# Best Bank for Mutual Funds and Direct Investing?



## J Watts (Jul 19, 2012)

I've been a life-time Scotiabank customer but lately their mutual funds haven't been that great. I also have some money with Ally (savings) and ING Direct (invested), but I would consider investing some or all of my investing money in another bank's mutual funds if the returns were good.

I would also consider moving some of this money into a direct investing account if the fees were reasonable.

Any thoughts?


----------



## Belguy (May 24, 2010)

Yes, don't restrict yourself to any one family of funds--either bank funds or otherwise. Set up a discount brokerage account with Scotiabank and then do your own trading using the ETF's in the model portfolios at www.canadiancouchpotato.com

Beyond that, if you have the interest, you can start trading in dividend paying stocks but that will take considerable extra research.

Oh yes, and don't sell your existing mutual funds if they still have deferred sales charges attached to them.


----------



## FrugalTrader (Oct 13, 2008)

If you want to stick with mutual funds, check out the TD e-series funds.


----------



## lonewolf (Jun 12, 2012)

Clark Howard & Suzy Orman often mention fidelity or Charles schwab. Fidelity is now in Canada so you might want to check them out as well as the banks. I have no experience with mutual funds from banks or Fidelity but Clark & Suzzy always seam to give good advice so it might be worth looking into. Morning star might help guide you


----------



## Belguy (May 24, 2010)

Beware of high fees and substandard performance from many mutual funds. Be fully aware of all of the fees that you are paying and how they will add up over time.

Fees matter!!!


----------



## lonewolf (Jun 12, 2012)

Belguy is on to something. Mutual fund cash levels has a very good track record for being a good market sentiment indicator.

Major stock market rallies have started when cash levels were greater then 11% i.e., 1974,1982,1990
Market sold off when cash levels were below 4.5% i.e., 1973,1976,2000,2007

I dont know how to put a link to a chart showing the dow to mutual fund cash levels but if googled they can be found for free.

@ the 2007 top mutual fund cash levels were the lowest going back to @ least 1968 (far back as chart went) Recently they set an all time low & have rallied a little off that low.


----------



## Eclectic12 (Oct 20, 2010)

^^^^^

It seems Belguy and you are onto different things related to MFs.

Belguy is warning that MF fees can kill one's investment return. For example, a managed Canadian equity fund with a MER of 2.5% is not going to do as well as one with a MER of 0.7%, if the returns are 3% (i.e. return after the MER is taken will be 0.5% instead of 1.8%).

You on the other hand seem to be talking about using how popular a specific type of MF is to decide what investment to buy.


Cheers


----------



## mrPPincer (Nov 21, 2011)

Eclectic12 said:


> It seems Belguy and you are onto different things related to MFs.


it did seem kind of apples and oranges didn't it?
It was a bit of a stretch, but both points did eventually lead to a similar conclusion for me..



lonewolf said:


> Major stock market rallies have started when cash levels were greater then 11% i.e., 1974,1982,1990
> Market sold off when cash levels were below 4.5% i.e., 1973,1976,2000,2007


Interesting, if these numbers are correct, this tells us that actively managed mutual funds tend to do exactly the wrong thing.
All the more reason to stick with the lower MER ones (and sales-fee free ones) as Belguy suggested, lower MER's for the most part indicating passively managed index funds, the lowest-cost ones being the TD e-series as suggested by FrugalTrader.


----------



## Eclectic12 (Oct 20, 2010)

mrPPincer said:


> it did seem kind of apples and oranges didn't it?
> It was a bit of a stretch, but both points did eventually lead to a similar conclusion for me...


As long as the OP realises that the first comment is more directly tied to looking for a good MFs or discount broker and the second is more advanced, it's all good. I know I was scratching my head to find a connection when I first read it.


Cheers


----------



## Clacker (Mar 18, 2012)

Go with Belguy's suggestion unless you have >$75 000 then consider discount brokerage with ETF's.


----------



## MrMatt (Dec 21, 2011)

Figure out what mutual funds you want.
if you want a couch potato fund, TD e-series is the cheapest option.
You can only get TD e-series though a TD account. I think they're one of the best options for Canadian retail investors. (I do own e-funds and TD stock)

If you want a mutual funds account, you can often only get that banks funds, but they compensate with lower/no fees. (ie no RRSP fee etc). For small registered accounts bank mutual fund accounts are actually a pretty good deal.

If you get a full brokerage account you may have minimum balance requirements, but they typically offer other banks funds, you can easily buy a RBC fund at BMO, or a BMO fund at TD. (I have) However there are some minor advantages to buying funds from your broker (minimum purchase sizes etc).


----------



## Eclectic12 (Oct 20, 2010)

MrMatt said:


> ...If you get a full brokerage account you may have minimum balance requirements, but they typically offer other banks funds, you can easily buy a RBC fund at BMO, or a BMO fund at TD. (I have) However there are some minor advantages to buying funds from your broker (minimum purchase sizes etc).


Good points ... though I suspect you meant "some minor _disadvantages_ to buying funds from your broker".

I think someone else posted that if one uses the TD Bank to buy the TD e-series funds, the minimum purchase is something around $100 where in a TD Waterhouse account, the minimum purchase is something around $1,000. Assuming I recall correctly - the higher minimum purchase through the broker is a disadvantage to those with less cash on hand.


Cheers


----------



## mrPPincer (Nov 21, 2011)

according to the fine print the minimum does seem to be $1000 but in actuality it's the same $100 minimum per trade as with td investment services, not sure why they don't update that, it could discourage potential new TDW customers, I did phone in on that very question before I first signed up.


----------



## Eclectic12 (Oct 20, 2010)

mrPPincer said:


> according to the fine print the minimum does seem to be $1000 but in actuality it's the same $100 minimum per trade as with td investment services, not sure why they don't update that, it could discourage potential new TDW customers, I did phone in on that very question before I first signed up.


Interesting ... that's good to know - thanks for a good update.


Cheers


----------



## MrMatt (Dec 21, 2011)

Eclectic12 said:


> Good points ... though I suspect you meant "some minor _disadvantages_ to buying funds from your broker".
> 
> I think someone else posted that if one uses the TD Bank to buy the TD e-series funds, the minimum purchase is something around $100 where in a TD Waterhouse account, the minimum purchase is something around $1,000. Assuming I recall correctly - the higher minimum purchase through the broker is a disadvantage to those with less cash on hand.
> 
> ...


Sorry, I meant there were some minor advantages to buying funds from your financial institution. 

Lets say you have a TD brokerage account and want to buy an RBC fund, they may have have a minimum purchase of 5000, whereas if you were a RBC customer the minimum would be 1000, 500, or even 100 in some cases.

FYI TD lets you buy efunds in brokerage accounts or td efund mutual fund accounts, not normal mutual fund accounts. I actually think efunds are one of the few products that is actually worth switching banks for, but only if you want passive investing.


----------



## Eclectic12 (Oct 20, 2010)

MrMatt said:


> Sorry, I meant there were some minor advantages to buying funds from your financial institution...


All the more value in posting to find out .... it turns out I was thinking you meant A and wrote B where you meant C! :biggrin:


No worries ... I just wanted to be clear.


Cheers


----------



## J Watts (Jul 19, 2012)

So, between Scotia iTrade or TD Waterhouse, any preferences? I'm thinking of starting small with maybe $500 or $1000. I already bank with Scotiabank.


----------



## mrPPincer (Nov 21, 2011)

I would suggest starting with a td efund mutual fund account through TD Investment Services, not a TD Waterhouse brokerage account.

Although you can purchase e-funds with a brokerage account, there are annual costs involved if you don't have a minimum balance with TDW, but not so with an online e-funds account.

The td e-funds have the lowest MERs around and IMO are the best place to start.
If you do want to buy stocks or etfs later you can always open a brokerage account as well at any point, but as other have pointed out, beware of the costs involved.

For a $1000 purchase and a brokerage fee of $10 or $30 you are losing a whopping 1% or 3% right off the bat, which not seem like a lot, but over time little nibbles like this add up to a huge bite out of your long term savings.

WRT the ETFs that you can trade free of brokerage fees through Scotia ITrade, I consider the MER costs on most of them too high for me to consider holding, and also IMHO some of those more specialized ones will be thinly traded so there would be further hidden costs to be found in the higher spread between the bid/ask and lower liquidity.


----------

