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Discussion Starter #1
Hello All

I have been reading this Personal Finance forum for a couple weeks now, and have found some of the information to be excellent. I am comfortable asking my question and seeing what kind of objective info comes to light.

The scenario is this: In 4 months my daughter will be done daycare, freeing up approx $1000 / month. My wife and I are going to be using some of that money to "loosen" up the monthly finances. We don't have a cc balance worth worrying about. I am looking at having approx $500-$700 / month to invest, split in some way between TFSA/RESP/RRSP. For arguments sake...lets assume none of these have been started or contributed too. We both have defined ben pentions.

My dilema is this: I work for a US brokerage (but live in Canada). I am Series 7 & 63 licensed, and have been doing a lot of personal finance reading. I am fairly confident that I can put together a "Couch Potato" style portfollio and do some dollar cost averaging in Index ETF's and perhaps after diversifing there, start some good div paying cdn stocks (DRIPS etc...). I feel like I can be un-emotional and take the long view...and be prerpared for the bumps in the road along the way IE: volatility.

My wife and I recently met with an Investment Advisor who works solely in MF's. He has been around the block, and to this point has helped us with our monthly finances and paying down our high int debt. We like and trust him. He wants to manage our money in a well diversified mutual fund portfollio.

I'm torn. I don't have a lot of spare time. But think that a couch potato port is some work upfront, and then re-balancing quartlery, annually...whatever.
Or I can have a hands off appraoch...let someone do the work for me...all the while thinking I'm getting torched by high MER's.

I'd love to hear your take...
 

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Depending on choices in allocation, amounts invested etc after 36 years using the rule of 72;

scenario 1: managed MFs , 36 years later you have 1 million

scenario 2: open an tdinvestments account (not a TDW brokerage account to start) to buy td e-funds online.
Invest with exactly the same asset allocation as in scenario 1, but at an annual cost that's 2% less.
36 years later you have 2 million.
 

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Couch potato is as little or as much work as you want it to be. You can contribute monthly in cash, and rebalance once a year (deploying your monthly cash contributions). It might take 4 hours a year. You're likely to save 1.5 - 2% of your assets under management every year in fees. If your IA is worth that, go with him.

Just to nitpick, any credit card balance is worth worrying about. The ROI of paying off credit card debt is the best available. As long as you have the discipline not to rack it up again.
 

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Hi ffej49. I have done similar math as mrPPincer, and come to the same conclusion. If, over 3 or 4 decades, you pay 2.5% fees instead of 0.5%, each doubling will be delayed by two years, and in the end there will be one less doubling. Your advisor must be fabulous if you would even consider giving him half of your nest egg!
 

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Discussion Starter #5
Just to nitpick, any credit card balance is worth worrying about. The ROI of paying off credit card debt is the best available. As long as you have the discipline not to rack it up again.
Duly noted. Consider me "newly discliplined". It will be fully paid off within the next couple months, at the same time as the daycare expense is taken care of. $1000 /mos will be freed up, and we will be using a portion of that to "loosen" our month to month expenses. The rest of our budget has allocations for vacations and other big ticket items on our list. That will leave 500-700 /month to go towards RESP/RRSP.

Thanks for the reality check!
 

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Fees really matter a lot. They can have a devastating long term effect on your portfolio returns. Keep your fees as 'little' as possible. Invest in the lowest fee, broadest based ETF's that you can find. Vanguard would be a good company to begin your search with. Spend time deciding on your own appropriate asset allocation according to your risk tolerance (do not overestimate this), time horizon and other circumstances. Keep your portfolio short. Four or five ETF's should be adequate. Then, trade only periodically and only for rebalancing purposes when your original allocation gets out of whack. Do not chase after hot sectors or commodities. All the best.
 
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