[eddyo]

Hey Guys,

Finally got me TD e-series TFSA account sent up and ready to make my first purchase.

I going to deposit the max amount ($5000) but am unsure on how to divvy it up.

Should I go with mostly bonds (similar to what ING offers)?
Should I spilt it equally between Bonds, Can/US/Inter equities or should I forgo the bonds all together and go with equities only??

My plan to use this account as a long term savings account ( 5, 10 years +) and looking for moderate risk and growth.

What would you suggest?

Eddyo

 

[Rickson9]

An investor should invest based on their knowledge level instead of what they 'want'. No offense, but everybody 'wants' solid returns with modest to no risk.

From your post, I would recommend GICs.

 

[Dr_V]

No offense, but from your post, I would recommend GICs.

While GICs (fixed income) are a fine component of any portfolio, I don't think that it's reasonable to assume that he should invest in them to the exclusion of other financial vehicles.

The question that the OP posed is rather complex, but thankfully, has been addressed in a few decent wikis/blogs. Take a look at:

http://www.finiki.org/index.php?title=Portfolio_Design_and_Construction

http://www.milliondollarjourney.com/portfolio-allocation-rrsps-tfsas-and-taxable-accounts.htm


K.

 

[Rickson9]

While GICs (fixed income) are a fine component of any portfolio, I don't think that it's reasonable to assume that he should invest in them to the exclusion of other financial vehicles.

I understand. I personally think he should.

The question that the OP posed is rather complex, but thankfully, has been addressed in a few decent wikis/blogs. Take a look at:

http://www.finiki.org/index.php?title=Portfolio_Design_and_Construction

I can't speak to the second link you provided, because it is very short. However, with regards to the finiki.org link I can definately say that I would never follow most of the ideas in there.

Concepts such as asset allocation (and diversification) as it is promoted in the conventional sense, makes absolutely no sense to me. It virtually assures the destruction of a person's ability to create wealth.

In my strong opinion an investor should seek to invest in assets where they are able to identify opportunity. If they are unable to identify an opportunity, they should invest in guaranteed instruments until they develop the skill.

 

[Spidey]

To get back to the OPs original question, from what was said, I would do something like this: 40% TD CDN equity - e, 40% TD Bond -e, 10% TD Dow Jones -e and 10% TD Int equity -e.

However, that being said, I know what Rickson was getting at. The way the question was phrased, leaves the impression that you (the OP) are fairly new to investing. (That is one reason I suggested such a large bond component.)
I would suggest reading several books: "Investing for Dummies" by Eric Tyson (please take no insult from the recommendation - it's a very good book), "The Four Pillars of Investing" by William Bernstein and "Stocks for the Long Run" by Jeremy Seigel.

Index funds are a reasonable place to start when your investing knowledge is limited. You may want to limit your investments, until you read at least those 3 books.

As a general rule, I would say that you should aim to read an investing book a month for the next couple of years (reserve them from the library) -- Perhaps put it in the bathroom.

 

[leslie]

The OP says he wants "long term savings account with moderate risk and growth". To me that shows he is unclear on the concept.

I would use the words "savings account" to refer to putting aside cash from my salary someplace where it's principal is not at risk, and where I can access it at any time (within say a week/month).

But investing is not saving. It involves putting your principal at risk of loss, tying it up for an extended period while it is 'put to work', and hopefully receiving a $ return in exchange.

The OP has to clarify where he is willing to risk his principal, whether he has plans for the money at some expected future date (like RE downpayment), or whether this will be his '6-month salary' back-up insurance.

 

[Dr_V]

In my strong opinion an investor should seek to invest in assets where they are able to identify opportunity.

In this case, rather than identifying singular opportunities, the OP is seeking to invest in all opportunities by holding index funds. It seems pretty clear to me that the OP isn't at a point where he either wants or has the ability to invest in individual assets, and would rather hold low-cost funds for both the simplicity and reasonable returns. There's no shame in that -- it's an approach that is known to work pretty well, particularly for people with limited investing knowledge or with limited desire to "dissect" stocks (as advocated by Graham).

My interpretation of the OP's post is largely that he doesn't want the most conservative strategy, but doesn't want the most aggressive one either, and I get the feeling that he is ready to invest for the long haul (given that he stated that he's seeking a long-term strategy). As a result, the OP may find the following link relevant to help them put together a portfolio.