Hey guys im from Quebec Canada and just opened a TFSA or better known as a tax free savings account.
I had the option for 1% interest annually or comverting it into a mutual fund. I went with the mutual fund option and took a conservative one thats 70% bonds 30% stocks and should perform 1.1% - 4.5% annually if I stick to it for 3 - 5 years.
>was the mutual fund a good idea
>is it too conservative?
All information is welcome, thanks.
>is it too conservative?
in my opinion, yes. at that rate you're probably losing value to inflation. you can invest in stocks through your TfSA and you won't be taxed on the gains
>>1093880
If i dont plan on trading stocks on my own arent i hust better off with the mutual fund?
I can always adjust the aggressiveness
Bump
>>1093497
>if I stick to it for 3 - 5 years.
Tu veux dire que tu a pris un GIC?
Pour ce qui est du pourcentage de bonds vs stock tu peux prend ton âge comme barème.
Exemple, si tu a 20 ans tu prend 20% bonds et 80 stocks, si tu a 60 ans tu prend 60% bonds 40% stocks. De cette façon tu diminue ton risque plus tu approche l'âge de la retraite.
Tu est avec quelle banque?
Quoi que cela ne change pas grand choses (outre le MER que tu paie), oui le choix de fond mutuel est une bonne idée car les comptes d'épargne n'offre que très peu de rendement (sauf si tu bank hop pour profiter des promotions (quoi qu'au Québec les choix sont plus limité)).
>>1094121
I am with TD, they said 30% stock 70% bonds, I am only 22, should I go more aggressive, is this rate too safe.
>buying mutual funds
>ever
You'll get killed in fees. Buy CVE:ART and thank me in a few months.
>>1094454
Montreal
>>1093497
Way too conservative and mutual funds are shit. You should probably be 90-100% equities in a low cost broadly diversified index fund, or a target date retirement etf from a company like vanguard. I don't know if that's available to french canadians, it's probably too capitalist. If that's the case just go with a plot of maple trees like everyone else up there.
>>1094228
Way, way to conservative.
Should be the other way around, 70% shares, 30% bonds / other.
>>1094782
>>1094787
Thanks for the input, considering im limited with my choices of mutual funds because I have to stick with the bank (to get my tax free returns) should I go 90/10 or 70/30 in your opinion?
Im with TD bank.
OP, look into ETFs.
Mutual funds are okay, but they never perform better than the market in the long term. Get a few ETFs and diversify.
>>1095559
Can you get an etf over mutual fund for your tfsa?
>>1095150
>70/30 or 90/10
It's kind of a crap shoot.
If you look at a target retirement date fund from Vanguard, and you're going to retire in 2045, the professionals would have you 90/10 right now, it will slowly be rebalanced over time to a more conservative distribution as you reach retirement. Warren Buffet points to research showing a 90/10 split being best for most people. You should expect 90/10 to have an annual return of about 9.5%.
Historically the advice has usually been 60/40. Professionals point to the significant reduction in risk offered by this distribution, the annual average return is about 8.5%. While its only 1% less than the above return, that compounds to a big difference over time.
It's really going to come down to how much risk can you accept. As a 21 year old your tolerance for risk is probably quite high so 90/10 or even 100 equities should be fine. If there's a likelihood of you needing some of the money soon (within the next few years,) for a down payment on a house or to fund grad school, a more conservative 60/40 or 70/30 would be more appropriate. The reason is if you need to draw money and are 100% stocks, the timing could work out to where you're trying to pull out a significant portion of your holdings during a market downturn. The downturn would reduce your portfolio more significantly than if you were 70/30, so you'll be withdrawing a bigger percentage of your assets than if you were more conservative and had a portfolio which maintained more of it's value.
If that's not the case, you don't need liquidity any time soon, the additional risk of 90/10 should be acceptable given that you have a very long time to retirement. There's plenty of time to recovery from any temporary downturns.
>>1095890
Thanks for the thoughtful answer. What if there is a downturn near my retirement though.
>>1095150
>>1095890
I didn't address the tax free aspect. First, that doesn't sound right that you can only be in the banks mutual funds for the tax free treatment, you should research that a bit more. They're probably trying to steer you into their own mutual funds so the salesperson can get a commission. My guess is that anything in that account will accumulate tax free.
If 90/10 does work out to 9.5% annually, and your mutual fund will at best perform about 4.5%, your tax rate would have to be more than 53% to prefer the tax savings offered by the mutual fund. That's probably not the case so go with a higher returning taxable account.
>>1095901
>downturn near retirement
You should be re balancing your portfolio as retirement approaches to a more conservative mix. If you cant invest in a target date retirement ETF, just copy their asset mix, which you can see online. It will likely stay around 90/10 for another 10 years or so then slowly shift to about 50/50 at retirement.
>>1095909
Is going with a mutual fund from my bank advisable if they supposedly have the lowest (MER) in Canada.
They claim its so cheap because its all operated online.
>>1095909
For the record its TD Bank. Again thanks for the input dude!
>>1095938
Mutual funds as a whole aren't really advisable, no. Their active management doesn't outperform the market and any fees just make things worse. A mutual fund that's a wise investment might exist, but it's a unicorn.
Be aware that lots of people make money off of selling mutual funds to unsuspecting investors like you, nobody makes money selling passive index fund etf's. You might have to put in more effort to invest in one.
I'd recommend a vanguard target date retirement etf but I don't know if that's available to you in canukistan.
>>1095982
I was reading an article that said if you had under 200k to invest you might as well go with a mutual fund because the cost with be minimal compared to having to trade etfs or something. Is there any truth behind this?
