Author Topic: Investing in Canada  (Read 9992 times)

osmviv

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Investing in Canada
« on: November 12, 2013, 01:18:08 PM »
I have always depended on my financial advisor to help me with my investing and I'm pretty sure he's a good guy.  However, after reading quite a bit on the MMM blog I realize I need to know a lot more about where my money's being invested and how much it's costing me.  I'm basically a complete ignoramous about this stuff and when I start reading the form titles (even) my brain recoils, it's like Greek.  I also live in Canada so a lot of the stuff probably doesn't apply to me.  Also, I'm 52 years old and have only just started thinking about early retirement after reading this blog!  My husband is about as anti-mustaschian as you can get, yet he's been wanting to retire "early" for years. I still hope to turn him around but it's not going to be easy.  If anybody out there can help me, I'd be super grateful!  BTW, we both make around 100K before taxes, but for my husband this is due to a fairly recent new job.  Before that, he was free-lancing and making between 30-60K most years.  That's partly why he's on a spending binge!

daverobev

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Re: Investing in Canada
« Reply #1 on: November 12, 2013, 01:38:42 PM »
Hey,

one option is to find a fee-based advisor. Have a good read through the Canadian Couch Potato website - there is a lot of good info there.

In short:

1. Max out your RRSP, assuming you will be in a lower tax bracket in retirement than you are now
2. Max out your TFSA, putting Canadian stock ETFs in here (US$ stuff should go in the RRSP as the US sees the RRSP as a retirement fund and thus does not withhold tax; in the TFSA tax is withheld and is NOT reclaimable).

There is a 'one fund' solution (ING Streetwise), a low-cost mutual fund solution (TD eSeries), and a discount brokerage solution (eg Questrade). The first is easy as anything, the second slightly more work but not much more (you'd have to rebalance yourself), and the last is most flexible, cheapest, but requires most knowledge.

Anything with a MER of > 1% is... well, in the long run, likely not to do as well as a low-cost index tracking portfolio. Actively managed funds are (in my opinion, and backed up by research) a losing proposition.

You need to decide what your goal is (retire in 5 years with $500k invested, thus giving you a budget of ~ $20k per year?), then see if you can budget to make it happen.

Spending binges are bad! You need to save everything you can so it will pay you later!!

Post any more details that you feel comfortable doing, but honestly if you are getting 'free' advice from someone - it isn't. They are in the business of making money for their institution primarily :-/

grmagne

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Re: Investing in Canada
« Reply #2 on: November 12, 2013, 02:08:56 PM »
Mr. Frugal Toque had a really good article about investing in Canada (hopefully there's a part 2).

http://www.mrmoneymustache.com/2013/09/21/canadian-investing-with-mr-frugal-toque-part-1/

Before discovering MMM I always assumed I would retire when everyone else did and then withdraw RRSP money post-65 in a middle-income tax bracket. This article opened my eyes to the idea that if you retire early in Canada then RRSPs are your best friend. You can avoid taxes during your working career AND when you withdraw from your RRSPs before 65.

osmviv

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Re: Investing in Canada
« Reply #3 on: November 12, 2013, 07:56:32 PM »
Thank you so much for answering my question.  I actually had a meeting with my advisor tonight and he was very open about the fees that are involved.  He says they are between 2-3% so I guess I'm being gouged, but realistically, I'm not sure I'm willing to put the time in to be me my own money manager.  I was thinking of taking part of my savings and trying to invest it independently but I'm too nervous to move it all.  At this point, I have maxed out on my RRSPs and my TFSA account. I also have a pretty decent pension (Thank you American Federation of Musicians, Canada!)  coming at age 65.  If I don't work another day, I'll have over 4000 a month and my husband has his musician's pension (around 2000/month I think) and a smallish university pension.  So, at regular retirement age we'll be okay, but if we want to retire at let's say, 60, we will have to cover those 5 years with our RRSP's and other investments which combined amounts to only $400,000.00 bucks at this time.  Our mortgage is paid off, so, come to think of it, we're not doing that badly!  If only my hubby would stop buying tubas we could retire at 58!  Anyway, I hope I'm not wasting your time with this, since I'm basically waffling on the whole idea of looking after my own investments. 

KMMK

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Re: Investing in Canada
« Reply #4 on: November 12, 2013, 08:59:37 PM »
Thank you so much for answering my question.  I actually had a meeting with my advisor tonight and he was very open about the fees that are involved.  He says they are between 2-3% so I guess I'm being gouged, but realistically, I'm not sure I'm willing to put the time in to be me my own money manager.  I was thinking of taking part of my savings and trying to invest it independently but I'm too nervous to move it all.  At this point, I have maxed out on my RRSPs and my TFSA account. I also have a pretty decent pension (Thank you American Federation of Musicians, Canada!)  coming at age 65.  If I don't work another day, I'll have over 4000 a month and my husband has his musician's pension (around 2000/month I think) and a smallish university pension.  So, at regular retirement age we'll be okay, but if we want to retire at let's say, 60, we will have to cover those 5 years with our RRSP's and other investments which combined amounts to only $400,000.00 bucks at this time.  Our mortgage is paid off, so, come to think of it, we're not doing that badly!  If only my hubby would stop buying tubas we could retire at 58!  Anyway, I hope I'm not wasting your time with this, since I'm basically waffling on the whole idea of looking after my own investments.

It sounds like what you really need at this point is just to determine exactly how much you spend now, how low can that number go and how much you and your husband can agree together to spend. $6000/month is a lot more than many of us here live on, even with rent/mortgage payments. So I think there are ways to make that $400,000 last until pensions kick in, if you were so inclined.

As far as investments, you are being gouged with those fees. If you want something super easy, I'd second the recommendation of the ING Streetwise Funds. They are very user friendly and you don't really have to understand much in the way of mechanics of what is happening in the background.

osmviv

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Re: Investing in Canada
« Reply #5 on: November 13, 2013, 07:07:01 AM »
Thanks, Kestra!  I will check into the ING fund.  But would you recommend moving all my investments over there?  That's scary! 

daverobev

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Re: Investing in Canada
« Reply #6 on: November 13, 2013, 11:24:31 AM »
Thanks, Kestra!  I will check into the ING fund.  But would you recommend moving all my investments over there?  That's scary!

I'm sure there are posts on it, but if you go to something like http://www.moneychimp.com/calculator/compound_interest_calculator.htm

Put in $0 starting balance, $1000 a month for 30 years, interest rates of 3% and 5% - just go with it, assume the 'drag' of your management is 2% p.a.

So with the managed fees (avg. 3% return) you end up with $580k; with eSeries (avg. 5% return) you end up with $830k.

Just think about that! Add in to the fact that fund managers often *lose* you money vs the index (75%? of funds do worse than 'the index').

So yes, bare logic says get ALL your money away from your fund manager because you are paying *them* primarily, and into the 1-fund ING solution - good write up http://canadiancouchpotato.com/2013/09/12/the-one-fund-solution/

I gave out the same quote yesterday - Upton Sinclair - "It is difficult to get a man to understand something when his job depends on not understanding it." - namely that the world would be better off without managed funds, as it is just a funnel of your money into their pockets, when a reasonably small amount of work can funnel it into your pockets.

If the market crashes, will the TD eSeries funds that track the Canadian and US markets go down? YES! But so will these managed funds. But you will *always* pay a 2% drag to have it "managed" for you... ugh.

osmviv

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Re: Investing in Canada
« Reply #7 on: November 13, 2013, 04:37:04 PM »
Okay, I will take your advice into consideration!  Very helpful.  I know this is going to sound pretty wussypants, but I really like my financial advisor, who is only doing his job the best way he can (I do believe!) so it would be hard to "fire" him.  We had a much worse financial advisor before this guy and we stuck it out with her for well over 10 years! Shows you what softies (read, "idiots") we are. I'll come back and post if we decide to make the switch.

alanwbaker

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Re: Investing in Canada
« Reply #8 on: November 14, 2013, 12:20:36 AM »
Hi Osmviv,

For a good roadmap read The Bogleheads' Guide to Investing.

Your advisor is proably a great guy, but the 2-3% you are paying him 10 times too much.  Management fees should be closer too .25%.  Take a look at https://www.vanguardcanada.ca/individual/etfs/etfs.htm.

As daverobev suggested, if you are not ready for do-it-yourself, get advice from a fee-based (not commission-based) advisor.


Ishmael

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Re: Investing in Canada
« Reply #9 on: November 14, 2013, 05:58:11 AM »
Read the book, "Stop Buying Mutual Funds!".

Also, read this blog article by the talented Mustachian, bo_knows, creator of cfiresim.com, the best retirement calculator out there.
http://cfiresim.com/blog/2013/11/07/how-fees-affect-retirement-dates/

Basically, he found that investment fees like yours add 10 years onto a working career!

Buying index funds is simple. Set up a discount brokerage with your favourite bank, and get them to help you transfer the money over. Then, check out canadiancouchpotato.com or MoneySense magazine for a simple investment strategy. (Most of MoneySense's articles are not Mustachian, but they have a good Couch Potato series, and Norm Rothery knows how to pick stocks properly.)

On a 100k portfolio, you're currently paying your financial advisor something like $2000/yr to not track the market, and this compounds every year... it's insane, and a system that depends on ignorance and inertia to exist. You're supporting people who rip other people off by remaining with your broker, and inserting someone in between you and your investments that can both steal money from you AND prevent you from getting at money that you want/need. (Both of these things happened to a family member of mine, with two different "advisors", before I got them into Vanguard index funds at their bank).

osmviv

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Re: Investing in Canada
« Reply #10 on: December 04, 2013, 01:53:42 PM »
Thanks, Kestra!  I will check into the ING fund.  But would you recommend moving all my investments over there?  That's scary!

I'm sure there are posts on it, but if you go to something like http://www.moneychimp.com/calculator/compound_interest_calculator.htm

Put in $0 starting balance, $1000 a month for 30 years, interest rates of 3% and 5% - just go with it, assume the 'drag' of your management is 2% p.a.

So with the managed fees (avg. 3% return) you end up with $580k; with eSeries (avg. 5% return) you end up with $830k.

Just think about that! Add in to the fact that fund managers often *lose* you money vs the index (75%? of funds do worse than 'the index').

So yes, bare logic says get ALL your money away from your fund manager because you are paying *them* primarily, and into the 1-fund ING solution - good write up http://canadiancouchpotato.com/2013/09/12/the-one-fund-solution/

I gave out the same quote yesterday - Upton Sinclair - "It is difficult to get a man to understand something when his job depends on not understanding it." - namely that the world would be better off without managed funds, as it is just a funnel of your money into their pockets, when a reasonably small amount of work can funnel it into your pockets.

If the market crashes, will the TD eSeries funds that track the Canadian and US markets go down? YES! But so will these managed funds. But you will *always* pay a 2% drag to have it "managed" for you... ugh.

I am continuing to study ETF's and other aspects of investing to get more understanding of how they work.  I have embarrassingly little knowledge of it, considering I've been saving in my RRSP's for 25 years.  Despite what you say about how I should move all my investments over at once, I feel better about doing this bit by bit, so I'm thinking of moving 50,000 over for now to see how I handle "do it yourself" investing.  It's not something I ever considered.  My husband and I have always been from the school of, "if it's not your specialty, pay someone whose speciality it is."  Okay, maybe that's more his motto than mine, but I went along with it. 
One question: I know you suggest the ING one-fund solution, but I have been banking with BMO forever so it would be easiest to open an Investorline account there and buy ETF's through them it seems to me.  Is this a wise approach?

daverobev

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Re: Investing in Canada
« Reply #11 on: December 04, 2013, 07:01:32 PM »
One question: I know you suggest the ING one-fund solution, but I have been banking with BMO forever so it would be easiest to open an Investorline account there and buy ETF's through them it seems to me.  Is this a wise approach?

Depends on how much they charge you a trade. ETFs are like stocks; mutual funds are not (I mean, they are, but you buy and sell them differently).

ETF or stock: You have a brokerage account, most of the big banks do this but it might cost you $29 a trade (each time you buy or sell). You can go for a discount brokerage like Questrade (commission free for ETFs when buying, $4.95 minimum for stocks and when selling ETFs).

With mutual funds that your bank runs you shouldn't pay to buy; there may be a fee if you sell them too soon (with RBC it was 30 days I believe) - but the MER tends to be a bit higher.

If you buy an ETF with Questrade, RBC, BMO, or *whoever* it makes no difference *except* for the cost of making the trade. For mutual funds, the bank will (for an easy account) only sell you their own. So you'd be buying the BMO mutual fund.

Hope that makes some sense.. in short, to do the 'one fund' solution, you'd be buying a mutual fund, and in that case you'd have to open an ING account to do so.

Re: Paying someone who knows how to do: that's fine, but that is *NOT* what the banks give you. An independent, fee-only advisor is working FOR you and makes no money based on what they sell you. A bank-based advisor makes commission based on what they sell you, so there is a ginormous conflict of interest there.

Ishmael

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Re: Investing in Canada
« Reply #12 on: December 05, 2013, 05:51:29 AM »
Re: Paying someone who knows how to do: that's fine, but that is *NOT* what the banks give you. An independent, fee-only advisor is working FOR you and makes no money based on what they sell you. A bank-based advisor makes commission based on what they sell you, so there is a ginormous conflict of interest there.

This is a critical difference. Sure, if you're more comfortable hiring a professional, that's understandable. Buying mutual funds through a broker is NOT that.

A fee-based financial advisor will focus on your interests and providing value. His/her compensation is clear and up-front, so you'll be knowing exactly what you're paying for and able to decide if you're getting value for your money. Also, he/she can provide another perspective and a place to ask questions. Though expensive, it is not a bad idea at all (assuming you do the diligence on their credentials and reputation, of course - which is probably roughly as much work as researching self-investment strategies!).

The incentives in the traditional mutual fund investment market are totally screwed up as it places the interests of your broker against yours. The higher fee funds they can convince you to "invest in", the more money they make. And the very nature of mutual funds is such that they will almost invariably do worse than a simple, do it yourself investing method. Are there good funds? Sure, about 10% beat the market (for a while). Are there honest brokers so ignore the siren call of higher fees? I'm sure there are, but the only way of being able to tell these things is to be educated in the first place - meaning the potential value they provide is worthless, IMO.

Many people scared of investing, but there's no magic to it. Make sure you understand how the taxes work for RRSPs and TFSAs. Do some research and find a quality, low-cost index fund or two that's well diversified, and keep buying them regularly through a reputable institution. It's safe, and there's no one in the middle that can defraud you or warp what is in your best interests.

It gets complicated outside of RRSPs & TFSAs, but they are more than sufficient for most people anyway.

mensa

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Re: Investing in Canada
« Reply #13 on: December 05, 2013, 07:02:34 AM »
Just a caution if you DO decide to completely switch your current funds:

Be aware that some funds carry a DSC (deferred sales charge). These funds (as it sounds) have a back-end fee, which decreases as you hold them longer. It usually disappears in about 7 years. If you're invested with an outfit like Investor's Group or its ilk, they may apply and these charges can add up, especially if you've bought them recently. I'm not saying you wouldn't necessarily be better off switching them out anyway, but it's always best to know ahead of time.

osmviv

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Re: Investing in Canada
« Reply #14 on: December 07, 2013, 07:45:20 AM »
Just a caution if you DO decide to completely switch your current funds:

Be aware that some funds carry a DSC (deferred sales charge). These funds (as it sounds) have a back-end fee, which decreases as you hold them longer. It usually disappears in about 7 years. If you're invested with an outfit like Investor's Group or its ilk, they may apply and these charges can add up, especially if you've bought them recently. I'm not saying you wouldn't necessarily be better off switching them out anyway, but it's always best to know ahead of time.

I was afraid of that very thing so I asked my advisor and it turns out that there still a lot of fees attached to moving some of  my investments. I may decide to move only the funds that are free of fees.  Thanks to all who responded to this question! Still have some reading to do..
One more thing, I believe bmo charges 10 bucks per transaction, which doesn't seem outrageous.

mensa

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Re: Investing in Canada
« Reply #15 on: December 07, 2013, 10:17:20 AM »
I think bmo's cheaper trades only apply if you are part of their private banking clientele, or if you have a 50k+ portfolio.

Also, it's unclear (at least to me) as to the products they allow you to trade. ie - don't think they offer Vanguard etfs.

osmviv

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Re: Investing in Canada
« Reply #16 on: December 07, 2013, 11:57:55 AM »
I think bmo's cheaper trades only apply if you are part of their private banking clientele, or if you have a 50k+ portfolio.

Also, it's unclear (at least to me) as to the products they allow you to trade. ie - don't think they offer Vanguard etfs.

Yes, I just checked on the BMO website and you appear to be right about the cost of trades.  (I was going by what a friend said it costs her...I guess I know she has more than 50 grand in investments!)  That is irritating because I was initially planning to move 50,000 but I'm not sure I should now, because of the fees charged by Investors Group. 


daverobev

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Re: Investing in Canada
« Reply #17 on: December 07, 2013, 12:34:10 PM »
http://canadiancouchpotato.com/2013/11/27/pulling-off-the-bandage-quickly/ might be worth a read!

IMHO - no reason not to go with Questrade - free purchasing of ETFs... I think they had a bad reputation in the past, but I've not had any problems with them at all.

mensa

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Re: Investing in Canada
« Reply #18 on: December 07, 2013, 01:12:46 PM »
Don't let the fees scare you too much - you should mos' def' do the math on them. If it's costing you 3% per year in fees, but it'll cost 5% to get out...it may be worth it, rather than hold the funds for years at a crazy price. Investor's Group is a bit of a  rip off, and their fees are some of the highest for some seriously underwhelming performance. Your advisor is definitely looking out for him/herself. S/he certainly doesn't want to lose all those juicy trailer fees every year...I'm guessing that if they actually showed you how much money you're paying to hold their funds on every statement you'd be much more anxious to get away from them.

As Daverobev mentioned, there are other low-cost brokerages around: Questrade, QTrade, et al. Have a look through the Canadian Money Forum for other recommendations.

Also as Daverobev mentioned - using a couch potato approach is a set it and forget it (with a bit of rebalancing) approach that won't have you feverishly checking the markets 70 times a day. Do some reading and keep an open mind.


Ishmael

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Re: Investing in Canada
« Reply #19 on: December 09, 2013, 07:29:16 AM »
Just a caution if you DO decide to completely switch your current funds:

Be aware that some funds carry a DSC (deferred sales charge). These funds (as it sounds) have a back-end fee, which decreases as you hold them longer. It usually disappears in about 7 years. If you're invested with an outfit like Investor's Group or its ilk, they may apply and these charges can add up, especially if you've bought them recently. I'm not saying you wouldn't necessarily be better off switching them out anyway, but it's always best to know ahead of time.

I was afraid of that very thing so I asked my advisor and it turns out that there still a lot of fees attached to moving some of  my investments. I may decide to move only the funds that are free of fees.  Thanks to all who responded to this question! Still have some reading to do..
One more thing, I believe bmo charges 10 bucks per transaction, which doesn't seem outrageous.
Definitely do the math. Find out the amount (DSC) for each investment, and figure out what percent that will be. Compare it to the MER for the fund. That will allow you to estimate a "pay back time" for the fees.

Fees are critical and you must minimize them, BUT you're in a situation where you will be paying some fees regardless of what you do. Make sure you're going to minimize them overall, not just attempt to avoid paying something up front.

That's the same as someone holding on to a bad stock because they want it to come back up to what they paid for it. While doing that, they're missing the opportunity to investing what's left in something better.

Also, your investor person might just emphasizing that point to scare you a bit, because he/she makes money by holding onto yours.

plainjane

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Re: Investing in Canada
« Reply #20 on: December 09, 2013, 08:44:13 AM »
I think bmo's cheaper trades only apply if you are part of their private banking clientele, or if you have a 50k+ portfolio.

Yes, I just checked on the BMO website and you appear to be right about the cost of trades.  (I was going by what a friend said it costs her...I guess I know she has more than 50 grand in investments!)  That is irritating because I was initially planning to move 50,000 but I'm not sure I should now, because of the fees charged by Investors Group.

Sometimes if you have a pre-existing relationship and you talk to someone about your plan to move investments over they might be able to put you into the lower fee group even if you don't _quite_ qualify.  Not sure if BMO would do this for you in order to get your business.

The other thing to consider is how frequently you're contributing.  If you're doing every 2 weeks/semi-monthly the transaction costs add up.  This should be part of your calculation of the tradeoff between the various options & MERs.

osmviv

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Re: Investing in Canada
« Reply #21 on: January 07, 2014, 12:33:47 PM »

There is a 'one fund' solution (ING Streetwise), a low-cost mutual fund solution (TD eSeries), and a discount brokerage solution (eg Questrade). The first is easy as anything, the second slightly more work but not much more (you'd have to rebalance yourself), and the last is most flexible, cheapest, but requires most knowledge.

Hi, All you helpful experts!  I have more questions about starting my healthy investment life.  I have been reading up on the TD eSeries and looked at Questrade also. I see some eSeries funds that look like they're low risk and get good returns. (For example:https://research.tdwaterhouse.ca/research/public/MutualFundsProfile/PerformanceAndRisk/ca/TDB903) If you were choosing between something like the above or going through Questrade, what would you choose? Is it more difficult for a newbie like me to choose good investments through Questrade?  I've searched their site but I can't seem to find info on how their individual ETF's are performing. Where would I find that? They certainly seem to have the lowest fees.

Spudd

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Re: Investing in Canada
« Reply #22 on: January 07, 2014, 12:36:55 PM »
Questrade is a broker so you can buy any ETF on the market through them. Take a look at the Canadian Couch Potato site for some sample portfolios.

The e-series funds are not ETFs, they are mutual funds, and are only offered through TD.

daverobev

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Re: Investing in Canada
« Reply #23 on: January 08, 2014, 09:07:54 AM »

There is a 'one fund' solution (ING Streetwise), a low-cost mutual fund solution (TD eSeries), and a discount brokerage solution (eg Questrade). The first is easy as anything, the second slightly more work but not much more (you'd have to rebalance yourself), and the last is most flexible, cheapest, but requires most knowledge.

Hi, All you helpful experts!  I have more questions about starting my healthy investment life.  I have been reading up on the TD eSeries and looked at Questrade also. I see some eSeries funds that look like they're low risk and get good returns. (For example:https://research.tdwaterhouse.ca/research/public/MutualFundsProfile/PerformanceAndRisk/ca/TDB903) If you were choosing between something like the above or going through Questrade, what would you choose? Is it more difficult for a newbie like me to choose good investments through Questrade?  I've searched their site but I can't seem to find info on how their individual ETF's are performing. Where would I find that? They certainly seem to have the lowest fees.

From what I've heard, ETFs 'are' mutual funds in Canada, legally/technically speaking...

The reason to go Questrade is a) it can be cheaper (ETFs with the same index have a lower MER if you pick a good one), b) it can be more flexible (there are a LOAD of ETFs available, both in CAD and USD). The reason to go eSeries is that it is much much easier - you can set up monthly or biweekly contributions and investments with no input required. Money just disappears and gets invested. You don't have the wide range of funds available ("Junior Oil/Gas ETF", "Dave's Wacky Awesome New Index ETF!") - you just go for four - Canadian Index (S&P Composite = pretty much all of Canada, US Index, International and Bonds). Easy. Job Done.

The eSeries Canada will track the same *underlying* index as ZCN.TO, or whatever ETF - so the performance ignoring the MER will be the same.

If you just want to invest and not think about it too much save the occasional rebalance, eSeries is the way to go, hands down.

And yes, check out CCP for the funds to use, but basically Canadian Index, US Index, International Index, Bond Index.

andru365

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Re: Investing in Canada
« Reply #24 on: January 08, 2014, 12:45:24 PM »
I'm an index fund investor but find the tax portion of investing hard to get a grasp on.

Please help me get better tax advantaged if possible.

Here are the accounts I have and the funds held within each. Allocations are based on Canadian Couch Potato model portfolios.

Standard Life RRSP
Canadian Bond Index (SLI)
Canadian Equity Index (SLI)
US Equity Direct Index Registered (SLI)
International Equity Index (BlackRock)
Canadian owned Blue Chip energy co. stock

TD RRSP (E-Series)
TD CDN Bond Index-e
TD CDN Index-e
TD US Index-e
TD Int'l Index-e

Standard Life TFSA
Canadian Bond Index (SLI)
Canadian Equity Index (SLI)
US Equity Direct Index Registered (SLI)
International Equity Index (BlackRock)
Canadian owned Blue Chip energy co. stock

TD LIRA (E-Series)
TD CDN Bond Index-e
TD CDN Index-e
TD US Index-e
TD Int'l Index-e

Ishmael

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Re: Investing in Canada
« Reply #25 on: January 10, 2014, 07:35:01 AM »
I'm an index fund investor but find the tax portion of investing hard to get a grasp on.

Please help me get better tax advantaged if possible.

Here are the accounts I have and the funds held within each. Allocations are based on Canadian Couch Potato model portfolios.

Standard Life RRSP
Canadian Bond Index (SLI)
Canadian Equity Index (SLI)
US Equity Direct Index Registered (SLI)
International Equity Index (BlackRock)
Canadian owned Blue Chip energy co. stock

TD RRSP (E-Series)
TD CDN Bond Index-e
TD CDN Index-e
TD US Index-e
TD Int'l Index-e

Standard Life TFSA
Canadian Bond Index (SLI)
Canadian Equity Index (SLI)
US Equity Direct Index Registered (SLI)
International Equity Index (BlackRock)
Canadian owned Blue Chip energy co. stock

TD LIRA (E-Series)
TD CDN Bond Index-e
TD CDN Index-e
TD US Index-e
TD Int'l Index-e
RRSPs and TFSAs are tax-sheltered accounts, so there's not much to understand about the tax portion. RRSPs allow you to defer taxes until you withdraw money, while TFSAs you can withdraw from with no tax implications at all (but you have to contribute with income you've already paid taxes on).

It's complicated when you invest outside of these types of savings vehicles, but RRSP and TFSA limits are so large nowadays there's not much need for an average person to do so, let alone a Mustachian!

plainjane

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Re: Investing in Canada
« Reply #26 on: January 11, 2014, 02:06:58 PM »
It's complicated when you invest outside of these types of savings vehicles, but RRSP and TFSA limits are so large nowadays there's not much need for an average person to do so, let alone a Mustachian!

I disagree, the limits aren't much at all for a Mustachian.  18% for RRSP, $5500 for TFSA.  So if you maxed out the two at a $50k annual income you'd only be running a 29% pre-tax saving rate.  And the percentage is worse the higher the income you are because the TFSA is a set number and RRSP gets capped.  You might have some contribution room in both from before you started accelerating saving, but it gets used up surprisingly quickly.

Here is an article about tax efficient investment
http://www.moneysense.ca/columns/reduce-your-tax-bite-to-sweeten-your-returns
http://www.milliondollarjourney.com/portfolio-allocation-rrsps-tfsas-and-taxable-accounts.htm