Many thanks!

Over the past few months I’ve started reading up on various theories (such as the couch potato strategy). I’m eager to get started but if anything I now feel more confused than ever. I am skeptical of all of the marketing from banks and other financial institutions and wonder if they really have my best interests at heart. I am even questioning mutual funds as a whole. I want my money to work for me as hard as it can, but where do I start? I have a grasp of the basics now but even with the couch potato strategy I still feel at a loss as to which low MER options are really the best and how to go from where we are today to that approach. And what emphasis should I place on RRSPs vs. paying off the mortgage early?

On top of that, there is the need to consider education costs for kids in addition to retirement and the rules on RESPs changed last year just to make things more confusing!

My RRSP strategy once I finish up my education will probably consist of ETF’s. Since I am very young, I will probably start out with 100% equities. My geographical diversification will probably be 25% Canadian 40% American, 35% International.

Well it has changed over the years….

1) Back when I first started I used Royal Mutual funds, mostly their balance funds if I recall.

2) Once out of university working for a high-tech company with a defined pension plan, I would get sacked with a pa (Pension adjustment) so it was easy to max out my contributions, and I eventually changed over to a Mutual Fund Broker and bought some high-risk mutual funds
(Resources) as I had the company defined pension plan using up most of my contribution room as a sold base.

3) Once my Mutual fun Broker started having kids and focusing more on family than investments, I took over managing it myself as a self-directed RRSP at TD, with a few banks stocks and mostly index funds, cashing out the resource funds into a more stable Cdn equity fund.

4) Leaving the high-tech company and having no defined pension, my contribution room increased and I started investing more into high-tech stocks, and high-tech mutual funds (in the dot boom and took a bath).

5) After that to consolidate all my accounts and to add some checks & balances to my investments I consolidated all my accounts with a full fee broker (Merill-Lynch -> bought out by CIBC). Changed the strategy to mostly good “value” dividend paying funds as the core (after getting burned on the tech stuff).

6) Once my wife got laid off, it went on hold for a siesta for 5 years, with basically year-end lump sum contributions with what I could scrap up at the time (or sell taxed investments from previous years savings.) The funds would mostly add to the existing base of funds I already had.

7) Now that she is back at work and the kids are older, we both started up contributing as much as we
could, as we bought had built up spare head-room to self-directed RRSPs.

Both my wife and me don’t current work for a company with a pension plans so we contribute to self-directed RRSPs. I was doing 1600 monthly and her 600 bi-weekly. We found it
was cramping our budget/life-style too much as we wanted cash to live for today as well (take the kids to
Disney, etc..) so we backed it off to 800 monthly each. (1600 total each month for the family)

We both now use the same full-service broker and have not been overly pleased with his advice, mostly has us in mutual funds (obviously paying him a trailer) and he now has another company he bought and seems more focused on developing it, than his client base portfolios, so I’m considering consolidating back to TD self-directed and managing it myself again (all in dividend stock, no funds), cheap 9.99 brokerage fees as I over the 100,000 mask. We were considering socking more at our mortgage but
he convinced us to up our RRSP contributions, and use the refund to throw at the mortgage. This will be the first year we do that.

Maybe after reading the book I’ll change my mind!!!

Lately I have focused mostly on buying good bank stocks, utility companies, pipelines, etc with solid dividends. (Some busts like Loblaws).

Sorry to be so long winded…

Eric

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I’m looking at Questrade for the latter.

Reason for Index Funds: Provide diversification while I build my Dividend paying stock holdings.

Reason for DRIPs: Since I have 30+ years to retirement I have time to let my holdings grow as I reinvest the dividends into additional units of the stock.

The other RRSP/retirement plan I am still running the numbers on is RRSP vs Mortgage. We’d like to pay down the mortgage ASAP to allow us to put more money into the RRSP/retirement accounts, but only if it makes long term financial sense. The peace of mind of having the mortgage paid off is another big plus.

TKO’S Strategy consists weekly purchase of Lotto 649:

1 Play for Jackpots < $10 M
2 Plays for Jackpots < $20 M
3 Plays for Jackpots < $30 M

“You can’t win if you don’t play”.

TKO’s backup plan includes a Greeters Bib at Walmart.

Cheers to your financial health,

TKO from Ontario