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How did your bank screw you up ?


cougar

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I have to give you my most recent account of events:

March 17th - the wake of COVID, markets crashing .....I went to my bank and asked them what the situation with my modest portfolio looks like.  They advised as of their last data I was going to lose 8% as of the beginning of the year (in a 2.5 month period).  OK , I thought, still better to leave before it gets much worse.  They sold and my loss was.......12.6%  not the 8% they quoted!

In the meantime my funds were parked in savings accounts generating interest while at the same time I was also paying interest to the same bank on my mortgage.

You want to know what the difference between the interest they pay me and the interest I pay them is?

It is 41 times in their favor!!!  While I pay them $4,192 in annual interest on $125K, they would have paid me  $7.20  for having and using the same amount from me!

Our government is of course fully complicit in this.  They will not allow me to use my money locked in RRSP accounts extinguish mortgage debt but they allow TD to lose 12.6% of same money in 2.5 months.

While the bank also has collateral for their loan, I have no collateral from them for what I gave them and the RRSP accounts are diminishing and depreciating daily.

Crime at its finest!

 

 

 

Edited by cougar
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I am astonished at the number of people across this country who let their banks advise them what to do with their money. Banks have no fiduciary responsibility to you as a customer. They will give you whatever advise profits THEM, not you. When you sell stocks, they earn money, as they do when you buy them. Stocks sitting in your account doing nothing earn them nothing. If you own bank mutual funds you are paying them ridiculously high rates on those funds. Banks will never give you the best rate on a mortgage. The bank is there to make money. It is NOT your friend. You have no friends in the business, banking or investment world.

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11 hours ago, cougar said:

They advised as of their last data I was going to lose 8% as of the beginning of the year (in a 2.5 month period).  OK , I thought, still better to leave before it gets much worse.

Investments go up and down all the time.  I wouldn't even think about cashing out at the beginning of a pandemic, since it's a temporary situation.  Also, if I were thinking about it, I'd ask what the loss would be now, vs later before going ahead.

While there is no fiduciary relationship automatically created between a bank and its customers, courts have found that such a relationship can exist in some circumstances

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courts have held that no fiduciary relationship will exist unless the proposed fiduciary is aware (or ought to have been aware) that its advice was being (and indeed was) relied on by the customer and that there is a relationship of sufficient "confidence" between the parties.v Fiduciary relationships have been found to exist between financial institutions and their customers in several situations, including: where the financial institution gives investment or business advice,

In your case, the bank could be expected to give you accurate information regarding your investments. 

Depending on certain factors, an investment advisor could hold a fiduciary responsibility to their clients.

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According to Canadian courts, there are five interrelated factors that can be used to determine whether a financial advisor has a fiduciary relationship with their client:

1.  The degree of vulnerability of the client as a result of factors like their age or lack of education, language skills, investment knowledge, or experience with stock markets.

2.  The degree of trust that the client places with the advisor and the extent to which the advisor accepts it.

3. Whether the client has historically relied on the advisor’s advice and judgement, and if the advisor claims to have special knowledge or skills on which the client can rely.

4. The extent to which the advisor has discretion or power over the client’s investments or accounts.

5.  Professional rules and codes of conduct that help to establish the advisor’s duties and the standards to which they will be held.

I certainly agree that the interest charged by banks and credit cards, vs the interest paid out is completely out of whack.

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1 minute ago, dialamah said:

Investments go up and down all the time.  I wouldn't even think about cashing out at the beginning of a pandemic, since it's a temporary situation.  Also, if I were thinking about it, I'd ask what the loss would be now, vs later before going ahead.

 

Yep, my mutual funds dropped like a rock off a cliff in March.  They've come back now like the pandemic never happened.

I wish I had invested a ton of cash in them when they hit the bottom back then. 

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4 hours ago, bcsapper said:

 They've come back now like the pandemic never happened.    I wish I had invested a ton of cash in them when they hit the bottom back then. 

And all this is contrary to any logic because the pandemic is still happening and is worse than ever before.

Unemployment is high, tons of money has been spent by governments on just maintaining the status quo with no real production or increase in sales as those products were never produced.

I am asking the bank to reinstate my account for 4.6% (difference between quoted 8% and 12.6% loss) of bogus money.

Mutual funds dropped because people were selling, like me, not buying.

 

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Mistake #1 was to EVER give money to a bank or take investment advice from someone working there.  As Argus stated: banks are in business to take YOUR money, not to give their money to you.  Also, when it comes to deposit accounts, you DO have a collateral guarantee from CDIC.

Now: that being said: you are right on the money Cougar - about the spread of interest rates between deposit and loan or ever worse credit card dept as well as the spread between buy and sell in forex is WAY out of whack - and it is the kind of thing that government SHOULD be legislating, regulating and enforcing to protect consumers.

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5 hours ago, bcsapper said:

Yep, my mutual funds dropped like a rock off a cliff in March.  They've come back now like the pandemic never happened.

I wish I had invested a ton of cash in them when they hit the bottom back then. 

I wish I had bought Tesla, which is a terrible investment by all recognizable methods of assessing value, vastly overpriced, to the extent one investment house JP Morgan, I believe, said that if it lost 90% of its value it would STILL be overpriced. But it's become a cult thing and is up 800% since March.

BTW, why do you own mutual funds? They charge ridiculous prices for what you can get much cheaper with an ETF.

Edited by Argus
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1 hour ago, Argus said:

I wish I had bought Tesla, which is a terrible investment by all recognizable methods of assessing value, vastly overpriced, to the extent one investment house JP Morgan, I believe, said that if it lost 90% of its value it would STILL be overpriced. But it's become a cult thing and is up 800% since March.

BTW, why do you own mutual funds? They charge ridiculous prices for what you can get much cheaper with an ETF.

I was never much of an investor.  Too chicken.  Most of my RRSPs are in GICs and as safe as houses, but not making much.  I have one set of mutual funds on medium risk. 

That said, I don't actually pay anything for them.  I never have, going back to 94, when I first bought them.

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2 hours ago, cougar said:

And all this is contrary to any logic because the pandemic is still happening and is worse than ever before.

Unemployment is high, tons of money has been spent by governments on just maintaining the status quo with no real production or increase in sales as those products were never produced.

I am asking the bank to reinstate my account for 4.6% (difference between quoted 8% and 12.6% loss) of bogus money.

Mutual funds dropped because people were selling, like me, not buying.

 

Yeah, I don't pretend to understand it all.  The same happened in 2008.  It was like a bungee cord.

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35 minutes ago, bcsapper said:

I was never much of an investor.  Too chicken.  Most of my RRSPs are in GICs and as safe as houses, but not making much.  I have one set of mutual funds on medium risk. 

That said, I don't actually pay anything for them.  I never have, going back to 94, when I first bought them.

I don't know of any mutual fund which does not have a yearly MER. You don't get a bill for it. It comes off your investments. If, for example, your investments make 7% you will be told they made 5%, with the other 2% going to the bank. If you lose 5% that year, you will be told you lost 7%. The bank gets its 2% regardless of whether your fund went up or down. If you look at the bank's prospectus for your fund it will tell you what the MER (management expense ratio) is.

Edited by Argus
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1 minute ago, Argus said:

I don't know of any mutual fund which does not have a yearly MER. You don't get a bill for it. It comes off your investments. If, for example, your investments make 7% you will be told they make 5%, with the other 2% going to the bank. If you lose 5% that year, you will be told you lost 7%. The bank gets its 2% regardless of whether your fund went up or down. If you look at the bank's prospectus for your fund it will tell you what the MER (management expense ratio) is.

I will check into that, thanks.

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3 hours ago, bcsapper said:

I was never much of an investor.  Too chicken.  Most of my RRSPs are in GICs and as safe as houses, but not making much.  I have one set of mutual funds on medium risk. 

That said, I don't actually pay anything for them.  I never have, going back to 94, when I first bought them.

Investing in markets is low risk over the longterm, if you invest very broadly over the entire market and diversify properly.  If the markets did not perpetually increase in value over the longterm our entire economic system would collapse, it's based on the concept of ever-expanding growth.

Statistics show that over the longterm, investing in the broad market will gain an average of 6-8% per year.  GICs/bonds will return about half that per year.  You also have to factor in compounding.

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Banks have no legal duty to act in your financial best interests when it comes to investment advice.  They are essentially salesmen offering you products in order to make money just like any other salesman.  They also earn different commissions on different products, so they have a major conflict of interest.  This should be illegal.

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11 hours ago, Moonlight Graham said:

Statistics show that over the longterm, investing in the broad market will gain an average of 6-8% per year.  GICs/bonds will return about half that per year.  You also have to factor in compounding.

And if the bank is taking 2% of that each year that's a third or a quarter of your profits. A lot of Canadian bank mutual funds charge 2% or more. Most ETFs charge well under 1%. And you can be more selective in what you get. Its not all about high risk. If you'd bought BMO's utilities ETF in January you'd be up about 16%, I believe, not counting the 3.5% dividend. It's hard to go far wrong with a bunch of electrical companies.

Edited by Argus
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23 hours ago, cougar said:

And all this is contrary to any logic because the pandemic is still happening and is worse than ever before.

Unemployment is high, tons of money has been spent by governments on just maintaining the status quo with no real production or increase in sales as those products were never produced.

I am asking the bank to reinstate my account for 4.6% (difference between quoted 8% and 12.6% loss) of bogus money.

Mutual funds dropped because people were selling, like me, not buying.

 

Thats is how this whole investing in the market thing  works, when there is a mass sell off, you should be buying at the same time for much reduced prices... , like BCsapper has already explained. why would you get into anything without educating your self on how it works ? 

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  • 2 weeks later...
On 12/20/2020 at 1:04 PM, Army Guy said:

like BCsapper has already explained.

You are both funny.  What you have there is the mainstream explanation of how things work, which is devoid of logic.

If there is no logic, you can only expect the disaster to happen to your funds sooner or later.

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9 minutes ago, cougar said:

You are both funny.  What you have there is the mainstream explanation of how things work, which is devoid of logic.

If there is no logic, you can only expect the disaster to happen to your funds sooner or later.

Under the mattress.  It's the only way you're going to be safe!

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On 12/29/2020 at 7:05 PM, bcsapper said:

Under the mattress.  It's the only way you're going to be safe!

Buying or trading existing equities is NOT in any way "investing" since you aren't putting  a penny into a company - you are simply gambling on a value of something that already exists over which you have no control (and if you did, you might well end up in court on charges of insider trading).   If you only put money into POs, IPOs or freshly issued bonds, you would be an investor.  But, if you really want to be "safe", invest in something you CAN have full control over - yourself.  Small business is not a cakewalk, but if you know what you are doing and invest in something at which you have expertise, contacts and experience, you can do one hell of a lot better than any bank or wild-ass guess of trading equities.  Take equipment, for example: if I put let's say $100k into a machine that does something I know and can either use, hire someone to operate or can rent out, I expect to get my money back in 3 years or so - a lot less if I am going to operate myself.  Most of all, don't quit your day job until you are earning enough on the side investment activity to be self sufficient.   I have a son-in-law with a fantastic government job who is walking out the door at a very young age - since he earns far more money on his side gig.

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The lessons here are:

Stay away from mutual funds. Invest in GIC's.

Start invesing early and consistently. (The Wealthy Barber)

If the bank is so greedy and making obscene profits, buy stock in the banks. Rather than complain about how much profit they make, your response should be, "I gotta get me some of that."

If you don't like the cost of borrowing, don't borrow. Credit cards are for suckers. 

 

Edited by Queenmandy85
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3 hours ago, Queenmandy85 said:

The lessons here are:

Stay away from mutual funds. Invest in GIC's.

Which give you what? A half a percent? I don't think they even pay enough to put you ahead of minimal inflation.

Mutual funds in Canada are a ripoff, with fees that are often 2% or more. ETFs, on the other hand, perform as well and their fees are well below 1%. Some of them are down around 0.5%.

Quote

If the bank is so greedy and making obscene profits, buy stock in the banks. Rather than complain about how much profit they make, your response should be, "I gotta get me some of that."

Scotiabank's dividend is over 5% now. Very nice.

Quote

If you don't like the cost of borrowing, don't borrow. Credit cards are for suckers.

You can't live without a credit card. The trick is to pay off what you borrow before they can charge interest.

Edited by Argus
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