TangoAlphaLima
Member
You may want to wait a bit. The kid gloves come off on Friday in China, when the "circuit breakers" will no longer be in play. It could get bloody, which could then turn global market even more bloody in return.
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How to Invest for Retirement
- Thread starter Piecake
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You may want to wait a bit. The kid gloves come off on Friday in China, when the "circuit breakers" will no longer be in play. It could get bloody, which could then turn global market even more bloody in return.
Earthstrike
Member
Well I do my full rrsp contribution at the earliest point possible meaning my next contribution, (Prolly gonna be 7k) is going in at aprilish.
We're experiencing the end of the business cycle. 2008 feels like yesterday but it was 7-8 years ago. We're extended beyond the average length that the business cycle lasts. The typical recession or mild contraction that follows a business cycle top typically takes 40 to 60% out of equity markets. It's completely normal.
This guy explains it well. For buy and hold investors move what you can into cash and wait for the 50% discount. Don't ingest this loss and wait 5 years to get back to parity.
I read this same advice several times over the past few years, including last year when China was melting down. This is terrible advice. Retirement investors should not be busy trying to time the market.
Earthstrike
Member
Feels to me too much like trying to time the market. It's never as simple as this. What I would do however is have an amount of funds that I throw into the market when it goes down.
Buy and hold investors should never be trying to time the market.
If you didn't withdraw before the China news, now it's definitely too late to withdraw. So don't move anything. You can wait with investing for another couple days but don't wait too long trying to time it. You missed the train on selling, don't miss the train on buying.
chaosblade
Unconfirmed Member
If you didn't withdraw before the China news, now it's definitely too late to withdraw. So don't move anything. You can wait with investing for another couple days but don't wait too long trying to time it. You missed the train on selling, don't miss the train on buying.
Hey, I sold my 189 shares of company stock right before the China thing to fund my IRA this year. Good timing.
Except it's up $5 since last week.
demosthenes
Member
I know I'm not taking my IRA out for 25 years, but, still feels bad man when you put your IRA funds in and the market tanks :lol
Wellington
BAAAALLLINNN'
This was posted in here before, but it's worth reposting at times like these: (Chinese markets were up today, sorry for those trying to time a deposit)
http://awealthofcommonsense.com/worlds-worst-market-timer/
http://awealthofcommonsense.com/worlds-worst-market-timer/
CopperPuppy
Member
Excellent post.
For retirement/buy-and-hold investors (so most of the people ITT), ignore this timing the market nonsense.
TangoAlphaLima
Member
Doesn't look like either of those things have kept the market from likely ending in the red when the closing bell hits in an hour.
Wellington
BAAAALLLINNN'
Perfect. Our timetables are so long who cares what it does now, tho it is nice to buy at a discount.
chaosblade
Unconfirmed Member
It will probably be a another week or 10 days before I can put my money in, so hopefully it doesn't bounce back too quickly.
Last year I maxed my Roth right before it plummeted, just missed the discount.
James Sawyer Ford
Member
Terrible advice. And recessions normally DON'T take 40 to 60% out of the market. The bust of 2000 and 2008 are quite rare in the grand scheme of things. Investors may only have 2-3 of those at most over an investment lifetime. For instance, the S&P 500 since 1976 has only had this occur twice (2000 and 2008).
Recessions can typically take 20% out of markets, and generally aren't too long lived. Also, who is to say we are at the end of the business cycle? Unemployment has gone down, though the figures can be terribly misleading. Wage growth is minimal and inflation is incredibly muted, two factors that normally are quite high at the end of a business cycle. This recovery has been extremely slow to materialize, so I would imagine it would result in a much longer business cycle than normal.
I feel the Chinese crisis is completely overblown. The markets just don't have much other news to react to at the moment. Sure, China's growth may not be a robust 10% anymore, but it's still growing. Their stock market is crashing, but it had a massive run-up last year resulting in a huge bubble. Why should I care? China represents maybe 1% (if that) of my equity portfolio. I could be wrong, but this feels a lot like August 2015 -- painful few weeks followed by an abrupt recovery. If earnings disappoint, then perhaps this could turn into a larger correction.
In the grand scheme of things I'm not too worried. Job growth continues in the US & the EU is showing signs of recovery again. 10+% corrections are fairly normal, and I'll continue to buy at the lower prices.
So you want to sell low and buy high? Sounds like a great recipe for long term success. US equities have performed better the past 5 years and have much higher valuations as a result. What does this tell us about the next 5 years? Nothing.
US equities were also disappointing during the "dead decade" of 2000-2010. But then they tripled in value.
VTIAX comprises mostly of the EU, Japan, and emerging markets. EU is still going through sluggish growth, and emerging markets are being hit hard by the commodities crash yet they offer the most promising demographics for growth. Will these areas continue to perform poorly? Frankly, I'm an optimist and believe they will experience their own recovery like the US and outperform at some point in the future. I'm currently buying more VTIAX to keep my global balance about 60/40 intl vs US.
vinnygambini
Why are strippers at the U.N. bad when they're great at strip clubs???
😢
Randolph Freelander
Member
Ah, yes. These have been an unfortunate string of very bad days. Oh well. Keep on keeping on.
Seriously
Shouldn't have even checked my accounts, I'm in the red for my "Personal Investment Returns" Having been through 2000 and 2008 has provided me a different perspective than one of sadness.
Discounts galore!
The purchase on my Friday paycheck will buy more shares than my last, at the end of 2015, as will the annual bonus a week or so later. I'm okay with this. When things bounce back - and they will - my account will just bounce back that much faster as a result.
Even 2008 is a relative blip on my long-term graph.
Discounts galore!
The purchase on my Friday paycheck will buy more shares than my last, at the end of 2015, as will the annual bonus a week or so later. I'm okay with this. When things bounce back - and they will - my account will just bounce back that much faster as a result.
Even 2008 is a relative blip on my long-term graph.
Calamari41
41 > 38
Time for dollar cost averaging to shine!
vinnygambini
Why are strippers at the U.N. bad when they're great at strip clubs???
Thanks for the perspective GhaleonEB and words of encouragement Randolph, still sucks for now though lol
Randolph Freelander
Member
Yes!
Unequivocally.
I'm thrilled that my 401K contributions kick back in this week, after hitting the maximum for 2015 last summer right before the market sputtered in the back half of the year. I was afraid I was missing some good prices. As it turns out, they're still around and getting even better.
Yes. Don't change your plans due to market volatility. For starters, you'll miss an opportunity to buy low, which is the first part of "buy low sell high".
http://data.cnbc.com/quotes/.SPX
Look at the 5 year graph. (Other sites will have longer horizons.) The market hasn't been this low in about a year, but there's been plenty of dips like this along the way. Even more if you look at the totality of the recovery period since 2009.
Sweet, thanks!
I've somehow never heard of Betterment until just now. Are the benefits they supposedly provide worth the additional fees over just straight picking my funds on Vanguard? It looks like they would do a better job of balancing what funds I'd be investing in instead of just dumping everything into a single admiral fund, but I figure for now that isn't a terrible plan since I don't have a ton of cash invested.
Randolph Freelander
Member
Are you speaking of retirement investing, as with an IRA, or just regular investing, or perhaps both? For me, particularly with retirement investing, I do not see the benefit, as it doesn't take much time or effort to periodically check in and rebalance. I'm fine with that amount of effort. I could be wrong, but since you're in a tax-advantaged account, I don't see that tax loss harvesting is a driver in that sort of account. So personally, I would just park my IRA with Fidelity or Vanguard and passively monitor it myself, avoiding Betterment's fee. However, if you're uncomfortable or simply do not trust yourself to get it right, then I suppose Betterment is a decent option.
One thing, though. I went to their site, and their claim on it is "Over 125,000 customers invest more than $3 billion with Betterment." To me? Those are low numbers. I kind of would like to see a couple more zeroes just to feel like it's more stable, though perhaps that's irrational on my part, I don't know.
If I moved anything I think it would be just the general investing stuff.
Right now I'm just 100% invested in VTSAX setup with a automated bimonthly addition from my bank account, I guess I'll have to do more research to determine if the balancing they would offer would offset the fee difference.
Right now I'm just 100% invested in VTSAX setup with a automated bimonthly addition from my bank account, I guess I'll have to do more research to determine if the balancing they would offer would offset the fee difference.
The_Inquisitor
Member
401k fund I am happy to keep maxing out currently. I won't be seeing that money for a long time anyways. My personal investment fund took a huge beating though. I wasn't planning on cashing out to buy a house at least for another 2 years so no issue on short term withdrawal issue. My emergency fund is in good shape anyways.
Canadian question :
I am a total newbie at this. Went to see my bank's free financial advisor just before New Year eve. Should have read this thread beforehand, ah ha. Boy am I getting screwed on the MER.
But no matter, as I intend to do better starting now. So, reading up on Wormdundee's post & Canadian Couch Potato website, it would seems to I will have to open up a TD Direct Investing account, as I am not comfortable enough with ETF trading and Tangerine looks way too much Canada-focused (and boy is the CAD going under right now...).
Which brings me to my question : with the ever dropping CAD, if I were to look into the TD e-fund Index line, should I still follow the CCP's template of 30/30/30, or curve it further into US/International? Will Canadian-owned stock, due to the ever-growing weakness of the CAD, basically handicap any index fund where they exist for the foreseeable future?
As I said, this is probably investing 101 so I apologize, but like Jon Snow, I know nothing. Pls halp.
EDIT 1 : Also, looking at TD's website, I am struggling to understand the difference between owning a standard TD account and having a TD Direct Investing account. What is the practical difference? You can buy the e-Series for a TFSA, right? Just started contributing to it this year, so I have quite a bit to catch up to in terms of contributions.
I am a total newbie at this. Went to see my bank's free financial advisor just before New Year eve. Should have read this thread beforehand, ah ha. Boy am I getting screwed on the MER.
But no matter, as I intend to do better starting now. So, reading up on Wormdundee's post & Canadian Couch Potato website, it would seems to I will have to open up a TD Direct Investing account, as I am not comfortable enough with ETF trading and Tangerine looks way too much Canada-focused (and boy is the CAD going under right now...).
Which brings me to my question : with the ever dropping CAD, if I were to look into the TD e-fund Index line, should I still follow the CCP's template of 30/30/30, or curve it further into US/International? Will Canadian-owned stock, due to the ever-growing weakness of the CAD, basically handicap any index fund where they exist for the foreseeable future?
As I said, this is probably investing 101 so I apologize, but like Jon Snow, I know nothing. Pls halp.
EDIT 1 : Also, looking at TD's website, I am struggling to understand the difference between owning a standard TD account and having a TD Direct Investing account. What is the practical difference? You can buy the e-Series for a TFSA, right? Just started contributing to it this year, so I have quite a bit to catch up to in terms of contributions.
okay so several things
what MER did they give you....
also, most Canadian investing banks will allow you to trade ETF's - and they're MUCH easier than even mutual funds, so I don't think you should be too scared of them.
On the bright side, what with you starting right now, you'll have a prime opportunity to buy into the market when it's down (and especially the Canadian market...)
Think of it this way - yes, the CAD is super low right now. What if it reaches its bottom and then rises and you're all invested in USD? You'll lose money. So I wouldn't worry too much about "oh but it's so weak right now" and if anything invest MORE into the CAD... but that's risky too, so just stick with whatever you feel comfortable with and ignore the "current" market.
For Canada, I'd recommend Questrade. I've used it for a while now and it offers free ETF-purchasing, so basically you have no fees to pay until you withdraw money. And even then the fees are pretty small. And it's convenient and has a pretty great online system.
Buy ETF's, whichever you prefer (I'd recommend Vanguard, e.g. VUN.TO is a classic, but check out the Vanguard Canada site) and then look away for a while.
The whole point of retirement saving is that you're investing into the NOT foreseeable future
Over the course of which stocks will always go up up up. Better investing in CAD stocks now than when they were par to the USD. I don't know anything about TD's accounts and stuff, but I will say that the low CAD shouldn't affect your asset allocation choices (that would be speculation and market timing). Just pick an allocation and stick with it.
The CAD will do what it does, don't let that stop you from having a well-diversified portfolio.
The CAD will do what it does, don't let that stop you from having a well-diversified portfolio.
Prax
Member
^ Hope you get answers Guesong, as I have similar questions.
I am with Tangerine right now, just started almost a year ago, actually! So the dying of the dollar is making things looks sad, but I guess I can hope for some kind of rebound in the far-off future perhaps? >_>
I figure once I reach about 30-40k, I'll switch over to TD's e-series
And yeah.. before reading up too much, I also went with a bank product, and the MER is like.. 1.47% or something. :T I haven't dipped BELOW book value yet though, which I suppose is better than nothing given the market right now. But yeah, I'll sell those off and "invest properly" once I even get enough funds in the first place. My time horizon's far enough to make a few minor screwups, I guess. lol
I am with Tangerine right now, just started almost a year ago, actually! So the dying of the dollar is making things looks sad, but I guess I can hope for some kind of rebound in the far-off future perhaps? >_>
I figure once I reach about 30-40k, I'll switch over to TD's e-series
And yeah.. before reading up too much, I also went with a bank product, and the MER is like.. 1.47% or something. :T I haven't dipped BELOW book value yet though, which I suppose is better than nothing given the market right now. But yeah, I'll sell those off and "invest properly" once I even get enough funds in the first place. My time horizon's far enough to make a few minor screwups, I guess. lol
This is a form of trying to time the market too. It's called "trying to catch a falling knife".
In any case, this is an old problem and there is an established solution for it: currency hedging. Just buy the hedged version of the US stock market fund and you will get the same return as the market, regardless of how the CAD and USD perform relative to one another.
well, by that logic currency hedging is also a version of trying to time the market, since you're counting on the current exchange rate being "desired". I remember reading that hedging isn't really worth it. I mean, I'm contemplating it now, but not heding my US funds has given me a lot of gains due to the falling CAD. Might start hedging once the CAD falls even lower as I don't think it'll keep falling all that much more and don't wanna lose all the gains if it goes back up.
A wonderful 2.46 % for one, and 2.47 % for the other.
As I said, I sure wish I saw this thread before. Investing roughly 20k right into the market just before it all comes down.
6k of it is locked in for a 3-year TFSA which is, as I understood it, guaranteed not to drop below value, but I cannot touch it until then.
6k into a TFSA with a 30 Bonds / 70 Growth value
7k into a RSP with 40 / 60.
3k into a basic, standard TFSA to serve as an emergency fund if I ever need it.
I wish I would have invested in more stocks, but apparantly the quiz they had me answer kind of locked me into these moderate accounts, or something.
I don't really know what I'll do with these at the moment. I assume I'd have to pay some kind of penalty or something stupid for taking them out right now (so I could invest them into a low MER) and they have dipped below what I paid for them at the moment, so I'll just leave these where they are and look at them in the future as a test, ha ha.
I have looked into Questrade, ETF and Vanguard, but Wormdundee's and Canadian Couch Potato gave me the impression that A) You had to have a bit more money to invest than what I have atm (they mention 50k, I believe) and B) It's more of a hands-on approach at times. The TD e-Series blurb being described as more fire-and-forget seemed more up my alley.
I do still have Questrade bookmarked though, and it being wholly online does sound easier than setting up a new TD bank account and stuff. So long as it is intuitive and not as heavy as it looked, I guess I'd figure it out with this thread's help.
Questrade has no account handling fee as long as you have above 5'000 CAD in it, not 50k
an ETF is literally "buy and forget about it", not hands on at all. It's the same as a traditional mutual fund, just cheaper and online.
I consider that fairly straightforward.
open account online, get mailed paperwork, mail paperwork back, deposit money, collect free goodies (they regularly have promos like "open an account, get a free ipad or so, might wanna look out for those)(checked, atm the promo is deposit 100k, get a 500CAD apple store certificate - don't worry, they've got lower-deposit ones as well lol)
then just buy online and you're done
Hedging is a method of risk mitigation. So yes, it can result in lower returns if the USD is strong. The point is not that its returns are higher, but rather that they are less volatile over the short term and are anchored to your cost of living.
Whether or not it is worth it depends on your investment horizon. If we are talking longterm retirement investment, like 15+ years, then it probably doesn't really matter that much. Relative currency valuations for developed nations tend to be cyclical, since devalued currency boosts exports and helps the economy. However for shorter term investment or if you just don't have the stomach for a lot of volatility, I think it makes sense.
Just to make sure :
Basically, this means that if I start Questtrade without transferring 5k over, let's say I invest 500 dollars quarterly in a Vanguard ETF : I don't have fees to pay? That's eligible for commissonable trade?
buying ETF's incurs no commission using Questrade, so I'm pretty sure that this would NOT apply... but don't quote me on that.
Interesting article about long run returns of equities vs bonds: http://www.economist.com/blogs/butt...=scn/tw/te/bl/ed/investingstocksforthelongrun
They included a chart, but I don't like it because it's MSCI World and only starts at 1997.
They included a chart, but I don't like it because it's MSCI World and only starts at 1997.
CopperPuppy
Member
Quick question for those more knowledgeable than I on this subject:
If I can swing the yearly maximum, does it behoove me to contribute everything I can for 2016 now to buy in at a discount?
If I can swing the yearly maximum, does it behoove me to contribute everything I can for 2016 now to buy in at a discount?
Randolph Freelander
Member
In aggregate, buying early is going to work to your advantage. Ignoring the current slide, the historical direction of the market is up. Therefore, you want to be at the beginning of the curve to give yourself the longest possible ascent.
In this current climate, nobody is going to be able to tell you with certainty where the market will be in 3, 6, or 9 months. Therefore, front-loading contributions for this year may or may not be for the best. It doesn't work out every year. But it does for most years. I suggest that you not worry about what's best for this year when you cannot possibly know.
Canadian-GAF, again.
So I have set up my Questrade account (made it Margin/TFSA/RRSP, because the more options the better right?).
Now, before funding and going in, I was looking into the Vanguard ETFs, and I know there have been recommendations in the past in this thread (quite recently but I cannot seem to find the post again). So what are the best choices?
So I have set up my Questrade account (made it Margin/TFSA/RRSP, because the more options the better right?).
Now, before funding and going in, I was looking into the Vanguard ETFs, and I know there have been recommendations in the past in this thread (quite recently but I cannot seem to find the post again). So what are the best choices?