[dagman1]

Hey All:

I just transfered my first $2000 into a TFSA in Questrade, have been saving $1000/mo.

I have done a lot of research about investing but haven't actually purchased anything to date.

I am going to implement a variation on the Couch Potato Strategy:

Canadian equity 20% (change to 30%)
US equity 20% (change to 30%)
International equity 20%
Canadian bonds 40% (change to 20%)

I'm young so figure I don't need to keep much in terms of bonds. I also don't want to have anything complicated until I have enough money (too many trades).

Three questions: (1) Does my allocation seem reasonable for the time being? (2) How should I go about purchasing (I was thinking using $1200 for CA equity and $800 for CA bonds as my first purchase)? (3) Is there a way to pay the trading fees with a credit card rather than out of the TFSA account?

TY in advance.

 

[slacker]

I recommend sticking with cheap TD e-series mutual funds until your portfolio reaches at least $30k.

http://canadiancouchpotato.com/2010/06/25/should-you-use-index-funds-or-etfs/

 

[GeniusBoy27]

The bond percentage I was always taught was whatever your age should be an approximation of your bond percentage.

Having said that, I have no bonds in my portfolio, since I figure I'm young enough to compensate for any sudden losses, and I make a good enough income to compensate. Even with the anticipated correction, I figure I won't overly worry, like the 2008 sharp decline that everyone could see coming.

 

[Four Pillars]

I agree with Slacker that TD efunds are a better place to start.

But since you are already at Questrade and will be saving quite a bit per month - I wouldn't worry about it.

My suggestion for purchases is to make as few as possible to save on trading commissions. Maybe just buy one ETF each month?

Here is a post I did analyzing the break even point if you start at Questrade

http://www.moneysmartsblog.com/index-funds-vs-etfs/

This is my take on starting at TD and then moving to Questrade:

http://www.moneysmartsblog.com/strategies-for-etfs-and-index-funds/

This post looks at ways to lower your costs:

http://www.moneysmartsblog.com/low-cost-ways-to-buy-dividend-stocks/

 

[Soils4Peace]

Questrade trading fees start at $4.95. No need to start with the TD e-series. You can start with iShares, XIC, XBB, XIN and XSP for example. But I would make the trades at least $1000. Get XIC (or XIU or CRQ) with the first $2000, then with you $1000 contributions buy one of the others balancing them over time.

 

[Belguy]

Hope that you checked out the model portfolios at www.canadiancouchpotato.com

Over the past several years, investors put more money into bond funds than into equity funds.

It turns out that those investors were right.

 

[dagman1]

Thanks, ya'll.

I'll probably go for XIC on my first purchase with the whole $2000. Sort of nervous about buying for the first time (I don't know why).

I've checked out all the couch potato portfolios, but I don't need to decide at this point. I think if you go with the most basic you can always work into the more complex ones as you have more cash.

 

[jagman]

a couple pet peeves

New to the forum...great idea you have here.

Just a couple items. I see people here (younger investors) falling for the old " I am young and can make up losses". Please, please..stop this nonsense. The brokers and advisors love this view.....the idea that they can put you in higher risk and higher fee funds..things that make them money. Then move you around as they churn your account..racking up the fees...to their pockets..losses to yours..but thats ok..you can make it up.

Mr Buffett says it best...Rule #1 Never lose money.. Rule#2 See rule #1. A small gain made today and multiplied slowly through time will make you far richer than any huge one time gain on a high risk investment. It's not easy to sit on the sidelines while stocks like Nortel rocket....but look what happened afterwards. Read the words of Graham..Buffett and others...study them. You will find that the richest investor in the world got that way by striving to reduce risk..and multiply his earning over time.

Don't make the mistakes I made when I was 30. That money is gone forever. You are young..you have the magic of compounding on your side. If someone tells you that you are young, therefore you can afford to lose money, then run the other way. However, if you decide to believe that, then let's just cut out the middleman. Send a cheque to me!!!...we'll call it a loss ..and you can start to make it up again. Make sense? Either does the whole" young so take risks" theory.

Ciao