tips on money management/investment | General comparisons | Discussion forum

paperpub said

Hi,
I'm a university student, in my mid twenties. I'm planning on investing a portion of my money for a higher return, but have very little ideas as to where to start. I have done some research on the web, but failed to find something satisfactory as I am hoping to get info in a Canadian context with realistic perspectives.

With me constantly working on my thesis paper/study, I don't think I want to (or capable of) trying anything aggressive and risky. As a beginner, I just want to play safe. Any ideas as to where to start?

I have looked up info on TFSA, GICs, but that's pretty much the extent of it. Actually, I'm not even sure what is a good number to work with for someone my age in investment related issues. So any help would be very much appreciated!!

Start with your TFSA first.. Only when your financial house is in order.. READ read read for the first year then begin investing your regular savings > TFSA savings (if rate is reasonable)/TFSA trading accounts..

paperpub said

Thanks for the tips guys. I will continue reading the thread on this site and the Money Sense resource

Kanaka, you have certainly touched upon ALOT of interesting topics. Your inspiring questions are really useful. I felt like a blank slate in this area, so it's good to have a list of questions to establish some of directions. I clicked on the link you have provided but it has many terms I am not familiar with :/ I guess it's all about learning.

Question -
I have always wondered whether I should meet with a financial investor at this age, considering I am a full-time graduate student, no stable income other than my scholarships, research grants, and summer jobs...is it a waste of time? I mean, what we going to talk about?

If it is indeed meaningful to set up an appt, I guess the best way to do so is to set up an appointment through my own bank?? What about other banks?

Thanks!

Paperpub

Do your own research first.....find out the pros and cons of buying shares, ETF, Mutual Funds, bonds, GIC's etc. (ie MER rates etc.)Your safest start is GIC's in a TFSA account. I have all of my GIC's that are TFSA in Accelerate, Outlook Financial, and Itrade. You have to feel comfortable with dealing with virtual banking first! You could go to a bank and get some advice and even begin to invest there. BUT you are not likely going to make a lot of interest and the person you will be dealing with will not likely be there for ever nor are they that likely to be qualified and are likely to be limited to the products that the banks approve. (ie. what is the best kick back for them .... is likely what they are going to sell .... but I do admit some of the banks do have GOOD ETF's).

For the article, you should look up the source of each ETF ie. go to the Ishares, Bank of Montreal and etc. web site and look at the distribuitions, where the holdings are, the yield etc.

Keep one thing in mind the MORE people or institutions between you and the product; everyone is taking and commision or kick back and you are at the end of the chain.

I do not see any reason why not to go see an advisor. Go to a few of them and interview them (but don't let them know what you are doing). I would first start off asking what they can do (what kind of long term plan could they provide for you) for you and ask questions and then do your "interview".
Ask your friends, aunts, uncles, cousins, parents and grand parents who they use. Don't think that an advisor or bank will make changes to keep your portfolio(s) in good shape during bad times. You have to ask for changes or just weather the storm..your choice. And keep in mind changes can also incur fees. We have always weathered the storm, satisfactorily. I would say you should look at an advisor with at least ten years experience and is under the age of 40 or so. Keeping that in mind you will likely have at least 2 advisors in your life time. I caution this; an advisor should have good ethics that allow he/she to grow their business by word of mouth and NOT be influenced by the free golf shirts, extra bonuses, and the free vacations offered by the Mutual Fund companies and the sort. If your advisor has a bunch of freebies (calendars, pens etc), briefcases, and clothing.....think twice about using them. We have a boutique type of investment office that we visit and they have changed over to Manulife. I like the advisor but do NOT like the idea of Manulife; but that is the way things are going for investors....less choice. So you have every right to find a good advisor that can provide a variety of products. Use the banking systems, brokerages and etc. for your use. I have never paid fees for a bank account, I have 2 accounts in Credit Unions in Winnipeg solely for investing in GIC's at higher rates and do not use them for day to day banking. I have accounts at Coast Capital as US funds are insured there vs at the Bank of Montreal. We have had most of our loans at the Bank of Montreal. My wife does day to day banking at the Bank of Montreal as I do at Coast Capital. BMO gives me free Money orders and Coast Capital charges.......BUT if I want to deal locally for a GIC .... Coast Capital has the highest rates for all of the credit unions and banks in BC.

There was an aritlce in my reader a month or so ago that said an 18 year old would be worth a million if you invested your full allowable amount in a TFSA every year .... so what ever you can set aside now and be able to increase that amount as you move on the better for you. If I was to wind the clock back 40 years I would invest in a combination of TFSA, Dividend Income, and an RRSP last.

You might want to read up on the Globe and Mail website and see what they have to say about investing in dividend producing products and how it is taxed...in some cases taxation is zero!

Keep in mind that you want to hide (legally) as much income earned, as possible, that may prevent you from being eligbile to "Income Tested" programs offered by the Provincial and Federal Governments. And you want to be sure that you will be taxed for you income at the lowest rates possible during your retired years. The latter is what I am in the midst of correcting .... that you can plan to have in place ahead of time.

I do not pay monthly fees for banking, credit cards or an advisor.

I do pay for new blank cheques every couple of years and for brokerage fees per purchase when required and stay away from purchasing anything with a front end or back end fee unless there is a limit that I am ok with...ie a back end fee is dropped after owning a Mutual Fund for seven years.