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Garth hates GIC's
August 5, 2019
3:46 pm
Briguy
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Briguy said

I do belong to ITrade but the way I understand it, you can only set up 3 automatic processes:
1) a systematic purchase plan for a mutual fund such as Mawer,
2) a systematic deposit plan into the account,
3) a dividend reinvestment plan (DRIP) for ETF / stocks.

You can't set up a systematic purchase plan for the ETF (stock) itself. I don't think you'd want that because usually you specify your limit price you'll pay to buy the ETF. Usually I'll limit it to the lowest price I've seen in the last month, and set the expiry date for filling my purchase transaction to a couple months ahead.  

Just heard back from Scotia Itrade today that you can set up a systematic purchase plan for IShare ETF's ( at no trading fee ) using the same form you would use to set up a purchase plan for mutual funds. This is because Blackrock has set up special funding for discount brokers like Itrade to do this for them. I wouldn't be interested since you are buying at market price, not limit price that you set,and your preauthorized dollar amounts may not translate into equal number of units, so if you contribute $100.00 a month and the ETF costs $30.00 , then you are only buying 3 ETF shares and $10 will sit in the account.

Getting back to Mawer 104, people are now predicting a possible 10% drop in stock market due to Trump/China trade talks so since Mawer 104 is at $30.70 I'll definitely be open to purchasing if it drops to $27.70. Might be time to cash in GICs at that point.

August 5, 2019
5:36 pm
Doug
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Briguy said

Just heard back from Scotia Itrade today that you can set up a systematic purchase plan for IShare ETF's ( at no trading fee ) using the same form you would use to set up a purchase plan for mutual funds. This is because Blackrock has set up special funding for discount brokers like Itrade to do this for them. I wouldn't be interested since you are buying at market price, not limit price that you set,and your preauthorized dollar amounts may not translate into equal number of units, so if you contribute $100.00 a month and the ETF costs $30.00 , then you are only buying 3 ETF shares and $10 will sit in the account.

Really? Cool, because the iShares Canada website doesn't list Scotia iTRADE as a participating broker in the PACC program. I wonder if one could similarly by BMO, Horizons, and other ETFs through issuer PACC programs. 😉

Yes, your orders would be market orders instead of limit orders, but at only $25-100 per contribution period (assuming biweekly or monthly contributions), the difference between a market and limit price is not especially significant (about 1-3 cents). Limit orders definitely make sense for lump sum contributions, but even dividend reinvestment or purchase plans are market orders and I'm sure you participate in at least one issuer-sponsored DRIP or a broker-sponsored DPP. 😉

Where it's challenging is that if you are purchasing multiple ETFs per period, you'd have to purchase $25-100 for each ETF, but that said, if the BMO ETFs are included, one could theoretically buy ZGRO or ZBAL commission free per period (after initial contribution on lump sum purchase).

Getting back to Mawer 104, people are now predicting a possible 10% drop in stock market due to Trump/China trade talks so since Mawer 104 is at $30.70 I'll definitely be open to purchasing if it drops to $27.70. Might be time to cash in GICs at that point.  

Remember that MAW104 is a Balanced Fund. A 10% U.S. or Canadian equity market correction wouldn't translate into a 10% drop in MAW's NAVPU because MAW also holds international and emerging market equities and ~40% fixed income, which is increasing in value to a fairly significant extent. 😉

Thus, you'd probably need a 20% drop in U.S. and Canadian markets to get MAW104 down to $27-$27.70. That said, MAW104 is commission-free as it's a mutual fund, and there's no trailing fees (though as Norman kindly dug up for us from Simplified Prospectus, investment manager may pay a distribution fee to discount brokerages from within its general operating costs, not out of a specific fund's accounts), you might be wise just to dollar cost average and buy a set amount of MAW104 (or any fund) as part of a regular installment schedule.

As far as GICs go, the U.S. 10 year treasury yields are now down to 1.70% and could go to 1.50% before the end of August. Banks often set their mortgage rates in line with the bond markets, so it's quite possible that, indirectly, we'll see GIC rates lowered between 0.30-0.60% within the next 1-2 months as the banks in Canada (and the U.S.) cut their mortgage rates by a comparable amount.

In this way, my earlier predictions on GIC rate cuts by fall appear to bearing fruit and seem to be accelerating. 2.50% on a 5-year GIC could well be the top GIC rate in Canada on or after October 1st, with 2.25% the top HISA rate (2.50% on Motive's Savvy Savings Account), Motus Bank cutting its HISA to 2%, and Meridian Credit Union GIC rates going sub 2%.

Cheers,
Doug

August 5, 2019
6:46 pm
Bill
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Always had my investments with RBC DI, had to hive some off some years ago and open a TD DI account in order to buy Mawer funds, though I also buy a GIC a year in TD DI so they make a bit of money off me. Personally, as my conviction is the West's millennials on down are 99% anti free-market capitalism (most don't even know it, seems to me) I don't believe going forward investing in the stock markets of Europe, USA and Canada will be fruitful, so I've trimmed my holdings considerably. Easier to do also because I've made my money, no need for undue risk any more for me.

August 5, 2019
7:37 pm
Joe
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Briguy said

Getting back to Mawer 104, people are now predicting a possible 10% drop in stock market due to Trump/China trade talks so since Mawer 104 is at $30.70 I'll definitely be open to purchasing if it drops to $27.70. Might be time to cash in GICs at that point.  

I think you should look back to December to see how MAW104 reacts to a market correction....10% drop might equal 3% drop, 17% drop might equal a 5% drop.

August 5, 2019
7:45 pm
Briguy
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Joe said

I think you should look back to December to see how MAW104 reacts to a market correction....10% drop might equal 3% drop, 17% drop might equal a 5% drop.  

Doug said

Remember that MAW104 is a Balanced Fund. A 10% U.S. or Canadian equity market correction wouldn't translate into a 10% drop in MAW's NAVPU because MAW also holds international and emerging market equities and ~40% fixed income, which is increasing in value to a fairly significant extent. 😉

Thus, you'd probably need a 20% drop in U.S. and Canadian markets to get MAW104 down to $27-$27.70. That said, MAW104 is commission-free as it's a mutual fund, and there's no trailing fees (though as Norman kindly dug up for us from Simplified Prospectus, investment manager may pay a distribution fee to discount brokerages from within its general operating costs, not out of a specific fund's accounts), you might be wise just to dollar cost average and buy a set amount of MAW104 (or any fund) as part of a regular installment schedule.

As far as GICs go, the U.S. 10 year treasury yields are now down to 1.70% and could go to 1.50% before the end of August. Banks often set their mortgage rates in line with the bond markets, so it's quite possible that, indirectly, we'll see GIC rates lowered between 0.30-0.60% within the next 1-2 months as the banks in Canada (and the U.S.) cut their mortgage rates by a comparable amount.

In this way, my earlier predictions on GIC rate cuts by fall appear to bearing fruit and seem to be accelerating. 2.50% on a 5-year GIC could well be the top GIC rate in Canada on or after October 1st, with 2.25% the top HISA rate (2.50% on Motive's Savvy Savings Account), Motus Bank cutting its HISA to 2%, and Meridian Credit Union GIC rates going sub 2%.

Cheers,
Doug  

You guys are right, so basically when the stock market drops by 10% and most likely GIC's are dropping at same time, it might be a good time to buy into a balanced fund like MAWER 104 which will have had about 3% or $1.00 drop in price to 29.70.

August 5, 2019
9:31 pm
Doug
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Briguy said

Doug said

Remember that MAW104 is a Balanced Fund. A 10% U.S. or Canadian equity market correction wouldn't translate into a 10% drop in MAW's NAVPU because MAW also holds international and emerging market equities and ~40% fixed income, which is increasing in value to a fairly significant extent. 😉

Thus, you'd probably need a 20% drop in U.S. and Canadian markets to get MAW104 down to $27-$27.70. That said, MAW104 is commission-free as it's a mutual fund, and there's no trailing fees (though as Norman kindly dug up for us from Simplified Prospectus, investment manager may pay a distribution fee to discount brokerages from within its general operating costs, not out of a specific fund's accounts), you might be wise just to dollar cost average and buy a set amount of MAW104 (or any fund) as part of a regular installment schedule.

As far as GICs go, the U.S. 10 year treasury yields are now down to 1.70% and could go to 1.50% before the end of August. Banks often set their mortgage rates in line with the bond markets, so it's quite possible that, indirectly, we'll see GIC rates lowered between 0.30-0.60% within the next 1-2 months as the banks in Canada (and the U.S.) cut their mortgage rates by a comparable amount.

In this way, my earlier predictions on GIC rate cuts by fall appear to bearing fruit and seem to be accelerating. 2.50% on a 5-year GIC could well be the top GIC rate in Canada on or after October 1st, with 2.25% the top HISA rate (2.50% on Motive's Savvy Savings Account), Motus Bank cutting its HISA to 2%, and Meridian Credit Union GIC rates going sub 2%.

Cheers,
Doug  

You guys are right, so basically when the stock market drops by 10% and most likely GIC's are dropping at same time, it might be a good time to buy into a balanced fund like MAWER 104 which will have had about 3% or $1.00 drop in price to 29.70.  

Yeah, though if you're going to stick with Mawer, you could always average in over 6-12 months. No commissions to do so. Buy 10-20% some time in the next month as we approach 10% correction then average in the remaining 80-90% you plan to invest on a monthly basis over the next year. You might be buying some high, but I suspect we'll have some elevated volatility in August and October, as well as tax loss selling in December.

Cheers,
Doug

August 6, 2019
8:26 pm
Joe
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Briguy said

Doug said

Remember that MAW104 is a Balanced Fund. A 10% U.S. or Canadian equity market correction wouldn't translate into a 10% drop in MAW's NAVPU because MAW also holds international and emerging market equities and ~40% fixed income, which is increasing in value to a fairly significant extent. 😉

Thus, you'd probably need a 20% drop in U.S. and Canadian markets to get MAW104 down to $27-$27.70. That said, MAW104 is commission-free as it's a mutual fund, and there's no trailing fees (though as Norman kindly dug up for us from Simplified Prospectus, investment manager may pay a distribution fee to discount brokerages from within its general operating costs, not out of a specific fund's accounts), you might be wise just to dollar cost average and buy a set amount of MAW104 (or any fund) as part of a regular installment schedule.

As far as GICs go, the U.S. 10 year treasury yields are now down to 1.70% and could go to 1.50% before the end of August. Banks often set their mortgage rates in line with the bond markets, so it's quite possible that, indirectly, we'll see GIC rates lowered between 0.30-0.60% within the next 1-2 months as the banks in Canada (and the U.S.) cut their mortgage rates by a comparable amount.

In this way, my earlier predictions on GIC rate cuts by fall appear to bearing fruit and seem to be accelerating. 2.50% on a 5-year GIC could well be the top GIC rate in Canada on or after October 1st, with 2.25% the top HISA rate (2.50% on Motive's Savvy Savings Account), Motus Bank cutting its HISA to 2%, and Meridian Credit Union GIC rates going sub 2%.

Cheers,
Doug  

You guys are right, so basically when the stock market drops by 10% and most likely GIC's are dropping at same time, it might be a good time to buy into a balanced fund like MAWER 104 which will have had about 3% or $1.00 drop in price to 29.70.  

IMO MAW104 or any balanced fund is not a vehicle for market timing. These funds are to be held longterm. Just buy when you can spare the cash.

August 7, 2019
9:53 am
Bill
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Exactly, Joe. And be very wary of investing advice found on a site dedicated to saving.

August 7, 2019
10:06 am
AltaRed
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Agreed. I buy my annual allotment of MAW104 in my TFSA every Jan 2nd.

August 7, 2019
2:04 pm
Briguy
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Bill said
Exactly, Joe. And be very wary of investing advice found on a site dedicated to saving.  

I wasn't giving advice, just sharing my opinions. I find your remark hurtful Bill, and I won't be sharing my opinions here in the future.

August 7, 2019
2:22 pm
Bill
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Briguy, I've no idea why you would think my comment was about you, read it again and you will see it's a general statement. And, as you point out, you weren't offering advice so again I've no idea why you would think a comment about investing advice was directed at you. But it's certainly your call if you want to withhold all future opinions.

August 7, 2019
2:30 pm
Briguy
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Bill said
Briguy, I've no idea why you would think my comment was about you, read it again and you will see it's a general statement. And, as you point out, you weren't offering advice so again I've no idea why you would think a comment about investing advice was directed at you. But it's certainly your call if you want to withhold all future opinions.  

I was the one who started the discussion about Mawer 104, so that's why I thought it was about me. And thanks for your permission allowing me to withhold all future opinions. It would have been nice if you had just said it wasn't directed at me and left it at that.

August 7, 2019
4:04 pm
Bill
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Briguy, you're right, it would have been nice. And it would have been nice (and less hurtful to me) if you had stopped before your sarcasm, i.e. your "thanks" re. me giving you permission to not offer opinions. In any event, I'm done with this line of conversation.

August 7, 2019
4:10 pm
Briguy
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Bill said
Briguy, you're right, it would have been nice. And it would have been nice (and less hurtful to me) if you had stopped before your sarcasm, i.e. your "thanks" re. me giving you permission to not offer opinions. In any event, I'm done with this line of conversation.  

Let's not end it on an angry note. I love your previous postings about how you have a multitude of accounts at different FIs and keep the majority of your money in a few of them, and move it around to get the best rates. That way one day your heirs won't have to worry about trying to retrieve your money one day from all over the country. I think it's a great strategy.

August 7, 2019
4:38 pm
Doug
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@Briguy, if this is helpful, I didn't think @Bill's comment when he said, "And be very wary of investing advice found on a site dedicated to saving," was directed at you or any one person in particular. I didn't find it particularly helpful, either, though, as this thread is entirely about investing strategy, sharing tips, and, yes, even advice. We all impart our opinions and offer advice on all manner of topics, from high interest savings account features or promos, GIC laddering strategies, and even equity investing. I think it would've been most helpful for @Bill to have said, "Exactly, Joe," and left it at that. Nonetheless, I don't think he was directing that comment at any one in particular. sf-cool

Besides, @Bill reserves most of his jabs for millennials, right @Bill? 😉

Sounds like you guys worked it out, though, which is awesome. sf-cool

Cheers,
Doug

August 7, 2019
4:49 pm
Briguy
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Doug said
@Briguy, if this is helpful, I didn't think @Bill's comment when he said, "And be very wary of investing advice found on a site dedicated to saving," was directed at you or any one person in particular. I didn't find it particularly helpful, either, though, as this thread is entirely about investing strategy, sharing tips, and, yes, even advice. We all impart our opinions and offer advice on all manner of topics, from high interest savings account features or promos, GIC laddering strategies, and even equity investing. I think it would've been most helpful for @Bill to have said, "Exactly, Joe," and left it at that. Nonetheless, I don't think he was directing that comment at any one in particular. sf-cool

Besides, @Bill reserves most of his jabs for millennials, right @Bill? 😉

Sounds like you guys worked it out, though, which is awesome. sf-cool

Cheers,
Doug  

Thanks @Doug for your cheerful summary, I definitely value your postings. Looks like your predictions of interest rates going down to zero are going to come true, talks with China aren't going well, yield curve is getting more and more inverted, and US has already dropped its rates once.

I'm not sure if we worked it out, Bill hasn't replied back 🙂

August 7, 2019
4:50 pm
Bill
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Thank you, and of course, Briguy, done, zero animosity. And I hope you reconsider re future comments, everybody has something to contribute to the idea-pool. The more (to use a currently popular word) diversity of ideas, the better, as far as I can tell.

August 7, 2019
4:52 pm
Briguy
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Bill said
Thank you, and of course, Briguy, done, zero animosity. And I hope you reconsider re future comments, everybody has something to contribute to the idea-pool. The more (to use a currently popular word) diversity of ideas, the better, as far as I can tell.  

^^ Thanks, Bill, just a misunderstanding. I'm definitely tired, my blind French bulldog got me up at 4am because she doesn't really know when day and night is.

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