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Thread: Investment Opportunities?

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    Default Re: Investment Opportunities?

    Quote Originally Posted by Axeman33 View Post
    So I've had a little time to do some reading but not much. I've been busy getting work done at my cottage with my free time.

    I am probably going to go with an ETF to start but I am curious, do different ETFs focus on different sectors?
    Yes... different industries, geographies, products. You can find an ETF for practically any theme.

    In my opinion the only ETFs worth buying are the ones that track the big indexes (S&P 500, Nasdaq, DOW, etc). The reason is because these charge the lowest MERs since they don't require active management. As you get into more specialized ETFs like oil & gas, marijuana, emerging markets, etc you will pay significantly higher fees for what will likely amount to inferior performance.

    Canadians should buy ETFs from ishares or Vanguard. Those are the two leaders that offer the broadest array of products and highest volume.

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    Default Re: Investment Opportunities?

    Quote Originally Posted by blayze View Post
    Yes... different industries, geographies, products. You can find an ETF for practically any theme.

    In my opinion the only ETFs worth buying are the ones that track the big indexes (S&P 500, Nasdaq, DOW, etc). The reason is because these charge the lowest MERs since they don't require active management. As you get into more specialized ETFs like oil & gas, marijuana, emerging markets, etc you will pay significantly higher fees for what will likely amount to inferior performance.

    Canadians should buy ETFs from ishares or Vanguard. Those are the two leaders that offer the broadest array of products and highest volume.
    I've been looking at Vanguard and Mawer ETFs... do you know much about Mawer?
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    Default Re: Investment Opportunities?

    Quote Originally Posted by lucafen4 View Post
    I've been looking at Vanguard and Mawer ETFs... do you know much about Mawer?
    Is Vanguard the VFV-T listing?
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    Default Re: Investment Opportunities?

    Quote Originally Posted by Axeman33 View Post
    Is Vanguard the VFV-T listing?
    Vangaurd is a firm that creates ETF's, so you're not actually looking for Vangaurd itself, but the ETF's they offer. (VFV is one of them though, so you're on the right track).

    For a new investor, I would recommend something VERY simple from Vangaurd. This is a site that helped me a lot what I was starting out: https://cdn.canadiancouchpotato.com/...-ETFs-2019.pdf

    For equity (stocks), they recommend a simple 1 fund portfolio: VEQT (which is a collection of over 12000 global stocks and gives you instant world-wide diversification). When I was starting out, these 1 fund solutions didn't exist so I have 4 funds that essentially combine to do the same thing. You can see it's holdings and everything else about it here: https://www.vanguardcanada.ca/indivi...nced/?overview

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    Default Re: Investment Opportunities?

    Quote Originally Posted by forumname View Post
    Vangaurd is a firm that creates ETF's, so you're not actually looking for Vangaurd itself, but the ETF's they offer. (VFV is one of them though, so you're on the right track).

    For a new investor, I would recommend something VERY simple from Vangaurd. This is a site that helped me a lot what I was starting out: https://cdn.canadiancouchpotato.com/...-ETFs-2019.pdf

    For equity (stocks), they recommend a simple 1 fund portfolio: VEQT (which is a collection of nearly 4000 global stocks and gives you instant world-wide diversification). When I was starting out, these 1 fund solutions didn't exist so I have 4 funds that essentially combine to do the same thing. You can see it's holdings and everything else about it here: https://www.vanguardcanada.ca/indivi...nced/?overview
    I'll look at that link. I think somenone else shared that earlier in this thread too but I appreciate the share.

    So basically, invest money in that one fund. If I have, lets say, $500 that I want to invest, buy as many stocks that $500 will get me. As I type this, VEQT is currently going for $23.68 per share. $500 would get be roughly 20 shares in VEQT.
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    Default Re: Investment Opportunities?

    Quote Originally Posted by Axeman33 View Post
    So basically, invest money in that one fund. If I have, lets say, $500 that I want to invest, buy as many stocks that $500 will get me. As I type this, VEQT is currently going for $23.68 per share. $500 would get be roughly 20 shares in VEQT.
    Exactly. Then you essentially own little tiny fractional shares of every company within the fund. $500 would only get you ~2 shares of Apple stock for example, and then you're in big trouble if Apple goes down. This way, you get a tiiiiiiny little piece of Apple instead. And Amazon, and RBC, TD, Microsoft, CNR, Suncor, Bank of Nova Scotia, etc, etc for all 12,526 holdings. Probably every publicly traded company you've ever heard of, and thousands more.

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    Default Re: Investment Opportunities?

    Quote Originally Posted by doulos View Post
    There is this general idea being tossed around these days that you're crazy if you're not depositing into your TFSA over your RRSP, when in fact there are very good reasons not to do so for certain people.
    Care to elaborate? It's the second time you've mentioned it without explanation ie RRSP over TFSA. Thanks

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    Quote Originally Posted by audiopile View Post
    Care to elaborate? It's the second time you've mentioned it without explanation ie RRSP over TFSA. Thanks
    I just assume that explanation is outside of my tax bracket
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    Default Re: Investment Opportunities?

    Quote Originally Posted by audiopile View Post
    Care to elaborate? It's the second time you've mentioned it without explanation ie RRSP over TFSA. Thanks

    You may have missed it. Post 53 by forumname and post 59 by me.

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    Default Re: Investment Opportunities?

    Quote Originally Posted by audiopile View Post
    Care to elaborate? It's the second time you've mentioned it without explanation ie RRSP over TFSA. Thanks
    RRSP vs. TFSA

    RRSP
    An RRSP allows the investor to use pre-tax dollars to invest. All gains are sheltered from tax and money withdrawn from an RRSP is taxable income.
    Because Canada has a progressive tax system (you pay a higher percentage of tax the more you make) the RRSP allows those who are making a higher income during their working years to reduce their taxable income, and thus tax payable in their working years and shift it to taxable income in their retirement years, where their income, and marginal tax rate will likely be lower.
    An RRSP is great for a "traditional worker" who has a standard bell curve income arc low, higher, highest near end of career and then a lower income in retirement.

    Quick Example:
    Worker today making $110,000. At $110k every dollar earned is taxed federally at 26%. If the worker earns $10k he pays $2,600 in tax and has $7,400 left to invest (I’m ignoring provincial and other deductions for simplicity)
    If the worker makes a $10k deposit into an RRSP his taxable income for the year is reduced by $10k and becomes $100,000 for the year. He leaves the money in the RRPS and until he retires. When he retires his expenses are much lower: no kids, no mortgage, simpler lifestyle. Since his expenses are lower he can live off a lower income.
    The worker’s income during retirement is $60k. So when he withdraws the money in retirement he now pays tax at 20.5% as opposed to 26%. Even if the worker never invests the $10k or makes any return on his investment he still saves taxes by paying income on the $10k at a lower tax bracket.
    Now, assuming the worker had a long time period he can expect to make between 4-8% return on investment year over year. All of those returns are tax free so long as they remain in the RRSP. So if his $10k becomes $40k over 20 years (not unrealistic number) the returns are tax-free. The worker can withdraw the $40k over the term of his retirement (at 71 things change) and continue to pay the 20.5% rate (or lower) to again reduce the total in taxes.

    The above is a basic example. The greater the difference between the worker's income in the year he makes an RRSP deposit and his income in the year he withdrawals, the greater the advantage the RRSP offers.

    The downsides to an RRSP are that the income does become taxable when withdrawn. Further, all withdrawals needs to be reported for tax purposes and it can be time consuming to get access to money.
    Think of an RRSP as an old school piggybank you have to smash to access. It's there when you need it but you only want to access it when absolutely necessary. the "one-smash" can be the length of retirement.

    TFSA

    A TFSA is basically the exact opposite of an RRSP. You invest after tax dollars into the account, all gains are tax free (the same) but when you withdraw funds the withdrawal is tax free.

    Also, it is much easier to continually deposit and withdraw than an RRSP. With an RRSP once you withdraw the space is gone forever, with a TFSA you continually gain $5,500 (or$6k) of space every year
    On the point of taxes, since you are investing after tax dollars and paying no tax on gains ever, a TFSA makes sense if you currently have a lower income than you expect to have when you want to withdraw.
    Because the withdraw rules are more lax for a TFSA makes sense for shorter term horizon investing, or for any withdraw you plan to make during a time where you will have a relatively high income.

    A TFSA is like a piggback with a plug in the bottom. You can put money in, pull the plug and get money out and then put money back in over and over again. You still have to do some tracking to ensure you do not over contribute but there are not tax consequences for a deposit or withdrawal.

    Conclusion:
    Invest in your RRSP first if:
    You have a higher income now then you expect to have in retirement. And
    You are investing for the long-run. Typically retirement.

    Invest in your TFSA first if:
    You are saving for something in the short to mid-term other than retirement
    You have a lower income now than you expect to when you withdrawal

    One final note, if you have both an RRSP and a TFSA and you put some portion of your funds into a high-risk, high-reward investment, it is perferable to make the high-risk investments in your TFSA because
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    Default Re: Investment Opportunities?

    So I dont have any RRSPs but I do have money in a TFSA. If I'm looking at buying ETFs, how do I differentiate between where I'm buying them from?

    That may be a dumb question to some but as someone who's never done stocks/investments, I'm not sure how it works in that regard.
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    Default Re: Investment Opportunities?

    Quote Originally Posted by Axeman33 View Post
    So I've had a little time to do some reading but not much. I've been busy getting work done at my cottage with my free time.

    I am probably going to go with an ETF to start but I am curious, do different ETFs focus on different sectors?
    Yes, there is pretty much an ETF for everything you can think of and they are not all created equally so do your research.

    Nothing wrong with keeping it simple and buying one that tracks the entire index. Both the TSX in Canada and the S&P500 / Dow Jones are on sale currently. Sale could get better or it may not, no one knows. Nothing wrong with starting to buy a little bit every week or month right now and create good savings habits.

    Of course if you're looking for something more specific like Canadian oil ETFs,they also exist. Mind the up front fees as well as the MER fees on anything you buy, that's very important for longer term investors.
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    Default Re: Investment Opportunities?

    Quote Originally Posted by Axeman33 View Post
    So I dont have any RRSPs but I do have money in a TFSA. If I'm looking at buying ETFs, how do I differentiate between where I'm buying them from?

    That may be a dumb question to some but as someone who's never done stocks/investments, I'm not sure how it works in that regard.
    So there's a few parties involved
    Your financial institution - This is where you open the TFSA account. This is either a bank or an online trading platform (Questrade) or similar.
    To buy an ETF you need to decide what ETF(s) you are wanting to buy.

    Because I cannot come up with anything better than couch potato strategy lets' use it's reccomendations

    https://cdn.canadiancouchpotato.com/...-ETFs-2019.pdf

    The one question you have to answer when using the couch potato model is your "risk assessment" from very risk averse to not risk averse at all.
    There is truth in the phrase "High Risk, High Reward" risker investments will, as a general rule:

    1. fluctuate more over the short-term; and
    2. give better performance over the long-term.

    If you can handle big swings (especially down-swings) and have a long investment horizin (10+ years) than a higher percentage of your portfolio can be invested in equity shares (stocks, which are riskier than bonds). If you are less risk averse or investing for the short-term you should go with a higher percentage of bonds (less risky).

    Let's say you want to invest the money stashed in your TFSA and you do not need it for 10 years or more. You decide to invest in a 60%equity/40% bond portfolio, this is a medium risky option (say a 6/10).
    The best option here is to buy the product "Vanguard Balanced ETF Portfolio" Trading symbol "VBAL"
    One share of VBAL can be purchase for $23.83

    Here is the fact sheet for VBAL
    https://www.vanguardcanada.ca/indivi...nced/?overview

    When you buy VBAL you are pooling your money with millions of others and buying a tiny fractional share of 12,526 different stocks and 16,000 different bonds.
    They are as mentioned 60% stocks and 40% bonds.
    The stocks cover all corners of the globe, with 40% US, 30% CDN, 5% Japan, 4% UK 3% China. .....

    So to buy VBAL you log onto your TFSA account online. Go to "Buy ETF"/"Buy" option.
    You may have to choose a stock exchange, you would pick TSX which is the Toronto Stock Exchange, where Vanguard Canadian products are bought and sold.
    You'll have to decide how many units to buy, if you want to invest all your money then [Total] - [$10] / price = number of shares you can purchase, round-off any partial shares.

    The $10 is in case there is a purchase fee, if it is less or non-existent you can ignore.
    Finally, for now it's probably best to buy at "market price" meaning you will pay whatever the market price is the instant you click "buy". VBAL is so massive the price will not change much.

    After you click buy, within about 60 seconds your account should update to show you holding x number of shares in VBAL. Multiple the units by the price and you get your market value.

    Now, here is the most important part. Log-Off and Do NOT check your account for at least 6 months

    The price will fluctuate daily, it will go up and down and all over the place. If you think you know what the market is going to do it will likely do the opposite half the time. If it dips you may get nervous and try and sell. Ignore all the noise, live your life and in 10+ years when you want the money go back and check, almost certainly your investments will be worth more than the day you purchased and by leaving your money alone in a low fee option you will most likely do better than you could have picking stocking yourself or paying someone to pick stocks for you.
    If
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    Default Re: Investment Opportunities?

    And if you aren't invested currently. It's a good time. Everything is down... Some are down 30+% from a month ago. Most of the Vanguard series are down 10ish or more %.
    If CV-19 sticks around, we'll see further losses. I would set up bi-weeklyor monthly ETF purchases. If starting out - just at the minimum. That way you're buying in little bits at a time wherever the EFT is priced at.

    For example:
    $500 at $23.50 - initial
    every two weeks/month:
    or whatever the min. is.
    $50 at $23.22
    $50 at $24.10
    $50 at 22.44

    This will, over time insulate you from the larger ups and downs.

    It's a great time to buy in.
    It's a really bad time to be selling.
    And right now.. Lawman is totally correct. Don't look for six months.
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    Default Re: Investment Opportunities?

    Quote Originally Posted by lucafen4 View Post
    And if you aren't invested currently. It's a good time. Everything is down... Some are down 30+% from a month ago. Most of the Vanguard series are down 10ish or more %.
    If CV-19 sticks around, we'll see further losses. I would set up bi-weeklyor monthly ETF purchases. If starting out - just at the minimum. That way you're buying in little bits at a time wherever the EFT is priced at.

    For example:
    $500 at $23.50 - initial
    every two weeks/month:
    or whatever the min. is.
    $50 at $23.22
    $50 at $24.10
    $50 at 22.44

    This will, over time insulate you from the larger ups and downs.

    It's a great time to buy in.
    It's a really bad time to be selling.
    And right now.. Lawman is totally correct. Don't look for six months.
    Yeah good idea.

    The only thing I'll add is this is a great idea if there are no transaction fees. If you're paying $10 a purchase you may want to save up to a decent amount: likely at least $1k before purchasing.
    Do NOT as an example: pay $10 to make a $50 or $100 purchase, as the fees will eat away at any returns.
    Lots of online platforms have free to buy ETF options in which case this works, if your platform does not offer that than consider the fees before making a lot of small purchases.
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    2xC, 2xRW, 2xLW, 4xD, 3xUtil, 2xG, 5 Bench
    G, A, P, PIM, PPP, SHP, GWG, SOG, Hits, W, SV%, GAA, SVs
    C: C. Keller, C. Mittelstadt, B. Nelson, R. Strome,
    LW: K. Connor, B. Tkachuk, J. Gaudreau, J. Marchessault, E. Rodrigues, A. Lafreniere
    RW: K. Fiala, J. Bratt, T. Jeannot V. Arvidsson
    D: R. Josi, J. Trouba, E. Gustafsson,
    G: L. Thompson, F. Gustavsson, V. Vanecek
    NO IR

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