Investing money....

[Mean Mr. Mustard]

Ok I stumbled upon roughly $7,000 in bonds that have been in my name since 1994 I guess, but when I was doing some basic research I found out at the current time they are only recieving 1.75% interest on them, and I was wondering if anyone here would have any better ideas of where I should put the money. I was thinking of ING Direct, or if anyone knows of any similar investment opportunities which I could take advantage of.

Thanks for your time.

[300spartans]

For now, at least put them in an ING Direct savings account at 2.4%.

Then you can try to figure out what your goals for the money are, your risk tolerance etc... Once you figure that out, you can look into GICs or mutual funds which are both offered by ING.

Another option to the ING Direct account is one offered by ICICI bank which currently pay 2.75%. They are pretty new in Canada but they are CDIC insured so your money is safe. http://www.icicibank.ca/

[Mean Mr. Mustard]

Fotze would you know how I could become involved in the segregated funds. The reason that I ask is I am in the age range where I figure if I start to invest some coin now, it actually could be worth something in the long term picture (20 year old right now).

It seems like a good deal, and a good thing to do in terms of security and in terms of growth potential for the capital which I invest.

Thankyou for your time once again.

[kermitology]

I had a couple thousand in bonds mature in November so I invested in a balanced mutual fund, so far it's paying me pretty well.. nearly $200 since then made. Though that can go up or down.

[300spartans]

I would not recommend segregated funds.

Look at it this way, you are buying insurance on an investment and the term is usually something like 10 years. Sounds great, the company is guaranteeing your principal over 10 years. But if you look at any equity fund, NONE have lost money over a 10 year period. What market really loses money over the long term?

Sure what if you look at the short term, lets say 5 years. There are funds which have lost money but even with a segregated fund you will be charged for taking out money before the 10 year term.

Furthermore, the management costs are also higher than typical mutual funds. In the long term, the real winner is the company selling you the segregated fund.

I think you'd be better off with a typical mutual fund that has a low mer, over the long run.

Just my opinion of course.

[Sylvanfan]

Yeah, for your age I don't think you can go wrong with an index based fund, or one of the Barclays Iunits funds. Both would have very low expense ratio's and will always mirror the respective index they benchmark against. Most mutual funds fail to beat the benchmark simply because they're facing a 2-2.5%MER they can't overcome. Something like the TSX capped index makes sure you don't have more than 10% of your money in one company no matter how much of the total index their cap is worth. Which would save you from owning a lot of Bell and Nortel shares that you might not want. Over the long haul this will get you a good return...But if you want to speculate, invest in the index now and look to pull out around 2010...Read some investing books on demographics, they'll serve as a good guide.

[calf]

Might want to look into money markets as well. Pretty low risk and decent returns. Go to your bank and see what they offer as well and if any of their mutual funds interests you.

[Sylvanfan]

If you have really low risk tolerance, and a long time frame...Credit union shares that you register can pay like 6-7% interest anually. Now the CU I deal with has a maximum of $3000 per year, and $5000 per client, and you have to leave the money with them til you turn 65. But they have a great track record, and are a very safe investment.

[Calgary Flames]

Change it into U.S. funds... the dollar is high right now, so if that $7000 Canadian buys you roughly $6000 U.S. and IF the dollar drops down to 65% again, that $6000 U.S. Could be worth nearly $10,000 Canadian in the future.

Of course, the dollar could stay where it is right now, or even rise in the future... Just me thinking aloud I guess.

[firebug]

I know a little bit about this stuff. (4th year finance student, previous IFIC license holder)

What you need to do is talk to a professional about this stuff. As well meaning as the advice you're getting is, you should talk to someone with some real expertise. Find out from some friends or family members if they have an advisor they would recommend.

Hopefully find someone with a Bachelor's degree and a CFP designation, they should hopefully have some idea of what they are talking about.

~bug

[Mean Mr. Mustard]

Firebug I was looking into getting some advice from the CIBC personal investment advisor but I talked to her once and she is about as dense as a brick... I actually walked out on her about 1/2 way through the meeting.

[I_H8_Crawford]

If you really want to learn about investing; get a couple of books, the first one is titled "Rich Dad, Poor Dad" and there's a couple after that... great ideas on how to invest and such, as well see a professional, but whatever you do, don't diversify your portfolio!

[300spartans]

Originally posted by I_H8_Crawford@Feb 12 2005, 10:24 PM
but whatever you do, don't diversify your portfolio!

what? explain....

[Incinerator]

I'm lazy and conservative so I stuck 3/4 of my life savings into a 5 year GIC with ING Direct, 2 more years and I'll renew again.

[Sylvanfan]

Originally posted by Mean Mr. Mustard@Feb 13 2005, 05:05 AM
Firebug I was looking into getting some advice from the CIBC personal investment advisor but I talked to her once and she is about as dense as a brick... I actually walked out on her about 1/2 way through the meeting.

Yeah, be careful dealing with Banks a lot of their people are licensed to sell mutual funds, but aren't licensed to give advice as to what fund to buy. I guess you have to ultimately decide what you want to do with the money yourself. Do you want to use it for retirement longterm savings, or would you like to try and use it to help you buy something like a house a couple years down the road. But it is worth your while to seek professional advice as they can answer all questions about tax consequences of different funds etc.., and it's worth spending $60 on books to educate yourself first. But beware a lot of these people are salesfolk and are going for commissions, and if you don't like what they're telling you, do like you did there and walk out.

[calf]

Originally posted by 300spartans+Feb 12 2005, 10:36 PM--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (300spartans @ Feb 12 2005, 10:36 PM)</td></tr><tr><td id='QUOTE'> <!--QuoteBegin-I_H8_Crawford@Feb 12 2005, 10:24 PM
but whatever you do, don't diversify your portfolio!

what? explain.... [/b][/quote]
I think behind what he's saying is that when you diversify away risk, you diversify away reward.

[shoestring]

Figure out what kind of investor you are,study the subject a bit.
Then get good some good advice from people you trust.
Then your gambling.

Remember the rule of 72 which states; take your interest gained off your investment and divide it into 72.It will equal the number of years it takes to double in value.

So a 4% return might be twice as good as two ;but 18 years compared to 36 years is not really that good of an investment.Or life changing. Pick the safest money.
Don't get me wrong you should have some in an account like that until YOU decide what to do with it. Don't spend it on a wedding ring.lol just kidding!
And don't gamble on penny stocks.Well,except I got a great one!

Where do you want to be in the future,paid employee,starting a business,professional? That is where your investment strategy should look at.

[firebug]

Originally posted by calf+Feb 13 2005, 12:12 AM--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (calf @ Feb 13 2005, 12:12 AM)</td></tr><tr><td id='QUOTE'>

what? explain....

I think behind what he's saying is that when you diversify away risk, you diversify away reward.[/b][/quote]
A very good way to go broke!

The key is staying on the efficient frontier based on the Capital Asset Pricing model. By understanding the Beta of the stocks you are holding and their covariance and coefficients of correlation, a portfolio can be constructed such that all non systematic risk can be eliminated while still providing optimum return.

Alternatively, a desired rate of return/risk tradeoff can be generated by holding different proportions of both the market and risk free portfolios.

But you can choose not to diversify if you feel so inclined.

~bug

My advice:

Decide what you want to do with this money
- is it for retirement
- is it for a downpayment on a house next year
- is it for a vacation in 5 years

The longer the timeframe, the riskier portfolio can be
- retirement 30+ years away, then stay with a good equity portfolio (indexed fund maybe?)
- Next years downpayment, then a money market instrument
- 5 year, then determine a balanced portfolio of both equity and fixed income instruments

Be careful of the advice most banks give you. Try and find someone who comes recommended from someone you trust (and is wealthier than you are).

[I_H8_Crawford]

Originally posted by calf+Feb 13 2005, 12:12 AM--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (calf @ Feb 13 2005, 12:12 AM)</td></tr><tr><td id='QUOTE'>

what? explain....

I think behind what he's saying is that when you diversify away risk, you diversify away reward. [/b][/quote]
You're correct Calf, also, another reason why I say not to diversify is what are you going to know more about? The one industry you place your money and time in, or the 100 industries that you could care less about?

It all depends if you want to be "safe" with your money, or if you want to get your money working for you... if you know what you are doing, and learn how to invest properly, not diversifying your portfolio can make you a lot of money.... that being said, you do have to know what you're doing, which is why I strongly suggest reading as many books on investing as you can; also make sure to brush up on all of your basic finance and accounting skills.

[Claeren]

Originally posted by firebug@Feb 13 2005, 09:06 AM

Be careful of the advice most banks give you. Try and find someone who comes recommended from someone you trust (and is wealthier than you are).

THAT is good advice. Most banks and mutual fund companies hire virtually anyone (no offence) to 'advise' unknowledgable customers, which essentially means they are the used car salesmen of investing, getting a commision of what they sell you and extra money for selling you the products that make the BANK the most money, not you. How much do you trust the word of a car salesmen? Exactly....

I would also NOT bet on a 65c dollar v. the USD. In fact, although i do not recommend waiting for it either, you would be better off waiting for a 90c dollar then a 65c one.



And indexed mutual fund with LOW management fees is a good bet long term. A reputable emerging markets fund will continue to grow, even more so if the twin American deficits do not get in order, as it is where many American investors put their money when the USD is stagnant or falling .

A GIC is not a bad bet short term if you are just looking for a place to leave it for 5 years before buying a house or something.



But PLEASE tell me you don't have credit card debt or high interest (car?) loans because THAT is where you should put your money pronto if you do. No sense having 7,000 making 5% when you have -7,000 costing you 17%....

Claeren.