Why do you assume a recession means that the stock market will be down? History tells a different story.

And this is the most anticipated and priced in recession in history.

Because I'd like to time an entry at a low point, sell the bump and buy right away after a small dip and then hold. Because just holding would take at least 3 years to yield something while managing the risk whereas if I do as I suggest I could counter the risk from fluctuation by averaging a lower cost from the quick flip.

Something like buying some ber runes 15 or 10 fg less than actual price, selling them right away for real value and waiting for them to lower a bit to buy them back to have more ber runes for same fg amount if that makes sense.

Again statistically you're unlikely to. Why do you think you're smarter than everyone who's entire job is to try to do this and have massive amount of data analytics available through massive amount of computing processes.

I don't understand how people think they're the smarter ones making better moves when its shown it does not on average ever work out.

Statistically, the best path forward is the easiest, put your money in as it becomes available and leave it. Don't make individual picks, index it and log out.

I'm not calling you out, this is a common flaw with the average investor's thought process.

Even if you make a small bump , its going to be so insignificant over the long run that the risk to reward is horrendous.

If you use figures from Fidelity and look at the S&P500, by missing the 10 best days over a 38-year period you would be cutting your return in half. It drops dramatically from there. Timing the market is for fools.

Now lets look at Dalbar figures.

Annually Dalbar publishes reports of average returns of the S&P, mutual funds, asset allocation funds, etc. In the 2017 report Dalbar published some eye-opening figures. The 20 year annualized S&P 500 return was 7.68% while the average equity fund investor was only 4.79%. The average fixed income mutual fund investor was significantly less.
Per the study 50% of the reason that individuals missed out on similar performance to the S&P was psychological reasons inducing loss aversions (withdraw due to market fear), metal accounting (separating investments mentally to justify the success and failure while not looking at a portfolio as a whole), lack of diversification, group thing / herding (following what everyone else is doing), regret (not performing a necessary action due to the regret of a previous failure), responding to media stimuli, and over optimism.


This post was edited by SBD on Mar 20 2023 02:42pm

Ok. Would you suggest to put it all in the index or fragment the funds into individual stock, index and cash index?

I don't have much to invest, between 60 and 80 grand and I need some of it to be withdrawable. I can't afford to lose any of it.

Bro, you cant afford to lose any of it and you're trying to time the market!

If that is the case Canadian GIC's right now are yielding 4-5%ish you can just put it in a redeemable GIC so its always available and use the interest off that to earn a little / hedge inflation .

If you truly cant afford to lose any of it right now due to upcoming expenditures, presumably a down payment on a home, the market isn't for you, stick to GIC's until you don't have that purchase on the near horizon. That's what I would do anyways.

This post was edited by SBD on Mar 20 2023 02:51pm

Right, unfortunately the GIC are fading right now, I may have missed the peek, highest rate I could have locked it was at 4.75% but it was for a 15 month term. They would not offer any longer for 4% and above.

So knowing that, and considering TFSA is in the play, should I lock fixed income in the TFSA and put the rest in the index outside TFSA?

I cant offer personalized advice. In general though you don't want to draw from your TFSA if possible. Given it's a tax advantaged account, you want to maximize the time value of money in those accounts and typically keep all money in the market. Something like a total US Market ETF is easy to just set it and forget it. Its certainly not the sexy way of investing, but when you back test different ETF's its typically the total US market or ones that index the S&P500 that do the best over the long run. Its not a short term strategy though.

Unless you're in a high tax bracket the and your marginal income tax rate is high, the interest earned on a GIC outside your registered account isn't going to have that much of a tax consequence.

I don't plan on withdrawing from the TFSA and my income tax rate is low actually. The reason I thought of using non registered account for stock market investments is that I could deduct losses from gains and thus lower capital gain taxation.

I still would like to have fixed income. Would you suggest bank dividend stocks for the TFSA and index funds for non registered?

Were getting a little too deep into the advice realm here but if you want something like Canadian bank stocks or a Canadian bank stock ETF like ZEB as part of your profile and you want to avoid tax on its dividends yes a registered account be it a RRSP or TFSA is a fine place for those and when the dividends are reinvested via having them set up toe DRIP (its sometimes a setting or request you have to make via your direct investing account) Canadian banks have performed similarly to a S&P 500 ETF, so its not a bad choice historically. What the future holds, who knows. If you don't reinvest the dividends from Canadian bank stocks, the performance is significantly worse than the S&P 500.



Eventually your TFSA and RRSP accounts will be maxed anyway and you will have to eventually start using a non-registered account. You could end up generating losses in your non-registered, but generally a total market fund has not lost money over a long term horizon. There are methods to loss harvesting but i'm not going to delve into that. If you want more details on that something like Canadian Coach Potato is a decent resource.

Don't forget that liberals are also likely to implement that first time home buyers savings account which is basically a TFSA this year. So if you have never owned your own home that's another registered / tax advantage account to start using. There's really no draw back since after 15 years if you don't buy a home it gets rolled into your RRSP without consuming any RRSP room.


Check out Canadian Coach Potato for a good Canadian resource. He also does model portfolios I think for the passive investor.

Money printer goes brrrrr

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