# Investing advice needed



## Logi (Apr 6, 2014)

Hello all, 

I put 31K into my TFSA account. Another 10K in cash emergency funds. Under TFSA, I'm thinking throwin 20K in mutual funds and 11K into something else, maybe redeemable GIC and have them readily available anytime. Am open for ideas and suggestions 

Some of the funds I researched on RBC Direct Investing: 

RBF 591 - RBC Canadian Equity Income Fund, 2.09% MER
RBF209 - RBC Select Very Conservative Port Sr A, 1.7% MER 
RBF461 - RBC Select Conservative Portfolio Sr A, 1.85% MER
RBF556 - RBC Canadian Index, 0.72% MER
RBF557 - RBC US Index Sr A, 0.72% MER	
RBF563 - RBC Canadian Government Bond Index, 0.67% MER

how would you invest those 31K, how much would you put under each fund, and what else would you consider investing in? Goal is to survive potentially poor equity or stock market ahead for '14, '15 

thanks


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## Logi (Apr 6, 2014)

Anyone?


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## Feruk (Aug 15, 2012)

None into any of these! Not sure which dumpster you dived into, but any product with a MER of over 0.5% definitely came out of one.

Let's look at RBF556: It has a MER of 0.72%. Ishares pretty equivalent ETF (XIC) has a MER of 0.05%. That's 14 times less. Do you love giving away your money that much?

Let's say your average return is 6%/year and you split your money evenly between these "funds". Inflation kills 3%. You'd pay 1.3% in fees leaving you only a 1.7% return.


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## gibor365 (Apr 1, 2011)

Logi said:


> Hello all,
> 
> I put 31K into my TFSA account.
> thanks


Looking at your portfolio.....I'd just advise you to open TFSA HISA in Peoples Trust and get 3% interest without any sweat  I have impression that 3% TFSA will beat you RBC funds

P.S. I kinda curious, why did you open account in RBC Direct Investing if you are still investing into RBC mutual funds?


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

I missed this one earlier but I find you have too many funds in your list. For the amount of money, there should be about half.

Also, why just RBC funds? Why not invest in your own equities picks? Those MERs you list are killers.

That said, I do have ONE of your fund choices (CDN Index) and have been happy with its performance but would consider the XIC mentioned above to reduce fees.


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## Butters (Apr 20, 2012)

If you have direct investing set up, buy ETFs they have lower fees. 

Read up on the Canadian couch potato before you do anything!


Some suggestions of ETFs

Maybe pick mostly canadian 40%
XIU or
VCN

Us 40%
VUS

And maybe a touch of international 20%
XEF
XEC


You only need a couple ETFs. Your trade fee with RBC will likely be 9.99 so make sure you're spending at least 2k so the broker fee doesn't eat you


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## Moneytoo (Mar 26, 2014)

*Same goal*



> Goal is to survive potentially poor equity or stock market ahead for '14, '15


I'm planning to open (and max out) my TFSA in a month or two, and even thou I have a Couch Potato portfolio in my RRSP account - wouldn't buy any Index Funds/ETFs right now for my TFSA. Thinking of some "safe" Dividend ETFs like ZPR and XRE for the time being.

People Trust's 3% account sounds interesting (thank you, gibor!) Would keep the money there for a few years (until the correction is over) - and then transfer cash to my fave TD Waterhouse, get some free trades, buy some iShares...


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## liquidfinance (Jan 28, 2011)

Agree with all. 

Do not put your money into these funds unless you like giving your money away. 

Do read Canadian Couch Potato. 

Do consider something easy to manage such as the portfolio described by SheaButters

As an example the management fees of an equal weight portfolio built of the ishares core products would be 0.12%

XIC - Canadian Equity
CAB - Canadian Bond
XUS - S&P 500
XEF - InternationalEquity



Consider opening an account with a discount brokerage such as Questrade where you can purchase ETFs for free. This way you can easily reinvest dividends / distributions into any underweight fund.

As gibor said the Peoples Trust TFSA is a great choice at 3%.


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## richard (Jun 20, 2013)

I would divide the stock portion between Canadian, US, and International (great suggestions for these above). Each market is a little different. Since we don't know what they will do next, rebalancing between those will help you take advantage of whatever does end up happening while not missing out on anything big. If it's easier for you to use mutual funds with expense of 0.7% that won't make much of a difference for the amount you have. It's better to buy those now than to wait a few years to figure out how to use ETFs.


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## Logi (Apr 6, 2014)

Thanks for the replies, I am with RBC 'coz that where my banking is so would be easier to transfer funds if need be back and forth

hmmm should we count inflation as part of the reduction of annual return? Does not seem right

I read on http://canadiancouchpotato.com/recommended-index-funds/ , if you guys noticed the majority of the funds listed there are above 0.6% on average :distrust:

I never bought ETFs, gotta look more, if it is like buying stocks then I can do that. What ETFs are closest to RBF591, RBF209?

After 7 days I can withdraw mutual funds without extra fees, that should not be a concern


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## Moneytoo (Mar 26, 2014)

Logi said:


> I never bought ETFs, gotta look more, if it is like buying stocks then I can do that.


Yes, it is 



Logi said:


> What ETFs are closest to RBF591, RBF209?


I was looking at iShares Packaged Solutions before:

1) XTR - iShares Diversified Monthly Income ETF
http://ca.ishares.com/product_info/fund/overview/XTR.htm

2) XGR - Growth Core Portfolio Builder Fund
http://ca.ishares.com/product_info/fund/overview/XGR.htm

3) XGC - Global Completion Portfolio Builder Fund

http://ca.ishares.com/product_info/fund/overview/XGC.htm

4) XAL - Alternatives Completion Portfolio Builder Fund
http://ca.ishares.com/product_info/fund/overview/XAL.htm

5) XCR - Conservative Core Portfolio Builder Fund

http://ca.ishares.com/product_info/fund/overview/XCR.htm

Liked XTR and XAL the most, but after reading http://www.berkes.ca/archive/XTR_analysis.pdf - decided to stick with Index Funds for now and purchase individual (not a "fund of funds") ETFs in the future (when I have more than 50K in one of the accounts)


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## Logi (Apr 6, 2014)

People Trust's 3% is not high, I believe with RBC's high MER it shall be more than 3% annual return. If we apply the inflation logic, that 3% would end up being 0%

If I get out of RBC, where can I go while keeping the account as a TFSA? Fund transfer back and forth is gonna be bit of a pain


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## Feruk (Aug 15, 2012)

Can you not simply buy ETFs through RBC? Look at the Couch Potato ETF page...

Inflation plays a huge role. Remember when your grandpa said a coke used to be a nickel and now it's two bucks? Inflation.


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## liquidfinance (Jan 28, 2011)

You do need to consider inflation. Your $ today is worth less tomorrow. To stay ahead your returns must exceed the rate of inflation. 

For simplicity there is nothing wrong with keeping everything with RBC as there would only be small savings by opening accounts with an alternative provider. 


I use Questrade and the fund transfer is simple and generally three days paying money to them or taking it out. I pay them by Bill payment and you withdraw for free via EFT. 

Remember if you did decide to open a new account you can't simply withdraw the money from the TFSA and then deposit it with the new brokerage. This needs to be done by completion of a Transfer of registered funds request.


Yes buying an ETF is done in exactly the same way as buying a stock.


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## My Own Advisor (Sep 24, 2012)

Agree with other comments....

Suggested ETFs for Canada (30-60%) = XIU, ZCN, XIC, VCN, VCE, a few others....

Suggested ETF for US (30-60%) - VTI (RRSP)

Pick a bond, maybe an international ETF product, done


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## My Own Advisor (Sep 24, 2012)

@Logi, I didn't read the above threads in detail, have you opened a self-directed, discount brokerage account? Either RRSP? TFSA? Non-Registered? All 3?


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## Logi (Apr 6, 2014)

RBC charges for ETFs $10 per each Buy/Sell transaction. We could buy large amounts at once to minimize overall cost, so $30-40 to buy and then same to sell 

I will read more on ETFs, but do they offer the same principle and choice of individual categories as mutual funds, or each ETF is a specific category by itself?

Example, any equivalent of RBF591, RBF209 in ETFs?


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## Logi (Apr 6, 2014)

My Own Advisor said:


> @Logi, I didn't read the above threads in detail, have you opened a self-directed, discount brokerage account? Either RRSP? TFSA? Non-Registered? All 3?


Its TFSA under Direct investing, supposed to be cheaper than RBC's regular Online Banking, and is self-administrated with no annual fees if 15,000$ or more is invested


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

OK so again, why are you 1) fixated on RBC products and 2) fixated on funds? With your DI account you can buy whatever stocks, MFs or ETFs you want, just make sure you make as few purchases as possible because every trade will cost you $9.99. You should be looking at stocks too, not just funds, and not using RBC funds as your benchmark.

You made a wise choice by going with Direct Investing btw. They've easily met all my expectations with no drama.


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## Feruk (Aug 15, 2012)

Logi said:


> RBC charges for ETFs $10 per each Buy/Sell transaction. We could buy large amounts at once to minimize overall cost, so $30-40 to buy and then same to sell
> 
> I will read more on ETFs, but do they offer the same principle and choice of individual categories as mutual funds, or each ETF is a specific category by itself?
> 
> Example, any equivalent of RBF591, RBF209 in ETFs?


I'd buy a big chunk at a time. It costs $10 to buy? Big whoop. If you bought $10K of a fund with 2% MER, it'll cost $200/YEAR! There are hundreds of ETFs. Every one of these funds from RBC has a semi-equivalent cheaper ETF.

I'm not gonna do the research for you, but I'll show you one fund comparison: RBF591
RBF591: http://fundinfo.rbcgam.com/mutual-funds/rbc-funds/fund-pages/rbf591.fs
XIC: http://ca.ishares.com/product_info/fund/overview/XIC.htm
VCN: https://www.vanguardcanada.ca/individual/etfs-detail-overview.htm?portId=9561
Look at second weightings. All are mostly financial, followed by energy. Look at top 10 holdings; your RBC fund has 8 of the 10 same "top 10" holdings as these ETFs. Identical? No, but close enough. Performance will be very similar. So would you rather pay 2.05% for the RBC product or 0.05% for XIC or 0.12% for VCN. Seems pretty obvious to me. Look at all the choices on ishares and Vanguard websites... That's 2 minutes of Googling, so you can take it from here.


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## gibor365 (Apr 1, 2011)

Logi said:


> People Trust's 3% is not high, I believe with RBC's high MER it shall be more than 3% annual return. If we apply the inflation logic, that 3% would end up being 0%
> 
> If I get out of RBC, where can I go while keeping the account as a TFSA? Fund transfer back and forth is gonna be bit of a pain


I very doubt that with those MF you gonna have better return than 3%


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## Butters (Apr 20, 2012)

Logi said:


> Its TFSA under Direct investing, supposed to be cheaper than RBC's regular Online Banking, and is self-administrated with no annual fees if 15,000$ or more is invested


I believe you can also avoid fee's if you auto-contribute $100 a month. Don't necessarily need $15,000
RBC Banking is free if you have multiple accounts (credit card, mortgage)
RBC is not a bad choice....

I have RBC mortgage, credit card and free banking....

But I still use:
Questrade, as they have FREE ETF's to purchase and if you sell 495 or less stock it's $4.95 a transaction up to (995 and higher stock for) $9.95
PC Financial, as they also offer free banking with no minimum holdings or multiple products

To avoid Questrade fee's you need 5k min, or just have to complete 1 purchase of a FREE ETF trade every 3 months.
Also, questrade's inactivity fee will discount off your next stock purchase fee.

One advantage to RBC that I may consider in the future is that they offer the DRIP discount (for example FTS.to offers a 3% discount to drip), as questrade does not. But that's not worth paying an extra 10$ EACH ETF buy or additional 5$ for each other trade in fees.


_If I get out of RBC, where can I go while keeping the account as a TFSA? Fund transfer back and forth is gonna be bit of a pain _
#1 You can ask questrade if they will pay for the transfer fees... If it's a large amount, they might. If it's small, something tells me you have more room left, and can hold off (do your $100 monthly to avoid fees) and do #2
#2 Or you could wait until December, take that money out, and re-add it in Jan



Keep asking questions, you are getting lots of good answers and information!!!!!


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## Moneytoo (Mar 26, 2014)

Nice article on the subject: http://www.fool.ca/2014/04/09/which-bank-charges-the-highest-mutual-fund-fees/

The “lowest fee award” goes to RBC (TSX: RY)(NYSE: RY), although the real winner is clearly TD (TSX: TD)(NYSE: TD), for having by far the best 10-year return.
...

The 10-year return for the iShares S&P/TSX Capped Composite Index ETF (TSX: XIC) is 8.12%, handily beating the average from the banks. In fact TD was the only bank to beat the index. So in general, Canadian investors are not getting good value.


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## Logi (Apr 6, 2014)

Load of good info here, I will pause, go read then come back for more questions if any. 

Since the funds are under TFSA and can be used at any time, I rather leave them in RBC to withdraw quickly

Thanks a ton to all by the way


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## Jeypic (Sep 22, 2012)

All you need is one fund for Canadian equity, one for USA, and one for international. Find the lowest mer's. With rbc di you have the freedom to pick from any funds, not just the high priced rbc ones. Then pick a bond fund, gic, or hisa for your fixed income.


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## banjopete (Feb 4, 2014)

I'd highly recommend following the advice given in general, paying 14 times less in fees is no small matter. Do a little future value calculator play with the difference 1% or 2% can make over a ten or twenty or thirty year time horizon. It's shocking. Also as tempting as it is to see TFSA's as a money in money out thing, it's also an incredibly powerful long term savings basket for many reasons.


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