I am a younger Canadian and want to put more thought into investing, and investing in Canada. What would you recommend? : personalfinancecanada

[–] [email protected] 1 points 1 day ago* (last edited 1 day ago)

I'd buy VCN.TO in your tfsa, to avoid withholding tax.

I'd do VO and VTI for RRSP, using IKBR for conversion to USD. Again to avoid withholding taxes, and to provide diversification.

Then your margin account do XAW.TO.

This is easy and avoids all the pitfulls of taxation while optimizing diversity. Though you can do some XEF.TO if you want more Europe exposure in your margin, since your RRSP is heavily into US and you want to keep it relatively balanced. Doing 5-10% KILO.TO for disaster risk can also be wise, as gold tends to spike when the stock market bailout comes in.

[–] [email protected] 2 points 1 month ago

TFSA with broad-exposure index ETFs is usually going to be the best option if you're young. I have something like that.

FWIW I cut out the US specifically and it's served me well over the past months.

[–] [email protected] 2 points 1 month ago

You’re on the right track

ETFs and Canadian banks are considered lower risk investments because it’s unlikely they will be gone tomorrow

[–] [email protected] 4 points 1 month ago

If you want a 100% Canadian portfolio, I would do some mix of ZCN and ZAG. Both are 100% Canadian from BMO. If you want international diversification without the US you can use VIU. 60/20/20 ZCN/ZAG/VIU would be a portfolio that heavily prioritizes Canada with reasonable diversification without investing at all in the US. (Which, from the title and political climate, I assume you might be looking for.)

[–] [email protected] 4 points 1 month ago (1 children)

I don't know but the market is very volatile right now. Whatever you invest now you might lose big in the short term.

But this all depends on your objective. What are you investing for? Short term gains? Retirement revenue? To buy your first property?

If you can answer that, we can give you better advice.

[–] [email protected] 2 points 1 month ago (1 children)

Long term gains, likely for a first property

[–] [email protected] 2 points 1 month ago* (last edited 1 month ago) (1 children)

RRSPs and FHSA is where it's at. Now what to tie them to is another story.

Honestly a good adviser at your bank would probably be better suited to help you.

In these times I would probably go with something low risk with guaranteed capital so you don't lose your initial investment at least. The interest will be lower though.

Edit: I forgot to mention to look up insurance companies as well, like Manulife or Sunlife. They have RRSPs and TFSAs as well with often more and better investment vehicles that bring more returns, but often with no guaranteed capital.

[–] [email protected] 0 points 1 month ago* (last edited 1 month ago) (1 children)

DO NOT take advice from financial advisors at banks in Canada. They are unregulated sales people paid to give advice that serves the interest of their employer.

The only people OP should consider taking professional advice from are flat-fee financial advisors. They will not find them at banks. And they must be flat fee.

If OP is not paying for the advice up front the advice is not going to be in OPs best interest.

[–] [email protected] 2 points 1 month ago (1 children)

Not necessarily. I mean they'll present you with the various investments the bank offers, like mutual funds and ETFs and things like that. They'll have different plans for you depending on how much you're willing to invest and how much risk you want to take, like high risk and no guarantees on your capital to low risk and guaranteed capital.

An independant financial advisors will tell you just about the same thing,

I don't see how one can benefit the bank more than another? If you can enlighten me I'd appreciate it.

And I also forgot to mention that insurance companies also offer TFSAs and RRSPs and often have more and better investment vehicles than banks with better returns.

[–] [email protected] -1 points 1 month ago* (last edited 1 month ago) (1 children)

Yes necessarily. If you have the ability to determine whether they’re pulling the wool over your eyes then you might as well just advise yourself at that point.

Even the internet is often a better place to get advice than an advisor at a Canadian bank who’s job performance is intimately tied with how efficiently he can scam you.

Also, I didn’t say independent financial advisor. You should also not go for advisors who are independent but charge some management fees in exchange for controlling your investments. I said flat fee financial advisor.

A flat fee financial advisor isn't going to sell you a scam mutual fund with 2% MER or advise you to take out a large debt you will not benefit from. They are paid by you and accountable to you with no authority to skim off the top of your assets. Those mutual funds you say are fine often rob people of half their retirement savings over the course of decades due to compounding effects.

You want to get advice ideally from those who have a fiduciary duty to YOU such that their interests are aligned with yours. Failing that, you want someone who has no stake in your money.

[–] [email protected] 0 points 1 month ago (1 children)

Even the internet is often a better place to get advice than an advisor at a Canadian bank who’s job performance is intimately tied with how efficiently he can scam you.

That is terrible advice! Don't listen to strangers on the internet! Not even anybody you know who isn't a professional. That's bad! They're not liable for anything.

If a bank advisor gives you bad advice they are liable. They're supposed to have a financial planner license which gives them the obligation to provide you with correct advice.

The title "financial planner" or its abbreviation "F.Pl." may be used by a person holding a diploma issued by the Institute of Financial Planning (the “Institute”) who has obtained a certificate from the AMF authorizing them to act in financial planning or who belongs to a professional order that has entered into an agreement with the AMF, in which case the person must satisfy the requirements of their professional order (see "Exceptions").

Source

Those mutual funds you say are fine often rob people of half their retirement savings over the course of decades due to compounding effects.

How can they be robbed of their retirement savings? What compounding effects? It all depends what these mutual funds have in them. I really don't see how a mutual fund can purposefully rob someone of their savings. And I especially don't see how the bank benefits from that other than the broker fees.

[–] [email protected] -1 points 1 month ago* (last edited 1 month ago) (1 children)

It is terrible advice. And it’s less terrible than advising them to go to a bank.

I’m sorry but you’re misinformed. When you walk into a bank and ask for financial advice those employees are NOT liable in Canada nor are they required to have full certifications.

They have no fiduciary duty to you and in fact they are PUNISHED for not scamming effectively or often enough for the banks. They have performance quotas to meet that are misaligned with their customers interests.

Pay for someone who is actually qualified.

As for why 1-2% MER actively managed funds pushed by banks can drain roughly half of your retirement savings there’s tons of info out there on how compounding effects work and the downsides of active management.

I encourage you to go pay for a qualified financial planner. It sounds like you’ve been lead astray.

other than the broker fees

EXACTLY. Do you know what compound interest is?

[–] [email protected] 0 points 1 month ago (1 children)

other than the broker fees
EXACTLY. Do you know what compound interest is?

Of course I know what compound interest is. It has nothing to do with broker fees. Broker fees are flat fees you pay for managing a fund. Maybe I don't get your point?

[–] [email protected] 1 points 1 month ago* (last edited 1 month ago) (1 children)

Between brokers fees & management fees those can easily drain half the value of a mutual fund over 30 years.

You don’t need 1-3% in fees to get lower ROI than a passive index fund with 0.25% MER. But a salesman at a bank will absolutely tell you otherwise.

[–] [email protected] -1 points 1 month ago (1 children)

I understand your point. But whether it's at a bank or not it's still the same thing. And it would be stupid for a bank to promote and sell investments that purposefully underperform just to take brokerage fees where the customer ends up losing more money if fees than anything. You'd end up with a class action lawsuit pretty quick.

Both my parents have worked in financial institutions initially as advisors and eventually became certified financial planners. I grew up learning about all the different investments the banks offered and the responsibility they had towards their customers. They wouldn't pull this kind of crap and always had their customers best interest at heart.

However, my mother did work dor a while in an insurance company as a quality assurance monitor on sales calls for insurance policies. The shit the advisors there would pull was stunning. Now THOSE guys were leeches. Selling resellable insurance plans that would cost the customer so much only to find out they were ineligible in the first place and things like that.

[–] [email protected] 1 points 1 month ago (1 children)

No, a mutual fund with 1-2% MER is not the same as an ETF with 0.25% MER. One of them steals half your money while the other does not.

it would be stupid for a bank to promote and sell investments that purposefully underperform

Nobody said purposefully. It doesn’t need to be purposeful for the stats to play out returns are lower for active management.
I just explained how there are literally massive financial advantages to them selling these funds.

Believe it or not it is very financially lucrative to drain up to half of people’s retirement funds while disguising it under opaque language they know people won’t understand (like MER, brokerage fees) while “”justifying”” their fees with hopes that they would outperform the market (which they don’t).

Sorry to break it to you but your parents were raised in a world where we had less data on these things. We now know their work over the years drained people of their money and siphoned it up to banks.

They didn’t need to be conscious of it for that to be the effect. That’s simply what happens. And because these are risk adjusted opportunity costs people don’t know better.

Moreover your parents worked in a market when 0.25% MER All in One ETFs didn’t exist. So it’s a moot point.

[–] [email protected] 1 points 1 month ago

Ok well I'm afraid we're going to have to disagree here.

In any case, I appreciate you taking the time to reply to me and explain your point of view.

[–] [email protected] 6 points 1 month ago (1 children)

How deep do you want to go? A person with an intense desire to understand everything and use the best data to take sensible decisions will like The Rational Reminder podcast and it’s wide content. Recently it discussed a paper challenging the use of bonds in a portfolio and proposing 100% stock in a 1/3 domestic market - 2/3 international market split as the optimal portfolio in most situations. Don’t take my word for it, understand the underlying logic and if it’s right for you yourself. Bonus for the nerds: how is the current chaos supporting or contradicting the efficient market theory?

If you want a more condensed explanation: don’t invest money you will need within the next decade and focus on low cost (low MER) index etf. Some all in one etf exist or you can choose 2-4 etf and rebalance them yourself. You don’t have enough talent and ressources to do single stocks: most professionals gets results below the market average.

[–] [email protected] 2 points 1 month ago (2 children)

Thanks!

If you want a more condensed explanation: don’t invest money you will need within the next decade

Does this include ETFs? I have some money in one and more sitting in a bank account, figured I'd make a plan and set it up properly

[–] [email protected] 2 points 1 month ago

Congrats for thinking like this when you’re young!(I wish I had!) Yes, make a plan! That’s the first step. Write down your goals (what you want in life and need the money for and when) Then do your risk profile. Then check that you have the basics of personal finance in place (no debts, emergency fund, etc) There are courses and online resources for this. McGill has just updated their personal finance and investing online course!

[–] [email protected] 3 points 1 month ago

Yes ETF are the best tool to access low cost index fund.

Both stock and bond will see high variation in price : don’t put yourself in a situation where you divorce or loose your job during a downturn only to need the money and sell at a loss.

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