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Discussion Starter #1 (Edited)
I just posted this in reply to "8 Financial Resolution Ideas for 2010" on milliondollarjourney.com and was suggested by one of the other repliers to post it in a forum for replies. I'm someone can point me in a direction and give me suggestions on how to narrow down investment decisions. Although, I've read some material on investing, I'm still very much overwhelmed by the options out there.

My goal for the year is to invest!

I have money but investing is very difficult for me, as there are so many options and choices to make that it boggles my mind. What kind of general investment strategy could be recommended for someone like me:

I’m nearly 30, single, no commitments and my only goal is to make as much money as possible so that I have a realistic option of retiring at 40-45 years of age with an average income of 40-50k (today’s dollars) until I die. I don't like my career, but I don't think it'd be a wise financial decision to try something else that I would probably end up not liking as well.

My portfolio:

income (bt): $80k + OT (ranges from 15k to 70k, last few years)

assets:

chequing account: $82500
“Loan” held in Father’s LOC*: $75000
RRSP – TD Managed Balanced Index Fund: $40000
Company Pension: ~$30000

total: $227500

*(he pays me interest instead of to the bank, and I can withdraw the money at any time)

debt:

none

So I have no idea where to begin, other than to open a TFSA, but invest in what? Income trusts? ETFs? are my thoughts so far.

Thanks for any advice.
 

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Hi loggedout,

I think your question is quite complicated because I am not sure about the details such as RRSP contribution limit, pension make-up etc. However, one suggestion I can make off the top is to simply use index funds to build your portfolio. Buy one Canadian, one US, one global, and then one fixed income index fund and leave it as simple as that?

As you are still young (but want to retire early) you probably can tolerate and will actually need some more risk (i.e. less fixed income and more equities).

Above all else, if you do want to retire at 40-45 then most important for you will be to focus on contributing as much money as possible to your savings plan. Don't take too much risk just because your time line is shorter. You will need to be super frugal...
 

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Well you are off to a great start.

I would suggest looking into some ETFs to start off with until the reach a level where you want to diversify your own portfolio into common sotcks.

But it all depends how active and involved you want to be! Research some options on iShares or Claymore's website and take it slowly!
 

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I would recommend to learn the language of investment which is learning how to read financial statements.

Without this knowledge I believe it would be far more difficult to achieve financial freedom.
 

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There is a recommended reading list for new investors on this forum.

I have observed that for every investor there is an investing style. Basically whatever you do needs to make sense to you and let you sleep well at nights.

I hear you saying that you need more information and try new things before jumping in with both feet.

You can also set up a virtual portfolio on www.wallstreetsurvivor.com to check out your brainy ideas on the market to see if they work.
 

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You are in great shape.

Retiring in 10-15 is possible just not likely.

From the tone of your post I think you are likely to get caught in some high flier that crashes and burns your money or worst just a flat out con game.

Stick to rock solid ETF,Div. Stocks, Riets for 80% of your portfolio, 10 % laddered bonds and GIC and only if you are interested in the work/ research should use the last 10% chasing higher returns.
 

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Don't even think about picking individual stocks - requires WAY more knowlege than what you have.

Your Balanced fund already holds some debt. Find out how much so you don't duplicate it.

You need to first decide whether you foresee a need for these $$ for say a home purchase. You can take a lot more risk with assets you won't need for 40 years, than you can with $$ you need in 5 years.

Start learning the basics of macro-economics. Your investing decisions hinge on your understanding and personal predictions about the future economy. E.g. right now I think stock are over valued in light of possible growth in the next five years. I am not just repeating what I hear in the media. I have formed my own opinion. You have to do the same.

Open a discount broker's account online. Buy three or four (max) ETFs of large indexes. This is known as the 'couch potato' strategy. It is tailor made for people like you.

http://members.shaw.ca/retailinvestor/next.html#passive
http://www.canadianbusiness.com/CBOSearch.do?Qp=c&Ntt=couch+potato&Qt=endeca&Ne=-1&Qo=5&Ne=6+2+7+5&Nf=&N=0&x=0&y=0
http://www.tmxmoney.com/en/sector_profiles/exchange_traded_funds/index.html
http://v1.theglobeandmail.com/partners/free/globeinvestor/funds/sept08/online/six-etfs.html
http://www.canadianfundwatch.com/files/anotherkind.pdf
http://www.bylo.org/ipus.html
http://www.indexinvestor.com/Free/ETFMarketOverview.php
 

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Your question is too broad without knowing a lot more about your investor profile, in spite of the basic data you have given us. But sounds to me like you should invest in a few basic investment books like:

Personal Finance for Canadians for Dummies, 4th ed. (2006) Eric Tyson & Tony Martin

Investing for Canadians for Dummies, 3rd ed. Eric Tyson & Tony Martin
For the more advanced investor, but has a chapter on mutual funds.

Stock Investing for Canadians for Dummies. Andrew Dagys & Paul Mladjenovic

Money Management for Canadians All-in-One Desk Reference for Dummies, 2nd Ed. Andrew Bell, Andrew Dagys & Paul Mladjenovic; Tony Inannou w. Heather Ball; Margaret Kerr & JoAnn Kurtz; John Lawrence Reynolds; Kathleen Sindell. I haven’t read this one, seems to be a compilation of material from some of the other books.

Off the top of my head, if you are unsure of what you should be investing in, you aren't ready to buy individual stocks, and should be looking at well-diversified mutual funds or ETFs as a starter.
 

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Discussion Starter #11 (Edited)
I have read books and internet articles to increase my knowledge of the financial world and investing, namely "Wall Street MBA" and "The Warren Buffet Way". I still don't have enough confidence to make decisions, other than the decision of making no decision.

I've maxed out my RRSP contributions but I am not satisfied with the performance of the TD Balanced Managed Index Fund. I would like to put my money into something more aggressive. I have reviewed ETFs, Income Trusts as likely candidates for investment vehicles, inside my RRSP and in TFSAs.

I don't intend to ever own a home, so that's not a consideration for me. I need the flexibility for psychological reasons that "cash in hand" provides, so I'm unwilling to tie my money into anything that I can't relatively quickly take my $ out of. Therefore "renting" is more suitable option for me. I don't really need to exercise that flexibility, I just always need to know that I have options, a means of escape.

Right now, the biggest thing for me is that I have a psychological block that's preventing me from making financial decisions. i just can't commit to anything long-term and i don't trust my judgements, even after doing the analysis.

Can't pull the trigger.

Finding a personal style and strategy for investing is also proving to be difficult.
 

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Don't even think about picking individual stocks - requires WAY more knowlege than what you have.

......

Open a discount broker's account online. Buy three or four (max) ETFs of large indexes. This is known as the 'couch potato' strategy. It is tailor made for people like you.
I agree, this is how we started once we took our $ back from our 'evil advisors'. ;)

We still have a majority of our $ in ETFs but have purchased some few stocks (<6) where the yield was good and we felt there was more chance of upside than down in terms of stock price.

IMO, issue is that right now even index based ETFs may be over priced, since the indexes themselves maybe. But the couch potato strategy is that in the long term you can't really go wrong with large indexed ETFs with low MERs, and my comment about things being over priced is getting into 'market purchase timing', which I think is a no-no from the couch potato 'couch'.

Maybe a suggestion would be to stagger buying into what you do buy over a few months just in case there is a market correction coming.

We are putting new $ in a fixed income ETF that showed relatively low price drops during the crash and are waiting to see what happens in Q1 / early Q2 2010 after earnings are out.
 

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I still don't have enough confidence to make decisions, other than the decision of making no decision.
I would suggest that there is nothing wrong with this and maybe you are being too hard on yourself. Everyone is different and everyone does not need to try to make huge % returns if that is just not what they are into.

I've maxed out my RRSP contributions but I am not satisfied with the performance of the TD Balanced Managed Index Fund.
At minimum you could likely simulate the fund you mention in a few couple ETFs and at least be making more because of the lower MER you would be paying.

I would like to put my money into something more aggressive.
Unless you know what you are really doing (and I'm not suggesting I do when it comes to cherry picking stocks), then more aggressive often == more gambling.

I need the flexibility for psychological reasons that "cash in hand" provides, so I'm unwilling to tie my money into anything that I can't relatively quickly take my $ out of.....I don't really need to exercise that flexibility, I just always need to know that I have options, a means of escape.
I hear you on this.

Right now, the biggest thing for me is that I have a psychological block that's preventing me from making financial decisions. i just can't commit to anything long-term and i don't trust my judgements, even after doing the analysis.

Can't pull the trigger.
Then maybe you shouldn't. I see nothing wrong with this as long as you are not losing $ in where you have your $ parked.

Finding a personal style and strategy for investing is also proving to be difficult.
I think this depends on what your overall goals are. If you don't have a clear set of short, medium, and long term life goals, then deciding and being able to sleep with the investment strategy you pick will make it hard to live with. Investing is just one part of life and living happily.

Thanks my opinion at least, I'm definitely not an 'investing machine'. ;)
 
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