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  • Jan 22nd, 2012 10:17 pm
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Member
User avatar
Aug 29, 2007
491 posts
24 upvotes
Montreal

post e-series?

I'm 25 years old, live without any debt, pay ~ $1000 monthly on an appt i rent, max out my RRSP's/TFSA and am making enough to be able to invest ~ $4000/month into something long term.

Like most people in this situation who have asked for advice here, I decided to pump my money into a balanced set of e-series ITF's and this is where my investment income has been going for the past year. I am now in the situation where I will soon have more monthly investment income and instead of ramping up my weekly e-series contributions I'm thinking about diversifying.

This money is to be invested long term (10+ years) and I am not entirely against a little risk, given that an investment has the potential to pay off in a meaningful way. It is possible that i would consider using some of this investment to purchase a house, but that will probably not happen in the next 4 or 5 years.

My question is open ended - I see a lot newbie investors advised to go e-series, but my question is what next?
7 replies
Deal Addict
Aug 28, 2010
3521 posts
1215 upvotes
Halifax
You need to answer the standard questions before any useful advice can be given.


What are you investing this money for?
How long are you going to invest it?


What is your risk tolerance?
How much of your investment will you be comfortable losing?
Deal Addict
Aug 28, 2010
3521 posts
1215 upvotes
Halifax
As for diversifing, index funds are extremely diversified already.

Other options may include:
REITs
Emerging markets
Commodities
Slice and dice indexing



But honestly, if you wanted to, you could do quite fine just investing in plain vanilla index funds for the rest of your life. Investing is best when it isn't exciting. If you can boringly achieve all of your goals, that would be great.
Deal Addict
Jul 23, 2007
2992 posts
958 upvotes
Brettimus wrote:
Jan 22nd, 2012 10:27 am
I'm 25 years old, live without any debt, pay ~ $1000 monthly on an appt i rent, max out my RRSP's/TFSA and am making enough to be able to invest ~ $4000/month into something long term.

Like most people in this situation who have asked for advice here, I decided to pump my money into a balanced set of e-series ITF's and this is where my investment income has been going for the past year. I am now in the situation where I will soon have more monthly investment income and instead of ramping up my weekly e-series contributions I'm thinking about diversifying.

My question is open ended - I see a lot newbie investors advised to go e-series, but my question is what next?
The next step is to invest in broad based index ETF's (exchange traded funds), but for me, that takes a few $thousand per transaction to make it worthwhile. Most of the ETF's I now invest in are with Vanguard. All in the RRSP's.

In the taxable portfolio, it's all individual Canadian dividend growth stocks.
Member
Apr 27, 2008
401 posts
33 upvotes
Stryker wrote:
Jan 22nd, 2012 10:41 am
The next step is to invest in broad based index ETF's (exchange traded funds), but for me, that takes a few $thousand per transaction to make it worthwhile. Most of the ETF's I now invest in are with Vanguard. All in the RRSP's.

In the taxable portfolio, it's all individual Canadian dividend growth stocks.

I agree, the e-series is great for small transactions, but once you get a high enough balance paying $5/transaction at questrade for ETFs at a lower MER is cheaper than $0/transaction at TD with MERs approximately 20-30 basis points higher.

That doesn't necessarily mean the couch potato strategy has to change, but it does allow you a wider range of indices if you do want something a little less plain.

It's pretty easy to determine the break even point. Right now you're paying $0/transaction but fees approximately 20bp higher. This depends on the fund so just check the MERs listed for e-series and ETFs (Vanguard, iShares).

If you switch to Questrade, you'll pay $5/transaction. Assuming four fund purchases a month (very basic mix), which should still allow you to rebalance monthly by adjusting your purchases each month, you're looking at about $240/year. That would require an investment of at least $240/.002 = $120,000 to break even. That's total invested, not monthly contribution. If you're investing in more funds, then it's even higher than that (about $30,000 per fund).

Now this is just a pure fees analysis. If you're looking for some other investments that are less correlated to your current investments (REIT, Commodities etc.) then just understand you're spending up to $60/year for the right (depending on your total holdings in each fund) and determine if it's still worth it.
Sr. Member
Oct 14, 2004
946 posts
124 upvotes
Toronto
Is it easy to move funds from e-Series to Questrade? I am wondering if you could build it up to 25k, and then transfer it to ETF's at Questrade, thereby incurring very little in the way of transaction fees?
Deal Addict
Mar 24, 2008
4760 posts
1032 upvotes
Toronto
actuarial wrote:
Jan 22nd, 2012 3:06 pm
I agree, the e-series is great for small transactions, but once you get a high enough balance paying $5/transaction at questrade for ETFs at a lower MER is cheaper than $0/transaction at TD with MERs approximately 20-30 basis points higher.

That doesn't necessarily mean the couch potato strategy has to change, but it does allow you a wider range of indices if you do want something a little less plain.

It's pretty easy to determine the break even point. Right now you're paying $0/transaction but fees approximately 20bp higher. This depends on the fund so just check the MERs listed for e-series and ETFs (Vanguard, iShares).

If you switch to Questrade, you'll pay $5/transaction. Assuming four fund purchases a month (very basic mix), which should still allow you to rebalance monthly by adjusting your purchases each month, you're looking at about $240/year. That would require an investment of at least $240/.002 = $120,000 to break even. That's total invested, not monthly contribution. If you're investing in more funds, then it's even higher than that (about $30,000 per fund).

Now this is just a pure fees analysis. If you're looking for some other investments that are less correlated to your current investments (REIT, Commodities etc.) then just understand you're spending up to $60/year for the right (depending on your total holdings in each fund) and determine if it's still worth it.
Most "experts" agree that there is no benefit to balancing monthly. Balancing once or twice a year will have the same effect. This would mean that break even is achieved much lower than 120k, more like 75k or so.
Deal Addict
User avatar
Apr 29, 2002
3812 posts
27 upvotes
Mississauga
James_TheVirus wrote:
Jan 22nd, 2012 7:01 pm
Is it easy to move funds from e-Series to Questrade? I am wondering if you could build it up to 25k, and then transfer it to ETF's at Questrade, thereby incurring very little in the way of transaction fees?

Yes, it's just one form that you fill out at QT and submit to them. They do the transfer and reimburse fees, if any.
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