Q: Hi Team,
I can't help but complement you on how you handled a recent question by Paul. To me it exemplifies your service and value to all retail investors. It's a "poster child" of how client-focused you are.
I just want to say thanks again so much for your great service. I don't think I (and many, many other members judging by their posts) have experienced such great service in any field, let alone in the investment realm. Feel free to publish if you wish.
Here is the question and your answer for your reference:
June 19, 2014 (asked by Paul)
Question: Good Day 5i Team,
I am a new investor who is starting late in the game, I am 49. I will be investing $700/month into my wife's TFSA and $700/month into my own TFSA. I have trading authority on hers. I have reviewed the Model Equity Portfolio and am fine taking risk in order to grow my investments over the next 15 years, not much time I understand but better late than never right?. My questions are:
1. Do I buy 1 stock at a time each month with the $700 ($1400 total between the 2 TFSA's) or should I wait and buy every 2 months so I have a larger dollar amount to make a larger purchase and also reduce my trading fee?
2. Is it better to spread the $700 ($1400 total) every month equally between 10 stocks and just purchase the same 10 monthly?
3. Do I limit myself to only 5 stocks in different sectors with one of the above scenarios?
Or do you suggest something else?
Thank you very much. I know that these questions might seem remedial but I would sure appreciate some guidance.
Paul
5i Research Answer:
We take all questions :)
In this situation, even with low trading fees, we would wait two months and buy a larger amount of one stock. Spreading the amount amongst many stocks would be quite expensive on a fee basis. It takes away from diversification in the short term, but because you will investing on a regular basis your diversification will improve each month (buy a new stock every two months). In addition, volatility will be your friend: if the market declines, even better for your situation.
You may want to start with a market ETF such as XIU in the short term for 'instant' diversification. Then, your portfolio will not be just 1 (2,3,4,5) stocks. Adding stocks after an initial ETF purchase may serve you well. We would go beyond 5 stocks, but there is no need for 20 under this scenario.
If you stay disciplines, 15 years is still a very good time frame. With regular investments and growth you may still do very well.
I can't help but complement you on how you handled a recent question by Paul. To me it exemplifies your service and value to all retail investors. It's a "poster child" of how client-focused you are.
I just want to say thanks again so much for your great service. I don't think I (and many, many other members judging by their posts) have experienced such great service in any field, let alone in the investment realm. Feel free to publish if you wish.
Here is the question and your answer for your reference:
June 19, 2014 (asked by Paul)
Question: Good Day 5i Team,
I am a new investor who is starting late in the game, I am 49. I will be investing $700/month into my wife's TFSA and $700/month into my own TFSA. I have trading authority on hers. I have reviewed the Model Equity Portfolio and am fine taking risk in order to grow my investments over the next 15 years, not much time I understand but better late than never right?. My questions are:
1. Do I buy 1 stock at a time each month with the $700 ($1400 total between the 2 TFSA's) or should I wait and buy every 2 months so I have a larger dollar amount to make a larger purchase and also reduce my trading fee?
2. Is it better to spread the $700 ($1400 total) every month equally between 10 stocks and just purchase the same 10 monthly?
3. Do I limit myself to only 5 stocks in different sectors with one of the above scenarios?
Or do you suggest something else?
Thank you very much. I know that these questions might seem remedial but I would sure appreciate some guidance.
Paul
5i Research Answer:
We take all questions :)
In this situation, even with low trading fees, we would wait two months and buy a larger amount of one stock. Spreading the amount amongst many stocks would be quite expensive on a fee basis. It takes away from diversification in the short term, but because you will investing on a regular basis your diversification will improve each month (buy a new stock every two months). In addition, volatility will be your friend: if the market declines, even better for your situation.
You may want to start with a market ETF such as XIU in the short term for 'instant' diversification. Then, your portfolio will not be just 1 (2,3,4,5) stocks. Adding stocks after an initial ETF purchase may serve you well. We would go beyond 5 stocks, but there is no need for 20 under this scenario.
If you stay disciplines, 15 years is still a very good time frame. With regular investments and growth you may still do very well.
