Investing advice for 26 year old Canadian

[johnbarton06]

Hello Everyone!

I've been a huge MMM reader/fan for a little over a year now and was wondering if I could get some investing advice.

I'm 26 years old and have managed to save roughly 85k, all of which is currently invested. About half is invested in hand-picked Canadian stocks from before I knew about index investing. The other half is invested in Vanguard ETFs, mostly tickers VUN and VXC. I've read the MMM/Mr. Frugal Toque posts on Canadian investing, but I want to know what other Canadians are doing today, and why. I would like to slowly sell my stocks and invest the money in more ETFs. Is this a smart move? If so, which ones do you recommend? Any comments would be greatly appreciated!

Thanks,

John

[Filliteracy]

Hey John,

Canadian here. It honestly depends on how you "hand-picked" them. If you did so using the tenets of value investing by reading the firms financial reports and knowing you didn't overpay for your investments then I wouldn't necessarily sell them. If you handpicked them by hearsay, the news, or randomly, I'd say you're better off selling almost everything and dumping everything into ETFs or low-MER mutual funds depending on how often (and how much) you will continue making deposits.

Personally, I have 80% of my equities portfolio in index funds tracking the TSX, S&P 500 and international stocks, with a speculative dabble into oil I made two years ago which is still earning me 6% dividends.

As for ETFs, you are already on the right track with vanguard, I've got some in VEU, VUS, etc. The rest are still mutual funds with lowish MER.

[Aminul]

I will let others comment on your asset allocation, but I will share a couple of personal stories.

My family is very much pro-TFSA after settling my late grandfather's estate.  The value of his RRSPs were counted as income on his final tax return, pushing him to a higher tax bracket and costing his estate a lot of money in taxes. 

My mother, who is retired and is receiving a pension, has to stick handle her RRSPs to ensure she isn't pushed into a higher tax bracket.

The lesson:  Consider an exit plan for your money when putting it in tax sheltered accounts.