Author Topic: Question before I take the plunge  (Read 1848 times)

Space Pickle

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Question before I take the plunge
« on: August 09, 2016, 10:21:38 AM »
Hi, I am almost ready to start investing. I have $13,000 saved up...I am Canadian and have been looking at buying ETFs through Questrade. Although the general wisdom says that you should not invest in ETFs unless you have < $50,000, Questrade offers commission-free ETF purchases so there's effectively no downside, right? (you still have to pay the ECN fee)

Fishfindr

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Re: Question before I take the plunge
« Reply #1 on: August 10, 2016, 11:03:11 AM »
I haven't heard of the $50k recommendation. I trade in and out of ETF's with approximately $25k-$35k on every trade.
If you're a gambler, there can be some amazing money made (SOXL for example), but I wouldn't recommend it unless
this is money you can afford to lose without losing sleep.

grettman

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Re: Question before I take the plunge
« Reply #2 on: August 10, 2016, 11:10:04 AM »
I never heard of the 50K rule either.  ETFs are fine so long as you invest and not TRADE in and out.  Stay the course.

What I don't like about ETFs is you can't put them on autopilot and I dislike having to remember to make purchases every other Friday.

FrugalFan

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Re: Question before I take the plunge
« Reply #3 on: August 10, 2016, 11:17:36 AM »
I think the general wisdom comes from the idea that higher MER's and costs don't affect you as much if your balance is small. But yeah, I use Questrade and I love the free buys, and have never sold yet. I buy at least once a month so the savings do add up.

Interest Compound

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Re: Question before I take the plunge
« Reply #4 on: August 10, 2016, 11:20:37 AM »
Travelling Biologist is right. The recommendation is to use ETFs no-matter-what if you have over $50k, because that's when the fees start to be noticeable, and ETFs have the lowest fees. Nothing wrong with using ETFs if you have less than $50k :)

Retire-Canada

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Re: Question before I take the plunge
« Reply #5 on: August 10, 2016, 11:32:34 AM »
Hi, I am almost ready to start investing. I have $13,000 saved up...I am Canadian and have been looking at buying ETFs through Questrade. Although the general wisdom says that you should not invest in ETFs unless you have < $50,000, Questrade offers commission-free ETF purchases so there's effectively no downside, right? (you still have to pay the ECN fee)

There is no downside to buying ETFs with QT regardless of how much money you have. That said if you are reading this site you are likely going to have $50K in a reasonably short time frame anyways so the question is really moot.

GreatLaker

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Re: Question before I take the plunge
« Reply #6 on: August 10, 2016, 11:50:11 AM »
The $50k guideline made sense some years ago when ETF MERs were higher and brokers often had higher minimums to get low-cost or free trades. When I started trading TDDI, most bank discount brokers charged $29.95/trade for accounts <$50k. With free ETF trades, I think they make sense at any account size.

There are some minor drawbacks with ETFs such as inability to hold partial shares, which means some cash will build up in your account even if you use drips. Also mutual funds are easier to automate regular monthly contributions.