A Guide to Savings and Investing (1 Viewer)

[Dentist]

Question for you smart folks. Current setup investments: -Work pension which I contribute 6% and get an 8% match (MER .25)-Mutual funds bought through an adviser (who doesn't charge me anything) on a bi-weekly basis. MERs between 2-2.5% :X -No debt other than mortgageI see my options as:1) Get rid of the mutual funds and put everything into my works pension. Only downside is I can't use a TFSA for this.2) Stop contributing to through my adviser and get into ETFs. Am I able to do this without a large lump sum? I don't have a big chunk of change sitting around to use for investing but I'd like to contribute bi-weekly ($300ish). 3) Keep with what I'm doing4) Other?

ETFs are bad for people contributing on a bi-weekly basis because you will incur a lot of transaction fees.An index mutual fund from Vanguard would be a far better choice.ETFs are only good if you have lump sums to invest, or you work with a discount brokerage and get either Free ETF trades or X number of free trades per month.If you use vanguard brokerage, then their ETFs are free to invest in, so then it's a good option.. same with Fidelity and their Free ETFs.. E-Trade has some toowhat is MERs?

MER = Management Expense Ratio. The cut the management firm takes off the top. Looks like Vanguard MERs come in between .09% and .45%. I don't use any brokerage right now. If, for example, I signed up with Vanguard, I could purchase any of their ETFs for free? No fees at all?

2-2.5% is horrible.Yes, if you have a vanguard account you purchase their ETFS with no transaction fees.. you just pay their management fee.Also i think there is an overall account maintenance fee if you have under 10K (but that's like $20 a year).https://personal.vanguard.com/us/insights/article/commissions-05042010fidelity also has free ETFshttps://www.fidelity.com/etfs/isharese-trade free etfshttps://us.etrade.com/investing-trading/etf

 

[Sarnoff]

2-2.5% expense ratio? Sorry but that's robbery. Your returns are going to have to be crazy good to justify that. You can't just match the market, you'd have to beat it handily.

 

[Cliff Clavin]

Question for you smart folks. Current setup investments: -Work pension which I contribute 6% and get an 8% match (MER .25)-Mutual funds bought through an adviser (who doesn't charge me anything) on a bi-weekly basis. MERs between 2-2.5% :X -No debt other than mortgageI see my options as:1) Get rid of the mutual funds and put everything into my works pension. Only downside is I can't use a TFSA for this.2) Stop contributing to through my adviser and get into ETFs. Am I able to do this without a large lump sum? I don't have a big chunk of change sitting around to use for investing but I'd like to contribute bi-weekly ($300ish). 3) Keep with what I'm doing4) Other?

ETFs are bad for people contributing on a bi-weekly basis because you will incur a lot of transaction fees.An index mutual fund from Vanguard would be a far better choice.ETFs are only good if you have lump sums to invest, or you work with a discount brokerage and get either Free ETF trades or X number of free trades per month.If you use vanguard brokerage, then their ETFs are free to invest in, so then it's a good option.. same with Fidelity and their Free ETFs.. E-Trade has some toowhat is MERs?

MER = Management Expense Ratio. The cut the management firm takes off the top. Looks like Vanguard MERs come in between .09% and .45%. I don't use any brokerage right now. If, for example, I signed up with Vanguard, I could purchase any of their ETFs for free? No fees at all?

2-2.5% is horrible.Yes, if you have a vanguard account you purchase their ETFS with no transaction fees.. you just pay their management fee.Also i think there is an overall account maintenance fee if you have under 10K (but that's like $20 a year).https://personal.vanguard.com/us/insights/article/commissions-05042010fidelity also has free ETFshttps://www.fidelity.com/etfs/isharese-trade free etfshttps://us.etrade.com/investing-trading/etf

It sure is. But it is pretty standard in Canada apparently. I'll check into those. Thanks.

 

[Cliff Clavin]

2-2.5% expense ratio? Sorry but that's robbery. Your returns are going to have to be crazy good to justify that. You can't just match the market, you'd have to beat it handily.

I know. That is why I want to get away from it.

 

[Sarnoff]

$10,000 invested for 30 years, assuming a 10% return, finishes at $174,494. 0.5% expense ratio = $22,291 in fees, so you're left with $152,203. At a 2.5% expense ratio, they take out $86,944, leaving you with $87,550. In other words, they keep about half your money.

 

[Cliff Clavin]

e-trade free etfshttps://us.etrade.com/investing-trading/etf

So this looks like the route I'd have to go. 50 ETFs to choose from that are commission free. (Fidelity is no good in Canada and Vanguard only offers 11 funds).Any other tips/advice? This is going to be long term. I have no experience trading but have a mediocre grasp on the fundamentals of investing. When it comes to choosing funds... where do I start? Reading a prospectus isn't going to mean much to mean. What happens with the dividends from these funds?

 

[NewlyRetired]

e-trade free etfs

https://us.etrade.com/investing-trading/etf

So this looks like the route I'd have to go. 50 ETFs to choose from that are commission free. (Fidelity is no good in Canada and Vanguard only offers 11 funds).Any other tips/advice? This is going to be long term. I have no experience trading but have a mediocre grasp on the fundamentals of investing. When it comes to choosing funds... where do I start? Reading a prospectus isn't going to mean much to mean. What happens with the dividends from these funds?

When you buy the fund you will have the choice to reinvest any capital gains and dividends back into the fund or just have them put into your account. Either way you pay taxes on them.

 

[Cliff Clavin]

e-trade free etfs

https://us.etrade.com/investing-trading/etf

So this looks like the route I'd have to go. 50 ETFs to choose from that are commission free. (Fidelity is no good in Canada and Vanguard only offers 11 funds).Any other tips/advice? This is going to be long term. I have no experience trading but have a mediocre grasp on the fundamentals of investing. When it comes to choosing funds... where do I start? Reading a prospectus isn't going to mean much to mean. What happens with the dividends from these funds?

When you buy the fund you will have the choice to reinvest any capital gains and dividends back into the fund or just have them put into your account. Either way you pay taxes on them.

Why is that? With my current mutual funds, my dividends get reinvested and I do not have to pay tax on them. Canada vs US thing?

 

[NewlyRetired]

e-trade free etfs

https://us.etrade.com/investing-trading/etf

So this looks like the route I'd have to go. 50 ETFs to choose from that are commission free. (Fidelity is no good in Canada and Vanguard only offers 11 funds).Any other tips/advice? This is going to be long term. I have no experience trading but have a mediocre grasp on the fundamentals of investing. When it comes to choosing funds... where do I start? Reading a prospectus isn't going to mean much to mean. What happens with the dividends from these funds?

When you buy the fund you will have the choice to reinvest any capital gains and dividends back into the fund or just have them put into your account. Either way you pay taxes on them.

Why is that? With my current mutual funds, my dividends get reinvested and I do not have to pay tax on them. Canada vs US thing?

Whoops, sorry, forgot you are Canadian. Yes, in US we pay taxes for the year the dividends and or capital gains distributions are granted, whether they are reinvested or not.

 

[Ketamine Dreams]

Interesting and frightening at the same time: http://money.cnn.com/2015/04/10/investing/investing-52-percent-americans-have-no-money-in-stocks/index.html?iid=ob_homepage_money_pool&iid=obnetwork

 

[Dentist]

Interesting and frightening at the same time: http://money.cnn.com/2015/04/10/investing/investing-52-percent-americans-have-no-money-in-stocks/index.html?iid=ob_homepage_money_pool&iid=obnetwork

Really not surprising nor frightening.

What percentage of the total population is:

1) over 70-75 and thus only in bonds or a CD ladder or something

2) Under 25 and thus haven't really even begun saving

3) Are basically on government assistance, disabled, or work bottom feeding jobs or really basic labor jobs where they are never going to have a work 401k or any real retirement plan... for these people social security is probably enough to maintain the level of lifestyle they were used to.

4) independently wealthy and thus don't need the stock market

I'm not sure what percentage that is... but it's got to be at least 33% right there.

Now, are there still a decent percentage of people that you probably know at your work that for irrational reasons or otherwise think that the stock market is a total rigged casino and that you'll just lose money there. I have a very good employee that's been with the company over 30 years and is going to have a garbage retirement because she has only put away like 3-5% of salary and invests in 100% money market.... therefore is like 50 y.o. and doesn't even have 150k in her 401k.. and i know she's not utilizing a roth ira.

Look, I think the market has some very rigged components of it... but in a no yield environment unless you're going to become a savvy real estate investor or other type of investor... the stock market is the only game in town... and I'm happy to play it.

So I really don't think numbers like this are as damning as you think they may be.

They sound really bad to the average FBG who couldn't imagine not having a retirement portfolio with a reasonable stock allocation for their age... but we just don't think like the bottom half of society... this message board certainly has to have a tilt towards more well read successful people overall.

 

[NewlyRetired]

This article states this person puts $5,000 into a traditional IRA, and another $5,000 into a Roth IRA.

I wasn't aware you could do that?

http://www.businessinsider.com/a-financial-planner-analyzes-the-budget-of-a-31-year-old-who-makes-79000-a-year-2015-5?utm_content=bufferfe4c6&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer

I am pretty sure you can do both (at least you used to be able to) but that they share the same cap limit. So you need to spread the limit amongst both IRA's. I think the limit is $5500 so I don't think you could put $5k into each (unless the rules changed recently).

 

[Hastur]

This article states this person puts $5,000 into a traditional IRA, and another $5,000 into a Roth IRA.

I wasn't aware you could do that?

http://www.businessinsider.com/a-financial-planner-analyzes-the-budget-of-a-31-year-old-who-makes-79000-a-year-2015-5?utm_content=bufferfe4c6&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer

I am pretty sure you can do both (at least you used to be able to) but that they share the same cap limit. So you need to spread the limit amongst both IRA's. I think the limit is $5500 so I don't think you could put $5k into each (unless the rules changed recently).

Yeah, It looks wrong. I was just reading the comments, and it seems like it is not right.

 

[Vincesanity]

Can do 1 or both but $5500 is the limit. You can do a 401k or ROTH 401k and an IRA though.