Comments on: Getting the Best Rate for my Fixed Income http://www.diyfinances.com/2006/03/27/getting-the-best-rate-for-my-fixed-income/ Take control of your finances. Tue, 06 Jan 2009 22:23:35 +0000 http://wordpress.org/?v=2.5.1 By: Average_Joe http://www.diyfinances.com/2006/03/27/getting-the-best-rate-for-my-fixed-income/#comment-74 Average_Joe Tue, 28 Mar 2006 04:19:13 +0000 http://www.diyfinances.com/2006/03/27/getting-the-best-rate-for-my-fixed-income/#comment-74 Oh. I forgot to mention. Earlier in my investing career, I used to have my RRSP invested in an "Aggressive Growth" managed fund at CIBC. This was basically an all equity managed fund. And it performed very poorly. I would have done better investing only in GICs. That experience turned me off the 'all equity' approach. Oh. I forgot to mention. Earlier in my investing career, I used to have my RRSP invested in an “Aggressive Growth” managed fund at CIBC. This was basically an all equity managed fund. And it performed very poorly. I would have done better investing only in GICs.

That experience turned me off the ‘all equity’ approach.

]]> By: Average_Joe http://www.diyfinances.com/2006/03/27/getting-the-best-rate-for-my-fixed-income/#comment-73 Average_Joe Tue, 28 Mar 2006 04:17:09 +0000 http://www.diyfinances.com/2006/03/27/getting-the-best-rate-for-my-fixed-income/#comment-73 That is a good question. And I wish I had a great answer. I am fairly new to DIY investing having started getting serious about it approximately one year ago (during my last meeting with my financial advisor just before RRSP season). Doing some reading, I had read that pension funds tend to run at a 70/30 or 60/40 equity/fixed income ratio. So I thought "If it is good enough for them, then it is probably a great starting point for me." So for the last year, I have maintained this asset allocation. However, this is my RRSP asset allocation. In fact, I do own more equity outside my RRSP. I have DRiPs as well as TD e-Funds in a taxable account. So my overall equity ratio is higher. One thing I intend to do in the next short while is roll my whole portfolio together (taxable and non-taxable) into a single spreadsheet. Then I can see what my 'true' asset allocation currently is and then I will adjust as needed. And I also hope to own an income producing property in the future. So that will hopefully give me government pension, my pension, my RRSP, rental income from property and dividend income from my DRiPs for retirement. That is a good question. And I wish I had a great answer.

I am fairly new to DIY investing having started getting serious about it approximately one year ago (during my last meeting with my financial advisor just before RRSP season). Doing some reading, I had read that pension funds tend to run at a 70/30 or 60/40 equity/fixed income ratio. So I thought “If it is good enough for them, then it is probably a great starting point for me.” So for the last year, I have maintained this asset allocation.

However, this is my RRSP asset allocation. In fact, I do own more equity outside my RRSP. I have DRiPs as well as TD e-Funds in a taxable account. So my overall equity ratio is higher.

One thing I intend to do in the next short while is roll my whole portfolio together (taxable and non-taxable) into a single spreadsheet. Then I can see what my ‘true’ asset allocation currently is and then I will adjust as needed.

And I also hope to own an income producing property in the future. So that will hopefully give me government pension, my pension, my RRSP, rental income from property and dividend income from my DRiPs for retirement.

]]> By: Canadian Capitalist http://www.diyfinances.com/2006/03/27/getting-the-best-rate-for-my-fixed-income/#comment-72 Canadian Capitalist Tue, 28 Mar 2006 03:18:29 +0000 http://www.diyfinances.com/2006/03/27/getting-the-best-rate-for-my-fixed-income/#comment-72 Quick question about your asset allocation: how did you end up with the 65-35 split? You are very young and you work for the federal government which has a very good pension plan (which can be thought of as a bond component). IMHO, your equity component should be much higher (unless you are investing the bond portion for the short-term). Quick question about your asset allocation: how did you end up with the 65-35 split? You are very young and you work for the federal government which has a very good pension plan (which can be thought of as a bond component). IMHO, your equity component should be much higher (unless you are investing the bond portion for the short-term).

]]> By: Average_Joe http://www.diyfinances.com/2006/03/27/getting-the-best-rate-for-my-fixed-income/#comment-71 Average_Joe Tue, 28 Mar 2006 02:59:23 +0000 http://www.diyfinances.com/2006/03/27/getting-the-best-rate-for-my-fixed-income/#comment-71 I tend to use the word MER quite loosely (especially when talking about mutual funds). Really I mean the cost of investing. Like Warren Buffett said, all these frictional costs like MERs, commissions, stock trading costs, etc... are all eating into OUR returns until there is nothing left for the investor (who takes all the risk). That is why I own DRiPs (and currently don't have a brokerage account). I prefer to send my money directly to the company. That is why I index. So that I can get the diversification with the lowest cost possible. That is why I want to read up on bonds, so I can build my own bond ladders. It might turn out that GICs are the best way to go for me. I don't know yet. And that is why I am a DIYer. To keep as much of my hard earned money working for me instead of funding somebody else's retirement. I tend to use the word MER quite loosely (especially when talking about mutual funds). Really I mean the cost of investing. Like Warren Buffett said, all these frictional costs like MERs, commissions, stock trading costs, etc… are all eating into OUR returns until there is nothing left for the investor (who takes all the risk).

That is why I own DRiPs (and currently don’t have a brokerage account). I prefer to send my money directly to the company.

That is why I index. So that I can get the diversification with the lowest cost possible.

That is why I want to read up on bonds, so I can build my own bond ladders. It might turn out that GICs are the best way to go for me. I don’t know yet.

And that is why I am a DIYer. To keep as much of my hard earned money working for me instead of funding somebody else’s retirement.

]]> By: Investing Intelligently http://www.diyfinances.com/2006/03/27/getting-the-best-rate-for-my-fixed-income/#comment-70 Investing Intelligently Tue, 28 Mar 2006 02:41:40 +0000 http://www.diyfinances.com/2006/03/27/getting-the-best-rate-for-my-fixed-income/#comment-70 My advisor buys individual bonds for his clients with lots of money (lowest cost that way). I'm using TD Canada Trust Bond fund right now. Once I have more money to make it worthwhile I'll probably switch over to iUnits XBB ETF. Or XSB maybe. Don't hate MERs only. I mean if you hate MERs, you should hate commissions, fee-based advising, the whole works too. MER is just one cost structure. For me, my portfolio is small so in many cases buying a mutual fund with an MER is cheaper than getting an ETF with a commission. My advisor buys individual bonds for his clients with lots of money (lowest cost that way). I’m using TD Canada Trust Bond fund right now. Once I have more money to make it worthwhile I’ll probably switch over to iUnits XBB ETF. Or XSB maybe.

Don’t hate MERs only. I mean if you hate MERs, you should hate commissions, fee-based advising, the whole works too. MER is just one cost structure. For me, my portfolio is small so in many cases buying a mutual fund with an MER is cheaper than getting an ETF with a commission.

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