Systematic Investment Plan feedback

[dealsngh]

Hi Friends

I started a Systematic Investment Plan of investing about $400 per month into a franklin templeton global growth mutual fund about 2 months back. My risk profile is aggresive as I do not need the money for next 20 - 25 years. I do have some knowledge of the market, watch CNBC daily , read some financial articles , read RFD personal finance section but I would not like to manage my protfolio on a daily or monthly basis (that is why chose to go mutual fund route). I plan to review my inestments on a yearly basis and make adjustments as required (may be next year invest in a balanced fund or may be in bond fund or any other good invetsment)

I have 125K - 150 K saved at this moment in GICs or High interest Savings and plan to buy a house 2 - 3 years down the line with atleast 25% down. The only other investemnt i have in stock market I have now is RESP plan for kids with TD. This was invested in balanced funds earlier and this year I moved to growth.

Will look into diversifying as each year passes at present my thinking is that I have enough cash to be able to take losses but want to maximize returns and at the end of this year I will have only 20% of my money in stock market.

Looking for feedback and suggestionsfrom fellow RFDers on 2 things.

1. Are there any better investments with a risk profile aggresive and time hoirizon 10 - 15 years?
2. Will it make better sense to invest $100 weekly rathen than $400 monthly.Will it give better dollar cost averaging or even monthly is good enough.

[tomincanada]

Hi Friends

I started a Systematic Investment Plan of investing about $400 per month into a franklin templeton global growth mutual fund about 2 months back. My risk profile is aggresive as I do not need the money for next 5 - 10 years. I do not have the time or knowledge to manage my protfolio on a daily or monthly basis (that is why chose to go mutual fund route). I plan to review my inestments on a yearly basis and make adjustments as required.

Looking for feedback and suggestionsfrom fellow RFDers on 2 things.

1. Are there any better investments with a risk profile aggresive and time hoirizon 10 - 15 years?
2. Will it make better sense to invest $100 weekly rathen than $400 monthly.Will it give better dollar cost averaging or even monthly is good enough.

The first thing that comes to my mind is that if you might need the money in 10 years you shouldn't be so aggressive. That is not long term investing. The second thing that comes to mind is I don't think you know enough about investing to be doing this yourself. You should do a little more research... talk to some people who are more experienced - even a bank rep will give you some decent advice sometimes.

Thirdly you should never put all your eggs in one basket. Mutual are almost as risky as stocks - and many of the more agressive ones lost upwards of 65/70 percent of their value last year. Did you know that? If you didn't you just proved my second point. Diversification is very important and anyone who might need the money in 10 years should have some guaranteed investments.

I'd say yes to question #3 but I doubt it makes a huge difference.

[dealsngh]

Thanks for your comments I revised my initial question based on your response to better define my expectations

The first thing that comes to my mind is that if you might need the money in 10 years you shouldn't be so aggressive. That is not long term investing. The second thing that comes to mind is I don't think you know enough about investing to be doing this yourself. You should do a little more research... talk to some people who are more experienced - even a bank rep will give you some decent advice sometimes.

Thirdly you should never put all your eggs in one basket. Mutual are almost as risky as stocks - and many of the more agressive ones lost upwards of 65/70 percent of their value last year. Did you know that? If you didn't you just proved my second point. Diversification is very important and anyone who might need the money in 10 years should have some guaranteed investments.

I'd say yes to question #3 but I doubt it makes a huge difference.

[tomincanada]

Thanks for your comments I revised my initial question based on your response to better define my expectations

Your revised post sheds a lot more light on your situation and as such I will revise my suggestions for you as clearly you are a much more careful investor than I had given you credit for.

It's so hard to predict who is going to do well over the next while and past results usually don't dictate future success. As such my only recommendation for you at this point is to diversify amongst 2 or 3 agressive growth funds that specialize in areas that make sense to you (ie.. Energy). Perhaps look at some index funds as well as I really think there is an opportunity to make a killing from them and their management fees are usually a fair bit less.

As for Question #2 - I still say yes.

[Germack]

I plan to review my inestments on a yearly basis and make adjustments as required (may be next year invest in a balanced fund or may be in bond fund or any other good invetsment)


1. Are there any better investments with a risk profile aggresive and time hoirizon 10 - 15 years?
2. Will it make better sense to invest $100 weekly rathen than $400 monthly.Will it give better dollar cost averaging or even monthly is good enough.

1) Do not try time to time the market
2) Make an investment plan and stick to it
3) Diversify better
4) Reduce costs by switching to ETFs or indexfunds

[ray420]

Hi Friends

I started a Systematic Investment Plan of investing about $400 per month into a franklin templeton global growth mutual fund about 2 months back. My risk profile is aggresive as I do not need the money for next 20 - 25 years. I do have some knowledge of the market, watch CNBC daily , read some financial articles , read RFD personal finance section but I would not like to manage my protfolio on a daily or monthly basis (that is why chose to go mutual fund route). I plan to review my inestments on a yearly basis and make adjustments as required (may be next year invest in a balanced fund or may be in bond fund or any other good invetsment)

I have 125K - 150 K saved at this moment in GICs or High interest Savings and plan to buy a house 2 - 3 years down the line with atleast 25% down. The only other investemnt i have in stock market I have now is RESP plan for kids with TD. This was invested in balanced funds earlier and this year I moved to growth.

Will look into diversifying as each year passes at present my thinking is that I have enough cash to be able to take losses but want to maximize returns and at the end of this year I will have only 20% of my money in stock market.

Looking for feedback and suggestionsfrom fellow RFDers on 2 things.

1. Are there any better investments with a risk profile aggresive and time hoirizon 10 - 15 years?
2. Will it make better sense to invest $100 weekly rathen than $400 monthly.Will it give better dollar cost averaging or even monthly is good enough.


Couple of things
1. with the $100K savings for house down payment, I suggest money market funds they tend to do better than savings accounts, but usually the good ones you need about at least $100K so in your case it might make sense. Check out some premium money market accounts.

2. Although I personally like the fund, but i think you should spread things out a little, like an earlier post said dont put all you eggs in one basket. Check out the TD e-series funds if you want to be passive or even some etf's if you want to be a little more active, their costs are much lower. if it is long term fee's can eat up a good chunk of your profits. Questrade returns your trailer fees which would reduce mutual fund costs somewhat http://financialhighway.com/canadian-discount-brokerage-review-and-comparison/

your questions:
1. I am not sure how aggressive you can be with 10-15 years, I would definitely include some fixed income in your portfolio no matter how long you have or how aggressive you can be. A combination of bonds and equities out perform 100% bond or equities portfolio, this is known as the efficient frontier. http://financialhighway.com/asset-allocation-what-it-is-and-why-its-important/

2. Not necessarily, monthly should be just a fine. you could do weekly but not sure if it will make a huge difference it might just increase your costs depending on your broker.

Good luck!

[dealsngh]

thankyou for your suggestion, I looked at TD , BMO & RBC premium money market fund and the yields they have had for the last year were less than the interest I got on my GIC's. can you recommend any good premium money market accounts that I should look at?

I also have discount brokerage account with BMO which i haven't used till now. As per BMO reps there is no load if I buy front load mutual funds through that account. This seems too good to be true? Anybody know if there is a catch somewhere? or should i start using BMO account for my investements.

For franklin templeton what i was told was that i have 5% deffered sales charge which keeps reducing at 1% per year so investing 100 per week for 400 per month does not change anything in terms of higher charges.

Couple of things
1. with the $100K savings for house down payment, I suggest money market funds they tend to do better than savings accounts, but usually the good ones you need about at least $100K so in your case it might make sense. Check out some premium money market accounts.

2. Although I personally like the fund, but i think you should spread things out a little, like an earlier post said dont put all you eggs in one basket. Check out the TD e-series funds if you want to be passive or even some etf's if you want to be a little more active, their costs are much lower. if it is long term fee's can eat up a good chunk of your profits. Questrade returns your trailer fees which would reduce mutual fund costs somewhat http://financialhighway.com/canadian-discount-brokerage-review-and-comparison/

your questions:
1. I am not sure how aggressive you can be with 10-15 years, I would definitely include some fixed income in your portfolio no matter how long you have or how aggressive you can be. A combination of bonds and equities out perform 100% bond or equities portfolio, this is known as the efficient frontier. http://financialhighway.com/asset-allocation-what-it-is-and-why-its-important/

2. Not necessarily, monthly should be just a fine. you could do weekly but not sure if it will make a huge difference it might just increase your costs depending on your broker.

Good luck!

[ray420]

thankyou for your suggestion, I looked at TD , BMO & RBC premium money market fund and the yields they have had for the last year were less than the interest I got on my GIC's. can you recommend any good premium money market accounts that I should look at?

I also have discount brokerage account with BMO which i haven't used till now. As per BMO reps there is no load if I buy front load mutual funds through that account. This seems too good to be true? Anybody know if there is a catch somewhere? or should i start using BMO account for my investements.

For franklin templeton what i was told was that i have 5% deffered sales charge which keeps reducing at 1% per year so investing 100 per week for 400 per month does not change anything in terms of higher charges.

As for money markets the TD and RBC premium ones are pretty much the best ones I know out there, so if your GIC give you a better rate stick with it.

BMO: well "front load" and "no load" are two different things, but yea with BMO investorline most funds are no load so there is no sales fee for most.
Is this a registered plan? BMO charges a fee for accounts under $15,000.

Dont you hold the franklin templeton with BMO investorline? if you bought it through mutual fund sales rep than yea 5 year deferred sales charge probably apply to it.

If you gonna go with mutual funds, just watch out for the fees, like i said questrade refunds your trailer fees which for growth funds can be about 1% so if it is a long term holding you might want to take a look at that.

CI has several good funds too, Harbour Growth and Harbour Growth & Income fund are couple i like.