# What would you do?



## garreTT (Aug 28, 2013)

Hello Everyone,

I've been on the forum lurking for a while and have decided to post my current situation to see what I can do next.

Currently I am a 22 year old business student with a major in Finance and a minor in Marketing. Currently I am employed as an Operations Manager with a Corporation. I handle day to day operations but I don't plan to be here forever. I've gathered a lot of experience and got into the working world much earlier than a lot of my fellow students. I currently still work full time and take 3 classes per semester full time to get my degree on time in the 4 years. I've been handling it very well but struggle to find time during the week. Keep in mind that I am paying around $2500 per semester (including textbooks) with some help from my family. My family is VERY willing to help but I pay for most of it, but I don't believe I would take it as seriously since I'm investing my own money and time into my education. Thus, I'm paying a good portion myself.

My current situation is as follows:

Cash - $30,000
TFSA - Maxed out (paying $200 every two weeks) $20,500. This is all invested in Mutual Funds (Entertainment and Communications/Monthly Income/Dividend Growth)
RBC Mutual Fund - $6000 (This was a gift from a relative that will stay inside of that account) (Monthly Income Fund)
Car (Paid Off) - $16,000 Market Value
*NO RRSP Contributions as of yet - see below

Monthly Salary - $3000 Net
Monthly Expenses: Cable - $160 (whole house) / Rent - $320 / Insurance - $300 / Cell Phone - $70
Quarterly Expenses - $2500 Tuition

I don't have any credit card debt, no student loans, no lines of credit or any other type of debt.

Right now I bank with TD and they treat me very well. I have a Select Service Account (now an All Inclusive Account?) and I would like to keep a balance of $5000 (although I am taking a loss on the possible interest on that amount). Thoughts?

My short term goals are as follows:

-Purchase a house within 3 years
-Finish my degree in Finance
-Get a financial designation

*I don't have any RRSP contributions but my contribution limit is around $25,000. What I plan to do is when purchasing my house (my salary should be in a higher tax bracket at this point) I will contribute the full amount to the RRSP to get the tax deduction. I would then use the tax deduction and withdraw the $25,000 with the home buyers program towards the down payment. Is this a good plan? Thoughts?*

Although I'm in Finance, I don't know which vehicle would allow me to gather some interest in the short term, while still maintaining liquidity and tax minimization. ETFs would be something to get into as the MER is fairly low and it seems to be rather liquid. As a student I'm always learning and this site has helped out a lot.

What would you do?

Thank you in advance.


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## Guban (Jul 5, 2011)

Have you thought about contributing the cash into your RRSP, but not taking the deduction until later? That way you can take advantage of tax deferred compounding. It would also give you some more timing flexibility with regards to the homebuyers plan. The money would be in long before you take it out.


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## humble_pie (Jun 7, 2009)

do they have an emoticon for *full of admiration*?

it would go *here*

garrett u are a one-man band, this is fantastic

speaking as a mother, though, i can't help but find myself thinking Hmmmmn He Could Be Having More Fun. Not to speak of 25 Years Is Too Young to Buy a House/ Go Have some Adventures First.

i believe that, in your place, i'd probably keep the pricey TD selective service account with its $5000 minimum deposit to achieve no-fee status. Reason is that i'd probably want to be cultivating a good relationship with my bank in case i did buy a house or borrow for whatever reason later.

but it's a tossup between keep the pricey SS account or put the $5k into the TFSA, meanwhile opening a free chequing account at ING. Re the TFSA, are you sure it's maxed out? you mention $20,500, but the present maximum is actually $25,500.

on the other hand, if you did contribute 25.5k into the tax-free & it's now down to 20.5k, some little bells & red lights should be ringing & flashing ...

EDIT: guban's suggestion to contribute RRSP now but claim later is excellent


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## Spudd (Oct 11, 2011)

humble_pie said:


> Re the TFSA, are you sure it's maxed out? you mention $20,500, but the present maximum is actually $25,500.


He's just 22, so that's probably why. 

I agree about putting it into the RRSP now and claiming it later as well. At least, the portion that is retrievable via the HBP. Within the RRSP I would just put it in a high-interest savings account, since you're definitely planning to buy a house in the next few years.


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## garreTT (Aug 28, 2013)

Thank you for all of the replies!

Guban: I have thought about this prior and I think it is a great idea, but do you think this is a great use for my capital? How would you invest it once in the RRSP?

Humble: Thank you for the kind words. I will be going to Mexico (Mayan Riviera) in December again this year as we went last year. I've also been to Cayo Levantado (google it) and it was a blast! I don't smoke, drink, gamble, or anything even remotely close and I always preach about the savings per year that I gather as opposed to some of my friends who are "having fun" on the weekends. I'd rather have the fun heading out of the country, somewhere warm, at least once a year rather than a couple of nights in town. Our family also owns a lake lot in which I frequent in the summer to "get away". The savings accounts have such a SMALL return, I think I could do better with other vehicles.

Spudd is correct in regards my contribution limit, it's 20,500 because when I was 18 the contribution limit was 5,000 and it's been 4 years for myself and the last year of contribution was $5,500. I've been investing small amounts throughout the year.


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## liquidfinance (Jan 28, 2011)

garreTT said:


> Spudd is correct in regards my contribution limit, it's 20,500 because when I was 18 the contribution limit was 5,000 and it's been 4 years for myself and the last year of contribution was $5,500. I've been investing small amounts throughout the year.


By my thinking you have the full $25500 available. 
If you're 22 now you must have. Surely

2009 - 18 $5000
2010 - 19 $5000
2011 - 20 $5000
2012 - 21 $5000
2013 - 22 $5500

Even if you are in an area where the age is 19 to open the account you still accrue the room from your 18th birthday.


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## garreTT (Aug 28, 2013)

liquidfinance said:


> By my thinking you have the full $25500 available.
> If you're 22 now you must have. Surely
> 
> 2009 - 18 $5000
> ...


Very interesting, I will need to look into this. If this is the case, I'll have contribute some more into the account. I'll log into the CRA's website after school today to get an accurate idea of my contribution room.


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## liquidfinance (Jan 28, 2011)

This is the important bit 



> In certain provinces and territories, the legal age (depends on the age of majority) at which an individual can enter into a contract (which includes opening a TFSA) is 19 years old. Beginning in 2009, individuals turning 18 years old in these jurisdictions who would otherwise be eligible, will accumulate TFSA contribution room for that year, and will carry it over to the following year.


CRA Link to the above

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/lgbl-eng.html


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## garreTT (Aug 28, 2013)

I'm from Alberta, I opened the account when I was 18. With that in mind, I should be able to contribute the $25,500 total; correct?


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## liquidfinance (Jan 28, 2011)

Yes.

The two important questions for people trying to determine their limit are:

1) Were you 18 in 2009?
2) Have you been a resident of Canada from at least 2009 up until now?

If the answer is yes to both then you have the maximum $25500 available. 

CRA website is not especially reliable. 
It tells me I have $25500 available yet the is not possible.

I became a permanent resident June 2012 so my limit is $10500 The 2012 limit + 2013


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## garreTT (Aug 28, 2013)

Alright, I have a meeting with an advisor (I asked for a more experienced representative to deal with) and will discuss this information with them this weekend. If I contribute the extra $5000 this year or $10,500 next year, what should I do with the remainder?


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## humble_pie (Jun 7, 2009)

garreTT said:


> My current situation is as follows:
> 
> Cash - $30,000
> TFSA - Maxed out (paying $200 every two weeks) $20,500. This is all invested in Mutual Funds (Entertainment and Communications/Monthly Income/Dividend Growth)
> ...



garrett your advisor this weekend is going to steer you gently in the direction of buying more mutual fund, you know that, right?

imho u have too much mutual fund product, in fact it's 100% mutual fund product, but i don't see any reason to change this right now, given that you are such a busy young person.

(btw how on earth is that 20,500 tfsa paying you $200 every 2 weeks? that's a return of close to 23%! doesn't sound quite right! either that or else you are the proud owner of the World's Most Magically Profitable Entertainment Fund!)

seriously, in the next phase perhaps you might want to consider how to get those mutual fund MER & other built-in investment costs down. The classic mode would be TD e-series index funds or else a parallel portfolio built from ETFs that you would buy through a discount broker. Since you mention TD bank, the TDDI online broker is as good as any, certainly better when it comes to the quality of research tools that it offers (i think u would be one who would like research tools.)

keep in mind, though, that TDDI doesn't presently offer a USD rrsp, which is a handicap if one wants to hold US stocks or US etfs. You do have enough assets to qualify for the lower-cost commission fees of $9.99.

just getting used to discount brokerland is a huge step, one that should be planned over a longish period of time when it comes to yourself, as your time is already heavily charged, what with being a full-time student plus holding down a full-time job. Perhaps a work plan with a reasonable ie non-stressful time frame might look like this:

1) put 5k into existing TFSA if possible (buy more mutual fund/monthly income product);

2) open an RRSP into which you would contribute an amount up to the max; invest this in some fund product or products that your bank representative will be able to sell to you; i believe it would be a good idea to stick with canadian equity & US equity;

3) keep any cash balance in a HISA account (they're currently paying something like 1.25% at TD);

4) commence studying the world of discount brokers & how you could set up a lean, efficient, etf couch potato portfolio. Good study resources are the website canadiancouchpotato.com & (for a crash condensed course) Canadian Capitalist's own model couch potato portfolios. He runs 2 of these & discusses them every quarter. I tend to favour the CC approach because it's fast n easy to understand, yet responsible & comprehensive. You'll find a link to CC blogspot at the bottom of this screen.

as part of this study/financial planning period, you could also hang here in the forum & try to make sense out of the chaos. You'll find threads dealing with everything from couch potato strategies to the most outrageous stocks in the world.

this study/financial planning period will take you well into 2014, i imagine. It might sound slow & dull, but please keep in mind that you will be building a foundation of financial knowledge that should last for the rest of your life, so patience is indeed a virtue here.

every good wish to you. Don't forget to have fun!


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

Very interesting. You sure have a lot saved for only being 22.

Warning: meeting with advisor usually means they will sell you more MFs either via rebalancing or by investing your cash so it "doesn't waste away in a savings account." Cash is king. Be very careful here. Lots of us around here have opinions about bank advisors.

I agree with all of your short term goals except buying a house in 3 years. Prices are inflated right now and probably will be in 3 years, also. Contrary to popular and oft-repeated rhetoric there is nothing wrong with renting a nice apt as long as you are quiet and don't disturb the neighbors. Don't be in a rush to buy into RE. It ties you down and costs a fortune to sell. Lots of taxes payable too. This does of course depend on your situation, where you live etc. My comments apply moreso to larger cities. If you're more than an hour from a large or medium city then you may be able to find better deals and it may be better to go for the house rather than apt. I'm just saying, don't blindly follow rhetoric.


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## garreTT (Aug 28, 2013)

Humble: I understand that the advisor will try to push me towards a mutual fund, but I am going to simply figure out my contribution limit and how much I've currently contributed. The mutual funds aren't paying me out $200 per month, I'm contributing $200(ish) per month into the mutual funds I hold. The only reason why I went towards mutual funds was because, according to on of my professors, "you're too busy to maintain a portfolio". The MER seems to be quite high in a couple of these funds and I would like to move towards ETFs in the near future. Would I be able to migrate the mutual funds that I've invested into ETFs? 

Let's say for instance come January 2014 my TFSA contribution limit will be $31,000. If I was to make a detailed plan with a new strategy for 2014 and beyond, would I be able to pull out my funds on December 30th and then put the full $31,000 into the accounts on January 1st 2014? I would need to do all of my homework before I do this.

I read the Canadian Couch Potato method and it seems like a very relaxed type of investing, which I don't mind at all. I would like to hop into different sectors if possible as well. What about DRIPs?

Royal: Thank you for the kind words. I can only say that after turning 18 and getting into an industry, hard work and dedication got myself into the position I am. The thought of schooling came afterwards once I gathered the experience and funds to attain it.

Property itself has indeed become inflated. I am located in a larger city in Alberta. I look back at these super low interest rates and I wonder how everyone will afford their mortgages when they renew in 5 or 10 years when rates go up. Do you think that this will lead to housing prices falling as interest rates increase? I understand exactly what you're saying and when the time comes to the research to see if we can purchase a house/condo/townhouse, I will ensure that I do my due diligence to make a clear and concise decision.

Thank you for all of the advice thus far, it's appreciated.


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## MoneyGal (Apr 24, 2009)

garreTT said:


> Humble: I understand that the advisor will try to push me towards a mutual fund, but I am going to simply figure out my contribution limit and how much I've currently contributed. The mutual funds aren't paying me out $200 per month, I'm contributing $200(ish) per month into the mutual funds I hold. The only reason why I went towards mutual funds was because, *according to on of my professors, "you're too busy to maintain a portfolio". T*he MER seems to be quite high in a couple of these funds and I would like to move towards ETFs in the near future. Would I be able to migrate the mutual funds that I've invested into ETFs?
> .


This doesn't mean you need to use a commissioned advisor and buy retail mutual funds, though. 

Fun fact: I guest-lectured for a few days in a fourth-year finance course earlier this semester (at Schulich) and the prof, a former Portfolio Manager, has the students assemble a portfolio (in groups of six students) and attempt to beat the index over the course of a semester (just setting out the limitations here). In six years of the course and hundreds and hundreds of students, not one group has beat the relevant indexes over the course of the semester. And they're spending time every week and getting evaluated formally - a large percentage of their mark is based on their investment success.


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## garreTT (Aug 28, 2013)

Very interesting. I'm not that far into my education as of yet, but I understand what you're saying. I've read quite a few of your posts on this forum and you seem to be very knowledgeable. If you wouldn't mind MoneyGal, would you be open to some PMs so I could discuss some other topics with you?


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## MoneyGal (Apr 24, 2009)

PM away. I do not bite!

(p.s. my lectures were on regulating the securities industry in Canada - how / what / who / why / when)


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## donald (Apr 18, 2011)

That sounds pretty pathetic(schulich-4 yr finance students!?)These are the future money managers?Be interesting to see what that prof outlines/structures with that mock portfolio.
IE:% of equities(if bonds are included)direct stocks or mutual funds/etf,If you have to have several sectors represented in that exercise(or currencies/which index)if you have to buy and hold or can trade ect-How long is a semester anyways?We have had a bull run for the last 4 yrs....not a single group even got lucky!??I gather half of cmf could beat the snot out of these kids(and it's 6 people/minds at work) some here on cmf are self-taught without a ''finance'' education)Seems like everyone one cmf is killing it lol.....they have to build this portfolio from scratch?(how much pretend $$$)It is a proven fact,you have such a greater chance with fake dollars also(This is leaving out the most critical component-Zero emotions involved(i guess for marks but real $$ trumps that)


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## My Own Advisor (Sep 24, 2012)

@MoneyGal,

Please tell me when we are going to have a national securities regulator in Canada?  Any keen insight into that political mess? I suppose that's another thread we could have here...


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## SpendLessEarnMore (Aug 7, 2013)

Mortgage rates are super low that many people can afford to accelerate their mortgage payments. So in 5 to 10 years if mortgage rates go up the mortgage payments might actually be less depending on how much they've prepaid into their mortgage. My current mortgage has over 30 years amortization left and I'm on pace to pay it off in 17 years. As I get closer to paying off the mortgage I can go variable less than 5 year terms for lower mortgage rates. Well that's my strategy anyways lol.

I have just 16k in my TFSA to play with but currently TDW gave me a $9.99 commission promotion until end of October. I'm trying to get 30 trades in before the end of the month to further qualify for the $9.99 commission. Don't know how they give this promotion out to people but doesn't hurt to ask if you qualify for a trial period one.


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## MoneyGal (Apr 24, 2009)

My Own Advisor said:


> @MoneyGal,
> 
> Please tell me when we are going to have a national securities regulator in Canada?  Any keen insight into that political mess? I suppose that's another thread we could have here...


I have no special insight but I spent a couple of years working with FINRA, the national regulator in the U.S. and ... I see multiple dimensions to the issue. We aren't going to have a national regulator anytime soon, that's for sure.


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## MoneyGal (Apr 24, 2009)

SpendLessEarnMore said:


> Mortgage rates are super low that many people can afford to accelerate their mortgage payments. So in 5 to 10 years if mortgage rates go up the mortgage payments might actually be less depending on how much they've prepaid into their mortgage. My current mortgage has over 30 years amortization left and I'm on pace to pay it off in 17 years. As I get closer to paying off the mortgage I can go variable less than 5 year terms for lower mortgage rates. Well that's my strategy anyways lol.


No disagreement but: the risk is for people who have little down, no plan to pay off quickly, are early in their mortgage, and rates rise earlier than "in 5 to 10 years."


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## Spudd (Oct 11, 2011)

SpendLessEarnMore said:


> I have just 16k in my TFSA to play with but currently TDW gave me a $9.99 commission promotion until end of October. I'm trying to get 30 trades in before the end of the month to further qualify for the $9.99 commission. Don't know how they give this promotion out to people but doesn't hurt to ask if you qualify for a trial period one.


You're spending $300, or 1.9% of your total money on commissions, so you can qualify for 9.99 commissions? This seems unwise. Wouldn't it be better to just position those 16k in stocks/etfs that you like, and leave them there so you don't need to pay more commissions?


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## AltaRed (Jun 8, 2009)

Spudd said:


> You're spending $300, or 1.9% of your total money on commissions, so you can qualify for 9.99 commissions? This seems unwise. Wouldn't it be better to just position those 16k in stocks/etfs that you like, and leave them there so you don't need to pay more commissions?


I agree completely. Getting caught up in these 30 trade offers is a sure way for the discount broker to suck money out of one's portfolio. Besides, and although I don't deal with TDW specifically, I understand that 'qualification' has to be re-qualified each quarter.


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## Butters (Apr 20, 2012)

SpendLessEarnMore said:


> Mortgage rates are super low that many people can afford to accelerate their mortgage payments. So in 5 to 10 years if mortgage rates go up the mortgage payments might actually be less depending on how much they've prepaid into their mortgage. My current mortgage has over 30 years amortization left and I'm on pace to pay it off in 17 years. As I get closer to paying off the mortgage I can go variable less than 5 year terms for lower mortgage rates. Well that's my strategy anyways lol.
> 
> I have just 16k in my TFSA to play with but currently TDW gave me a $9.99 commission promotion until end of October. I'm trying to get 30 trades in before the end of the month to further qualify for the $9.99 commission. Don't know how they give this promotion out to people but doesn't hurt to ask if you qualify for a trial period one.


Or, you can just sign up with Questrade 4.95 a trade (for under 495 shares), first 50$ free in trades, and free to deposit in ETF


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## AltaRed (Jun 8, 2009)

SheaButters said:


> Or, you can just sign up with Questrade 4.95 a trade (for under 495 shares), first 50$ free in trades, and free to deposit in ETF


Yes, but Questrade (and other boutique discount brokers) are not as user friendly or have as many resources as the big bank ones AND may not be around very long, i.e. they get bought out. Once an account gets to certain minimum sizes ($25k or $50k, or whatever qualifying for <$10 commissions), the differences in commissions between the discount brokers become relatively meaningless for anyone other than active traders. Be wary of being penny wise and pound foolish.


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## SpendLessEarnMore (Aug 7, 2013)

Spudd said:


> You're spending $300, or 1.9% of your total money on commissions, so you can qualify for 9.99 commissions? This seems unwise. Wouldn't it be better to just position those 16k in stocks/etfs that you like, and leave them there so you don't need to pay more commissions?


True which is why I'm waiting for my credit card in the mail to fund my IB account. I think I'll leave the TD Waterhouse ones for long term investments and just have to save up for the $50k. The $9.99 commission I found is only good for buying low priced stock or huge quantity of stocks in one trade. But than if you get a partial trade that fills over a 2 day period they charge you twice the commission.


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## Synergy (Mar 18, 2013)

^ this is better than watching TV  - prior post was deleted by admin so my comment no longer makes any sense! It was funny though...



> I don't have any credit card debt, no student loans, no lines of credit or any other type of debt


 - Congradulations and keep up the great work - that's tough to do as a student.


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## garreTT (Aug 28, 2013)

Interesting to come back to this haha.

I've talked with the advisor and it's indeed 25,500. 

What do you think about this as a method to my madness:

1) December - withdraw funds from Mutual Funds
2) January - Open a DI account with TD Canada Trust
3) January - Put in the full $31,000 into ETF funds (possibly couch potato method)
4) Put the remaining funds into my RRSP (with the exception of about $6,000 to allow a buffer for my chequing account)
5) Wait.

Ideas?

Thank you.


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## humble_pie (Jun 7, 2009)

garrett i don't believe it's necessary to wait until late december/early january for these steps, other than the 2014 tfsa contribution, which of course has to wait.

the other steps can be carried out now or whenever you are ready. There's no need to withdraw anything, though. I'm assuming the mutual fund account is a td canadatrust tfsa & the new tfsa will be a TDDI broker account. Just transfer the tfsa from tdcanadatrust to the new brokerage account at tddi.

you could set up the broker tfsa with that $5000 missing contribution for a prior year, although i'm not sure about the timing of this since presumably you've already made your 2013 tfsa contribution.

once again, no need to WD anything from tfsa. You could transfer the mutual funds as is (in kind) or else you could redeem them while tfsa is still at tdcanada trust & then you would only be transferring the proceeds of redemption, ie cash. This latter manoeuvre might be faster & simpler.

i imagine the reason your advisor at school suggested mutual funds to you is because he knew how busy you would be & he was hoping to reduce stressors in your life, not add them. This was also the reason why i mentioned upthread that taking the mutual fund route right now for additional investments is a not-bad idea.

but i can see you already champin at the bit & rarin to go, so the time seems to have come for leaving expensive high-MER funds in order to buy efficient, low-cost etfs.


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## garreTT (Aug 28, 2013)

Humble - Thank you for everything that you've contributed thus far, it's been helpful.

With midterms this next week I've been quite busy and trying to find time to post has become almost non-existent. My contributions are monthly into the Mutual Funds at $200 every pay day (two weeks). This is usually $400 per month with two exemptions throughout the year; one being November where there is 3. Is there any way I can continue to transfer funds in this manner into my ETFs or would I be charged for the purchase of the funds? Unfortunately I won't have time to get into the bank this week so I will have to get in there this next weekend to make this happen. 

Could you please pass on any links about ETFs (other than Canadian Couch Potato) so I can get a better grasp on it? Also, will I be able to purchase any ETF through TD or am I limited?

Thank you,

-Garrett


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## Butters (Apr 20, 2012)

Garrett, you can buy EFT with any broker, *ITS LIKE A STOCK* but different brokers have fees

The problem is, unlike mutual funds, you have to buy WHOLE UNITS, you can't just dump money over...

So you have to MAKE A TRADE to buy Units (or STOCK if you will)


To make ONE TRADE with TD Waterhouse, it will cost 29 dollars PER TRADE unless you have 50k then its 9.95 still a huge number if you plan on doing it often with low amounts 



with QUESTRADE it is *FREE* to buy any EFT's (but you will pay 5 dollars to sell)


So simply put, to do monthly contributions to EFT i would *STRONGLY* recommend *QUESTRADE* to reduce your FEEs! And overall get you more bang for your buck!


XBB is a good bond one
VDY is a dividend huge on the financial sector
ZDV is a riskier Dividend one

VUS us total market
XIC
XRB

so you can look up any one of these quotes, lets try VDY
https://www.vanguardcanada.ca/advisors/etfs/etfs-detail-overview.htm?portId=9560
It will show you they take a MER of 0.35% 

now hopefully this link works
http://ca.finance.yahoo.com/echarts...n;ohlcvalues=0;logscale=off;source=undefined;

(if not go to yahoo finance type in VDY, hit the large chart, filter for 1 year, and hit the events tab, and select DIVIDEND)
You can see it pays dividends each month

But i'm sure some other people have a nice whole completely diversified list out there, a bunch of different ETF's, couch potato has done the best job of simplifying stuff, i would recommend their EFT site
http://canadiancouchpotato.com/recommended-etfs/


i hope this gets the point across, if you have any questions send me a private message


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## realist (Apr 8, 2011)

I'm curious what people's advise to the OP (and myself) would be on ETFs vs. TD e-series funds? I'm currently doing a Couch Potato style plan (give or take) using e-series funds. Given the relatively low amounts involved (I'm putting in between $500-1000 /mth) I feel like the e-series is better value than paying trading fees for ETFs. 

Thoughts?


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## Synergy (Mar 18, 2013)

realist said:


> I'm curious what people's advise to the OP (and myself) would be on ETFs vs. TD e-series funds? I'm currently doing a Couch Potato style plan (give or take) using e-series funds. Given the relatively low amounts involved (I'm putting in between $500-1000 /mth) I feel like the e-series is better value than paying trading fees for ETFs.
> 
> Thoughts?


Agreed - e-series is great for those with small portfolio's or for those that want to make regular contributions. I personally like the flexibility of the e-series funds and use them exclusively in my RRSP. I hold individual stocks in my non-registered accounts. 

A more detailed answer including calculations can be found here: http://canadiancouchpotato.com/2010/06/25/should-you-use-index-funds-or-etfs/


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## dsaljurator (Jan 12, 2012)

There is a line where ETF's start to beat the e-series MF's, but I think you have to have a pretty sizable portfolio to get there. With TFSA's, ideally you want to be in a position to put the full years deposit into your account on the first of the year, so you only have one set of trading fees to pay. If you're contributing monthly, e-series are far and away the winner since you have no transaction fees.


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## garreTT (Aug 28, 2013)

Alright, it's the point where I put the money into the chosen accounts.

I will be slightly following the Canadian Couch Potato form of investing with the following funds:

Canadian equity	34% TD Canadian Index – e (TDB900)
US equity	33% TD US Index – e (TDB902)
International equity	33% TD International Index – e (TDB911)

My thought behind not having bonds is with the interest rates on the rise, the bond market doesn't seem to be going north any time soon. I know the majority of the portfolio is in bonds, so do you think this is a bit of a risk with solely heading into equities or a smart move? Also, what about dollar cost averaging? Should I spread the $31,000 over the 12 month period since there are no commissions?

With all of that being said, I'm still keeping a large portion of my cash position liquid. I don't have time to manage my own portfolio with 3 night classes and one Saturday class this term. I'm hoping to purchase some property in the next 2-3 years with the likelihood that interest rates will be more nominal and housing prices will go down.

Thoughts?

Thank you in advance for all of the help thus far!


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## Synergy (Mar 18, 2013)

garreTT said:


> Also, what about dollar cost averaging? Should I spread the $31,000 over the 12 month period since there are no commissions?





> Lump sum investing pays off


http://www.canadianbusiness.com/inv...g-pays-off-so-take-that-bonus-to-your-broker/

I'm on the fence - I like the idea of DCA - especially with e-series. But if I had dropped all my money rather than $ cost averaging over the first 1/2 of 2013 I would have performed better with my index funds - should have, could have, etc. But then again - who knows what the future may hold. Seems like the current consensus would be to drop the lump sum and forgot about it.


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## wendi1 (Oct 2, 2013)

I would invest the lump sum now, but then continue to invest monthly as it comes in.

There is no "magic" in DCA, IMHO, it is only appropriate if you are a naturally nervous person. Dipping your toes in, so to speak.


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## garreTT (Aug 28, 2013)

I'll throw the DCA out the window then. What about the fund allocation?


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## humble_pie (Jun 7, 2009)

salut garrett & best wishes for 2014!

here you are speeding along & right on schedule with the big etf purchase. Congratulations, you have succeeded in spite of a crushing load of responsibility! i hope school & job are both treating you right.

it's not clear to me from your messages where your "savings" are, with which you plan to buy real estate a few years hence. Here - just upthread - you're committing the entire $31k to a balanced allocation among 3 equity etf types. You say no bond funds - i'd agree - but where all are you keeping the short-term liquid investment for the RE purchase?

knowing you just a little bit from this forum, though, i'd imagine you have the RE funds efficiently squirrelled away in a safe but accessible place.

wishing you the very best. Don't forget to come back more often & let us know how things are going.

PS re timing, i think if it were myself, i'd commit a major portion now - something like $20k - but hold back the balance for a few months in case we have an end-of-winter setback, as often happens.


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## garreTT (Aug 28, 2013)

Hey Humble! You as well for 2014!

Both are treating me right thus far. A bit on the crazy side taking 4 classes but in the end I will get used to the course load.

So far, to keep it as easy as possible, allocate $21k into the different funds above diversified evenly among them in the very near future. After the winter blues, invest another $10k into the accounts.

The remainder (while still keeping a balance of $5000 in my chequing account) will be put into a savings account so that I can still accumulate some interest on it but while still continuing to be liquid. That number should be somewhere in the range of $20k. Would this be an okay strategy? Could I potentially put this somewhere else and still keep it just as liquid with the same guaranteed return? What about RRSPs? I know I said that I would be waiting to invest into my RRSPs until I could put away one lump sum. I could put some away right now and claim it at another time and then withdraw 25k for the home buyers plan tax free.

Thoughts?


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## Longwinston (Oct 20, 2013)

garreTT said:


> Interesting to come back to this haha.
> 
> I've talked with the advisor and it's indeed 25,500.
> 
> ...


I think you are conflating _Investment vehicle_, with _investment_.
You don’t need to worry about the January / December thing unless you are removing the $$ from the investment vehicle (TFSA)
If you are simply changing investment types (Mutual Fund to ETF) there is nothing to worry about as far as limits etc etc.

And yes, you should get out our Mutual funds and into ETF’s. you can get ETF’s that are more broad and less risky than mutual funds with no problems.
Good luck and good job for being where you are at your age.


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## garreTT (Aug 28, 2013)

*Quick Update*

Finally opened up a Self Directed RRSP through TD Waterhouse. This is where I will be fully contributing this year. Unfortunately it's not enough to cover the $25k minimum amount to avoid fees, but after giving them a call, they said that it's after a 6 month period that it would come into effect. This next tax season, my contribution limit will increase thus allowing me to put in the full amount to avoid any fees. These will be spread among the "Couch Potato" method of investing through TD E-Series.

The remaining of my TFSA with be fully contributed into a People's Trust earning 3% until that promotion is over. I feel this is as liquid as possible and has an alright return. This is will be used for down payment money in the next couple of years.

The remainder of my cash will be around the 10k mark. Not certain where a certain portion of this will go.

It seems like I'm a bit behind in my schedule but with school, family and everything else under the sun, it's very difficult to find time anymore.


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## humble_pie (Jun 7, 2009)

garreTT said:


> *Quick Update* ... Finally opened up a Self Directed RRSP through TD Waterhouse ... unfortunately ... fees ... [to be] spread among the "Couch Potato" method of investing through TD E-Series ...
> 
> It seems like I'm a bit behind in my schedule but with school, family and everything else under the sun, it's very difficult to find time anymore.


no, you're not behind. You're doing wonderful (emoticon for "admire")

re the rrsp & its nasty fees even if they are going to be only temporary fees in your case: these fees are a low $25 per annum, last i heard? i'm only inquiring because i don't know for sure.

i'd say $25 fee is not worth any hassle to avoid. But if the fee is considerably more & seeing that the rrsp account was to be 100% TD e-funds in its early stages, it could be opened without fee directly at TD investment management, ie the fund company itself, no?

this can be quirky to arrange so won't take the time at this moment to explain how-to. Let us know if TDDI's rrsp fee for you is low & do-able, something like $25.

otherwise, 2014 looks like it opened up great for you!


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## garreTT (Aug 28, 2013)

Hey Humble,

I appreciate all of the advice and follow ups you've added to this thread and forum .

http://www.tdwaterhouse.ca/products...ting/accounts/self-directed-rsp-rif/index.jsp

If you refer to the link above, the below portion is included near the bottom.

"With a Self-Directed RSP you have the opportunity to tailor your portfolio. Your plan is administered by TD Waterhouse Canada Inc., which charges an annual administration fee of $100.00 plus GST or HST. If you maintain a minimum balance of $25,000 in your account, you won’t pay an administration fee."

There would be a $100 annual fee applied to my account of choice. If there is not $25,000 in the account 6 months AFTER opening the account, this would be applied. My maximum contribution limit is at JUST UNDER 24k for the 2013 tax season. In the 2014 season, it should be more than the $25,000. (This was the information that I got from a TD DI rep.)

I'm just creating my budget for 2014 and I'm noticing that after all of my my expenses during the year, I will earn approx. $20,000 net. With the remaining amount after my TFSA and RRSP fully contributed, where should I allocate this other amount? I don't think purchasing stock in small bursts during the year as it'll be eaten up by commissions. Savings account?


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## humble_pie (Jun 7, 2009)

garrett i have 2 suggestions for you:

1) you have chosen the TD self-directed RRSP which does carry the $100 fee as you say. But since you are commencing with e-funds only, why not go for the basic RRSP which only has a $25 fee?

in the basic RRSP structure, investor does not buy individual stocks or options, but can buy any & all kinds of mutual funds including e-funds. This basic plan can easily be changed to self-directed in a few months, or whenever you might get the balance up above that $25k level.

i'm told you can make the change by phone, so perhaps phone now, or very soon, before things have jelled?

2) try calling the french line. They all speak english perfectly, so you'll be fine. On your phone menu there must be an option - in french - for the french line? you'll be able to figure out which it is ... i mean, it won't be english or chinese so there you go each:

re the cash balance after you've topped up your investment savings plans, i'll get to this in a little while, ok


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## garreTT (Aug 28, 2013)

The press 2 for French is an old advertising / cold calling trick that I learned a while back. Not only do you get directed to someone who could speak english, but I think they will be located somewhere closer to Canada. I just got off the phone with DI and my contact at TD. He said that's it's been setup as a basic. He will call to confirm that with DI and ensure that he is correct. Since it's a newer account, they can change it pretty quickly.

Sounds good!

Thank you.


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## humble_pie (Jun 7, 2009)

(laughter) what do u mean "somewhere closer to canada?"

most of them are in montreal! by default the french line overflows to ottawa or a few francophone reps in the otherwise vast anglophone homeland of markham ontayreeeoh


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## humble_pie (Jun 7, 2009)

garreTT said:


> I'm just creating my budget for 2014 and I'm noticing that after all of my my expenses during the year, I will earn approx. $20,000 net. With the remaining amount after my TFSA and RRSP fully contributed, where should I allocate this other amount? I don't think purchasing stock in small bursts during the year as it'll be eaten up by commissions. Savings account?



this is just a budget, right? 
you've just blown $31k in 3 different equity e-funds, right?
budget calls for topping up TFSA & RRSP as a first priority, right?
anything left over could be budgetted for mumblety pegs but this doesn't mean it has to be spent on mumblety pegs tomorrow, right?

i think i'd budget this slot for savings for now. I mean, the bull market is long in the tooth, there can sometimes be a seasonal breakdown at the end of winter or in spring, i think it would be prudent to wait & see. Meanwhile i think i'd be thinking about canadian energy. A sector that should be well enough represented in your canadian equity e-fund.


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## garreTT (Aug 28, 2013)

I don't like being transferred overseas. That's what I meant by "closer to Canada". English (especially utility companies) means that I would like to be automatically transferred to someone in a completely different country it seems.

Recap:
31K TFSA Peoples Trust (3%)
23ishK - RRSP (e-Series and will top up after I get my notice of assessment for 2013)
Remainder - Roughly 10K prior to my return. With education and RRSP contributions, it will be higher.

Savings it shall go. Done and done.

I think I will make a diary in that section of the forum to track my progress.


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## humble_pie (Jun 7, 2009)

garrett i imagine you must have been calling through tdcanadatrust automated phone system or via your td branch but the branch person put you into the wrong system.

because tddi the broker has zero overseas french-speaking call centres. Zero overseas english call centres. Zero overseas chinese call centres. All tddi personnel are canada-based. To get their securities licenses, the representatives have to be canadian residents.

what i'd like for you to do is try out this number. It should take you straight to the canada-based TD direct investing french call centre:
1-800-361-2684

for tddi english call centres in markham & ottawa, here are couple numbers:
1-800-668-1972
1-877-783-6390

this number should lead to a tddi bilingual french/english menu selection:
1-800-363-6751

don't go overseas for broker assistance. As they say, local greenery is fresher, better.


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## garreTT (Aug 28, 2013)

It was meant to be more of a joke Humble.

TD has been nothing but great. The person who I deal with at my bank has been my banker for years and the person who I discussed my situation with at DI was great.

I meant to say that when it comes to _other_ companies, they tend to outsource their call centers. 

Thank you for taking the time to look into their numbers and I will note them.


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## Nemo2 (Mar 1, 2012)

humble_pie said:


> (laughter) what do u mean "somewhere closer to canada?"
> 
> most of them are in montreal! by default the french line overflows to ottawa or a few francophone reps in the otherwise vast anglophone homeland of markham ontayreeeoh


I remember when Sun Life initially moved out of Quebec, circa 1978........they installed lines with Montreal phone numbers in Toronto which were answered exclusively in French.......and they didn't let on where they were.


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## garreTT (Aug 28, 2013)

Bit of an update:

People's Trust TFSA - Maxed out
RRSP - Dollar Cost Averaging through the couch potato method 
Remaining Cash in chequing account (trying to get a solid plan as this next semester I only have one class)

So far everything is going pretty well. I got a letter in the mail that I made the deans honour roll for the degree program that I'm currently enrolled in. Feels pretty good with all of the hard work finally paying off


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