Hello, I'm a US citizen and I've been happily investing in mutual funds via my company 401k and Fidelity with expense ratios on the order of 0.05% to 0.3%. But I've just started helping my girlfriend (Canadian citizen) come up with a plan to establish an RRSP, and my jaw dropped when she showed me the mutual funds offered by her bank (Bank of Montreal). Mutual funds with expense ratios averaging 2%! Even the lowest-cost index funds (US Equity, Canadian Equity, Intl Equity) all have an MER > 1%.
Canadian bogleheads, are there better options available for index funds? Outside of a work-sponsored plan, what providers are available for setting up an efficient 3-fund portfolio?
I've visited finiki.org, and while it provides a lot of great advice (took me a while to understand the differences between RRSP and TFSA), it doesn't elaborate on whether Canadians have access to a Vanguard or Fidelity-like organization.
Low-cost mutual fund providers in Canada?
- in_reality
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Re: Low-cost mutual fund providers in Canada?
Schwab One International offers great low cost ETFs. http://international.schwab.com/
Vanguard Canada may too... https://www.vanguardcanada.ca/individual/portal.htm
Vanguard Canada may too... https://www.vanguardcanada.ca/individual/portal.htm
Re: Low-cost mutual fund providers in Canada?
Vanguard has ETFs in Canada, https://www.vanguardcanada.ca/individual/etfs/etfs.htm
Re: Low-cost mutual fund providers in Canada?
TD e-Series funds are the lowest cost index mutual funds with MERs in the range of 0.30% to 0.50%. They can only be bought from a special e-Series mutual fund account or a TD Waterhouse brokerage account.
Vanguard Canada and iShares Canada are two of the ETF providers that offer a bit cheaper options.
The Canadian Couch Potato blog has some model portfolios which will highlight some of the possible funds and ETFs.
http://canadiancouchpotato.com/model-portfolios/
Vanguard Canada and iShares Canada are two of the ETF providers that offer a bit cheaper options.
The Canadian Couch Potato blog has some model portfolios which will highlight some of the possible funds and ETFs.
http://canadiancouchpotato.com/model-portfolios/
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Re: Low-cost mutual fund providers in Canada?
While Canada may have some of the highest cost mutual fund expenses in the world, there are some low cost options available. TD e-series funds have already been mentioned and are a good option for those who do not want the extra complexity of ETFs. Some folks like to be able to invest automatically each month into mutual funds. With TD e-series funds, you can build a diversified portfolio using 4 funds:
1) TD Canadian Bond Index -e DEX Universe Bond index
2) TD US Index -e S&P 500 index fund
3) TD Canadian Index -e S&P TSX Composite Index
4) International Index -e MSCI EAFE index
One of the nice things about Canada's retirement savings system is that you can open your own RRSP if you don't like the one offered by your employer. RRSP in Canada is like Traditional IRA but with exactly the same contribution limit as the employer plan. Another great feature is the fact that Canada tracks unused contribution room from prior years and allow you to make up for missed contributions later.
My friend in Canada had a very high cost RRSP at her employer so she opened her own TD RRSP at TD Waterhouse to invest in TD e-series funds. Her employer match went into the high cost RRSP but all the employee contributions went into her own low cost RRSP. When she changed jobs, she transfered everything out of the high cost RRSP to her RRSP.
TFSA is like Roth IRA on steroids with no earned income requirement. See this link:
http://www.tfsa.gc.ca/
1) TD Canadian Bond Index -e DEX Universe Bond index
2) TD US Index -e S&P 500 index fund
3) TD Canadian Index -e S&P TSX Composite Index
4) International Index -e MSCI EAFE index
One of the nice things about Canada's retirement savings system is that you can open your own RRSP if you don't like the one offered by your employer. RRSP in Canada is like Traditional IRA but with exactly the same contribution limit as the employer plan. Another great feature is the fact that Canada tracks unused contribution room from prior years and allow you to make up for missed contributions later.
My friend in Canada had a very high cost RRSP at her employer so she opened her own TD RRSP at TD Waterhouse to invest in TD e-series funds. Her employer match went into the high cost RRSP but all the employee contributions went into her own low cost RRSP. When she changed jobs, she transfered everything out of the high cost RRSP to her RRSP.
TFSA is like Roth IRA on steroids with no earned income requirement. See this link:
http://www.tfsa.gc.ca/
How the Tax-Free Savings Account Works
-As of January 1, 2013, Canadian residents, age 18 and older, can contribute up to $5,500 annually to a TFSA. This is an increase from the annual contribution limit of $5,000 for 2009 through 2012 and reflects indexation to inflation.
-Investment income earned in a TFSA is tax-free.
-Withdrawals from a TFSA are tax-free.
-Unused TFSA contribution room is carried forward and accumulates in future years.
-Full amount of withdrawals can be put back into the TFSA in future years. Re-contributing in the same year may result in an over-contribution amount which would be subject to a penalty tax.
-Choose from a wide range of investment options such as mutual funds, Guaranteed Investment Certificates (GICs) and bonds.
-Contributions are not tax-deductible.
-Neither income earned within a TFSA nor withdrawals from it affect eligibility for federal income-tested benefits and credits, such as Old Age Security, the
-Guaranteed Income Supplement, and the Canada Child Tax Benefit.
-Funds can be given to a spouse or common-law partner for them to invest in their TFSA.
-TFSA assets can generally be transferred to a spouse or common-law partner upon death.
- Bylo Selhi
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Re: Low-cost mutual fund providers in Canada?
BMO also has their own low-cost ETFs if she wants to remain loyal to "her bank." See http://www.etfs.bmo.com/dimideme wrote:the mutual funds offered by her bank (Bank of Montreal). Mutual funds with expense ratios averaging 2%! Even the lowest-cost index funds (US Equity, Canadian Equity, Intl Equity) all have an MER > 1%.
TD e-Funds are great, especially for those starting out. The advantage of e-Funds is that they have low minimums and no brokerage fees so they're ideal for making small monthly contributions, e.g. by payroll deduction. Then when you've got a few $1,00s in one fund you can sell it and buy a lower-cost ETF. Inside an RRSP or TFSA there are no tax consequences in doing this.The issue for her, if she's a loyal BMO customer, is that she'll have to open the RRSP/TFSA with TD Bank or TD Waterhouse in order to buy e-Funds.