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Discussion Starter #1
I haven't been much into investing, I tried it once before and it was a nightmare.

I see a lot of stocks I want to buy but to get one of these brokerage accounts going is a pain. I'm so tempted just to buy Tangerine mutual funds even though it doesn't have my companies I'm looking for.

To go with a online broker I'd need to create an account, last time they ask for drivers license, tax returns etc etc it took forever to create. Then since all my cash is rrsp and tfsa I'd have to figure out how to transfer these accounts over to the brokerage account. Then there is usually all these fees and junk. Think the one I got nailed with last time was my balance wasn't high enough. Had to make a 3% return to just break even with the fees.

Anyways I guess I'm wondering how bad is it to invest in mutual funds with Tangerine? I was looking at the dividend paying INI235 or maybe INI240. It would be so simple, click a couple buttons and done.

If it's a big waste of money to buy a mutual fund is there a simple brokerage account. I don't want to spend days or weeks setting this stuff up, transferring money, figuring out how to transfer rrsp and tfsa etc.

Thanks
 

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I'm not sure how experienced you (or others reading this) are, so forgive me if I sound like I'm "talking down" here.

The first thing to know: There are many types of mutual funds, but broadly, they can be divided into "actively managed funds" and "index funds."

In actively managed funds, a manager actively buys and sells and picks stocks, attempting to "beat the market." This involves high fees, and the majority of actively managed funds fail to beat the markets.

Index funds simply buy and hold a bunch of stocks from an index. For example, a Canadian index fund might hold all the stocks on the TSX. You get a huge variety of stocks, and the management fees are very low, because there isn't nearly as much management involved.

Index funds are better. Get index funds. Some people will disagree with me, but they're wrong.

I don't know a ton about the tangerine mutual funds. I'm glancing over them now, and they seem okay, but their fees seem high to me. About 1%, it looks like? That means you pay 1% of your money every year. Invest $100, you're paying them $1 a year for the pleasure.

Personally, I buy ETFs from Blackrock ("iShares"). The fees are usually much lower. 0.06% instead of 1% like at Tangerine. For larger portfolios, this means HUGE savings. Say you have $100,000 invested. At Tangerine, you're paying $1,000 a year! At Blackrock, you'll pay $60 a year. What would you rather pay, $1,000 or $60? As your portfolio grows and grows, you can end up spending a lot of money for funds with a 1% fee. (Some actively managed funds even have fees of 2-3% so I'd avoid those.)

Setting up a brokerage account at a place like TD Web Broker involves some paperwork. But it's really not that complicated. You schedule an appointment at any branch of TD, fill out some papers, and in a few days, you gain access to their system. There IS a learning curve to using the system, however.

If the learning curve intimidates you, another option is to buy index funds directly from banks. No need for an online brokerage. TD offers index funds with MERs (the fees) ranging from 0.3% - 0.5%. Still much more expensive than ETFs, but much cheaper than Tangerine.
 

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Discussion Starter #3
I'm not that experienced I read some stuff but it was still kind of a disaster last time I tried.

Example I didn't know that's the way Mer works. I didn't know you just get charged that fee no matter what, I thought it was based on returns or something.

So why are some places expensive? Is tangerine just scamming people or is there a reason Blackrock is 0.06 and Tangerine is 1% It's an online only bank so they don't have any additional costs for buildings etc.

I'm losing my enthusiasm already. Just seems like a bunch of setting stuff up and learning, then a bunch of little fees all over the place and what it gets you is possibly a littler higher rate than long term GIC. Or you can just loose a bunch also.
 

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I'm losing my enthusiasm already. Just seems like a bunch of setting stuff up and learning, then a bunch of little fees all over the place and what it gets you is possibly a littler higher rate than long term GIC. Or you can just loose a bunch also.
For those that don't have the time, or are not interested in learning, direct investing is likely not the way to go. If you still wish to invest you could find a financial advisor to handle all the work for you BUT this normally comes are a cost, either directly or indirectly.
 

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Honestly if it is too much work for you.
Look at Canadian Couch potato, use the simple portfolios.
You could go TD eseries if you are ok with electronic banking.

Otherwise print out the couch potato portfolio and go to your current bank and ask for the same thing with their mutual funds.
Rebalance once a year or so.
 

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Example I didn't know that's the way Mer works. I didn't know you just get charged that fee no matter what, I thought it was based on returns or something.
Nobody is born knowing these things! We all had to learn it sometime. Everyone here didn't know this at some point. We all learned it somewhere.

Yes, MER is charged no matter what. Even if your portfolio loses a ton of money, you're still charged the same percentage. It's taken out of the amount of money you have invested, not out of your profits.


I'm losing my enthusiasm already. Just seems like a bunch of setting stuff up and learning, then a bunch of little fees all over the place and what it gets you is possibly a littler higher rate than long term GIC. Or you can just loose a bunch also.
The good news is that even investing with a 1% MER is better than not investing at all. Even if you did end up going with Tangerine, because it's easiest for you, you're already way ahead of people who don't invest at all.

I recommend reading the book Millionaire Teacher. It's a quick read. You can probably read the whole book over a weekend. And it really simplifies "couch potato" investing with index funds.
 

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They are not nessarily bad but do cost more in fees which can add up over the years. If you do decide to go that route or add one or two look at the following companies:

Mawer
Steadyhand
Leith Wheeler
 

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After the 1929 - 1932 crash, I read that if memory is correct investment trusts had to change their name to mutual funds to get people to invest in them. Take a look @ chart of the Dow or chart of the S&P with mutual fund cash levels. The higher the degree of top the smaller the cash level the opposite is seen @ bottoms, which shows that mutual funds are poor market timers.
 

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Discussion Starter #10
Okay thanks for the info I won't bother with mutual funds. Maybe Ill start a brokerage account or just say forget it and buy useful assets with the cash or pay down my house.
 

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Discussion Starter #11
After looking into mutual funds I realized I don't understand how investing works at all . I was looking at the one mutual fund, over 5 years it was 5% return on average and the mer is 1%. Your telling me people are willing to take all this risk for a 1% gain over just getting a 3% GIC for 5 yrs?
 

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After looking into mutual funds I realized I don't understand how investing works at all . I was looking at the one mutual fund, over 5 years it was 5% return on average and the mer is 1%. Your telling me people are willing to take all this risk for a 1% gain over just getting a 3% GIC for 5 yrs?
Would have to see which fund you talking about BUT an average of 5%/year might not be bad depending on the fund. Also, most sites (IIRC) are reporting after the MER is taken so it would be 2% more than the 3% 5yr GIC.

And BTW, it can be much worse than that. Say you bought (random pick here) TDB900 CDN mutual fund on Jan 1st. As of today you've lost 30% of it's value! Equity related funds do have their risk indeed.
 
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