Canadians are idiots when it comes to saving and investing

[cybercoma]

For most people (young people), if they started putting $5,500 into their TFSA each year and invested that in that index fund Bonam mentioned then they likely would end up with around $650-$800,000 at 65.

Between that, having a house paid for (which most people do by 65), CPP and OAS/GIS (kicking in at age 67), this would be far more than many people are going to have when they retire.

Too many Canadians are house rich and liquid asset poor which is a shame.

median income is just over 30k. You're talking about someone putting just under 20% of their gross income away.

[WestCoastRunner]

Oh, that's rich. Go back and read the title of your thread again.

Even the op, never mind the title is sneering at the average Canadian and placing Argus on some pedestal.

The average Canadian should hire a Financial Planner to help with their financial plannning. Not every investment advisor out there is out to swindle the average Canadian investor. Some of them are, believe it or not, are quite honest and do take their oath seriously. Many advisors can be hired outside of a bank so they have access to sell mutual funds from many other companies such as trimark etc. They are not tied into selling a bank's portfolio.

[On Guard for Thee]

Getting a drivers licence is a barrier to driving but people still learn how to drive. And that's a lot harder than learning how to invest.

I don't know about that. I learned to drive even before I was old enough to hold a DL. (i was raised on a farm) And I'm a pretty good driver if I do say so myself. What makes driving easier IMO is that those "signs" don't keep changing.

[Bonam]

median income is just over 30k. You're talking about someone putting just under 20% of their gross income away.

When I was living on 20k I was still putting away like 3-4k. And now I put about 60% of my (after tax) income away (or about 45% gross).

[Bonam]

The average Canadian should hire a Financial Planner to help with their financial plannning. Not every investment advisor out there is out to swindle the average Canadian investor. Some of them are, believe it or not, are quite honest and do take their oath seriously. Many advisors can be hired outside of a bank so they have access to sell mutual funds from many other companies such as trimark etc. They are not tied into selling a bank's portfolio.

One of the points being made in this thread is that you really don't need a financial planner, nor should you really buy mutual funds. No, most aren't there to swindle you. But they do charge you a fee. A money manager that charges say a 1.5% fee out of your 6% yearly returns means that after 30 years, an initial 100k investment will have grown to 375k instead of 575k. That's a huge chunk (almost half) of your potential returns just gone to the money manager, in exchange for a service that you could have done for yourself at the cost of maybe 40-80 hours of work throughout your entire lifetime. It's just not worth it, no matter how well-intentioned the money manager.

[cybercoma]

When I was living on 20k I was still putting away like 3-4k. And now I put about 60% of my (after tax) income away (or about 45% gross).

Good for you. When were you living on 20k? Was it in today's economy?

[Argus]

The average Canadian should hire a Financial Planner to help with their financial plannning.

The average Canadian doesn't NEED a financial planner.

Many advisors can be hired outside of a bank so they have access to sell mutual funds from many other companies such as trimark etc. They are not tied into selling a bank's portfolio.

What difference does that make? Mutual funds outside banks have even higher management fees, and often have early withdrawal penalties, and a big chunk of that money goes to the 'advisor' who 'advises' you to buy those funds. Mutual funds are a ripoff. Anyone who has been paying the least bit of attention to the investment world in Canada over the past five years must surely be aware of that by now.

[Argus]

Oh, that's rich. Go back and read the title of your thread again.

Was I talking about you?

Yes, but there's the rub. It's easy to see what is appreciating, you can't tell what will keep on appreciating. And that's where the risk is. Even the housing market is crazily unpredictable and it's much more tied to fundamentals than most stocks.

You can't see the future, which is the risk. Nevertheless, equities are the only game in town now if you want to build savings for your future.

[bush_cheney2004]

...You can't see the future, which is the risk. Nevertheless, equities are the only game in town now if you want to build savings for your future.

Actually, savings for the future are also built from the direct accumulation of cash and reduced spending.

[WestCoastRunner]

I am not recommending anyone buy MF's, stocks, bonds or any investment instrument. I will leave that up to the individual. My point was that there are MF's with lower management fees than the banks charge and some MF's even have ETF's.

A financial planner makes a lot of sense for many reasons. They do not just sell investments.

- they help an individual set goals and take steps to achieve them, they help parents to save for their kids education, they help plan and save for retirement, they advise on the right diversity of investments, help to determine insurance needs, help to build an estate to leave to your family, and help to reduce taxes.

But hey, if individuals want to solicit advice from an online forum, go for it!

[eyeball]

Good for you. When were you living on 20k? Was it in today's economy?

It could have been in his parent's house, which he may have inherited given how much he's able to save now.

[Bonam]

Good for you. When were you living on 20k? Was it in today's economy?

It was 7 years ago so not particularly dissimilar from today.

[Bonam]

It could have been in his parent's house, which he may have inherited given how much he's able to save now.

I was living in Montreal, by myself, renting a small studio for $650/mo. As for my parents, I sure hope I won't be inheriting anything from them for several more decades!

Edited November 11, 2014 by Bonam

[Bonam]

I am not recommending anyone buy MF's, stocks, bonds or any investment instrument. I will leave that up to the individual. My point was that there are MF's with lower management fees than the banks charge and some MF's even have ETF's.

A financial planner makes a lot of sense for many reasons. They do not just sell investments.

- they help an individual set goals and take steps to achieve them, they help parents to save for their kids education, they help plan and save for retirement, they advise on the right diversity of investments, help to determine insurance needs, help to build an estate to leave to your family, and help to reduce taxes.

But hey, if individuals want to solicit advice from an online forum, go for it!

Online forums are free to solicit advice in. Aside from MLW which isn't necessarily a great resource for this, there are many online forums where people discuss financial matters, and there is great free information out there for people to educate themselves with. You can go a long way by educating yourself rather than relying on professionals when it comes to things like this.

Edited November 11, 2014 by Bonam