Investing

So one of your ancestors invested $1 in the market in year 1800...

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  • Feb 25th, 2017 7:57 am
[OP]
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Nov 12, 2008
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Aurora

So one of your ancestors invested $1 in the market in year 1800...

I hear about this scenario quite a few times, and I understand the reasoning behind it is to illustrate how the markers have grown, but just for fun let's explore this statement literally.

Is this even possible? Logistically how would someone even invest $1 in "the market" in 1800? There were no index funds, so would they have to buy a portion of every single company on the market at that time? And if they did that, how many of those companies are still in existence today? I think GE was one of the original companies, but what would be the value of the investment if 99.9% of the companies went under years ago?

Second, let's say an index fund DID exist back then, and you have the paperwork to prove your ancestor invested in it. Who is obliged to "pay out" - the firm that issued the index (such as Vanguard)? If they don't exist then once again you're SOL?

More seriously - I'd like to invest a lump sum for my kids that will not be touched for 50 years. I want to completely forget about it for the entire time, but guarantee it will still be there (barring any catastrophic changes to the market). Kind of like giving them an envelope with a "do not open until year 2067" on it, with a certificate inside they can easily cash out. So no Vanguard or TD funds as I'm not confident Vanguard or TD will still be around in 50 years.

Does anything like this exist? Maybe a Canada savings bond?
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Buy CNR, CP, ENB etc. I do think these companies or their successor companies will be around for a long time. Or buy land maybe.

Gweedz wrote: I hear about this scenario quite a few times, and I understand the reasoning behind it is to illustrate how the markers have grown, but just for fun let's explore this statement literally.

Is this even possible? Logistically how would someone even invest $1 in "the market" in 1800? There were no index funds, so would they have to buy a portion of every single company on the market at that time? And if they did that, how many of those companies are still in existence today? I think GE was one of the original companies, but what would be the value of the investment if 99.9% of the companies went under years ago?

Second, let's say an index fund DID exist back then, and you have the paperwork to prove your ancestor invested in it. Who is obliged to "pay out" - the firm that issued the index (such as Vanguard)? If they don't exist then once again you're SOL?

More seriously - I'd like to invest a lump sum for my kids that will not be touched for 50 years. I want to completely forget about it for the entire time, but guarantee it will still be there (barring any catastrophic changes to the market). Kind of like giving them an envelope with a "do not open until year 2067" on it, with a certificate inside they can easily cash out. So no Vanguard or TD funds as I'm not confident Vanguard or TD will still be around in 50 years.

Does anything like this exist? Maybe a Canada savings bond?
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Oct 21, 2014
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Burlington, ON
Gweedz wrote: I hear about this scenario quite a few times, and I understand the reasoning behind it is to illustrate how the markers have grown, but just for fun let's explore this statement literally.

Is this even possible? Logistically how would someone even invest $1 in "the market" in 1800? There were no index funds, so would they have to buy a portion of every single company on the market at that time? And if they did that, how many of those companies are still in existence today? I think GE was one of the original companies, but what would be the value of the investment if 99.9% of the companies went under years ago?

Second, let's say an index fund DID exist back then, and you have the paperwork to prove your ancestor invested in it. Who is obliged to "pay out" - the firm that issued the index (such as Vanguard)? If they don't exist then once again you're SOL?

More seriously - I'd like to invest a lump sum for my kids that will not be touched for 50 years. I want to completely forget about it for the entire time, but guarantee it will still be there (barring any catastrophic changes to the market). Kind of like giving them an envelope with a "do not open until year 2067" on it, with a certificate inside they can easily cash out. So no Vanguard or TD funds as I'm not confident Vanguard or TD will still be around in 50 years.

Does anything like this exist? Maybe a Canada savings bond?
Large companies usually companies don't go bankrupt. Some do, but the company can often be acquired and new equity is issued from the acquirer.

For example, Studebaker. It was acquired by Worthington Corp, which in turn was acquired by Cooper industries. If you had stock in Studebaker and held through the mergers, you would not have lost your equity, but instead would have shares of Cooper, or been paid out in cash had you never sold. That is assuming that the acquirer didn't just pay out cash for company to the existing shareholders. (Edit: Cooper was aquired by Eaton, you'd actually own Eaton shares)

As with any business, you must monitor it's health. It would not be a good idea to purchase any asset and leave it sit without monitoring for fifty years.
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In the 80's and 90's I used to read about a fund down in the U.S. that held blue chip stocks that were originally bought in 1935 and never sold. At that time it was called "Lexington Corporate Leaders". The fund has since been taken over by another financial company and has been renamed Voya Corporate Leaders Trust Fund. The fund had a great track record when I first found out about it near three decades ago, and apparently it's performance is still one of the best out there.

Nothing to stop you from buying your own individual stocks and building something similar yourself.
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Nov 24, 2013
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Vanguard or TD not existing in 50 years wouldn't mean your investment in their funds would disappear. ETF or MF units give you a claim to your share of the net asset value of the fund, a fund which owns underlying assets. Similarly, if you owned individual shares and Questrade was your brokerage, Questrade going out of business wouldn't invalidate your share ownership.

I think one problem you run into trying to "set it and forget it" with physical stock certificates is if a company you own shares in gets bought out, the terms don't always involve getting shares in the buyer. Sometimes it's a cash buyout, and sometimes the buyer is taking the company private (see: Dell). If somehow the firm underwriting the deal doesn't get a hold of you to pay you out your stake, I imagine you're still entitled to it even after time has passed, but if you don't claim it in a timely manner, you'd be missing out on intervening growth. Likewise, I'm not sure how dividends would be paid over time.
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Apr 22, 2014
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I buy my son a maple leaf on each birthday. Or I just move one from my stack to his...

I would be near retirement now if I'd invested my paper route money in RY or TD instead of packs of Opeechee or Upper Deck. Speaking of, where do you sell early 90's hockey cards?
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eldeejay wrote: I buy my son a maple leaf on each birthday. Or I just move one from my stack to his...

I would be near retirement now if I'd invested my paper route money in RY or TD instead of packs of Opeechee or Upper Deck. Speaking of, where do you sell early 90's hockey cards?
Trading cards are worthless due to the internet :) I got boxes of 90's NBA cards, worth less than what I originally paid for.

Might need to wait 100+ years when the cards start disintegrating and possibly makes them rare.
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Oct 11, 2010
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buy physical gold?
[OP]
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Nov 12, 2008
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Aurora
Mike15 wrote: Vanguard or TD not existing in 50 years wouldn't mean your investment in their funds would disappear. ETF or MF units give you a claim to your share of the net asset value of the fund, a fund which owns underlying assets. Similarly, if you owned individual shares and Questrade was your brokerage, Questrade going out of business wouldn't invalidate your share ownership.
I think I understand your Questrade example because it is an individual share of a company, but if I buy a Vanguard ETF and Vanguard goes under, what would happen to the ETF? Does it automatically get cashed out? I don't think I can just hold on to it for another 10 years, and then transfer it (in cash) to some other broker.

I'm not actually worried about these places going under, I'm just trying to see what investment type would have the best chance of surviving 50 years, let alone 200+ years.

No one mentioned anything about my bond suggestion. Is it not a valid option? I would think that a country has less chance of going under than any stock or fund.
Last edited by Gweedz on Feb 24th, 2017 12:14 pm, edited 1 time in total.
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Yep bonds are almost guaranteed to be honored but if you are trying to benefit from a long time horizon such as 50 years, bond will be a wasted opportunity. I would only buy blue-chip US or CDN equity. US has many great options.
Gweedz wrote: No one mentioned anything about my bond suggestion. Is it not a valid option? I would think that a country has less chance of going under than any stock or fund.
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Oct 21, 2014
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eldeejay wrote: I would be near retirement now if I'd invested my paper route money in RY or TD instead of packs of Opeechee or Upper Deck. Speaking of, where do you sell early 90's hockey cards?
Now if you had bought MTG cards and got a Black Lotus, Mox or Timewalk, you'd be way in the money :)
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Gweedz wrote: I'd like to invest a lump sum for my kids that will not be touched for 50 years. I want to completely forget about it for the entire time, but guarantee it will still be there (barring any catastrophic changes to the market). Kind of like giving them an envelope with a "do not open until year 2067" on it, with a certificate inside they can easily cash out. So no Vanguard or TD funds as I'm not confident Vanguard or TD will still be around in 50 years.

Does anything like this exist? Maybe a Canada savings bond?
You can't completely forget about it.

You have to pay taxes on it unless it's in a TFSA or RRSP.

You want dividends to get reinvested as well.

If the lump sums are small enough to fit in your available TFSA room and you utilize DRIP then you can mostly forget about it.

A Canada Savings Bond that doesn't even beat inflation would be a horrible choice. The lump sum that was "large" now would be "small" later and your kids would think "aww, that's cute dad socked away $X way back when thinking it was a lot of money" LOL.

Say you put away enough now to buy a car for each of them. In 50 years in a CSB they may not have enough combined to buy one car.

Pick a low cost ETF like Vanguard. Reinvest dividends. Don't "completely" forget about it. If the company / funds change, you can change to match.

Pretty sure the S&P 500 will still be a thing in 50 years and people will still want to invest in it.
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ace604 wrote: You can't completely forget about it.

You have to pay taxes on it unless it's in a TFSA or RRSP.

You want dividends to get reinvested as well.

If the lump sums are small enough to fit in your available TFSA room and you utilize DRIP then you can mostly forget about it.

A Canada Savings Bond that doesn't even beat inflation would be a horrible choice. The lump sum that was "large" now would be "small" later and your kids would think "aww, that's cute dad socked away $X way back when thinking it was a lot of money" LOL.

Say you put away enough now to buy a car for each of them. In 50 years in a CSB they may not have enough combined to buy one car.

Pick a low cost ETF like Vanguard. Reinvest dividends. Don't "completely" forget about it. If the company / funds change, you can change to match.

Pretty sure the S&P 500 will still be a thing in 50 years and people will still want to invest in it.
And in 50 years it's looking likely that people won't even own their own cars ;) You'll just summon a driveless car with your phone and have it pick you up and drop you off, no insurance, no maintenance etc.
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jfall wrote: And in 50 years it's looking likely that people won't even own their own cars ;) You'll just summon a driveless car with your phone and have it pick you up and drop you off, no insurance, no maintenance etc.
Yep, and if Apple or Tesla or Uber or a company that doesn't exist yet becomes huge and makes a ton of money off of that it will probably be in the S&P 500 and you will be invested in it :)
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Gweedz wrote: I think I understand your Questrade example because it is an individual share of a company, but if I buy a Vanguard ETF and Vanguard goes under, what would happen to the ETF? Does it automatically get cashed out? I don't think I can just hold on to it for another 10 years, and then transfer it (in cash) to some other broker.

I'm not actually worried about these places going under, I'm just trying to see what investment type would have the best chance of surviving 50 years, let alone 200+ years.

No one mentioned anything about my bond suggestion. Is it not a valid option? I would think that a country has less chance of going under than any stock or fund.
I don't know if there's any comparable real world examples, but fund units own the underlying assets of the fund. The company managing the fund just manages the portfolio, the ins and the outs, and collects its fee. The manager going under doesn't make the assets disappear, and the assets belong to you, not the fund managers' creditors. The exception would be some kind of embezzlement / Ponzi scheme where the fund never actually purchased the assets on your behalf, just said it did (see Madoff).

...
I believe the longest time horizon for most government bonds is 30 years, not 50, much less 200, so it'd have to be reinvested at some point. Tax implications, along the way, etc. And, as Ace notes, it's also unlikely to yield nearly as much over time as an equity (esp. safe government bonds).
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If I was in your shoes (I do the same for my kids in their RESPs), I have everything in XAW/VCN Etfs

All my fixed revenue portion of my own portfolio is sitting in short term bonds ETF and mainly in cash,
Might invest some in Corporate bonds but waiting for this year to unfold.
GICs are a waste of an opportunity and Canada Saving Bonds are aweful.
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Now your basic idea is a good one, but you should invest in a highly diversified equity ETF, something which has the potential to give you on the long term a good return.
I think that the idea of letting it sit there is a good one in the sense that you should never ever ever ever sell it and keep adding to it a little bit every year/quarter/month or whatever no matter what the markets are doing.
By doing so, statistically and in the long run, you will maximize the chances to have a good return.
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Feb 8, 2017
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if start investing early enough you don't need to go into super high risk stuff. let the power of compounding and dividends do the heavy lifting for you. when my kids start working (hopefully they can get a job !!) i'll get them to buy Vanguard S&P500 etf and tell them not to touch it until they are 60. LOL

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