Get it out! Tell us what you think SHOULD happen (or not) in the world of money, finance, investing, etc.!
The old timers had financial advisers through banks or wealth management companies. They sat down with you and gave you some 6% return rate graph until you reach 65. One and done. Maybe every once in a while they contact you to re balance a little if you have a large asset. For most they hardly bother. You either have to track them down to tell them exactly what you want and still you likely ended up being told that you need to contribute more money. There is very little intelligence built in the process, especially considering you have been paying 1-2% of the entire portfolio.
The old way makes no sense because
- For millennials, how many times career changes you may have to make before 65? Let alone how many jobs.
Jobs with a pension plan or even company matching RRSP/401K are harder and harder to find.
Interest rate has been low for decades = Bonds, GIC and saving options are mostly lower than inflation
There are also opportunities of course.
- Rise of robot advisers and other AI/ML technologies
Trading platforms are getting cheaper and easier to use for this tech generation
Level 2 data is more comprehensive and affordable
With all the info now on our finger tips, is there a better way to tackle the challenges?
Almost Old Timer
I don't think you should just talk about "old timers".
Some of "them" were active traders before you were born and for "some of you" the financial advisers are the best you can do.
You are right that things have changed though, so I think we should talk about the "old times" rather than the "old timers".
I also think you should use fewer acronyms, or explain them first time you use them.
I think I know what AI/ML means but in the context of current individual investing... I think it's a wild goose.
Also because once it becomes the "battle of algorithms" (I think it already started) those with winning algorithms have no reason to share them so only mediocre ones will be available to the public.
Basically, a good tide (like now) will rise all ships (even mediocre ones) making people think they are winning so they invest more, just so the pros can slowly skim off their money.
Almost Old Timer
I also think you should allow more selections in your poll; one should never have all eggs in one basket.
Also there are Investment Savings Accounts available with most brokers.
You can park cash in any accounts (usually RRSP or TFSA eligible) by buying them just like you would purchase a mutual fund. They typically pay higher interest rate than money market funds.
The cash parked are also counted towards the cash balance available besides as part of the asset in total.
e.g. RBF2010 with RBC Direct Investing
DYN1300 with Scotia iTrade
currently paying 0.95% interest
Saving interest rates are starting to move up.
Christmas time is time to shop around. You will find that in Canada there are some better TFSA saving rates than others.
For example Alterna Bank just increased their TFSA to 2.05%.
So if now you are with a bank offering 1.5%, it may be worth-well to move some.
If you are planning to move your TFSA funds from one financial institution to another, you might want to consider withdrawing funds from your current TFSA in December and depositing them in a new financial institution in January once 2018 has arrived. because:
1. Any withdrawal that you make will open up contribution room for the following year without any tax implications.
2. Make a withdrawal as late in December as possible in order to minimize the number of days the funds are outside of a TFSA.