Latest posts by Wanderer (see all)
- Investment Workshop 5: Setting Up Personal Capital - November 30, 2016
- Investment Workshop 4: To Buy or Not to Buy? - November 23, 2016
- Investment Workshop 3: Picking Your ETFs - November 16, 2016
Not a day goes by where we don’t get an email asking exactly what to do to start investing for their future Financial Independence. We talk about the strategies we used and how we actually built up our nest egg, but what people kept asking for was a step-by-step guide on how to actually build a portfolio for themselves.
Well, we’ll do you one better: I am proud to announce the start of the Millennial Revolution Investment Workshop!
This will be a year-long workshop that we will run right here on Millennial-Revolution.com, where we will walk through the exact steps (with screenshots) of how you, the reader, can build your own portfolio of low-cost Index ETFs just like we did. And we’re going to do it with REAL money, in the actual stock market LIVE for you to see.
Why? Because we can talk about Modern Portfolio Theory and Index Investing until we’re blue in the face, but it’s not going to help people who are just too new at this to risk doing it themselves. As we build up our portfolio, you’re going see our actual holdings fluctuate up, and crash back down at various times. And through it all, you will see how we deal with the screaming talking heads in the media yelling about how it’s different this time and the sky is falling. It’s never different this time and the sky is NOT falling.
Throughout this whole thing, we will be acting as if we’re in the same boat as many of you are: Still working and just starting to build your portfolio from scratch. As such, we will be starting all the way from the process of opening the right accounts, how to fund them, picking the securities and actually putting in the orders. Oh, and because of our large US audience, we will be running two portfolios in parallel: A Canadian one worth $10,000 and a US also worth $10,000 (USD).
And through it all, you are free to come along. You can match our exact moves with however little or as much money as you want, or maybe put your own twist on our investment strategies, or you can sit there with a bucket of popcorn to see how it goes. Totally up to you.
And your cost for participating: Nothing. I know that apparently what bloggers are supposed to do when they get big is to start hawking some $1000 e-course, but we’re not going to do that because:
- We hate that shit.
- We don’t need the money.
- We believe that knowledge about how to invest for your early retirement is a human right. Unlike those big banks and financial companies trying to screw you every day, we don’t think investment knowledge is something that only the rich or privileged should have access to. Everyone should have access to it, and it should be free.
So we will be conducting this workshop for FREE. We only ask that if you participate, please use the affiliate links we provided to open up your brokerage accounts, so we can cover the costs of running this blog and keep it free.
Standard Disclaimer: We are NOT licensed financial advisors. This Workshop is for demonstrative purposes only, and shouldn’t take the place of a formalized, holistic financial plan created by a licensed financial advisor. You participate at your own risk.
OK, so ready to get started? Let’s start by opening up a Brokerage account.
In the past, we have advocated using TD e-series mutual funds when your portfolio size is smaller because buying/selling ETFs typically incurs trading costs. Those days are gone, because now brokerage companies have started offering accounts where you can trade ETFs for FREE. Knowing this, it now makes little sense to go with mutual funds anymore. Sorry, TD Waterhouse. Them’s the breaks.
In Canada, the brokerage account we’ll be using is Questrade. We’ve been toying with them for the past couple months and so far we like what we see. Questrade offers commission-free buying of any Canadian or US-listed ETF. Selling an ETF will incur the normal trading commission of $4.95 to $9.95 (depending on the number of shares sold), but when you’re still working and in the accumulation phase of your portfolio-building, you’re almost always buying and rarely selling (maybe once a year to rebalance if even that). So this is effectively free trading for the average long-term ETF investor, plus you get to take advantage of the much lower management fees inherent in Index ETFs (again, in the 0.1% range). We’ve been using them for a few months now and the fee structure seems legit. No monthly or hidden fees or anything.
Opening up an account is free. If you don’t already have one, use this link as it gives you a $50 rebate on commissions going forward. That might come in handy if we need to rebalance later on down the road.
Questrade offers two types of accounts:
Because we’re going to be directing our trades ourselves, we want to select “Self-Directed.”
And for the Self-Directed Account Type, we are going to pick a normal non-registered account “Standard Individual.” (We will talk about RRSP/TFSA accounts in a future post). We won’t be messing with options at all, so pick “No” for the Options trading. And make sure if it’s not there, you add in the offer code of “feb23fb6” so you can get your $50 of free trades.
After that, you’ll be asked for your name, address, SIN, etc. Go ahead and fill that out and complete your application.
Once you’re done your application, though, there’s still paperwork you have to mail into them. Questrade requires a “Statement of Acceptance,” which you have print out, sign, scan, and upload back to them. They also require a bank statement (I just download mine from Tangerine and uploaded it), as well as an “Attested ID,” which is SUPER annoying. Basically, you have to photocopy your passport and get a CPA, lawyer, doctor, etc. to sign the paper attesting that you are who you say you are, and then you have snail-mail it to their headquarters in Toronto. Alternatively, if you live in Toronto, you can just pop by their head office near Finch Station and show them your ID there.
If you’re planning on following along, I’d suggest you start this process soon. It took us a few weeks to get everything accepted.
USA (TD Ameritrade)
And now onto the Americans. For you, we’ll be using TD Ameritrade. Why? TD Ameritrade offers commission-free trading on certain ETFs, and somehow all the ETFs we plan on using are in that list, including all the cool ones run by Vanguard!
If you don’t currently have an account, you can open one up using the link below. We’re going to be only using ETFs on their commission-free list so the advertised “commission-free trades for 60 days” doesn’t really matter. YAY! free shit!
Again, for the purposes of this experiment we’ll be opening up an Individual trading account. We will be talking about how to invest using tax-advantaged accounts in a future post, but to keep things simple we will start with this.
The account opening process is fairly straightforward, but at the end you have to print out, sign and snail-mail a whole bunch of documents to their headquarters in Omaha, so again if you’re planning on following along you might want to do this sooner rather than later as it does take a while.
And finally, we’re going to be using Personal Capital to analyze our portfolio going forward. Why? While I liked the commission-free trading structure of both brokerages, I wasn’t terribly impressed with the portfolio analysis/visualization tools of either of them. Personal Capital has some nifty visualization tools we can use to track our portfolio, plus it supports both Questrade AND TD Ameritrade. So by linking our accounts to Personal Capital, we’ll be able to show one screen to track our portfolio’s performance rather than having to take screenshots of both Questrade AND TD for our American readers.
Opening an account is free (sensing a theme here?) and pretty straightforward. If you don’t have an account, you can open one using this link. If you’re American, use this badge…
And if you’re not, please use this one…
Opening this account is even simpler than opening up the brokerage ones since you don’t need to print anything out, and once you do link your Questrade or TD Ameritrade account so that you can see your trading account. Once that’s done you will be ready to rock and roll.
Personal Capital also has tools you can use to track your net worth similar to Mint.com, so feel free to play around with the interface and see if it strikes your fancy.
OK phew, that’s it! Next week we will go over the steps involved in funding our trading accounts and picking out which ETFs we are going to use for our portfolio. Don’t worry if your paperwork hasn’t been approved yet. We’re going to be spending a few weeks talking about overall strategy, so plenty of time for you to get ready.
Thanks for participating, and let us know if you run into any problems in the comments below!
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