Archive for March, 2007

This and That

March 29, 2007

  1. The Star’s Ellen Roseman reviews the Canadian edition of Dan Solin’s book The Smartest Investment Book You’ll Ever Read.
  2. I enjoy money manager Tom Bradley’s blog and wondered why he doesn’t post anymore. Turns out that the feed for the blog has changed. You can subscribe to his blog here.
  3. The Wealthy Boomer is finally becoming a real blog with a RSS feed (sadly, no full feed yet) and comments (you have to register to comment). Jon Chevreau wrote about “a get rich quick” real estate event in Toronto in which The Donald was scheduled to make an appearance.
  4. Jonathan Chevreau reviews John Bogle’s The Little Book of Common Sense Investing.
  5. With a month or so left to file your income taxes, you can still get a $10 discount on QuickTax just by visiting the TaxWiz website.
  6. Still on the subject of taxes, check out this top ten list of tax-filing tips from Ernst & Young.
  7. Jeremey Siegel reports on a chat with the Oracle of Omaha.

Ask the Readers: Will Kits

March 29, 2007


Jamey from Guelph writes that he doesn’t have a will yet and wonders if the widely-available Canadian Will Kit is a good solution. We have already talked to a lawyer and are not taking the will kit route because I don’t want to take any chances with such an important document. What do you think? Have you used a will kit and would you recommend it?

A Reader asks: What do I do Next?

March 27, 2007


Reader Mike has the following question:

In my various reading adventures over the last year, the overwhelming message is to move to ETF/index funds/passive portfolio management using a self-directed account. The counsel seems to end there. What does one do with the newfound purchase freedom? My prime motive in moving is to lower the expenses for holding investments. In my case, my RSP investments are primarily mutual funds.

I could:

  1. Sweep through and sell everything single one of them, incurring lots of DSCs, and buy ETFs.
  2. Wait until I’m clear of the DSC snag before unloading the funds (but then what was the point of transferring my account?)
  3. Switch to a fund within the same family that possibly has a lower MER, explore some of the cheaper fund classes that are out there.

Option 3 seems best, not knowing exactly the total DSC potential without checking each funds DSC rate, but it’s a daunting task given that there are so many possibilities. The point of this was to make it passive investing. I don’t mind following though on finding equivalent, cheaper funds within each fund family if that’s what it takes. I’m curious to know what other’s experiences are and if there is better approach.

If you substitute stocks for mutual funds, your dilemma is similar to the one I face, except that I do not have to pay a fee for selling a stock early. I would suspect that a similar strategy to the one that I adopt with stocks would work for you:

  1. Devise your asset allocation targets based on your age, risk tolerance etc.
  2. Invest new money into index funds so that it brings you closer to your asset allocation target.
  3. Whenever a stock position is sold, invest the proceeds in index funds according to the target established in (1).

I am afraid that you have no alternative other than analyzing each mutual fund that you currently own and deciding whether to sell or hold. Some funds may have posted such a terrible performance that it may make sense to bite the bullet, take the DSC hit and sell. Others may have a satisfactory performance and you may decide to hold them for now as a proxy for one of the asset classes you want to be invested in. Fortunately, taxes are not a consideration because your holdings are within a RRSP. I welcome readers to share their thoughts on Mike’s question.