Choosing Between DIY Index Investing and Canada’s Robo Advisors

DIY index investing versus Canada’s robo advisors

As someone who tries to help people optimize their personal finance decisions, I have been frustrated by the DIY investing hurdle for several years now.

I know that I’m not alone in this frustration, and it appears to be quite a common affliction amongst many in the personal finance blogging community.

See, I know that basic index investing using 2-4 vanilla ETFs is relatively easy (with maaaaaybe 3-10 hours of upfront reading) and super cheap. And I know that I can show others that DIY index investing using 2-4 vanilla ETFs is relatively easy and super cheap…

I even know that most of the time, at the end of my sermon our chat, folks will agree that using ETFs, embracing passive investing, and simply rebalancing their portfolios 1-4 times per year is the way to go.

What I don’t know is how to get people to actually execute DIY index investing!

I’m not sure exactly where I lose people...But somewhere along the road from learning about the statistical excellence and relative ease of building a “couch potato portfolio”—and actually opening up a discount brokerage in order to purchase their first few units of an ETF—way too many of the people I’m trying to help get lost.

They wander off course, start looking at maps of a million other investment paths, half-complete the 1-2 forms that are needed, and eventually, several years later, they realize that they:

  1. Never started investing, or
  2. Are still investing in high-fee mutual funds

Clearly these are very sub-optimal outcomes

Do As I Say – Not As I Do

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The Price You Pay For Mutual Funds

Management Expense Ratio (MER)

If I were to ask you what you’re invested in, many would say they have mutual funds from their banks or investment companies.

If I ask you how much it costs you every year to have these mutual funds, most would say “nothing.”

Step back and think about this.

Are all these companies and their financial advisers working for free to ensure your financial success?

Are all these advisers working for non-profit companies?

Management Expense Ratios

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The War On Debt: On The Hunt For A Job

The war on debt: on the hunt for a jobAfter a few months cleaning up our spending habits, we’ve saved a bit of money per month…

But it’s still clear that if I want to pay off The Colossus in five years or less, I must increase my income.

There are two ways I could achieve this:

  • Write a business plan and aggressively build my freelance business, or…
  • Get a nine-to-fiver that’s worth a mid-range income.

Casual freelancing suited me when my kids were young, but they don’t need me anymore. So…

Do I want to build a business when my career goal is simply to write and sell fiction?

For now, I don’t have that luxury. Not while I have this monkey on my back—a debt that, without drastic intervention, will never be paid off except by life insurance.

Where to start?

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Nailing The Basics of Mutual Funds

Nailing the basics of mutual funds

The RRSP season has come and gone ... did you get a call from your bank representative or financial advisor this year?

I can only imagine what percentage of their annual business is completed during the first few months as people are rushing to make their RRSP contribution before the deadline.

The mutual fund industry has done a brilliant job of advertising and convincing people that Registered Retirement Saving Plans (RRSPs) and mutual funds are one and the same.

But that couldn’t be further from the truth.

Quick Recap

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