What would you Like to Know?
What is an "online investing firm"?
RBC Direct Investing is an online investing firm, providing access to
a complete range of investments including stocks, bonds, mutual
funds, and options, to clients who are comfortable making their
own investment decisions. Clients can manage their investments
online, through an automated phone system, or over the phone with
a qualified investment services representative. Trades start as
low as $28.95
Online Investing
is designed for investors who prefer to manage all or a portion
of their investments on their own. At RBC Direct Investing, we offer a
wide range of services, including the execution of orders to buy
and sell securities at commission rates often significantly lower
than those charged by full-service brokers.
Direct Investing brokers do not provide advice or recommendations
to clients.
Find out how to open an account
As a self-managed investor, do I still require a financial plan?
All investors should have a financial plan in place. Here are
5 reasons why you should:
1. Identify your goals. The process of forming
a financial plan forces you to think about and identify your true
financial goals and dreams. The next part of the process is implementing
an investment portfolio that will realize them.
2. Reduce Risk. A financial plan takes a comprehensive,
clear-headed look at your financial situation, including taking
measures to protect your assets and your loved ones should an unforeseen
event occur such as job loss, disability, or premature death.
3. Save Money. Developing a financial plan often
results in the identification of opportunities to reduce costs
or save taxes.
4. Focus on the long term. Everyone can be influenced
by short-term events. But a long-term focus is required for long-term
goals. A solid financial plan can help you stay on track and ride
out short-term market fluctuations.
5. Time savings. Once your financial affairs
are in order, you'll need to spend far less time managing and worrying
about them day-to-day.
I often hear about maintaining a balanced portfolio, what does
this mean?
Generally a portfolio should have a balance of equities, bonds
and cash. For every investor, there is an ideal balance between
the three main asset classes - cash equivalents (cash, money market,
short term bonds), fixed income (T-Bills, bonds, GICs), and equities
(stock). On average, cash and bonds provide lower returns, but
are less volatile. Stocks provide greater return potential, but
are more volatile. Your ideal asset mix depends on factors such
as your risk tolerance, lifestyle requirements, investment time
horizon and current market conditions.
What is dollar-cost averaging?
The principle behind dollar-cost averaging is that an investor
invests a fixed dollar amount in a particular investment on a regular
basis (weekly, monthly, quarterly etc.), and in so doing, is able
to buy more shares when the price is down and fewer shares at higher
prices. The end result is that the investor owns the stock at an
average cost that is lower than the average price of the investment
over time.
In the example below, the investor puts $500 of a stock during
each time period. The average price is $7.40, but his average cost
is only $7.00 ($2,500 divided by 357).
Time
Period
| Amount
Invested
| Price
| Number
of Shares
|
Average
Cost
|
| 1 |
$500 |
$10.00 |
50 |
$10.00 |
| 2 |
$500 |
$8.00 |
62 |
$8.89 |
| 3 |
$500 |
$6.00 |
83 |
$7.69 |
| 4 |
$500 |
$5.00 |
100 |
$6.77 |
| 5 |
$500 |
$8.00 |
62 |
$7.00 |
| |
$2,500 |
$7.40 |
357 |
$7.00 |
NOTE: Commissions are not factored into the dollar cost averaging
grid
To assist you in taking advantage of dollar-cost averaging RBC Direct Investing
has an Automatic Investment Plan.
Where can I research different stocks?
There are several sources for direct investors to research their
investments.
At RBC Direct Investing we have provided some suggested links that we
feel may be beneficial to self-directed investors. You will find
links to:
- Exchanges (TSX, Montreal, CDNX Venture)
- Information Services such as SEDAR (which provides
the disclosure documents of public companies and mutual funds
across Canada and Canada Newswire)
- Securities Industry Link (such as Ontario Securities
Commission, Derivatives Institute, Canadian Investor Protection
Fund, etc)
As a RBC Direct Investing Online Investing client, you will also have
access to the Globe and Mail web sites - globeandmail.com, globeinvestor.com
and globefund.com. This comprehensive financial toolkit gives you
one-click access to Reuters breaking financial news, First Call
Earnings Estimates, Company Snapshots and Mutual Fund Profiles,
Charting, ROB TV. Please note that links to other web sites or
references to other third party products, services or publications
at this site should not be taken as an endorsement or approval
from RBC Direct Investing Inc. The information available on our Web
site is provided by sources believed by RBC Direct Investing to be reliable.
Any information, including performance data available through any
third party provider, is not guaranteed to be current, accurate
or complete and is subject to change without notice.
Part of my portfolio is investing in GICs and recently I've been
hearing a lot about a "laddering" technique. What does this refer
to?
An effective strategy in managing interest rate risk is to stagger
the maturity dates of a series of interest bearing investments - a
strategy called laddering. Here is how laddering works: Say you
want to invest $25,000 in GICs. Rather than selecting one term,
you buy five separate GICs of $5,000 each, with terms from one
to five years. By laddering your investments, you will have one
GIC maturing each year. The proceeds can be used for immediate
financial needs, or reinvested in a new five-year GIC. Laddering
ensures that you receive a portion of your savings in ready cash
each year. And it allows you to average out the rate of interest
that is payable to you, reducing the risk of locking in all your
money at a low rate for a long period of time.
There are several ways to research what GICs are available. Please
visit our online Fixed Income Centre.
When I place a trade, will a trader automatically review it?
As of December 31, 2001, RBC Direct Investing is no longer required to
assess every order against the investor's stated objectives. These
regulatory changes give you the power to have your orders processed
without undergoing a suitability review. Benefits of this change
include faster order-processing and more immediate control over
your portfolio.
I am 71 years of age and have been told I must convert my RSP.
What does this mean?
You are required to convert your RSP into an income-paying structure
by the end of the year in which you turn 71. You may convert earlier,
if you wish. Your choices are cash (lump-sum payment, less applicable
taxes), an annuity, a Registered Retirement Income Fund
(RIF), or a combination of these options. Because of its flexibility,
the RIF is the most popular conversion option. With a RIF you are
required to withdraw a minimum amount each year, based on a formula
according to your age, or your spouse's age. There is no upper
limit for withdrawals. Like RSPs, RIFs can hold a wide range of
mutual funds, stocks and bonds. One of the few restrictions is
that you cannot make contributions to a RIF.
Is it possible to make a contribution to my RSP account with
securities from my Investment account?
Absolutely, you can contribute eligible investments from outside
your RSP at their fair market value. There may be tax implications
so please make sure to consult your tax advisor, if you have questions
about any deemed dispositions.
What GICs are available through RBC Direct Investing?
We offer Guaranteed Investment Certificates from over 20 different
issuers and most are insured by the Canada Deposit Insurance Corporation
(CDIC). The GIC terms offered are from one to five years. GICs and other fixed income products are available online.
To view our GIC rates and find out more, please visit our online Fixed
Income Centre.
What is your mutual fund trading cut off time?
The trading cut off time for most mutual funds is 2:30 p.m. Eastern
Time. These trading times are subject to change without
notice, so you should confirm the time when you place your order.
Orders received after the cut-off time will be processed the next
business day.
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