As I mentioned one of the common themes I hear from folks when I attempt to chat with them about how they are saving for their future, is the Tyranny of Choice, and the mental gridlock all of these possible choices can cause for some folks.
I do get lots of questions about, “… what in your opinion is the best vehicle for investing?”, and the easiest answers are:
- Can you be more specific?
- It depends on what your goals are, what are your goals?
- Why does my opinion matter to you?
Note I never answered the question? My advice is usually to go learn some stuff and decide for yourself, since I never feel too comfortable telling people what to do with their money.
As an example, you want to open an RRSP, what do you do? First you find out whether you can put money into an RRSP (do you have RRSP space), then you look into the various RRSP savings vehicles out there. If you are a TD Bank customer, you can set up:
- A TD Mutual Fund RRSP Account
- A TD GIC RRSP Account
- A TD Waterhouse self-directed RRSP account
- I am sure a plethora of other things
Notice, what vehicle you can choose ends up being dictated depending on which savings vehicle you try to use (i.e. if you choose a TD Mutual Fund RRSP account, you can buy TD Mutual Funds (and not all of them either)), so the advice here is try to keep as many options open, and set up as flexible an account as possible. In my case I set up a TD Waterhouse Self-Directed RRSP account (but if you bank with BMO you can set up a Nesbitt Burns account, and with other banks you can use their brokerage house, or even some of the on-line brokerage firms).
Self-Directed RRSP accounts are more flexible and more expensive administratively (for the account) (usually), so you need to figure out what makes you comfortable. The other thing with Self-Directed accounts is the SELF-DIRECTED part of it, you are going to make the trades and such in the account. If you don’t feel safe doing this, then maybe you need a full service brokerage house?
As you can see in the past few paragraphs, I haven’t really even touched on the title of this post: which is the better choice ETFs, Mutual Funds, Index Funds, etc., and you know why? It’s nearly the last decision you make you have to set all this stuff up first.
Don’t worry about deciding, worry about getting started on getting the infrastructure in place. You’ll have time to finally decide what you want to buy, but you will need to do a lot of groundwork first.
It took me about 3 weeks to get my Self-Directed RRSP in place and running (so that I could actually make a trade), anybody got it set up and flying sooner?
TD’s investment accounts are RIDICULOUS for fees. Even their e-series index funds have fees that are at least five times the MER of the cheapest Vanguard fund. As you noted, they’ve jacked up their safety deposit box fee. Their accounts are extremely expensive. They are masters of tacking on charges. Canadians get gouged by fees because they’re either too polite or too dumb to change to a credit union and a fee-free institution like ING. All TD does is run ads with two cranky old men, who are probably cranky from a lifetime of getting screwed by TD’s fees. MBNA, the issuer of Canada’s best credit card the SmartCash MasterCard, just got acquired by TD. I am waiting for when they sneakily eliminate the 3% cash back program on gas/groceries. When they do, I’m sure they’ll institute a crappier program and outright lie that it’s better for some reason. I have US money (that’s one decent account; I keep the minimum 3k balance to keep the $0 perks for travel since even at ING, $US cash earns only 0.5% a year) and my backup Visa at TD.
I find it expensive to use the self direct RRSP in TD. I was using it before and am paying $100 per year? Half a year ago, I decided that RRSP is not for me. So I withdraw all my money and lose around $1000 in total. i am happy now because I feel that RRSP cannot steal the $100 from me every year. By the way, I put all the money in TFSA instead. At least they do not steal $100 from me every year.
Interesting, I always find that moving money that is Tax Free into the Taxed side of the world always makes me queezy.