Before you jump in, make a plan and understand your options
I would start in these two places and read everything linked from there if you plan to go at it as on your own.
How much do you know about financial independence?
Most important is to understand your risk tolerance. Youve discovered your risk tolerance is more than barely keeping up with inflation.
What about losing half of your equity over the course of 2008? Are you willing to keep buying stocks while they crash hard?
What about when interest rates start rising and the value of your bond fund drops 4%? Do you know enough to hold that fund and not panic sell? After the bond funds duration is up, the higher interest rate will recover your lost capital. That might be ten years out if you buy med/long term bond fund.
As to your immediate quedtion, moneysense allows only 3? unpaid views of thier articles per month. Copy/paste it for reference.
http://www.moneysense.ca/canadian-online-brokers-at-a-glance/
Read the overcontributions and transfers section below carefully. Dont withdraw your TFSA. Have your new account transfer funds from the old one with no impact. If you stick with your current bank, the transfer will likely be free. If not, ask your new brokerage if they cover transfer fees from the old bank.
The favourite broker on most forums is Questrade because they allow free ETF purchases. I decided to stick with my big bank broker who charges $9.95 per trade. This was due to personal reasons, mostly knowing my big bank will most likely still be in business 50 years from now.
What you plan to buy and how much/often you plan to save plays a big role in where you're best to set up shop. Think long term. Automate contributions for best longevity.
Ok now we're talking.
- Any recommendations for the best brokerage firm to set one up?
- Simple as transferring from one TFSA to another?
Adding to Heckler:
Two 'big' ways to do this.
A) Do as you said, and setup with a company. They will assist with everything.
Or
B) Do it yourself.
Details on A)
- firms will charge you. There's a bunch of terms for this but they all basically take % of your earnings off the top (or in some setups even the remaining principle in the case of loses). Say your investments make 7%, and the fees are 3%, your left with a 4% net.
- One big term is management expense ratios (MERs), look them up and how they can eat away at an investment. It's a lot over long periods of time.
- fees range from 0% to +3%. anything over 2% is considered robbery. acceptable MERs are generally around 0.5 to 1.5% range. Lower is always better.
- firms act in their own interests. This is obvious, but important. They make a living off of you. Fullstop. Everything said to you should be treated with huge skepticism followed by you hitting the google and asking others you trust.
- The big pro: They are super easy to use. You give them money, they assess how comfortable you are investing, (known as risk tolerance) and then manage it accordingly. Often there is other advice that will come along with these firms for free. Such as an adviser sitting down with you and getting your expenses/finances in a row. This is always good thing to do anyways, but keep the previous point in mind. A financially healthy you means they will benefit as well so use that to your advantage.
Details on B)
- It's more work but not a lot. For better or worse, you are the one at the helm. You dont have to cram all at the start, but getting involved in this stuff is truly a life skill worth developing over time.
- With most banks it's a simple online application to setup a TFSA investment account. usually [HTML_REMOVED]24hrs for approvals and shows up as just another online account. Transfer money from chequeing or savings into it and then start buying funds. Usually your bank will have online resources to show you how to do this functionally. otherwise ask questions :)
- There are tonnes of online guides to help you self manage and plan these things. mrmoneymustache.com and canadiancouchpotato.com are two great ones to start getting into. The CCP links directly to model portfolios.
- Research something called ETFs. By example: Vanguard ETFs have some of the lowest MERs around and have huge offerings; by definition ETFs are not a single holding of one company, but instead you own units that hold a small % of hundreds or even thousands of individual stocks within. This make them great ways to invest while diversifying and lowering risk without really thinking about it.
- Once your account is setup, you can buy and sell ETFs as if they were a stock ticker. For simplicity at the start, stick to ETFs that are offered on Canadian exchanges (eg: TSX) as getting into other markets is a deep well of things to consider. (eg: foreign exchanges, with-holding tax etc.)
- TSFAs should be boring as hell. To offset trading fees, save up a few thousand over however long it takes, then do a bulk buy. Dont try to 'time the market' just pull the trigger. Remember that time horizons are usually decades so no need to twitch out on these things and micro manage.
- What ETFs should you buy? well there's a lot of info out there. This is where the feelings of self induced overwhelminess can creep in. Everyone want to do the best thing to max their money, but what most dont say is that there are a whole load of ways to be do exactly that that. The links above (and Heckler's) will help, and good setup examples are in the CCP link I gave above. For ME, I broke my ETFs into 4 parts all through ETFs offered on the Canadian exchanges. I bought 1 Canadian only ETF, 1 US only ETF, 1 Developed markets outside of North America (Europe) and 1 Developing countries ETF (China/India etc). I set a goal that portioned out a certain target % that I think is good for each, Say 30, 30, 20, 20 = 100%. this is Just one way to do things. Going 100% US only ETF is perfectly fine too. Sometimes I 're-balance' my portions when I bulk buy. Sometimes I put the buy all into one, sometimes I put it into all 4. Depends on the money I've saved and how 'off' the buy makes my target goal. Like I said, there's no single "right" way of doing things.
- When I did my first go at this self managing thing I ended up learning a lot more about ETFs in the year after I started. When I had my next chunk of money, I didn't even look at the gains/losses on ETFs I had and sold the whole thing and re-bought the funds I wanted in the proportions I wanted. Excluding the gains/losses, it was a $50 lesson. No big deal. But I'm glad I just jumped in and started and didn't wait for 'the perfect time, with the perfect ETFs' or else nothing would've happened for me.
Whatever you do, don't over worry and dont over think - doing almost anything TFSA or savings related is 90% of the battle. Ignore the ups and downs, check on them whenever you've saved enough to buy again, and ask a lot questions. BAM! You're now doing great!
If that doesn't sound like you, then maybe a firm is the way to go. I first started that way myself - I didn't even know self managing existed. The more I learned tho the more I said "I want to do this myself" and Bam! I don't regret the fees, it was just one step in a long learning process. Either way, welcome to your first step.
EFT = emotional freedom techniques??
Or ETF = exchange traded fund??
EFT = emotional freedom techniques??
Or ETF = exchange traded fund??
Morning plus lack of coffee = Typos
:P
(but thanks for catching that)
i just shove everything into ING Streetwise. but i know little about this stuff nor am i interested enough to learn, and i'm sure someone here can tell me why it is bad. but it seems to do well compared to the amount of effort i put into it. key point for me though is the amount i don't spend on it and can do other things i'd rather do
i just shove everything into ING Streetwise. key point for me though is the amount i don't spend on it and can do other things i'd rather do
Theres nothing wrong with simple, as long as you understand your options. Just understand the fees please. Say no to 4% DSC (deferred service charge) and 6% FEL (front end load) mutual funds.
http://canadiancouchpotato.com/2012/04/09/ings-streetwise-fund-v-td-e-series/
the ING streewise stuff is quite low cost and seems popular with the index low fee pundits. simple and similar to the TD e-series stuff.
I used ING for a mortgage and they are good to deal with Did it all over the phone
ING is no longer a thing in Canada, eh?
When one person suffers from a delusion, it is called insanity.
When many people suffer from a delusion, it is called religion.
I got a mortgage 6 years ago when they were part of ING
I think BNS bought them
I haven't noticed any difference
It used to be great using any Credit Union ATM for free with ING, but with Tangerine now it's only ScotiaBank ATMs. That's the only diff I've seen. This was a more noticeable difference out in the sticks I guess
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