Investing Series – The Mechanics

So now you’re all set with your knowledge of how to invest your money and know what range of options are available to you.  Depending on what you want to do there are some final steps you should take in order to actually get your hard earned money working for you.

If you decide that you want to set up some fairly conservative investments such as GICs or Bonds (good options if you need the money in the short term), then sitting down with an investment specialist at the bank you already go to shouldn’t be a problem.  Definitely DO NOT just walk up to a register and ask about putting a thousand dollars into a mutual fund.  These people will not be able to help you and you will subsequently be passed off to someone that probably shouldn’t be seeing you.  Instead, call ahead and explain that you need some information on investment options within the bank.  Explain that you have a pretty good working knowledge of investment classes and investment vehicles such as RESPs, RRSPs, and TFSAs (which you should now have after reading the investment series).  All major banks and credit unions will carry the full line-up up government bonds and GICs, and will be able to offer any of the above investment plans/accounts at competitive rates (you can shop around, but these are pretty concrete investments).

Don’t Let the Bank Make Your Decision For You

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Things will get a little more interesting if you want to invest for the long term and wish to get exposure to stocks/equities.  There are two main ways for the average person to get into buying stocks.  One way is to go to your bank or credit union and they will hook you up with an investment professional that will be a financial planner.  Financial planners can help you in a variety of ways.  They can help you budget, minimize taxes, advise you on investment plans, and offer many other services.  One thing most financial planners can’t do is trade stocks.  This is what stock brokers do.  Obviously at a big bank the planner will work with a stock broker if they have to, but more than likely they will try to set you up with one of the bank’s mutual funds.  This may or may not work for you (see my thoughts in last week’s article).  If you have a clear idea of what you want to get into when you go in for your appointment, and outline why you think your choice of investment and investment vehicle is best for you, a good financial planner will optimize your choices and help you reach your goals.

Discount Brokerages

The other main option you have when looking to buy stocks is to deal with an online discount broker.  This allows you to buy and sell a huge range of stocks on a variety of stock exchanges with the click of a mouse.  This do-it-yourself method has become a lot more popular over the past few years, and if you want to absolutely minimize fees and take control of your investments this may be a legitimate option.  Many people just don’t want to dive into the massive pool of investment information out there and would rather pay a little more to have an investment professional set them up and “hold their hand” through the investment process.  If you’re looking to get into index funds most banks can do this for you and they are also available online if you truly want to maximize your investment funds.  One of the most popular online index funds amongst financial “gurus” is the E-Series line from TD Bank.  For many university students and young adults out there I would probably recommend this as a great way to begin investing and enter the world of stocks in the least risky way possible (any time something is nicknamed the “couch potato” version it is at least worth considering right?)

Compound Interest – Real Life Magic

Remember to watch for fees and don’t get bullied into buying a mutual fund that will take a lot of money out of your pocket.  The next article will be the most rewarding one in the series.  We will wrap up our introduction to investing by examining why letting your money work for you can be such a powerful strategy.  We’ll examine what your retirement (or one of your other goals) could look like if you begin investing today and let compound interest work its magic.  I think the results my shock you, I know they were a huge surprise to me when I first crunched the numbers.


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12 years ago

I’m a big fan of the TD e-series too and think it’s the best way to start off.

Easy dollar cost averaging and low cost :)

Though they are a b*tch to get and take money out of. But I’m sure you already knew that :)

12 years ago

In Indonesia there are currently around 40 fixed rate government bond issues with coupon ranging from 7 to 13.5% per annum. I would say that this bond is as good as risk-free. However the coupon will be adjusted to at what price you purchase the bond whether at discount or premium. Secondary market is available so that basically you can purchase and sell the bond as you wish.

Would love your thoughts, please comment.x
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