You sign up for an RRSP or TFSA account with TD Canada Trust, select the “e-series” fund called “TD Canadian Index – e” and boom, you have a stock index tracking fund that only charges 0.33% MER.
There’s also “Canadian Bond Index – e” at 0.55% Great.
Putting all your investments into the relatively concentrated Canadian stock market could make for a volatile ride (Nortel and RIM shares, anyone?
) In my own investments, these days I split new purchases evenly between US stocks (Vanguard’s VTSAX) and other major economies through their Total International Stock Index Fund (VTIAX).
But enough of the rehash, the real question is: What To Buy Once You Have the Account That’s not too hard a question, right?
We all know that stock or bond index funds are the way to go unless you think you’re smarter than the stock market () Novice Investment When I started the investment game, I had no idea what I was doing. My father, a wise man who taught me to fear debt and spend only money that I had, instructed me to max out whatever pension contributions my company would give. Money Mustache and I worked for a Canadian company that kicked in 50 cents on the dollar up to 5% of our salaries. Intermediate Investment So I did you some research and here’s what I came up with from the national banks in Canada.
Expert Investment Well, Canada, there are a couple more options for you, if you’re willing to put your toque on tight, ride your dogsled that extra kilometre and deal with a bit more hassle. This outfit offers Mutual Funds in something it calls an “e-series”.
Even here in the market-crazy US, people get tricked into buying front-loaded funds, back-loaded funds, actively-managed funds with multiple-percentage-point fees, whole life insurance, and other dubious investments.
The benefit of an ETF is an even lower expense ratio.
Now that you can buy Vanguard funds here in Canada, there is no excuse for getting ripped off with excessive fees: See their rates here : https:// Note: Another benefit of looking at Vanguard ETFs is easy diversification.
Anything you put in an RRSP doesn’t count as taxable income for that year.
Instead, it gets taxed when you take it out – after it has accrued compounded investment gains without being taxed on the way. It also grows untaxed and, furthermore, you pay no tax when you withdraw from it.
So we immediately set our pension contributions to 10% of our paycheques, and happily took the 5% bonus. We get that from the fact that the stock market tends to return at least 7% per year when averaged over long periods of time (like my planned 60 year retirement). I could have made this chart larger by including every fund every bank had, but we’re principally concerned with low-cost funds that track Stock Indices and Bond Indices, so that’s what you’ll see here.