I want to help my little brother get on his feet financially. He's 34, 16 years younger than me. The problem is, I'm just learning myself; I've been in Altamira funds for 20 years, and am planning to switch to ETF's with a reasonable asset allocation and re-balancing. But I'm just learning about this stuff myself! It's like being a teacher who's studying to keep just one step ahead of the student. Anyway, I want bro to have a more solid start than I did. Here's what I plan to tell him initially:
"I suggest you look into TD e-Series mutual funds. These are "index" mutual funds, and have the lowest price of just about any mutual funds available. Index funds just follow established market indexes, and usually beat most other more managed funds most of the time, since it turns out that in a market with a lot of educated players, nobody can make better guesses about market movements than anyone else. Here's a couple of links for the TD funds:
- a listing of them: www.tdcanadatrust.com/mutualfunds/tdeseriesfunds/mer_diff.jsp
- what they are: www.tdcanadatrust.com/mutualfunds/tdeseriesfunds/help_eseriesfunds.jsp
- all the (too much) detail in the "Index Funds" prospectus: www.tdcanadatrust.com/mutualfunds/dprospectuses.jsp
Their main advantages are:
- cheap (very low MERs. Keeping in mind that it is realistic to expect only around 4% return after inflation, so a 2% MER will eat HALF of your expected return. So although a difference in 1/2% annual fee doesn't sound like much, it actually *is*.)
- you can add to them without paying any fees, including automatic monthly purchases if you want
- you can move them around to rebalance your portfolio without paying any fees
- they're a big enough family that you can construct a reasonably diversified portfolio
Later, you should consider even cheaper index ETFs, but hold off on this idea until your portfolio has grown bigger (this is because there is a brokerage fee to buy them, so you generally only want to do it with bigger blocks of money). "
...is this good advice? Is the TD fund family the best choice for now (I've no experience with them personally)? Is there anything else I should be telling him???
If you have comments, Thanks in advance!!!