics, a 4th year university student who thinks he knows something but probably doesn't  or a 90 year old retiree on their death bed.
These forums are great for specific information, but you're still going to have to make the overarching decisions, based on the details that only you know, by yourself.


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## Spudd (Oct 11, 2011)

With that amount of money, I wouldn't take any risk at all. 1.8 million (the total after 15 years) would be enough for me to be very comfortable at retirement, so I would just pile it into GIC's.


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## marina628 (Dec 14, 2010)

I think we can all agree to eliminate the real estate idea 
Personally I went to the Library and got many books ,started reading as many online website as I could and took small positions in stocks I felt more comfortable with.If you are not driven to put in the time and effort to build your own portfolio then pay somebody but speaking from experience it is much more rewarding to do it yourself .


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## DrMatt (Dec 11, 2011)

dogleg said:


> ... My mini- Bible on investments is Phil Town's 'Payback Time'. I think he has things figured out ...


Looks like a good book... Hadn't seen that one, thanks!


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## DrMatt (Dec 11, 2011)

marina628 said:


> I think we can all agree to eliminate the real estate idea
> Personally I went to the Library and got many books ,started reading as many online website as I could and took small positions in stocks I felt more comfortable with.If you are not driven to put in the time and effort to build your own portfolio then pay somebody but speaking from experience it is much more rewarding to do it yourself .


So... I have been building my own portfolio, and enjoying that immensely, and I'm sure a lot of our funds will end up in there... But I feel like I'm missing something?! 

Why do you say I should eliminate real estate?? It's one of the only things I haven't tried yet... Rentals seem to be a good way to build cashflow over time.... Plus it's probably the only 'business' venture that I'm willing to attempt...


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## DrMatt (Dec 11, 2011)

Spudd said:


> With that amount of money, I wouldn't take any risk at all. 1.8 million (the total after 15 years) would be enough for me to be very comfortable at retirement, so I would just pile it into GIC's.


You know... That's exactly my concern!! Why not just put it all in GICs?? Or one huge bond ladder?? I suspect its because once 2 million is in sight... $10 million seems necessary... And then, that'll likely mean $100M is important... and so on... And one of the most important considerations (for me) is intergenerational wealth... And how to pass it on efficiently... So many questions... So few answers!


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## DrMatt (Dec 11, 2011)

peterk said:


> Why hypothetical Dr. Matt? Do YOU have 5 years experience in market investing, does the person you're asking for? If so, why the generic funds/stocks/real estate questions?
> 
> You need to give us a lot more info to produce any meaningful answer. And you need to realize that any answer given is just another amateur opinion on the internet. It could be the advice of a multimillionaire investment genius, a 14 year old kid who's taking statistics, a 4th year university student who thinks he knows something but probably doesn't  or a 90 year old retiree on their death bed.
> These forums are great for specific information, but you're still going to have to make the overarching decisions, based on the details that only you know, by yourself.


Good points. I was just hoping some opinions and thoughts on that matter might stimulate me... To read something or consider something else to research... And it appears I've already got some directions to pursue, so THANK YOU all... This has been fun so far!

I have been investing in stocks and options for about three years... Finally saw the light and sold my fifteen-years-FLAT-mutual funds in 2008... Just in time to buy the lows of jan-mar 2009... I intend to continue doing this, but am interested in trying my hand in real estate as well (have owned five properties and made money on four of them, but lived in them all and haven't tried the rental game yet)

The other thing I've been bothered by is: I read somewhere that Warren Buffet has averaged 21% annualized... So that is essentially the theoretical limit of sustained growth in the stock market over time (and by no means attainable by me)... Even at that rate, $120,000/year grows to $11million in fifteen years... That would be great... But its not going to happen... And some people create billions in wealth in one lifetime... But they don't do it by investing in other people... I gues I'm hoping to find inspiration on these boards... More than specific answers I guess...


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## Dmoney (Apr 28, 2011)

Hate to burst your bubble, but even putting away 10K/month you're not going to get anywhere near 100M so keep your focus on some of the smaller numbers. 

I'm assuming by the name you're a doctor? Freshly graduated? Aiming to retire in 15 years? Likely closer to 30 than to 25 if you're just out of school? 

One advantage you have over most is an almost unparalleled ability to earn. You put in more hours, you get more pay. Depending on specialty you could be making north of 50K per month gross. If you're working long hours, you likely don't want the headache of direct real estate investment, the return for your time just isn't there. 

One option is MD physician services which runs a wealth management service specifically for doctors, but it's essentially little more than mutual funds. They do have a private investment counsel for large portfolios which may or may not be much better, however the costs are less.

The other option is doing it yourself, and if you have five years experience, I'd recommend that route. Couch potato portfolio, dividend growth stocks, broad-based ETFs, lots of options, everything has probably already been said in the forum, just gotta search for the details.


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## Sampson (Apr 3, 2009)

Lot of mis-reads. $10k/ MONTH not year.

I would keep doing what you've been doing, assuming your 2009 purchases help produce a well-diversified portfolio.


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## donald (Apr 18, 2011)

What about francising?Multi nationals that has a system in place,re-estate in place,advertising in place.Mcdonalds,tim hortons,starbucks ect.Hire out all operations and set it up in a way that your getting reports(even if you pay a gm more than industry average)I know a family who was wealthy(not personally) and took it to the next level by acquiring several tim hortons(3)Ive always wondered how that game worked and what the roi would be,that might be a interesting segment in re.You have alot of money what about investigating apartment blocks?


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## marina628 (Dec 14, 2010)

I have a few rental properties and I would say buying a property on your own to try your hand at rentals would be ok.To start a biz and form a partnership ,I am not a fan of partnerships when you obviously do not need any help qualifying for a mortgage.


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## DrMatt (Dec 11, 2011)

Franchising... That's something I know nothing about... But it's interesting... Feels again like you're really just making other people rich though... franchise fees and overhead costs... You're right about having to hire someone you can trust and paying them well... It defeats the purpose if you have to work there... 

How much does something like that cost and what can you expect in terms of Cashflow? Anybody know?

Also have considered multi-unit apartment blocks but I feel like I should probably own at least one rental first...


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## donald (Apr 18, 2011)

I think i read somewhere mcd won't interview/talk to you unless you meet there requirments i believe its north a 1m in assets.I dont know how it works thou,i would guess it would'nt be a bad investment....you got to pays fees but look what you get.....second to none advertising...prime re-estate.....customer base from day 1....system of inventories....system of employees,basically your grandfatherd a recipe of making $,i know there is even a mcd business school in chicago who specializes in teaching/mentoring there francisee.

Wonder if you get stock ect....im sure you would make a soild yield on a investment....8/9/12?yield on it?The system must work...i wonder what a operator/investor would get compensated?percentage of net sales of store...i dont know.


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## marina628 (Dec 14, 2010)

We have friends who recently got a Tim Hortons they had to have $200,000 cash in hands plus another $350,000 which could be financed.Tim Horton's require hands on people and must have minimum of 2 people on franchise .They are paying about 20% off the top back to Tim's each month not including cost of inventory.


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## marina628 (Dec 14, 2010)

http://www.aboutmcdonalds.com/mcd/franchising/us_franchising/aquiring_a_franchise.html 
Just in case anyone was interested ,It is too much work for me lol


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## Potato (Apr 3, 2009)

Spudd said:


> With that amount of money, I wouldn't take any risk at all. 1.8 million (the total after 15 years) would be enough for me to be very comfortable at retirement, so I would just pile it into GIC's.


Amazing how the same situation can lead to totally different answers. For me, I'd say that even if it never grew after contributing, and dropped by half the day after I took retirement, I'd _still _have almost a million dollars, which could fund a comfortable retirement. So my risk tolerance would be huge, and I'd pile it all into equities.

As for other options, a good point was raised in another thread about the value of your time. Unless you want to spend your free time managing rentals or checking in with your restaurant staff, stick with passive investments. Stocks, bonds, or ETFs of those.


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## screwjack (Dec 14, 2011)

Potato said:


> Amazing how the same situation can lead to totally different answers. For me, I'd say that even if it never grew after contributing, and dropped by half the day after I took retirement, I'd _still _have almost a million dollars, which could fund a comfortable retirement. So my risk tolerance would be huge, and I'd pile it all into equities.
> 
> As for other options, a good point was raised in another thread about the value of your time. Unless you want to spend your free time managing rentals or checking in with your restaurant staff, stick with passive investments. Stocks, bonds, or ETFs of those.


Without knowing the purpose of the investment and the time horizon of the investor, just saying saving 10k per month is not enough to make an investment decision. 
However, if it is the case of an average person who hope to retire with an average life style after 15 years, then the answer is obvious. As some pointed out, 1.8 million in total is more than enough to warrant a comfortable life style, so all you need to do is to throw the monthly savings into government bonds and make sure they outrun inflation. The laddering should mitigate some of the interest rate risk.


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## Sampson (Apr 3, 2009)

screwjack said:


> However, if it is the case of an average person who hope to retire with an average life style after 15 years, then the answer is obvious.


I don't think the average person can save $10k per month, but I do aggree with you that we don't have enough info to offer advice.


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## Oilers82 (Jan 17, 2011)

If the OP is saving $10k/month I doubt he'd be happy to retire with only 1.8 M net. And consider if he's a physician there is NO pension...just whatever he's saved.

It'd be useful to know what other assets there are, like in 5 years of investing what kind of net worth from investments, is there owned property? etc.

But here's an idea...have you thought about investing back in your own field? Health care is probably as stable an investment as any, especially in the next 20 years with the boomers aging. There's an always-renewing supply of people to work for you (ie new grads), and its like a commodity that's always in demand (when are people not gonna get sick?). Health care is profitable in all systems of health care, and will be accessed regardless of the state of the economy.

So run a business related to the field..you already know tons about it. Run a clinic, own a lab/pharmacy, build an OR, run a niche service in your community...many ways to invest.


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## DrMatt (Dec 11, 2011)

Ok. So. Second year out of residency, my wife and I earned combined salary ~400k this year, ~250k the year before, ~90k the two years before that... And much less for the ten years prior to that... (peanuts really)... We're likely going to hover at this level for some time (~400). We have about 60k in stocks (online brokerage account- all of that is what's left after doubling up on stocks we bought in early 2009 and sold for profit to pay off the 50k investment loan which allowed us to make the purchases in the first place - haven't been adding to these accounts... It is split between our maxed TFSAs and a bit in my RRSP - not maxed). We have a ~550k home with about 230k left on the mortgage which should be paid off in about two years - hence the sudden 10K per month. Three kids. Pushing 40. Kinda do want to do better than 1.8M!! Considered health care company option but I really don't want to get into the business of managing physicians - literally worse than herding cats. Looking for inspiration. If none will likely have a big bond ladder, a great life, and not much else.


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## doctrine (Sep 30, 2011)

> Why do you say I should eliminate real estate?? It's one of the only things I haven't tried yet... Rentals seem to be a good way to build cashflow over time.... Plus it's probably the only 'business' venture that I'm willing to attempt...


This amuses me. Rather than invest in a house, which subjects you to maintenance/tenants/pain in the ***, why not just invest an equivalent amount in real estate companies that can give you an immediate 4-6% on your capital with no pain in the *** involved. It is very rare that you are going to achieve 5% after costs, and someone like FCR or KMP will give you that right now (at a favourable dividend vice interest/income rate), or alternatively with numerous REIT's that may give you 7-8%. And no property taxes or upkeep involved.


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## celishave (May 8, 2010)

Everyone is saying how much $1.8 Million would be assuming no growth at all. $1.8 in fifteen years time is more like $1.5Million today. That is alot of $ certainly but it wouldn't really fund an extravagant retirement in reality. Basically bare bones + a couple of vacations a year.


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## Oilers82 (Jan 17, 2011)

DrMatt is that 10K/month personal savings only? What about what money you've left in your corporation? Don't forget that that's almost like an RRSP of its own (though it is taxed at 15% annually). Most of your money seems to be in registered accounts so that's all personal savings...

I'm in a similar position as you (2nd year out of residency); currently my wife and I make probably 70K less a year than you guys do, our home is about the same value and we have the same amount of mortgage left to pay. We have slightly more (like $5k) in stocks. We are both 29, no kids yet (lower expenses). 

For us, we've decided that our free time is too important to take up a time-consuming business or deal with rentals (we thought long and hard about going that route). I'm currently using a pretty standard couch potato approach, though I sold all of my European equities awhile back to avoid the impending losses. I'm heavily considering switching into a diversified dividend portfolio spread out amongst my personal registered accounts and my corporation, and hope to live off the dividends when I retire. I assume that even with minimal capital appreciation of equities, I should be able to accumulate $3 million in stocks, and if my portfolio pays me an average of 3.5% annually, that'd be more than enough to live on during retirement. That's a fairly simplified way to think of it, but that's what I"m going on. 

If you do find something that you're very passionate about and enjoy doing in your spare time, and you can make money off it, then great. But my advice would be not to stress yourself out too much; your job is probably enough at the moment. Enjoy your time off and ensure you are as happy/fresh as possible for your patients (sorry, I did some research on physician wellness and its somewhat important to me).


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## Dmoney (Apr 28, 2011)

DrMatt, do you have kids? Have you and your wife set up a corporation?

I'd recommend getting a good accountant and shelling out however much it costs annually. You'll probably find there's an opportunity to avoid a ton of taxes through income-splitting with children (you'll need to check the rules on this one, you may be able to pay dividends to your kids, tax-free up to nearly 70K/year), shielding income in the corporation, writing off expenses aggressively etc. 

Are you a private practice or working in a clinic/hospital?

As for investment strategy, unless you really enjoy managing investments as a hobby, you really have no need too look for oversized returns. Personally, with your earning power, I'd avoid direct real estate investment, investing in a franchise or small business. You've worked hard to get through med school and now you're likely working pretty hard, so why add on another responsibility when you've already got great cash flow coming in. I'd aim for a passive strategy, unless, like I said, you're really passionate about investments and love doing it. 

Also, I doubt that there's any investment you can get into right now where an hour of your time will return more than if you were to just work another hour as an MD, so that would be my main consideration.


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## FrugalTrader (Oct 13, 2008)

Personally, I would look into converting excess savings into a *passive* income stream... like dividends or distributions from REITS with the goal of building a stream big enough to cover household expenses.

Becoming a landlord is another job which requires time (and sometimes stress)... even with a property manager.


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## screwjack (Dec 14, 2011)

celishave said:


> Everyone is saying how much $1.8 Million would be assuming no growth at all. $1.8 in fifteen years time is more like $1.5Million today. That is alot of $ certainly but it wouldn't really fund an extravagant retirement in reality. Basically bare bones + a couple of vacations a year.


Obviously that was an approximation only. There is not enough information (expected future inflation, real risk free rate, annual pay raise, etc.) to calculate the present value of the sum of his savings.
Anyhow, assuming 1.8m is the money you have today and with 5% annual growth, you could buy yourself an annuity with an annual pay of 98.6k for 50 years! (117k if it's spreaded out over 30 years.) That's almost double the median household income. Maybe that's small change to you, but it's way more than I would ever need for retirement.

But, as someone has pointed out, the original poster would probably not be content with this as he is a physician earning much more than an average person. So again, without knowing what he really wants from the investment, no one here could give out sound advise. For instance, is the money only for his and his wife's retirement? Are they hoping to maintain their current life style? How risk adverse are they? Will the money be left to their kids? If yes, how much? These are just some of the questions he should answer when he is making his investment decision.


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## screwjack (Dec 14, 2011)

doctrine said:


> This amuses me. Rather than invest in a house, which subjects you to maintenance/tenants/pain in the ***, why not just invest an equivalent amount in real estate companies that can give you an immediate 4-6% on your capital with no pain in the *** involved. It is very rare that you are going to achieve 5% after costs, and someone like FCR or KMP will give you that right now (at a favourable dividend vice interest/income rate), or alternatively with numerous REIT's that may give you 7-8%. And no property taxes or upkeep involved.


This is the classics rent or buy argument. Sometimes it's better to buy. Sometimes it's better to rent. It depends on the situation. For one thing, he has three kids, so chances are buying is better.


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## Oilers82 (Jan 17, 2011)

screwjack said:


> This is the classics rent or buy argument. Sometimes it's better to buy. Sometimes it's better to rent. It depends on the situation. For one thing, he has three kids, so chances are buying is better.


No I think that post was REIT vs being a Landlord. No doubt he should own his house but that post is just saying there's no reason to take on an income property when he can get stable returns, without any work, from an REIT.


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## DrMatt (Dec 11, 2011)

Oilers, you sound like you're having the same issues we are?! I've got a couple ideas for businesses in the health care field but I'm really hesitant to go there... I'm a doctor not a business guy... I think a lot of docs assume we can figure it out... And maybe we would... But it will likely take more time and effort than my practice could afford.

All,
At the end of the day, we've worked hard to give our children a better life. The big issue for me is providing a legacy for my kids. I want to have a passive income stream from investments, possibly businesses, that sustains our lifestyle. But the underlying issues will, hopefully, be able to be passed on. We will not have an extravagant lifestyle but we do intend to travel and enjoy some of the finer things. Once our house and cottage are payed off, we figure the equivalent in todays dollars of $10000/month after tax, should be more than enough... The trouble is getting there without killing ourselves with work along the way! That's why my focus is projected yield growth... E.g. Dividends increases are awesome!

My portfolio: I have sold a bunch of covered calls over the last two years, which is fun, but I'm sure I've missed a ton of opportunities along the way (don't have time to pay attention that closely)... Also love the cash-secured puts, really the only way to buy stock!!! 

The other thing is that my current 60k in stocks has cost me nothing! Which is great. 2009 will likely not be repeated in our lifetime and I feel fortunate that I was in exactly the right place to pounce... However, my account was worth about 80k, 8 months ago... Haven't sold much since january... I tend to stick to the strong dividend payers so don't really care what the market says their worth... (eg, bought more RY when it dropped to 43 last week, from cash on hand from dividend payments). I have fun with it and feel like I can be disciplined enough to manage my own little fund (with no MER - because I make a point of offsetting my trading fees with option premiums)... Although I did make a bad call on yellow media, which I watched go from $6 down to $0.19... And kept it all the way despite many warning signs that I ignored... Still keep it too, in a sick way, to remind myself not to be such an idiot in the future... 

We will be incorporating around the same time as the house is paid off... We're not really frugal enough to save a ton right now, our savings consist of the $10K we put on the mortgage monthly... The nanny is a big expense... So, we'll incorporate as soon as we're able to leave a bunch behind in the corp. At that point, it may be more than 10K/month? Who knows?

So now that I've laid out my entire life for everyone and their dog to see... Can't wait to hear what you have to say! Hoping to get some good advice and stimulating suggestions for future planning...


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## screwjack (Dec 14, 2011)

DrMatt, obviously you know what you are doing and are on track with your investments. But I would probably correct you on 2009 being a life time opportunity. For the past two decays, there are at least 3 downturns/buying opportunities (much more if you also count the crises outside this continent), so it pays to be patient.


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## peterk (May 16, 2010)

Sounds like you're doing fine. To get a passive income of $10k/month after tax will take ~4million, which will take about 15 years to grow to at your 10K savings rate, assuming historical returns. 

Keep doing what you're doing, don't be risk adverse, and consider leveraging on market downturns.


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## heyjude (May 16, 2009)

DrMatt,

We pensionless physicians have to build our own retirement funds and it is essential to live below our means. Don't get caught up in the "I'm a doctor so I deserve a BMW" nonsense. 

If you don't already have it, you and DW should get life insurance. It's essential to provide for your children in the event of death. Get disability insurance too, now while you are young and healthy. Pay for it with personal income so any benefits are tax free.

Incorporate your practice(s) once you are able to save (the breakeven cost was ~$60K in annual savings about 10 years ago when I did it). There are excellent tax efficiencies and after a decade or two you will be able to employ your kids to do bookkeeping, etc, for the corporation. 

It seems you are already conversant with financial terms and keep educating yourself. One of the biggest mistakes physicians make is to fail to get savvy about finance. Many of us are very naive and we have a reputation for being gullible and easy to scam. If you are approached about amazing opportunities in angel investing, mortgages or art, look at them with a very jaundiced eye. They may be targeting you.

If you want to invest in real estate I would avoid the hands on approach. Either buy REITs or invest in managed real estate. If you PM me I can provide some suggestions.

MD Management provides good investment support and funds with reasonable MERs for physicians early in their career, but once you become a highly informed investor, realize that they have limitations. I left MDM after I had an inheritance and they couldn't tell me what the Sharpe ratio of their segregated funds was. Then they tried pushing funds that were obviously not in my best interest. I realized that they were more about selling products than about cutting edge and that I had outgrown them. Why? Because I had taken the Canadian Securities Course. Anyone can do it. You've studied more difficult stuff in medical school. Consider it when you have some free time. (Tuition fees are tax deductible).


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## Dmoney (Apr 28, 2011)

heyjude said:


> DrMatt,
> 
> MD Management provides good investment support and funds with reasonable MERs for physicians early in their career, but once you become a highly informed investor, realize that they have limitations. I left MDM after I had an inheritance and they couldn't tell me what the Sharpe ratio of their segregated funds was. Then they tried pushing funds that were obviously not in my best interest. I realized that they were more about selling products than about cutting edge and that I had outgrown them. Why? Because I had taken the Canadian Securities Course. Anyone can do it. You've studied more difficult stuff in medical school. Consider it when you have some free time. (Tuition fees are tax deductible).


The CSC is absolutely useless when it comes to managing investments or making astute investment decisions. You really learn nothing about actively managing your own investments, it's very basic and simple material. If you want a good curriculum, take the CFA. It's much more comprehensive and useful. The CFA is to medical school what the CSC is to a basic first aid course. No comparison. 

One avenue to consider is the private investment side of MDM which has fees of less than 1%. Make your own informed decision about it, but it's one route you can go. I think MDM can also provide a good range of services in terms of estate planning, tax efficiency, incorporation, etc. Due dilligence is important though as everyone is ultimately out for themself.


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## Cal (Jun 17, 2009)

DrMatt, i am sure that you will find alot of people on here recommend to manage everything yourself. If you aren't confident enough, I would consider prefessional management.

You may be a year or two ahead of time in regards to investing in RE, or a few years too late, depending upon how you look at things. 

I am sure that at some point you will figure out that it really doesn't matter if you hit 10mil or such, but you will figure out how much is enough for you and your retirement situation.


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## DrMatt (Dec 11, 2011)

Heyjude,
We do our best to be frugal... I'm still driving a nine year old car... And my wife still clips coupons and goes out of her way to buy the 'loss-leaders'... But even with our income rising, with 3 kids and a mortgage it's tough to feel like we're getting ahead. Can't wait for the mortgage to be gone! 

Never been impressed with MDFinancial. Can't stand mutual funds of any stripe, knowing what I know now about MERs. (wish I had have learned that lesson twenty years ago!)

I suppose part of me wishes I had a bit of an entrepreneurial spirit... And the great idea!... One of the toughest parts of a startup must be raising the capital... But it feels like we're OK in that department... Just shy of the spirit and business savvy and vision... 

So... What will likely happen is we'll keep on keeping on... We love our jobs and our kids and our house... I'll probably do just fine with our investments... We'll likely end with the conservative 3-4M... And try to pass that on efficiently.

Who knows, maybe this board will still be around in 17 years and I'll let you know how it all turns out?!


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## Dmoney (Apr 28, 2011)

DrMatt said:


> Never been impressed with MDFinancial. Can't stand mutual funds of any stripe, knowing what I know now about MERs. (wish I had have learned that lesson twenty years ago!)
> 
> Who knows, maybe this board will still be around in 17 years and I'll let you know how it all turns out?!


My parents have been in MDM's mutual funds for close to 30 years now. Just recently they switched over to the private investment side. They were able to take advantage of the huge growth from the early 80's to the 2000s, and were very happy. Not so much over the past decade. But that's the way the market has gone. They've had mixed reviews over the past couple of years, but I'm not sure how much of that is MDM's fault and how much is the fact that the markets have been volatile and short on gains lately. 

I'm with you in disliking mutual funds and I prefer managing my own money, but at the same time my job is in investments, I'm surrounded by investment professionals, and I spend 14+ hours a day analyzing investment opportunities. 

While it's possible a diversified basket of ETFs will beat most mutual funds, I wouldn't suggest anything more actively managed for a physician. The odds of beating the market are stacked against you, and you have much greater earning potential through your day job. Easiest way for you to get outsized returns is to see another 5 patients (depending on your specialty this may be more or less). You said you loved your job, so it likely won't even feel like work. My mom is a GP and well past retirement age, but loves it and likely won't stop working as long as she is able to. Think about how much you'll make if you work longer than the 15 years you originally planned... In the long run, you really don't need incredible returns to have an extremely comfortable lifestyle and retirement.


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## DrMatt (Dec 11, 2011)

I'm sure I'll work longer than those 15years... I just want to be passively earning that 10k/month by then... So I can stop if I want to... Or take a break... Or go work in the third world...

What about private investment management...??? I have had conversations with a guy at Scotia McLeod who's eager to take over managing my money for me... If I heard correctly, the cost remains 1% of invested assets up to the first million and possibly less on the rest (but I wasn't listening that intently)... And they say they actively manage... Would that be worth it? 

My impression is that they probably won't be able to do much better than I can with a couch potato portfolio... So why should I pay anything?


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## Dmoney (Apr 28, 2011)

That's the fear. So far the PIM has underperformed all of its benchmarks except for international equity, so it's not necessarily any better. I think the fees are something similar to what Scotia quoted you (1% under $1million, 0.5% or something over). I would say it's better than MDM mutual funds, but it's likely still going to underperform a passive strategy by that 1% or 0.5%.

Also, it's a long only strategy and they rebalance asset classes (cash, fixed income, Canada equities, US equities, International equities) and in my short experience following them, they are not especially astute at market timing. That being said, I don't think Scotia or RBC or TD or anyone else is going to do any better, and I think MD does have a suite of other products that are good for doctors (tax, incorporation advice etc.).

Really, I'm just saying that your time may be worth more as a doctor than as a part time investor, but it never hurts to jump in and learn as much as you can to try and apply yourself.


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## DrMatt (Dec 11, 2011)

It would be great if they would be "actively managing"... including selling the options that I would want sold... building a bond ladder that doesn't suck... focussing on the long-term yield growth that I want... but the truth seems to be that no one cares about growing my money but me. 

I started putting $20 per week in a "mutual fund" basket when I was eighteen... I kept that up for eight years, increasing the deposit to a whopping $400 per month for the last year... when I went to take some funds out to buy my first home, I did the math... turns out I had less than what I'd deposited... while the guys on Bay street drive Porsches... It should be illegal!

If I were running a mutual fund I would charge nothing on the first 2-5% (up to the prevailing risk free rate)... Then take 1% off the next 5% earned over that... And 2% of anything over that... That seems like the only ethical way of doing things to me!

Why hasn't anybody done this? (my guess is because they'd either never get paid, or they'd be forced to treat our money like their own!)


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## Lephturn (Aug 31, 2009)

DrMatt said:


> It would be great if they would be "actively managing"... including selling the options that I would want sold... building a bond ladder that doesn't suck... focussing on the long-term yield growth that I want... but the truth seems to be that no one cares about growing my money but me.
> 
> I started putting $20 per week in a "mutual fund" basket when I was eighteen... I kept that up for eight years, increasing the deposit to a whopping $400 per month for the last year... when I went to take some funds out to buy my first home, I did the math... turns out I had less than what I'd deposited... while the guys on Bay street drive Porsches... It should be illegal!
> 
> ...


Oh there are funds that do that - it's called a hedge fund. It's not quite that simple but basically they only get paid if they make money. They are also free to be much more than long-only and to use derivatives. The problem is that the regulators are basically controlled by the big money financial companies, so they make sure most individual investors are not allowed to participate.

I swear the things that people think are "safe" vs. "risky" just make me shake my head.


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## humble_pie (Jun 7, 2009)

doc maybe i am not getting it but didn't you mention your account is 60k plus you have a nice but modest house that's heavily mortgaged plus your savings, although substantial, are currently going to pay down the mortgage.

plus the feeling i get is that you can manage fine on your own but you are a sociable guy who would like an investment buddy. Enter the scotia dealer, you name him in your first post & he reappears later, so clearly he's made an impress. Although why he is quoting you 1% on a 60k account i don't know. That's 600 bucks per annum. Maybe MDs are such hot future prospects as clients they'll sign em up for peanuts & hope the account will still be running a decade later when the $$ really start to be interesting ?

re finding a 3rd party option expert, best to forget this. One should not even think of giving that discretion to another self-claimed option expert. Even at IB there are very few among the clients who do, in fact, manage others' accounts for fees.

once i was explaining to a french-speaking investment counsel how there are no option managers serving the retail trade. If they are any good they're already trading energy futures for hydro quebec or doing swaps in banks treasury departments, i said. What's left over professing to serve the retail trade are crackheads, i said. Crack Edds ? she asked. What does zat mean ze Crack Edd ?

because you'll have to do your options yourself, doc, you might as well manage the entire shebang. You're obviously doing conservative option strategies & it's doubtful your scotia buddy can do these any better than you can yourself. What others have pointed out has merit. A few dollars missed here or there because of an option trade you were too busy to do is meaningless when compared to the income potential of your professional practice.

one way you could gain efficiency is to concentrate in only a few securities, ie keep building up selected share holdings & selling identical options. Good old stuff like banks, telcos, big energy. It's just as easy to sell 20 or 30 contracts as to sell 5.


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## DrMatt (Dec 11, 2011)

I had a lengthy post almost completed and my son bumped the back button on my iPad... It disappeared into the ether?!? Maybe it's a sign I'm spending too much of my vacation time on this forum?

Humble,

You're right about the 60k and the future prospects. No shortage of money managers courting docs... In general we have comfortable incomes and no time to manage it... Plus we generally don't have a schmick what to do with it anyway...

The mortgage is actually ~160 (at 3.49 fixed), but I count the 70k of LOC debt (at prime) in 'house debt' even though it's technically not. (they give large unsecured LOCs to docs too! - the trick is not using them!)

I think I'll post my Plan in the diaries section (maybe that Steve guy will be interested in giving some advice? If I'm lucky!)

Happy holidays every one! And thanks for your input!


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## DrMatt (Dec 11, 2011)

humble_pie said:


> " doc... the feeling i get is that you can manage fine on your own but you are a sociable guy who would like an investment buddy..." .


That's true too..! Hence posting on a message board for the first time in my life! ... My wife is not interested... Doctor friends don't like to talk about it... And high school buddies don't want to hear it "Wish I had your problems!!" is not helpful...


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## Cal (Jun 17, 2009)

If you are just looking for some investing buddies, or a second opinion on some of your investing thoughts, you have found the right place.

Welcome to the cult.

There are some very knowledgeable people here.


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## Oilers82 (Jan 17, 2011)

DrMatt said:


> That's true too..! Hence posting on a message board for the first time in my life! ... My wife is not interested... Doctor friends don't like to talk about it... And high school buddies don't want to hear it "Wish I had your problems!!" is not helpful...


This is exactly why I joined this board too. There are a good number of docs though who do enjoy talking about finances and investing.

I would offer to be an investing buddy but I'm really new to all this and probably wouldn't give you much useful input. But as we said before our situations are eerily similar so if you find any great/useful info do share!


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## DrMatt (Dec 11, 2011)

Deal. I will try to keep up to date with my plans under the "money diaries" section. (Where it looks like I might have touched a nerve?!)


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## atrp2biz (Sep 22, 2010)

I'm not the doc in the family, but even after my wife finished her residency in DI, we have kept our frugal ways. We drive a 14 year old Sienna and a 6 year old Hyundai Sonata and plan on driving these until they die. We'll never be big spenders, and intend on accumulating wealth (which is our way of keeping score).

We live off of my income (since I can't protect/defer it in a PC) and keep hers in a PC (she hasn't drawn anything out yet). I'm too lazy to do the modelling but I'm wondering what the optimum salary is from a tax perspective. She'll be over the SBL in the next fiscal year of the PC, so is it better to bonus down to the SBL or take out a smaller salary (note we're in Alberta)? If the difference is marginal, we would prefer taking out a smaller salary and leaving the rest in the PC, but would like some input if anyone has done these calculations.

As for investing, we do it all ourselves. We don't like the hassle of real estate (except the principal residence) and prefer to load up on dividend paying stocks. We are almost entirely invested in equities, except $200k in a PE infrastructure fund that I used to work for and my DC pension which I have decided to allocate 100% to a PH&N Bond Fund. That's it--pretty simple. Not too much thinking required.


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## valueindexer (Jun 17, 2011)

It sounds like you're doing pretty well and if you continue investing in the same way I would guess there's a great chance you'll end up with a lot more than 1.8. The biggest risk might be overconfidence. Completely passive income (government bonds) seems to give returns in the low-single digits, managing an equity portfolio and doing enough reading to understand it seems to get you in the high single-digits, and anything more requires risk or a lot of time.

The other question no one's asked is what kind of income you need. If you're saving this much I'm guessing you don't spend as much as the average doctor, but the ratio of savings to spending really determines how long you need to save and what returns you need. Creating a completely secure income from your portfolio is a big enough accomplishment on its own and shouldn't be overlooked in a race to 100m.

There are some good alternative investments but there's no question they come with more risk, so if it comes with a high return I would limit it to a small part of the portfolio. A bit of diversification can still be better than nothing and might boost your returns. As someone else pointed out the good investments are not the ones that come to you, they're the ones you have to work to find (I'd guess that anyone eager to take your money has <1% chance of doing better than you). If you know someone with real-estate experience that might be an opportunity. 10 years of experience doesn't guarantee it can't lose money (especially if it's concentrated in one city/province) but it seems like you can afford a little risk if you don't need to manage the rentals.


I'm a fan of starting businesses but for me the personal enjoyment is worth as much as the earnings, otherwise it wouldn't be worth it. Being actively involved in any business venture is likely to pay an extremely low hourly rate for the first 3-15 years, if it goes well. If you're interested enough to stick it out that long (and you can afford it) you might find a way to earn more, but you're already getting an hourly rate now that's hard to beat. 

If you want to know if you're entrepreneurial watch videos on mixergy.com. Nearly everyone there talks about how they spent a lot of time on something that made them very little money for a few years, then they made a small change without thinking much of it and it gradually turned into a profitable business. There is no "great business idea" that works right away, just countless attempts and failures until you understand an industry well enough to find the opportunities that will pay you back.

The way I look at is is that a new idea has to prove itself by showing scalable revenue *before* I'll put much money into it. This might change when I have more to invest but your chances of starting a successful business increase a lot when you've started 5 or more of them. It's too easy to over-commit without knowing the true risk. I'm working on 3 new businesses now, doing the minimum to get them paying their costs and bringing in customers and then seeing if they have real growth potential. If one of them turns into a real business that will be a great outcome.

You might be able to do angel investing eventually but from what I hear you want to do a minimum of 10 investments at once so one of them can give you a return, similar to starting businesses.


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## DrMatt (Dec 11, 2011)

Atrp2biz,
Wow, sounds like you've got very little to worry about! What are you doing lurking around here? I've honestly never had to consider what to do if we earn over the limit. Interesting dilemma. Don't think I'll ever have that issue personally. But there is likely a simple solution. Can't you pay out some in dividends virtually tax free? Given that she is not drawing a salary that would probably be your best bet? 

I'm interested in hearing about your plans for your estate. Do you have kids? Have you thought about how you'll pass it on? 

Thanks for the post. It's got me thinking.


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## atrp2biz (Sep 22, 2010)

Yeah, radiologists are overpaid.  I forget where this conference was, but there were these physician dolls: surgeons and emerg docs in scrubs, while rads were in plain clothes with a Starbucks in hand.

Well, the dividends can be paid out, but they would still be taxed in the PC at the general rate. She will be drawing salary eventually, but we haven't figured out how much yet. In 2011, she drew no salary because she did a lot of locums during her fellowship outside of the PC.

As for kids--yes. We have a two-year old and plan having two more. The PC is organized with several different classes of shares already to allow for specific distributions to either my wife, myself or our kids. 

We've thought about the estate as well. We're thinking of doing an estate freeze within the PC relatively early on (maybe in the next few years or so--I'm 32, she's 29). This will allow for a tax-free inheritance down the road (my limited understanding). Since my wife would always have control, we can still draw salary distributions at any time, but our plan is to have most of the money in the PC. We're going to speak with a lawyer about this in addition to getting our wills done for 2012.

Definitely lots to think about.


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## DrMatt (Dec 11, 2011)

I do ER work... Started writing my "impression" on imaging studies in the middle of the night... for the radiologist to cut and paste from... Hilarious how we have to read the X-rays and act on them while the patient is dying in front of us, and don't get to bill for reading the study... And the next day the radiologist can agree with my impression, from their PAX-viewer at their cottage, and bill some ridiculous amount of money... I'll never understand our system?! (although... I must admit it's nice to have the expert second opinion!!)

Never heard of an estate freeze... Another interesting concept for me to read about! Thanks!

Happy holidays everyone!


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## uptoolate (Oct 9, 2011)

Thanks for the post and sharing the details of your situation. It would be great if we could all get together and share and learn from each other’s experiences. I guess that is the idea of this forum and the initial idea, for more specific groups, of the money management arms within various professional organizations.
I think that it sounds like you are well on your way and have managed to avoid falling into the lifestyle trap that messes up many professionals. It is hard not to start enjoying the ‘good life’ before one actually has the resources in place to do it. The current generation of medical students may never have the ability to live as well as the boomer doctors who are nearing retirement due to the huge debts many of them are incurring to get through medical school. Living frugally and well below one’s means is the key and you seem to have well recognized that.
I agree with many of the tips. The biggest consideration for you may well be if and when to incorporate. It sounds like both you and your wife are MDs and that would mean that each of you could theoretically incorporate though that may not be the way to go due to the costs of incorporation and possibly being ‘associated’ companies and only being able to enjoy the lower small business rate up to the limit for a single corporation. Needless to say, the most important thing you need is an excellent tax accountant who has a fiduciary duty to you. Incorporation for at least one of you would likely be very beneficial given your level of income. In the current low interest rate environment you may even be wiser to do it sooner than later. This is because the low small business tax rate leaves much more money inside the corporation to earn investment income as opposed to taking the money as income at your highest marginal tax rate and then paying down a mortgage that hopefully is at a historically low interest rate. Again, it takes a good accountant with significant tax knowledge to help you decide which way is the right way to go. Other potential benefits of incorporation have been mentioned and I am sure that you are aware of them. 
So keep living below your means, max out RESPs each year (free money), max out TFSAs, and insure for the big stuff (life and disability). RRSPs you could take up with that trusted tax accountant again. Personally, if you weren’t incorporated, I would max them out. If you are incorporated it becomes a little more complicated but under the heading of not putting all the eggs in one basket (the corporation), it may be best to take enough salary to entitle you to a decent size RRSP contribution as well as making the CPP contribution.
As far as the 10k per month, the original question (sorry for the above but that seemed to be where the thread was going), it is up to you and your wife. Much of it has to do with personality. You make a very good family income and certainly one priority should be not to mess it up – you know ‘First do no harm…’ and all that. Too often it seems professionals make the big mistakes of living the high life, getting divorced, speculating with their money, etc. It sounds as if you have investing knowledge so why give 1% or more of your money per year to do what you could do yourself. (Again, with some great help from that trusted tax-wise accountant). I haven’t met many Canadian doctors who have the skills or temperament to be landlords or property managers and honestly, you have 3 children and a wife and hopefully a life, take the time to enjoy them all. The same goes for small businesses and franchises, sounds good but really do you think you that it would be time well spent. My advice would be to mainly stick with a Couch Potato approach for the bulk of your holdings and to take some small portion to have fun with in the markets as it sounds as if this could be a hobby of sorts. If you are good or lucky at it then it is a big bonus, if not then you have had some relaxation and learned some invaluable lessons. 
Sorry to be so long winded. Merry Christmas and Happy New Year!
PS Happy to get in on the Investment Buddy Deal!


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## DrMatt (Dec 11, 2011)

Thanks for the post ... That pretty much sums up the evolution of my plan! It's changed significantly since I made my first post here, mainly due to the informative and thoughtful replies... Plus there's something to be said for the 'journaling' aspect... Re-reading your own posts a couple of days later can solidify or alter what you think you know about something.

This seems like a good place to find some like-minded investors in similar fimancial straights... So I intend to stick around for a while... 

With respect to incorporating now vs later: my wife and I both hate debt... We're trying to get rid of it as fast as possible... we consider our primary residence a liability (as opposed to an asset) so as soon as we can limit what it costs us (in terms of mortgage interest) the better we'll feel about it... We like the idea of not owing anything to anyone... Plus our cost of living goes way down.


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## Cameron (Apr 6, 2011)

I personally use a full service broker, I have had great success and had access to other solutions that aren't available if you DIY or from any bank mutual fund reps.

I have had a full estate plan done, full business and personal plan completes, insurance review, and also started an IPP, and will be preparing a estate freeze in the future. All quarterbacked by my advisor.


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## kcowan (Jul 1, 2010)

The idea of not owing anyone is the most valuable you can have.


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## uptoolate (Oct 9, 2011)

Yes the idea of not owing anything is an excellent one but the bottom line of maximizing dollars at the end of the day may not be consistent with having absolutely no debt. I agree totally with the 'idea' and it is one of the values that we hope to instill in our children. I always cringed when 'advisors' would suggest that using leverage in the markets was the way to true wealth (no one ever seemed to add 'and true poverty'). Statements like 'you can borrow at 3% and any fool can get you a return of 10%'. I know colleagues who listened and still have the yoke around their necks after the tech bubble and the most recent correction. Not many were in a mood to put in more when the market was near its bottom. This said, if you incorporate and leave money in the corporation paying only 15% tax (or whatever the SB rate lands at) instead of your highest marginal personal rate to pay off your mortgage then you would likely come out ahead. This is especially true with mortgage rates so incredibly low. 
I must admit that this is a 'do as I say and not as I do' piece of advice because personally I went wild and payed off all of my mortgage debt prior to incorporating. It is great to have no debt and that feeling is wonderful but it is not 'priceless' and it did come with a price in terms of opportunity cost.
There are many decisions along the way. Again, my advice would be to find a great accountant who is very tax and corporation savy. At the end of the day, maybe we just stick with the KISS principle. Cheers.


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## DrMatt (Dec 11, 2011)

Cameron said:


> I personally use a full service broker, I have had great success and had access to other solutions that aren't available if you DIY or from any bank mutual fund reps.
> 
> I have had a full estate plan done, full business and personal plan completes, insurance review, and also started an IPP, and will be preparing a estate freeze in the future. All quarterbacked by my advisor.


If you don't mind my asking, how much did all that cost you? Commissions, MERs, fees? And what made you decide to go with the IPP? Is your advisor a friend? Independent or big bank/firm? Do you do any DIY trading at all? And what do you mean by "great success" exactly...


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## DrMatt (Dec 11, 2011)

kcowan said:


> The idea of not owing anyone is the most valuable you can have.


Intuitively, I figure as much... But it's also true about the 'loss of opportunity' cost... I think I understand that well enough to reverse my thinking if a significant opportunity presents itself (E.g. If the banks get below $25 again, I'll probably be all in). For now... Our plan for 2012 is to get rid of as much of this debt as humanly possible.


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## Four Pillars (Apr 5, 2009)

You really can't go wrong with paying off debt, even if there are other options that might end up being more attractive ( on paper at least ).


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## uptoolate (Oct 9, 2011)

Lephturn said:


> Oh there are funds that do that - it's called a hedge fund. It's not quite that simple but basically they only get paid if they make money. They are also free to be much more than long-only and to use derivatives. The problem is that the regulators are basically controlled by the big money financial companies, so they make sure most individual investors are not allowed to participate.


You're kidding right? 'Only get paid if they make money.' Hedge funds? LOL


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