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Bank insisting on investing in mutual funds?

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Deal Guru
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Feb 23, 2008
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Bank insisting on investing in mutual funds?

I went to the bank to do investing. The banker insists on putting the money into mutual funds. I already have mutual funds and don't see a real need to invest more at this time. I didn't follow their recommendations, and did what I felt was right-GIC's.

So what is with the bank pushing mutual fund investments? Is it their prime objective to make you invest in the stock market so their mutual fund company will make the $$?
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Feb 17, 2007
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yes.
the advisor you are seeing will get 1% trailer fee from the money you gave them.
so if u put in 1,000,000, your hard working advisor will get 10,000 each year.
and for some unknown reasons, the mutual funds performed super good, your million dollar investmemt becomes two million, your advisor will collect 20,000 in fees.
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Jul 28, 2009
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ETFs are much much much better than mutual funds.

and yes, they make a lot off mutual funds.
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Mar 20, 2003
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Check out CBC's Marketplace from last Friday on MER's (or just google that term)... that's why they push mutual funds, they probably make more profit on them than you do (at least in this recession like economy).
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PunPryde wrote: ETFs are much much much better than mutual funds.

and yes, they make a lot off mutual funds.
So how do I buy these ETF funds? Questrade?
Feneant wrote: Check out CBC's Marketplace from last Friday on MER's (or just google that term)... that's why they push mutual funds, they probably make more profit on them than you do (at least in this recession like economy).
Yea I was going to watch that episode but missed it. I wll check for it online.
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ACC-Major wrote: yes.
the advisor you are seeing will get 1% trailer fee from the money you gave them.
so if u put in 1,000,000, your hard working advisor will get 10,000 each year.
and for some unknown reasons, the mutual funds performed super good, your million dollar investmemt becomes two million, your advisor will collect 20,000 in fees.
So the advisor is just trying to line their pockets? Wow!
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ACC-Major wrote: yes.
the advisor you are seeing will get 1% trailer fee from the money you gave them.
Someone correct me if I'm wrong, but I don't believe bank advisors get commissions. They may have a quota or get so type of bonus based on their annual sales, but they aren't collecting a 1% trailer fee.
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FunSave22 wrote: Someone correct me if I'm wrong, but I don't believe bank advisors get commissions. They may have a quota or get so type of bonus based on their annual sales, but they aren't collecting a 1% trailer fee.
Yea they are no load mutual funds, meaning no broker fee. I don't think they make a personal commission?
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cheapmeister wrote: So how do I buy these ETF funds? Questrade?
Yep, you can buy it like any other stock. ETF stands for exchange traded funds, so are very similar to mutual funds but are traded on exchanges. Virtual brokers lets you buy a bunch of ETFs commission free. The biggest advantage to ETFs is that the fees are substantially lower than mutual funds, think 0.1% vs 2.00%. Also, you know the value of your funds and portfolio at any time, where as with mutual funds you have to wait until EOD or the next day until the bank updates the prices. I made the mistake of buying mutual funds a couple years ago (they made money but i could have made more in ETFs) and I am now in the process of dumping all them and buying ETFs instead.
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There are mutual funds that are OK too; they mirror the ETFs you'd want to buy. They are index trackers.

So, take XIC.TO, which tracks the S&P TSX Composite index (254 largest companies by market cap in Canada); this is also available at RBC, TD, CIBC, etc, etc.

TD eseries is the cheapest; the RBC version has a MER of 0.7% or so, where XIC is roughly 0.2%. I have a biweekly purchase of the RBC one, which I can move over to Questrade when it gets large enough - I'm not "missing out on the action" but I'm also not paying brokerage fees for each purchase.

To avoid: Ideally, all "actively managed" funds. I'd say RBC's 0.7% is the max. you'd want to pay. Have a read of the Canadian Couch Potato...
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Oct 20, 2010
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daverobev wrote: TD eseries is the cheapest; the RBC version has a MER of 0.7% or so, where XIC is roughly 0.2%. I have a biweekly purchase of the RBC one, which I can move over to Questrade when it gets large enough - I'm not "missing out on the action" but I'm also not paying brokerage fees for each purchase.
I'm curious, are you doing this in a non-registered account where you can just withdraw the cash? Otherwise isn't RBC charging you fees to transfer the assets?
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daverobev wrote: There are mutual funds that are OK too; they mirror the ETFs you'd want to buy. They are index trackers.

So, take XIC.TO, which tracks the S&P TSX Composite index (254 largest companies by market cap in Canada); this is also available at RBC, TD, CIBC, etc, etc.

TD eseries is the cheapest; the RBC version has a MER of 0.7% or so, where XIC is roughly 0.2%. I have a biweekly purchase of the RBC one, which I can move over to Questrade when it gets large enough - I'm not "missing out on the action" but I'm also not paying brokerage fees for each purchase.

To avoid: Ideally, all "actively managed" funds. I'd say RBC's 0.7% is the max. you'd want to pay. Have a read of the Canadian Couch Potato...
I looked at the TD eseries mutual funds, and their rates of return look rather low compared to Td's regular line of mutual funds?
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ACC-Major wrote: yes.
the advisor you are seeing will get 1% trailer fee from the money you gave them.
so if u put in 1,000,000, your hard working advisor will get 10,000 each year.
and for some unknown reasons, the mutual funds performed super good, your million dollar investmemt becomes two million, your advisor will collect 20,000 in fees.

No bank advisor gets 1% trailer fees. Not for the big 5. maybe for IG.
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Nov 27, 2006
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cheapmeister wrote: I went to the bank to do investing. The banker insists on putting the money into mutual funds. I already have mutual funds and don't see a real need to invest more at this time. I didn't follow their recommendations, and did what I felt was right-GIC's.

So what is with the bank pushing mutual fund investments? Is it their prime objective to make you invest in the stock market so their mutual fund company will make the $$?
First, you made a huge mistake investing in GICs unless you need that money in exactly 1 year from now.

Second, most equity mutual funds are going to make a lot of money this year.

Third, do your due diligence.
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Oct 24, 2012
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The adviser was recommending mutual funds because GIC return is crap.

Now, as to what is more profitable to a bank, that's GIC. Banks make a ton with GICs. It's raw money they can lend out on the credit side for more than what they give you. Basically, they make money out of nearly no capital of their own.
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sirex wrote: Second, most equity mutual funds are going to make a lot of money this year.
If you are serious about that statement, then please tell all of us what to buy this year. Haha :cheesygri
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bgallagher wrote: If you are serious about that statement, then please tell all of us what to buy this year. Haha :cheesygri
Like what? ETFs or Mutual Funds, anything with high proportion of US and Canadian Equities should be good. I would lean more towards US equities and International equities.
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sirex wrote: First, you made a huge mistake investing in GICs unless you need that money in exactly 1 year from now.

Second, most equity mutual funds are going to make a lot of money this year.

Third, do your due diligence.
How do you know this? I found the mutual funds have now started to go up in the last 2 months or so.
There are some issues with Europe in Greece, and the US passing the increase in the debt ceiling.

I don't think GIC is a mistake. I am guaranteed the money, with mutual funds, it can go down.
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cheapmeister wrote: How do you know this? I found the mutual funds have now started to go up in the last 2 months or so.
There are some issues with Europe in Greece, and the US passing the increase in the debt ceiling.

I don't think GIC is a mistake. I am guaranteed the money, with mutual funds, it can go down.
If you GIC rate is < 3%, you are guaranteed a lost after tax and inflation.
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cheapmeister wrote: I don't think GIC is a mistake. I am guaranteed the money, with mutual funds, it can go down.
There are capital guaranteed investment products that has a return rate based on market performance. It's a pretty good mix of the two world. However they are a PAIN to liquidate before term.

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