I know there are many women out there just like me who struggle financially and never seem to catch a break when it comes to saving money. We might make a little headway, save money, and start feeling good about that success. And then an unexpected expense comes along. No one plans to get in a car crash or have their car break down, but when it happens sometimes the only option is another car. We do what we have to. It’s all about survival.
The reality is having our savings, as meager as they might be, sitting around in a savings account making little interest isn’t going to be much help at funding our retirement or saving for big expense items like a new car or a vacation. This is why financial advisors don’t want to deal with singles = less commission in their pockets.
Now that you have a little money put aside, what you do next depends on how much risk tolerance you can take, and time frame when you need these funds. If you’re young and lose money, time is on your side to earn more money. On the other hand, if you’re closing in on retirement age, you don’t want to take risks, but at the same time you probably need to make as much money as you can.
Then if you’re like me, you’re tired of your financial institution playing stupid games with you. Who else is unhappy with their financial advisor and the advice they give? Raise your hand!
If you’re at a high-fee fund shop or bank, quit it. – Dale Roberts @ Cut the Crap Investing.
Mutual funds and financial advisors
If you’re feeling lost on what to do with your money and need a better return than a low interest savings account, the bank’s financial advisor will try to sell you on mutual funds.
Mutual funds have a very high MER (management expense ratio), around 2% but it could be higher. Sometimes lower, but around 2% is pretty average. By the way, Canada has the highest MERs in the world. That’s a pretty big chunk of change you’re paying someone to manage part of your portfolio. Also your financial institution’s investment advisor who’s selling you these funds, who do you think is getting the profit? Of course, they want to sell you their products. They make commission or management fees.
The big question is – are these “financial advisors” worth what you’re paying them when they get their cut of the MER? Check out this article on Cut the Crap Investing that asks why pay these advisors when they’re not really offering advice. https://cutthecrapinvesting.com/2019/04/10/why-pay-your-bank-or-advisor-when-they-are-not-offering-any-advice/
Invest your money yourself!
Yes! Did you know you can do that? DIY our investments!
There are a number of ways you can invest your money, but mostly it’s going to involve getting an online trading account so you can bypass the middleman financial advisor and stock broker. With an online trading account, you buy and sell the stocks you choose.
How do you choose?
When I say “choose” that means both the online trading platform and the stocks to buy and hold in your account.
It’s called research.
If ditching your mutual funds and that slug of a financial investor at your financial institution appeals to you, and DIY investing is very new to you, take the first step. Look at the Canadian Couch Potato and the model portfolios. https://canadiancouchpotato.com/model-portfolios/
For my American readers – the original Couch Potato, Scott Burns, is a Texan. Click here for Couch Potato Investing.
Great articles on both sites, no matter what your nationality.
It’s easier for you to read the model portfolios than for me to recap it. Use a couch potato portfolio as your starting point if you’re not confident jumping into the stock market. The couch potato is your baby step to move forward at DIY investing. Everyone who follows that link, and keeps reading and clicking on more links to get more information – WAY TO GO! I’m proud of you for taking your first baby steps!
OK. Maybe, I lied just a little! I’ll recap a bit of the couch portfolio so you know what I’m doing and not doing.
The first option is Tangerine Investment Funds. Tangerine is an online bank, formerly known as ING Direct. The Investment Funds were originally known as Streetwise Mutual Funds. They have a lower MER than many other mutual funds at 1.07%. Great option if you’re not quite ready to ditch mutual funds yet. I bought in when the Streetwise Funds first came out, I think in 2008, to hold in my RRSP. The name changed when it became Tangerine. I think the fund I hold is now called the Balanced Growth Portfolio. I have about $6,000 in this fund, and the last time I contributed was 5 years ago. No further plans to buy more Tangerine funds.
The Canadian Couch Portfolio gives the TD e-series funds a nod because their MER is lower than Tangerine. Read my post I’m a survivor of a rogue TD employee to see why I’ll never deal with this bank again.
Individual ETFs are the next option to which I say YES! I hold ETFs (Exchange Traded Funds) in my non-registered account and my RRSP and TFSA. I don’t buy into what the Couch Potato says your minimum portfolio should be. Any dollar amount is a good starting point. I use the online trading platform Questrade. To open up an account, you’ll need to transfer in a minimum of $1,000. Once you’re ready to trade, Questrade doesn’t charge you for buying ETFs. Yay! If you sell, there will be a small commission fee depending on how many shares you sell, less than $10 fee, probably. Click on the Questrade link to learn more about investing and trading.
More on Questrade
I checked into other online trading platforms and liked Questrade the best for their low and no fees when compared to Qtrade and others. If you’re thinking of signing up with Questrade, use my referrer ID: vs8gmwh5. Or you can also click here https://www.questrade.com/?refid=vs8gmwh5
You’ll receive $50 in commission free trades! Yippee! I believe I’ll earn $70, if I’m reading the referral program correctly. Just want to disclose that before you click. I also used a referral code when I signed up and got $50. In fact when I opened my RRSP and TFSA accounts I also used a referral ID code and got the $50 for both those accounts too!
Back to Couch Potato’s option 4 which are asset allocation ETFs. These are one fund solutions depending on how you want to asset mix your stocks and bonds. Of the ones Couch Potato lists, in my RRSP I hold about $3000 in VGRO, the most aggressive of these funds.
Here are a few places online that I used for guidance and advice when putting together my portfolio.
I lurk on the Canadian Money Forum where the users talk about personal finance, investing, retirement, and other topics. No charge to read or sign up for a free account to post and ask questions. Very friendly, encouraging group of knowledgeable savers and investors here.
I follow a few blogs and websites and get email notifications of new posts and newsletters.
Money Sense has a recent article on the best online brokers in Canada if you want to check out the options.
I hope some of these links help you out with learning to DIY your money.
Savings and GICs
If you’re not quite ready to invest your money, for the time being get it into a higher interest savings account or GIC (you sign up for a set term like one year for slightly higher interest rates). You’ll get better rates with online banks. I have online accounts with Tangerine and EQ Bank.
Reminder: you can get a $25 bonus if you sign up for an account at EQ Bank before July 8, 2019. Free money is always a good thing! Read my post on how to get your $25 bonus.