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How to become a better do-it-yourself investor


Thinking about taking the plunge into direct investing - or want to become better doing it? Gail Bebee joined us to answer your questions.

Gail Bebee is a personal finance and investing writer and is dedicated to helping Canadians better manage their money. She has just published the second edition of No Hype – The Straight Goods on Investing Your Money, her popular book on investing basics for Canadians from the viewpoint of a savvy financial industry outsider. An honours graduate of the Canadian Securities Course, she also teaches courses on investment planning and speaks frequently on personal finance topics.

A full transcript of the live discussion follows:

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Darcy Keith - Good morning everyone and welcome to this live discussion with Gail Bebee on using online brokers. I'm Darcy Keith, web editor with Globe Investor. We look forward to an informative discussion for all.

Darcy Keith - This live discussion is part of our 2011 Online Broker Rankings, which we revealed to the world last week. Click here to see the entire package.

Darcy Keith - Good morning Gail

[Comment From Gail ]

Hi Darcy.

Darcy Keith - Just to start off Gail, I have a few questions. For those thinking of switching to an online broker, especially one that may be cheaper than their current one, how much is it going to cost? Does somebody have to sell each stock and investment they own to do that and then repurchase? That would mean a huge hit in one-time fees I would have to pay.

[Comment From Gail]

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For most investments, there is no need to sell. Along with the online brokerage account application form, you fill in a form that authorizes your old broker to transfer all the investments in your old account to your new online broker.

Darcy Keith -

For those worried about hackers and privacy, what do they need to know? Are these concerns overblown?

[Comment From Gail]

No security system is perfect, but online brokers have a number of ways to protect you. •Web browser encryption - look for 128-bit encryption like the banks and online shopping sites •Firewalls •Ongoing Monitoring of their web site •Sophisticated logins – verification questions only you can answer You can help by: •creating strong passwords and verification questions – don't use your Mother's maiden name •Using up-to-date anti-virus/anti-spyware software and a firewall •Reviewing your statements and reporting any errors or suspicious activity. CIBC advertises an online security guarantee if someone gains unauthorized access to your accounts through CIBC online services - 100% reimbursement of the money lost if you followed their requirements.

Darcy Keith - Thanks Gail, that's useful information. Now, here's Ryan with our first question from our readers:

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[Comment From Ryan ]

Like many I have a pretty good general knowledge of the financial market. However, with working my regular job I find I don't have the time needed to properly research stocks and manage my portfolio. Are there any tips or investment stratiges you can suggest. I am in my late 20's.

[Comment From Gail]

Online brokers offer "canned portfolios" and some rebalance these regularly. There are what I call all-in-one portfolios you could buy ...

[Comment From Gail]

Claymore Balanced Income CorePortfolio™ ETF, bnak monthly income funds, Mawer RSP mutual fund

[Comment From Rose ]

Im 60, semi-retired and have 60K in a LIRA. Can u advise a better way to invest it rather than A GIC which does not pay much interest.

[Comment From Gail]

Ah the risk reward conundrum. I have a LIRA with about $35000 and I put it in the Mawer Canadian Balanced Retirement Savings Fund. This is riskier than a GIC, but still conservative and it should deliver a higher return than the GIC over the long haul.

[Comment From ]

Are options something that a DIY investor should consider in trading? Especially if they are NOT day traders?

[Comment From Gail]

I am not an options person and I don't think they make sense for the average investor. The brokers make lots of money on them!

[Comment From Gordana ]

Recently sold our house and now we have 300k sitting in a high interest savings accout. Opened up a TD Waterhouse acct and tsfa accounts. With the volatile markets, I'm scared to make the first move, any suggestions?

[Comment From Gail]

What do you want to use the money for? This will determine what you buy. For short term goals- leave it in the savings account.

[Comment From Brian ]

Hi Gail. I think the volatility in the US market represents a tremendous opportunity to buy at low prices. How would you recommend investors go about taking advantage of this?

[Comment From Gail]

You never know where the market will go. Decide on an investment plan, asset allocation and the price you want to pay for an investment. For stocks, I like to buy the company based on what I think its value is, not whether the market volatility will deliver extra returns

[Comment From Monica Dhar ]

I would like to invest in the recent Gold IPO from the Mint. Could you please tell me how to go about it. I have an online investing account

Darcy Keith - We had an interesting Streetwise blog on this IPO this morning. Click here to see it

[Comment From Gail]

This is an ETF, I believe, so you would buy it like a stock. I am not a gold bug, so I don't know the trading symbol.

[Comment From Bill ]

When buying or selling ETF's with an online broker, are there fees other than the transaction fees, and if so, how much would they be?

[Comment From Gail]

It depends on the broker. The deep discount brokers may charge exchange access fees. I am not sure of the specific costs, but they are generally much lower than the commission. The bank online brokers and Qtrade generally include these fees in the commissions.

[Comment From Andrew Toronto ]

If you are doing more than trading basic stocks, should you be looking at exclusive features? For example, TD e-funds could form the basis of a couch potato portfolio, but TD doesn't provide free ETF purchases.

[Comment From Gail]

I think you should choose the broker that best meets your overall needs. Performance reporting is high on my list of essentials.

[Comment From Elgin ]

I currently have 4 DRIP stocks BCE, BMO, FTS, and TRP. What are your thoughts on dripping? Thanks.

[Comment From Gail]

If you are willing to do the extra paperwork, DRIPS (Dividend Reinvestment Plans) are fine. The easier way is the use the broker synthetic DRIPs which reinvest dividends in whole share.

[Comment From John ]

Hello.I am currently suffering "deer in the headlights syndrome" Have about 30% of my portfolio in cash and am looking for the right time to start nibbling in. How does one overcome this fear?

[Comment From Gail]

Behavioural finance is a growing discipline. Start by not looking at the stock market every hour or every day. Get back to basics - you need an investment plan and you should stick to it.

[Comment From Brendan ]

Hello Gail... I'm mid 20s and doing very well saving - socking away 40% of my salary in RRSP, however I realize I can be a bit riskier with my investments as I'm still young... I decided to open an online account and play around with 10K in savings in my online TFSA... would there be a good ETF you would recommend that might be a bit riskier, but would have a good upside?

[Comment From Gail]

That's a tough question to answer....

[Comment From Gail]

It depends on your goals. I think you should start with edcuting yourself about risk and then tyr to choose. How much are you really willing to lose? 20%, 30% 50%? then, choose an ETF from there. I would stick with Canadian ETF providers to start - iShares, BMO, Horizons and Claymore are the established players.

[Comment From TAMMY ]

Hi, Gail. I am in my mid 40's and my employer has our pension with Sun Life. As employees, we have the opportunity to invest in an RRSP through SunLife at reduced fees (they are around 2% for us). They are encouraging us to move all our RRSP investments over to them because these "reduced fees" are a great advantage. Unfortunately - they are only offering specific mutual funds to invest in. I presently have my rrsp mutual funds with the Bank. Do you feel this is a good idea? I am concerned this may be a selling tactic - as it is hard to compare apples to apples when they are not selling the same funds. BlackRock Funds (former CII?) compared to Scotia Bank Funds. Thanks.

[Comment From Gail]

2% MER is not a great deal. You can do better. The Mawer Balanced RSP fund for example has an MER of about 1%.

[Comment From Lloyd ]

What is the best place to put cash in an on-line account?

[Comment From Gail]

No money market funds. High interest online savings accounts pay around 1.2%.

[Comment From ]

my online broker does not offer a US side in my rrsp. Is it worth switching so the dividend stays in US funds?

[Comment From Gail]

To finish off where to put cash. Here are some examples with minimums CIBC Renaissance High Interest Savings Acct. ATL5000 $1000 Altamira Cash Performer AIS100 $1000 Dundee C$ Investment Savings Account DYN500 none Manulife Bank Investment Savings Acct. MIP510 none ICICI Bank HIISA IBN100 $1000 B2B Trust High Interest Investment Acct BTB100 none RBC Investment Savings Account RBF2001 $500

[Comment From Gail]

To answer the US dollar RRSP question, it depends on how many US dividends you receive. It may be better to push your existing broker to get with the program (TD Waterhouse are you listening?)

Darcy Keith - Here are a couple related questions concerning credit unions - and the safety of investing in them:

[Comment From ]

Is the Guarantee provided by Provincials Credit Unions for GIC as good as the Federal CDIC ?

[Comment From Ken ]

How safe are Credit Unions (outlook financial) in Manitoba. They claimed that our deposits are 100% guarantee without limit.

[Comment From Gail]

Short answer I can say. However, I personlly think the risk of the provincial deposit insurance corporations not delivering is low.

[Comment From Kevin ]

Any reading materials that you could suggest to us who are looking to invest?

[Comment From Gail]

Well, being totally biased, my book No Hype- The Straight Goods on Investing your Money (second edition is just out) is a good place to start. In the Resources section of my web site I have a list of useful references that goes well beyond just books.

Darcy Keith - I'll just add to that by saying we have some great information here at the Globe Investor site for investors wanting to learn more. You can start exploring by clicking on the Investor Education tab near the top of the screen. Or, click here to see the main entry page. Many videos, columns and articles on becoming a smarter investor, no matter your sophistication level

[Comment From Victoria ]

What criteria or personal knowledge levels woudl you recommend for an aspiring direct (online) investor versus going with a broker who will handle trades fro you?

[Comment From Gail]

Learn the investing basics (stocks, bonds, ETFs ,mutual funds, how markets work etc. ) Know yourself, make sure you have the time to do your research. Understand the risks of investing. Always, think for yourself. That's a starter list!

[Comment From Hugh ]

If one wants to buy US securities, is there a low-cost way of converting currency? If I remember correctly, anks seem to charge 2%, online brokers charge 1%. Surely there is a cheaper alternative.

[Comment From Gail]

You could look to the independent currency conversion firms, but then you have to move money around and it takes time.

Darcy Keith - A follow-up question now from Rick on high interest saving accounts:

[Comment From Rick ]

"To finish off where to put cash. Here are some examples with minimums" Are AIS100, IBN100, ATL5000 mutual funds? If so can they be bought from any brokerages?

[Comment From Gail]

The high interest accounts available vary by brokers. e.g. RBC has their own account and CIBC has the Renaissance account, so they will push these to clients. You should call your broker and ask what is available.

[Comment From MIchael ]

what type of initial portfolio would you suggest to enter a market first time. I can afford some risk, but want a general idea of a balanced portfolio. [Comment From Gail]

Look at the canned mutual fund or ETF portfolios your broker offers - they usually have several based on the risk you want to take. The ETF firms also have sample portfolios and even some all-in-one fund of funds ETFs

[Comment From Monica Dhar ]

Darcy: I just read the streetwise blog, I don't find any ticker or further information

Darcy Keith - Hi Monica, I just asked the writer of that post, Tim Kiladze. He says they are finalzing the last stage of the IPO and after that investors will be able to buy it on the open market. So, stay tuned - it will be coming soon

[Comment From Trudy ]

What do you think about dividend stocks for investing. I've been hearing a lot about them. And how would you go about learning more about them?

[Comment From Gail]

I am a big believer in dividend stocks. Only companies that are established and make profits usually pay dividends. You need to learn how to pick stocks since dividends are just one aspect of a smart stock purchase. You could start by buying dividend ETFs or dividend mutual funds.

[Comment From vicky ]

would online investing be for more of long term or short term strategy

[Comment From Gail]

You can do either. You decide on your investment plan and then execute it at your online broker.

[Comment From Iain ]

As a reasonably well educated stock investor but inexperienced in the Bond market, are bond ETFs generally a good solution?

[Comment From Gail]

I have personally concluded that buying bonds directly at an online broker is not worth the trouble. Also, you rarely get a good deal as an individual investor. So, I use bond ETFs. Just remember, they do not for the most part have a maturity date, so the price varies with interest rates.

Darcy Keith - Thanks Gail. We're almost out of time I'm afraid. My apologies to Bob, Neil and all those who had questions we didn't have time to answer. Here's one final question from Donna:

[Comment From Donna ]

My portfolio is light on bonds and heavily-weighted on equities. In today's market conditions, would it be prudent to increase Cdn bond holdings?

[Comment From Gail]

You need an investment plan. In rock bottom interest rate environments, bond prices will likely go down in the future when rates rise, so you would want to have bonds with maturity dates or ETFs with short bond matuirty dates.

Darcy Keith - Thanks Gail. Any final thoughts you'd like to leave with our audience today?

[Comment From Gail]

Learn the investing basics before you buy your first investment. Think for yourself. Don't spend too much time watching the stock market go up and down.

Darcy Keith - Thanks Gail and thanks everybody for joining us today. It's another rocky day in the markets, so make sure to keep checking back with the latest developments here at Globe Investor. Good bye!


Gail can be reached at Her website is

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