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Well Balanced Funds in Canada: What You Required to Know
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great video. thanks for the insight Marc!
He’s preaching! 🗣️🗣️
I recall getting some Balanced mutual funds for my RRSP. Like you, they sold you something in house; of course. Like you, I felt like it was a good investment. I ended up using it for a first time home owner purchase. since then, my brother worked in a bank and the whole salesperson aspect of it made it clear that they have targets and my interests are secondary to their need to sell me something. “Balanced” means ” I don’t know what I am doing”…which apparently is what ‘diversification’ means too?
I also invested in some Working Opportunity Funds which gave an additional tax savings… that fund needed up not being able to pay out, the fund was sold off to another company and I eventually got about half back of what I put in in 2003 or so. WOF was a BC thing but the failure of that would make an interesting story, I think.
another story idea: How did covid effect the stock market between 2020 and now? The spike and the inevitable fall? also the internet and our ability to invest in the stock market so easy, even no fee brokers which make it even easier to invest ( gamble?). if Covid happened in 1990 would the market have done what it did in 2020? I kinda think it would not have.
Third place ?
It was raining
I had to take garbage out
Slipped
Still crawled up the driveway and managed to comment albeit very late
Good video Marc! Can’t lie, a majority of my rrsp is in RBC’s select balanced fund and it has done well these last 25 years as when your young, it was easy and seamless to get started. Yes, it has quite a high mer vs say etfs. As of late (8 years), I have been building a portfolio of individual high quality dividend stocks in the various sectors but still keep my select balanced as a hands off cruise control approach to part of my portfolio. All the best Marc.
Just a correction, a lot of these funds, once you have more than 200K assets, become series F funds and the MER decreases
Why anyone thinks they get more value from a balanced mutual fund with high fees than simply buying VBAL or XBAL with a fraction of the cost, is beyond me. It is difficult enough to save up for your own retirement without saving up for some mutual fund salesperson’s retirement as well
holy crap! Marc! I will need to watch your vid a few more times to follow all the layers you mentioned. Youtube is accommodating that way, pause, listen again, etc. This trailer fee issue. So does that mean when mention of a trailer fee shows up, when in the process of buying an investment say with bmoinvstorline, it is indicative that the investment is a “mutual fund” sort of vehicle? I will spend some time researching the answer while I wait to possibly hear from you, Marc. In the meantime, I will be researching names of Mutual funds. I remember a few decades ago I learned to never buy a mutual fund again once I found how much of the “slice of the pie” management(s) were taking. Thanks for this topic Marc! Verrrrrry Interrrresting🤔😳🥴 ☺🙏🇨🇦
There’s was a time a few decades ago (I guess) when mutual funds and the scumbags who push them…I mean “investment advisors” …were basically the only option we had if we wanted to invest in the markets. After working for about 25 years and Investing with my slippery bazterd…I mean,”investment advisor” for several years. I realized the guy was (as the kids say) gettin paid! And my balanced fund wasn’t paying ME all that much!! Man did I get soaked on those trailing fees when I flushed that clown,but I learned a valuable lesson. Nobody should care about my money more than I do. Now days with robo advisors,ETFs, and at home trading platforms the investment world is a different world. Great episode Marc!👍👍👍
It hurts to see these MERs when you know you could buy a low cost ETF like VFV and pay 0.09%.
Great video Marc, I have done a similar analysis using VEQT as this etf holds 4 other ETFs within, VUN, VCN, VIU and VEE. Based on my analysis every 1000 invested in VEQT costs 2.40 but if you hold its components separately the total cost is 1.45 for the same 1000 dollars and holding components also have a higher yields as well. And the best part is, as you pointed out, we can decide what percentage of each etf we would like to invest within our portfolio. For this reason, I bought its components rather than one ticket etf VEQT.
Further to this, I also switched ZSP for VUN and XEF for VIU to spice things up. This way my money is not all tied up with vanguard but with vanguard, ishares and BMO. This is so much fun and I save some money in fees.
I did the same analysis a few months ago because I’m taking control of all my RRSP invested in mutual funds (with RBC ironically, but not Balanced, a third is 100% equity and two-third is 80 Equity/20 Bonds).
I get the same cost difference as you, and I noticed I was getting more dividends with the components instead of VEQT.
XEQT and ZEQT have both lower MER than VEQT at 0.20%. I’ll probably go with XEQT’s components, there are less titles than in ZEQT so easier to replicate. Still has to do the MER analysis to see if it’s like VEQT.
I’ve been buying ZSP and XEF for a while now. XEF has done very well recently, helping me staying in the green with gold and silver.
@Sea Bass I used to invest with TD mutual funds with an “advisor” and wasn’t happy with the performance at all as most of mutual funds MER was over 200 basis points and not even beating index funds. So I moved from TD over 6 years ago and never looked back. I use ETF for developed and developing markets (XEF, VEE) etc and use S&P 500 or total US market etf plus hand pick about dozen US stocks in my RRSP and mostly stocks for Canadian markets but I do own some XIU.
I honestly don’t understand why anyone would invest in a mutual fund when ETFs are much cheaper and so easy to buy.
Because people are not educated in this field and most are simply not interested. I’m new to investing and want to learn what ETFs to use. Can you suggest sources of where to start?
I work for one of the Big 5 in Canada & as soon as your account hits $50k we automatically convert your portfolio to a premium class & fees are reduced by 3/4 so like a 2% one becomes 0.5% so huge reduction.
Then you’re not at RBC. I’m with them, have over 50k in mutual funds (about to be transferred so I can self manage them without fees) and I’m still paying the 2%. If my MER had been at 0.5%, I might have left one account with them.
What is the premium conversion called?
oh boy 2.13% MER is pretty bad, but I’ve seen my parents hold mutual funds that had an eye popping 3.8% MER.
Great video Marc! Have got experience w RBC mutual funds as well, ditched them years ago for etfs and stocks
Great video, thanks Marc!
I had my first retirement planning with a big bank. What did they recommend? Moving all my funds into balanced.
Seems like your beef is with high cost mutual funds and not balanced funds or asset allocation.
A RoboAdvisor will have much lower fees while being balanced or you can just buy VBAL for MER of 0.24
Very informative video. I was charged a fee of 3.4% every year as MER by a well-known investment firm. After 4.5 years when I wanted to move my investments to a different broker, they charged me additional 3% as penalty because my funds were locked for 7 years. If I had any questions during the investment period, my advisor was not available to answer. Agents that answer the phone calls didn’t have much information. In all I paid several hundred thousand dollars in fees and penalty. My gains were about 3% per year when the market on average was growing by 7-13%. I know that there are some regulations now and agents are not paid front loading commission, but my funds were locked before the law came into effect. I wish I understood this before reaching the retirement age. I am happy that you gave a detailed explanation. I lost so much of money, but I hope others don’t. Million dollar is not so much when you want to live 20-25 years after the retirement.
I like this video Marc! You are very right in that you always need to be be conscious of the math in regards to fees and if you have an advisor, their commissions and any other fees that may be involved.