The beginning process of investing?

[chr1s]

Hey guys, just need some insight. I've read a few For Dummies books on Canadian investing and personal finance, but I'm still not sure of how the process works for me to start investing.

I'm 18, and aside from reading the books, my only experience with banks and money has been through my scotiabank chequing account. From what I've gathered, what I would like to do is invest in a few mutual funds through a TFSA. I've done a little bit of homework and am looking at sceptre, trimark, and fidelity, but I don't know how I would purchase their funds.
Do I open my own TFSA through scotiabank or something first? I just don't know the step-by-step process. If it's better to go through a different bank or something, please let me know.

I have about $7k to invest with an expected horizon of 7+ years. Should I invest it all into the tfsa now? I know that the tax free shelters only 5k, but I don't make much money.... would I still be shafted by income taxes if I invest outside of the TFSA?
Thanks... this is all I can think of ATM.

[Chuck Norris]

You'll learn much more as you go and you will have much to learn.

Right now, the TFSA is capped at $5000 with an expectation to increase it another $5000 every years (I'm assuming indexed).

Mutual funds are all the same. Every company pretty much has the same thing so pick a company with the lowest MER's and also has a large product family so that you can switch from fund to fund if you need to without penalty.

You might not be making much income now however starting young with your RSP's has never hurt anyone so you may want to consider that option as well.

You can do this all at your local bank although at some point you may find a need to break away from the typical banks as they are unable to offer some of the sophisticated products (nothing to be concerned about at the moment).

At a lower income, you have no idea what it's like to get shafted by income tax. Wait until you own a few homes or have a business with huge income

There are a lot of tricks and tips that may or may not help you with investing over the next few years. I would suggest learning a lot more IMO but this is coming from someone's who's profession is an investor.

[chr1s]

Thanks for the reply Chuck...
Should I ask for a self-directed tfsa? Once I set it up at say, scotiabank, how do I purchase the mutual fund? Do I tell them which one I want? Or will they have a limited list of funds from other companies that I can choose from? What would be the best for me?

One more question: how does a discount broker fit into this? Are they a way to bypass the bank? Would they have any advantages for me, an extremely newb investor?

[hirevtuner]

honestly if you are considering mutual funds, you should look into ETFs cuz the management fees are lower and it can be opened through a stock acct like scotia

[Chuck Norris]

Originally Posted by chr1s

Thanks for the reply Chuck...
Should I ask for a self-directed tfsa? Once I set it up at say, scotiabank, how do I purchase the mutual fund? Do I tell them which one I want? Or will they have a limited list of funds from other companies that I can choose from? What would be the best for me?

One more question: how does a discount broker fit into this? Are they a way to bypass the bank? Would they have any advantages for me, an extremely newb investor?

You can walk into Scotiabank, ask to see a financial planner, and they can create your TFSA and put whatever mutual fund you want into it.

As mentioned, ETF's are a popular alternative for a number of reasons. The biggest two being the management expense ratios are smaller (you pay less fees) and most money managers do not outperform the market.

You can use a discount broker but you are on the hook for everything. This means you have to do everything yourself. You have to set up the account, fund the account, decide what to buy, and execute the trade yourself.

It's not as hard as it may sound but if you've never done it before it can be a bit scary. I think it's great that you want to save at an early age. If I saved more when I was younger I would be better off (I'm sure you've heard that a million times already).

Go to Scotia, or rather phone your home branch and ask to set up an appointment with a financial planner. You can just hear what they have to say and then sleep on it for a day or so. There is no reason you have to buy or do anything they say right away. A good planner will let you sleep on it.

If you have any questions you should post it here and see if the planner is a retard or actually decent.