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The inbox has filled up again with your questions, some of which are extremely interesting. Here is the latest instalment.

Robo investing

Q - Can you give any information generally on ETF robo investing and on WealthSimple in particular (which I understand is a group that involves people from Power Financial). We have not yet invested in individual ETFs because of the profusion of choices and bells and whistles and thought robo's may be a way to buy and try them with a small amount, less than $20,000.

We are over 60, with the larger part of our portfolios in Canadian equities. So far we don't need the cash and just reinvest earnings. We are currently just building an inheritance for the kids, but will fritter some of it away on travel soon.

Finally, should I wait for a general pull-back or dive in as the product seems to have some diversity? – Mary B.

A – More people are expressing interest in robo investing because it's cheap and the concept is easy to understand. Traditional brokers say they're not worried about this new competition yet, but that may change in a few years.

Robo investing involves allowing a computer to build and manage a portfolio for you using exchange-traded funds (ETFs). You have to decide what type of portfolio you want – the basic choices are conservative, balanced, or growth although some companies may offer more sophisticated options. Once that decision is made, the computer chooses the appropriate mix of ETFs and rebalances the portfolio on a periodic basis. Distributions are automatically reinvested.

The costs vary from one company to another but are generally quite low. WealthSimple, which is a Canadian company, charges 0.5 per cent a year plus the fees on the underlying ETFs, which average around 0.2 per cent. The first $5,000 is free for one year. There is no minimum investment required.

Does it work better than using a financial adviser or doing it yourself? Who knows? These companies are very young so do not have the benefit of a long track record on which to make comparisons. WealthSimple has a chart on their website that purports to show the difference in returns between its approach and a "traditional investor" from September 2014 to February of this year. Naturally, it shows they do better. But their "traditional investor" profile assumes the markets go up by 4.3 per cent a year and the investor pays fees of 2 per cent compared to their 0.7 per cent. That won't always be the case.

If you want to try it out, my suggestion is to start with a limited amount of money, say $10,000. Continue to invest the rest as you normally do now. Compare the results over the next one to three years. If robo investing provides a better return, move more money there.

It's a whole new way of managing money and the concept is appealing. But put your toe in the water first.

As for waiting for stocks to drop, that involves market timing, which no one has done successfully for any length of time. If you want to try out this approach, go for it. – G.P.

Stingray

Q – I am wondering whether you have had a chance to look at Stingray Digital Group (TSX: RAY.A) recently, as it has had a significant pullback in the past month or so from its high of over $9. It dropped to $7.31, I believe, the other day and a buying opportunity may be upon us (it has, in fact, rebounded back up to almost $8 since then). Stingray's music packages seem to be almost everywhere you look these days and the company frequently announces new contracts obtained. Its future looks bright, it would appear on the surface at least. – Doug H.

A – Stingray, which is based in Montreal, provides streaming music service in 156 countries, reaching an estimated 400 million households. In Canada, it offers over 200 channels that feature Canadian artists in all genres and all eras.

It's an attractive business and the company is profitable, reporting earnings per share of 33 cents for the first nine months of fiscal 2017 (to Dec. 31). It even pays a small dividend of 4.5 cents per quarter.

Unfortunately, the company is not showing much growth, which is what investors are looking for these days in the technology sector. Sales for the first nine months were up 16.7 per cent year over year. That may seem impressive but in the high tech world it makes Stingray look like a laggard. Net income for the period fell 42.6 per cent to $6.1-million.

Those aren't the kind of numbers that would get me excited and the p/e ratio of 43 looks excessive. You can take a flyer on this if you wish but I think there are more attractive high tech opportunities out there. – G.P.

Unused RRSP room

Q - I am age 70, retired, and living on a fixed income. My tax bracket is not forecast to change going forward. My question: I have $15,000 in unused RRSP room. Should I contribute the $15,000 prior to converting to a RRIF? - Steve S.

A – Based on your profile, there is no tax advantage to topping up the RRSP. You'll get a tax deduction if you contribute but you will pay tax at the same rate when the money comes out. Plus all the investment income you earn in the RRSP/RRIF will be taxed on withdrawal.

If you have contribution room, a Tax-Free Savings Account (TFSA) would be a better choice. There is no deduction when you contribute but neither will you pay tax on withdrawals. Plus all the investment income you earn in the plan will be tax-free. – G.P.

Investing in the U.S.

Q – If one wants to invest in the S&P 500, is one better off to do it on the New York exchange instead of the TSX and, if so, what would be your recommendation? – Jacques L.

A – The TSX will work just fine. You can choose between an ETF that is hedged back to Canadian dollars or one that is unhedged.

The iShares Core S&P 500 Index ETF (CAD-Hedged) trades under the symbol XSP. The average annual return for the three years to April 30 was 9.81 per cent. The unhedged version of the same fund trades as XUS. It had a three-year annual return of 18.37 per cent, the difference being the gain in the value of the U.S. dollar against the loonie.

If you expect our dollar will continue to decline against the greenback, choose XUS. – G.P.

If you have a financial you would like to submit, send it to me at gpape@rogers.com and write Globe Question in the subject line. I can't guarantee a personal response but the most interesting questions will be answered here periodically.

Gordon Pape is Editor and Publisher of the Internet Wealth Builder and Income Investor newsletters. For more information and details on how to subscribe, go to www.buildingwealth.ca.

Follow Gordon Pape on Twitter at twitter.com/GPUpdates and on Facebook at www.facebook.com/GordonPapeMoney

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