Fabulously Broke’s Retirement + Investing Primer – Pt. 6: Lart parting tips before you go forth, do battle and court Lady Luck

DISCLAIMER: This is totally from my own personal experience and point of view. I am not a professional financial advisor, nor do I claim to be one. I’m just a girl trying to make it through the world and pass on what I’ve learned so far from reading, talking to others, and by trial and error. I’m also purposely keeping it simple.

PART 6: LAST PARTING TIPS BEFORE YOU GO FORTH, DO BATTLE AND COURT LADY LUCK

Other things to think about when you’re picking whatever mutual funds you’ve decided upon.

Be diligent

Look at your stocks once a month, or if you’re paranoid like me, every 2 weeks. But the point is, to look at them. Don’t just invest, and leave them there to rot. If the economy is taking a downturn, look at your stocks and allocate accordingly. Also, don’t leave your stocks in the default mutual fund that your company’s retirement plan may have them in. This is normally the “Money Market Mutual Fund”, which returns a solid, low risk interest rate, but is usually pretty low, like 4% – 6%, which you can get in a regular savings account. Take a bit of risk, it’s worth it.

Be as Neutral as Switzerland

When you’re picking index funds, you may come across: US$, CAN$, C-NE (Currency Neutral). I always pick Currency Neutral. This is because I don’t want the hassle of wondering if the Canadian dollar will pick up, or the US dollar will pick up, and constantly having to juggle between these 2 mutual funds to benefit more. Certainly, if you care, and want to make a bit more money, and are intuitive about the dollars rising in both respective companies, then by all means, go ahead and spend your time juggling it around. Me, I just throw it into currency neutral, which takes into account the risk of currencies rising and falling constantly, and tries to adjust automatically for it by what financial people call ‘hedging’.

Go “E”, “E”, “E”

I’m using TD Bank in Canada as an example ONLY because I bank with them, as I have found that they have the best Basic RSP retirement plan than all the others, but I encourage you to go out and do your OWN research on these banks, and don’t take my word for granted (to be honest, TD Bank in all other aspects are really an awful bank to deal with, in terms of regular account/banking fees, etc, and if I could, I would’ve avoided using TD for my RSP because of the rude customer service I got from their main branches when I opened a bank account YEARS ago before switching to PC Financial after the fiasco. But my purse said: Are you mad!? So my cash won out).

So, TD Bank has a series of mutual funds called the “E-Series”. They also have these other vague names like “Investor Series” and other funds similarly, and confusingly named like that.

Now, the E series just means “Electronic”, or online. Which to me, translates as less overhead. And that means less of a fee. Which means a lower MER. And more profit in my pocket at the end of the day. And you still get the same great service from TD Waterhouse’s Customer Service Reps (which is a completely different division from their TD Banking section – they’re separate and not linked whatsoever).

In contrast, the Investors series, has some other benefits because of real live people touching your investments. I have no clue, I haven’t investigated into how different the Investors series is from the E Series.

Alls I know, y’all (as the once-great Britney Spears would say), is for the same US Index Fund that’s Currency Neutral, the MER for the E Series is a skint 0.55%. Not bad. In contrast, the MER for the Investors Series is a slightly chubbier 0.89%.

What’s the difference between the two? Not much. Just that real live people will be clicking a button to transfer or buy and sell your investments for you. The E series however, makes YOU click your OWN butons to transfer, or buy and sell your investments. How dare they! You should only be so lucky to pay an extra 0.34% for the privilege of someone else doing the clicking for you. 😛 The nerve of ‘youse’, self-sufficient investors…….

Et voila.

Now that you’ve gone through the Fabulously Broke Crash Course in Retirement and Investing, you should know the basics of investing. There is a TON more out there, but just taking the time to absorb this information will be more than enough for any beginniner. When you feel more comfortable, and are more curious, then check out the other more advanced, cooler financial blogs out there that don’t constantly post about pretty frocks and sexy stiletto heels, and learn more about your money. 🙂

All of my previous posts can be found on the right-hand side of this blog 🙂 I also have a FB Retirement Calculation (tres simple calculation, there are more sophisticated ones out there by far), a FB Budget Planning Tool and a FB Daily Expense Tracking Tool – all in Microsoft Excel (.xls) pre-2007 upgrade. I say this because the MS Excel 2007 suite that came out uses a different file extension, that you have to download a special program to bridge the two disapparate formats. (I know, what a pain…)

Lastly

Forward any questions/comments to: brokeinthecity at gmail dot com and I’ll try my best to post them (anonymously of course), and answer them, or at least point you to a better direction/blog for more answers..

Update: The retirement savings poll results are in!!

POLL QUESTION: “What percentage of your take-home pay goes towards retirement? (Include company match %)”

In first place, unfortunately is: 0% Retirement? What retirement? Are you nuts!?. 37% of you don’t save ANYTHING for retirement! If you’re old enough to work, you’re old enough to save or at least entertain the thought of saving. Period.

Happily, the results go up from hereon in!

19% of you save 4-6% of your take-home pay, and 16% save OVER 15% of your take-home pay, and 15% of you save 10%-12% of your take-home pay.

And last but DEFINITELY not least, are what the rest of the minority saves.

1%-3% of my take-home pay 5%
7%-9% of my take-home pay 3%
13%-15% of my take-home pay 2%

Wow is all I can say. These are very encouraging numbers, keep up the great work, and just remember that the path to financial security (not even wealth or being part of the millionaire’s club), is by saving your money and accumulating wealth.

It is easier to earn more money than it is to accumulate wealth.