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?