Making a Visit to Moneyville

Canada’s largest newspaper, The Toronto Star, joined the universe of personal finance websites in September with the launch of Moneyville. The huge site contains a mix of news and features as well as regular blogs from writers such as the Star’s inimitable consumer advocate, Ellen Roseman.

This week Moneyville is running a three-part series of articles by yours truly:

  • In the first piece, I pick apart a common criticism of index-based ETFs: that they’re “just average” because they’ll never beat the market. This is an argument that advisors love to make, implying that they can help their clients do better. As I explain in the article, if you simply earn “average” returns — those delivered by the market indexes — you’ll trounce the majority of active mangers over every long period. (Coincidentally, The Oblivious Investor ran a blog post on just this topic yesterday.)
  • Finally, the series wraps up with a discussion of three situations where ETFs are the wrong choice. Exchange-traded funds are one of the most important financial innovations of the last decade, but they’re not for everyone. One of the most important points for investors to understand is that ETFs are generally a poor choice for people with small accounts (less than $30,000 to $50,000), and they present some challenges for investors who make small monthly contributions. Index mutual funds are often a less costly choice, despite their higher MERs.

4 Responses to Making a Visit to Moneyville

  1. DM November 18, 2010 at 10:00 am #

    Congrats on the series Dan! Good exposure for you. I hope it leads to a few more mutual fund refugees.

  2. ETF thinkin' November 18, 2010 at 12:43 pm #

    CCP:

    Out of the ETF’s you suggest on here, what one(s) represent are the lowest risk in our current environment to invest in? Myself, I have quite a bit of captial to invest and just want safety over returns.

    Thanks! 🙂

  3. Canadian Couch Potato November 18, 2010 at 12:50 pm #

    @Thinkin’: I can’t recommend specific investments for individuals. Overall, the least volatile ETFs will be those that hold short-term investment grade bonds. But if your goal is safety of principal, be aware that bond funds can lose value, too. Don’t ignore GICs.

  4. ETF thinkin' November 19, 2010 at 5:59 am #

    Thanks so much CCP, your advice is much appreciated. I do like fixed investment GICs, I’ll have to see if you have done an article on GICs vs ETF bond funds.

    I follow your writings on a very regular basis, keep up the great work.

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