Author Topic: Investing for Canadians  (Read 4149 times)


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Investing for Canadians
« on: July 03, 2012, 10:05:06 AM »
A question for my Canadian brothers and sisters:

Our options for investing are significantly different than for our neighbours to the south.  The roundly mmm-touted Vanguard group of funds have only just made it to the Great White North, and are limited to six ETFs.

I'd like to hear what other Canucks are investing in?  My husband and I currently put away $867 per month into mutual funds (with the associated 2-3% MER).  I've done some reading in the last year or so, and because we invest monthly I have concluded that index funds are probably a better bet than ETFs for us.  I want to fire our financial advisor (or mutal-fund salesman, more accurately) and start putting that money into one or more index funds.  I'm thinking a TSX/S&P 500 blend. 

Is anyone out there on a similar path?  What are you investing in?

A related question: I have NO knowledge about managing my own investments.  Don't know how to open an online discount brokerage or anything.  How does one get started investing in index funds?   


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Re: Investing for Canadians
« Reply #1 on: July 03, 2012, 12:55:01 PM »
I haven't started on buying my own index funds yet, but am going to start right away. Check out this site: - especially the info from the top links. Some good starter information about index fund investing.
For online brokerage I'm going to use TD. I've read as much as I can on their website about the e-series fund, and next week I'm going to get an appointment at the branch to walk me through the sign-up paperwork and make sure I know what I'm doing.

I also use ING Direct funds right now - MER is only 1%. Very similar to the couch paper strategy except they do the balancing for you.

For other stuff, I'm getting 2% at a credit union for short-term savings, and did some GICs when the rates were higher. Now it seems pointless to lock in for 5 years at 3%.

Of course, make sure you're using your TFSA and RSPs to your advantage.
From the library I get Canadian Money Saver magazine, which has lots of good articles on a variety of things - from basics to advanced investing.

Norman Johnson

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Re: Investing for Canadians
« Reply #2 on: July 03, 2012, 03:00:56 PM »
I invest using Canadian Couch Potato's TD e-series investment portfolio. I was already a TD customer, so opening an account was not a stretch.


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Re: Investing for Canadians
« Reply #3 on: July 04, 2012, 07:21:59 AM »
@Kestra -- thanks for mentioning the Canadian Money Saver magazine...I was wondering where to get current information myself, and if I can get it from the library, so much the better.


  • 5 O'Clock Shadow
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Re: Investing for Canadians
« Reply #4 on: July 09, 2012, 02:29:46 AM »
Hi eldub,

A related question: I have NO knowledge about managing my own investments.  Don't know how to open an online discount brokerage or anything.  How does one get started investing in index funds?   

Before jumping into investing, it's most important to educate yourself.  The person who understands your situation best is you, and for that reason I wouldn't allow anyone else to make my decisions for me (ie. mutual fund salesmen).  It may be possible that 100% index funds isn't best for your situation.

The best investing book I've read is "A Random Walk Down Wall Street", which is also recommended by MMM.  One major point is picking stocks are bad and index funds / ETFs are good, and it tells you in detail.  The journey that the book takes you on will help you understand why.

The next book you should read is "The Wealthy Barber".  It's an easy read, and is tailored to Canadians.  Although it is basic, it covers more areas concerning financial planning than just investing, ie. wills and estate planning is the first thing you should do before getting deep into investing.

I can recommend "Investing for Canadian Dummies" (or whatever variation it is).  It 's all right and it should get you on the right track.

You might consider hiring a financial planner who doesn't have a stake in whether you buy his funds or not, but I think it would be un-Mustacian, as the person who knows your money best is you.

Once you've read a bit, check the references section and follow up on books that may pertain to your situation.

Concerning investing for Americans versus Canadians, here's some things I understand (it's best to verify for yourself):

Our situations are very similar, except Canadians cannot deduct mortgage interest payments, and the CRA seems to be nicer than the IRS.  ;)

If you pay off your house, and then borrow against your house to invest, the interest on that loan *is* deductible.

Consider what you put in your RRSPs.  Dividends from Canadian companies are taxed at a lower rate, so if you have American and Canadian stocks (and maxed out your RRSPs), it's better to have the American stocks in your RRSP.

You may find that you have trouble sleeping at night if you are in 100% ETFs (this position is called 'aggressive' for a reason).  If this is the case, you may have to dial back your stocks.  Your health is more important than any of this.

There is a place for bonds.  The long term average for bonds is about 5%, stocks is 10%, over 100 years.  Are you not going to touch your money for 100 years?  If you were 100% in stocks in 2007 and wanted to retire in 2009, you could have taken a 50% haircut easily in 2008, and set your retirement back years.  The general advice is to taper into bonds say 5-10 years before you retire.

Consider diversification.  It may be possible to get higher returns on an Asian index fund over the next few years.

Also consider that the Canadian economy is strongly tied to the US, so US funds may not be a bad idea either.

To add to the confusion, consider the currency your stocks are in, and where you want to retire.  With the rise in the Canadian dollar, US investments have lost considerable value due to currency variations.  You could gain on currency variations as well.  If I were retiring in Canada, I would taper my investments into Canadian currency before I retire.

However, if you are going full on Mustachian, and not planning for "Freedom 65", it could change everything.

Vanguard ETFs aren't the only ones.  Even index mutual funds with a MER <1% aren't bad.  With mutual funds you can buy "partial" shares, while with ETFs you have to buy full ones, which is good if you are investing say $50/month.  And often no trading fees.

I've said it too many times already, but it's the most important thing:  Only you know what you have, what your goals are, and what is best for you.  Once you understand that, you can ask the Mustachians for more details and get some good advice.


p.s. I'm with Royal Bank, and I don't really like them.  I get the feeling that they are raiding my pockets when I'm not looking.  Likely, you are going with a buy and hold strategy, so it's not critical who your broker is.  Last I checked, the cheapest trades were with "International Brokers" at about $2 / trade, compared with up to $30 with Royal Bank.


  • 5 O'Clock Shadow
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Re: Investing for Canadians
« Reply #5 on: July 12, 2012, 10:26:39 AM »
Lots of good info here, posting so I can find the thread again.