# Where do you invest?



## SlowandSteady60 (Feb 19, 2012)

I've read a lot about investing and sometimes it almost seems like the more you read, the more confusing it gets. In some ways it all makes sense to me but for someone who is just starting out, deciding where to invest your money, who to trust with it, what funds to choose, all seems very confusing. You have to choose an advisor or go it alone, then choose between Mutual Funds, ETF's, DRIPS, stocks, bonds, cash, gold ....... So here's a question for all the people out there who have done well and it goes out to the newbies if you will who are just starting out. Where do you start and what choices are better than others. Maybe this has been asked before but I know there are always people out there with the same question. Thank you in advance for your responses.


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## GoldStone (Mar 6, 2011)

SlowandSteady60 said:


> Where do you start and what choices are better than others.


TD eFunds.

See The Global Couch Potato portfolio, Option 2:
http://canadiancouchpotato.com/model-portfolios/

One note about this model portfolio. If you are 20- or 30-something, the bond fund allocation might be too high for you.

Use TD online account to start:

http://www.tdcanadatrust.com/produc.../mutual-funds/investment-options/new-acct.jsp


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## gibor365 (Apr 1, 2011)

I don't beleive that there is somebody who started well from day one. You start , you're doing mistakes, you learn, and you doimg less mistakes....


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## GoldStone (Mar 6, 2011)

gibor said:


> I don't beleive that there is somebody who started well from day one. You start , you're doing mistakes, you learn, and you doimg less mistakes....


Why make mistakes that you don't have to make?

The Couch Potato portfolio is a sensible way to start.

Day-trading penny stocks... or paying 3% MERs... not so much.


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## gibor365 (Apr 1, 2011)

GoldStone said:


> Why make mistakes that you don't have to make?
> 
> The Couch Potato portfolio is a sensible way to start.
> 
> Day-trading penny stocks... or paying 3% MERs... not so much.


Why?! I'll give you an example.... you can watch hockey on TV for 30 years and understand the rules , tactics and so on, but you will learn how to play when you start plaing, and the fact that you know it from TV won't prevent you from doing mistakes....

The same thing about "paper" portfolio, I usually win in casino games when I play free online, in real world success rate is much less 

And who are talking about penny stocks?! There are a lot of solid blue-chip dividend stocks with high yield and low beta.... and MER = 0


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## Soils4Peace (Mar 14, 2010)

It is not necessary to make mistakes, whether to learn or to make money.

A TFSA structured as a TD e-series couch potato is an excellent place to start. The minimum purchase is $100 per fund so you can start small. Your MER will end up around 0.40 to 0.45%, which is about one fifth of what many Canadian retail investors are paying. It involves strategy, which many portfolios don't have. 

I would tweak the typical portfolio to include NASDAQ because for a stock fund it has relatively low correlation to the world and Canadian markets. And I would keep bonds low for now, for example:

30% Canadian
25% US
25% MSCI EAFE
10% NASDAQ
10% Canadian Bonds


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## Brad911 (Apr 19, 2009)

I'll also submit for consideration an indexing strategy.

It is cheap, effective and allows you to learn a lot of important habits related to buying, selling, portfolio allocation and diversification.


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## financialnoob (Feb 26, 2011)

I think a lot of it has to do with the individual. I think we often get caught up in how we must maximize everything, and it can feel impossible trying to find the optimum strategy for investing. It can be frustrating that there's no single right answer to point to, but the thing is you don't need the one magical solution to invest and benefit.

In essence, I think you're wondering where to invest without looking at your own personal situation. You're driving along but you don't know where you're going, but you want to know the quickest route to get there. 

You need to figure out what your goals are, what your timelines are, and what you need to achieve those. If you need an average of 2% growth vs. an average of 6% growth, then that's going to influence your choices. If you are concerned about retirement only vs. leaving behind an inheritance, that changes things again. You need to figure out what works best for you, and then develop a road map to get there.

The nice thing is there are a million different paths there. Some may be quicker, some may involve fewer turns, but it's nice to know you can get there even if you get lost a bit or take the scenic route. But you have to figure out where you want to go first.


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## SlowandSteady60 (Feb 19, 2012)

Hey All,
There is a lot of good conversation here on this subject. I have to agree with financial noob though. This is a journey and there are many paths and many reasons to take one path over another. There isn't one set of rules that works for everybody but I guess I was looking for "what has worked for you". Some of you mentioned the Couch Potato strategy and this is good, but are you using it and does it work for you? What kind of yield are you getting from it. There is a large range of people out there who go from doing poorly and losing money to doing well and raking it in. The ones who have been doing this for a while and have had and are still having great success at it, what are you doing right and what have you invested in? That's what I'm after with this question. What's working for people in these tough times? I'm sure there are dozens of stocks doing well and we can't track all of them by ourselves. Sharing knowledge is powerful.


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## doctrine (Sep 30, 2011)

I decided to start by opening a discount account at Questrade, depositing money and buying Canadian dividend paying companies in a non-registered account. Owning shares in a company has been an eye opening experience for me. I do like the coach potato type strategies as well and in the future will be using them for my RRSP, TFSA and any RESP I may be starting. You really just need to jump in somewhere and keep your eyes open and learn.


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## Cal (Jun 17, 2009)

IMO, best way for someone to start out is a etf couch potato portfolio, it is simple has low management expenses, and if you fall off of the investing wagon it is a reasonable way to invest.

From there I would follow the holdings of the etf's, get some familiarity and branch out in the direction that suits your individual tolerance, personality and life situation the best.


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## indexxx (Oct 31, 2011)

I'd start by reading The Wealthy Barber Returns as well as Investing for Canadians for Dummies- and then over time, any other books from the library that catch your eye- like Boosting Your Financial IQ, Derek Foster's books are good for learning about Dividend Reinvestment Plans (DRiPs), Gordon Pape has two excellent books on TFSAs, and there's a good book on finding value stocks called "The Little Book that (still) Beats the Market", by Joel Greenblatt.

As far as where to invest, I'll go along with indexing to get started, but also add that DRiPs/SPP are a great idea.


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## Spidey (May 11, 2009)

I've kind of gone in 2 separate directions. In my registered accounts I use a mostly index strategy with a combination of ETFs and efunds.

In my non-registered and leveraged accounts I use a high-dividend stock strategy. I find that an index strategy is particularly not suitable to leveraging, as in this case I want relatively stable, high-dividend stocks at a low point in their cycle. Mind you leverage is not appropriate for someone just starting out.

As far as where to start, I would say reading as much as possible. Get at least one financial book per month from the library.


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## Szarky (Aug 27, 2009)

gibor said:


> I don't beleive that there is somebody who started well from day one. You start , you're doing mistakes, you learn, and you doimg less mistakes....


Very well said, it's all about making less mistakes over time. I made the mistake of letting an advisor take control of my retirement plan and put me into mutual funds with 2.7% MER's 

I did a lot of research and switched to TD's e-Series and have been extremely happy ever since. Not only do I use them for my RRSP's but for TFSA also. They're basic, easy and you have full control of (for free) re-balancing, transferring, buying. I love it.


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## Mike59 (May 22, 2010)

I invest in cycles ,and feel this is a secular bear cycle for stocks. I therefore own no conventional equities. In a nutshell:
65% cash/fixed income
25% gold and silver bullion funds
10% gold miner etf, but this is a trade that i'll try to time and exit within 1 year

Plot the tsx or dow vs gold over the last decade and realize how astronomical the loss of value has been


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## uptoolate (Oct 9, 2011)

I agree with the TD e-funds, Canadian Couch Potato website, indexing, asset allocation and the like. Andrew Hallam's book 'The Millionaire Teacher' is a very good introduction and can get it at the library or Costco for $12 bucks. There are also 'Sleep Easy Investing' by Gordon Pape, 'The Gone Fishing Portfolio' by Alexander Green and books by John Bogle. I think Andrew Hallam's book is very easy to read, to the point and recent. He talks about asset allocation and investing with TD e-Funds and various index ETFs.


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## newfoundlander61 (Feb 6, 2011)

My TFSA is currently 100% cash.


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## Eclectic12 (Oct 20, 2010)

SlowandSteady60 said:


> I've read a lot about investing and sometimes it almost seems like the more you read, the more confusing it gets.
> 
> In some ways it all makes sense to me but for someone who is just starting out, deciding where to invest your money, who to trust with it, what funds to choose, all seems very confusing.
> 
> You have to choose an advisor or go it alone, then choose between Mutual Funds, ETF's, DRIPS, stocks, bonds, cash, gold ....... So here's a question for all the people out there who have done well and it goes out to the newbies if you will who are just starting out. Where do you start and what choices are better than others. [ ... ]


Welcome to the wonderful, wacky world of investing.

It can be overwhelming - if one is trying to be on top of it all or invest "perfectly". Bear in mind that investing is no different than learning any other skill such as car repair or painting. It takes time/effort so it is more important to learn what you can, at your own pace. Over time, your skills will grow which gives more tools in the toolbox to make money. It will likely be more profitable to avoid mistakes and be doing what you are comfortable with than to "be in the dark" where anyone can take advantage of you/your money.


As others have mentioned, TD eFunds in a Couch Potato portfolio is a good place to start. It's not a lot of effort, likely beats a savings account and when you've learned more, you can choose to stick with it or branch out.

For books, I liked:
a) _The Wealthy Barber_ by David Chilton 
b) _The Beginner's Guide to Investing_ by Richard Croft and Eric Kirzner, though I'm not sure it's been updated in a while so it may have a few spots that are outdated.

I'm reading _Personal Finance for Canadians for Dummies_ by Eric Tyson and Tony Martin, then _Stock Investing for Canadians for Dummies_ (same authors). My brother wants to learn about finance/investing so when I saw these two at my local bookstore for 30% off, I figured I'd give them to him.


Cheers


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## Eclectic12 (Oct 20, 2010)

Mike59 said:


> I invest in cycles ,and feel this is a secular bear cycle for stocks. I therefore own no conventional equities. In a nutshell:
> 65% cash/fixed income
> 25% gold and silver bullion funds
> 10% gold miner etf, but this is a trade that i'll try to time and exit within 1 year
> ...


If one has the skills and comfort level, fine - but I'm not sure it's a good place for someone learning about investing to start. There's far too much risk of buying in high, not knowing when to sell and losing one's shirt.

IAC, the TSX versus gold is a loss of opportunity - not a loss of real dollars.

Something like eighty percent of the Canadian stocks/trusts I've purchased in the last three years are up between 10% to 90% for a capital gain and have been paying 4% to 30% dividends. If I'd put it all into gold, sure - I could have done better but I'd also not be able to sleep at night.

Then too, buying Potash in Dec 2011 at $42 and selling in Jan 2012 at $47 doesn't hurt either.


As I said before, there all kinds of ways to make more money than current savings account rates. For me, that variety makes it interesting and new every day.


Cheers


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## Mike59 (May 22, 2010)

Eclectic12 said:


> If one has the skills and comfort level, fine - but I'm not sure it's a good place for someone learning about investing to start. There's far too much risk of buying in high, not knowing when to sell and losing one's shirt.
> 
> IAC, the TSX versus gold is a loss of opportunity - not a loss of real dollars.


Inflation is the ultimate tax and silent portfolio killer, I'd say it is a loss of real dollars. Even as recent as start of 2010 during the TSX rising in value, gold bought .09 units of the TSX, now it buys 0.14 units, that's a 55% loss in purchasing power for the TSX, I'd call that losing one's shirt!

I've learned in my short investing career that there is serious money to be made by doing the opposite of what everyone else is doing, it's not hard, and just requires a mental flick of the switch. 

I disagree with most of the posts about library books and financial guides, but hey, that's my own comfort zone. My advice to a new investor would be to question everything, trust no one, and don't be afraid to be a contrarian.


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## humble_pie (Jun 7, 2009)

mike59 you say you have had a short investing career & obviously this has coincided with an exceptionally rare meteoric rise in gold & precious metals.

if you look at the charts since 1972 when the US abandoned the gold standard, gold has spent long periods languishing & doing nothing. The present bull phase began more than a decade ago. It is certainly possible, theoretically speaking, that we could now be headed for a long-drawn-out plateau or worse in gold price.

a new investor with a short investing career who chose gold as his vehicle has done well in the last few years. However, he would have done abysmally, for several years, if he had begun 12 or 15 years ago. In no sense does he hold the keys to the kingdom of heaven.

the reason so many forum members suggest that new investors read good books & think carefully about their asset allocations is that these experienced members are hoping the novice will plan a sturdy, resilient, diversified wealth portfolio that can last him all the days of his life.


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## GoldStone (Mar 6, 2011)

Some stats to support excellent response by humble_pie.

*Average Annual Return*


```
10yr     20yr     30yr
TSX Composite   7.0%     8.7%     9.1%
Gold            13.5%    6.9%     4.1%
```
*End Value of $1000 Investment*


```
10yr     20yr     30yr
TSX Composite   $1974    $5290    $13716
Gold            $3535    $3816    $3306
```
*Total Return by Decade*


```
2001-2011   1991-2001   1981-1991
TSX Composite   72.54%      200.10%     132.86%
Gold            278.28%     -3.27%      -42.05%
```


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## Argonaut (Dec 7, 2010)

Stock markets, governments, and currencies come and go. But gold is the oldest and truest investment. I recommend a 25% allocation.


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## SlowandSteady60 (Feb 19, 2012)

So far this has been an awesome post with a lot of great responses. I thank you all for your candid answers and hope we can get some more feedback from senior members. I myself have an array of funds, ETF's and some gold stocks which have allowed me to make a buck here and there but not as well as some of you have done. I myself recommend the Couch Potato strategy to newbies and I have read all the books mentioned except for Millionaire teacher which is on my list of things to do. For someone to say these books are a waste of time, I say you must be a genius and know everything about investing, but we all know that can't be true. So if you are new, pick up some books and read. The best teacher I found so far though, is the school of hard knocks. You learn very quickly when it's your money out there. Keep the thread alive. Good knowledge for everyone!


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## MC25 (Mar 9, 2012)

Next drop in silver I think Ill get SLW or SLV. Silver could be on the rise very soon.


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