bank service charges and a smaller portfolio

[selkirk]

hope everyone is enjoying their summer. recently during family gatherings and summer barbeques came across two different problems.

1. friends of mine, had a line of credit at a bank (one of the big 5 in cdn.). anyways with their house almost paid off, in about 5 years they wanted to get a larger line of credit just in case they find a camp.

so they would have the money in place. anyways their current line of credit is at prime, the bank increased their line of credit.

however they told them later there was a $440 service charge for the larger amount.

Result: after one phone call they cut it to $240, however told them to get it to zero. they are good customers at the bank.

anyways the bank manager phoned and apologized and reduced the fee to zero.. many Canadians are charged these service fees and do nothing about it; one reason cdn. banks make large profits on their retail banking divisions.

always question service Charges.



2. A young couple both teachers have 10,000 to invest.

the husband is a gambler however the wife does not want little to no risk (that is often the case).
their account is at CIBC so here is what I suggest for the money.


CIBC Monthly income fund
low mer 1.42% min $500, pays a monthly div .06 which will be revinested in more units. basically holds financials banks, ect.
1yr. 17.78 3 yr. 14.64%
those are good numbers markets been on a run, would expect close to 10% on average.

Scotia Dividend fund (sold through scotia bank) great dividend fund, similar to the one above low mer. great long term track record.

other CIBC funds CIBC Capital appreciation. big cap great record.

CIBC emerging companies small caps, great record but this year underperform group. this has a little more risk so would only put 500-2K in the fund.

so starting August 1, will track this small portfolio.

3,000 CIBC dividend fund
3,000 CIBC capital appreciation fund
3,000 CIBC emeging markets fund
1,000 cash.....to put in another fund later.

the reason for all CIBC funds is that is where the money currently resides.....most times people do not like move money to another bank or fund family....another reason cdn. banks have very profitable retail banking divisions....

should make more than the .25% /year they are making in the money now.

thanks
selkirk

 

[chucker]

Selkirk, i enjoy reading your post's and was hoping for a little advice on my rrsp's that i own.
I have $11,000 in Scotia Partners Balanced Income & Growth Portfolio.
And $6,000 in Scotia Selected Balanced Income & Growth Fund.

Have had them both about 2 years and are up about 8% in that time. I would like to stay with Scotiabank, so would you leave them there or do you have any suggestions on what i should do with them. I am going to follow your advice so any help would be greatly appreciated. I consider myself a mid to high risk investor.

Thanks Chucker.

 

[selkirk]

Chucker have had a look at the two funds you own. Also since this is your RRSP you should be carefull and always think things through.

anyways your funds are probably avg. and will always be.

Scotia select is a collection of BNS mutual funds.

Scotia Partners is a collection of mutual funds from other companies.

so both are a collection of funds. do not care for the mer (management expense ratio) 1.93% for scotia select.

and 2.20% for partners.

These funds returns scotia select 6m -.11 1yr. 3.03 3 yr 7.28

partners 6m -.64 1yr 4.17 3yr 7.33

perphaps you could put some in the Scotia cdn. index 1%mer 1yr. 18.42% 3yr 19.49% 5yr. 9.39%.

this would be usefull since you could compare you funds with what you make or lose on the index.


note: you can buy XIU on toronto it charges only .18MER so that is the best way to track toronto.

you may also want to look at Scotia Dividend fund 1yr. 11.07% 3yr. 16.67%
well run fund that owns financials, note: financials have struggled for most of the year, long term great investment. but good chance may not do much this year, banks are strugglling.



for a flyer scotia Latin America has done great 1yr 37.39%, 3yr 34.7 5yr 14.72.

mer is high at 2.71%, you could by an etf on the region much lower expense.

however still has done well. would only put a little in, this fund.....because it can be very VOLATILE!!!

last 3 months lost over 8%. you may want to have something like this outside the RRSP.


later you may want to open a discount brokerage. BNS offers one, this way you could open a self directed RRSP.

you could buy bonds, and etfs like the XIU, and also hold your own BNS funds and you can easily buy some from other mutual funds.

suggest Mawer, Saxon, good no load fund families.

you can also open a non rrsp account just to see how it works. $5000 and up to avoid fees.

in self directed usually waive fees after 25000. but you can ask them.


for now if you want to wait on a discount brokerage would put some in the index, div fund, mentioned.

note: may also want a short term GIC. the markets are looking weak, so these may be also short term.

main risk in index fund is exposure 25%+ to the oil/gas sector which can be volatile.

thanks
selkirk

 

[chucker]

thanks for the advice.

chucker