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Monday, May 18, 2015

A small investor (me) facing rough choices: to save money or to invest it?

For once in a very long time, I left a $1 000 in my banking online savings account. That way, I won't have to pay and repay that $2.95 banking monthly fee. Banking fees can be really annoying, especially when you have that huge investment portfolio and have barely nothing at all in savings... The reason behind is the little money I have at my disposal, I am a small investor. I need to choose between saving and investing, and every single times, its my investor mood that win. But not this time. Investing in stocks is highly addicting.

I hope not to pay for banking fees ever again. I would like to have another 2k left in cash there just in case of needs. I don't know if banks with no monthly fee exist in Canada, but from what I know, the best checking accounts you can get is probably with Desjardins - or like I have - with the Caisse populaire acadienne, the best checking account for the fee. Having still my banking account in New Brunswick is my way to stay somewhat connected and to give a bit of my business to my homeland.

In 2 days, Glentel Inc. (GLN) will be acquired by BCE and I will be cashing in some $$$. This will leave me with a bit more than 2k inside my TFSA to reinvest. I am facing the same dilemma that one of my reader who asked by email what could be good investments for a TFSA. At first, I was thinking about investing - again - in the JFT Strategies Fund (JFS.UN). The fund performs well, no doubt about it, but its not a dividend payer in a regular basis and believe it or not, I need cash.

So I am now in the same situation that my reader, I am looking for a good growth dividend stock that will pay me a nice income to add up to my current dividend distribution. And when you already hold everything that I could imagines as good investment, its not easy to make a choice. I am searching for a grandpa stock - really save even if nothing is save when it come to stock - and a 4% dividend yield.

Currently, Bank of Montreal (BMO) with its 4.137% dividend yield could be a good stock pick.


Louis-Paul David said...

Have you tought about going with an index ETF ?

With Vanguard VDY you would get a mix of 94 canadian dividend payer.

The 12 month yield is 3.33% so a little short of your 4% target. However the risk is much lower than with a single stock.

Anonymous said...

I have been with RBC forever. Never paid a monthly fee. Consider what $1000 in your account is costing you in lost opportunity: saving $3/month or $36/ year. That is 3.6% you are saving. Invest $1000 in BMO that pays 4% and you are ahead.

Anonymous said...

SUnny-Investing in ETFs are never going to make you rich. It's time to up your sexy game to become more knowledgeable about investing in general. Common DV, make your blog sexy for real time investors:)


PS-If you are looking for yield go with Cherry Hill Mortaage REIT-yields 11.5%. Only downside is the stock performs like 'cash'(ie: the stock never gets above book value of $20/share)

Anonymous said...

You should buy an etf with international exposure like Ishare all country minimum volatility (XMW) and also pays a dividend of 1.75% or Vanguard All world ex Canada (VXC) with a dividend yield of 1.44%. This will give you two things: International and US exposure which you don't have and not have to break your head whether you are picking a good stock or not.

Anonymous said...

Dear Sunny,

Keeping a $1,000 in your bank account is not costing you a lost opportunity! Investing $1,000 in BMO that pays a 4.09 % taxable dividend is not a good decision; the after tax result is less than 3.60%

Anonymous said...

It may be possible to have your money and still not pay bank fees. I do my trading and banking all via one bank, after talking with the bank they removed the fees on my chequeing account even if I don't keep much in it. And the fees they charge on my trades is very competitive.

Anonymous said...

Dear other Anonymous:

It's still 4.09% if it's in a sexy TFSA! And don't forget capital gain and dividend increases!


Thank you

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