Comments on Triaging My Way To Financial Success: Mailbag: TD Canadian Bond Index Fund (TDB909)

Good post td canadian money market ..Keep Posting ...

2009-10-30T11:24:22.205-04:00

Good post td canadian money market ..Keep Posting

Jack
td canadian money market

Thanks guys. This has been very informative.

2009-06-22T12:12:21.715-04:00

Thanks guys. This has been very informative.

interesting points. however, the flexibilty and lo...

2009-06-19T21:52:26.802-04:00

interesting points.
however, the flexibilty and long-term planning related to the purchasing of individual bonds would allow the new investor to 'fill up' the individual rungs of a properly laddered portfolio slowly, over time. If you start with $5000 and can contribute the same amount each year in savings, you can purchase individual bonds safely.
security risk, as you descibe it here, is essentially meaningless.
TD waterhouse (and most large online financial institutions in canada) offers a call centre for anyone who has a discount brokerage account. they will happily discuss diversification, credit risk, inflation and interest rates. this will further help an individiual investor who takes the time to learn about bonds.

You should never have all your eggs in one basket ...

2009-06-19T21:49:54.567-04:00

You should never have all your eggs in one basket and although this fund is highly rated against its peers and diversified into many issues there is risk. If an individual has the time, knowledge and size of a portfolio to invest into individual bonds than BIB's suggestion on a model portfolio is a valid consideration.

The problem for a retiree is that a sizeable amount of capital could be eaten up by fees very easily. A $500,000 base of capital at 0.48% per year is still $2400 in fees and the taxable exposure in a non-registered account isn't that great. The bond fund is a good choise for a passive investment strategy, but I wouldn't recommend putting your entire portfolio into the hands of one investment manager.

Ok you bond guys... The distributions from this fu...

2009-06-19T13:09:56.794-04:00

Ok you bond guys... The distributions from this fund being around the "4% rule", what would you think of a retiree putting her entire savings into this fund and living off the distributions?

I don't think it either over or under-exaggerates ...

2009-06-19T12:58:44.345-04:00

I don't think it either over or under-exaggerates risk. Jordan didn't disclose what amount of capital he/she had invested in the bond fund and buying individual $5,000 bonds might be cost or risk restrictive to that investor's approach. One would argue that if he/she had anything less than $50,000 invested in the bond fund that individual bond ownership (mixed between corporates and government bonds) would be ill-advised based on security risk.

The plan you presented BIB is good for a more novice bond investor, but I think (and I can't speak for Jordan) that the question was posed be a new investor looking to learn more about individual bonds. There I still think diversifying into a corporate bond ETF with the bond fund would be a better option while he/she learns what's required to appropriately protect themselves from risk.

this post over-exaggerates the risk of investment-...

2009-06-19T10:17:11.005-04:00

this post over-exaggerates the risk of investment-grade corporate bonds to inflation and defaults in canada.
'jordan' would likely be better served by selling the bond fund and opening a discount brokerage account, using the fixed income tools readily available and diversify (no more than 10% of your money in a single issue) among AA-BBB rated utilities, financials, reits, and retailors (molson, loblaws), and create a 7 year ladder. he can preserve the rest of the capital in 10 year real return bonds if he's that afraid of interest rates and inflation and wants a clear 10 year plan.
the MER (about 0.1%) will be included in the original price and the yield will likely be 100 basis points(or 1%) higher than the TD bond fund.

Patrick: the distribution will change each month d...

2009-06-18T17:17:59.873-04:00

Patrick: the distribution will change each month dependent on the income after fees) that the fund generates from its bond holdings (income from bonds and capital gains)

For the past three months here is the % paid out in units to my account:

March: 0.36% (4.34% annualized)
April: 0.36% (4.34% annualized)
May: 0.35% (4.20% annualized)

Sorry to keep asking these kinds of things, but I ...

2009-06-18T15:36:26.458-04:00

Sorry to keep asking these kinds of things, but I just couldn't tell from the prospectus... What's the distribution yield on this fund?

Patrick: Yes the fund distributes income monthly. ...

2009-06-17T13:45:21.788-04:00

Patrick: Yes the fund distributes income monthly. I re-invest the income into new units (compounding the growth) but for many retirees who use the fund it provides some monthly income depending on how many units you hold. The word "may" used in the prospectus might just be a precautionary term in the event that they skipped income one month for any number of reasons.

Do you get monthly distributions with this fund? ...

2009-06-17T13:30:33.347-04:00

Do you get monthly distributions with this fund? The prospectus just says it "may" distribute income monthly.