Investing

Index investing - Not going so well for me.

  • Last Updated:
  • Jul 7th, 2016 6:57 pm
[OP]
Newbie
User avatar
Aug 20, 2012
69 posts
5 upvotes
Toronto

Index investing - Not going so well for me.

I started getting interested into index investing last year, followed the couch potato TD-e series portfolio (Aggressive model). In that year, making lump sum contributions i invested 15k in total. Currently my portfolio is
TDB900 TD CDN INDX -E /NL'FRAC 35.80%
TDB902 TD US INDX C$ -E /NL'FRAC 33%
TDB909 TD CD BD IDX-E SE/NL'FRAC 9.70%
TDB911 TD INTL IDX E SER/NL'FRAC 21.60%
All i have seen till now for the past year is, after putting in 15k, the total value is dancing around the 15K, mostly around $14,600.. rarely $15,200. Now its $14,500. Not sure if i am doing something wrong here. Being impatient? Many blogs say that, i should i buy when market is down, I do have collected more money in my savings, that i have in tangerine savings, Should i invest that too?
Being a newbie to this, any insights are welcomed and will be helpful.

FYI: I am 26, just started working last year after graduation. Do not have much expenses.(Saving around 2.5K / month after expenses) So don't need that money for any foreseeable future. Just looking for better utilizing my money.
52 replies
Deal Addict
Dec 3, 2014
2348 posts
1820 upvotes
Ontario
The market has been trading sideways for a year now. At 26, presuming you are investing for retirement, just keep making your contributions. Over the long run you will be up significantly.
Newbie
Jul 31, 2014
67 posts
78 upvotes
Vancouver, BC
I'm couch potato as well, I am down for the year and I just keep buying every month. The whole point of this style of investing is that you have a long horizon and don't think too much about your brokerage account.
Deal Addict
Sep 13, 2003
1282 posts
110 upvotes
Remember what your goals are for investing - short or long term. If you're a long term investor, there will be up and downs. Unfortunately you began investing during a tough season but things will get better if you stick to your goals and plans. Down $500 is actually not that bad - you lost 3% of your investments during some crazy times.

Saving some funds for rainy days is different for everyone. There are general tips but may not be practical for everyone.
Figure out how much you think you'll need to get by with your savings if you lost your job, and the hopefully you can find a new job within 3 months.
Deal Addict
User avatar
Jan 19, 2007
1091 posts
498 upvotes
Torontario
Well you have time to learn...and you are paying for it. In this low-interest environment, considering your age, you should NOT buy any bonds indexes or anything that carries a heavy-expense ratios. TDs one are reasonable but just not good enough as Blackrock and other major players on the market of passive investing products. See iShares ETFs - Canadian on not. I personally like XIU (18 bips ratio), IVV (7 bips ratio), and HDV - these are my

Overall I found recently while bench-marking my diversification the following Portfolio Analyzer tool to very good with suggestion:
http://www.sectorspdr.com/sectorspdr/to ... io-builder
Deal Addict
Sep 20, 2014
1159 posts
382 upvotes
Calgary, AB
The historical market return over any given 10 year period is close to 9%ish. But remember that's the AVERAGE return. You're doing just fine. If you don't need the money for the foreseeable future then forget about it. In due time, you'll be happy with the returns you get.

Also, stop reading the blogs that tell you it's a "great idea to buy when the market is down". That's generic advice that's easy to state and hard to follow. How does one determine exactly that the market is "down"? It catered 3-4% when Britain voted out of the EU. Is that down? Because it still remains overvalued by historical standards.

The idea behind index investing is to take this macro-economic nonsense that you do not understand out of the equation. Keep making regular contributions and you will do the above automatically. A $1000 contribution during a "down" market will buy more than one in the "up" market. Problem solved.
Deal Fanatic
User avatar
Sep 8, 2007
9019 posts
10320 upvotes
Way Out of GTA
You have to understand is that you started a) after the market had been on a good 3 year run b) you started after the US FED ended QE which was pumping up stocks. Right now the US market is trending sideways for over a year as it tries to grow earnings into its valuation. As others have said on the couch potato model it's better to look at things over the long term 10-20-30 years. Upping your contributions after a big down move can also help returns but that is adding elements of timing.

High quality dividend stocks can at least pay out a yield while you wait, which may be of interest to you.
Deal Addict
Nov 9, 2013
4033 posts
3862 upvotes
Edmonton, AB
pulkit10 wrote: The historical market return over any given 10 year period is close to 9%ish. But remember that's the AVERAGE return. You're doing just fine. If you don't need the money for the foreseeable future then forget about it. In due time, you'll be happy with the returns you get.

Also, stop reading the blogs that tell you it's a "great idea to buy when the market is down". That's generic advice that's easy to state and hard to follow. How does one determine exactly that the market is "down"? It catered 3-4% when Britain voted out of the EU. Is that down? Because it still remains overvalued by historical standards.

The idea behind index investing is to take this macro-economic nonsense that you do not understand out of the equation. Keep making regular contributions and you will do the above automatically. A $1000 contribution during a "down" market will buy more than one in the "up" market. Problem solved.
Agreed. Returns are lumpy. I remember reading somewhere that in a year, there's like 8 days that drive the total return. It's not a slow gradual march upwards, rather it's swings and over time you tend to come out higher than lower.

Stocks for the Long Run by Jeremy Siegel is a good read. He shows you the historical long term returns for the stock indexes over various time periods, and he also shows you that the longer you hold your stocks, the less variability there is (meaning, the longer you invest, the less risky it is because you're less likely to lose money).

Do you dollar cost average? For my index portfolio it makes me feel good when things go down because I know my fixed monthly contribution is actually buying me more units (dollars are going farther!)
Deal Expert
User avatar
Jun 9, 2003
24800 posts
1913 upvotes
Markham, ON
1/2 of the portfolio is outside CDN...(even with hedging)...you'll take hits on the depreciating c$.


the TDB902, TDB911 doesnt look likes its hedge also.
Sr. Member
Oct 27, 2014
554 posts
1065 upvotes
Toronto, ON
thelefteyeguy wrote: 1/2 of the portfolio is outside CDN...(even with hedging)...you'll take hits on the depreciating c$.


the TDB902, TDB911 doesnt look likes its hedge also.
are you serious man?
Sr. Member
May 5, 2010
971 posts
118 upvotes
thelefteyeguy wrote: 1/2 of the portfolio is outside CDN...(even with hedging)...you'll take hits on the depreciating c$.


the TDB902, TDB911 doesnt look likes its hedge also.
what....
Deal Fanatic
Nov 22, 2015
5781 posts
5284 upvotes
jatinbehl wrote: I started getting interested into index investing last year, followed the couch potato TD-e series portfolio (Aggressive model). In that year, making lump sum contributions i invested 15k in total. Currently my portfolio is
TDB900 TD CDN INDX -E /NL'FRAC 35.80%
TDB902 TD US INDX C$ -E /NL'FRAC 33%
TDB909 TD CD BD IDX-E SE/NL'FRAC 9.70%
TDB911 TD INTL IDX E SER/NL'FRAC 21.60%
All i have seen till now for the past year is, after putting in 15k, the total value is dancing around the 15K, mostly around $14,600.. rarely $15,200. Now its $14,500. Not sure if i am doing something wrong here. Being impatient? Many blogs say that, i should i buy when market is down, I do have collected more money in my savings, that i have in tangerine savings, Should i invest that too?
Being a newbie to this, any insights are welcomed and will be helpful.

FYI: I am 26, just started working last year after graduation. Do not have much expenses.(Saving around 2.5K / month after expenses) So don't need that money for any foreseeable future. Just looking for better utilizing my money.
A year is nothing in the grand scheme of investing. Keep in mind what your time horizon is. I typically say a minimum of 5 years before you can really see any kind of trend other than random fluctuation
Deal Fanatic
User avatar
Oct 9, 2008
5681 posts
2235 upvotes
Thornhill
Since you're investing in the index - Total Return = End Price – Initial Price + Income Received since Initial Price.

It's that simple.
Deal Addict
Mar 22, 2010
3028 posts
898 upvotes
OP you have to understand first what the index investing is... it is never designed to pose a huge return (fluctuation). This is precisely how index fund is designed (to withstand market fluctuation). of course, fund itself will go down in an event like "Brexit" but if you have used dollar cost average concept and contributed same amount money, then you should have gotten some units at discounted unit. (and now market is back up)
Deal Addict
Jan 20, 2016
2028 posts
1010 upvotes
Houston, TX
bluejazzy wrote: what....
YTD hegded version (904&905) is a bit better then unhedged (902&911). +2% vs -0.5%. On 5y-10y horizon unhedged works better. (~5% yearly hedged vs 7% yearly unhedged)
IMO the only benefit to have hedged - is when buying lump sum of US stocks AND when CAD\USD is VERY far away from it's historical 1.2 ratio (like this Jan-Mar). Once CAD is within +-10% from median, unhedged works better, especially with INTL stocks as both CAD and INTL used to drop against USD, thus having hedged INTL will make downturn quite painful.

And as it was said, in long-term investing you should ignore all noise and do not look less then 5y periods...which have been fine for CCP portfolio making 5-8% yearly for last 5y period...
Deal Addict
User avatar
Jan 19, 2007
1091 posts
498 upvotes
Torontario
rapashoo wrote: OP you have to understand first what the index investing is... it is never designed to pose a huge return (fluctuation). This is precisely how index fund is designed (to withstand market fluctuation). of course, fund itself will go down in an event like "Brexit" but if you have used dollar cost average concept and contributed same amount money, then you should have gotten some units at discounted unit. (and now market is back up)
Let me rephrase this to the core: in a mature market economy, if the markets are rational (on a Kensian a long-term basis) they would follow the growth of that economy as a real-GDP growth of about 2.5% (that is approx 4.5% - 5% nominal), then a large index fund would follow a similar growth for the same period.
Sr. Member
User avatar
May 29, 2008
521 posts
291 upvotes
Index investing is played out. Everyone and they grandma do it. Some think it's no more risk than savings account. I don't want to wait until I'm old and decrepit to enjoy my gains.
Deal Addict
Sep 6, 2010
1935 posts
699 upvotes
Vancouver
gouki556 wrote: Index investing is played out. Everyone and they grandma do it. Some think it's no more risk than savings account. I don't want to wait until I'm old and decrepit to enjoy my gains.
LOL played out, typical millenial attitude....I WANT IT ALL NOW!! Please.
Deal Addict
Oct 4, 2009
2694 posts
1558 upvotes
Montreal
OP get back to us in 20 to 30 years! In the meantime just keep buying regularly and live your life.
Deal Addict
Jan 27, 2015
1037 posts
462 upvotes
Edmonton, AB
jatinbehl wrote: I started getting interested into index investing last year, followed the couch potato TD-e series portfolio (Aggressive model). In that year, making lump sum contributions i invested 15k in total. Currently my portfolio is
TDB900 TD CDN INDX -E /NL'FRAC 35.80%
TDB902 TD US INDX C$ -E /NL'FRAC 33%
TDB909 TD CD BD IDX-E SE/NL'FRAC 9.70%
TDB911 TD INTL IDX E SER/NL'FRAC 21.60%
All i have seen till now for the past year is, after putting in 15k, the total value is dancing around the 15K, mostly around $14,600.. rarely $15,200. Now its $14,500. Not sure if i am doing something wrong here. Being impatient? Many blogs say that, i should i buy when market is down, I do have collected more money in my savings, that i have in tangerine savings, Should i invest that too?
Being a newbie to this, any insights are welcomed and will be helpful.

FYI: I am 26, just started working last year after graduation. Do not have much expenses.(Saving around 2.5K / month after expenses) So don't need that money for any foreseeable future. Just looking for better utilizing my money.
Your first question should be: what is your end goal? What are you trying to accomplish? If your goal is to fund a retirement plan (presumably at least 20 years out) then you should be Dollar Cost Averaging in to these funds.

You're saving $2.5K per month; that is an excellent start! Starting maximizing your TFSA and then your RRSP, then open up non-registered account. But keep on buying on a regular basis. Don't time the market.

Be patient. It'll take a decade to see any meaningful return. The amount you save is more important than the rate of return during your first decade of investing. Read the last sentence again. And good luck!

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