Gail Bebee: Monty, If you intend to keep the mutual funds, consider transferring them. The question is whether the bank will charge fees to transfer the funds. If you are opening new accounts at the discount broker, try to get them to pay for any transfer/account closing costs.
Jon Wilson: Can you explain what ECN fees are all about? When should I expect to be hit with this fee?
Anthony: How do you get around from paying ECN charges? I really don't require this service. The brokers don't advertise this hidden cost.
Gail Bebee: ECN Electronic communication networks charges. No easy answers to this one, other than to shop around. Some discount brokers may offer a break on certain trades.
Eric: What do you advise for a reasonably knowledgeable and active investor who needs to net decent returns during a market downturn? The government won't let us short stocks in our RRSPs or other tax-protected accounts where most of us keep the majority of our investments funds. Cash, GICs and bonds barely have a pulse. Inverse ETFs are too few and most of them are leveraged, volatile and risky. Is there nothing left but dumpster-diving a falling market for the odd stock that manages to buck the downtrend? Thanks.
Gail Bebee: I haven't found a way to overcome the risk-return relationship that exists in the marketplace. If you want to take on some higher risk for a better fixed (or almost fixed) income return, you could look at something like:
- -the Claymore preferred shares ETF (CPD), pay outs around 5% which mostly qualifies for the dividend tax credit (effectively increasing your after tax yield)
- -a real estate ETF, the iShares REIT ETF (XRE) with about a 7% distribution which will consist of a combination of income and return of capital
- -established Canadian companies paying dividends eligible for the dividend tax credit e.g. BCE with a yield of around 5.5% or one of the Canadian banks.
Malaya: I am in the process of transferring my investments from Dominion Securities, and would like to know, how do I keep track of the book value of my stock holdings for income tax purposes.
Gail Bebee: I have transferred stocks between discount brokers and the book value was reflected in the new account. If the book value does not transfer, you could call your new broker and ask to have the book values added to your account. In any event, keep the statements from your old account. These will have the book value for tax purposes.
John: I'm considering buying ETF's. Do you have any suggestion on which company is better: ishares, Claymore, BMO's new funds?
Gail Bebee: Each ETF company tires to map out a distinct space with their ETFs. So, it depends on what you are looking for. I would start by asking what kind of investment I want to buy and then seeing what each company has on offer.
John: I've been using Scotia iTrade (formerly E*Trade Canada) for quite some time and am fairly comfortable doing that. One of the few negatives I encounter is what to do with cash inside my RRSP accounts. The only option viable option I've found is to use money market funds but there are very few of them in which one can park small (< $5,000) amounts and even those few that are available have very low yields. And you incur a fee if you withdraw the funds in less than 3 months. Do you have any alternatives to suggest?
Gail Bebee: You could consider one of the high interest daily savings accounts such as CIBC's Renaissance or Manulife High Interest Savings Accounts which can be bought in your discount brokerage account. The CIBC account has a minimum of $1000, Manulife's is probably the same. Both currently pay 0.75%, not much but better than nothing. Regarding money market funds in discount brokerage accounts - I don't think early redemption fees apply to no load MM funds. RBC Direct confirmed this for their accounts. Check with your discount broker to confirm their policy.
Jimmy: It seems only iTrade allow you to trade for $9.99 flat if your assets with them are $50,000 or higher or you do 30 trades a quarter. All discount brokers give you this rate if you trade 30 or more times a quarter, but the others require you to have $100,000 in assets or 30 trades. Why does iTrade have a lower threshold?
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