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General Retirement Fund Questions

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General Retirement Fund Questions  Reply with quote  

I'm a Canadian young professional looking to begin investing in my retirement fund. I have $15,000 and will be making monthly contributions of $500. I will begin withdrawing from my retirement fund in about 35 years, and I am looking for a simple portfolio that would require me to spend at most a few hours a month to maintain. My knowledge about the finance world is minimal but I am trying to determine how I can maximize my return with minimal long term risk.

After a few weeks of research I have concluded that I should look into investing in index funds and/or blue chip stocks. Index funds have low service fees and tends to have a fair rate of return over an 10+ years. Blue Chip stocks also have a fair rate of return over 10+ years but do not have any service fees. Some Blue Chip stocks also play dividends which I can use for future investments. In my opinion, investing in a few index funds feel like the safe an ideal investment however I am thinking if I should try investing in blue chip stocks such as Costco and Amazon? When I look at these stocks, their historical performance seems to return more then index funds?

If I do decide to invest in index funds, which ones should I be investigating in? Through my research I feel that Vanguard VCN, VUN, and VTI one is popular due to its low service fees. I am also banking with TD Bank and was recommended that I look at TD's e-Series: TDB909, TDB000, TDB902. What are your recommendations for index funds to be investing in?

In Canada, we have a taxed differed retirement fund called an RRSP where you are taxed when you withdraw money from your account. If I place an initial amount of $10,000 into this account, let it mature for 35 years until it is $30,000 before withdrawing the money, will I be taxed on the $30,000 or my initial $10,000? I think I will be taxed on the $30,000. In that case, wouldn't it be ideal to place my investment in the Canadian TFSA where I am taxed only on my contribution so I can avoid taxes on my growth?

My understanding is that moving funds into an ETF fund costs $10 per transaction. My initial plan was to contribute $500 monthly into my retirement fund. I feel like this idea isn't worth it as I don't want to spend 2% on transaction fee so I am now thinking of an annual contribution of $6000. I am wondering what should I be doing with the $6000? Should I leave it in my savings account, or is there a short term investment plan I should use?

In conclusion, my questions are:
1) Should I invest in index funds and/or blue chip stocks?
2) Any recommendations for index funds? I bank with TD but I'm not loyal to their e-Series index fund.
3) Do you get taxed on the growth money in your RRSP? If so, then would it be ideal to use a TFSA so your growth will be tax free?
4) As there are ETF transaction fees, instead of doing monthly $500 contributions I am thinking of doing an annual $6000 contribution. Should I temporarily invest the $6000 in a short term investment?
Post Fri Aug 05, 2016 1:19 am
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