I pulled an investing 180.
Since I wanted to use the majority of my bonus to go into my RRSP, I booked an appointment on Thursday to speak with my financial advisor at TD Bank. Before my appointment, I sat down to really think about my investing goals and the current market conditions.
Disclaimer: this is my opinion, do not base your investments upon what I’m about to say. Do research and be informed. I am NOT suggesting or recommending courses of action for your investments.
Truthfully, I think we’re heading for another dip in the economy. I think we’re in the calm before the storm. The European economies have been collapsing like houses of cards, and with a globalized financial system, we ought to be feeling the effects. Way more than we currently are. Unemployment, particularly in the 20-30 range, is double the national average. As Mrs. Lovett said to Sweeney Todd, “Times is hard, sir. Times is hard.”
My RRSP was invested in the TD Dividend Growth Fund. 40% of that fund is in the financial sector. I bought into the fund during 2008, when it was at its lowest point, and I averaged a 12% total annual return on it (from 2009-2011 alone, I made a generous 10% return, after the 2% MER). However, within the past few months it hasn’t budged, and has even gone down in value. I’m not a fickle investor … I don’t mind the buy and hold strategy when it works. But since my spider senses are tingling, I’m listening to my gut. So on Thursday, I switched funds.
I am now in the TD Canadian Bond Fund. It has a relatively low MER (1%), and even between 2007 and 2008, it gained 1.8%. Though the fund is bonds, it’s cashable. It is much lower risk than my Dividend Growth and given the economic instability, I feel much better putting my money in that fund, especially since I may have to draw upon this money to fund my education (to go to Teacher’s College). I have approximately $8100 invested in this fund.
I also set up my first ever “fun money investing account.” It’s the closest I’ll ever get to gambling. After seeing skyrocketing returns on the precious metal fund (albeit it is the most volatile fund I’ve ever seen), I have put $100 into the fund, and will be contributing $25 biweekly. I have no purpose for the money. It’s simply a fun money, risk-taking account. Right now, the fund is down. Buy low, sell high. Precious metals are almost a bet against the economy; when the economy tanks, people put their money into precious metals as a safety.
Just for kicks, my advisor looked at my RRSP GIC to give me an update on its returns (I bought it in June 2007, it will mature in the June of this year). It has dropped in value by 50% since I’ve bought it and hasn’t recovered. Thank GOD it’s a GIC and my principal is protected! Whew!
I feel more excited and confident about moving forward. I was no longer feeling secure with such a strong foothold in the financial sector, especially with my belief that a market correction is in the works. If I’m right, I’m going to feel like a million bucks. If I’m wrong … well, better luck next time. Only time will tell.
(P.S. Two updates – I broke my coffee rule since my clinic instructor asked if I wanted to grab a coffee with her after our 16k run on Sunday. Couldn’t say no. I also am moving forward on my volunteering goal…on the 22nd, I will be leading ten preteens in a visual arts activity for a local youth group organized by my cousin. If it goes well, and I’m hoping it will, I have some bigger ideas for youth sustainability projects and running groups!)