Stocks - The Best Buys 2

[DoubleK]

Originally Posted by TorqueDog

What are you looking to invest in and how do you want to use the account? ETFs? Mutual funds?

I'm looking switch from mutual funds to ETFs.

I currently invest semi-monthly in TDB 216, TDB 661 and TDB 964. I'd be looking to do equivalent low MER Index ETFs. It's essentially a couch potato style portfolio that I've used over the past few years. It would be nice if I was able to add/change the amount of my contributions without having to call my planner.

Originally Posted by TorqueDog

If you want to buy index ETFs, Questrade has $0 commissions to buy ETFs, but standard commissions to sell ($0.01 per share, minimum of $4.95 to a max of $9.95) (pricing). And if you want to invest using margin, you can use the balance in your TFSA as buying power in your Questrade margin account.

I don't know what margin trading is, so that's probably not the thing for me. Just looking for somewhere I have control and don't pay a lot of fees.

[Resolute 14]

Margin trading is basically a loan. A brokerage (like Questrade) will allow you to borrow money to buy extra securities if you wish. The amount they will give you based on how much you have invested with them. You can only do it with a margin (regular) account though. Not from within a TFSA account.

[OMG!WTF!]

There are some benefits to using margin as well. You can borrow usd instead of converting which can save you a lot in exchange fees.

[TorqueDog]

@DoubleK: Sounds like Questrade is probably a good option for you then, just open a TFSA with them. Minimum funding amount is $1,000 to get your account activated, or you can just transfer your existing mutual funds to them in kind and get started that way.

[DoubleK]

Originally Posted by TorqueDog

@DoubleK: Sounds like Questrade is probably a good option for you then, just open a TFSA with them. Minimum funding amount is $1,000 to get your account activated, or you can just transfer your existing mutual funds to them in kind and get started that way.

Thanks for your help. That's the conclusion I've come to as well. Additionally, I found a referral online for $50 in free trades. Not suggesting that changes my opinion, but I'll take free money if it's on offer.

[TorqueDog]

They have a few different promotions going on.
https://www.questrade.com/about-us/programs-promotions
The 'Transfer your accounts for free' promo is the one you want, they'll cover all your transfer-out costs from your existing broker.

Also, when you sign up, don't bother with any of the streaming data packages. Real-time 'Snap quotes' are free, and the TSX gives free real-time Level 1 anyway, IIRC. I only have real time Level 1 streaming because I'm day/swing trading options. I don't even bother with Level 2.

[DoubleF]

Originally Posted by DoubleK

I'm looking switch from mutual funds to ETFs.

I currently invest semi-monthly in TDB 216, TDB 661 and TDB 964. I'd be looking to do equivalent low MER Index ETFs. It's essentially a couch potato style portfolio that I've used over the past few years. It would be nice if I was able to add/change the amount of my contributions without having to call my planner.

I might get laughed at for this opinion in this thread again... I understand risk aversion, but I think it's insane people will have personal portolios in excess of $5K that are essentially purely mutual funds or term deposits. I understand these are useful more in companies and corporations that are hoping to fight inflation and cannot risk losing principal... but from a personal standpoint, there's no reason why anyone with more than $5K shouldn't at least consider a small amount in stocks.

I always suggest learning on Canadian bank stocks. They're easy to understand from a business point of view and they give a dividend that's generally much better than a savings account or mutual fund and they're traded so frequently in high volumes that it's super easy to cash out on a whim if you need the cash. I'm not saying convert the whole thing. I'm saying buy 1-2 Canadian banks at $1K a pop and monitor it over a year. If your bank stock tanks, there are way worse issues in general than you losing a significant percentage in your stock. In general, as long as you hold the bank stocks super long term, these stocks will continue to trend upwards long term and they're easy coach potato stocks you can adjust for just by looking at the front page of the newspaper for the most major events that will significantly affect the short term prices.

Having other stocks is definitely more fun with the boom and bust and I've swung some serious home runs... but sometimes I look at some of the quirky and stagnant things in my portfolio and wonder why I didn't just load up on a bank stock and collect dividends for 5 years and collect a respectable but not amazing capital gain after that long duration.

[Slava]

Originally Posted by DoubleF

I might get laughed at for this opinion in this thread again... I understand risk aversion, but I think it's insane people will have personal portolios in excess of $5K that are essentially purely mutual funds or term deposits. I understand these are useful more in companies and corporations that are hoping to fight inflation and cannot risk losing principal... but from a personal standpoint, there's no reason why anyone with more than $5K shouldn't at least consider a small amount in stocks.

I always suggest learning on Canadian bank stocks. They're easy to understand from a business point of view and they give a dividend that's generally much better than a savings account or mutual fund and they're traded so frequently in high volumes that it's super easy to cash out on a whim if you need the cash. I'm not saying convert the whole thing. I'm saying buy 1-2 Canadian banks at $1K a pop and monitor it over a year. If your bank stock tanks, there are way worse issues in general than you losing a significant percentage in your stock. In general, as long as you hold the bank stocks super long term, these stocks will continue to trend upwards long term and they're easy coach potato stocks you can adjust for just by looking at the front page of the newspaper for the most major events that will significantly affect the short term prices.

Having other stocks is definitely more fun with the boom and bust and I've swung some serious home runs... but sometimes I look at some of the quirky and stagnant things in my portfolio and wonder why I didn't just load up on a bank stock and collect dividends for 5 years and collect a respectable but not amazing capital gain after that long duration.

It's not that I completely disagree, because I generally agree. But the thing is $1k doesn't really give you much of a position.

The other thing is that portfolio construction matters. Everything from diversity and risk management to pure asset allocation are important factors and buying one or two stocks doesn't give you much in that regard.

[puckedoff]

Originally Posted by DoubleF

I might get laughed at for this opinion in this thread again... I understand risk aversion, but I think it's insane people will have personal portolios in excess of $5K that are essentially purely mutual funds or term deposits. I understand these are useful more in companies and corporations that are hoping to fight inflation and cannot risk losing principal... but from a personal standpoint, there's no reason why anyone with more than $5K shouldn't at least consider a small amount in stocks.

I always suggest learning on Canadian bank stocks. They're easy to understand from a business point of view and they give a dividend that's generally much better than a savings account or mutual fund and they're traded so frequently in high volumes that it's super easy to cash out on a whim if you need the cash. I'm not saying convert the whole thing. I'm saying buy 1-2 Canadian banks at $1K a pop and monitor it over a year. If your bank stock tanks, there are way worse issues in general than you losing a significant percentage in your stock. In general, as long as you hold the bank stocks super long term, these stocks will continue to trend upwards long term and they're easy coach potato stocks you can adjust for just by looking at the front page of the newspaper for the most major events that will significantly affect the short term prices.

Having other stocks is definitely more fun with the boom and bust and I've swung some serious home runs... but sometimes I look at some of the quirky and stagnant things in my portfolio and wonder why I didn't just load up on a bank stock and collect dividends for 5 years and collect a respectable but not amazing capital gain after that long duration.

To be fair, the TDB's that he posted are Canadian, US, and international index so he is effectively holding those same bank stocks you are talking about but with more diversification and less work on his part.

To the OP I would just switch to a TD Waterhouse brokerage account and then buy TDB 902, 906, 911 (the low-cost versions of what you are holding, if my memory serves me correctly.

[DoubleF]

Originally Posted by Slava

It's not that I completely disagree, because I generally agree. But the thing is $1k doesn't really give you much of a position.

The other thing is that portfolio construction matters. Everything from diversity and risk management to pure asset allocation are important factors and buying one or two stocks doesn't give you much in that regard.

The point really isn't about the $1K position affecting the over portfolio or diversification. Plus I'm mentioning people with pure mutual fund/ETF portfolios who aren't truly constructing portfolios anyways. It's more along the lines that bank stocks are IMO the easiest stocks to really understand from a newbie/amateur point of view. If ultimately stocks aren't your thing, by all means do ETF and mutual funds. But I think that if you're going to store your life savings into these things, you should understand what these things are in general.

But perhaps I am just ranting in an outdated manner. Me saying that a small dabble in bank stocks to understand the stock vehicle is perhaps akin to me being incredulous that people no longer want to learn to drive. IMO it's a life skill that everyone should have in case of emergency etc. even if you don't regularly drive. But everyone else is content with mutual funds/ETFs as one would be happy with transit/uber etc. Furthermore, my beef with mutual funds is outdated with some of the newer rules. I just hated how in the past some of them could be kinda greasy with their admin fee rules etc. They'll claim you get a 5% gain or something, but after fees, you're sitting on like half of that.

Old man yelling at clouds here. Sorry ya'll.

[stone hands]

i just buy american index funds and dont worry about the why or how

[TorqueDog]

Holy crap, I just realized DoubleK and DoubleF are different posters. I was like "Why do people reply to themselves like that?"

I have a 100-lot position of a smaller dividend-paying Canadian financial institution already, and will start adding 100-lots of the bigger players as I build up capital in my margin account. Problem is a 100-lot of a bank stock trading at $107 is $10.7k, so it takes a while for new investors or those with smaller accounts to get to that level. Commissions being what they are for most Canadian brokers, even for Questrade, it adds up if you keep adding to your position through smaller acquisitions.

I have the following on my radar once I hit my capital targets for the account:
CM.TO (CIBC) - 5.32% quarterly dividend
BCE.TO (Bell Communications) - 5.31% quarterly dividend
FTS.TO (Fortis) - 3.55% quarterly dividend
A good mix of industries, and a healthy dividend to reduce my cost basis and generate some quarterly income that I don't need to keep an eye on like I do with my options trading.

[Bill Bumface]

Originally Posted by DoubleF

The point really isn't about the $1K position affecting the over portfolio or diversification. Plus I'm mentioning people with pure mutual fund/ETF portfolios who aren't truly constructing portfolios anyways. It's more along the lines that bank stocks are IMO the easiest stocks to really understand from a newbie/amateur point of view. If ultimately stocks aren't your thing, by all means do ETF and mutual funds. But I think that if you're going to store your life savings into these things, you should understand what these things are in general.

But perhaps I am just ranting in an outdated manner. Me saying that a small dabble in bank stocks to understand the stock vehicle is perhaps akin to me being incredulous that people no longer want to learn to drive. IMO it's a life skill that everyone should have in case of emergency etc. even if you don't regularly drive. But everyone else is content with mutual funds/ETFs as one would be happy with transit/uber etc. Furthermore, my beef with mutual funds is outdated with some of the newer rules. I just hated how in the past some of them could be kinda greasy with their admin fee rules etc. They'll claim you get a 5% gain or something, but after fees, you're sitting on like half of that.

Old man yelling at clouds here. Sorry ya'll.

Don't you think it's pretty dangerous to advise new investors to go completely into one sector in one geography? Sure, they have been stable for decades, but that means nothing and seems risk as hell to me.

I think the most important party of risk management is to be geographically and sector diverse.

Canada represents such a small portion of the world markets, it is home bias to have the majority of your portfolio invested in Canadian companies.

We've seen banking blow up elsewhere. There are no guarantees that doesn't happen here.

[Slava]

Originally Posted by DoubleF

The point really isn't about the $1K position affecting the over portfolio or diversification. Plus I'm mentioning people with pure mutual fund/ETF portfolios who aren't truly constructing portfolios anyways. It's more along the lines that bank stocks are IMO the easiest stocks to really understand from a newbie/amateur point of view. If ultimately stocks aren't your thing, by all means do ETF and mutual funds. But I think that if you're going to store your life savings into these things, you should understand what these things are in general.

But perhaps I am just ranting in an outdated manner. Me saying that a small dabble in bank stocks to understand the stock vehicle is perhaps akin to me being incredulous that people no longer want to learn to drive. IMO it's a life skill that everyone should have in case of emergency etc. even if you don't regularly drive. But everyone else is content with mutual funds/ETFs as one would be happy with transit/uber etc. Furthermore, my beef with mutual funds is outdated with some of the newer rules. I just hated how in the past some of them could be kinda greasy with their admin fee rules etc. They'll claim you get a 5% gain or something, but after fees, you're sitting on like half of that.

Old man yelling at clouds here. Sorry ya'll.

No, I realise that these people aren't building a portfolio. The thing is the mutual fund is though and that's kind of a big deal. It doesn't seem like it in the first week of 2020 because in 2019 literally everything worked. This is in direct contrast to 2018 where basically nothing worked in the final quarter. Regardless, I'm not defending mutual funds on the larger scale. That said, for certain applications they're the best thing going. From a tax perspective there are funds that are undeniably the best option IMO. For smaller investors who need risk management and diversity a managed mandate of some sort (be that an ETF or fund of some sort) is going to provide that.

I do think you're overestimating peoples interest in stocks and investing though. It's interesting to you and me and probably most people in this thread. But for the average population they have little to no interest I'd say. It's probably akin to me at a car dealership. I need a car; I have some interest while I'm looking for a car and probably should learn more about what I'm doing there, but I have a job and wife and kids and such. Learning about cars and all that only carries so much interest to me. So when the time comes I look around and let a professional do the heavy lifting. That's the financial industry these days.

[Slava]

Originally Posted by Bill Bumface

Don't you think it's pretty dangerous to advise new investors to go completely into one sector in one geography? Sure, they have been stable for decades, but that means nothing and seems risk as hell to me.

I think the most important party of risk management is to be geographically and sector diverse.

Canada represents such a small portion of the world markets, it is home bias to have the majority of your portfolio invested in Canadian companies.

We've seen banking blow up elsewhere. There are no guarantees that doesn't happen here.

I was going to say that it sounds like a great plan to buy a bank and DRIP for decades. The returns are great and it's easy. Psychologically though, whole other story. First, it's the FOMO. You have a bank and it's not doing anything this year while someone else is making a killing in ABC sector. If that doesn't shake you, how about a 2008-09 financial crisis where people are convinced the world is collapsing. Dividends get cut, the share prices plummet and governments have to plow liquidity in to keep the system from completely freezing. Still holding? It's easy to say in early 2020 because 2019 was a dream, but it's possible. I am lukewarm on the banks though. I look at Toronto and Vancouver real estate and that combined with the rising debt levels of fellow Canadians makes me a little concerned for the banks. Everything is fine, as long as people are working and paying the bills, but things change.

[DoubleF]

Originally Posted by Bill Bumface

Don't you think it's pretty dangerous to advise new investors to go completely into one sector in one geography? Sure, they have been stable for decades, but that means nothing and seems risk as hell to me.

I think the most important party of risk management is to be geographically and sector diverse.

Canada represents such a small portion of the world markets, it is home bias to have the majority of your portfolio invested in Canadian companies.

We've seen banking blow up elsewhere. There are no guarantees that doesn't happen here.

Possibly. But if you don't know what you're doing on the stock market, you're not investing anyways, you're gambling. I suggest learning on a bank stock because they're easy to understand.

I do understand a diverse portfolio though. But if you tell someone who doesn't know much about investing to stop buying mutual funds and start with a self directed diverse stock portfolio, that's major information overload and those people aren't going to be convinced to learn about stocks.

But I guess you're right Slava. What I consider to be just basic understanding for self preservation purposes isn't something of the majority of people' want to spend time on. Heck, I'd probably have a similar success rate telling people to learn the basics of how meat goes from animal to grocery store (ie: barely anyone).

[postman56]

What should I be expecting from my portfolio managed by a professional these last three years?

The TSX composite over the last 3 years has grown 7.9% with 2 significant double digit declines in three years.
Therefore the simple return is 2.6% annually. People like to talk about 2019 and how well it did, but it has been quite a volatile process.

I would appreciate it if someone can provide some realistic performance returns for my investments.

[Slava]

Originally Posted by postman56

What should I be expecting from my portfolio managed by a professional these last three years?

The TSX composite over the last 3 years has grown 7.9% with 2 significant double digit declines in three years.
Therefore the simple return is 2.6% annually. People like to talk about 2019 and how well it did, but it has been quite a volatile process.

I would appreciate it if someone can provide some realistic performance returns for my investments.

Honestly, you need a benchmark that reflects the investments. So the TSX had a great 2019, poor 2018 and mediocre 2017. But if you were invested only partly in Canada with a piece that fixed income, you can't really use just the TSX as a benchmark. And frankly, if you were 100% invested in Canada I would question the strategy and efficacy of that, but that's another discussion.

Overall, I can try to help you with this, but would need to know the split for your holdings. Feel free to send me a message with that kind of thing if you like.

[stone hands]

Originally Posted by postman56

What should I be expecting from my portfolio managed by a professional these last three years?

The TSX composite over the last 3 years has grown 7.9% with 2 significant double digit declines in three years.
Therefore the simple return is 2.6% annually. People like to talk about 2019 and how well it did, but it has been quite a volatile process.

I would appreciate it if someone can provide some realistic performance returns for my investments.

if you are indexing, short term gains/losses dont really matter because as long as there is human ingenuity and the world turns, you'll average out 8% in the long run

i would caution against heavily biasing towards the canadian market as we are small players and our government is hellbent on getting rid of our few profitable industries

[Bill Bumface]

Originally Posted by DoubleF

Possibly. But if you don't know what you're doing on the stock market, you're not investing anyways, you're gambling. I suggest learning on a bank stock because they're easy to understand.

I really see zero reason why a person in that situation wouldn't be investing in ETFs only.

You need a pretty sizeable portfolio before individual stocks starts to make sense.

Sure they are fun, and lots of us do it, but the stats on how many people can consistently beat whole market returns for more than ~10 years say none of us should be investing in individual stocks.