In Praise Of TFSA's

[reel]

It all seems so confusing to me and I've tried several times to understand it  ac_crying

Don't listen to the rest.  Listen to me...



A TFSA is just a "vehicle" to invest.  No different than what was before, except capital gains (profits) are not taxed.



It is a registered savings "vehicle."



Put anything you like in there.  You can!  I prefer to self-direct, since it always works out better that way.

I'm always worried about potential loss. I want a guaranteed investment (which is what I have)  not chance of losing anything.

Guaranteed investments (GIC's, high interest savings accounts, etc.) usually pay less than the rate of inflation.  Thus the only guarantee you get is a guaranteed loss.

[Anonymous]

It all seems so confusing to me and I've tried several times to understand it  ac_crying

Don't listen to the rest.  Listen to me...



A TFSA is just a "vehicle" to invest.  No different than what was before, except capital gains (profits) are not taxed.



It is a registered savings "vehicle."



Put anything you like in there.  You can!  I prefer to self-direct, since it always works out better that way.

I'm always worried about potential loss. I want a guaranteed investment (which is what I have)  not chance of losing anything.

Guaranteed investments (GIC's, high interest savings accounts, etc.) usually pay less than the rate of inflation.  Thus the only guarantee you get is a guaranteed loss.

You got that right reel. What a fucking waste.

[Anonymous]

This means buying and selling on your own.  You can buy anything listed on the market.  Never buy mutual funds.  The banks take too much.  You can buy essentially the same thing with a self-directed...  "IShares" is a good example.

Mel Gibson, our TFSA's are in mutual funds except for some separate stocks that we bought..



We are satisfied with our return..



But, we are interested in ETF's too.

Fash, both mutual funds and ETFs are a pool of stocks that is put together to diversify and reduce the risk vs. purchasing an individual stock.  ETFs are very simple.  A set of stocks are pooled when the ETF is started and the composition doesn't change.  With a mutual fund, you have a fund manager that plays with the balance of the stock composition in the pool, trying to make more money.  The catch with mutual funds is that fund managers are rarely successful at beating the market long term, but you still have to pay an exorbitant fee to that fund manager (whether he wins or loses with your money).  Over time, the ETF has consistently been demonstrated to be the same or better than a mutual fund, but you pay no management fees.  



Since the fees are something like 1-3% per year, the mutual fund has to do substantially better than the ETF to make you more money and they almost never do.  The bank would much prefer to sell you a mutual fund because they claw back part of that fee from the manager if they sell you the mutual fund.  For some odd reason, people are convinced that mutual funds are lower risk, when in fact they are just a steady drain.

You are definitely right about ETF's being cheaper than mutuals. However, depending on the amount invested, you can get a waaaaay better deal than the fees you quoted.

[Annie]

Our kids also have high interest savings accounts, although I'm not seeing much of interest in them to justify having them.  Son is checking out RRSP's. I told him he should research and make an appointment with the bank. It's never too early to start investing in your future.

[reel]

Our kids also have high interest savings accounts, although I'm not seeing much of interest in them to justify having them.  Son is checking out RRSP's. I told him he should research and make an appointment with the bank. It's never too early to start investing in your future.

Tell him to get a TFSA, not an RRSP.  And put it into an ETF or REIT.  It's not too tough.

[Anonymous]

This means buying and selling on your own.  You can buy anything listed on the market.  Never buy mutual funds.  The banks take too much.  You can buy essentially the same thing with a self-directed...  "IShares" is a good example.

Mel Gibson, our TFSA's are in mutual funds except for some separate stocks that we bought..



We are satisfied with our return..



But, we are interested in ETF's too.

Fash, both mutual funds and ETFs are a pool of stocks that is put together to diversify and reduce the risk vs. purchasing an individual stock.  ETFs are very simple.  A set of stocks are pooled when the ETF is started and the composition doesn't change.  With a mutual fund, you have a fund manager that plays with the balance of the stock composition in the pool, trying to make more money.  The catch with mutual funds is that fund managers are rarely successful at beating the market long term, but you still have to pay an exorbitant fee to that fund manager (whether he wins or loses with your money).  Over time, the ETF has consistently been demonstrated to be the same or better than a mutual fund, but you pay no management fees.  



Since the fees are something like 1-3% per year, the mutual fund has to do substantially better than the ETF to make you more money and they almost never do.  The bank would much prefer to sell you a mutual fund because they claw back part of that fee from the manager if they sell you the mutual fund.  For some odd reason, people are convinced that mutual funds are lower risk, when in fact they are just a steady drain.

Reel, I wish I had this information when we first set up our TFSA's..



How did you purchase and ETF?



Was it through your bank..



I would like my husband and I to make an appointment with our bank officer.

[Annie]

I think I'll tell him to talk to a financial adviser at the bank.  I think it's time he seriously starts to think about logical investments.  He's pretty good with money management and it's never too early to start investing for the future. Any little bit can go a long way if done right, I think. He's not a risk taker either and wants a guarantee rather than a guessing game. He also doesn't want to have to spend a lot of time managing it either.

[Anonymous]

I think I'll tell him to talk to a financial adviser at the bank.  I think it's time he seriously starts to think about logical investments.  He's pretty good with money management and it's never too early to start investing for the future. Any little bit can go a long way if done right, I think. He's not a risk taker either and wants a guarantee rather than a guessing game. He also doesn't want to have to spend a lot of time managing it either.

I am so happy that we have this thread..



There is so much to learn to protect our savings..



Thank you to everyone who has contributed or will do so.

 ac_smile

[Annie]

I'm happy too Fash, having a thread dedicated to financial advice is a huge help!  Although I'm still a bit confused on some investment options, I did learn a few more things  ac_dance

[Anonymous]

I'm happy too Fash, having a thread dedicated to financial advice is a huge help!  Although I'm still a bit confused on some investment options, I did learn a few more things  ac_dance

I know Shen Li didn't intend this to be an advice or suggestion thread, but I am so glad that is the way it developed.

 ac_smile

[Annie]

I give this thread 2 thumbs way up!

[Anonymous]

I give this thread 2 thumbs way up!

You're fucking welcome. ac_dance   ac_gumpop

[Annie]

Haha fucking thank you!    ac_drinks

[Corp. Taxes Suck]

Haha fucking thank you!    ac_drinks

That Shen Li is one smart fucking fortune cookie. She's sweeter than fucking sugar too.



Bob,



You got your handle back. ac_drinks

[Anonymous]

Haha fucking thank you!    ac_drinks

That Shen Li is one smart fucking fortune cookie. She's sweeter than fucking sugar too.



Bob,



You got your handle back. ac_drinks

That is good Shen Li..



No more taking handles that are not yours please.