Tag: commissions

Categories
Investing

Questrade Mutual Fund Fee Rebate And Free Transfer Offer

Questrade discount brokerage has just come out with a great way for retail mutual  fund owners to save on high management fees by offering to rebate up to 1% of those  fees.

What’s the deal with the Questrade mutual fund rebate?

Questrade will rebate up to 1% of the management fee for any mutual funds  held at Questrade.  This amount has to exceed $29.95 per month for the  investor to get any rebate.  This means that you need to have more than $36,000 in mutual funds before the rebate kicks in.

How is this possible?

When an investor buys a mutual fund from an advisor then the advisor is paid  a “trailer” each year which is based on the amount of the investment.   Typical trailers for equity mutual funds are 1%.  Bond and money market funds  will be lower.  The amount Questrade will rebate will be equal to the trailer  paid on the funds you owned.

The problem is for a do-it-yourself investor who wants to buy retail mutual  funds is that they can only buy them through an advisor or a discount  brokerage and they are charged for the trailer even if they don’t have an  advisor.  With this new program the investor will be able to save most of the trailer amount.

How much will it cost to transfer my mutual funds to Questrade?

If you transfer before March 2, 2009 from a different financial institution and transfer at least $25,000 then it will be  free of charge.

How much are mutual fund trading fees?

Questrade charges $9.95 per mutual fund trade.

I don’t have $36,000 – is it still worthwhile?

Depends on the situation – if you are close enough to $36k (ie $30k or more)  and will be buying more mutual funds then it might be worth doing even though  you won’t get the rebate for a while.  At the very least it won’t cost you  anything.

Another situation might be if you have some back-end funds that you don’t want to pay commissions on.  If you are planning to just buy low cost ETFs then you might consider moving the mutual funds to the same institution.

Where do I sign up?

Click on the banner below or on any of the links you see in the article.

I demand more information!

Check out my Questrade discount brokerage review and my Questrade referral promotion articles for more information.

Is it really cheaper to pay $10 per trade rather than get my advisor to do it for me?

Let’s look at an example – say you have $100k in mutual funds with an average mer of 2.5% and the only service you get from your “advisor” is he completes 12 trades per year for you “free of charge”.

With the advisor you will pay a total of $2,500 per year for the fund management, the advisor’s services and the 12 trades.

With Questrade you will get a rebate of $1,000 (approx) and you will pay $120 for the trading fees for a grand total of $1620 for the fund management and the 12 trades.

$2,500 (current fees) – $1620 (Questrade fees) = a savings of $880 per year.

Personally, I’d rather invest in passive index funds and ETFs which are way cheaper (also available at Questrade) but for anyone who wants to own retail mutual funds – this is a great deal.

Categories
Real Estate

11 Things To Think About When Buying A House

Buying a house is a very difficult decision – there are large sums of money involved, the transaction costs and hassle of moving mean that you can’t just buy another house if you don’t like the one you end up with, and you don’t have enough information to make a completely informed decision. The best you can do is try to educate yourself in all aspects of the house hunt, keep a clear head and buy a house that fits your situation.

Here are some things for house buyers to be aware of when looking for a new home.

1) Location

  • How far is it from where you work? Can you handle the time/money involved in the commute?
  • If you have young kids or are planning to have them – how far from the grandparents from the house? They tend to be the best babysitters.

2) Budget

It’s nice to say “buy within your budget” but that might not realistic. Do a quick budget estimate, look at some houses that you might be interested in and then revise the budget or revise the houses. If you really can’t afford a house then don’t buy one. There is nothing wrong with renting.

3) Know your market

It’s critical that you know the market you are looking in. The asking prices for houses are often not indicative of their true value and the only way to be able to estimate a house value is to look at as many houses as possible. Take notes and find out what they sold for.

4) Don’t trust your real estate agent

I would suggest that most house buyers use an agent but keep in mind that although they may be very competent, their commission structure ensure a huge conflict of interest. Please read this post on why you shouldn’t trust your real estate agent.

5) Don’t end up house poor

Sometimes house buyers “fall in love” with a house or neighborhood or even just the idea of owning a house and they place too high a priority on it. This can lead to regret when the novelty wears off and you don’t have any money to do the things you like to do. Try living for six months on a “pretend” mortgage payment and see how it goes.

6) Take your time

Until recently, many buyers were afraid of missing out on future price gains or being “priced out of the market”. If you are renting and saving as much as you can, then you will be fine. Here are some tips for renters to be able to keep up (or down as the case may be) with their house owning friends.  Note – this one isn’t as relevant as it was last year!

7) Make a decision

Previously, I said to look at lots of houses to learn the market. At that point you should be able to purchase a house fairly quickly. If you are looking for the perfect house or trying to time the market then you will never buy a house. I know people who did ten year house searches which is a big waste of time. The reality is that you will be happy with a good percentage of all the houses you look at, so as long as you can eliminate the worst choices then you will be thrilled with your new home.

8) Don’t worry about the down payment

Yes, I know – it sounds pretty shocking in the sub-prime era to suggest that a down payment of less than 20% is acceptable, but in my opinion, the ability to make the mortgage payments is the main factor for affordability. In other words, it’s the size of the mortgage that matters. Of course you can get better rates with a larger down payment so it’s better if you have one, but don’t sweat it if you have a small or zero down payment.

9) Don’t blow your budget on renovations and furniture

Most people end up buying a house that has mortgage payments large enough that the buyers have to “make the payments fit” into their budget. While this is not the best way to buy a house, some of these buyers then make things worse by spending more money on renovations and house decorations. Unless you buy a total wreck of a house, you do not need to spend big bucks on renovations. You can live with the non-granite kitchen counter and the couch set that doesn’t fit the room perfectly. I don’t care if the house has full-on 70’s decor – you can live with it for a year or more until you can fit the extra expense in your budget.

10) Be careful of flip properties

There are people and contractors who will buy a house, fix it up very quickly and turn around and sell it for profit. The problem with these houses is that they tend to look very good on the surface ie nice paint, trim, granite counters etc, but on the inside they are pretty ugly and might have substandard electrical, insulation etc.

If you are interested in one of these houses then make sure they have closed permits and check with the inspector to see if their inspection notes. Better yet, just don’t buy one.

11) Don’t buy the perfect house

If the house is livable and you have a good life, then you will be happy with whatever house you end up buying. If you spend more money on a “better” house, then you will quickly get used to it and will be no happier than if you had bought an “average” house.

My opinion is that it’s just a house. The people inside are what make it special.

Summary

Learn as much as you can about real estate, your budget and your local house market, but be prepared for the fact that buying a house is all about compromise, incomplete information and a lot of doubts! If you keep at it however, the odds are very good that you will end up with a home that suits your needs.

Other posts

10 mistakes I made as a first time home buyer.

Categories
Investing

Questrade Referral Promotion

Questrade discount brokerage in Canada has a new referral program where you get $50 worth of trades if you are referred by another customer. The basic program has been around for a while but they have improved the referral process.

Lowest Stock Trading Commissions!

Feel free to use this link when you fill out the application. For other bloggers feel free to sign up for the referral program and of course use “dc988dd9” as the referrer ID.

You can see what I wrote a while ago about Questrade here.

Why I like using Questrade for trading stocks and exchange traded funds

I use Questrade for my non-registered leveraged account as well my rrsp and I’m quite happy with them. My attitude about brokers is that their service is a commodity in that they all do the same thing – they convert your money into shares and vice-versa so the only variable as far as I’m concerned is the cost. As a low cost investor I want the lowest fees and for my situation, Questrade has the lowest fees.

Questrade also deals with mutual funds -they will rebate up to 1% of the management fee back to the investor.  Read more about the Questrade mutual fund rebate.

The minimum to open an account is $1000. The minimum to keep an account active is only $250.

My suggestions on which discount broker to use:

If you are looking to do a lot of rrsp “wash trades” then Questrade and TDW are your best bet. A wash trade is when you sell a US$ security in your rrsp, it gets converted to CDN$ (and you pay a currency conversion on it), and then you buy a US$ security and you pay the currency conversion again. They do not charge for the conversions in this case.

If you are looking for a discount broker that offers a lot of extras like fancy graphs and research then you should stick with the big banks. But consider that for $29/trade (if you don’t have $100k) you are paying a $24 premium per trade for that extra research, bells, whistles etc. Even if you only do 10 trades per year that’s $240 per year. There is a lot of research available for free on the internet and $240 will buy quite a bit of the paid research (or a lot of beer).

If you are looking for more information on mutual funds, index funds and ETFs then sign up for a Morningstar free account.  Morningstar is the industry leader in investment information.

Categories
Investing

Indexing My RRSP

I recently moved my rrsp account from low cost mutual funds to Questrade where I bought some ETFs. I thought I would share the experience with you since I learned a few things during the process.

My plan was to buy four ETFs:

  1. XSB – ishares short term bond (Cdn $)
  2. XRB – iShares real return bond (Cdn $)
  3. VTI – Vanguard US equity (US$)
  4. VEA – Vanguard Europe and Far East (US$ to buy)

I described in a previous post about my first efforts at completing an equity trade. With this solid background I figured I’d be in better shape this time.

If you check out my post on my planned asset allocation you’ll notice that this portfolio is incomplete. That’s because we have several investment accounts so this one doesn’t represent the entire asset allocations. Once I get all the accounts figured out then I’ll post on the final asset allocations.

My goals for this exercise was to try to buy as many shares as possible and minimize the amount of cash in the account and to try to get it over with quickly. I didn’t want to have to spend a lot of time at work trying to get the best price for each security.

I started off with the Canadian purchases. This turned out to be a minor mistake because for some reason I thought that once I purchased the Canadian securities I would phone Questrade and get the Cdn$ converted to US$ and then buy the US$ securities. In actual fact when you buy US$ securities, you put the order in and then the dealer converts to US$ when the trade gets filled. The problem is that since you don’t know the exact currency conversion rate in advance you can’t utilize your last few dollars properly when buying a US$ security since you don’t know the exact maximum number of shares you can buy.

I used only limit orders which are market orders with a limit on them ie if you put in a buy when a stock is trading for around $50.00 with a limit of $50.50 then you will get the market price but only if it is less than or equal to $50.50.

Anyways, on with the trades…

XRB – The ETF had gone from $18.49 to $18.50. I put in a limit order for 700 shares with a limit of $18.55. It was filled immediately for $18.49. Very successful trade!

XSB – This one caused me a some trouble. This one has very slow trading activity so unless your order gets filled right away it might take a while. The last order was $27.97, I put an order for 1050 shares with a limit of $27.98 – first mistake – I should have had a higher limit. Second mistake, I didn’t put in a “all or none” order and 50 shares got filled at $27.98. The price drifted up during the day so my 1000 shares remaining with a limit of $27.98 couldn’t get filled. The problem was that I was already looking at one commission for the 50 shares so if I cancelled the remaining order the I have to pay a second commission. Luckily the trades are cheap at Questrade because by the end of the day the order had expired. The next day the last trade was $28.03, I put in my order of 1000 shares with a limit of $28.05 – filled right away.

VTI – this ETF had the higher share price so I bought it next. Last trade was $146.17 so I put in order for 350 shares with limit of $146.20. The price went up quickly to $146.20 so I had to wait about 15 minutes and it was filled at $146.20.

VEA – my problem with this order was that I didn’t know how much money I had in US$ – I called Questrade to get a recent conversion rate which I used to approximate the amount – I decided to go for 1000 shares. Last trade was $47.29, I put in order for 1000 shares with limit of $47.32 with all-or-none to prevent partial filling. Price went up for a while but it got filled about half an hour later at $47.32.

The next day I checked my cash balance and I ended up with about $900 in cash. This isn’t a big deal since these ETFs will be creating cash via interest and dividends anyways but if I could do it again, I would have left one of the Canadian securities to be the last trade so that I could accurately use up all my cash.

Anyways, it was fun buying these ETFs and I ended up learning quite a bit in the process.

Categories
Investing

Why I Suck At Trading

I’ve come to the realization that I would not make a very good stock trader. The evidence leading to this conclusion became glaringly apparent when I made my first ever stock purchases over the last couple of months. Both trades were Bank of Montreal purchased for my leveraged stock plan.

After doing a bit of research on the mechanics of buying stocks along with practicing on the trading simulator at Questrade, I was able to get comfortable with getting the real time quotes and placing an order with a limit. The limit probably wasn’t necessary since I was buying board lots of a heavily traded company, but better safe than sorry.

The other part of being on the “buy side” was waiting for a dip. I had read in many books and blogs that the best way to accumulate dividend stocks was to “buy on dips”. It seemed pretty obvious that all one had to do was wait until said dip appeared and then let the trading begin! The only problem was an an extreme lack of patience on my part. Once I got it into my head that I was going to be buying some stocks then I kept a close eye on the price in order to identify a dip at which point I would pull the trigger. However due to the feverish excitement I was in, I ended up spending way too much time at work checking the price of the stock. I’m sure my co-workers were suspicious since I was spending a lot more time glued to my computer than I normally do. After a while I decided that dip or no dip it was probably better to pay a couple of bucks too much for the stock rather than lose my job because I was checking real time quotes all day long. The other problem I had was a constant irrational fear that the price would skyrocket and if I didn’t buy right away I would never get it for that price again.

I ended up buying the first 100 shares of BMO at $71 which was after the shares had been hanging around $68 for a while because of the trading scandal. The reason I couldn’t buy when the stock was lower was because I didn’t have the account set up yet and it took a while for that to happen. For the next trade I told myself that I would wait patiently until the stock hit the very bottom (wherever that is). But history repeated itself and I ended up buying 200 shares at $68.60 which felt a lot better than $71 but of course, better deals could have been had with a little patience.

Since my plan is to hold these shares for a long time, the initial purchase price isn’t all that important but the competitive spirit in me demands that I get the best price possible. I didn’t accomplish that goal with my purchases this time but I’m hoping that next time I’ll be able to stay cool long enough to get a good deal. If not, the dividend cheques will help make up for it.