Saturday, November 24, 2007

MG's 4 goals - (goal # 2)

About one year ago my wife and I set 4 long-term goals for our non-registered portfolio. I have these goals indicated on one of my Excel spreadsheets that I use to track my non-registered portfolio. The reason I have them there is so that I can see the 4 goals as a reminder, as well as to check up on my progress regularly. When creating these goals I tried to make them simply stated, specific, challenging, and of course realistic. I thought I would share these 4 goals for our non-registered portfolio in a series of posts. Goal # 1 was shared on my November 4th post.

Goal # 2
Keep our 'Buy Fee' under 2.0%*

*What is meant by the term 'Buy Fee' is the percentage derived from the following formula:
(Commissions + other fees) / ((Total Purchase Cost - (Commissions + other fees))

Basically this is a measure of the fees we pay to invest divided by our total investment net of fees.

Currently our Buy Fee = 2.2%. We are not meeting this goal due to the fact that we paid some big fees for stock certificates in order to set up DRIPs during the first few months of this portfolio's existence. I expect this buy fee to continue to drop until I get it under 2.0%. I imagine I will maintain the fee at around 1.9% - 2.0% for the next five years or so.


4Life said...

MG: I have question that I am sure you will consider remedial. What is a "non-registered portfolio"? I see this a lot on the Canadian sites that I read, so I suspect it has something to do with Canadian tax law, possibly something similar to our (U.S.) IRA's?

Best Wishes,

MG said...


In Canada, we have what is called an Registered Retirment Savings Plan (RRSP), or even for a child a Registered Education Savings Plan (RESP). The are tax sheltered until you access them. Probably similar to an IRA etc. in the US.

Non-registered simply means that it is not tax sheltered. I just use the term to differentiate from our RRSPs (registered portfolios).

FourPillars said...

What is the advantage of paying the fees up front for certificates in order to do a DRIP directly with the company? Seems to me that most discount brokerages do DRIPS for free so why not just buy from them?


MG said...

The advantage is that the owning the shares direct with the company (transfer agent), allows you to buy fractional shares. Synthetic drips do not allow this.