Originally Posted by Rick_Head
Vanguard and others offer index ETFs that trade on the TSX. A Canadian can also buy any ETF trading on the NYSE. Mutual funds are another matter. You are pretty much limited to those offered by Canadian firms. Most Cdn MFs have high MERs, TD e-funds have some of the lowest.
If you are investing small amounts (like a 25 yo might do) buying MFs commission free might be smarter than paying $10 - $29 per trade to buy ETFs.
While it is unlikely to apply to a 25 yo, owning large amounts of US companies (or US ETFs) on the NYSE can put you in the position of owing US estate tax. Yes there are high NW limits to when it applies but tax rules are subject to change at the whim of politicians.
Research the TFSA. It may be the investment of choice for low income 25 yo.
I agree. Your friend's DD first needs to start LBHM, pay down consumer debt, don't accumulate any more, then start investing on a small scale. Assuming she is in a low tax bracket, the TFSA is where she should begin. This has been around since 2009 and for the first couple of years, the annual contribution room was $5K; it has since gone up to $5.5K. If she has never put money into a TFSA she now has a cumulative contribution room of $36,500. Those savings can be invested in a broad range of products and returns will never be taxed. At her age she should put some money in equities and should also have some liquid emergency funds. I recommend that she open a TD Waterhouse account and purchase some TD e-funds.
Disclaimer: I do have some TD e-funds in my own TFSA, including a Canadian index fund (TDB900) and an investment account (TDB8150) which pays 1.5%. There are no commissions to buy or sell TD e-funds within a TD Waterhouse account.