The price of advice

WASHROOMS

Matt has a problem. Too little money. Or is it too much?

“Fifty grand,” he says. “I can’t manage it myself, but neither can I find someone half decent to do it.

“From talking to different investment firms in my small town, most indicate that to have a fee based advisor you usually must be investing $100,000 or greater to start. So, what are the rest of us to do? Just accept MERs, with your Sun Life’s/Investors Groups of the world? I’d prefer to avoid a self-directed investing fund, as not sure what to pick.  Any advice would be appreciated!!!!”

Good question. Most people have no idea how to find an advisor, what the hell the letters after their names mean, what kind of service they provide, how they’re paid or what to watch out for.  That has led millions of us into the warm embrace of [email protected], where she seduces you with the enveloping sexy simplicity of mutual funds, complete with their embedded and nigh-invisible insidious fees.

No wonder advisors are considered as trustworthy and ethical as, say, used Kia salesguys, politcians or Kevin O’Leary.

There are basically three flavours of advisors. Fee-for-service guys will analyze your situation, draft a financial plan and a suggested portfolio, then charge you about $250 an hour. The process will probably take ten hours or so, to meet, get the facts, discuss your goals and risk tolerance and run over the draft portfolio. Then, of course, you’re on your own. You’ll have to invest on your own, monitor assets,  rebalance things as necessary and move assets around for tax-efficiency.

Then there are the commissioned guys. Like the ‘advisor’ at the bank who says, “I don’t charge you directly for anything!” Or the mutual fund salesperson at IG. In fact, over 95% of advisors are compensated by collecting commission, which puts them in an inherent conflict-of-interest situation (why the regulator is pondering how to end this). The question investors need to ask is, are you selecting stuff for me to own because you get paid a better trailer fee, or because it’s correct for my situation?

Naturally, most commissioned advisor-salesguys drift toward mutual funds with fat fees in the 2.5% range (called MERs – management expense ratios) because they pay well, whether the client makes money or not. That’s human nature, and many advisors licensed to this level do not actually have a fiduciary duty to the people they serve. (That means, by law, they must put their client’s interests ahead of their own.)

Not all are self-centred, naturally. Lots of advisors paid by commission are honest, effective and trustworthy people. Bot lots aren’t.

The kind of advisor Matt is seeking, fee-based, eschews commissions and charges the client a management fee to look after their portfolios and financial plans. That normally varies by account size, so the more you have the lower the overall percentage. Where possible, never pay more than 1% annually of the value of your portfolio, but over a million that should drop to about 0.85%. All fees on non-registered accounts can be deducted from your taxable income (mutual fund commissions cannot), and normally come out of growth in your account monthly. Plus a fee-based advisor should do the same kind of plan a fee-for-service guy does, but for free.

(Disclosure: I’m a fee-based dude when not writing a pathetic blog and beating off xenophobes, house-horny moisters, lefties, realtors and outraged Moms.)

Now, how much money do you need to have an advisor? Matt’s right – fee-based guys are normally best if you have $150,000 since (at a 1% fee) that covers the financial planning, investing, monitoring, rebalancing, tax and retirement planning advice they shell out. Mutual fund advisor-salesguys who sell you an off-the-shelf fund will gladly handle smaller accounts because they don’t actually manage your money (a fund manager does that, for the MER charged). A fee-for-service guy will help anyone, but the one-time cost is substantial.

Two alternatives: self-investing and robos. The latter, like WealthSimple or BMO’s Smartfolio are options, but not without cost. For example, the bank’s robo has an annual fee of .7%, plus embedded ETF charges, while WealthSimple is half a per cent. Of course, with this approach you’re trusting your money at an algo, not a person.

Or, you can do it yourself, opening a trading account with an online outfit like TD Direct or QTrade. Expect no investing or tax advice, no management fees and to shell out ten bucks a trade. You also get to claim all the credit or take all the blame. Obviously the best route to go here is ETFs, not individual stocks, if you’ve got a relatively small amount.

What assets to buy? Keep reading.

172 comments ↓

#1 TurnerNation on 04.20.16 at 5:24 pm

They are going to fry the shorts into next week.
____ in May and __ ____

#2 Newish Garth Fan on 04.20.16 at 5:25 pm

Question for Garth or others in the know:
At age 47, am I better off investing within RRSPs or TFSAs?
I hope to retire in 13 years, with a gov’t pension of ~$50,000/year (and yes I know I’m very fortunate to have it – assuming its still there). Only meagre RRSPs otherwise, no TFSAs yet. Only debt being my $140,000 mortgage, to be paid off in about 8 years if I don’t focus on it further. No dependants or spouse, just me.
I had been focussing on paying down the mortgage, but after a few months of reading this blog daily, I’m a convert and am switching to focus on building whatever savings I can, instead of on my single asset/house. Considered selling my townhouse here in Ottawa (worth ~$300K) but haven’t fully got my head around that yet. Still considering…
Advice would be greatly appreciated. Criticism is admittedly deserved.

#3 salonist on 04.20.16 at 5:27 pm

read a book.opened a brokerage account and put myself through school

and then as you say the learning starts after school

#4 conan on 04.20.16 at 5:36 pm

A fee is a fixed cost to the investor whether 1 dollar is invested or one million. Your one percent is based on assets under management and that my friend is a commission.

This was tried in England and in Australia and the result was only the wealthy could get decent advice.

People with less money ended up paying more for advise because MERs became cost of fund plus one percent. In other words the less well to do ended up getting crappier service and paid more in fees.

The regulators need to wake up and smell reality.

Sorry, but a fee paid by an investor for service ain’t the same as a commission paid by a product provider. The issue is conflict of interest. Management fees eliminate that. — Garth

#5 Lisa on 04.20.16 at 5:36 pm

He should check out the Canadian Couch Potato blog. Tangerine funds are reasonable in this situation.

#6 understood by few on 04.20.16 at 5:39 pm

Go read Canadian Couch Potato. Choose one of the model portfolios and self manage.

The 3 etf solution is great for someone starting. Super easy to buy (plus less commissions to worry about), easy to rebalance and it’s well diversified for such a simple portfolio.

Down the line when you are feeling braver and more educated you can make changes (e.g. make it more closely match Garth’s millennial portfolio if you like).

Your bank might offer trading or you can open a discount brokerage account. I use Questrade for my personal accounts and have been happy with them.

#7 BOOM! on 04.20.16 at 5:39 pm

Wow. Investing conditions vary quite a bit between the US and Canada.

Only an idiot would pay any mutual fund fee over .5% and the same goes for ETF’s. Oh yes, the ones with 2% or better, plus a 5% front end loans, and even what’s known as a 12b1 fee a “trailing commission” are on the market, but like I said, only an idiot would allow themselves to be directed there, or select one.

I handle my own stuff. Have since day 2. Day 1 I used a broker to execute stock trades, who charged me plenty. I read more, wised up, and finally figured out there is NOBODY

#8 BOOM! on 04.20.16 at 5:40 pm

part 2…

…who will care more about the outcome of my investing more than me.

So, I learned to do it myself. Mostly, I get it right.

Nobody cares more about your health than you, either. So get a medical degree. — Garth

#9 Bram on 04.20.16 at 5:41 pm

Anyone can invest with online stock trading, because it is easy.

Why is it easy?

Two reasons:

1) You always pay fair price because all sellers and buyers are meeting at a single place. Unlike buying a used car, it is impossible to overpay for a stock: you pay exactly what that stock is worth at that particular point in time (plus $9.95 trading fee.)

2) All that ‘balanced portfolio talk’ that you hear a lot about on this blog? This is only important for old people close to retirement, or investors who need the money back short term, within next five years or so.

Here’s the dirty little secret no advisor will tell you:

If you can afford to put away your investment long term, let’s say 15+ years…
Then it matters not how you compose your portfolio. Any 10 randomly selected large cap stocks will do. Those stocks go up, those stocks go down. But over 15 years you will see a healthy appreciation, guaranteed! Maybe one of those 10 companies went bankrupt, not important: the gain of the others will make up for it. The chance of 2 or more going down of your 10 in your portfolio is pretty much zero.

End effect: your investment will grow, and it will grow faster than any mutual fund, and most likely faster than an ETF as well. Just go long term, and be patient.

Bram

Complete crap. — Garth

#10 robo man on 04.20.16 at 5:41 pm

Im SUPER new to investing, so I have thrown 5K to wealthsimple to see how it goes over 6 months. After a few questions and a phone call they looked at my ‘risk factor’ ( 8 outta 10 – I’m in it for the long term) they applied the follwing;

Foreign stocks = 25.6%
US Stocks = 19.8%
Dividend Stocks = 14.8%
Canadian Stocks = 10%
Conpany Bonds = 10%
Real Estate = 10%
High Yield company bonds = 5%
Gov Bonds = 4.8%
Cash = .01%

Its only been 2 weeks and they have returned +2.75 in total amount. Again, its only been 2 weeks.

Ill report back in 6 months!

Best of all, I don;t have to do anything!

#11 Shawn on 04.20.16 at 5:43 pm

The Value of Advice

The price of advice is one thing, the value of advice is another thing.

Advice is DEFINITELY not a case of “you get what you pay for”

Good advice could pay for itself tens of times over in investment results.

Bad advice could lose you your total investment (and quickly thereafter your marriage) in the worse cases.

So, while the price of advice is important, getting quality advice is FAR more important.

However, for a given asset allocation, price then becomes important.

No sense paying a lot for advice if you are going straight to index funds.

Sometimes the lowest cost advice might also be the best.

There is little correlation between the price of advice and the value of the advice. In fact the charlatans often tend to charge more. You will pay hefty commission if you want to get into most exempt market investments and various private investments. Often, those will leave you non-diversified or worse, broke.

#12 wallflower on 04.20.16 at 5:45 pm

Read the last two years of this blog… set up self directed. Probably create TFSA if no current TFSA. 2011-2016 contributions. Easy peasy.

#13 understood by few on 04.20.16 at 5:45 pm

#2 Newish Garth Fan

—————–

Depends on your income. I’d lean towards saying max TFSA first, but if you are making significantly more than 50K/year now, then the tax deferral of contributing to your RRSP might make it worth putting some of your money in there (to maximize your tax return).

A good question for your accountant (if you have one).

#14 Andrew on 04.20.16 at 5:47 pm

Thanks Garth, that is actually very timely and relevant advice.

I’m in a similar boat to Matt, have a similar amount of money so finding an advisor at the moment isn’t really possible, but give it a few years and I’ll be there. My advice to Matt would be simple. Set up an account on Questrade and buy a couple of ETF’s. You can have global diversity with about 3-5 ETF’s, VCN, VXC and VAB is a good start, and all you have to do is re balance once or twice a year. Anyone can do it quite easily, it is also free to buy any ETF on Questrade (have to pay a little to sell) so re-balancing is easy, even monthly.

I do have one question though. When it does become time to find a fee based advisor (that’s the only one I would opt for personally), is the minimum amount required to trade through them required to be in one account? We have our money split between 2 TFSA and 2 RRSP accounts, so if they are combined to make $150,000 is that enough to start with a fee based advisor? Are there higher fees for the more accounts you have?

Thanks

#15 bill on 04.20.16 at 5:48 pm

I wonder what Garth will recommend…
one of them might be CPD…

#16 Shawn on 04.20.16 at 5:53 pm

Different Advisor Choices

Personally, I think there are many quality services that are right in different circumstances. The nice lady at the bank is fine for starting out. The InvestorsGroup guys are fine for those who would otherwise probably never invest.

A ton of people will never ever seek out a fee-based or fee-only investor. And many are not capable or interested in do it yourself. Many of those people can be well served by mutual fund advisors.

Paying 2% on investments might still lead to a LOT more retirement money than the alternative of simply spending all the income and never investing.

2% of 50k is $1000 dollars, of which $500 would go to the mutual fund sales guy. If you think about it, that is a bargain for getting any kind of decent advice. Layers charge $500 per hour and yet people complain about paying the mutual fund advisor $500 on $50,000? (plus $500 to the funds themselves)

How about $100 for a client with $10,000. Would most of want to take that on?

Mutual fund salespeople put people into investments and if the investments go up, the customer tells himself how smart he was. If they go down he blames the mutual fund guy.

Actually one of the best reasons to use an advisor is to have someone to balame when things go down.

No one works for free.

Different strokes for different folks.

And no, I have never sold mutual funds, or anything else other than my time and analysis and thoughts.

Okay, I promise after today’s round to return to my self-imposed hiatus from posting until May 1. It’s too time consuming.

#17 ILoveCharts on 04.20.16 at 5:53 pm

Check out Canadian Couch Potato. Keep it simple. Maybe $10k each in five ETFs. Make sure you actually achieve diversity.

Or phone up SunCom and try to place $50k in their next deal.
http://www.scmp.com/comment/blogs/article/1937267/stampede-inside-story-vancouvers-wildest-property-deal-gone-7200

#18 understood by few on 04.20.16 at 5:55 pm

Sorry, but a fee paid by an investor for service ain’t the same as a commission paid by a product provider. The issue is conflict of interest. Management fees eliminate that.Garth

————–

This. Spoke with a friend that has worked (as in past tense) in a bank as an “investment advisor”. He very clearly stated it was a sales position. There is major pressure to push product that are profitable for the bank.

He didn’t like that, but a job is a job. Gotta put food on the table. Plus it pays a lot better than a used Kia salesman.

He is now doing something much more fulfilling and self manages his own investments.

#19 ed on 04.20.16 at 5:56 pm

Most advisors, including RJ, charge 1% after a portfolio reaches 500,000. Until then you are looking at 1.7% with about 150,000. What are your thresholds Garth?

Those fees are set by the advisor, not the company. Nobody should pay more than 1%, as I stated. — Garth

#20 Shawn on 04.20.16 at 6:00 pm

The Dirty Little Secret…

Bram number 9

If you can afford to put away your investment long term, let’s say 15+ years…
Then it matters not how you compose your portfolio. Any 10 randomly selected large cap stocks will do.

*******************************************
I agree. But it’s not a secret and not dirty.

But it only works for those few people who can truly live with the volatility and who have the time energy and knowledge to open their own trading account.

Like I said earlier, different strokes for different folks.

Anyone bashing entire categories of approaches (Mutual funds, do it yourself, fee-only) is not providing a credible opinion. Face it most of us are biased to one approach or the other. But that does not excuse bashing other approaches on a blanket basis.

#21 hope & ruin on 04.20.16 at 6:04 pm

Reading today’s blog reminded me of how I ended up here. I was going to the library at night to study for the csc exams. Got bored, started googling…ended up at greaterfool. 8 months later: I have learned plenty, made many sarcastic remarks. And did zero studying for that exam.

#22 Gramps on 04.20.16 at 6:07 pm

Are there advisors who charge a % of gains
rather than a % of portfolio?
Your opinion? (I thought there was, in the range of
15-20% of profits)

You really want to give someone an incentive to gamble with your money? Only do that if they agree to share the losses. — Garth

#23 Alex Greene on 04.20.16 at 6:08 pm

“Nobody cares more about your health than you, either. So get a medical degree. — Garth”

Sorry, but that’s a terrible analogy. Learning to manage an index-based portfolio + tax optimized strategies requires grade 10 math skills (if that) and a few days of reading/learning. And you don’t need a medical degree to manage your health either unless you have a complicated condition.

I recommend canadiancouchpotato.com. Or, if you prefer books, The Millionaire Teacher by Andrew Hallam. You should be able to find it in your local library.

There’s no reason why you should be paying > 0.3% MER for your portfolio of index ETFs ($50K+). For smaller accounts, Tangerine Mutual Index Funds is a great alternative (about 1% MER).

#24 Rook on 04.20.16 at 6:14 pm

I’m wondering if anyone has any experience dealing with BMO investor line? I’m wondering if this is a good avenue to buy and trade etfs for someone in a similar situation to the person on Garths post. Is it as good as TD direct or Qtrade?

#25 powder_hound86 on 04.20.16 at 6:19 pm

Quest trade is great for small portfolios.

Any ETF purchase is commission free! Its very easy to start a low fee, low expense diversified ETF on quest trade.

No reason to shell out thousands for an investment advisor when its never been easier and cheaper to manage an investment account yourself.

#26 hope & ruin on 04.20.16 at 6:20 pm

anybody who has written the csc exam/course. did you found it useful, easy, hard?

#27 Potato on 04.20.16 at 6:22 pm

Here’s a reading guide for those who want to learn to go the DIY route.

#28 NoName on 04.20.16 at 6:24 pm

Matt if you dont know what are you doing index it.
Read this, bit older article but worth reading.

http://www.modernluxury.com/san-francisco/story/the-best-investment-advice-youll-never-get

#29 hope & ruin on 04.20.16 at 6:24 pm

I meant was it easy/hard for a regular person. Not one that says “did you found it”

#30 Alvina Knows on 04.20.16 at 6:36 pm

#13 Rook on 04.20.16 at 6:14 pm

BMO IL has met my needs for over a decade. This includes TFSA, RESP, RRSP and margin accounts that hold, at times, both C$ and US$ stocks, ETFs and cash. (I still can’t hold US cash in my TD Waterhouse full brokerage account, so if there is a plan to graduate from TD Direct to TDW, don’t do it.)

I have enough accounts and holdings to get 9.95 trades, but I think they have relaxed the rules and give this flat rate for any balance. YMMV.

#31 steerage steward on 04.20.16 at 6:38 pm

The for fee adviser is probably the best option.

If all you want is to save for retirement via a RRSP, a simple setup would be to calculate what you need to save using an online calculator (link to one below), and auto invest the money from your paycheck (plus any money you already have saved) into a broadly diversified index based target date fund provided by your employer. This makes saving and managing the investment automatic, and selects the best investment for the retail investor with low expenses. Most importantly it removes the potential for you to mess things up; just let it run and in 20-30 years retire.

Again a fee adviser can help with a lot more, taxes, budgeting, estate planning, etc.

Online retirement calculator: https://www.cibc.com/ca/retirement/article-tools/rrsp-calc-intro.html

#32 salonist on 04.20.16 at 6:47 pm

I keep snippets from mr turners posts

here is one

“NoOneOfConsequence on 02.04.16 at 2:36 am
I noticed a few comments about “HOW TO TRADE STOCKS IN TFSA”.

Ok – so here it is: detailed instructions.

1. Phone your bank and make an appointment to see an investment advisor: I chose TD, as at the time I got 20 trades free. RBC has another offering. Free trades are nice when starting small.
2. Go in and ask to setup a SELF DIRECTED BROKERAGE ACCOUNT, AS A TFSA. They will immediately know what to do. THERE IS NO COST TO THIS.
3. Say no to all the offers of money market and mutual fund pumping that will follow.
4. Sign the papers, setup a password.
5. Wait about a week for everything to clear and for you to get your account activated.
6. Put some money in the account. Use “new” money as it’s easier. NOTE: DO NOT TRANSFER $$$ FROM AN EXISTING TFSA!! If you do it wrong, you will take a double hit on contribution room. The bank can do it properly…but a fee will apply. You really need to avoid fees when starting out.
7. Log into TD web broker (or whatever), and familiarize yourself with the trading platform. The free one is fine for newbies.
8. Hopefully you book marked the Greaterfool articles so you can look up the ETF and preferred suggestions.
9. Place your order. (if you watch for a few days…you will see a trading cycle…buy at the time of day it’s the lowest…).
10. The stock goes into the account next day…or later, provided your bid is accepted. (on the banking platforms, you place a bid. But stocks move constantly…so you might pay a few cents more but never less than what you bid).
11. Dividends are deposited automatically directly into your brokerage account. (note – if you have stocks paying in USD (POT) you will take a hit on the exchange rate. there are ways to deal with this…but it’s beyond scope of blog 101).
12. Keep doing this every pay day. The key to investing is regularity…make it a habit.
13. Don’t listen to anything that Millenial Realist and all the other naysayers are spewing on this blog…it’s all crap and excuses for failure.
14. Don’t panic on down turns…look for opportunities.
15. Don’t look at your stock prices every day – always remember you are in this for the long haul.
16. In a year – look at your account, and how much you have saved. It makes you feel like you accomplished something.
17. Repeat steps starting at number 6.

Have fun, good investing.

Oh yeah…and rocks are less liquid than you think, plus they come with the highest fees in the world. I learned that the hard way.”

#33 Gramps on 04.20.16 at 6:49 pm

“Gamble with my money” is what the stock market is.
Imo. But there are safe bets and not so safe. What I really don’t want to do is pay someone 1% of 1/2 million and still be losing instead of making gains.

Investing is all about containing risk. Right now residential real estate poses more of it. — Garth

#34 crowdedelevatorfartz on 04.20.16 at 7:05 pm

@#2 Newish Garth Fan

Excellent questions.
Why not do both?
Sounds like you have tons of unused RRSP room….. soooo.
Slam some money into RRSP’s and then invest the tax refund into TFSA’s. It worked for me.
I have almost no unused RRSP room left and very little TFSA room left.
Oh, and talk to either an accountant or investment advisor.
Best money you’ll ever spend.

#35 In-Comparison on 04.20.16 at 7:07 pm

If you pay 1% directly to the advisor and 1% Mer on Funds = 2% Total or should it be 1% all in to manage approx. 400k portfolio. Thank you.

Embedded ETF fees should amount to no more than o.3%. Management fees are deductible on non-reg accounts. — Garth

#36 crowdedelevatorfartz on 04.20.16 at 7:09 pm

Just recieved “realtor porn” via the internet from the
Globe and Mail.
“House Flipping”……..
Kinda reminds me of when Justin Beiber was constantly in the news…..
When will it end?

#37 Blogbitch on 04.20.16 at 7:12 pm

Thank you, Garth, for this straight up advice. At some point, we were all where Matt is now. [email protected] will gladly take your money, and that’s a crying shame. I wish someone had been there for me to give me this kind of advice.

#38 Paulo on 04.20.16 at 7:13 pm

hi Garth love your blog have a interesting story for ya: as a result of your blog i have been able To get/convince a number of the gals whom waitress where i work to open and make weekly deposits to there own TFSA accounts been about a year and a half now they have maxed there amounts wow amazing. any way you could give me some advice that i could pass on to them on how to do some basic investing san’s fees so they could increase there winnings tax free?

#39 WalMark of Sadkatoon on 04.20.16 at 7:15 pm

Is this just jealousy on my part? Maybe. But the idea of directors getting $200k from each of several Board seats and deferring all income taxes on that for several years offends my particular sense of fairness.

if your looking for fairness your gonna have a bad time

#40 salonist on 04.20.16 at 7:15 pm

snippet two

“With fifty grand, Kelly should not be paying an advisor, not giving the bank fat mutual fund fees. She should not be trying to time investments that will stay in place for years, if not decades. And the first place she should invest is inside her TFSA, where all gains will remain free of tax.

The process is simple. Open an online brokerage account. Establish a TFSA and a non-registered (or ‘cash’) account. Transfer your funds. Do what I recommended in a post several weeks ago:

“So divide the TFSA money into five piles, putting equal amounts into ETFs (exchange-traded funds) that mirror (a) the S&P 500, (b) the TSX 60, (c) a basket of preferred shares, (d) real estate investment trusts and (e) a Canadian bond index. You can use iShares products, or Vanguard, BMO exchange-traded funds or others. But these five will give you safe (preferreds and bonds) as well as growth (equities and commercial real estate).”

For example, using iShares, you’d buy XIU (Canadian stocks), XSP (US stocks), XPF (preferreds), XRE (real estate trusts) and XSB (short bonds). As your funds grow, you can add lesser weightings in XEM (emerging markets) or XCS (small-cap Canadian companies). When you get to $150,000 or so, it makes sense to pay someone 1% to manage this growing nestegg, rebalancing it, giving you tax avoidance advice and gaining further diversification.

Of course, this is but an example. There are lots of other exchange-traded funds around, and they’re getting cheaper (even though costs are already a small fraction of what a mutual fund charges). There are also advisors who’ll take on a smaller portfolio, but the fees can be brutal. Besides, you don’t need one.

If you get the right asset allocation and – above all – stop reading damn financial blogs, you’ll soar.”

#41 Doug t on 04.20.16 at 7:17 pm

I shorted my shorts and now my wife won’t let me wear them out in public

#42 salonist on 04.20.16 at 7:18 pm

snippet three

“Regular, terminally bored readers will know I favour 40% safe stuff (a mix of government, corporate, high-yield and inflation-indexed bonds, plus preferred shares) and 60% in growth-oriented assets (some REITs, plus ETFs holding large and small companies in the US, Canada and internationally). The best way for most people to achieve all of this is through low-cost, highly-liquid ETFs (exchange-traded funds). For example, a single asset can deliver a massive amount of diversification (the ETF called XSP holds 500 of the largest US corps; XIU gives you the 60 biggest in Canada).”



#43 cto on 04.20.16 at 7:41 pm

Garth
After years of investing in mutual funds I realized that it had become more important for someone with knowledge to keep an eye on my nest egg as there is so much variability out there now.
I ended up with someone from scotia macleod.
I read you once mentioned that canadian banks want to invest in too much maple. Do you think they were an ok choice?

Depends on the choices made. — Garth

#44 Harbour on 04.20.16 at 7:44 pm

SELL in MAY and GO AWAY

#45 Shawn on 04.20.16 at 7:46 pm

The Problems With Shorts

#41 Doug t on 04.20.16 at 7:17 pm

I shorted my shorts and now my wife won’t let me wear them out in public

************************************
Shorted or Sharted?

#46 Cici on 04.20.16 at 7:47 pm

My only advice to Matt: don’t listen to Bram. (Individual stocks are too risky, especially for newbies with small portfolios, and $50,000 is small…but a great start.)

Also, I’d personally avoid the Tangerine funds; I went Questrade, and have been trying to integrate Garth’s advice with some of the Couch Potato advice. Am learning a lot (mostly through errors), and although I have not seen the big returns that some on this blog love to brag about, I’m doing better than my bank GICs, and having a lot of fun learning.

Oh, one more thing: if you are like me timing is your enemy (well, and laziness to)…so be good and do what Garth says…diversify right from the start (I didn’t, was trying to hunt for bargains, but this has cost me). If you are well-balanced from the get-go, you’ll be able to rebalance to take advantage of market opportunities.

But, hold on and wait for his advice, and once that initial amount crawls up to $150,000 or over, do yourself a favour and get off your butt and try to find a good fee-based advisor: someone who is honest and who understands the market and economy will probably make you more money than you’ll make on your own…and take care of all the rebalancing for you (and probably at a lower per-unit cost since they are buying in bulk, thereby skirting individual transaction fees).

#47 For those about to flop... on 04.20.16 at 7:47 pm

Boss , I was going to stop reading when I saw 250 dollars an hour for advice and then I saw” beating off xenophobes” and I knew I had to keep going…

M41BC

#48 Bram on 04.20.16 at 7:52 pm

#19
Those fees are set by the advisor, not the company. Nobody should pay more than 1%, as I stated. — Garth

Frankly, the whole concept of charging a percentage of principle, I find curious.
I was new to Canada in ’07 and was surprised to find that this is the norm in Canada.

If an advisor really is worth his fee, he should be able to charge a percentage of the gains.

If the advisor screws up, and there is capital loss, the client still ends up paying?
Is that fair?

If an advisor really thinks he is so good: charge 10% of the gains.
Portfolio does -10%? Advisor gets nothing.
Portfolio does +5%? Advisor get 0.5% of original principle.
Portfolio does +40%? Advisor gets 4% of original principle.

The fact that in Canada, no advisor does this, tells you something about their confidence of their own ability.

#9
Complete crap. — Garth

Really?

Bram

Really. Fee-based advisors are not the norm, but rather make up less than 5% of the industry. As for paying someone more if they take greater risks with your money, you are insane. — Garth

#49 Grey Dog on 04.20.16 at 8:00 pm

2. TFSA or RRSP or Mortgage
You need to also consider OAS clawback in the retirement years as you cash out RRSPS, since you have a decent pension.

Contribute both to mortgage and future investments doesn’t have to be one or other. Although today with interest rates being so low for mortgages, most are using spare cash for investments.

#50 Jules on 04.20.16 at 8:01 pm

Re the photo, my experience in business meetings is the male peacocks do all the bla bla bla ing.

#51 Greyhelm on 04.20.16 at 8:05 pm

Matt’s $50 Gs

Garth has disallowed me mentioning specific mutual funds in the past (although specific ETFs are mentioned here ALL the time), but someone has already mentioned Tangerine funds tonight, so perhaps fund companies are allowed.

There ARE low cost fund companies with long, successful track records. They usually keep their MERs low by not paying trailer fees, advertising, etc. Examples are Phillips, Hager & North (PHN), Steadyhand, Leith Wheeler, Beutal Goodman, and Mawer.

My wife’s entire RRSP is with the Balanced Fund of one of the above (which shall remain nameless). It has an MER of 0.93% and a minimum investment of 50K or under. Here is its track record (after fees) as of March 31;

1 yr 2% (2015 was 10.5%, bad winter I guess?)
3 yrs 11.8%
5 yrs 10.5%
10 yrs 7.4%

You can’t argue with those results. These people consistently beat the index in most fund categories.

You probably can’t get a personalised plan (I’ve never asked) but I have picked an advisor’s brain for 30 minutes or so.

A low-cost, high-performing balanced fund (they do the rebalancing) is a good alternative for beginners and even experienced investors.

#52 NotSoNewToETFs on 04.20.16 at 8:09 pm

I’ve been managing my own trading account for just over a year now. Best decision I’ve made. I’ve gained, I’ve lost, I’ve learned a lot and my fate is in my own hands. Scotia iTrade has 50 commission free ETFs, so you don’t even need to pay the $10 fee. Great for smaller portfolios. FIE (Canadian financials) pays regular dividends at about 7% annual at current price.

#53 Mr Crispy on 04.20.16 at 8:14 pm

Not to change the subject, but I just moved out of one of these two dumps in downtown Vancouver 5 months ago. If you think residential real estate is out of control here, check out what’s happening with commercial!

http://www.scmp.com/comment/blogs/article/1937267/stampede-inside-story-vancouvers-wildest-property-deal-gone-7200

#54 For those about to flop... on 04.20.16 at 8:21 pm

#7 BOOM! on 04.20.16 at 5:39 pm
Wow. Investing conditions vary quite a bit between the US and Canada.

Only an idiot would pay any mutual fund fee over .5% and the same goes for ETF’s. Oh yes, the ones with 2% or better, plus a 5% front end loans, and even what’s known as a 12b1 fee a “trailing commission” are on the market, but like I said, only an idiot would allow themselves to be directed there, or select one.

//////////////////////////

Boom, I have mutual funds….does this mean we can’t be blog buddies anymore?
When I started looking at what to do with my tfsa ,I thought I was going to get ETFs or get an adviser but what worked best for me at the moment is this.
When it grows to a decent number I will reassess,but this is doing fine.

I still have the bosses recommended percentages and when I go to the bank I tell them what I want and I see the same person and I told them no sales stuff just do as I say and nobody gets hurt.

I ask Garth if he can quarterly tell me what he is getting from a 60/40 and if I can stay close to that I call it a win.
Last year I broke even but I have a portfolio in Oz as well and it went up 7%.

Sure I am not getting rich but I am not gambling either.
I rode out the GFC without selling anything so I guess as well as stupid I am stubborn as well.

A lot of guys do everything for the whole family ,whereas my wife and I had stuff from before we were married and we add to this and make sure we don’t overlap too much.

I don’t like throwing away money,which some people view mers as but I have never worked for Enron either so I don’t consider myself to be the smartest guy in the room…

M41BC

#55 Bram on 04.20.16 at 8:27 pm

#22
You really want to give someone an incentive to gamble with your money? Only do that if they agree to share the losses. — Garth

Ok, excellent point. It would indeed encourage gambling.

I was wrong, I see now!
Sorry.

Percentage of gains would indeed make less sense than percentage of principle.

I still think diversification won’t matter for long term, though.
Time smooths out the ups and downs just as well as diversification does, if not more so.

Bram

#56 Toronto Dweller on 04.20.16 at 8:29 pm

This is why I love reading this blog, as some good advice was given.

#57 Quick question on 04.20.16 at 8:30 pm

Hi Garth and commenters-
If an 18 year old wants to open a TFSA comprised of ETFs and only has about $1000 to start with, are they limited to having to open an online account because they don’t have much money to start with? I was hoping to find a professional to help with the actual investing. Is starting with only $1000 just not enough to open a TFSA with ETFs? Thanks in advance.

#58 Give us this Blog our daily Garth on 04.20.16 at 8:42 pm

RE: [email protected] – The Nice Lady At The Bank

Yearly, I used to buy small amounts of registered term deposits (small out of pocket) to pay back my HBP Loan (Home Buyers Plan) from 2003. The returns were terrible, but I suppose I always knew it. Simple. Easy to understand. Zero risk for almost Zero return.

Have the banks no shame selling this crap to hard working folks who have very little money? And then, it gets loaned back out to the same but different people at 8%.

Regular folks don’t know this. They don’t teach you how to invest in High School.

BTW, the HBP I took out in 2003 was the luckiest thing I ever did right. Garth, I might tell you the story one day.

#59 In-Comparison on 04.20.16 at 8:46 pm

How do you distinguish between ETFs bought for yield ie CPD, ZPR yielding 5.5% approx vs an ETF purchased for capital appreciation ie XSP yeilding 1.83 %. And where would income funds come into the mix for example Enbridge Income Fund. Thank you.

#60 straight shooter on 04.20.16 at 8:48 pm

Probably the best advise is to get a subscription to magazine line Money Sense or CMS (Canadian Money Saver) and follow fellow investors advise.

They have plenty of model portfolio’s with more history to back them performance. I personally like beat the TSX portfolio. Pure blue chip stock and performance to match over 5, 10, 10 years.

No BS about MF/ETF, asset diversification, rebalancing OR “Balanced PotFolios” mumbo jumbo – they all end up lining someone else’s pockets at the end of day.

#61 Harbour on 04.20.16 at 8:55 pm

#57 Quick question

I opened a TFSA two years ago with $10 just to lower my monthly bank fee. It still has $10 in it.

#62 JSS on 04.20.16 at 8:57 pm

Anyone on this site buy ETF called FIE? Would this one etf work towards a balanced portfolio ?

#63 Franco on 04.20.16 at 8:57 pm

I am not sure why you knock IG so much?

#64 blobby on 04.20.16 at 8:58 pm

As someone who’s lost about $10k banking on the Canadian dollar dropping again (still cant decide to hold or cash out).. I think i’ll stick with someone else investing my money for me

#65 Scumop on 04.20.16 at 9:00 pm

One day found myself convinced to open a trading account and buy some ETFs (thanks Garth). I’m a little guy. The only advisor I can afford is the one in the mirror. So…

Spent a year making sure I could deal with losses, and that tumbling down the stairs look on the charts that keeps people awake at night. Much practice last summer and again at the start of this year. I learned I can do this w/o fear. This is core: no fear. Learn to re-bias your instinctive belief that a loss of $5 is twice as bad as a gain of $5 is good. No problem. Not a mathematical automaton, but doing ok.

Really traded almost nothing. Had bought diverse, held, watched until Feb 2016, then fixed a great deal. Did a lot of looking around. Discovered the near magical FIE (7+% of dividend spitting joy) quite late, buts thats part of the process. Discovered a lot of other things too. Some good, some bad. Some quite strange and unexpected.

In Feb, began a more formal education. Have watched some 20 videos on iTrade on technical analysis, options trading, regular trading, strategies, etc. These were about an hour each, but I would spend 2 to 3 hours with them, taking notes, checking things, reviewing, making sure I understood what I watched. Then many more hours of independent research and study.

Videos are deceptive. You think you have learned a lot but your retention is surprisingly low. You must walk the knowledge, or its a watch & forget experience.

Discovered a lot of legitimate stuff such as the easy to take Investopedia. And of course google finance, reuters, yahoo finance (charting currently broken), and others. Lots of self interested bloggers with buy-my-books (or worse – subscribe to my hot tips for $$$) sites pollute the space though.

Recently opened a practice account to see if I learned what I thought I did. Apparently so (but too short a time sample yet).

I spend a lot of time doing the research and being sure that I buy only for the most rational of reasons. And if something starts circling the drain, flush. This is taking about 4 hours a day currently. I am a thorough person on this sort of thing. I think you need to be, or you are going to be feeding me.

Have started using what I learned on the real money accounts. Cautiously. Looks good.

There’s some who say things like just buy a bunch of large caps and wait. Or whatever simplistic thing. You can get cheap index mutual fund or etf to do that for you. You will be better off getting the etfs/mfunds if looking for simple formulae. Picking stocks requires requires real effort. And you have to watch the things like a cat stalking a mouse. Large caps have been known fall very far, even expire worthless. Have you got the stomach (and stops) to dump your precious stock you invested so much money in, or will you chase it to the bottom certain that it will come back?

Garth advocates certain approaches for good reasons. I can diverge – now – because of many hours study and experimentation, and a commitment to daily maintenance and research without emotional attachment. If you can’t do that, you should not be investing on your own or you are just feeding the pot. Not that I mind you feeding *my* piece of the pot.

I developed software and embedded systems for 3 decades, so its also natural for me to be comfortable with complexity, detail, math, and continuous learning (kinda thrills me to solve deep technical problems). If you too can invest the time to dig deep, and find the trading/investing thing a pleasure to work in, go for it.

But if you think there is some magical or easy formula that will make you immune to risk, and eventually rich, walk away now.

Or at least go simple. Garth publishes and updates his recipes regularly. Learn how to implement them and you will be fine. Risk is minimized (but not absent entirely), you really can ignore the investments for months at a time, and long term end up with a decent sack of loot. You can also spend an hour or two a day on things other than stock market nerdery.

#66 John Spencer on 04.20.16 at 9:09 pm

Yeah this is the problem for investors like me who have less than 100K in assets. Right now I have everything with my bank but indeed the MER hovers around 2-3%. I have been looking at robo-advisors like WealthSimple and I may decide to try since the MER is more like 1%. I also found some “robo-planners” but I am quite skeptical. One Canadian site called Detego supposedly does free automated financial planning, but I did not dig much at this point. Please let me / us know if you have experience with so-called robo-advisors or robo-planners.

John from Vancouver

#67 understood by few on 04.20.16 at 9:11 pm

#57 Quick question
————
Go look it up. Each broker will be different. I’m pretty sure $1000 is the min for Questrade in a tfsa (and maybe 2k in an rrsp?). Anyhow, asking people here is silly. Go look it up for your broker if choice.

#68 Mark on 04.20.16 at 9:15 pm

“If an 18 year old wants to open a TFSA comprised of ETFs and only has about $1000 to start with, are they limited to having to open an online account because they don’t have much money to start with? I was hoping to find a professional to help with the actual investing. Is starting with only $1000 just not enough to open a TFSA with ETFs? Thanks in advance”

Some professionals (ie: Garth has mentioned that he does this with some clients) will take young people as clients either with a high future income potential, or because they are members of a family that has a significant amount of assets invested with them. Of course, if, a decade down the road, you only have contributed an additional 10 grand (or some low number like that), it wouldn’t surprise me if such an advisor either drops you as a client altogether, or relegates them to a minimal of professional service.

At some level, an advisor needs to be paid for his/her services, and cover off the cost of ‘compliance’ and various other back-end functions. I’ve read in trade publications that most clients under $50k in invested assets are an ongoing loss simply because of admin costs, and that it would be unprofessional if not unethical for an advisor to unduly raise his fees or ‘churn’ such accounts to generate additional fee revenue to cover those losses.

So basically, if you go to someone with that level of assets, you need to present to them a credible case that you’re going to be bringing more assets in the future. Either that, or just pay someone for a one-time consult on ETF strategies. Or as others here suggest, just read up on that Couch Potato Portfolio strategy and run with that for a while. Evaluating whether or not additional professional advice brings value to the table.

#69 Victor V on 04.20.16 at 9:19 pm

Anxious homebuyers in Toronto and Vancouver are rushing to close deals: survey

http://news.buzzbuzzhome.com/2016/04/anxious-homebuyers-toronto-vancouver-rushing-close-deals.html

#70 Harbour on 04.20.16 at 9:19 pm

#53 Mr Crispy on 04.20.16 at 8:14 pm

One way to keep the ponzi going is to keep raising the average price so the sheeple will continue to go into frenzy

#71 Nodebt on 04.20.16 at 9:21 pm

I can’t make any money investing it seems…. So I bought 3 slummy houses…Slummy #2 cost me and my little cousin 202k including propert transfer tax and lawyer fees. There’s a suite up stairs that pays 1300/month and basement suite pays 800/month they pay the gas & hydro. The house has new furnace, new roof, new hot water tank and both bathrooms had been renovated. It’s also a zoned duplex lot. We upgraded the electrical/4600, insulated the attic/1200 and cleaned out all the air ducts/240. So we’re in for 208k. We get just over 25k per year. I can’t see why we both can’t make 10k each on a 104k investment? So what’s better than that house? buying stocks, etfs, blow or booze? Tenant upstairs been there 6 years, tenant in basement 12 years, there going no where. Tim Hortons and beer store 3 min walk! If they move out I will get 2300-2400 month for both suites! Do I care if they move out? Not at all, it will be rented within 48 hours. So did I make a bad mistake buying this slummy? The funniest part is that I bought it with my little cousin and he hasn’t even been in it or seen it yet lol, he’s a world class athlete and knows big cuz knows a deal when he spots one! By the way it’s not far from lilooet! Hahaha

#72 BC_Doc on 04.20.16 at 9:27 pm

@Matt

I’m a Do It Yourself Investor. If I were to recommend one book to read, it’s by Jack Bogle– “The Little Book of Common Sense Investing.”

My kids are hard working adolescent and college aged kids. They work hard and have picked up on their parents’ saving habits. The three eldest asked me to help them get going with investing. I put them into a three fund portfolio. 60% equity, 40% fixed income. The three funds are by Vanguard:

VXC-T All World Except Canada Equity (40%)
VCN-T Canadian Equity (20%)
VAB-T Canada Aggregate Bond Index (40%)

I have them in RBC Direct Investment accounts. Cash dividends go into RBF-2010 which is an interest paying savings account.

I tell my kids, if anything ever happens to me, they will never go wrong with this type of investment account– I tell them to plan on saving at least 18% of their income year in and year out (after tax if it’s going into a TFSA, pre-tax if it’s going into an RRSP). Do this year in and year out, live within your means, stay married to your first spouse, and you’ll have a comfortable, hopefully early retirement.

Good luck!

P.S. Garth, do you work in a fiduciary capacity with your clients/sign a fiduciary agreement?

#73 Shortymac on 04.20.16 at 9:34 pm

I’ve been meaning to ask, for your investment firm:

1) What is the minimum amount to invest?
2) Will you deal with FATCA and other issues (I’m a US Citizen, Canada PR)?

Basically I have money sitting in old pensions that I haven’t transferred over because my understanding is pensions do not count during FATCA, but given the coming crisis I’m not sure what to do.

What crisis would that be? — Garth

#74 steerage steward on 04.20.16 at 9:41 pm

Canada has the highest MERs in the world. Best I can figure it’s because most people just buy what their bank tells them.

If you choose not to educate yourself some one will always be standing ready to take advantage of you.

#75 pwn3d on 04.20.16 at 9:49 pm

Mid April numbers are out, detached are up 17.7% in Toronto and 18.8% in GTA. That may be a good place to park some money. Other options include the exact opposite of anything Mark writes.

#76 pwn3d on 04.20.16 at 9:50 pm

Oh I forgot to mention 905 detached… only up 20.4%. Crazytown.

#77 Metaxa on 04.20.16 at 9:50 pm

For those just starting out and wanting or needing a bit of guidance beyond internet posts don’t discount the old investment houses like Dominion, Odlum, Wood Gundy, etc. Steeped in history, it seeps in today still…that privilege and honour of being of service to your fellow man as opposed to being a sales organization.

There are even some not owned by banks!

My kids skipped the bank/CU thing and went straight to Dundee (now Holliswealth) but here is the thing…they picked the guy (with my help).
I’d watched him for years…as an administrative type at another firm, community involvement, Chamber meetings, etc. Finally he made planner with the alphabet behind his name. Then his own Dundee office.

He was delighted to welcome my entry level spawn and he has done very well by them and any fees or commissions or whatever remuneration he takes is well earned.

Its not so much which firm you are with, its who is your advisor.

I have stuff with Dominion…not because I like that one over any other but because my lady is good….real good and for now she works out of Dominion’s offices. She has never even come close to offering me anything Royal and there is so much more each year than last that I really don’t care how much she remunerates herself.

I hope it is a lot so she can enjoy a life as fun and comfortable as I do.

I think its pitiful looking for the cheapest manner to handle your investments…pay the damn fee, go outside and plant some flowers, eat some peaches, you will be better off for it.

#78 Sheane Wallace on 04.20.16 at 10:02 pm

and the best investment would always be the house!

I bet that house prices will go up at least 20 % in To and Van from current valuations. And the CAD is getting stronger. Insanity? No, government largesse before the hiperinflation.

#79 Mark on 04.20.16 at 10:03 pm

“The house has new furnace, new roof, new hot water tank and both bathrooms had been renovated. It’s also a zoned duplex lot. We upgraded the electrical/4600, insulated the attic/1200 and cleaned out all the air ducts/240. So we’re in for 208k. We get just over 25k per year. I can’t see why we both can’t make 10k each on a 104k investment? So what’s better than that house? buying stocks, etfs, blow or booze?”

Certainly dramatically better metrics than in the big cities. 25k rent against a $208k investment meets the “rule of 100” (is actually preciously 100X monthly rent). So you should do okay having acquired the property at what is considered the maximum a residential landlord should acquire property for to ensure a competitive return. In the interests of portfolio diversification, however, you should add other asset classes as funds permit.

#80 Harbour on 04.20.16 at 10:04 pm

#71 Nodebt on 04.20.16 at 9:21 pm

Any one of these…

http://remax-lillooet.com/listings/index.php?cur_page=0&action=searchresults

#81 Min In Mission on 04.20.16 at 10:06 pm

I will be back for more reading tomorrow.

#82 Sheane Wallace on 04.20.16 at 10:08 pm

Just calculated that a (brick) house in Frankfurt, Germany, the financial heart of Europe is 3 times cheaper than a crappy card board particles house in Vaughan.
With the worst traffic in the world along Rutherford and HWY7/if lucky.

Free universities, much cheaper healthcare (than our ‘free’ one)

#83 BOOM! on 04.20.16 at 10:14 pm

#54 Flopper….

I too, have mutual Funds, ETF’s, individual stocks, can use options if so inclined, use both market and limit orders for buying, AND selling ETF’s and stocks.

MY comment, that here -in the U.S.- nobody need pay more than .5% per year in (mer) fund fees, and there are many funds that have fees of .05% and .10% around, I OWN some, is still a fair comment.

I do own an ETF with .5% annual fee which just happens to be the highest fee in my current portfolio, thanks.

What many people fail to take into account is the fact that fund fees, any front end “load” fees, any financial manager’s fees reduce your net available performance every year.

Paying 2.5% fees for an investing lifetime has cost you a significant portion of your portfolio. Paying 1% considrably less, paying .07% or 05% even less.

In the meantime, per Garth’s advice, I’ll be working on my medical degree.

“Brain surgery while U wait” will be available shortly. Just need to re-set the laser & microwave.

U get what U pay 4…. many times, even less

M64WI

#84 Shortymac on 04.20.16 at 10:32 pm

@Garth

I’m not sure what the pensions have invested in and how the housing and oil downturns and the Canadian debt crisis will affect the TSX, canadian mutual funds, etc.

#85 For those about to flop... on 04.20.16 at 10:36 pm

#46 Cici on 04.20.16 at 7:47 pm
My only advice to Matt: don’t listen to Bram. (Individual stocks are too risky, especially for newbies with small portfolios, and $50,000 is small…but a great start.)

Also, I’d personally avoid the Tangerine funds; I went Questrade, and have been trying to integrate Garth’s advice with some of the Couch Potato advice. Am learning a lot (mostly through errors), and although I have not seen the big returns that some on this blog love to brag about, I’m doing better than my bank GICs, and having a lot of fun learning.

Oh, one more thing: if you are like me timing is your enemy (well, and laziness to)…so be good and do what Garth says…diversify right from the start (I didn’t, was trying to hunt for bargains, but this has cost me). If you are well-balanced from the get-go, you’ll be able to rebalance to take advantage of market opportunities.

But, hold on and wait for his advice, and once that initial amount crawls up to $150,000 or over, do yourself a favour and get off your butt and try to find a good fee-based advisor: someone who is honest and who understands the market and economy will probably make you more money than you’ll make on your own…and take care of all the rebalancing for you (and probably at a lower per-unit cost since they are buying in bulk, thereby skirting individual transaction fees).

//////////////////////////////////

Hey Cici,just on your advice to diversify from the start.
Myself and another guy on here (MF) did this at the start of last year fully loaded our tfsa from the start and got burnt a little bit.
I did not want to procrastinate so I loaded up instead of buying on the dip, the money has to be there to build a base but it’s nice to get off on the right foot.
Anyway this year I bought CAD equity on the dip and the results are obviously better .
I just did 5k ….4 in large and mid cap and 1k in small cap and the results in the last 3 months.,.18 and 17.5 respectively.
I’m the last guy on here that should be giving financial advice but I would say if your late 20s early 30s take a year or so to build a base and work out what you want to do.
As of next year we will be allowed to have contributed 50k ,any person that age that has their tfsa maxed ,even if not fully invested is going to be doing better than most.
I make less than 40k a year, as does my wife but we don’t use it as an excuse not to try and save for retirement,which a lot of younger people do today…

M41BC

#86 Freedom First on 04.20.16 at 10:38 pm

May 15, 2014 “The Millennial Portfolio” (This Blog)

This may be for you. Don’t know much about you Matt, but this Portfolio is a good place to start. Stick with index ETF’s and you will be fine. Keep it simple

On a personal note. Stay single. Live with no one. Let every one else have kids. You enjoy your life. No charge.

Freedom First.

#87 Mark on 04.20.16 at 10:42 pm

“And the CAD is getting stronger. Insanity? No, government largesse before the hiperinflation.”

Adjusted to inflation, “Justin”s budget was no worse than Harper’s actual record deficit-wise. And as Canada’s housing market continues to slow down/fall, consumer demand should remain very soft putting a cap on prices and even inducing a mild amount of deflation.

Hyperinflation, at least in Canada, is not at all in the cards. The CAD$/USD$ pair is now within range for the BoC to seriously consider implementing another policy rate cut at the end of May to provide much needed stimulus of an otherwise very weak economy.

#88 RayofLight on 04.20.16 at 10:42 pm

I do my own investing. I use TD because the data you can get on the companies is good. The charting aspect to the TD broker site is not strong. For charting, I use TC2000. All the information I need to decide on a company I place on each chart. I use a standard format of my design to record the data on each chart. I use weekly candlesticks over a two year screen, and with the mean regression tool, project the plot 6 months into the future. This allows me to directly compare the performance of one chart to another. Over the past 3 years I have averaged north of 30% /year, not so much this year.

#89 Mike on 04.20.16 at 10:49 pm

I was in the same situation – not enough money ($65k), no time (2 young kids). Then I decided to follow the adive give for free here.

I opened a BMO investorline self directed RRSP account and invest in a balanced portfolio, all in ETFs. I opened it two months ago, it’s up 1.39%.

Here is my split:
Canada Fixed Income
VAB: 10%
XQB: 10%
Emerging Market
XEC: 5%
Int. Equity
XEF: 15%
US Equity
VUN: 20%
Can. Equity
XIC: 10%
VCN: 5%
Preferred Shares
ZPR: 20%
REIT
ZRE:5%

It’s very easy in fact, no need to pay a bearded dude to do it for you :)

I intend to rebalance every 3 months. Maple stuff have been treating me very nicely since I opened…

Hope this helps.

Mike

#90 Capt. Obvious on 04.20.16 at 11:03 pm

OMG. I read these comments and realize how clueless many people are. There is literally only one strategy, the one Garth repeatedly explains, that counts as investing. Most people seem to be speculating. Not the same thing.

Advice that includes tax planning is, just… I need a moment. So beautiful.

#91 Chris in Nanaimo on 04.20.16 at 11:10 pm

Canadian couch potato is a great place to start/learn. Their current model portfolios only consist of 3 Etf’s covering the entire planet. Rebalance a couple of times a year. Annualised gains of around 6-7% for their 60/40 portfoilo. Simple, easy, Can’t complain.

My online brokerage is Scotia iTrade. Happy with them so far.

#92 For those about to flop... on 04.20.16 at 11:19 pm

Hey Boom ,I just want you to know something.
Once you stated that yourself and your wife earnt 100kUs only once and the rest of your careers less, and have made a good fist of life and don’t want for anything.
Besides the fact that we get on ,I look up to you for that reason alone ,too many people use excuses for not looking after their future.
When I started on this blog I thought about what to do with my Tfsa and Garth gave me the same numbers and advice as he did on the blog today.
The fact is Garth is going to have to do this until he is 101 before I will have enough money for him to look after, and so he might never be my paid financial adviser I decided that he would probably be better served being my life coach instead.
I am a grown ass man ,but it’s nice to have someone guide you,reassure you ,explain things to you and have a laugh with…
Garth as my life coach and you Boom as a role model what could possibly go wrong…

M41BC

#93 Nobody on 04.20.16 at 11:43 pm

@14 – find a professional when the tax they will save you is greater than their fee.
That probably means when you have > $1M in non-registered accounts.

Don’t assume any professional adviser will do better returns than the market. If they could consistently beat the SP500 over decades, why are they working for you for a few $ in fees?

#94 Smoking Man on 04.21.16 at 12:04 am

Doing Vegas sobar is a ultered universe. My first time ever, booze won’t stay down. Wine tastes like vinagre. Hard shit makes me want to puke. Stuck with beer.

This chic approaches me on Flamingo Rd and Las Vegas Blvd. Sad story about her broken down 1970 impala. She’s got her 10 year old son with her who is embarrassed as hell. She’s looking for 12 bucks for a bus.

Probably a bull shit story, I give her a 50, I just had a stack of em. She gives me a big ass hug. She said she asked 200 people for help. Not one would.

I said. I’M Canadian…..

The kid shock my hand…. I believe them…

Being sobar sucks.. but the shit you see is incredibly intense.

Oh she asked for a smoke. I was smoking. I said I quit I bummed this one. An other hug….. your beautiful she said.

I thought you should have seen me before the fever when I had an extra 30 lbs..

I’m grossly thin now…been eating Starbuck bananas all week. Just a buck.

#95 Whinepegger on 04.21.16 at 12:14 am

For those unwilling to learn or just wanting someone else to manage their funds for a relatively low MER, check out the Saskatchewan Pension Plan.

Eligible to all Canadians
MER of approx 1%
8.1 % avg return over the last 30 years
RRSP eligible

I do believe there is a max contribution of $2,500 year, with the ability to transfer up to $10,00 year from an RRSP.

https://www.saskpension.com/site-map.php

#96 NAME on 04.21.16 at 12:47 am

Need any other comment?
Desperate Chinese Investors Flood US, Canadian Housing Markets, But Real Numbers Are Taboo.
In Vancouver, 33% of sales are to Chinese investors (National Bank)
Buying a home in the US or Canada has been an effective way for foreign residents to launder some money and get their wealth out of harm’s way. In the trophy markets on the US West Coast and in the Canadian cities of Vancouver and Toronto, rumors of a massive influx of Chinese money have swirled with growing intensity for years.

#97 Mark on 04.21.16 at 12:51 am

In a similar situation as the individual in the blog article, but fortunately a little birdie helped me out in terms of choosing 5 simple ETFs:

XSP – follows the S&P 500
XRE – S&P/TsX Capped REIT
CPD – S&P/TSX CDN preferred shares
XIU – S&P/TSX 60 Index

XSP – Canadian Short Term Bonds

In less than a month, my portfolio is up 1.4%

#98 No debt on 04.21.16 at 1:43 am

#79 mark – thanks dude
#80 Harbour – none of those at all – 150 Kms as the crow flys
Once slummy #1 is finished and up and running it will be one money making machine! 500k investment it’s gonna spit out 6-8k month
Slummys rule! My cousin is a slumlord and I’m proud of the little prick to convince me to buy these slummys! I love you cousin!

#99 OffshoreObserver on 04.21.16 at 2:05 am

===================================
#8 BOOM! on 04.20.16 at 5:40 pm
part 2…

…who will care more about the outcome of my investing more than me.

So, I learned to do it myself. Mostly, I get it right.

Nobody cares more about your health than you, either. So get a medical degree. — Garth
=====================================

Garth: A Medical Degree does not guarantee squat. There are countless “credentialed” charlatans.

#100 Mark on 04.21.16 at 2:50 am

“Complete crap. — Garth

Really?

I think Garth was attacking the idea that a portfolio of 10 securities was adequately diversified. It is not. A portfolio of 10 securities is susceptible to an excess amount of volatility. Chances are, those 10 securities may be selected based on correlated factors (such as prior success), rather than true sector and national diversification. There’s just so many things that could go wrong, and so many biases that end up in such small portfolios constructed by novices that even if they do end up outperforming (which is rather statistically unlikely) the index, the amount of risk taken is excessive relative to the return (ie: poor Sharpe ratio).

Even that famous investor from Omaha, while he has managed to outperform, can attribute a lot of his outperformance to picking basically two winning sectors of the US economy, and that of picking the US at all as a place to invest. Namely, the financial sector which has spent the past ~35 years in a bull market. And the consumer consumption sector. Which has also been in a long-term bull market. His dogma, of avoiding capex-intense investments, will, at some point, fail him or his disciples. I don’t know when, and I’m not if he’ll be alive to see it, but such dogmatically driven investment strategies, just like excessive personal wealth, rarely last forever.

#101 Big Sal on 04.21.16 at 5:19 am

All stocks all the time, go where the money is. With Trudeau Liberal hyperinflation raging along at 20% p/a you have to do better that 5% p/a.

#102 Weedeater on 04.21.16 at 6:14 am

Oh my. Run, don’t walk to the book store or library for Millionaire Teacher. Open either a TD Waterhouse self directed TFSA brokerage account or Mutual Fund account and stuff it with eSeries index funds. These can only be held at TD. You can also buy bank index mutual funds at other banks but the MERs are higher. I’ve compared the returns & MERs on the most common ETFs and bank index mutual funds and come to the conclusion this is best way for an investor to go. Remember to rebalance every year and don’t touch it. If you’re young you have the biggest factor on your side for great returns: time.

#103 Ace Goodheart on 04.21.16 at 6:50 am

What I’ve learned, and what people who find themselves in the position of actually having extra money to invest, will learn, is that the world is set up for rich folks.

Our ultra wealthy earn their incomes from capital gains, dividends and non-cash benefits and options.

These people control government (every five years or so we get to vote for another one of their children).

Their incomes are taxed much less than the income of a working person.

So you will find that dividend income, capital gain income and non cash option and benefit income, is cheaper to earn, than is income derived from a salary. For example, earning $80,000 per year by working, costs more in tax, than earning $80,000 per year in dividends. This is set up so that the wealthy pay less tax than the middle class, and it is set up this way because the wealthy control our governments (and always will control them).

Our society is set up to prevent you and I from earning income through dividends, capital gains and the like. It is set up in a way to force the “middle class” to work for 25-30 year periods, full time, in order to pay off “debt”. These people have no investments because they have no extra money at the end of the month.

Once a person realizes this, it is very possible to do something about it. The most important thing to do is get rid of all your debt, as soon as you can. When you do that, you find that you have a lot of extra money.

Next step is to invest the extra. We have then yet another tool of the wealthy, used to keep the middle class poor, and this is known as the investment industry. They will tell you it is impossible for you to invest your own money, you will lose money if you try and you should just give your money to them. They are of course wrong.

When you are investing, you are doing the same thing that the wealthy do, and that is venture capitalism. You are putting cash behind good businesses and ventures, and you are making your money off of the dividends and profits and capital gains of these businesses and ventures. And you are paying less tax on this enterprise, than someone who works for someone else for a salary (of course you are, you are the owner of the business, that is paying the person the salary, obviously you want your employee to pay more tax than you do, you are wealthy after all – why level the playing field when you control the government?).

If you cannot beat the wealthy (and you can’t), join them. As soon as possible. Because life as a middle class mortgage slave is really hard and really sucks.

The tax system encourages people to risk capital, because without that activity there would be a far smaller middle class. — Garth

#104 Cottingham a bargain on 04.21.16 at 6:51 am

#19 ed on 04.20.16 at 5:56 pm
Most advisors, including RJ, charge 1% after a portfolio reaches 500,000. Until then you are looking at 1.7% with about 150,000. What are your thresholds Garth?

Those fees are set by the advisor, not the company. Nobody should pay more than 1%, as I stated. — Garth
——

I am surprised that no one has asked the following question??!

Why would someone pay , say the 1% on a 3 million dollar portfolio , or 30 grand over someone with a 1 million dollar portfolio , or 10 grand ?

Please don’t tell me it is three times the work for the planner.

Wouldn’t be surprised at all if you delete this Garth but financially well to do people like me (all from real estate) have caught on.

Does the realtor commission level fall by half when the property you are selling costs less? Actually the more money an advisor has to manage in a single portfolio, the more complex the client’s needs usually are – tax and estate planning, avoidance strategies, retirement and business integration plans, portfolio rebalancing and so on. But, feel free to be cheap and see how that works out for ya. — Garth

#105 fancy_pants on 04.21.16 at 7:41 am

how do you save for a down payment on moving targets – targets that keep moving up faster than you can stuff your piggy bank? Answer, you don’t, hence the sell your kids, your soul and all reasoning. buy now or forever be priced out mentality rages on.

http://www.theglobeandmail.com/report-on-business/top-business-stories/saving-for-a-home-down-payment-a-struggle-in-toronto-and-forget-about-vancouver/article29704915/

#106 Mike in Toronto on 04.21.16 at 7:53 am

#97

Hold CPD long. I’m up 20% in the past 12 months!

Oh wait, I mean “down”

Waiting for somebody to explain why Preferreds were never a good idea afterall. I guess it’ll be the same people talking about their strategies to make money in a rising market.

#107 Greatest Foul on 04.21.16 at 7:56 am

I have been with WealthSimple for a year now. MER is .5%. Going down to .4% once I build the pile to 240k

#108 CFP on 04.21.16 at 8:22 am

Comments on this post are exactly why people need advisors. So much mis-information. It’s scary.

Be careful what you wish for! No fees equal no advice.

#109 fancy_pants on 04.21.16 at 8:31 am

ps. your picture of the day happen to be coincidence?
http://www.foxnews.com/us/2016/04/20/target-use-bathroom-your-gender-identity.html

#110 fancy_pants on 04.21.16 at 8:33 am

and is it ironic that the store is called “Target”?

#111 MF on 04.21.16 at 8:34 am

#10 robo man on 04.20.16 at 5:41 pm
#89 Mike on 04.20.16 at 10:49 pm

Yes you are doing the right thing but sorry to break it to you but that’s just lucky market timing. Had you started the same time as I did last year, you would already be down in the red and headed a lot lower over the months ahead. It’s easy to think of yourself as an “investor” when you are in the positive but get ready for when the market tanks and your numbers go down with no end in sight.

advice:

-Keep your bonds and safe stuff since the market WILL tank and you will need them. Ignore the BS above about all stocks. You 100% won’t have the guts to watch your money go down by half and “wait” for it recover no matter what you say to prepare yourself.
-Don’t complain to Garth here like everyone else does when the numbers go down. You can vent like I do but don’t blame him and say you should have bought a crap condo instead.
-When everyone is pessimistic and believes the system is about to implode..go against your gut and buy more or rebalance. It’s hard to do and you won’t do it like I couldn’t, but try pretending you are a robot sent from planet Nectonite to buy equities from the struggling humans if it helps.

#15 bill on 04.20.16 at 5:48 pm

I’m still down about %7-8 on CPD from when I took the plunge in April of last year. I wish I never touched it (yes I know the yield will help over time). I regret it.

#85 For those about to flop… on 04.20.16 at 10:36 pm

Solid advice as usual. I agree and urge people not to go all in and to leave some powder in the keg for the inevitable hickups. Flop and I learned this the hard way so take it from us.

MF

#112 Matt on 04.21.16 at 8:57 am

Garth,

You should endorse Primerica. A superb ethical company who teaches financial independence.

#113 Cottingham a bargain on 04.21.16 at 9:08 am

Garths response to me at #104.

I totally agree with you that a realtors commission shouldn’t double just because the same property value has doubled over past number of years. That’s why I negotiate all those realtor (vulture)fees down when buying or selling property.

I’m not much of a financial asset investor so being cheap doesn’t apply here but if I was you bet I would be watching my costs.

Anyhow, I still don’t believe that the increased complexity in the financial planning of a million dollar account verses a 3 mill account warrants a tripling of fees either.

Just my cheap 2 cents

#114 TurnerNation on 04.21.16 at 9:15 am

TC2000, Wood Gundy, Dominion? What decade are we in?
Charting. ..only two things matter: Price and volume. I use unadorned bar charts at Stockwatch.com
No paralysis by analysis.

#115 Mike in Toronto on 04.21.16 at 9:19 am

#108

“Be careful what you wish for! No fees equal no advice.”

People have realized that there’s money to be made in taking fees for advice with no guarantee of performance.

So while it’s true that “no fees equal no advice”, it’s not true that “fees equal advice”

#116 Yanniel on 04.21.16 at 9:21 am

For God’s sake Matt, do it your self. Just Google a little bit and put together a portfolio. It is really not that hard.

I started mine last December and wrote about it in my blog:

http://www.yanniel.info/2015/12/ETF-balanced-portfolio-for-canadians.html

Hope it helps.

Yanniel.

#117 Bottoms_Up on 04.21.16 at 9:50 am

#57 Quick question on 04.20.16 at 8:30 pm
———————————-
You can open an account, but you might be charged quarterly ‘inactivity’ fees if you’re not making one trade per quarter. I believe Questrade waives this fee once you have $5000. So it might be better to save up $5000 first before opening a TFSA trading account.

#118 Bottoms_Up on 04.21.16 at 9:53 am

#61 Harbour on 04.20.16 at 8:55 pm
———————-
That’s not a TFSA trading account. That’s $10 sitting in a cash account earning 0.00001% interest. Apples and oranges.

#119 Xray Raver on 04.21.16 at 10:21 am

Corruption money flooding out of China

Capital outflows from China are a growing phenomenon driven by the nation’s anti-corruption campaign, which makes people nervous and spurs them to pull money out, Soros said. While China’s reserves swelled by $10.3 billion in March to $3.21 trillion, they’re down by $517 billion from a year earlier.

“There is a definite urge for people to diversify, to get your wealth out,” said Soros.

One must assume that many of the hundreds of thousands of houses that have been blacked out, schools decimated and businesses wrecked through lack of trade may have some commonality?

http://business.financialpost.com/news/economy/chinas-debt-fueled-economy-eerily-echoes-u-s-on-brink-of-2008-crisis-george-soros-warns

#120 robert james on 04.21.16 at 10:26 am

If Soros is right, this may be the event that ends the real estate bubble in Van.. http://business.financialpost.com/news/economy/chinas-debt-fueled-economy-eerily-echoes-u-s-on-brink-of-2008-crisis-george-soros-warns

#121 Noel on 04.21.16 at 10:36 am

Why they don’t teach investing and how to do your taxes in high school is beyond me.

I saw a good joke. “Good thing they taught me about parallelograms in school instead of how to do my taxes, its really going to help me out this parallelogram season”.

#122 Cottingham a bargain on 04.21.16 at 10:37 am

Just wanted to add Garth , although I am not much of a participant in financial market investing , I have nothing particularly against it.

It’s just that every wealthy guy I know has created their wealth through real estate. Never met anyone who did it in the stock market.

Also, most of the wealthy people I hang with aren’t as particularly sophisticated and educated as say a guy like you is. Neither am I actually.

What I find most interesting about real estate is how much simpler the process of investing in it is and how much more control you have over your success, verses being subject to the external events , out of our control ,that so often rock the financial asset world negatively .

Just a simple perspective . Nothing more

#123 Noel on 04.21.16 at 10:39 am

#26 hope & ruin on 04.20.16 at 6:20 pm
anybody who has written the csc exam/course. did you found it useful, easy, hard?

___________________

Easy, not useful. In my mind its a cash grab. Some other CSI courses are much better though – if you’re going to do the CSC, do a few others as well.

#124 dodgedbullet on 04.21.16 at 11:24 am

#106 Mike in Toronto

I’m in with CPD too, have losses on cost, but am making money with dividends… buying more of the stock with a DRIP.

Part of a selection of ETFs, some performing well (QQQ up 50% since I bought it) some not doing so well… like CPD.

Best of endeavors to you.

#125 Shawn on 04.21.16 at 11:34 am

Tax the Working Class?

The tax system encourages people to risk capital, because without that activity there would be a far smaller middle class. — Garth (at 103)

**********************************
There is some truth to that.

On the other hand it is not a coincidence that the tax rules, made by politicians (wealthier than average) favors the wealthy.

Is it really true that people would not save and invest without tax advantages on the profits?

Would people stop saving for retirement is there was no tax break?

What level of tax break is best? Have we gone too far?

What investments, exactly, do we need to encourage in Canada? Investments in more shopping centers and office towers (REITs)? Really? More car dealerships? More restaurants? More Hotels? More condos? All those things get the same tax advantageous for investors as do investments in manufacturing.

Do we need to encourage more investments in the supply-flooded energy industry?

How about we stop trying to have the government decide the investment level through the tax system.

Profitable endeavors should be able to find investors without tax advantages to the investors.

I think the working and lower middle class knows very well they are disadvantaged in taxes compared to the investor class.

Never ask the barber if you need a haircut. And never ask an investment manager if more tax breaks are needed for investors.

Signed, An investor.

#126 understood by few on 04.21.16 at 11:54 am

#103 Ace Goodheart on 04.21.16 at 6:50 am

For example, earning $80,000 per year by working, costs more in tax, than earning $80,000 per year in dividends. This is set up so that the wealthy pay less tax than the middle class, and it is set up this way because the wealthy control our governments (and always will control them).

—————

Nope. It is set up this way because taxes have already been paid on dividends. Our tax system tries to eliminate double taxation. Investors receiving dividends get a tax credits to reflect the tax paid at the corporate level, however the current credit does not fully eliminate double taxation (i.e. it could go further to be considered “fair”).

Your wage was not taxed at a corporate level (it is an expense) so it is taxed fully at a personal level.

Capital gains is different. I’d agree that the taxation around it is primarily to encourage investment. And that makes sense. If you taxed it like interest, then why would anyone choose risky growth investments over interest paying investments?

#127 raj on 04.21.16 at 11:55 am

Follow Warren Buffet advice

Step 1: “Start by reading book from Jack Bogle (Founder of Vanguard) “Little Book of Common Sense Investing”

Step2: Buy S&P 500 low cost index ETF. Vanguard could be good.

Step 3: Never sell, Never buy stock, don’t time to market.

I know talk about diversity. S&P 500 has income from all over the globe. Besides TOP 500 US companies are well diversified and know how to take care of themselves. Avg S&P 500 return is over 7% in the long run. I am not smart enough to buy 5 ETF and re-balance them. I tried.

my entire portfolio is made up of VFV.TO or VSP.TO which ever makes sense to you.

Get some tax advice. Best way to do it is to call CRA “its free lunch” eat their head till you are satisfied.

last but not the least “Visit Garth’s blog regularly” He is crazy (Sorry Garth) and will keep you in check and occasionally bite you in behind.

#128 Peter on 04.21.16 at 12:24 pm

Please define. [email protected]

#129 Peter on 04.21.16 at 12:25 pm

Typo. [email protected]

#130 BOOM! on 04.21.16 at 12:32 pm

#92 Flopper…

Me, as a role model? I’m flattered, but Flooper… aim HIGHER. I probably match more as a guy in a criminal line-up, than any role model.

As we say here when we lose control driving down an icy winter road, “here hold my beer, and watch this shit”…

Yes, married now for almost 42 years to same Miss Wonderful. We only once managed to hit 100K combined income. When we started saving / investing with a purpose & direction it was 1987. That year, our combined income maybe was $25-26 Grand? Not a thriller number!
It went up from there, not too fast either. It was my 2nd to the last year of work that we hit that magic number.

What we got was tight on spending for dumb consumer stuff. Shopped HARD for things like insurances, dropped whole life, for 20 year term policies that cost less than half as much but provide 10 times the coverage, figuring by the end of 20 years we could pay for burying each other, just by saving & investing the difference. Worked out that way, too.

Instead of buying a new car every 2-3 years, went with used cars kept the same length, or more. (I drove 50,000 miles+ a year back then). Killed off car payments a LONG time ago!

Best of all, we started putting away 10, then 12, then 15% of our gross earnings in our employers 401-K plans (your RRSP ideas). Took the tax deduction. When we had a ROTH (your TFSA) we tried to put after-tax money in there. We didn’t do as well the first few years, kid, bills, life gets in the way…you know how that goes.., but soon we were able to put $5,000 or 6,500 after age 50 max here into the tax free stuff, as well as do the 401-K.

No, it wasn’t perfect, we made errors, we didn’t get everything “perfect” who does?

I had a couple of health scares, coming within croaking off twice once at 44 and once at 58. Wife had a bout with cancer. We took a look and said: what are we doing?

Then I decided to retire at 60, she at 62. No debts by then, and $550k in investments. Use mostly Garth’s balanced approach, but I do use some individual dividend stocks -minority portion!!

Thought we can live on my small pension, social security, and earnings from investments. Remember, I handle the investments, too. With good wife’s suggestions she is no idiot. We make joint decisions, no bitching allowed!!

Well, I have now been retired 5 years, wife 2. Investments total $748K currently, and the plan thus far has been OK. No complaints, it still isn’t ‘perfect’ as nothing ever is, but close enough to smile.

Your mileages will vary.

#131 Gramps on 04.21.16 at 1:05 pm

Really?

Bram

Really. Fee-based advisors are not the norm, but rather make up less than 5% of the industry. As for paying someone more if they take greater risks with your money, you are insane. — Garth

Paying someone a flat rate of portfolio seems more insane to me than paying a percentage of gains made.
The gamble with my money could happen either way, but one way he makes nothing.
If he is providing more than stock advice, say tax advice,
then % of portfolio makes more sense.

What else would a full-service advisor do? — Garth

#132 Dan S on 04.21.16 at 1:19 pm

I know its a bit out of your regular topic but could you help explain how gas prices seem to move around with no understanding and why the price of a barrel dropped by 60% but the consumer only sees a drop of 30% at the pumps?

#133 Noel on 04.21.16 at 1:54 pm

#132 Dan S on 04.21.16 at 1:19 pm
I know its a bit out of your regular topic but could you help explain how gas prices seem to move around with no understanding and why the price of a barrel dropped by 60% but the consumer only sees a drop of 30% at the pumps?
__________________

Gas stations in Canada pay in US$ to buy refined gasoline from the US, Houston, Louisiana etc. so the exchange rate will have a big effect.

Also the cost of getting refined gas to Canada fluxuates, transportation costs, refining costs, logistics providers are constantly changing.

Gas stations also charge the highest price they can get away with. In areas where there are more pumps, lower prices. Less pumps, higher prices.

The fixed costs (taxes) of gasoline are very high, so even if you do see a 60% drop in crude, it won’t come close to being passed through into retail gasoline prices even after all the above is factored in.

#134 Ponzius Pilatus on 04.21.16 at 1:58 pm

What else would a full-service advisor do? — Garth
————————–
My full-service advisor at the KIA dealership always advises me to get the full-service deal.

#135 Ponzius Pilatus on 04.21.16 at 2:00 pm

Why would anyone pay for investment advise when you can get it free from your dog walker?

#136 NoName on 04.21.16 at 2:12 pm

@MF
Hard way !? pft…

So the story goes like this, when my 1st child was born some lady gave us some “free” diapers for our new born daughter and handed us some resp pamphlet, and few weeks later sold us resp with 2.75% mer and 3500$ upfront fee. In my defence when that sale happend I was only 4yrs in canada, my English vocabulary at the time was maybe 1000-1500 words on a good day, and didnt now much back then.

So in 2007 when I got to my senses and realized first two years of contributions went for “refundable” fee, something clicked in and I clue in that I was being royaly *[email protected]&%#. So I made a desition to move it out regardless of cost.

I remember phone conversation and “them” telling me not to do that because I’ll lose 3500, referring to same 3500 that they already took. I just told them I’ll rather pay someone else more to lose it all, than to say with them and hung up.

So fast forward to 2008 market was melting and I am looking at my daughter’s resp portfolio that I “managed” since some time in 2007. Basicly in acc. was some small cash position 1500 or around that number and rest was in FIE (i remember around that time they cut dividends form 5.5c to 4c it was just free fall). I was looking at it one day I can see close to 60% loss on 90% of the assets. To make things more interesting same day during a dinner my wife asked me how is money doing, at first I didn’t know what to say, than I sad “everione is losing money now days, but on a bright note she’ll have enough for bass pass”, wife put her eyes in a laser mode and replyed “good, not everything is gone…, can you fix it?” so i did. luck or not…

100% tru story

#137 Ace Goodheart on 04.21.16 at 2:17 pm

RE: #126 Understood by few: agreed with this somewhat, however there are things that can be done at the corporate level to reduce tax payable prior to dividends being issued, so the result is the same. Study tax law and you’ll learn a lot about what can actually be done.

Also there are these wonderful things called “REITS” which pay no tax and distribute all of their earnings to the trust unit holders. You really need to look at these things and get some. They are very useful vehicles for putting your money to work for you. Every cent is working hard, 24 hours per day, while you relax.

Bottom line is, the best advice that can be given to someone who wants to get ahead, stop full time work and have an income coming from money they have, is get your money working for you. Money which is working full time, is taxed less than a person who is working full time. For whatever reasons. It doesn’t matter.

The way most people live their lives is frankly nuts. Huge mortgages, credit card debt, loans, equity “lines of credit”, and on and on and on. They are feeding a system. The system is run by the Velociraptors of our Society, and these people only understand one language and they only relate to their surroundings in one way.

If you have a lot of debt, you are feeding these people.

#138 BOOM! on 04.21.16 at 2:18 pm

I am a huge fan of INDEX funds.

I have used an S&P 500 index fund since 1987. It has gone up, and down with some regularity, then always recovered to a NEW high. (Look at a chart going back to the beginning of this index if in doubt).

There are LOTS of other indexes, both bond and stock types. You can buy as an ETF or Fund.

I have used the S&P 500, total stock market, international, total Bond, all INDEXES among others (ETF or fund).

They don’t always out perform managed funds of the same type, but their track records show they do often enough to make them worthy.

I have used, and still use some managed funds based on my investment objective.

There is NO track record to show any one “type” is best for ALL investing objectives that I have ever seen.

That said, there is ample evidence to indicate an INDEX fund outperforms managed funds in any number of investment objectives-but not ALL. (factoring in costs)

Clear as mud? No, VERY clear., READ the history.

Know what your objective is…
Know what % you are allocating for each objective…
Know your investment “costs” before you invest
Invest, Do NOT let emotions control your future actions!
Feed Investments as Scheduled…weekly, monthly, etc.

Remove when fully “baked”., live happily thereafter.

There. Simple.

#139 Hurtin' Albertan on 04.21.16 at 2:21 pm

Condo investors hurting in Oilberta:

http://www.cbc.ca/news/canada/calgary/condos-rental-glut-money-pits-economy-downturn-1.3545202

#140 bill on 04.21.16 at 2:24 pm

#111 MF on 04.21.16 at 8:34 am
yeah I am down a bit as well [8%]
not complaining at all as Garth has pointed out they pay you to hold it and I am still buying ..along with other etfs and preferreds . digital realty seems like an interesting business…

#141 Mike on 04.21.16 at 2:25 pm

All,

I have used every type of advisor over the last 20 years, and truthfully the true test is not when everything is doing well but rather in the downturn. They always call asking you to invest when times are good and they show you fancy graphs with gains vs market blah blah blah, the problem is when times are rough and the fancy graphs don’t show gains but rather losses they are quick to hide.

The key to balance in your portfolio is a good mix of real estate, stocks (pick 10 solid companies in 3 sectors and easily liquid assets. Quit running up your personal debt with buying crap you don’t need and stop making things too complicated. All these investment gurus make there money by making this stuff seem so hard.

#142 bill on 04.21.16 at 2:26 pm

peter
it means ‘the nice lady at the bank’…
recently one of the dogs posted his/her list of acronyms and FAQ’S.
I will see if I can find it.

#143 TCContrarian on 04.21.16 at 2:30 pm

8 BOOM! on 04.20.16 at 5:40 pm
part 2…

…who will care more about the outcome of my investing more than me.

So, I learned to do it myself. Mostly, I get it right.
********************************************
Nobody cares more about your health than you, either. So get a medical degree. — Garth

—————————————————————-

Why the sarcasm against people who can manage for themselves, Garth?

We don’t all need your financial services Garth, but that doesn’t mean we don’t appreciate a healthy debate on issues, whether in agreement or not.

Just sayin’…

Speaking for myself, I spend more time educating myself in investments in a week than most people spend in a year – so why should I not be more capable than the average ‘Joe’?
Ditto for 8 BOOM.

Oh, and about ‘health’, most of the medical training revolves around management of the sick, not improving ‘health’.
I haven’t seen a doctor in 25 years (other than to get x-rays for potential fracture form sports injuries)!

#144 Shawn on 04.21.16 at 3:02 pm

Gasoline Prices

#132 Dan S on 04.21.16 at 1:19 pm
I know its a bit out of your regular topic but could you help explain how gas prices seem to move around with no understanding and why the price of a barrel dropped by 60% but the consumer only sees a drop of 30% at the pumps?

*******************************************
Could it be that the cost of crude makes up less than half the final all-taxes-in cost of gasoline at the pump? Why yes it could.

#145 Shawn on 04.21.16 at 3:06 pm

Do It Yourself Investing

Why the sarcasm against people who can manage for themselves, Garth?

*******************************************
Never ask the barber if you should buy the equipment and have your wife cut your hair.

It may not be wise to have an amateur cut your hair, but don’t expected an unbiased answer from a barber.

And, never ask a realtor if you should do a sale by owner.

Look, different strokes for different folks. Blanket condemnation of different approaches is not appropriate.

#146 Michelle on 04.21.16 at 3:14 pm

Matt, pick up a copy of “The Moneysense Guide to the Perfect Portfolio.” It is a fast read and will walk you through everything you need to set up a low-fee portfolio that is super easy to manage. The TD e-series funds would likely work well for a portfolio of your size.

#147 Experience on 04.21.16 at 3:23 pm

Who needs an advisor when all the information I’ve ever needed is right here in this chat.

As an investor for 50 years, true value of advisor/funds/diversification is when markets tank. Retail ppl will run for the hills and crystallize loses. Experience will leave ppl invested.

Sounds easy. It’s not. It’s the hardest when on your own.

Good luck to this next generation. “DIY”

If you think a pro is expensive, wait till you see how much a DIY will cost

#148 salonist on 04.21.16 at 3:37 pm

harper skewered

#149 millionareinretrospectiveinvesting on 04.21.16 at 3:44 pm

I just 18 months ago began playing with a small bit of money. As a 36 y/o with a grandfathered golden pension my biggest regret is not taking more risk and following my gut more.

BBD.B @ 0.77 — Could have doubled my pot if I’d been brave enough to risk it all.

To each his own; there is no “wrong” answer.

Just take responsibility for your every decision and learn as you go.

#150 pavlo on 04.21.16 at 3:47 pm

Imagine that they just acquited Mike Duffy how about that eh back to full pay is that retroactive from a year ago.

#151 WalMark of Sadkatoon on 04.21.16 at 4:00 pm

So we’re in for 208k. We get just over 25k per year. I can’t see why we both can’t make 10k each on a 104k investment? So what’s better than that house? buying stocks, etfs, blow or booze?

this is a mediocre return for a rental. not worth it for the risk and work involved. rule of 100 is only used by novices or inexperienced. a low cost index would be a superior investment.

#152 Nemesis on 04.21.16 at 4:01 pm

#DiabolicalMischief,Or… #ConnectTheDots… #FunForAmateur$leuths…

[TimesColonist] – Metchosin property asking price $28.8M, region’s highest; last sold at $4.9M

…”The Swanwick Road property belongs to Richmond businessman Raoul Emil Malak, land title documents show. Ansan’s website said he is the owner of Ansan Traffic Group, Western Canada’s largest provider of traffic-management services. Malak could not be reached Wednesday. This property was on the market last year for $13.25 million. It is now listed with Morning Yu, of Metro Edge Realty in Richmond.”…

#HelpWithTheDots…

[Sun] – Former agents battle Richmond realty agency over commission fees

http://www.vancouversun.com/business/former+agents+battle+richmond+realty+agency+over+commission+fees/11779815/story.html

[G&M] – Vancouver real estate firm’s new ads feature ‘shadow flipping’ homes

http://www.theglobeandmail.com/real-estate/vancouver-real-estate-firms-advertisements-feature-shadow-flipping-homes/article29704220/

[G&M] – Reorganized crime

http://www.theglobeandmail.com/report-on-business/rob-magazine/reorganized-crime/article1241686/?page=all

#153 WalMark of Sadkatoon on 04.21.16 at 4:03 pm

#89 Mike on 04.20.16 at 10:49 pm

that looks horribly over diversified. if u wanted to run in place, get a treadmill

#154 WalMark of Sadkatoon on 04.21.16 at 4:09 pm

being primarily a real estate investor i didn’t know what to do with my tfsa so i just followed Buffett’s advice and put 90% into SnP500 index and rest in cash. i wouldn’t have bothered w stocks but the tfsa was a gift so i had to do something

#155 But but but.... on 04.21.16 at 4:15 pm

“Expect no investing or tax advice, no management fees and to shell out ten bucks a trade.”

But but but! Even if you hire a fee-based advisor or a fee-for-service guy, you stil pay the ten bucks per trade. And, if you leave the trading to a professional, such as one as a wealth management group, it may well be that the buy and sell prices that show up on your monthly equity tramsaction overviews are in fact not the prices that the intermediary pays and receives; at the end of the trading day, all prices during the day are known to them, and you will have no idea at what times they actually bought or sold your equities on any given day. There is no oversight of any kind; you can bet this kind of fraud is widespread, regardless of fiduciary responsibilities. Or, Garth, do you have convincing evidence to the contrary?

You have no idea what you are talking about. So stop. It’s too embarrassing. There are no trading charges with a fee-based advisor. With an advisory account you receive a trade list before any are executed. The trades are done at the prices promised, and upon your authorization. There is no intermediary. — Garth

#156 triplenet on 04.21.16 at 4:42 pm

#79 Mark

He’s in Lilooet for God’s sake.
Ever been to Spuzzum? Same thing.
It’s a high risk dividend only “investment” that will at first opportunity suffer the effects of a softening real estate market.

And just because it’s zoned duple doesn’t mean you can build one. Your land value is ~$35k.

#157 Bottoms_Up on 04.21.16 at 4:51 pm

#144 Shawn on 04.21.16 at 3:02 pm
————————-
It’s also due to a change in refining margins. At high oil prices they tighten up their margins on gasoline profit and at low oil prices they expand them.

#158 BOOM! on 04.21.16 at 5:00 pm

I do -now- manage my own stuff.

Not always. 1st 18 or so years only used 2 index funds, next 7, 4 index funds. Then retired, rolled my 401-K over to where our ROTH’s are. Used a broader variety of index funds, ETF’s, managed funds as needed.

Transfered 100K to an adviser to see if he “added value.”
Left if there for a tad over a full year. He did a great job, but truthfully, nothing added when I figured all the costs.

It is a horse a-piece. I use an accountant to do my taxes, he provides me with tax planning advice. (I don’t always follow it too closely), and that is why it COST ME $2,796.00 this year when I sent the I.R.S. our 2015 tax return!

Totally PREVENTABLE TAX BILL!!! This dumb ass is a slow learner, but he won’t get fooled again.

Tax planning, and Tax avoidance are legitimate practices, and I highly recommend using them wherever you can. If your fund manager does this as well, well worth his 1% fee. -Just heed the advice-

#159 cramar on 04.21.16 at 5:01 pm

#92 For those about to flop… on 04.20.16 at 11:19 pm

#130 BOOM! on 04.21.16 at 12:32 pm

———

Ah! If the Millennials would only listen to those who have done it!

We are in a similar boat. It continually amazes me how little you need in monthly income to live a good quality life. Those who think they need a yearly $90k in pensions & income to live a decent retired life are those who think they need >$150,000 as a working couple to exist. The keys are simple:

1) STAY OUT OF DEBT!
2) Own your own house without mortgage (or rent).
3) Live in a low-cost low-stress area.
4) Learn to enjoy simple pleasures like:
– exercise
– inexpensive quality home meals
– activities like bicycling, walking, reading, gardening, thinking, listening to good music, enjoying the warm sun in your own back yard.
5) Do #1

I’d put 4) against a $600,000 mortgage any day!

#160 Shawn on 04.21.16 at 5:09 pm

Mike Duffy

#150 pavlo on 04.21.16 at 3:47 pm

Imagine that they just acquited Mike Duffy how about that eh back to full pay is that retroactive from a year ago.

************************************
He was on PAID leave the whole time. Back to being a senator now.

This entire thing was a farce. Expense account issues are almost never criminal matters. If something was allowed and then later disallowed the usual thing would be to pay back the money.

The idea that Nigel Wright covering the costs was a bribe was a non-starter.

It was a big waste of time and now maybe Duffy will sue for defamation.

As for claiming PEI as the primary residence, he was REQUIRED to do so. It was all well known when Harper appointed him as Senator from PEI.

The charges were a joke and probably politically motivated.

And there never was any differentiation between Senate duties and party duties. He was appointed to the SENATE to promote the Party.

You don’t set up a loosey goosey thing like this and establish loose norms and then charge people for following the established practice.

My congratulations to Mike Duffy.

#161 Metaxa on 04.21.16 at 5:32 pm

#114 Turner Nation writes:
TC2000, Wood Gundy, Dominion? What decade are we in?

Again, reading comprehension, please!
Read the original guy’s predicament in the blog, then re-read my post which was to not discount those old, venerable outfits if you can find an advisor in one of them who embraces your position.

I hope I live long enough to read the bleating on here when some of you go through the CRA thing at retirement and find out your DIY, macho internet, self made man crap doesn’t stand.

I bet you blame Trudeau, not yourselves.

#162 espressobob on 04.21.16 at 5:47 pm

BBD.B @ 0.77- Could have doubled my pot if I’d been brave enough to risk it all.

…………………………………………………………………………

Having a proper portfolio set up by a pro proves to be prudent for many.

One of the more important functions of a fee based advisor is to advise against doing something really dumb.

#163 Truck Nutz on 04.21.16 at 6:15 pm

Garth, I’ve heard you say many times ETF’s pay dividends, so don’t worry about the purchase cost. But how can you tell when stuff is ‘On Sale’?

We want it all — Buy at a low cost AND make dividend profits.

We sold the house and want to invest the money (safely), with the luxury of cashing out in 12-24 months after the housing market presumably crashes.

I want to make wife proud, or she might take away my truck nutz.

#164 Derek R on 04.21.16 at 6:21 pm

#142 bill on 04.21.16 at 2:26 pm wrote:
peter
it means ‘the nice lady at the bank’…
recently one of the dogs posted his/her list of acronyms and FAQ’S.
I will see if I can find it.

Would that be The GarthFAQ by any chance?

#165 Move on VREU on 04.21.16 at 6:33 pm

What? No VREU Update today? Its Thursday no?

I guess the strong sales in April means that this is not the month the market collapses on Victoria. Maybe next month….. :)

#166 BOOM! on 04.21.16 at 8:27 pm

#159 Cramar

Could not agree MORE !!!!!

It CAN be done on less than a 7 figure income today.

Not sure If I want to try it 20 years from now? The cards have been dealt on gov’t support…. Don’t count on much by that time. You will need a high 6 figure to make it work WITH today’s subsistence numbers, inflation adjusted.

I am just glad we were fortunate enough to have had great stock return years in the 1990’s and post 2008, where I had gone into 100% bonds in early 20098 to save our butt. The growth since Mar 2009 has been wonderful !!

It is not the same world now. The desire for a ‘house’ and not a small 1108 sq ft starter, but the BIG “forever house” may well derail many of the young, depending on locations.

If I had ALL the answers, I would write a book…
sorry, just a blog dog. -woof-

#167 [email protected] on 04.21.16 at 10:53 pm

best post ever, very useful advice.

#168 bill on 04.21.16 at 11:01 pm

#164 Derek R on 04.21.16 at 6:21 pm
Thats the one!

#169 SK on 04.22.16 at 12:33 am

>Frankly, the whole concept of charging a percentage of >principle, I find curious…

It’s as a plumber would charge a percentage of the house price for fixing a toilet :)

#170 SK on 04.22.16 at 1:18 am

>…Paying someone a flat rate of portfolio seems more insane to me than paying a percentage of gains made.

It’s as a plumber paid a percentage of the house price fro for fixing/maintaining appliances :)

#171 Djumbe on 04.22.16 at 6:06 pm

Dawgs,
I run a small personal portfolio of four TD e-Series Index funds worth $175k total in both Reg and Non Reg accts. Overall portfolio is Balanced 60 equities/40 fixed with some cash on the side for good shopping days. Non Reg account is 45% US / 30% CDN / 25% INT and has done particularly well with a $17k unrealized gain – mostly thanks to US. Here’s the question – is there any reason to “harvest gains” on the Non Reg account or just let the 17k unrealized gain sit there? I don’t want the Capital Gain in my income and don’t need the cash for other purposes. It just feels weird to see the gain and do nothing. Dawg thoughts?

#172 lolita on 04.22.16 at 11:21 pm

why do you have to beat off lefties?

Is it because you don’t care about issues like the tax evasion depicted in the Panama Papers scandal? That is one company in one tax haven. Imagine all the evasion that will never surface to the eyes of justice.

https://en.wikipedia.org/wiki/Panama_Papers