The One-Fund Solution

[Note: This post was updated in May 2014, when the former ING Direct changed its name to Tangerine.]

What’s the best way to get started with index investing? That’s the question Justin Bender and I ask in our new white paper, The One-Fund Solution. In our opinion, if you’re new to self-directed investing and you have a relatively small RRSP or TFSA, the place to begin is the Tangerine Investment Funds.

I’ve written about the Tangerine funds (formerly the ING Direct Streetwise Portfolios) before, and I often get pushback from readers. They point out these balanced index funds carry an MER of 1.07%, which is expensive compared to my ETF model portfolios, and even the TD e-Series funds. But most of this criticism comes from experienced do-it-yourselfers who forget that reading this blog means they’re among a small minority who consider investing something of a hobby. Most Canadians are not like them. Most people, even if they are good savers—and that’s the most important characteristic of a good investor—would rather watch Say Yes to the Dress than use a rebalancing spreadsheet.

My point is, rather than comparing the Tangerine funds to the optimal solution, let’s compare them to the typical investor’s situation. There is more than $900 billion in mutual funds in Canada, and the average MER of a balanced fund is 2.15% (according to Morningstar’s 2013 Global Fund Investor Experience Report). It’s true this figure includes a trailer fee for advice, something you won’t get with a Tangerine account. But the sad truth is investors with five-figure portfolios typically get either dreadful advice or no advice. And in many cases they don’t need to pay for professional help. If you’re just tucking away a couple of thousand dollars a year in tax-sheltered accounts, it’s tough for an advisor to add value.

That describes the majority of investors in Canada. According to recent report from Advocis, the average client of a mutual fund advisor in Canada has an account between $64,000 and $75,000. What percentage do you think have globally diversified, regularly rebalanced portfolios that cost less than 1.07%? And if those investors are paying a 1% trailer fee, how many are receiving good advice? I’d suggest at least three out of four would be better off simply socking away money in a Tangerine Investment Fund.

Justin and I fully explain the advantages of this simple solution in the white paper, but I’ll summarize the main points here:

Easy account setup. If you already have a chequing or savings account with Tangerine, opening a new investment account can be done online in about 10 minutes. Even if you’re not already a client, the application process is still almost entirely online.

No need to learn how to trade. Making ETF trades is often intimidating for novices, and mistakes can be expensive. With the Streetwise Portfolios you make all your contributions and withdrawals through the Tangerine website, which is much more user-friendly.

A single monthly contribution. Making pre-authorized monthly contributions is generally not possible with ETFs, and adding small amounts to an ETF portfolio can be inconvenient and costly. Tangerine clients can set up a single weekly, biweekly or monthly Automatic Savings Program with a minimum of just $25.

Automatic rebalancing. If you use multiple ETFs or index mutual funds, rebalancing requires you to monitor your portfolio and make calculations with a spreadsheet. It also means you need the emotional discipline to sell assets after they have gone up and purchase others that have fallen in value. The Tangerine funds make all that unnecessary, as they are automatically rebalanced quarterly.

Client support. Some discount brokerages—including Questrade and Virtual Brokers—have enticed investors with commission-free ETFs. I’m aware many readers are pleased with these bargain brokerages, and that’s fine. But they would not be my first recommendation for investors with small portfolios and no investing experience. I’d rather send them to Tangerine, where the mutual fund reps have been specifically trained to answer questions about index investing.

If you’re happily investing with a portfolio of ETFs or TD e-Series funds, keep up the great work. But if you’ve never invested on your own before—or if you have a friend or family member in that situation—download our white paper and learn how you can get started in indexing investing with a simple 0ne-fund solution.

143 Responses to The One-Fund Solution

  1. Brian G August 12, 2014 at 4:11 am #

    For what it’s worth, Tangerine is not alone with their slow transfers. Last year I closed and transferred my RRSP from TD to another institution and it took TD over one month to complete the work on their end. It was unprofessionally done and required constant follow up on my part and they even “lost the paperwork” at one point and wanted me to fill out a new set of forms. It’s not right, but it happens because we’re Canadians I guess.

    All this said, do remember that transfers between institutions are relatively rare events so, I wouldn’t worry about it too much.

  2. Darren August 19, 2014 at 1:02 pm #


    I currently have around 30k saved it is sitting in a regulat TFSA account at 1.3% (Tangerine). I was thinking of moving it to a Tangerine Balance Portfolio. The only thing is I am also looking at buying a house soon so I will possibly be spending all or most of that money. Would it be worth it to switch the money from the regular TFSA to the Tangerine Balance Portfolio TFSA? The house may or may not happen soon. The thing is I’m unsure of what the fees are if I want to cash out my Tangerine Balance Portfolio TFSA after possibly only a few months.

  3. Canadian Couch Potato August 19, 2014 at 8:45 pm #

    @Darren: If there is any reasonable chance you will need your money for a home purchase in less than three to five years it really should not be in stocks. I realize rates are low now, but that is the price of safety. (There should be no transfer-out fees at Tangerine.)

  4. Steve L August 21, 2014 at 6:04 pm #

    Hi Dan,
    I have about 21k that I can invest. I currently have a chequing and savings accounts with tangerine. I was looking to open a TFSA and RSP account with them. Since I never contributed in TFSA I have the full amount available this year which is 31000$ if i’m not mistaking. I was thinking of putting 12 000 in the TFSA balanced portfolio and 2000$ in RSP balanced portfolio. I’m thinking of putting the remaining 7000$ with People’s trust tfsa high interest account which is at 3%. I want to do this because I don’t want to touch the money in the the tangerine portfolio if I ever need the money.

    I know the interest that People’s trust is offering will not be forever, but 3% is still better than buying GIC right now. If the situation changes then I will mofify my strategy.

    I was wondering if you think it is a good thing to do and if you suggest doing things differently. Should I just forget about PT bank and put 19 000$ all in the tangerine balanced portfolio?

  5. Canadian Couch Potato August 22, 2014 at 4:27 pm #

    @Steve: I’m really not able to comment on your planned strategy without knowing more about your needs, but there is nothing in your comment that suggests you’re doing anything unnecessarily risky. The only thing I would point out is that the People’s Trust account is a better choice for any amount you think you might need in the next five years or so. The Tangerine funds should be reserved for long-term investments only.

  6. Steve L August 22, 2014 at 7:30 pm #

    Thats what I thought. I don’t want to touch the money I will be putting in the TFSA balanced portfolio. I will be putting money monthly into the balanced portfolio and try to max it out. Every year I will contribute to the RSP, but I prefer maxing out the tfsa first as I’m in the low income bracket.

    I want to keep some cash on the side for emergencies and PT bank offer the best interest compared to other banks. I have another chequing account with national bank which I use to pay the bills. My works pay goes into that account since it was the first account I opened.

    Thanks for the tips Dan. Great job on the blog.

  7. Kelly O October 3, 2014 at 7:01 am #


    I am a young and new investor looking at investing a small amount of money (2000) in the Tangerine Balanced Growth Portfolio, however I plan, within the next 3-5 years, to have saved enough to make opening my own discount brokerage account a better option and at which point I would move my funds to there and mirror the same type of portfolio but at a lower MER. Does it still make sense to move my funds into the tangerine fund for now if I plan on keeping them in stocks but in a different form or should I just leave them in a regular bank account until I have saved enough to open my own discount brokerage account?

    Great blog by the way! Very helpful for confused young investors like me!

  8. Canadian Couch Potato October 3, 2014 at 8:03 am #

    @Kelly O: It definitely makes sense to get your $2,000 invested immediately rather than letting it sit in a bank account. There is always a learning curve in investing, and it’s better to start early with a small amount of money so you can gain experience when the stakes are low. I would not be in a great rush to open a discount brokerage account: the Tangerine funds are a good choice for many years.

  9. Santana January 15, 2015 at 10:00 pm #

    If i am going to invest 15K, should i invest 5500 in the TFSA Investment fund and the rest in a regular Investment fund?

  10. Rob January 27, 2015 at 1:11 pm #

    What about BMO ETF portfolio mutual funds offered to Investorline users? Wouldn’t these fare as an attractive alternative to Tangerine’s funds for a small investor seeking a one-fund solution?

  11. Canadian Couch Potato January 28, 2015 at 7:57 pm #

    @Rob: Hard to say anything without seeing the details of the actual fund, but as long as the fees are low and the fund is broadly diversified it’s likely to be a reasonable alternative.

  12. Susan February 23, 2015 at 1:25 pm #

    Hello, I have a whole bunch of RSP GICs in Tangerine already, as well as a TSFA (and another with Royal and mutual funds with Philips Hager North). I also have a couple of unreegistered savings accounts with Tangerine.
    I would like to be getting more than the pittance GICs offer. What kind of returns can I expect with Tangerine’s One-Fund?
    I’m an unsophisticated investor who isn’t very good at keeping an eye on things so I would like a low-maintenance option. I’m 54 and hope to retire by 62 or so. (I also have a good defined-benefits pension from a private firm.)
    My RSPs are maxed out but not my TSFAs (I think around $10K but may be $15 in them) and I would like to max them out.
    Thank you for any help.

  13. Canadian Couch Potato February 23, 2015 at 11:09 pm #

    @Susan: Because the Tangerine funds have a high allocation to stocks, their returns are not predictable. You may want to look at their long-term performance to get some idea of their past returns and risk:

    The Tangerine funds are certainly low-maintenance, but it is very important to make sure you choose one that is appropriate for your risk tolerance, especially if you are used to investing in stable investments like GICs.

  14. paola April 12, 2015 at 4:58 pm #


    Any suggestion on starting an investment portfolio for our kids? They have their own savings 1.5k each but I’m not sure how to invest their money on their behalf because of the taxes. Is there an option?

  15. Canadian Couch Potato April 12, 2015 at 10:09 pm #

    @paola: Children under 18 cannot have an investment account in their own name, but you may be able to set up an informal trust for them. This means you would administer the account until they turn 18, after which the account becomes theirs. If you can demonstrate that the money in the account is actually theirs (and not simply money you gave them to invest) the accounts may be taxable in their names. Even if you must pay tax on the income it may still be worth it if the accounts teach them about investing.

  16. Vicky May 5, 2015 at 10:39 pm #

    Hi Dan,

    I actually have a follow-up question regarding your response to Darren’s comment.

    If you are planning to buy property (or are at least open to that idea) within the next 5 years, what type of investment should you make with the money that you’re presumably saving for a down payment? Assuming that you have long-term investments in your TFSA and RSP, where should you park your short-term savings?

    I haven’t found on article on this here, but would love to see one!

  17. Canadian Couch Potato May 6, 2015 at 10:09 pm #

    @Vicky: If you are planning a major purchase within a few years, I’m afraid there’s only one responsible option, and that’s cash (or a GIC if you are confident you won’t need the money immediately). If the TFSA is full, a taxable account is probably fine for these savings, since interest rates are so low that there’s little tax liability anyway.

  18. Chen May 21, 2015 at 1:44 pm #

    I have about $40,000 in my TFSA and recently invested about $1100 into Tangerine Balanced Growth Portfolio. I just realized the limitation in the investment choices of Tangerine after having dumped all my savings into their TFSA. For the time being would it be wise to invest all the $40,000 into their MF? I have enough in my regular savings to not worry about the funds in my TFSA. Thanks!

  19. Canadian Couch Potato May 21, 2015 at 3:17 pm #

    @Chen: There are only four Tangerine funds to choose from, but each one is a balanced portfolio that is broadly diversified, so there’s really no need to have more investment choices, especially for a small portfolio. Just make sure the version you choose is appropriate for your risk tolerance.

  20. Tim May 26, 2015 at 12:20 pm #

    Hi Dan,

    I’ve got a TFSA and RRSP maxed out at scotiabank and have 15K I’m looking to invest long term. I don’t want to move my TFSA or RRSP money from scotia quite yet until I get a better grip on this stuff(I’m brand new to investing) – what would you recommend I do with the 15K when tax shelter is not available from TFSA/RRSP? I’m in a high tax bracket as well so tax efficiency would be ideal. thanks!

  21. Canadian Couch Potato May 26, 2015 at 1:43 pm #

    @Tim: I would like to help, but there is simply no way to answer that question without having a complete understanding of your financial situation and your goals. In the broadest terms, the best strategy is usually to include the non-registered account in the context of your overall portfolio and to simply use it to hold the most tax-efficient asset class. That is usually the Canadian equities, since the dividends are tax-favored and the capital gains can be deferred indefinitely.

  22. Lisa June 1, 2015 at 5:56 pm #

    You said to Vicki on May 6, “If you are planning a major purchase within a few years, I’m afraid there’s only one responsible option, and that’s cash”

    So, right now I have about 15k in my RRSP (through work, invested by whatever work chose) and about 10k thats just in my TD TFSA savings account making 1%. I think I would like to buy a house in 4-5 years. I was going to put that 10k into a Tangerine balanced or balanced growth TFSA. You’re saying it’s a bad idea? It’s better to keep int my TD TFSA savings account at 1%?


  23. Canadian Couch Potato June 1, 2015 at 7:06 pm #

    @Lisa: If you plan on using using your savings in less than five years or so you need to understand that stocks and bonds can lose money over that period. With short-term goals, it usually makes more sense to choose safety over potential growth.

  24. Andy June 1, 2015 at 7:20 pm #

    @Lisa It might not make a big difference, but you could do a bit better by moving your TFSA to People’s Trust. They’re currently offering 2.25%.

  25. Kim June 15, 2015 at 5:09 pm #

    I have some funds in tangerine’s RSP savings account and would like to move them into tangerine’s mutual funds. All of my funds are for long-term investment. Would you suggest moving the entire amount from the savings account to the mutual fund in one shot? Is it better to move a bit at a time over a couple of months? Thanks for the insight.

  26. Canadian Couch Potato June 15, 2015 at 11:07 pm #

    @Kim: If you are in for the long term, trying to time your entry point is not necessary. It might work out, but you will probably just be more anxious by dragging out the decision.

  27. Mike August 12, 2015 at 11:38 pm #

    I have had an Investors Group fund for years because I didn’t know any better. My knowledge is limited, investments are a hazy confusing cloud to me. I have recently opened a Tangerine checking and TFSA account, and I am getting quite enamoured with the idea of doing my RSPs through them, just transferring the lot from IG to Tangerine, and your article gives me confidence. I am not sure though, as you mention one of the selling points being a modestly small portfolio. My portfolio now is getting larger (closing on 300K)…yet I am not really any further ahead in really understanding how best to manage it.

    Is there a particular down side to putting a larger portfolio into Tangerine? What is the reason you particularly suggest it for smaller portfolios? I am well diversified with IG, but I am still paying MER of around 2.5 to 2.7% (some a bit more, some less). I admit, I don’t know what’s going on under the hood of the Tangerine portfolios, but…I am not sure if I want to either. Is it a too-many-eggs-in-one-basket thing?

  28. Canadian Couch Potato August 12, 2015 at 11:58 pm #

    @Mike: The Tangerine funds are a bit expensive for large portfolios compared with other DIY options, such as the TD e-Series funds or ETFs. But if you don’t have the experience to manage a portfolio with many moving parts they may still be a good choice even at $300K, especially if you are currently paying over 2.5%. But I am wary of recommending any DIY solution if investing is “a hazy confusing cloud.” It would likely be better for you to find a different advisor who charges a lot less, which should not be difficult with a portfolio of that size.

  29. Adam September 1, 2015 at 11:21 am #

    I currently have $50000 invested in Investors Group Mutual Funds. I plan to withdraw/sell these as soon as possible to reinvest with the One Fund plan with Tangerine you have described above. Do you have any advice or tips about how to go about transferring the old investments to Tangerine? Do I approach my current investment advisor and ask him to sell all my mutual funds so I can take the money elsewhere? Are there fees/taxes involved with this? How best can I go about it without paying for it?

  30. Canadian Couch Potato September 1, 2015 at 12:11 pm #

    @Adam: When you open the new accounts with Tangerine they will handle all the transfers for you. You do not have to specifically ask the IG advisor for anything. All of the IG mutual funds will need to be sold when the transfer is made, so if there are fees or taxes payable there is no way to avoid this.

  31. Robert September 2, 2015 at 4:50 pm #

    I am considering moving all our investments to Tangerine. We have about $430k with our financial adviser who is peddling Quadrus products and they have been under performing and the 2-2.5% MER, its almost criminal. Sadly after 15 years we are not on the same page with strategy and timing in moving our money around to where I want it to be.

    I am in my early 50’s and want to retire in 6-7 years. I just don’t have time to delicate and be a day trader or manage several stocks, I just want to be able to pay less fees and move my money around as I see fit in a timely manner. Are these Tangerine funds a good idea for us? we also have $65k in TFSA’s and savings in Tangerine.

  32. Canadian Couch Potato September 2, 2015 at 5:00 pm #

    @Robert: The Tangerine funds start to look a bit expensive at $400K to $500K. They are also not very flexible: they are all balanced funds, so you don;t have any control over asset location (keeping bonds in the RRSPs and equities in the TFSAs and non-registered accounts, for example). And of course there is no one to help with retirement planning, which will be important if you are planning to retire in 6-7 years. It might be worth considering working with a different advisor who charges much lower fees and offers planning services.

  33. Robert September 2, 2015 at 5:08 pm #

    Thanks, I will look into a new FA. This will be painful as I have zero tolerance for the sales pitch these days.

  34. Michael September 23, 2015 at 1:15 am #

    First i want to say, great article and thanks for reassuring that Tangerine is a good fund. A bad experience with TD Mutual Funds years ago turned me off anything that was not safe, but now I recognize it is time for a change.

    You mentioned “The Tangerine funds start to look a bit expensive at $400K to $500K”.
    I am curious what you suggest when we reach that amount.
    I don’t mind paying a 1.07% fee if the fund has a 5% return. This is still better than inflation.

    But perhaps I need to understand the fee better.
    How does the fee work?
    Do they take (almost said steal) 1.07% of my whole balance 1 time per year? Or is it more often?

    Through my work, we have Sunlife Financial and they are taking fees monthly. Those seem quite high although they tell us they are among the lowest (not as low as Tangerine). I tolerate it because the 3% my company contributes is free money. But i do not invest more than i have to with them due to fees between 1.38% and 2.23%.

    Until now, I have been investing my self directed RRSP’s in GIC’s but now they have reached ultimate low interest rates and I need to start earning a better return if i want to retire in 20 years. But I still want moderate risk since my Dad had a bad experience.

  35. Canadian Couch Potato September 23, 2015 at 8:55 am #

    @Michael: Mutual fund fees are normally calculated daily and charged monthly. A 1.07% MER does indeed mean that you are charged 1.07% of the average balance each year, or $107 for every $10,000 invested. With a large portfolio, a 1.07% fee is quite expensive and there are much cheaper options, including the e-Series funds (about half the cost) or ETFs (as low as 0.15% or so), though these options do require more hands-on work by the investor.

  36. Joe October 11, 2015 at 9:19 am #

    Thanks for this article and all of your other writing on index investing. After downsizing homes I have about $50K to start investing – I’m planning on starting an couch potato ETF account with the $50K. I also now have enough cashflow to continue investing on a monthly basis – I’m wondering if it would make sense (to simplify the trading) to setup an automatic savings program with Tangerine (say $500/month) into their balanced growth portfolio – then once per year move that money into my ETF account to rebalance?

  37. Canadian Couch Potato October 11, 2015 at 9:34 am #

    @Joe: Thnaks for the comment. Amy transfer from one brokerage to another will typically result in a fee, so this isn’t a good idea. A better strategy would likely be to use e-Series funds at TD Direct and then switch to ETFs when the portfolio is larger.

  38. May October 12, 2015 at 11:47 am #

    I’ve been trying to read over all this investment information for months now and it’s been both enlightening and overwhelming! Thanks for doing this though, as I am making moves to start investing properly, albeit maybe not as smartly as some people.

    My husband and I are in our early 30s and have opened up Tangerine TFSAs to start investing in their funds for our retirement, but we also have mutual funds and index funds with our bank for TFSAs and RRSPs. The MER at the bank is a little bit high (~ 1.1 – 1.5), but we weren’t very savvy and a bit too lazy/nervous to go the DIY route at the time.

    I was wondering, though, that when we amassed more funds closer to 200-300k (in about 15 years), if it’s suggested to sell them all off and then reinvest into them ETFs and try the DIY route? Is that how it works? I assume I’ll have more time and motivation to actually look into rebalancing and making manual contributions by then, but I’m unsure how that transition is supposed to look.

  39. Canadian Couch Potato October 12, 2015 at 12:39 pm #

    @May: Thanks for the comment. I hope you won’t feel overwhelmed: just start slowly and gain some comfort before making any significant changes in your investment plan.

    I don’t necessarily think it makes sense to build your portfolio to $200K to $300K before jumping into ETFs as a DIY investor. In many ways, the opposite makes more sense. If you are interested in DIY you may want to start when your portfolio is small and your mistakes will not be very costly. Jumping into a new activity only after you’ve saved serious money will likely be even more intimidating.

    You are probably fine with Tangerine for several more years. At some point you may want to look at the TD e-Series funds, which are a good introduction to DIY investing as they require more hands-on maintenance than Tangerine. ETFs may come later, but only after you’ve got your feet wet. For now, I’d encourage you to focus on good saving habits and not to worry too much about the smaller investing details.


  1. Cool Stuff Around the Web #6 - Mom and Dad Money - September 14, 2013

    […] Canadian Couch Potato: I like the argument here for most investors using a one-fund investment portfolio. This lines up perfectly with my advice given here. I really think this is the way that most people should go. […]

  2. Is the ING Direct 2014 TFSA Kick Start Account a Good Idea and How to Open One | Financial Crooks - May 1, 2014

    […] at ING Direct Tangerine in their Streetwise funds. According to the Canadian Couch Potato (Read: the One Fund Solution)  this is a reasonable […]

  3. How to Buy a Mutual Fund at Tangerine for your TFSA, RRSP or Savings | Financial Crooks - July 4, 2014

    […] excellent website that covers this type of investing in depth run by the Canadian Couch Potato. On his site, he suggests that for beginning investors who don’t have tens of thousands of dollars to commit […]

  4. Do One Good Thing for Your Future Self…Today | Russ Dyck on Findependance - May 22, 2015

    […] The One-Fund Solution (also by Dan) is a great post and I would do it no justice to try and summarize, so I will simply encourage you to give it a quick read and if you like what you see and are ready to drink the koolaid too, go on and read the White Paper he mentions in the post. Don’t worry if you are not all that informed with regards to MER’s or rebalancing spreadsheets, as they will come into play when you are ready to move into more DIY investing. Just know while the United States enjoys some of the lowest MERS fees (MER – Management Expense Ratio, % of your portfolio used to pay the mutual fund managers), Canada has some of the highest in the world. […]

Leave a Reply