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Discussion Starter #1
Hey everyone, so as many of you already know I am a younger investor interested in doing a bit of investing with some money that I intend to use within the next few years.

I do have some of my money socked away in a HISA but I am also interested in getting exposure to the stock market.

Now I feel there would be a couple ways to do this. Now I am at a point in time where I cant decide whether it would be better to avoid the 20$ buy commision and 20$ sell comission by going with a low fee Mutual Fund or to go with an ETF or two.

With the ETF I could dollar cost average with monthly contributions but I am still not sure as to what would be the best choice.

So basically I cant decide whether to buy:
1) ETFs (With 20$ commission one way)
2) Mutual Funds (I pay no upfront trade commission but pay MERs etc)

What would be the better choice? Does anyone have a strategy as to how I should go about this?

Note: My investing time frame is anywhere from 1 - 4 years depending on when I need the money for school. Also I do know I could choose to put it all in a TFSA HISA but I would prefer to take a bit of risk for better returns.

Thanks to any suggestions!
 

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Jamie, in my opinion 1-4 years is way too short a time period to be invested in the markets if you "need" to preserve capital. However, if you do have cash that you plan on keeping invested for the long term, it may be cheaper to buy low cost index funds (ie. TD e-series) while your account balance is lower.
 

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I'm with Frugal on this one...my personal rule of thumb is to keep money needed in 5 years or less out of the stock market. What I suggest is that you start investing for the long term now, if you can afford it...it doesn't take much. I think the minimum initial investment in TD e-series funds for example is only $100 then $25 subsequently. Set up a regular investment plan and put 50 or 100 bucks a month into two or three funds. Keep the money you need for school in a HISA. That way you can get your feet wet in the markets while taking advantage of the time aspect of compound interest, at the same time keeping your school money safe and sound.
 

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You can quarter your trade comission to $4.95 per trade with Questrade. It becomes a little more affordable to dollar cost average.
 

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Jamie, in my opinion 1-4 years is way too short a time period to be invested in the markets if you "need" to preserve capital. However, if you do have cash that you plan on keeping invested for the long term, it may be cheaper to buy low cost index funds (ie. TD e-series) while your account balance is lower.
+1
 

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One also doesn't need to buy every fund every month to DCA. Just buy the fund that is most underweight each month. That can drastically reduce your commission expenses.
 

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You can quarter your trade comission to $4.95 per trade with Questrade. It becomes a little more affordable to dollar cost average.
+1

Also mutual fund maximizer in Questrade may give you back some money depending on the fund that you purchase. Check it out.
 

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Discussion Starter #8
Honestly, I have heard some not so great things about Questrade. As well a their tools/research being nill to barely existant. That is why I went with Qtrade, atlhough qtrade does offer no fee mutual fund trading. Equities are 20$ a trade though.
 

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Honestly, I have heard some not so great things about Questrade. As well a their tools/research being nill to barely existant. That is why I went with Qtrade, atlhough qtrade does offer no fee mutual fund trading. Equities are 20$ a trade though.
I use questrade and it's fine. The research is pretty scant, but then research is useless to me. It's a bunch of tea leaf reading.
 

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Honestly, I have heard some not so great things about Questrade. As well a their tools/research being nill to barely existant. That is why I went with Qtrade, atlhough qtrade does offer no fee mutual fund trading. Equities are 20$ a trade though.
There is a thing called the internet that is free. Why do you need to pay for an asset allocator tool? It's a pie chart.. What are these other tools worth so much? If you need fancy tools that hold your hand, you shouldn't be investing. All I need to input into Questrade is a ticker and limit order - no tools required
 

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Discussion Starter #12
Yea, honestly though I went with Qtrade because it felt that they actually cared about their customers when I phoned with a few questions and about emails aswell. They replied promtly and always by the next business day. Thats mostly the reason I went with them.

I didnt mean only by the research, I also really liked Qtrade because of the tools they had. If you are curious as to what tools check their website, the list is quite exstensive.

But yea the commision IS higher but I am willing to pay it if they are a reliable broker. And honestly some of the horror stories I heard about Questrade made me second guess my application and then went with Qtrade.

Although I havent really seen many people talk about Qtrade...anyone have good or bad experiences with them ?
 

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Honestly, I have heard some not so great things about Questrade. As well a their tools/research being nill to barely existant. That is why I went with Qtrade, atlhough qtrade does offer no fee mutual fund trading. Equities are 20$ a trade though.
What's no fee mutual fund trading? Maybe if you choose a fund in Qtrade, and I look it up in Questrade, we can do a compare to see what the total costs are.

As a beginner investor, I think those qtrade tools could be interesting for learning purposes. You definitely need lower commission fees if you are trading often which doesn't sound like you are. Once you have $4.95 trades, you can't go back to higher fees :)
 

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Discussion Starter #14 (Edited)
Yea that is understandable davext, personally I just got worried about Questrade because ive heard of some of the weird and sly tactics they use. Ive heard of some people getting charged random fees on their accounts etc. It just made me a tad worried. Honestly the main reason why I went with Qtrade is because you never know what kind of assistance you may need, as well as based on the fact that I will have this account for years to come I find comfort in the fact that Qtrade has really nice customer service and enough tools to satisfy anything I may want to do later on in life. Although lower fees would benefit me now I am not too sure what to do anymore.

Although at the moment I am second guessing myself although what I could do is open up a Questrade account for now, although how much are the transfer out fees ?

EDIT: I forgot to mention that Qtrade states on their site that they charge no commission to buy Mutual Funds, although I am not completely sure as I have not tried buying them yet.

I think my Qtrade account application got lost in the mail haha! I sent it out two weeks ago and Qtrade hasn't received it yet (stupid Canada Post)

EDIT: I just wanted to add that my father just showed me his Mutual Fund income statement (or w.e it is). I was looking at the portfolios overall performance and I noticed that since he started it (1998) he has only had a 3.25% return since inception. Now this seems pretty damn low even for mutual fund portfolio. This is my dilema as to whether or not I should use Mutual Funds or ETF's to begin my portfolio. I look at how Mutual Funds perform compared to ETF's which usually are dismal. This fund is for my Education (RESP).

Now my dad was pretty adamant that I need to consider getting a "professional" to help me consider what I want to do with my money. This has been my dilemma with my dad, I have not been able to get him to realize that the fees even on CIBC Mutual Funds are horrible compared to so many ETFs (I will admit there have been a few nicely performing CIBC funds) although many ETF's do perform better than MF's or ATLEAST have lower fees. I just cant stop thinking about how much has gone down the drain in fees in his portfolio.

Do you think that he would have been better off if he added some ETF's to this full Mutual Fund portfolio?

Here are the allocations btw:
Saving: 5%
Income: 25%
Growth: 70%

There is approx 50k in this RESP Portfolio.

Return Comparison:
1 Year: 5.14%
2 Year: 5.04%
3 Year: -0.68%
4 Year: 1.82%
5 Year: 2.89%
10 Year: 1.79%
Since Inception: 3.25%
 

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I looked up Questrade and they do charge a $9.95 fee. But this have the mutual fund maximizer which easily gets you that amount of money back and more.

Picking Mutual funds to me is like picking stocks in that I'm never confident with the future performance so I try to make sure the MER is not too much and the holdings make sense.

You can easily find a lot of mutual funds that have had huge returns using globefund.com

I purchased the CIBC Precious Metals Fund about 3 months ago and that's up 30% from when I bought it. It's part of my precious metals asset allocation. I believe all the precious metals funds have done well this year.
 

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Discussion Starter #16
I understand that Mutual Funds can be better in some ways, although I just dont like the fact that when I use a comparison tool (for example at getsmarteraboutmoney.ca) and see that in my dads situation he could have saved a ton on fees if he had used an ETF comparable to a Mutual fund (Fee wise)
 

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Well that's why it's a good idea that everyone is switching to ETFs. I try to avoid mutual funds but my uncle insisted that I try this one. His argument was that his FA said that they do a really good job researching and that it's hard to know all the different mining companies.

I took his advice with a small amount of money. He has much more to invest than me and he told me that he was up $100,000 in 2 months. That's something to smile about but he definitely has to watch out when that rally is over.
 

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Discussion Starter #18
Yea, Honestly I think my approach to investing via Couch Potato will work for my lifestyle. When I start saving for my RRSP and RESP if I have children it will most likely be a Couch Potato style portfolio whether it be Aggressive or Conservative depends.

Although regarding the discount broker thing, I think I am still going to put my money at Qtrade just because I like what I have seen so far and also I am discouraged by Questrades ranking in that Globe and Mail discount brokerage comparison...
 

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Yes the mass media always knows what's best for you

With something as serious as investing, you should take the time to read the fees so you aren't surprised with "hidden" fees. Questrade is pretty bare bones and you can be surprised if you spend more than you have, spend currency you don't have, input an order more than once etc. If good service is preventing you from making these mistakes or fixing them for you then I don't mind being with a discount broker.
 
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