Investing

Investing RESP/RRSP with TD Direct Investing !

  • Last Updated:
  • Jan 6th, 2020 12:03 pm
[OP]
Member
Apr 5, 2017
237 posts
37 upvotes

Investing RESP/RRSP with TD Direct Investing !

Hi Folks,
I have nearly $30000 CAD in my RRSP and $15000 CAD in my kids RESP account, sitting as CASH since 2 years. What's my best investment options. My kids are 1,4 and 6 year's old & I'm 33 year and my wife is 30 year's old. We don't have any pension plan from work !
Kindly advice...
Last edited by MK1986 on Jan 6th, 2020 8:33 am, edited 1 time in total.
7 replies
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Feb 1, 2012
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Thunder Bay, ON
MK1986 wrote: Hi Folks,
I have nearly $30000 CAD in my RRSP and $15000 CAD in my kids RESP account, sitting as CASH since 2 years. What's my best investment options. My kids are 1,4 and 6 year's old & I'm 33 year and my wife is 30 year's old. We don't have any pension plan from work !
Kindly advice...
Do you mean TD Waterhouse the full service broker or TD Direct Investing (TDDI) the discount broker? TDDI is a good discount broker but have a $10/trade commission, so if you want to buy regularly like monthly, consider a broker like Questrade that has commission free ETF purchases.

At your age, you have potentially 40 to 50 year timeline for investing, and 25 to 30 of that is saving. Investment selection is a couple of steps into the process. It should start with a broader assessment of your objectives, timeline, risk tolerance, development of a strategy, writing an Investment Policy Statement, choosing a broker. And it's true that no one will care as much about your money as you, which is why you need to spend enough time learning before you jump into it. My apologies for sending you back to the starting line if indeed you have already done those things.

Finiki, the Canadian Financial Wiki is a great place to start:
https://www.finiki.org/wiki/Getting_started
https://www.finiki.org/wiki/Investment_policy_statement
https://www.finiki.org/wiki/Portfolio_d ... nstruction
https://www.finiki.org/wiki/Simple_index_portfolios

One of my favourite introductory resources is "If You Can" by William Bernstein. It is a free ebook and the author says more about investing in 16 pages than many say in hundreds. It is US based but the same principles apply in Canada, just substitute Canadian funds like those described in the portfolio design link above. This link will take you straight to the free pdf.
https://www.etf.com/docs/IfYouCan.pdf

If you like that book, The Four Pillars of Investing by the same author is a really good book for understanding investing:
https://www.amazon.ca/Four-Pillars-Inve ... 0071747052

Are you interested in simple DIY investing with ETFs? A site like www.CanadianCouchPotato.com has model portfolios and lots of learning resources for index investing. If you want to try actively managed mutual funds, Morningstar.ca is a good resource tool. But over 5-10 year timelines 90% of actively managed mutual funds trail their benchmarks, so good luck picking a winner. Are you interested in stock picking? A book like The Single Best Investment by Lowell Miller is a good resource, as is the Dividend Growth thread on this forum. But individual stock investing will take a huge amount of research, and constant monitoring of your portfolio.

Considering the basic nature of your question and that you have 3 kids, my recommendation is that you start with a very simple ETF portfolio, then decide after some time if you wish to move to a more complex portfolio. A single balanced ETF will get you extremely broad diversification at very low cost. You can find more information at these links:
https://www.finiki.org/wiki/Balanced_ETF
https://canadiancouchpotato.com/model-portfolios/ (scroll down near the bottom to Option 4)

Both of the above articles are a bit out of date and don't have all the balanced ETFs available. Any one of Vanguard VGRO, iShares XGRO or BMO ZGRO would be a good balanced choice to start with about 80% equities and 20% bonds. If you want all equities look at Vanguard VEQT or iShares XEQT. With your long timeline, all equities is OK, but will be volatile. For example $1000 invested at the start of 2000 would have dropped to about $700 by the end of 2002, and taken until some time in 2010 to recover and stay above $1000.

If you start simply with one of the GRO or EQT ETFs, invest regularly and hold until you need the funds for retirement spending you will do well.
I solemnly swear, to never assume I have an inkling at which direction the market will head, and to never make any investments based on a timing strategy.
[OP]
Member
Apr 5, 2017
237 posts
37 upvotes
Deepwater wrote: Do you mean TD Waterhouse the full service broker or TD Direct Investing (TDDI) the discount broker? TDDI is a good discount broker but have a $10/trade commission, so if you want to buy regularly like monthly, consider a broker like Questrade that has commission free ETF purchases.

At your age, you have potentially 40 to 50 year timeline for investing, and 25 to 30 of that is saving. Investment selection is a couple of steps into the process. It should start with a broader assessment of your objectives, timeline, risk tolerance, development of a strategy, writing an Investment Policy Statement, choosing a broker. And it's true that no one will care as much about your money as you, which is why you need to spend enough time learning before you jump into it. My apologies for sending you back to the starting line if indeed you have already done those things.

Finiki, the Canadian Financial Wiki is a great place to start:
https://www.finiki.org/wiki/Getting_started
https://www.finiki.org/wiki/Investment_policy_statement
https://www.finiki.org/wiki/Portfolio_d ... nstruction
https://www.finiki.org/wiki/Simple_index_portfolios

One of my favourite introductory resources is "If You Can" by William Bernstein. It is a free ebook and the author says more about investing in 16 pages than many say in hundreds. It is US based but the same principles apply in Canada, just substitute Canadian funds like those described in the portfolio design link above. This link will take you straight to the free pdf.
https://www.etf.com/docs/IfYouCan.pdf

If you like that book, The Four Pillars of Investing by the same author is a really good book for understanding investing:
https://www.amazon.ca/Four-Pillars-Inve ... 0071747052

Are you interested in simple DIY investing with ETFs? A site like www.CanadianCouchPotato.com has model portfolios and lots of learning resources for index investing. If you want to try actively managed mutual funds, Morningstar.ca is a good resource tool. But over 5-10 year timelines 90% of actively managed mutual funds trail their benchmarks, so good luck picking a winner. Are you interested in stock picking? A book like The Single Best Investment by Lowell Miller is a good resource, as is the Dividend Growth thread on this forum. But individual stock investing will take a huge amount of research, and constant monitoring of your portfolio.

Considering the basic nature of your question and that you have 3 kids, my recommendation is that you start with a very simple ETF portfolio, then decide after some time if you wish to move to a more complex portfolio. A single balanced ETF will get you extremely broad diversification at very low cost. You can find more information at these links:
https://www.finiki.org/wiki/Balanced_ETF
https://canadiancouchpotato.com/model-portfolios/ (scroll down near the bottom to Option 4)

Both of the above articles are a bit out of date and don't have all the balanced ETFs available. Any one of Vanguard VGRO, iShares XGRO or BMO ZGRO would be a good balanced choice to start with about 80% equities and 20% bonds. If you want all equities look at Vanguard VEQT or iShares XEQT. With your long timeline, all equities is OK, but will be volatile. For example $1000 invested at the start of 2000 would have dropped to about $700 by the end of 2002, and taken until some time in 2010 to recover and stay above $1000.

If you start simply with one of the GRO or EQT ETFs, invest regularly and hold until you need the funds for retirement spending you will do well.
Sorry , my accounts are with TD Direct Investing (TDDI). Thanks a lot for the detailed explanation, I'm a beginner, so I have to start from the scratch and I'm gonna read all the links you have provided. Really appreciated your help ! I wish I could meet you in person but looks like you are too far !
Thanks again mate... Stay blessed :)
Deal Addict
Dec 4, 2016
1750 posts
801 upvotes
VEQT for RRSP and VGRO for the RESP? Then switch RESP to VBAL when the kids are around 10 years old? Once your RRSP gets to 100k+, consider opening US account and doing Norbert's gambit. Until then, focus on putting more in.
[OP]
Member
Apr 5, 2017
237 posts
37 upvotes
BlueSolstice wrote: VEQT for RRSP and VGRO for the RESP? Then switch RESP to VBAL when the kids are around 10 years old? Once your RRSP gets to 100k+, consider opening US account and doing Norbert's gambit. Until then, focus on putting more in.
Out of curiosity, how much interest (approx) we will be getting on these options annually ? TIA.
Deal Addict
Dec 4, 2016
1750 posts
801 upvotes
MK1986 wrote: Out of curiosity, how much interest (approx) we will be getting on these options annually ? TIA.
With this option, you ride the stock market. So sky is the limit, and there's basically no protection of your principal, except for the 20% bond portion of RESP.

As an optimist, I personally use 8% nominal return over the long term for VEQT and 7% for VGRO.
[OP]
Member
Apr 5, 2017
237 posts
37 upvotes
BlueSolstice wrote: With this option, you ride the stock market. So sky is the limit, and there's basically no protection of your principal, except for the 20% bond portion of RESP.

As an optimist, I personally use 8% nominal return over the long term for VEQT and 7% for VGRO.
Sorry, I have very little knowledge about all these. To my understanding even if the market crashes, If I hold on to it, It can come up, So lets say if the market crashes and my stocks went negative, if I'm not touching it, does it affect my principal or not ?
Deal Addict
Dec 4, 2016
1750 posts
801 upvotes
MK1986 wrote: Sorry, I have very little knowledge about all these. To my understanding even if the market crashes, If I hold on to it, It can come up, So lets say if the market crashes and my stocks went negative, if I'm not touching it, does it affect my principal or not ?
Generally, if you buy index fund, you expect to hold onto the fund whether the market is up or down, as long as you don't need the money. Hence the need to switch to VBAL as the kids get closer to university age. In reality, few people has been tested in a prolonged bear market, like 1973, never mind a "real" market crash like 1929.

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