Investing 101 for Newbies

Contribution by: Troy Are you interested in investing and wealth management? Sorry to break it to you, but the world of investing is a lot harder today than it was 30 years ago. With a whole lot of quants (math geniuses) doing computer trading and a much more complex world, investing just keeps getting harder and harder. Now for the good news. For those of you who can wade through all the muck, the profits to be made have never been greater. As volatility increases, more skillful investors have more chances to make ever greater returns. So if your new to investing and one day want to be a kick-ass investor, this is the post for you. Here is some investment advice for y’all newbies out there.   Avoid Mutual Funds   (This is just my opinion – I’m sure others will have their own.) As you transition from a USA 401(k)/ Canadian Registered Retirement Plan (RRSP ) to your own brokerage account, I suggest you stay clear of mutual funds. In the past, I worked for one of those small-time retail customer banks. Essentially, we peddled mutual funds to all our clients without actually believing in any of the BS […]

Straight Talk About Fees and Penalties on Mutual Funds

Mr. Canadian Budget Binder received a question from one of his readers and asked me to craft a guest post to answer it. Question: Can you explain MER Fees and Penalties regarding investments?  What Does MER stand for? MER means Management Expense Ratio. There are a variety of expenses that make up MER. Some are: The fee paid to the fund managers for managing and investing your money Legal and audit fees of the fund Advisor sales compensation and trailer fees (ongoing service fees) Advertising expenses that promote the fund The cost of buying and selling the stocks the fund holds How does this impact my investing return? All published returns for a fund are net returns, after the MER has been deducted. In simple terms Fund A has a return of 10%. Its MER is 2.5%. The net return to the investor is 7.5% Fund B has the same 10% return but has an MER of 2%. The net is now 8%. The lesson we can learn from this is that lower MER’s usually mean more money for the investor all other things being equal. Some investors have focused exclusively on buying investments with the lowest cost. There are investments […]

Reader Question: RRSP’s-The Need To Know Basics

YOUR RRSP QUESTIONS ANSWERED Reader Question: I want to save for retirement. Where is the best place to save for this? I have been told NOT to use RRSP. Can you help? Saving for retirement is a good thing and RRSP’s (Registered Retirement Savings Plans) are a popular tool for doing so. I don’t know the client’s age or his/her income so this answer is predicated on the fact that the client has several months of income in an emergency fund. An emergency fund is a base component of proper planning and should be done before making any RRSP contributions. Also, it assumes the client is making more than $40,000 in income per year, as incomes under $40,000 don’t benefit much from tax savings on RRSP contributions. Below I will try to define some of the Basics of RRSP’s and also illustrate some of the long-term advantages. When Did RRSP’s Begin? RRSP’s first came into existence in 1957 as a government supported effort to help Canadians save for their retirement.   Types of RRSP’s   There are broadly speaking three main types of RRSP’s Individual RRSP-where the contribution is made in your name and held in your name. Spousal RRSP– […]

MR.CBB’s Weekly Blog Post Picks July 20,2012

Good Day Mates!- Wow, did I ever read lots of blog posts this week! I’ll be honest it’s been a doozy of a week for me though so I’be been doing some serious multi-tasking. I’ve painted up a storm as you may already know and still waiting for my landscaping materials. I’m actually to the point where I don’t care if they come in around September as it will be cooler for me to lay my new path and dig the holes I will need. Next weeks project is to put our new entry door in, paint the garage, and put in the new man door on the garage and cold room. I don’t need a “honey do” list I make them for myself! We’ve also been busy with our out-of-town student visiting for the month and so far so good.  Our grass looks like hay as we are no longer permitted to water it without permission. I’m happy to say my front garden will have minimal grass next year after I’m done with it. There’s nothing worse than spending money on your lawn only for the city to turn around and say, ya you can’t water it.  Pointless! That’s my […]

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