Where do I start?!

NewInvestor · 08-25-2009, 10:00 AM

Hi Everyone,

I am new to the forums, but have been reading MDJ for some time. Here are some quick numbers on myself and finances:

Age: 27 (Wife: 24)
Income: $80K salary with perks (Wife: $55K)
Mortgage: approx $190K owing.
House Value: approx $325-340

Now that my wife and I are settled into our house, and know monthly expenses etc better, I think it is time to budget in some investment money every month.

I am thinking that I will start out small ($300-400 monthly), and invest in Mutual funds. The RRSP will provide a nice tax return, and that can go against my mortgage.

I am looking for more info on Self-Directed Mutual funds. Where is a good place to begin? Would something like TD's eStock allow me to purchase into DRIPs as well? I thought that a small investment into DRIPs may also be a good thing.

Where do I start?!

Thanks!
John

FrugalTrader · 08-25-2009, 11:57 AM

Hey John,

Welcome to CMF! The TD e-series and buying DRIP are two separate entities. The TD product has to be purchased through a TD mutual fund account (perhaps through td waterhouse as well?) and DRIP/SPP are purchased directly from the company that offers them.

Synthetic DRIPs can be setup at most discount brokerages but they will not purchase partial shares. For example, if you bought some shares of CIBC and wanted to DRIP the shares, you need enough in the quarterly dividend to purchase at least 1 share or else the dividend just gets paid in cash.

Hope this helps!

NewInvestor · 08-25-2009, 12:05 PM

Thanks!

I am leaning more to the Mutual Funds through TD E-series.

Any Advice or links for beginers? I read your blog, but some of the info is above my expertise in the field

-John

DrStan · 08-25-2009, 12:13 PM

The TD e-Series are an excellent way to start investing in monthly amounts. You don't specify whether you already have other investments, but the e-Series can be purchased in small instalments with no additional fees, plus their expense ratios are low compared to other mutual funds.

You could consider opening up a TD Investment account, and then converting it to an e-Series account. It's fairly easy to do, just contact your local branch and meet with an advisor to open your Investment account. Invest your first lump sum deposit in the TD Money Market Fund. Once the account is opened, you can fill in the paperwork to convert to e-Series, which gives you the full range of mutual funds and cheaper e-Series versions. Plus you can make your contributions weekly, monthly, or whatever you choose.

Decide what you would like to purchase (Canadian Equity, Bonds, U.S. Equity, International Equity) and in which proportions (%), and set up automatic withdrawals from your bank account. I think that would be a good start. Nice and simple. You could start researching stocks, etc., and eventually open a brokerage account once your savings are substantial enough and you feel like wading into ETFs and other more sophisticated investment vehicles.

I think your instincts are good; this approach would allow you to build a good portfolio at reduced fees, and to get your feet wet with relatively low risk. Good luck!

NewInvestor · 08-25-2009, 12:22 PM

Thanks DrStan!

The research now is where to invest... Canadian Equity, Bonds, U.S etc).

Right now, I dont have much saved. I withdrew $20K for the HBP in January, so I am starting up now

Thanks
John

Shayne · 08-25-2009, 04:25 PM

My opinion is to pay off all debt before investing, but I think I am a minority. I am just very debt averse and want the security of being totally debt free.

Paying down your mortgage with your tax refund is a good stragedy, but this will help you out just a little bit more:

http://www.debtfreeby43.com/2009/07/06/free-money/

Good luck!!

Rickson9 · 08-25-2009, 04:31 PM

Low fee index funds.

Jon_Snow · 08-25-2009, 05:57 PM

In early July I took the plunge into the world of investing. I constructed a "couch potato" portfolio consisting of 4 different TD e-series low cost index funds. I am approaching 7% gains since early July. And to think that this money was sitting in my "high interest savings account" earning a whopping 0.75% interest.

steve41 · 08-25-2009, 06:27 PM

The first thing you want to determine is how your cash flows might look. You have to determine the level of risk/return you can stomach, what inflation rate, how you expect your salary to behave (indexed to inflation, greater than, no indexing) when you plan to retire... etc.

Based on you both working to 60, salaries indexed to inflation, a market return of 6%, inflation at 2%, mortgage 6%-25 year, dying broke at age 95 and living in BC.... you could expect to enjoy a constant lifestyle (after tax) of $87K.

Start there and work backwards... less risk, retiring earlier/later, wife leaving workforce, adjusting lifestyle downwards post retirement. $87K is a pretty comfortable lifestyle, IMHO.

Unless kids factor into the equation... then you start RESP-ing, etc.

dogcom · 08-25-2009, 08:38 PM

Jon Snow it is great you have taken the first step and had a good start in investing. The only thing that bothers me is you said. "I constructed a "couch potato" portfolio consisting of 4 different TD e-series low cost index funds. I am approaching 7% gains since early July. And to think that this money was sitting in my "high interest savings account" earning a whopping 0.75% interest."

It is great that you had that gain but it could just as easily been a loss and 0.75% would look really good. If you are investing on a regular basis and you don't care about the short term ups and downs except the odd bragging about how well you did then that is fine. I am sure you already think this way, but I say it just in case.

08-25-2009, 10:00 AM	#1
NewInvestor Junior Member Join Date: Aug 2009 Posts: 4	Where do I start?! Hi Everyone, I am new to the forums, but have been reading MDJ for some time. Here are some quick numbers on myself and finances: Age: 27 (Wife: 24) Income: $80K salary with perks (Wife: $55K) Mortgage: approx $190K owing. House Value: approx $325-340 Now that my wife and I are settled into our house, and know monthly expenses etc better, I think it is time to budget in some investment money every month. I am thinking that I will start out small ($300-400 monthly), and invest in Mutual funds. The RRSP will provide a nice tax return, and that can go against my mortgage. I am looking for more info on Self-Directed Mutual funds. Where is a good place to begin? Would something like TD's eStock allow me to purchase into DRIPs as well? I thought that a small investment into DRIPs may also be a good thing. Where do I start?! Thanks! John

08-25-2009, 11:57 AM	#2
FrugalTrader Administrator Join Date: Oct 2008 Location: Newfoundland Posts: 591	Hey John, Welcome to CMF! The TD e-series and buying DRIP are two separate entities. The TD product has to be purchased through a TD mutual fund account (perhaps through td waterhouse as well?) and DRIP/SPP are purchased directly from the company that offers them. Synthetic DRIPs can be setup at most discount brokerages but they will not purchase partial shares. For example, if you bought some shares of CIBC and wanted to DRIP the shares, you need enough in the quarterly dividend to purchase at least 1 share or else the dividend just gets paid in cash. Hope this helps! __________________ Million Dollar Journey - Follow my journey to one million in net worth..

08-25-2009, 04:25 PM	#6
Shayne Senior Member Join Date: Apr 2009 Posts: 128	My opinion is to pay off all debt before investing, but I think I am a minority. I am just very debt averse and want the security of being totally debt free. Paying down your mortgage with your tax refund is a good stragedy, but this will help you out just a little bit more: http://www.debtfreeby43.com/2009/07/06/free-money/ Good luck!! __________________ Live Debt Free. www.debtfreeby43.com

Thread Tools
Show Printable Version Email this Page
Display Modes
Linear Mode Switch to Hybrid Mode Switch to Threaded Mode

08-25-2009, 12:05 PM	#3
NewInvestor Junior Member Join Date: Aug 2009 Posts: 4	Thanks! I am leaning more to the Mutual Funds through TD E-series. Any Advice or links for beginers? I read your blog, but some of the info is above my expertise in the field -John

08-25-2009, 12:13 PM	#4
DrStan Member Join Date: Apr 2009 Posts: 99	The TD e-Series are an excellent way to start investing in monthly amounts. You don't specify whether you already have other investments, but the e-Series can be purchased in small instalments with no additional fees, plus their expense ratios are low compared to other mutual funds. You could consider opening up a TD Investment account, and then converting it to an e-Series account. It's fairly easy to do, just contact your local branch and meet with an advisor to open your Investment account. Invest your first lump sum deposit in the TD Money Market Fund. Once the account is opened, you can fill in the paperwork to convert to e-Series, which gives you the full range of mutual funds and cheaper e-Series versions. Plus you can make your contributions weekly, monthly, or whatever you choose. Decide what you would like to purchase (Canadian Equity, Bonds, U.S. Equity, International Equity) and in which proportions (%), and set up automatic withdrawals from your bank account. I think that would be a good start. Nice and simple. You could start researching stocks, etc., and eventually open a brokerage account once your savings are substantial enough and you feel like wading into ETFs and other more sophisticated investment vehicles. I think your instincts are good; this approach would allow you to build a good portfolio at reduced fees, and to get your feet wet with relatively low risk. Good luck!

08-25-2009, 12:22 PM	#5
NewInvestor Junior Member Join Date: Aug 2009 Posts: 4	Thanks DrStan! The research now is where to invest... Canadian Equity, Bonds, U.S etc). Right now, I dont have much saved. I withdrew $20K for the HBP in January, so I am starting up now Thanks John

08-25-2009, 04:31 PM	#7
Rickson9 Banned Join Date: Apr 2009 Location: Mississauga, Ontario Posts: 702	Low fee index funds.

08-25-2009, 05:57 PM	#8
Jon_Snow Member Join Date: May 2009 Location: an island in the Salish Sea... Posts: 44	In early July I took the plunge into the world of investing. I constructed a "couch potato" portfolio consisting of 4 different TD e-series low cost index funds. I am approaching 7% gains since early July. And to think that this money was sitting in my "high interest savings account" earning a whopping 0.75% interest.

08-25-2009, 06:27 PM	#9
steve41 Senior Member Join Date: Apr 2009 Location: BC Gulf Islands Posts: 395	The first thing you want to determine is how your cash flows might look. You have to determine the level of risk/return you can stomach, what inflation rate, how you expect your salary to behave (indexed to inflation, greater than, no indexing) when you plan to retire... etc. Based on you both working to 60, salaries indexed to inflation, a market return of 6%, inflation at 2%, mortgage 6%-25 year, dying broke at age 95 and living in BC.... you could expect to enjoy a constant lifestyle (after tax) of $87K. Start there and work backwards... less risk, retiring earlier/later, wife leaving workforce, adjusting lifestyle downwards post retirement. $87K is a pretty comfortable lifestyle, IMHO. Unless kids factor into the equation... then you start RESP-ing, etc.

08-25-2009, 08:38 PM	#10
dogcom Senior Member Join Date: May 2009 Posts: 281	Jon Snow it is great you have taken the first step and had a good start in investing. The only thing that bothers me is you said. "I constructed a "couch potato" portfolio consisting of 4 different TD e-series low cost index funds. I am approaching 7% gains since early July. And to think that this money was sitting in my "high interest savings account" earning a whopping 0.75% interest." It is great that you had that gain but it could just as easily been a loss and 0.75% would look really good. If you are investing on a regular basis and you don't care about the short term ups and downs except the odd bragging about how well you did then that is fine. I am sure you already think this way, but I say it just in case.