Canadian ready to invest 20k in ETFs

[housenuts]

i think you're arguing two separate things.

if you are going to invest $500 monthly that seems like a fine way to go about it. it would however be bad if you were making 5 $100 transactions with an ETF and getting dinged $10 for each transaction cost. but if it were a mutual fund and no transaction costs, then so be it.

but i think this is the argument for it being a suboptimal psychological crutch. correct me if i'm wrong.

Person A has 24k.
He's a bit of a timid tommy and isn't sure which way the market is going to go, so he doesn't want to invest all his money and have the market take a nosedive on him. He wants to get some money in there, but he wants to do it conservatively. So he goes for the DCA approach. Over the next 2 years he will fund his account with 1k each month. This ensures he's buying more when it's low, and buying less when it's high.

Person B also has 24k. He wants to invest all his money right away, and isn't worried too much about changes in the market, because he knows eventually he's bound to make a profit. So he diversifies, and invests it all at once.

Who do you think will do better?


So in conclusion, if you have a lump sum, get it in there. If you don't have a lump sum, and want to say invest 10% of your paycheck each monthnthen DCA is fine. And beware of transaction costs if you're constantly funding your account because they will eat you up if you're just adding small amounts.

[MarkD]

[ QUOTE ]
Wells Fargo is great for customers carrying over $25,000 in total deposits/investments. The highlights:

[ QUOTE ]
Now when you link your WellsTrade® brokerage account to your Wells Fargo®PMA® Package, you’ll get 100 commission-free online trades a year. Use your commission-free trades for stocks, exchange-traded funds, and even no-load mutual funds.

Just link your WellsTrade account to a PMA Package – our premier offering for investment and banking customers. To qualify for a PMA Package monthly service fee waiver, all you need is $25,000 in brokerage, loan balances or deposits.

[/ QUOTE ]
More details here.

[/ QUOTE ]

This seems available to US residents only. Am I missing something? Is this available to Canadians as well?

[MarkD]

[ QUOTE ]
So in conclusion, if you have a lump sum, get it in there. If you don't have a lump sum, and want to say invest 10% of your paycheck each monthnthen DCA is fine. And beware of transaction costs if you're constantly funding your account because they will eat you up if you're just adding small amounts.


[/ QUOTE ]

This is why I buy mutual funds and do everything through my bank. It cost me nothing to transfer money from my chequing account to trading account and cost me nothing to purchase the mutual fund (assuming no load).

And yes, I was not referring to investing the 25k over 12 months or something like that. I was talking about doing exactly what my example illustrates when I mentioned DCA'ing.

[Trencherman]

[ QUOTE ]
This seems available to US residents only. Am I missing something? Is this available to Canadians as well?

[/ QUOTE ]
Sorry, I didn't think to check on that before posting.

[gull]

Let me clarify:

Periodic investing is fine. Investing 10% of your paycheck each month is a great thing to do.

By dollar cost averaging, I'm talking periodically investing some amount of money that you already have. The reason it's bad isn't because of transaction costs - it's because the money you have in the market has a positive expectation, and by dollar cost averaging, you're not getting the maximum return because not all of the money is invested.

[Neko]

housenuts,
I'm in the same position as you and will be interested to hear what you end up doing. I have a lump of cash just sitting in a PC financial savings account getting 4.2% or whatever but I imagine I could be doing better elsewhere.

[Scotty_12]

Im currently sitting with a bunch in a US ing account getting 3.75 and wondering should I leave it there - is the US dollar going to keep tanking or will it appreciate? Should I invest somewhere with US cash, or just convert to CAD and invest it that way?

[PatInTheHat]

Also in same position. Been investing between PC Financial and CIBC's Monthly Income Fund which has done alright for me.

Interested in what others are doing though.

[all_in_lam]

meh i put 15K in vanguard - symbol vwo

why u need to make constant contributions of a few hundred dollars ..

[Isura]

house,
Vanguard ETF would be fine for you. Note normal Vanguard index funds available to Canadians is limited, but they have a great selection of ETFs. ETF would be fine since you're not making regular deposits and they have low MER. See http://www.efficientmarket.ca/article/Global_ETF_2

neko, pat
What I'm doing ATM is keeping my RRSP money in a bunch of TD index funds (e funds with MER of .3-.5%). I don't think you're allowed to use ishares or vanguard ETFs to fund an rrsp, so that is my reasoning.