Quote:
Originally Posted by mastertop101
Mastertop,
Not sure if anyone has replied to your post but here goes.
Firstly, you have a timeframe of 5+ years. While this gives the advisor you use an idea that they can help you to invest in products with more risk, you need to determine a more exact timeframe and an approximate amount that you need when you get there.
ex. retire at 60 years old, X amount of years until then, need x amount for large capital purchases (boat, cabin, etc), and x amount per month living expense
Once you have this you can start to create a plan to get there.
The products you mentioned (ETFs) are great but when you buy an passive index fund they create a small problem in that you own a larger amount of your investments that in theory are overpriced. An example is that you buy the TSX60, if TD Bank soars it will be included in the 60 at a higher percentage than it was when it was cheaper. A company such as RIM (make the Blackberry) may have missed earnings and dropped in price, it will not make up a lower percentage of your holdings and may be undervalued and a good buy.
If you have $40k to invest you can buy a few products and my suggestion would be to own some of these passive index funds but also to buy some managed funds as well. You mentioned the banks charge MER fees on the investments. While that is tough to swallow the extra diversification of owning both managed and passive invesments can actually help to lower volitility and potentially help to increase returns in the long run.
Lastly, I would discuss your investments ideas with a full service advisor. Not sure where you are at in Canada but find an Edward Jones, Raymond James, or even an Investors Group advisor that you feel you can work with and have them help you reach your goals. They will help to make sure your PLAN is on track and will rebalance when necessary (every six months to annually).
Hope this helps.