RRSP Season is Coming

[deicer]

Here's some interesting info that's posted weekly in the Business section of the Toronto Star.

Makes you ask the question: Do you want to gamble or sleep at night?

Seems that equity funds aren't much better than GIC's afterall.

[J.O.]

If only I'd known you back in 1990, Rich. That's when I bought my first mutual fund.

[Kip Powick]

If only I'd known you back in 1990, Rich. That's when I bought my first mutual fund.

Ain't 20/20 hindsight grand!!!

Yeh, a lot of my friends have stated the same thing but when one goes back in time, one was raising a family, school, university, etc., and "spare" investment $$$ was in scarce supply. I was extremely fortunate with being in the CF so there was an indexed pension and when all the kids bid adieu we did start putting more away cause one sure can't depend on the airline industry for a big pension, especially if one's employment time was short.

A few businesses on the side, and one marriage has contributed as well, and an excellent $$ manager really put us on the right track...no complaints out here

I wish all of you well, especially those that have had to seek employment many times, it cannot be fun but take heart......when you hang up your spurs, you will really begin to enjoy life.

[deicer]

Mutual funds are designed to make fund managers rich, not investors. They take their "management fees" regardless of how the fund performs. It's funny how we like to criticize CEOs for taking huge bonuses even when things aren't going so well, but we don't seem to mind paying a fund manager for poor performance. At least we rarely do anything about it. We'll get a second opinion when told our car needs new brakes, but we rarely ask twice about anything a "professional financial analyst" tells us. We have been suckered by the financial industry into thinking that investing is beyond the intellectual capabilities of the average person by promises of larger than average returns catering to our 'need for greed'. Rarely does the BMW or Mercedes in the parking lot of a financial institution belong to a client.

Here's something interesting for the curious investors here. I just did a quick search of BMO's price history (including stock splits) from 01 Jan 1990. I worked out that if you bought $1000 worth of BMO stock on the first day of every year since 1990, you would currently own roughly 2775 shares (not including any dividend reinvestments!) worth roughly $166500 and paying about $7764 per year in dividend income. Factor in dividend reinvestments and those numbers would be significantly higher. Not bad for a $21000 investment!

How does that compare to your average mutual fund or GIC???

It cannot be denied that there may be the occasional exceptional investor out there who attends to his finances to his best advantage. Congrats if you are in that category.

It is for the "Average Joe" who has been duped into investing in the markets who I posted this for.

It is just to show that there are safe, steady, insured alternatives that will give just as good a return in the long run, all while letting you sleep at night.

Iceman

[Spinnaker]

If you like DRIP's then there is any easy way to subscribe to Share Purchase Plans and not trigger fees. As soon as you have one share you can call the company transfer agent (CIBC Mellon or Computershare) and buy directly from the company you wish monthly or quarterly. This avoids broker fees and allows you to make small monthly purchases for each. BMO and Scotiabank allow this, and will both sell partial shares for your DRIP. It's an easy way to take advantage of cost and unit averaging on solid blue chip stocks that are usually quite expensive. I have mutual funds and I'm happy with my CFP, but after you reach a comfortable egg you need to diversify in to other investment tools if you want to be sitting fat in the golden years.

As Buffet says... 'the best time to sell is never'