Finances

Investing In Mutual Funds: A List Of Pros And Cons

Investing in mutual funds: a list of pros and cons

In Nailing the Basics of Mutual Funds, we went through mutual fund basics, like: what they are, the different types, and…

...what to keep in mind when certain mutual funds are being recommended to you by your friendly neighbourhood financial advisor or investment professional.

In this post, we’ll weigh the pros and cons of owning mutual funds.

Sure mutual funds provide a number of advantages...but they also come with some disadvantages that should NOT be overlooked.

So let’s get started.

5 advantages of owning mutual funds

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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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Best Credit Cards in Canada 2017

The best credit cards in Canada

Can there really be one single BEST credit card?

Most people would say "no".

I agree, there is no one size fits all ... but, there is a one size fits MOST.

I've been honing my credit card comparison system that tracks and ranks credit cards by 50+ features for nearly 7 years now. I'm not just comparing points or rewards either. I'm figuring out the true value of each different reward point or mile and combining that with all the other features, insurance, and perks that each card offers so cards can be compared apples to apples. The result is one simple score out of 5.

All the research has been done and all the numbers have been crunched and updated. Finally, there can be one true champion that is best for most Canadians in 2017.

Of course, the decision of whether the winner meets your needs is all yours ... but you won't find a better starting point than this. (Not sure what to pick? Take this short quiz and find out.) Keep reading » about Best Credit Cards in Canada 2017

7 Steps To Get Ahead With Your First Paycheque

Tips on managing your first paychequeYou did it!

You officially finished school and you landed your first job.

Along with that, the long–anticipated First Paycheque just hit your bank account.

Although this makes me sound like I’m 80 years old, I remember my first paycheque well…

I got paid monthly, so when it showed up in my account, I felt like a very, very rich lady.

Just kidding. I felt like a new grad on a budget, which was the appropriate reaction.

So yes, I was getting paid for my work, instead of getting graded on it. I now needed to make this very limited amount of money cover ALL of my monthly needs. (And stretch it to include a few wants.)

Luckily, I had read a personal finance book or two in my time (#nerdalert) so I wasn’t flying blind – and you don’t have to either.

Here are 7 steps you need to take to make the most of your first paycheque. And still have a little bit of fun along the way.

1. Figure Out How Much You Make After Taxes

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The War On Debt: Save, Pay Down Debt, Or Both?

The war on debt: save, pay down debt, or do both?I read a quote recently that was attributed to Warren Buffett, which went something like, “Do not save what is left after spending, but spend what is left after saving.”

I suspect Warren wasn’t in debt when he said that.

The fact that we had no retirement fund was a niggling worry that we simply pushed away because other things were more immediate—until I watched my parents move into a special care home a year ago…

They had a decent pension. And a lump sum from the sale of their house. But without the provincial financial subsidy that helps pay for their 24-hour care, they would certainly outlive their money.

Since my husband and I have spent a good portion of our working lives as entrepreneurs, we have not paid into any pensions. Our house will be ours by the time we retire...

But if we don’t act now, it’s the only money we’ll have.

And given the uncertain condition of the provincial coffers, I am skeptical that any such government senior care subsidy will exist 30 years from now.

My Three Needs

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The War On Debt: Spending Blindly With Plastic

The war on debt: spending blindly with plasticWhen I was newly married in the nineties, we used a cash envelope system to control our weekly spending. We’d guess how much we needed for groceries, gas, entertainment, personal items, etc.

Each time we spent money, we replaced it with a receipt. And when the money was gone…

We had no more to spend until next pay.

Being a visual person, I liked this method. But as debit technology grew, my husband gravitated to it quickly. Because he thought cash was too easy to fritter away.

Little did we know how easy it is to fritter money away by debit, too.

Invisible Money

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