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Advice for my little brother

14K views 36 replies 16 participants last post by  OntFA 
Good to know that he'll be able to do it, lot's of people stumble on that. In terms of individual investments I think that the TD efunds would be fine to start off with. The goal would be to have him invested until he accumulates enough funds to buy an individual ETF so you just want something low cost and easy to set up on the preauthorize purchase plan.

But if you are eventually going to use ETFs and you like Claymores line up check out they new system (link below):

http://www.claymoreinvestments.ca/etf/investment-services/pacc

The minimum amount seems to be $50 so you might be able to skip TD efund as a middle man to accumulation sufficient amounts.

Hope that helps!
A.
I believe TD-e series funds are a very good way to start... low fees, lots of indices to choose from, low PAC minimum...

I was not aware that you could do this w/ the Claymore ETFs. Has anyone successfully done this w/ their discount brokerage? It says you do need an initial amount though... so you may end up paying some commission to start?
 
Here's a couple of other things I plan to tell him that maybe someone wants to comment on:

- given his 30+ year investment horizon, he should consider investing in 80 - 100% equity vs. bond funds for the next couple of decades. I personally would choose 100%. Maybe:
25% TD Canadian Index
25% TD U.S. Index (the cheaper vanilla version, not the Currency Neutral one)
25% TD International Index (ditto, the non-Currency Neutral version)
12.5% TD European Index
12.5% TD Japanese Index
Another thing you may want to consider is how your brother may feel about market volatility. Even though this portfolio is diverse (in equity), it may still be healthy to have a bit of fixed income (ie: the Canadian Bond Index) just to smooth those bumps along the way. It may make sense to put a large % into equities, but it will be painful if the market declines by +30% and he "panic sells". Try to get a feel for how he takes this and then see if you guys can work on an asset allocation that works for him. You may want to get him to read "The Intelligent Asset Allocator" by William Berstein.

In terms of TFSA/RRSP, it also depends on his situation. If you are planning to setup an emergency fund for him, you may want to get him to put the funds into a Tax Free High Interest Savings account. The reason being is, you never know when you'll actually need the emergency fund, so it makes sense to have the money in something safe. If the funds are down, and he needs money (a real emergency), it still doesn't make sense for him to tap into the account because he'll be redeeming his funds at a loss. Maybe set aside some cash for actual emergencies, and set aside the rest for investing. You guys are well on your way!
 
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