How to get the most bang for my buck
Well, I finally did it and switched my non-registered mutual funds (condo down payment) over to the TD Canadian Index e-Fund. I was originally investing in the TD Balanced Growth Fund with a 2.14% MER. Over the past year since I started investing in it, I’ve gotten just a 6.5% return … and while that’s not shabby, I know I could do better. With this new fund, they’re only taking a 0.31% MER, which is a difference of 1.83%, and that’s huge! Since its inception, it has a 9.3% return, and over the past two years, is returning 21.8%. In 2006, it returned 16.9%.
From the fund overview for my new e-Series fund, it states:
Why Invest
One-step exposure to large, well-established Canadian companies; Low MER; Superior tracking versus peer group; Lower turnover of securities results in fewer realized (taxable) capital gains, making this Fund tax efficient.
The Canadian economy is doing so well now that I think I’ll be okay in this fund for a while, since it invests in 100% TSX. Economists are predicting the TSX will hit 15,000 by the end of the year (it’s just over 14,000 right now).
Right now, my condo down payment fund is housed in two places: 1/3 of it is now in the new TD e-series fund, and the other 2/3 is in a high interest savings account earning 4%. Because I was paying off my debt, I only had $50/month being auto-deducted from my bank account into my mutual fund account. Now, I think I’m going to up my investment to $800/month into the e-fund, and then try and match that amount into my high interest savings account.
Is that a good strategy, or should I be putting a lot more into the mutual fund for the potential for a higher return? Maybe I should just plop all of my money into the mutual fund, because barring a total collapse of the Canadian economy, the fund should give me more than a 4% return, which is what it would be earning in the savings account.
However, I will be taxed on my earnings from the mutual fund since it’s non-registered, and (hopefully) I plan on withdrawing in the next 2 years to pay for the down payment … so I’m not sure. Perhaps I should just stop over analyzing this whole thing. We’re not talking a lot of money here for most investors. In a few years when it’s all said and done, it should only be worth $40,000. That’s a huge amount to have in my opinion, but that’s just me.
Any thoughts? Has anyone else been in the same sort of situation?
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[...] few days ago, I blogged about how I was so excited to switch my non-registered mutual funds account from the TD Balanced Growth Fund, over to the Canadian Index e-Fund. Well, today I got an [...]