Hello, I really love your article. Hi Annie, so sorry to hear about your job loss. You still have time on your side, but you need to make sure your personal finances are in order.
Any thoughts as to why? Hi Ian, thanks for the kind words! The pandemic has definitely caused a lot of volatility in the market. Bond funds got clobbered along with stocks. Corporate bonds in particular did poorly as investors flocked to the safety of US Treasuries. In reality, different markets move in different ways depending on a wide variety of factors.
In turbulent times, investors do tend to favour stable economies like Canada and the U. The entire experience reinforces the need to diversify your investments broadly across the entire globe.
Loved the article! I would like to manage my portfolio myself but am not sure whether to go for index funds at a large bank or with an online discounted brokerage account like questrade. Hi Abigail, thanks very much! The inactivity fees will not apply to you if you plan on contributing to the account regularly and buying ETFs. Questrade is the cheapest by far. It also has the fastest currency exchanges, and most importantly, based on your comment, there is no fee to buy ETFs.
I do a bill payment from my bank account. It would probably be fairly easy to set up a recurring transfer. I highly recommend it. I like this article. There is still a fee difference 0. Are the dividends automatically re-invested in the ETFs offered in Canada? No worries, though. You can also look at U. You can ask your brokerage to reinvest the dividends, though.
I use Questrade as broker and buy stocks and ETF through them. Appreciate any help, thanks. Thanks for this fantastic article! I have one question though. Hi Luka, thanks for the kind words. In order to invest in ETFs you need to open a discount brokerage account. Low Low to med Med Med to high High. Inception date. Income distribution. Capital gains distribution. Load structure. Sales status. Fund facts Fund facts. Reports Monthly update. You can invest with less risk.
Most indexes include dozens or even hundreds of stocks and other investments, and the diversification leaves you less likely to suffer big losses if something bad happens to one or two companies in the index.
Index funds are available for a wide variety of investments. You can buy stock index funds and bond index funds, which cover the two big parts of most people's investment strategies.
But you can also buy more focused index funds that drill down into certain parts of the financial markets. It's a lot less expensive. Index funds are usually far less costly than alternatives like actively managed funds. That's because an index fund manager just has to buy the stocks or other investments in an index -- you don't have to pay them to try to come up with stock picks of their own. You'll pay less in taxes. Index funds are quite tax-efficient compared with many other investments.
For instance, index funds don't have to do as much buying and selling of their holdings as actively managed funds, and so index funds avoid generating capital gains that can add to your tax bill. It's a lot easier to stick with your investing plan. When you use index funds, you can automatically invest month after month and ignore short-term ups and downs, confident that you'll share in the long-term growth of the market. Why not invest in index funds?
Some of the downsides of investing in index funds include the following: You'll never beat the market. Index funds are designed solely to match the market's performance, so if you want to prove your mettle as a superior investor, index funds won't give you that chance. You don't have any loss protection. Index funds track their markets in good times and bad, and when the market plunges, your index fund will plunge as well. You won't always own stocks you like. Depending on the index you choose, you can end up owning some stocks you'd rather not own, while missing out on others you'd prefer.
Image source: The Motley Fool. Stocks Owning shares of individual companies can be especially rewarding, but you'll need to do some research. Exchange Traded Funds ETFs are collections of stocks that trade just like a stock, bought and sold throughout the day with fluctuating prices. Mutual Funds Mutual funds are also collections of stocks, and they can be actively or passively managed.
Retirement Planning Properly planning for retirement could be the most important investment decision of your life. Both can also be held in non-registered accounts. With both, there are two ways to make money. One is from capital gains when you sell the fund for more than you paid for it. The second is with distributions. Depending on the type of fund you buy, you may get distributions of dividends, interest, capital gains or other income the fund earns on its investments.
With a mutual fund, you may choose to receive distributions in cash or have them reinvested in the fund for you. Unless you request the distributions to be paid in cash, the mutual fund will often reinvest the distributions for you. Instead, the cash is held in your account until you say how you want it invested.
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