Personal Finance

Just starting out, would like some advice on investing

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Newbie
Sep 15, 2010
4 posts

Just starting out, would like some advice on investing

Hi all,

I'm 26 years old and have been working for just over a year now, and have built up sufficient emergency funds over the past year that I am ready to start looking at other investment options. I'm leaning towards investing in index funds (probably e-series), as I would prefer not to have to actively manage my investments, but would like to hear thoughts from people out there.

Here's a little of what my finances look like:

TFSAs: ~13k mostly laddered in GICs (~8k), some in ING high interest savings (~5k), but I plan to start transferring them to index funds as the GICs mature over the next 5 years.

RRSPs: ~1k, started small ($500) with ING streetwise funds to get a feel for how index investing/mututal funds work, and I contribute $100 every month to keep it going for now.

Regular chequing and savings accounts have enough to cover my expenses and emergency funds.

Moving forward, I plan on investing in the TD e-series funds with my TFSA (starting with the $5k I have sitting in my ING TFSA account and the additional $2k room I still have for this year), but based on my past year's budget and experience in building up my emergency funds, I'm pretty sure I can expect to save ~$10k/year. $5k will go into the e-series TFSA MF account, but I will still have room to invest another $5k.

So a couple of questions:

1) Would if be a good idea to invest in TD e-series funds with a non-registered account with TD as well after I max out my TFSA contributions? Or should I consider some other form of investment?

2) Or would it be a better idea to instead increase my RRSP contributions? I'm making about 50k/year and my marginal tax rate is ~30%, so I'm not sure that using RRSP contributions right now is the best use of my contribution room.

3) I think my concern is that it seems like I'm only investing in TD e-series and ING streetwise mutual funds across the 3 types of savings that I have (non-registered, RRSP & TFSA), and although I know they index funds are already diversified, they still look a lot like only 1 type of investment. Are my concerns about diversification valid or should I just not worry about that?

My ING Streetwise MFs are my first type of investment outside of savings accounts and GICs, so I'm pretty much a novice when it comes to investment options, and would love to hear what people think.
5 replies
Jr. Member
Jul 1, 2008
185 posts
15 upvotes
Toronto
sourgrapes wrote: 1) Would if be a good idea to invest in TD e-series funds with a non-registered account with TD as well after I max out my TFSA contributions? Or should I consider some other form of investment?
Yep! You should invest any excess funds that you won't need for ~10+ years. If you have the RRSP room, you can contribute, but defer taking the deduction if you're not sure it's worthwhile with your current tax rate.

Just remember that in a non-registered account you'll have to track every purchase and sale yourself for tax purposes, so set up a spreadsheet and keep it up-to-date as you buy/sell.
3) I think my concern is that it seems like I'm only investing in TD e-series and ING streetwise mutual funds across the 3 types of savings that I have (non-registered, RRSP & TFSA), and although I know they index funds are already diversified, they still look a lot like only 1 type of investment. Are my concerns about diversification valid or should I just not worry about that?

Well, you're right: they are pretty well diversified. You should also have a bit of cash for short-term/emergency needs, but it sounds like you've got that as well.
Deal Fanatic
User avatar
Sep 18, 2009
5016 posts
559 upvotes
Southwestern Ontario
You should look for a financial adviser. It is hard to get a good one and retain, but worthwhile in the long run. Ask your friends who use one; get a good one by word of mouth.
And meet their standards, otherwise they may move on without you.
Deal Addict
Nov 15, 2010
2043 posts
793 upvotes
Ottawa
jayt90 wrote: And meet their standards, otherwise they may move on without you.
What do you mean?
Deal Fanatic
Jul 1, 2007
8569 posts
1763 upvotes
Unfortunately for the amount of money he has he won't be able to find a good advisor. Only one of those "no family left behind" advisors, who go after the little guys.

He's got the right idea on his approach.
Money Smarts Blog wrote: I agree with the previous posters, especially Thalo. {And} Thalo's advice is spot on.
Newbie
Sep 15, 2010
4 posts
[QUOTE]Just remember that in a non-registered account you'll have to track every purchase and sale yourself for tax purposes, so set up a spreadsheet and keep it up-to-date as you buy/sell.[/QUOTE]

Did not know that. Thanks for the heads up!

[QUOTE]And meet their standards, otherwise they may move on without you.[/QUOTE]

I don't really get what you mean by "meeting their standards"... And as Thalo has pointed out, my portfolio is small, so I'm not sure there would be any planners who would want to work with that. Going to a bank to see one of the financial advisors probably won't do much for me either since I already have an idea of what mutual funds I want to invest in.

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