Index / ETFs

[Scopez]

Alright you rich old fucks out there (in the most sincere loving way possible)

I need a bit of advice,
- i am in my 20s and I want to put 500/ month into the market for the next 20 years....
I am aware that playing the stocks to get rich quick has a 99% failure rate, so i am wondering if anyone here can explain to me like i am 15 years old, the type of index / etf I should put my money in so i can retire in 20- 30 years off investments i make now - which ETFS / INDEXS should i look into, is it worth it to invest in american index's based off the foreign investors tax etc...


I get a pretty nice pension (if it's even around by time i am supposed to retire) and rrsp contributions from my union however i don't plan on working that long to utilize the full potentiwl of the pension. And when im more established in the market I'll be pulling out the rrsp and reinvesting it

 

[fall]

The answer is simple: any ETF that has low MER (under 0.1%) and track market index. How much you want to hedge internationally is up to you, but simple S&P-TSX index fund will be enough if you plan to retire in Canada. For international retirement, buy funds that track US index - do not worry much about taxes you paid in the US since you will be able to use it as a foreign tax credits (and Canadian taxes are higher). You may lose a bit on not able to claim preferential treatment for dividends, but it will be like 25% of dividend payments, so, about 0.5% annually of your investment. Investing $500/month in ETF is costly ($7 transaction fee), so, instead, invest $6000 every year. But do not expect to get rich or retire on measly $6000/year investment.

 

[mightymouse007]

Best U.S. ETFs for 2020 - MoneySense

Our panel reveals their thoughts on the best exchange-traded funds for exposure to companies south of the border.

www.moneysense.ca

I personally think the US market is the best to invest.
Cdn market is sort of lagging behind.
If you are going to invest in Canadian Market,
Energy, Financial are prob your best bet. Energy is kind of low right now.
Shopify being an exception. Some High growth, High-Risk Reward, you can try LSPD, DCBO.

But if you are thinking long term, it's prob best to put your money into an index fund.
XUU, and VFV are good options with low MER. They invest in US Big Companies like Amazon, Apple, Microsoft, and so on.

If you want some international markets in Asia and such, VIU, VEE, XEF aren't bad. A little bit higher MER, but allows you to diversify across globally.

 

[fall]

Best U.S. ETFs for 2020 - MoneySense

Our panel reveals their thoughts on the best exchange-traded funds for exposure to companies south of the border.

www.moneysense.ca

I personally think the US market is the best to invest.
Cdn market is sort of lagging behind.
If you are going to invest in Canadian Market,
Energy, Financial are prob your best bet. Energy is kind of low right now.
Shopify being an exception. Some High growth, High-Risk Reward, you can try LSPD, DCBO.

But if you are thinking long term, it's prob best to put your money into an index fund.
XUU, and VFV are good options with low MER. They invest in US Big Companies like Amazon, Apple, Microsoft, and so on.

If you want some international markets in Asia and such, VIU, VEE, XEF aren't bad. A little bit higher MER, but allows you to diversify across globally.

The small issues with non-Canadian companies is that their dividend are taxed at a higher rate. But since dividend yield is usually below 3%, it is not a big deal.

 

[fall]

If you already have a pension plan and only in 20's, you can take a bit of risk. Consider 100% stock ETFs like XEQT or VEQT, both of them are broad market index etfs with very low management fees. Try to maximize RRSP first if you are at least making 90k+ if not maximize TFSA first. If either of the accounts are maximized, maximize the other one. If you intend to pull out for a downpayment or education, don't invest in market, invest in a cash rrsp account instead.
Also deal with a low fee broker like Qtrade or Questrade. If you are only making few transactions a year i.e. every quater only buying, which by the way is statistically the best strategy, you can use any broker, you'll still come ahead.

Best wishes!

Yes to investing in stock-only ETFs (look for the management fees of under 0.15%). I would be cautious about using RRSP: it will help save you taxes today, but when you will be old and rich, you will have higher marginal tax rate.

 

[jeff2]

If you see Mawer Global Small Cap going through a rough spot, you could consider putting some money there in addition to index etfs.
With valuations at this level, it is hard to recommend investments.

 

[mightymouse007]

The small issues with non-Canadian companies is that their dividend are taxed at a higher rate. But since dividend yield is usually below 3%, it is not a big deal.

Oh yes, I forgot to mention. TFSA accounts, their divs are tax if you buy US stocks. So, its best to use your RSP account to do so.

 

[danmand]

12 times $500 is $6,000 which is the limit for TFSA. Then you do not have to worry about taxation, whether dividends, interest or capital gains.
Decide which sectors you want to invest in, utilities, banks, industrials, gold etc.
I have had best results with medical/retirement homes REITs and gold mining shares.

 

[fall]

Why are you against investing by yourself and promoting silly ETF's. Come visit us in the stock picking competition and see the results for yourself.

https://terb.cc/xenforo/threads/%E2%96%87-%E2%96%87-%E2%96%87-the-stock-picking-competition-%E2%96%87-%E2%96%87-%E2%96%87.724536/

CC's and mine pics put together generated almost 300% returns in 11 weeks. How much will your ETF generate in a year 10%?.

Because I have an appropriate education background in this subject. Anecdotal evidence (like someone being able to pick up a winner a few times in a row) means absolutely nothing. Stock-picking and especially active trading is not investment. making someone to believe that he can beat market risk-adjusted rate of return by doing "analysis" by himself using publicly-available data is very irresponsible and will end up in an average loss of money or taking unnecessary risk fop the same expected level of return. The fact that some people do it and end up making money is not a result of their abilities but simply the fact that they were lucky to be in the upper tail of all the people who tried it.

 

[fall]

You have an "appropriate educational background in this subject"? You mean, you have read a book about ETFs?

"Anecdotal evidence"? It is not, it's all there in black and white , documented every week for past 10 weeks and will continue. You are welcome to have a look. This stock picking competition however has one "flaw", which an "expert" should be able to see immediately, but it is not "anecdotal evidence". And no, we are not lucky to "pick up some winners a few times in a row".

"Stock trading is not investing" bloody hell mate. It's like saying " sometimes when I close my eyes, I can't see".

Please join us in the competition and put your best ETF against our pics. You should win in the long run, no ?

Why not try leveraged ETF's while you are at it and watch your money disappear faster than in a divorce court?

As an expert please tell us specifically which ETF should this young man invest in on Monday?

Gladly answer to your last question: any ETF that track market-wide index. But do it when you have money, not on Monday. Ideally every few month to achieve better diversification. Same applies to selling when you will decide to sell - do not sell at once, spread over time to reduce volatility. And by invest I mean put you money there and wait for at least 5 years.

Good luck with you closed eye investment strategy. I am surprised that with your mad skill you are not running any large hedge fund yet.

As to anyone else reading this topic: stay away from these "specialists" that are saying you should "learn how to invest" and "research stocks" or, even worse, "use technical analysis". And stay away from any "investment" books: buy yourself a basic Undergraduate textbooks to learn about asset pricing and systematic risk, and remember one word: diversification. Also, if at some point on time you will feel that you are smarter than most other traders, ask yourself: are you sure about it?

 

[fall]

Your devotion to one book is reminiscent of religious zealots devoted to their book.

There are many ways to participate and profit in the financial markets. And no one is "best" and should be blindly followed.

Your advice on not to educate yourself is plain dumb. I hope you didn't pay more for your education than the price of that book.

Reading "investment" books or following "expert" advises and doing "research" is not education yourself. Go take a few formal University classes on this subject to educate yourself and you will see all this "home-made research" and "stock-picking" for what it is - a medeval medicine.

 

[desert monk]

The 2 best market index ETF are: VOO, and its Canadian $ counterpart, VFV.

 

[fall]

Why don't you just tell us the name of the book you think is worth reading.

I will share mine, hope you don't sweep it under the carpet as "anecdotal evidence".

I would suggest to start with a basic investment textbook: "Investments: Analysis and Management", 14th Edition, by Charles P. Jones and Gerald R. Jensen. Of course, I assume you know the basics of finance. If not, then start with the first 17 chapters of
"Fundamentals of Corporate Finance", 11th Edition, by Stephen Ross, Randolph Westerfield, and Bradford Jordan before approaching the investment textbook. At least one University-level statistics class is needed too.

 

[fall]

This is standard prices for college textbooks, but you can look up a much cheaper earlier editions. My guess you were joking about the calculator . Sorry, but the investment book that you mentioned and any similar "investment" book are just a yellow press.

 

[fall]

Did you even read the books you suggested?



Chapter 1 Page 15 of the first book.

"The Importance Of The Internet.

Any discussion of the investment decision process must focus on the role of the Internet, which in short time has significantly changed the investment environment. Now, all investors can access a wealth of information about investing, trade inexpensively and quickly in their brokerage accounts, obtain real-time quotes throughout the day, and track their portfolio.

This is true revolution- the Internet has democratized the flow of investment information. Any investor, at home, at work or on vacation can download an incredible array of information, share comments with other investors, perform security analysis, manage portfolios, check company required filings, and carry out numerous activities not thought possible for an individual investor only a few years ago. "


The above is exactly what I said in my first post.

Please, read beyond Chapter 1 (in any textbook, chapter 1 is just an introduction)

 

[fall]

Let's end this year on a positive note and compromise.

The OP should allocate no more than 5% of his portfolio to personal trading and invest the rest in low cost index funds.

I hope you agree.

Happy and Prosperous New Year.

Absolutely. IMHO, there is no harm in stock-picking and frequent trading as long as it it is done mostly for entertainment purposes. It is like going to a casino: sometimes you win, sometimes you lose. The only difference is with market trading you have expected profit (unless your trade so much that you spend a fortune in brokerage fees) while in casino your have expected loss . So, stay away from casinos and have fun picking stocks: same thrill of taking the risk but with positive expected return. I'd say, for each $100K invested in index, put aside $20K to play with: if you win, not only you will have more money to spend on lovely SPs, but you will also feel good (especially if you spend it on the right SP), if you lose - well, it is not the end of the world.

 

[flyhy]

Study technical analysis. Think of the markets as Spiralling through time, thats what w.d. Gann "Tunnel Through the Air" was saying.

 

[fall]

Study technical analysis. Think of the markets as Spiralling through time, thats what w.d. Gann "Tunnel Through the Air" was saying.

Whatever float your boat.