# New Investor - Tangerine Mutual Funds



## OBA_1207 (Feb 9, 2015)

Hi everyone,

I'm pretty new to investing, but eager to get started. I've done some light research, and familiarized myself with some key terms (bonds, stocks, MER, etc.) and have decided that the best option for me ATM is to start investing with Tangerine's TFSA mutual funds. I'm just having a little trouble choosing which one-- I think it's between the Balanced and Balanced Growth Fund.

I'm 23 years old, turning 24 next month, and just about to finish my undergrad in April. I have no major savings (2-3k), but have two financial goals: The first is to save and gain interest on enough money to make a downpayment on a condo by the time I'm late 20's or early 30's. I'm looking at contributing monthly to a fund (~$200), and hopefully within the next year saving about 5K to drop in there to get the ball rolling. I'm thinking I'd withdraw the funds in about 6-8 years for a downpayment.

My second goal, is to have something where I can save for the distant future/ retirement. Given that I'm practically 24, I'm looking at keeping this fund going for about 25-30 years. I was thinking because this is long term, perhaps I could invest in the most risky Tangerine MF, the Equity Growth Fund, for maximum long term earnings? I've read a lot of mix things bout whether or not you should take risks or play it safe when young. Personally, I like to think I'm comfortable with SOME risk, and some volatility is ok as long as I don't lose all my money...

I'm still new to this stuff, so I'm not sure what my best approach here should be. I was thinking two separate Funds for the short term (condo) and long term (retirement), but maybe I should just choose a more balanced fund to invest all my money? If taking the two fund approach, I'd look at (once full-time employed) making $200 deposits a month towards the short-term fund, and $50 a month towards the retirement fund.

Again, any advice appreciated. Thanks all.

-OBA


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## gardner (Feb 13, 2014)

Have a read at Canadian Couch Potato. http://canadiancouchpotato.com/category/indexing-basics/



> Option 1, from Tangerine, is a one-fund solution that’s ideal for investors who value simplicity.


Couch Potato likes the Tangerine Balanced Portfolio (INI220) I believe


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## gocanada (Jan 3, 2014)

OBA,

The Tangerine funds are a good choice. At your age, I would recommend the Equity Growth fund for anything you consider long term savings (10+ years). Tangerine is a good choice because they do re-balancing, etc. automatically for you. If I were you, I would check out http://canadiancouchpotato.com/model-portfolios-2/. I personally started with the e-Series funds and have since moved to ETFs. There is a bit more complexity, but the fees (MERs) are lower. The percentages don't sound like a big difference, but they do make a big difference compounded over the long term. Keep in mind that if you use Questrade, you don't pay to buy ETFs, only to sell, so you don't necessarily need a big portfolio to start that way, but with $50/month, TD e-Series or Tangerine are good solid choices.

For your shorter term fund, you should think about how you would feel if the market made a major adjustment. In a 6-8 year period, you cannot be certain of the returns. You should consider a HISA or GIC for this savings. You will only get 2-3% interest, but the risk profile is different.

I'm sure you know to make use your TFSA and RRSPs - TFSA seems like a good choice for your short term fund, and RRSP for your long term fund.

I hope that's helpful.


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## OBA_1207 (Feb 9, 2015)

Thanks, gardner.

gocanada, thanks for the great advice. I guess being new to investing, I'm not quite sure what the risks really entail. I mean, I'm assuming with the more conservative choice like the Tangerine Balanced Portfolio, I'm not going to lose all of my money. If the risk comes down to losing a percentage of the interest, I could cope with that much better. I guess also because I don't really stand a chance at achieving my financial goals without the nice interest, it makes it seem more worth the risk to me.

gocanada, I'm assuming you are of the philosophy that taking more aggressive risks for long terms savings is good however if you would recommend the equity growth fund?

Also, from what I gather, bonds are much safer investments, yes?


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## GreatLaker (Mar 23, 2014)

Sounds like you are well on your way to a good savings plan.

Risk manifests in 2 ways: possibility of loss, and volatility. Since the Tangerine funds invest in a lot of different stocks and bonds, the possibility of total loss is essentially zero. But the funds can fluctuate in value, and if you need the money on a certain date, you want minimal or no volatility.

Bonds are a loan to a company, that it must pay back with interest, unless the company becomes insolvent. Stocks mean you own a piece of the company. If a company goes bankrupt, bonds must be paid back before stocks so they are less risky, but usually grow slower.

Take a look at the Tangerine portfolio returns on the Canadian Couch Potato site, especially the lowest 1 year return. 
http://canadiancouchpotato.com/wp-content/uploads/2015/01/CCP-Model-Portfolios-Tangerine.pdf

If you put your retirement savings in the Equity Growth fund and it went down one third in a year, how would you feel, even if you know you don't need the money for 30 years. If you put your home savings in the Balanced fund and it went down 20% would you think of selling, even though you dont need the money for 5 to 10 years? Selling equities because of a short term loss is a common investor mistake because they don't understand volatility.

Keeping your existing savings in a high interest account for emergencies, putting the condo savings in the Balanced fund and your retirement savings in the Equity Growth fund is a great starting point, but recognize there will be some ups and downs along the way. If you don't think you can stomach those ups and downs, pick more conservative Tangerine funds. Then as you get closer to your goals, consider moving the condo savings to GICs a few years before buying, and moving your retirement savings to something more balanced starting about 15 years before retirement.

Finki.org is an excellent Canadian learning resource.
http://www.finiki.org/wiki/Main_Page


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## OBA_1207 (Feb 9, 2015)

GreatLaker, thank you for the excellent advice. You really clarified the stakes for me.

Just to be clear, are you recommending that I choose the 'Balanced Fund' over the "Balanced Growth Fund" for the short-term, down-payment savings? You clearly know what you're talking about, so I'd very much so appreciate your opinion in making my decision.

Tangerine Balanced Fund: 40% Canadian Bonds, 20% Canadian Stocks, 20% US Stocks, 20% International Stocks.

Tangerine Balanced Growth Fund: 25% between the 4.

Thanks so much, 
O


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## OBA_1207 (Feb 9, 2015)

Also, I really don't think I'd freak out if my money dropped 20% one year. I'm pretty patient and in it for the long haul, and understand that periods of volatility can and will occur.


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## Butters (Apr 20, 2012)

Earning more money
and spending less

will be the 2 keys to building your wealth right now...
$5000 sitting at 5% interest will earn you $250 for the year...

or you could work 10 more hours at $25
or prepare food at home and not go out to eat 10 times


2 funds area's are great, but the more you put down on that condo, the less you'll pay in taxes in the long run... once you free yourself on that mortgage payment, you can triple your savings rate.


buy below your means, and keep saving my friend, live frugal


You should look into Home Buyers RRSP, it allows you to put $25,000 dollars from RRSP onto your first house purchase.... with the money you'll save from tax rebate you can use that to further accelerate your down payment.... paying it back slowly over the next 15 years



Seems like money save now will be in there for over 5 years....

if you look at the 10 year return of those mutual funds, they are all within a 1%
I'd be tempted more towards securing money and going with Balanced Income
when you get closer and closer to buying the house, put more into just a regular savings account


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## OBA_1207 (Feb 9, 2015)

So, SheaButters, your vote is that for my long-term savings, I invest in something most conservative. Thanks.


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## gocanada (Jan 3, 2014)

Hi OBA,

I highly recommend you read this this whole series of posts: http://jlcollinsnh.com/stock-series/. A lot of your questions about risk are answered there.

The author is American, but 98% of the stuff is still relevant to Canadians. You will just have to learn about TFSAs, RRSPs, and other Canadian specific tax stuff elsewhere (he will mention the American 401k, etc in there). Also, instead of using the fund he recommends, use one of the Couch Potato portfolios (Tangerine, TD e-Series, or Vanguard funds).

Good luck!


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## dogleg (Feb 5, 2010)

OBA: This is more about Tangerine's accounting procedures than their financial strengths. I was with them for several years and recently transferred out because their on-line account data is, in my opinion, unsatisfactory. For example if you have an investment that matures it 'disappears' from on-line access. It is as if it never existed. I asked them to upgrade this aspect of their system but they never did. Very strange for a bank. Something to think about. Good luck with your investments.


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## Butters (Apr 20, 2012)

I said put everything you can into your condo savings, keep that secure.... and get even more secure the closer to purchase date

once your condo is paid off you'll free up more cash... since you will have ZERO mortgage payments, you can instead save for retirement

HOUSE NOW ... RETIREMENT LATER

If you buy a condo for 200k, 25 years later it will cost you over 400k in interest and such.... the sooner you pay it off, the less interest they'll take
so instead of wasting that spare 200k into interest, you put that into savings....
so in 25 years you pick... 
A) do you want a paid off condo OR
B) do you want a paid off condo (say in 15 years) with 200k savings (from the remaining 10 years)

Dave Rasmey, the king of debt free, believes that no one should take out a mortgage over 15 years


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## GreatLaker (Mar 23, 2014)

OBA, yes that was my suggestion. But rather than making investment recommendations on this forum. I prefer to give people ideas and point them to learning resources to help make their own decisions. Noted value investor Benjamin Graham is reported to have said an investment portfolio should never have less than 25% or more than 75% stocks. Anything in-between is your choice. And always keep some emergency funds readily accessible, and keep any money you absolutely need to have (like a condo down payment when you sign an agreement to buy) in guaranteed funds like a savings account or GIC.

Really the important things are get started investing, contribute regularly, don't sell just because the market drops a few percent, and increase your savings as your income increases. Really you could put everything in the Balanced fund or Balanced Growth fund. Splitting it among 2 funds lets you mentally separate your condo savings from retirement savings.

If you plan on buying a condo the year you turn 30 and the market dropped 20% would you be upset, or would you be OK with delaying your purchase by a year or 2? Your answer will help determine how much risk to take. Or you could do a web search for an online risk assessment questionnaire. At the finiki.org site I mentioned in my earlier post have a look at the sections on Asset Classes, Portfolio Design and Risk and Return. If you really cannot decide, consider putting it all in the Balanced fund, then if you want to switch later you can, especially in a TFSA or RRSP where there are no tax consequences.

Another good resource is If You Can: How Millennials Can Get Rich Slowly by William Bernstein. He says more in that 16 page book than some authors do in hundreds of pages.
http://www.etf.com/docs/IfYouCan.pdf

Good luck and let us know what you decide and if you have more questions.


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## OBA_1207 (Feb 9, 2015)

Hi GreatLaker,

So I’ve decided to make these goals for now. At this very moment, I don’t really have much funds saved; I just paid for two semester of school so I forked up my savings on that, but I do have about $1,800.

*The plan with Tangerine:*

*1. Tangerine Tax-Free Savings Account* for emergency funds. Here, I’ll put $1,500, and contribute $50 a month until I get back into full-time employment, in which case I’ll increase contributions. My goal is to get this to about $5,000, and then let it coast.

*2. Tangerine Balanced Growth Mutual Fund* for my short(ish) term financial goals for a condo down-payment. I’ll possibly withdraw from this in 6-8 years. I’ll start off by just putting $100 in here, and contribute $25 a month until I find full-time employment—in which case I plan on contributing closer to $200-300 a month.

*3. Tangerine Equity Growth Mutual Fund* for my long-term financial goals. I’ll put $200 in here at first, and contribute $50 a month until full-time employment when done school in a few months. Once done school, I’m going to aim to $250-$350 a month in here.

I’d really like to spend the next year or two putting as much away as I can to get each of these funds at 5k, and then look at more reasonable monthly contributions—depending on my upcoming employment situations.

Also, GreatLaker, to answer your previous question about the risk: I’m ok with holding off on buying my own place for a year or two if the market takes a dip if that means my money will have grown to a larger amount. I don’t have an absolute deadline to own my own place—just a rough estimate that I want to work towards. For this reason, I’m going to go for the balanced growth instead of the Balanced.

Oh, thanks so much for all of the helpful resources, by the way ☺

PS: Any critiques of this plan?

OBA


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## NorthernRaven (Aug 4, 2010)

You might want to do a little looking around for the TFSA account. Tangerine is currently paying 1.05% interest (aside from the "new money" short term promotion), and you can find better permanent rates. They've also recently instituted a $45 TFSA transfer-out fee (fairly common with TFSA accounts), so make sure Tangerine is where you want it before depositing. You can still withdraw with out fee, but you lose that TFSA "room" until the start of the next year and can't redeposit that portion until then (nasty penalties if you do).

Not to promote them, but Peoples Trust has a 2.5% TFSA rate. It was actually locked in at 3% for the last few years, and even at the new rate it is a very good number. Presumably they feel it worthwhile in terms of attracting business, as a loss leader of sorts, rather than doing the "promotional rate" come-on that others do. As far as I know they haven't put in a transfer-out fee yet either (one of the few holdouts). The difference on $2000 for a year between Tangerine and PT is only about $30, but checking out options is always good.


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## OBA_1207 (Feb 9, 2015)

Hey all,

One more question. A family member has $40,000 laying around in a regular old savings account earning 1.08% a year, and was interested in investing it as well with the hope of dividing it and not touching one portion for about 9-10 years, and the other portion in about 15 years. They seem to be on the low-medium risk side. Because they're a bit older, they'd feel better playing slightly more conservative with their money. What are your thoughts on $30,000 in the Tangerine Balanced Fund (40% bonds, 60% stocks) and $5,000 in the Tangerine Equity Fund (100% stocks)?


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## Spudd (Oct 11, 2011)

I would probably just stick with the whole thing in the Tangerine Balanced Fund, to be honest.


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## OBA_1207 (Feb 9, 2015)

Spudd said:


> I would probably just stick with the whole thing in the Tangerine Balanced Fund, to be honest.


Why is that?


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## GreatLaker (Mar 23, 2014)

This has more equities therefore is riskier than your original proposal. Before it was $200 a month to the mortgage savings (balanced) and $50/month to the retirement savings (equity growth), which would give about 65% equities. Now your proposal mixes balanced growth and equity growth, which would result in about 85% equities. It could be volatile. I'd consider notching the condo savings back to the balanced fund instead of balanced growth since you will want to use all of it at one time when you buy the condo. The retirement funds can be invested in a riskier asset, since you won't need the funds for 30 years and will gradually draw them down. I am not saying don't do it but consider carefully. It's easy to think your risk tolerance is high when markets are going up.

Regarding your other family member the characteristics you stated are "on the low-medium risk side" "a bit older" "slightly more conservative with their money" but you suggest a mix of 2 funds that would total to 66% equities. And the difference between 9-10 years and 15 years is not that much. I'd suggest one fund, either Balanced Income or Balanced. Show them the portfolio returns from the CCP site and see which they are more comfortable with. Also what will they do with the money in the timelines you stated. If they need to spend it all at once that would drive a more conservative allocation than if they are going to draw it down gradually in retirement.

With this investing strategy you are on your way to a great start though, with the plan for regular monthly savings, no matter what asset allocation you decide.


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## fatcat (Nov 11, 2009)

for the life of me i cannot figure out why you want to put money into a fund that will siphon 1% off every year ?

the tangerine balanced fund has an mer of 1.07 compare that to td e-series which are in the range of .3 to .5 or etf's which are now as low as .05

do you have any idea how much money you will pay in fees over 40 years at 1.07% mer ? ... let me tell you, a *lot* ... a boatload, a cr#pload

forget bonds at your age (add a bond fund when you hit 40), buy an equity growth etf or e-series, look at it twice a year and keep pumping money into it every month ... ignore the movements of the market

you will end up rich in 40 years


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## OBA_1207 (Feb 9, 2015)

fatcat said:


> for the life of me i cannot figure out why you want to put money into a fund that will siphon 1% off every year ?
> 
> the tangerine balanced fund has an mer of 1.07 compare that to td e-series which are in the range of .3 to .5 or etf's which are now as low as .05
> 
> ...


It's my understanding that these funds require more knowledge of investing, correct? As I'm quite new to investing, I'm not sure which fund would be most appropriate to choose with the e-series, nor do I follow the market close enough to know when I should switch funds. Does that make sense? Or is the e-series more simple than I assume?


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## OBA_1207 (Feb 9, 2015)

Also, I feel as if I might be missing something here. When I use the mutual fund cost calculator (http://www.getsmarteraboutmoney.ca/.../mutual-fund-fee-calculator.aspx#.VNwyRkL4vFI) to compare the cost and estimated return of the e-series funds, such as the e-series US Index fund, versus the Tangerine Equity Growth fund, the Tangerine Fund always reveals more interest in return. Am I missing something?


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## GreatLaker (Mar 23, 2014)

OBA_1207 said:


> It's my understanding that these funds require more knowledge of investing, correct? As I'm quite new to investing, I'm not sure which fund would be most appropriate to choose with the e-series, nor do I follow the market close enough to know when I should switch funds. Does that make sense? Or is the e-series more simple than I assume?


Tangerine Equity Growth includes Canada, US and Global equities in one fund. To get equivalent diversification with e-series you would have to buy 3 different funds. Plus the Tangerine fund rebalances regularly, whereas with e-series you would have to rebalance yourself. In return for the convenience of the Tangerine fund it charges a higher MER (1.07% vs. about .45% with e-funds). You can get still lower costs by using Exchange Traded funds, but they are more complex since you have to buy them like stocks. At the CCP site read the summaries on the model portfolio page where they give reasons to choose each of the options.
http://canadiancouchpotato.com/model-portfolios-2/
Also read the "One Fund Solution" white paper there.

The point about going for lower fees is very valid over the long term. I switched from Tangerine funds (called ING Streetwise at that time) to ETFs about 4 years ago and am glad I did, but in return for the lower cost there are some added complexities. You can always move to a different solution later. Do you want to spend more time analyzing, or get your money working for you now?


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## OBA_1207 (Feb 9, 2015)

Thanks, GreatLaker.

Just so you know, I've already set up my two funds at Tangerine. The Balanced Growth Fund, and the Equity Growth Fund. The investment has begun, but now I'd consider doing some shifting around based on the comment on this thread that a portfolio should own only between 25-75% stocks. *Currently, my total portfolio is 87.5% stocks and 12.5% bonds* (Balanced Growth Fund + Equity Growth Fund)-- which might be over-estimating my risk. Here are two new options I'm considering, plus a third I'm less keen on:

*Tangerine Balanced Fund + Equity Growth Fund:* 80% stocks & 20% bonds in total portfolio.
*Tangerine Balanced Income + Equity Growth Fund:* 65% stocks, 30% bonds in total portfolio.

The third, which eliminates the Equity Growth Fund from the picture (my long-term savings fund) would mean:
*Tangerine Balanced Fund + Balanced Growth Fund:* 67.5% stocks, 32.5% bonds in total portfolio.

GreatLaker, your suggestion is to choose the Balanced Fund + Equity Growth Fund, yes? Any other recommendations would be appreciated. Thanks for all the help getting me set up thus far everyone!


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## fatcat (Nov 11, 2009)

laker is right
there is a tradeoff of simplicity versus cost

tangerine is easy, one stop shopping for 1.07

but you can easily pick 3 eseries like canada, usa and international and balance as you go by adding to each in whatever amounts you choose and save about .50 ... over say 20 years, .50 really adds up

etf's can give you similar options with even lower mer's and you can stack your cash and buy shares every quarter for *free* in certain brokerages

nevertheless, getting started is what matters and it isn't too difficult to move to a new system after a year or two
if tangerine appeals to you and feels comfortable then that is a good way to start

i just wouldn't buy any bonds at your age at this time, i see much more upside to equities

i would build up your cash and your shares so if there is pullback you can buy more equities

in other words keep your bond allocation in cash like 15-20%

on the other hand if you just pump money in every month, you will catch the market at all price points

you are smart to think of investing at your age, i wish i had

good luck


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## OBA_1207 (Feb 9, 2015)

Well, fatcat, I want to choose an option with bonds because i have 2 saving goals: 1 is long-term retirement, and the second is for a condo/home down payment in probably 6-8 years, roughly. I'm choosing the Equity Growth fund for the long-term savings, which is 100% stocks, but need to pick one for the short term goal of the down-payment. Again, because I'm not dead set on a specific date to own a home, and a + or - 2 years doesn't bother me, I'm thinking that maybe a fund with higher growth potential, and a little less stability, isn't a terrible thing. That's why as is, I've chosen my short-term(it) fund to be the balanced growth with only 25% bonds.

This may sounds stupid, but I'm not exactly sure how the MER fees add up over time and impact me. I've read many things about this, but nothing has hit the nail on the head with my understanding yet...


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## none (Jan 15, 2013)

Compare a MER of 2% versus a MER of 0.2% on 10K over 25 years - assume average growth of 7% per year (minus MERs)

> 10000*(1.05)^25
[1] 33863.55

> 10000*(1.068)^25
[1] 51794.22


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## zidane (Jan 8, 2012)

OBA, are you going to have these mutual funds in your TFSA? 

I'm in the same position as you. I was considering Tangerine, but I am deciding to go with TD e-series as I would like the lower MERs and to be more involved in my finances.


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## My Own Advisor (Sep 24, 2012)

You could do much worse than the Tangerine Balanced.

I think if you're just starting out, this could be very good to get your feet wet, as you read up on opening a brokerage account(s), ETFs, and more.


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## none (Jan 15, 2013)

My Own Advisor said:


> You could do much worse than the Tangerine Balanced.
> 
> I think if you're just starting out, this could be very good to get your feet wet, as you read up on opening a brokerage account(s), ETFs, and more.


Yeah, TD E-series i better but that takes some time to set up and move TFSA's over (6 weeks or so). It would be nice to get that done though; however, you may want to eventually buy ETFs and to do that you need to go to TD Waterhouse. 

I'll leave this here: TD mutual e-series account tranform form.
http://www.tdcanadatrust.com/docume...mutualfunds-tdeseriesfunds-convertaccount.pdf


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## fatcat (Nov 11, 2009)

put the money designated for your old age in a single equity growth fund
put the money designated as a down payment for a house in a hisa
don't mix the 2 purposes in mutual funds
too complicated and could be costly if the market hiccups down
put the house money in a hisa or roll over into gic's
kis


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## alexasmith (Sep 30, 2014)

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## JordoR (Aug 20, 2013)

If you did want to go with a Tangerine fund, I would personally go with the Balanced Growth instead of the Equity.

The Equity Growth having 0% allocation to any bonds would concern me a bit, unless you purchased some separately - however that sort of defeats the purpose of the Tangerine "One-Fund" easy of use. People get a bit too focused solely on the gains of stocks and less on the losses. If you look at the yearly returns, both the Balanced Growth and Equity Growth are very similar (usually the Equity edging it out by 1%), but during a crash I would be shocked if the Balanced wasn't the clear winner of the two.

If you are looking long term, there will be up and down years - and with 100% of your money in pure equity (albeit a mix of CAD/US/INT) I would be a bit hesitant.


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## dogleg (Feb 5, 2010)

OBA..: Good luck with your Tangerine investments. Just an added note about security; a while back when I was with them I had my account hacked into and several thousand dollars was stolen. Evidently that weekend about thirty of us were hit. Please make sure you have a good firewall on your computer.


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## Waterman (Feb 24, 2015)

I recently opened a Tangerine account with 40% bonds/ 60% stocks for my girlfriend. She has no interest in learning to balance or doing any investments herself. She wanted an RESP for her baby sister but we decided to go with a TFSA in case she needs to money suddenly or her sister doesn't go to school.

So far it is working out fine; returns are good. But I worry if 7-10 years from now when money begins to be taken out the sale prices will be low.

I personally think Tangerine is good for those not looking to do much work themselves. Though I acknowledge there are better options.


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## scientist (Feb 14, 2015)

dogleg said:


> OBA..: Good luck with your Tangerine investments. Just an added note about security; a while back when I was with them I had my account hacked into and several thousand dollars was stolen. Evidently that weekend about thirty of us were hit. Please make sure you have a good firewall on your computer.


dogleg, did they insure you for your losses?


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## Waterman (Feb 24, 2015)

scientist said:


> dogleg, did they insure you for your losses?


+1 
This has me slightly concerned as well.


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