Both just south of 30-years-old, Ruby and Bryn should be very proud of what they’ve accomplished so far: $140,000 in combined RRSP savings, in addition to other investments in TFSAs and non-registered accounts. The couple, who live in Fernie, B.C., have been deliberately blending various strategies for the last few years: individual stocks, actively managed mutual funds and indexed mutual funds. Ruby, a mine engineer, says she and Bryn, who also works in mining, were comparing and contrasting their respective returns. But now they have a young child and just want to focus on a plan that will be easy to manage and have low fees.
Given the couple’s desire to simplify their investing life and to keep expenses at a minimum, an indexing strategy is a great option for Ruby and Bryn. Dan Hallett, vice-president and principal of the High View Financial Group, recommends the couple use TD e-Series mutual funds. “They’re ideal because they’re almost as cheap as ETFs but you don’t need to pay brokerage fees, you can invest to the penny, every cent of distributions can compound through a full reinvestment and they’re ideal for those making regular deposits, as Ruby and Bryn are doing.” For instance, a balanced global equity portfolio made of e-Series funds would have an MER of just 0.44%. While the couple doesn’t need their own brokerage accounts to buy these funds, they would require a TD online account to purchase them. Hallett’s final recommendation is for the couple to dial back their risk, as 82% of their portfolio is in equities. “This looks a little on the aggressive side,” he says, suggesting they limit their stock portion to 75%.