Author Topic: Canadian Newbie investing 13k in stocks (TFSA)  (Read 4087 times)

TightFistedScot

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Canadian Newbie investing 13k in stocks (TFSA)
« on: January 17, 2017, 03:23:12 PM »
I need some advice. I just opened a new TFSA itrade account (scotiabank trading account). I put 13k into the account that was previously earning almost nothing in interest.

My plan is to divvy the funds into a fairly equal amount of:

medical marijuana companies predicted to do well in 2017 (I will pick about 4 Canadian and US companies)
REITs (recommendations welcome)
TD Bank (I already have a chunk of my RRSPs in TD and Scotiabank and they are doing well)
Anything else?

My father has recommended I wait until after the Trump inauguration to see how the market is doing.

What are your thoughts?

RichMoose

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Re: Canadian Newbie investing 13k in stocks (TFSA)
« Reply #1 on: January 17, 2017, 03:28:53 PM »
I think you'll find most of us on MMM to be pretty critical about your plan. :)

Just about every Canadian on here uses Index ETFs in a "Lazy Portfolio" style for investing. Great diversification, low costs, less volatility.

TightFistedScot

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Re: Canadian Newbie investing 13k in stocks (TFSA)
« Reply #2 on: January 17, 2017, 03:46:00 PM »
I think you'll find most of us on MMM to be pretty critical about your plan. :)

Just about every Canadian on here uses Index ETFs in a "Lazy Portfolio" style for investing. Great diversification, low costs, less volatility.

Hah oh okay, thanks.

I'm planning to invest 5k in Wealthsimple ETFs in a few months to try it out.

Is it possible to do Index ETFs using Scotiabank itrade?

I do want to invest in medical marijuana and apartment REITs because I think there is a possibility of getting some great returns.

RichMoose

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Re: Canadian Newbie investing 13k in stocks (TFSA)
« Reply #3 on: January 17, 2017, 04:05:54 PM »
Hah oh okay, thanks.

I'm planning to invest 5k in Wealthsimple ETFs in a few months to try it out.

Is it possible to do Index ETFs using Scotiabank itrade?

I do want to invest in medical marijuana and apartment REITs because I think there is a possibility of getting some great returns.

Wealthsimple is a rebalancing service that charges you 0.5% on your money to do what you can do yourself in about 10 minutes once or twice a year. The first $5,000 is free, but unless you're very new to investing I wouldn't be forking out for that. You can buy ETFs with any self-directed brokerage account because ETFs trade on the stock market just like stocks.

Here's some resources to check out:

The Canadian Couch Potato has some great resources on ETFs and Index Investing. http://canadiancouchpotato.com/wp-content/uploads/2015/01/CCP-Model-Portfolios-ETFs-2016.pdf & http://canadiancouchpotato.com/couch-potato-faq/

I also have my own portfolios that I believe will perform quite well and are comparable to CCP: http://therichmoose.com/portfolios/

Garth Turner uses an ETF strategy with his clients as well. The allocations do change somewhat but it's close to this:

Canadian Index ETF: 20%
US Index ETF: 20%
International Index ETF: 15%
REIT Index ETF: 5%
Corporate bond ETF: 15%
Preferred Share ETF: 15%
Government bond ETF: 10%

On the medical pot and apartment thing, well it's a personal decision but make sure you educate yourself and know the reasons why you are investing in them. Just because it's hyped up in the media right now doesn't mean it will be a good investment. For me I find it hard to just Canopy being valued at $1.27B when their total revenue is at about $25-$30 million per year. Insane considering in my home town about 1 in 50 houses grew the plant with some basic gardening equipment and some grow lights. It's pot, not quantum computing. :)

Heckler

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Re: Canadian Newbie investing 13k in stocks (TFSA)
« Reply #4 on: January 17, 2017, 06:56:10 PM »
VCN - so hot right now!  Can you buy it in iTrade?

TightFistedScot

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Re: Canadian Newbie investing 13k in stocks (TFSA)
« Reply #5 on: January 18, 2017, 10:56:33 AM »
Thank you so much everyone for your input!

With your help I did a bit more research and found a recommended CDN Vanguard ETF.

Ended up doing roughly:
1/3 of CDN ETC (VCN)
1/3 TD Bank
and the other 1/3 I split up into a REIT (Plaza), and 2 medical marijuana companies (Canopy and Aphria)

fingers crossed

daverobev

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Re: Canadian Newbie investing 13k in stocks (TFSA)
« Reply #6 on: January 18, 2017, 05:39:06 PM »
Thank you so much everyone for your input!

With your help I did a bit more research and found a recommended CDN Vanguard ETF.

Ended up doing roughly:
1/3 of CDN ETC (VCN)
1/3 TD Bank
and the other 1/3 I split up into a REIT (Plaza), and 2 medical marijuana companies (Canopy and Aphria)

fingers crossed

You should check out Canadian Couch Potato. IMHO you are playing with fire.

human

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Re: Canadian Newbie investing 13k in stocks (TFSA)
« Reply #7 on: January 18, 2017, 07:26:58 PM »
Index funds aren't really something you "try out" you need to determine long term savings goals and invest for the long haul. Pick an asset allocation and rebalance on a predetermined schedule or with cash if your investments are small enough.

Heckler

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Re: Canadian Newbie investing 13k in stocks (TFSA)
« Reply #8 on: January 19, 2017, 12:12:57 AM »


fingers crossed

You should check out Canadian Couch Potato. IMHO you are playing with fire.

At least he's 1/3 slightly diversified. /esarc




Mattzlaff

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Re: Canadian Newbie investing 13k in stocks (TFSA)
« Reply #9 on: January 19, 2017, 12:14:06 AM »
Out of curiosity why did you decide to invest in a TFSA over a RRSP?

Both are tax advantaged and I get that the TFSA is a quick tax free withdrawal but if you're planning on going with long term savings you get a tax break from the RRSPS and 13k is a pretty good one.

Seems to me like you're looking to make a quick buck by betting mostly on stocks and that you dumped into your TFSA unless of course you've maxed your RRSP first. Like others have said betting on stocks is playing with fire. For long term saving ETFs are where it's at.


Heckler

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Re: Canadian Newbie investing 13k in stocks (TFSA)
« Reply #10 on: January 19, 2017, 12:15:15 AM »
Check it out Scot.  When you concentrate on any one stock, you bear a lot of risk.


http://canadiancouchpotato.com/couch-potato-faq/

TightFistedScot

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Re: Canadian Newbie investing 13k in stocks (TFSA)
« Reply #11 on: January 19, 2017, 05:11:12 AM »
Index funds aren't really something you "try out" you need to determine long term savings goals and invest for the long haul. Pick an asset allocation and rebalance on a predetermined schedule or with cash if your investments are small enough.


Yeah for the ETF I will be keeping it there for the long haul. Sorry I didn't make that clear initially.

TightFistedScot

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Re: Canadian Newbie investing 13k in stocks (TFSA)
« Reply #12 on: January 19, 2017, 05:21:45 AM »
Out of curiosity why did you decide to invest in a TFSA over a RRSP?

Both are tax advantaged and I get that the TFSA is a quick tax free withdrawal but if you're planning on going with long term savings you get a tax break from the RRSPS and 13k is a pretty good one.

Seems to me like you're looking to make a quick buck by betting mostly on stocks and that you dumped into your TFSA unless of course you've maxed your RRSP first. Like others have said betting on stocks is playing with fire. For long term saving ETFs are where it's at.

Good question - yeah I should elaborate on my situation a bit further.

I selected TFSA for a couple reasons. First, I am not contributing much at all to RRSPs right now because I am a full-time PhD student and I pay next to nothing in income taxes. This year I will contribute 1k to RRSP. I currently have 9k in my RRSP account (also in itrade, mostly bank stocks).

The 13k in TFSA will, for the most part, be there for the long term - hence the ETF. However, I do hope to make some faster earnings off medical marijuana. The weed stocks being more of a gamble, and one I'm willing to take. With that said, I also want to be able to access some of these funds in emergency situations (ie when I complete my PhD and potentially out of work in the job hunt, and I'm also planning a fairly modest kitchen renovation within a year so I may need to grab some extra $$).

I'm 31, single, and willing to take a bit of a risk for a learning opportunity. My father has done very well in the stock market so he has also given me a bit of advice.

Appreciate all of your insights. This has been really helpful. I am definitely going to do Canadian Couch Potato style for my next investment - which probably won't be for a while. It's so hard for me to save due to my modest PhD stipends, contract teaching and research work, and costs to run my house in Toronto.
« Last Edit: January 19, 2017, 05:25:37 AM by TightFistedScot »

Rockies

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Re: Canadian Newbie investing 13k in stocks (TFSA)
« Reply #13 on: January 22, 2017, 09:17:14 PM »
I  think people should emphasize you have made a huge positive step, and that is that you are investing and willing to learn. Don't get overly stressed about what people have to say here and don't take criticism personally. You are on the right track and after just a few months of thinking and asking advice you will start to get on the right track.

However myself being someone who made some early on mistakes I'd warn against the marijuana stocks or anything else thats too concentrated. TD isnt a horrible company, but its best to just own a canadian ETF that holds a ton of Canadian bank (and other industry) stocks so your money isn't concentrated in a single company. You will have a lot less risk that way.

You arn't playing with huge amounts of money here, but after a year or two you hopefully will realize that a Canadian couch potato type portfolio is best for you where you split out your money between a few simple ETF funds and then just hold them forever. I'd say anything more than 5% of your portfolio in individual stocks (TD) or crazy gambles (marijuana stocks) is too much. It makes a big difference once you start accumulating more money, and you will feel safer in highly diversified ETF's that hold hundreds of stocks in them.

My biggest hope is actually that you loose money in your gambling with individual stocks so it will teach you that this is a bad route. If you happen to luck out in your gambling hopefully that doesnt provide mental confirmation for you to go out in the future and bet larger sums on other gambles.

Good questions, and good luck!

tyir

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Re: Canadian Newbie investing 13k in stocks (TFSA)
« Reply #14 on: January 22, 2017, 10:00:24 PM »
Hi Scot, I'm around the same age and also Canadian. I agree with most of the advice about not putting so much into individual stocks, but since this isn't a huge amount I don't think it's a big deal and it may work out ok - as you say, it's just very high risk/reward.

My biggest issue with your proposed portfolio is the massive amount of country bias. Canada is like 5% of the global market, so I don't see why you want to put every egg in that basket. You probably should read this article: http://canadiancouchpotato.com/2012/05/22/ask-the-spud-does-home-bias-ever-make-sense/

At any rate, I don't see why you want to put so much in TD specifically. It will most likely do fine, but will probably be very coorlated with VCN. I'd say switch that component with XAW/VXC.


Captain and Mrs Slow

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Re: Canadian Newbie investing 13k in stocks (TFSA)
« Reply #15 on: January 25, 2017, 07:28:37 AM »
For investing advice check out Canadain Money Forum, it's quite good and not so international

Filliteracy

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Re: Canadian Newbie investing 13k in stocks (TFSA)
« Reply #16 on: January 25, 2017, 02:25:51 PM »
Thank you so much everyone for your input!

With your help I did a bit more research and found a recommended CDN Vanguard ETF.

Ended up doing roughly:
1/3 of CDN ETC (VCN)
1/3 TD Bank
and the other 1/3 I split up into a REIT (Plaza), and 2 medical marijuana companies (Canopy and Aphria)

fingers crossed


Tightfistedscot, Canadian here as well. Two pieces of advice: when your dad says "wait until x" or something to that effect, that's market timing. Timing the market is a losing proposition. Secondly, it's clear to me that you don't understand the difference between an investment, and speculation. Your weed stocks (I own APH myself) are speculation. The fundamentals don't currently support their valuation, which is entirely propped up by expectations of future government policies. If you choose to speculate, you should mentally keep it separate from your portfolio, and shouldn't represent more than 10% of your portfolio (from The Intelligent Investor by Graham).

I also concur with the concerns of other posts as to your allocation (why did you purchase 100% Canadian?). I'm 26, and my TFSA portfolio is broken down into:

50% VUS
20% BND
20% VEU
10% VCE

I also own (speculatively) 100 shares of Total S.A. (pays 6% dividends, is fifth largest vertically integrated oil multinational), and 170 shares of Aphria, because reasons. I make sure that the lion's share of my portfolio is index funds, because getting rich means having a boring portfolio. Putting almost 33% of your portfolio in weed stocks is playing with fire. Try 5%...