What would you tell someone who wants to get started investing?

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
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cannew
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Re: What would you tell someone who wants to get started investing?

Post by cannew » 21 Jun 2017 16:19

adrian2 wrote:
21 Jun 2017 15:33

I've recommended investing with no transaction costs, so my "generic buy" does not involve commissions.
So the answer to your question is: the same number of shares / units are purchased with $150 in a DRIP vs. $150 in other money.
Investing today vs. next week vs month end vs. quarter end makes no difference; just do it.
The more frequent transactions (e.g., $150 in dividends) would be more of a headache in tracking. For a taxable account, it's going to be a bigger headache.
Care to name the specific no fee "generic buy" Hers are BNS.
As mentioned before we are talking about 4 transaction per year to record, not much of a headache.

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Re: What would you tell someone who wants to get started investing?

Post by adrian2 » 21 Jun 2017 16:55

cannew wrote:
21 Jun 2017 16:19
adrian2 wrote:
21 Jun 2017 15:33

I've recommended investing with no transaction costs, so my "generic buy" does not involve commissions.
So the answer to your question is: the same number of shares / units are purchased with $150 in a DRIP vs. $150 in other money.
Investing today vs. next week vs month end vs. quarter end makes no difference; just do it.
The more frequent transactions (e.g., $150 in dividends) would be more of a headache in tracking. For a taxable account, it's going to be a bigger headache.
Care to name the specific no fee "generic buy" Hers are BNS.
Widely diversified, low cost index funds such as the ones from Tangerine, PC Financial, TD Bank etc.
Mawer Balanced is also a good choice.
A single stock carries a lot of risk that can be avoided.
As mentioned before we are talking about 4 transaction per year to record, not much of a headache.
Let's reverse engineer your example.
$150 per quarter is $600 per annum, that works out to about 200 shares of BNS worth about $16k .

If she does not save a dollar more, just the forced savings imposed by the DRIP, she will not get very far.

Let's say she can only manage $100 per month, which will result in 16 transactions per year, and $1,800 total investment.

It makes no practical difference whether she has 12x$100 monthly investments + 4x$150 DRIP's vs a single investment of $1,800 once a year. In a taxable account, it's a significant difference in recording 1 transaction vs. 16.

If one feels it's easier to save $100 every month compared to coming up with $1k+ every year, my first suggestion is at least do it in a registered account. And my second suggestion is to try and save a bit more. :)
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Re: What would you tell someone who wants to get started investing?

Post by cannew » 21 Jun 2017 17:06

adrian2 wrote:
21 Jun 2017 16:55

Widely diversified, low cost index funds such as the ones from Tangerine, PC Financial, TD Bank etc.
Mawer Balanced is also a good choice.
A single stock carries a lot of risk that can be avoided.

Tangerine, PC Financial Mer 1.07%
TD Bank Mer 1.91%
Mawer Balanced Mer 1.19% to 1.43%
Not exactly no fees!

All investing comes with risk, but compare BNS chart and dividend history going back to 1999
https://www.google.ca/finance?q=TSE%3AB ... GEUumjmoAG
Set chart to All
Here's Mawer Balanced fund chart:
https://www.google.ca/finance?q=MUTF_CA ... mIUd6zl_AJ
Roughly the same price growth as BNS 2008 to today, about 65% but Mawer doesn't show any distributions and deduct the Mers each year.
Investing is personal and if one prefers funds or etf's fine. I'll stick with individual stocks.

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Re: What would you tell someone who wants to get started investing?

Post by BRIAN5000 » 21 Jun 2017 17:54

4. Costs matter. Diversification matters. I'll do the first few trades. I'll do so in a pattern easily replicable. She can take over when she cares to. No trade for less than $1K. XAW or VXC for ex-Canada. VCN and VDY for in Canada. (Refinements like NG to buy US domiciled ETFs in an RRSP can wait.)
You're already going to use XAW if you use XIC you can use a PACC monthly to match her contributions (min $50 each) if its registered no book keeping?

I want my daughter to do this because it's off the top and automatic just like her RRSP 5% (max) from paycheck with employer match.

I will maybe kick in a few $1000 to each ETF she picks to start the PACC but I want her to make the trades for initial purchase, need one share, no broker fees, no partial shares, no discount, TFSA in her name already set up at TDI.
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Re: What would you tell someone who wants to get started investing?

Post by CROCKD » 21 Jun 2017 17:57

My post re investing for my minor grand daughters seemed to have elicited an avalanche of posts. Meanwhile I have been on a seniors hike all day. :)
It has certainly given me much to consider and think about and I thank everyone who contributed to the discussion.
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Re: What would you tell someone who wants to get started investing?

Post by steves » 21 Jun 2017 18:33

Marry a rich widow. :thumbsup:
Live Rich, Die Broke (but not too soon).

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Re: What would you tell someone who wants to get started investing?

Post by cannew » 21 Jun 2017 21:21

adrian2 wrote:
21 Jun 2017 15:33

If she does not save a dollar more, just the forced savings imposed by the DRIP, she will not get very far.

Let's say she can only manage $100 per month, which will result in 16 transactions per year, and $1,800 total investment.

It makes no practical difference whether she has 12x$100 monthly investments + 4x$150 DRIP's vs a single investment of $1,800 once a year. In a taxable account, it's a significant difference in recording 1 transaction vs. 16.

If one feels it's easier to save $100 every month compared to coming up with $1k+ every year, my first suggestion is at least do it in a registered account. And my second suggestion is to try and save a bit more. :)
You seem to be applying this to someone older and working full time. We are talking about an 18 yr old student working part time. In my books for her to be saving any amount is great, $100 per month is fantastic. I'll ignore your other concerns.

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Re: What would you tell someone who wants to get started investing?

Post by adrian2 » 21 Jun 2017 22:26

cannew wrote:
21 Jun 2017 21:21
adrian2 wrote:
21 Jun 2017 15:33

If she does not save a dollar more, just the forced savings imposed by the DRIP, she will not get very far.

Let's say she can only manage $100 per month, which will result in 16 transactions per year, and $1,800 total investment.

It makes no practical difference whether she has 12x$100 monthly investments + 4x$150 DRIP's vs a single investment of $1,800 once a year. In a taxable account, it's a significant difference in recording 1 transaction vs. 16.

If one feels it's easier to save $100 every month compared to coming up with $1k+ every year, my first suggestion is at least do it in a registered account. And my second suggestion is to try and save a bit more. :)
You seem to be applying this to someone older and working full time. We are talking about an 18 yr old student working part time. In my books for her to be saving any amount is great, $100 per month is fantastic. I'll ignore your other concerns.
If $100 per month is fantastic, great. Just put it in a registered account.
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Re: What would you tell someone who wants to get started investing?

Post by ockham » 21 Jun 2017 23:00

[quote=BRIAN5000

..... you can use a PACC monthly.....[/quote]

After your earlier post, I looked at the BlackRock PACC quickly yesterday. The mechanics weren't clear to me. Right now, my daughter has set up a PAC to move funds from her bank account to the brokerage. Do you use the BR PACC to move funds from the brokerage to BR??

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Re: What would you tell someone who wants to get started investing?

Post by BRIAN5000 » 22 Jun 2017 00:14

ockham wrote:
21 Jun 2017 23:00
[quote=BRIAN5000

..... you can use a PACC monthly.....
After your earlier post, I looked at the BlackRock PACC quickly yesterday. The mechanics weren't clear to me. Right now, my daughter has set up a PAC to move funds from her bank account to the brokerage. Do you use the BR PACC to move funds from the brokerage to BR??
[/quote]

We haven't tried this yet and it was new to me that's why I asked if anyone was using it. I will phone TDI ASAP and report back.
“Sometimes you are going to sell early and wish you would’ve held on, other times you will hold on a
little bit longer and wish you would’ve sold early - this is just part of the game.” - Frank Zorilla via Abnormal Returns

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Re: What would you tell someone who wants to get started investing?

Post by BRIAN5000 » 22 Jun 2017 02:54

5. No fixed income?? No emergency fund?? Bank of Dad will continue to cover that, as it always has.
I don't like this idea to much, my daughter will have to decide on her own AA (with help if she asks) and in her mind have no backup from dad. I believe she needs to be an autonomus individual and look after herself. In her email I posted she has two competing goals short term, travel and long term, retirement she needs to figure out how to save for each, where and what products to use. If she asks for more help I'm wiiling to give some suggestions she has to pick and adjust as she sees required.
“Sometimes you are going to sell early and wish you would’ve held on, other times you will hold on a
little bit longer and wish you would’ve sold early - this is just part of the game.” - Frank Zorilla via Abnormal Returns

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Re: What would you tell someone who wants to get started investing?

Post by AltaRed » 22 Jun 2017 10:09

BRIAN5000 wrote:
22 Jun 2017 02:54
I don't like this idea to much, my daughter will have to decide on her own AA (with help if she asks) and in her mind have no backup from dad. I believe she needs to be an autonomus individual and look after herself. In her email I posted she has two competing goals short term, travel and long term, retirement she needs to figure out how to save for each, where and what products to use. If she asks for more help I'm wiiling to give some suggestions she has to pick and adjust as she sees required.
I operated under the principle of no helicoptering. From the time the bank accounts and GICs were turned over to our sons when they turned 18 almost 25 years ago, we had no input into their financial affairs, other than to respond to questions in recent years about investing ideas. There has been no lifeline over the 20+ years they have taken care of themselves, albeit I did pass through my share of an inheritance from my mother to them 2 years ago with a suggestion to use it to eliminate their mortgages. I think they invested instead.

The primay lesson we taught them from the get-go was to LBYM and they have done so throughout their lives. That is all it takes to create and accumulate savings/wealth. There really are only about half a dozen important concepts to grasp to develop a sound financial basis.
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Re: What would you tell someone who wants to get started investing?

Post by SkaSka » 22 Jun 2017 13:03

It took us several years (at least since I joined this forum) to fill out our registered accounts and 2017 has finally been the year we started investing in non-registered accounts.

Starting with registered accounts meant that there was no need to consider things like ACB and taxes for buying and selling, which was a nice thing to not worry about as you start the investing journey.

Even now, with registered accounts, after contemplating things like individual Canadian stocks, DRIP, and ETFs, we decided to go with the easiest, smoothest, and most stress-free way by deciding on a broad-based total Canadian market ETF like XIC with no DRIP and monthly purchases of >$1000. That way, the quarterly dividends can get scooped up with monthly contributions and reinvested, as opposed to having one more transaction to have to keep an eye on and record (the DRIP).

As much as I enjoy investing, I do not consider spending more time than necessary with the paperwork involved as a good use of my time!

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Re: What would you tell someone who wants to get started investing?

Post by BRIAN5000 » 22 Jun 2017 16:00

I called TDI and of course they have no idea what I'm talking about when I mentioned PACC into iShares ETF's. A couple of more calls and I got a nice lady in Boston that will send me some info and hopefully a contact person at TDI cause TDI is on the list as a Plan Agent. Meanwhile I will try to post the PACC enrolment form or at least a link. The form requires a void cheque so it looks like it's direct from your chequing account. She said she will send all relevant information so we will see says she took over the position about 1.5 years ago so it's not a new thing?

https://www.blackrock.com/ca/individual ... -en-ca.pdf

How can I buy ETF shares on a monthly savings plan?

http://www.moneysense.ca/columns/etf-sh ... ings-plan/
DRIP/PACC/SWP Investment Programs
https://www.blackrock.com/ca/individual ... t-programs
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little bit longer and wish you would’ve sold early - this is just part of the game.” - Frank Zorilla via Abnormal Returns

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Re: What would you tell someone who wants to get started investing?

Post by ockham » 22 Jun 2017 22:54

BRIAN5000 wrote:
22 Jun 2017 02:54
5. No fixed income?? No emergency fund?? Bank of Dad will continue to cover that, as it always has.
I don't like this idea to much, my daughter will have to decide on her own AA (with help if she asks) and in her mind have no backup from dad. I believe she needs to be an autonomus individual and look after herself. In her email I posted she has two competing goals short term, travel and long term, retirement she needs to figure out how to save for each, where and what products to use. If she asks for more help I'm wiiling to give some suggestions she has to pick and adjust as she sees required.
I agree with your autonomy goal, except to say that the aim of "in her mind have no backup from dad" seems artificial. If she's relying on me for product advice, and for AA advice, I'm wearing it if things go badly sideways. Period. I know it and she knows it in the sense that she trusts me.

My rationale for no initial FI is that in the early stages of accumulation, contributions overwhelm return performance. ISTM no meaningful understanding of the emotional impact of an equity pullback is gained in circumstances where a couple of months of contributions are larger than even a bear pullback. Since a primary purpose of FI is to deal with that emotional impact, why bother in the early stages?? Lots of time to address that a bit later.

I should clarify, my daughter's investment goal is retirement. She saves for her travel separately.

P.S. Pls report when you learn more about the BlackRock PACC. I looked over their forms, they wanted a void cheque, leaving me wondering where the brokerage fit into the picture.

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Re: What would you tell someone who wants to get started investing?

Post by AltaRed » 22 Jun 2017 23:28

ockham wrote:
22 Jun 2017 22:54
My rationale for no initial FI is that in the early stages of accumulation, contributions overwhelm return performance. ISTM no meaningful understanding of the emotional impact of an equity pullback is gained in circumstances where a couple of months of contributions are larger than even a bear pullback. Since a primary purpose of FI is to deal with that emotional impact, why bother in the early stages?? Lots of time to address that a bit later.
There is a difference between having an FI allocation and an emergency fund. The former can wait for a period of years, perhaps a few decades, while the latter is really a lifeline, i.e. back stop, to a curve ball life throws at oneself.
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Re: What would you tell someone who wants to get started investing?

Post by cannew » 23 Jun 2017 09:43

AltaRed wrote:
22 Jun 2017 23:28
ockham wrote:
22 Jun 2017 22:54
My rationale for no initial FI is that in the early stages of accumulation, contributions overwhelm return performance. ISTM no meaningful understanding of the emotional impact of an equity pullback is gained in circumstances where a couple of months of contributions are larger than even a bear pullback. Since a primary purpose of FI is to deal with that emotional impact, why bother in the early stages?? Lots of time to address that a bit later.
There is a difference between having an FI allocation and an emergency fund. The former can wait for a period of years, perhaps a few decades, while the latter is really a lifeline, i.e. back stop, to a curve ball life throws at oneself.
Everyone should have funds set aside for emergency, but in one respect they should be treated the same way as funds invested for the future, Don't Touch It Unless Absolutely Needed. Funds invested should be considered Spent and one should not panic if its value drops. Just consider it a paper loss and not a big deal. Guess the exception is if one is a short term investor trying to time the market.

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Re: What would you tell someone who wants to get started investing?

Post by ockham » 23 Jun 2017 12:40

AltaRed wrote:
22 Jun 2017 23:28
ockham wrote:
22 Jun 2017 22:54
My rationale for no initial FI is that in the early stages of accumulation, contributions overwhelm return performance. ISTM no meaningful understanding of the emotional impact of an equity pullback is gained in circumstances where a couple of months of contributions are larger than even a bear pullback. Since a primary purpose of FI is to deal with that emotional impact, why bother in the early stages?? Lots of time to address that a bit later.
There is a difference between having an FI allocation and an emergency fund. The former can wait for a period of years, perhaps a few decades, while the latter is really a lifeline, i.e. back stop, to a curve ball life throws at oneself.
Agreed. But we may now be into parsing the differences between a good plan and a perfect one.

The basic elements of the answer to this thread's question, in my view, are: (i) pay off debt, (ii) identify a sustainable savings rate, (iii) if possible, make that savings rate high enough to max out TFSA and RRSP, (iii) open a discount brokerage account, (iv) move the funds saved into the brokerage, and (v) purchase a few low cost broadly diversified ETFs. Do this and, imho, you're likely to do well enough. There are still details, true, but these are the basics.

Allocation between FI and Equity is a deep problem, in part because it is deeply personal. One usually knows only in retrospect whether one got it right. My daughter is extremely risk averse. Were she to take a canned risk- profile questionnaire, the recommendation would come out "100% short term savings". She needs to see, by direct experience, how wrong that is. Hence, 100% equities to start.

Emergency funds?? She's lucky to be in a family that can and will cover that, if truly necessary. I see little point in playing psychological games with that. YMMV, of course.

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Re: What would you tell someone who wants to get started investing?

Post by kcowan » 23 Jun 2017 14:49

I think what you are saying is that DD will not pick equities. I would think maybe MAW104 would be the best you can get for her to build her confidence in consistent returns. And I would suggest at least a mini-emergency fund. The Bank of M&D will not cut it as a learning experience.
For the fun of it...Keith

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Re: What would you tell someone who wants to get started investing?

Post by BRIAN5000 » 23 Jun 2017 15:01

P.S. Pls report when you learn more about the BlackRock PACC. I looked over their forms, they wanted a void cheque, leaving me wondering where the brokerage fit into the picture.
Ok email was sent to wrong address I now have a response and checking again at TDDI and checking if info can be posted.

I believe the way it works is you have an account let's say at TDDI, you fill out the form and send it to TDDI then they send it to State Street.
“Sometimes you are going to sell early and wish you would’ve held on, other times you will hold on a
little bit longer and wish you would’ve sold early - this is just part of the game.” - Frank Zorilla via Abnormal Returns

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Re: What would you tell someone who wants to get started investing?

Post by BRIAN5000 » 05 Jul 2017 16:38

BRIAN5000 wrote:
23 Jun 2017 15:01
P.S. Pls report when you learn more about the BlackRock PACC. I looked over their forms, they wanted a void cheque, leaving me wondering where the brokerage fit into the picture.
Ok email was sent to wrong address I now have a response and checking again at TDDI and checking if info can be posted.

I believe the way it works is you have an account let's say at TDDI, you fill out the form and send it to TDDI then they send it to State Street.
I hope no one was holding their breath waiting for an answer, still working on this. I have one TD's best :? working on determining if this is possible on the discount brokerage side or not. It might only be on the wealth management side nobody knows. :roll:
“Sometimes you are going to sell early and wish you would’ve held on, other times you will hold on a
little bit longer and wish you would’ve sold early - this is just part of the game.” - Frank Zorilla via Abnormal Returns

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