Hey everyone, Nelson here. Mostly because of my laziness, we have a fancy new staff writer. And it’s Vanessa, the girl from everyone’s favorite blog named after herself, Vanessa’s Money. We are also, uh, good friends (WITH BENEFITS!) so be nice, dammit.
A couple of months ago the bank sent me a friendly letter — hey, our monthly rates are going up and we aren’t honouring your banking package anymore. We’ll just help ourselves to $4 each month, ok? THOSE BASTARDS.
I hated everything about the letter and decided to let RBC have a piece of my mind. I got dressed up nicely and went to the bank to demand that they honour my free banking package forever. I’ve been a good customer for years and I was sure that the nice man at the bank would do me a favour and waive the fee.
Unfortunately, I’m not that charming (Nelson’s note: shoulda shown more cleavage). Plan B was to invest the minimum amount possible to qualify for RBC’s multi-product discount (credit card + investment = free banking!). I asked the nice bank guy what my options were and was treated to this gem:
Me: Can I hold ETFs in my TFSA?
Nice bank guy: Oh no, EFTs are only for RBC Direct Banking clients
Me: *stares* What’s an EFT?
Nice bank guy: It’s like a mutual fund
Resigned to the fact that I was dealing with an idiot and that I had to invest in a mutual fund or GIC to get free banking, I asked him to show me all his emerging markets funds and then picked one at random (RBC Emerging Markets Dividend Fund). Next, of course, came my investor profile. Question after stupid question that the RBC computer needed answered in order to let the nice bank guy sell me a mutual fund. Finally we were good to go — except there was a block because apparently I’m not allowed to have 100% of my TFSA in high-risk mutual funds. What country is this? I can hold 100% of my TFSA in cash, 1% GICs and mutual funds that consistently lose money because of the management fees but I can’t have all of my eggs in a risky basket? The branch manager came over, I explained my position (A $500 investment, in the unlikely scenario that that it goes to $0, won’t kill me), convinced him that I knew what I was doing and that I understood the risks and he approved the sale.
So how has this mini-investment done in the 9 months that I’ve held it?
Oh boy, those four months at the beginning of the year sure were scary when the fund fell to only $25 (5%) more than I paid for it! /sarcasm
I’ve been paid 2 quarterly distributions and, even after a 2.46% management fee, the fund is up $54.36 (10.87%) in 9 months. This is a 14.5% annualized ROI on an investment whose main purpose is to save me money. If we factor in the $4 a month in bank fees that I’ve saved, I’ve got myself a lovely $90.36 net gain which represents an 18% return in 9 months (24.1% annualized).
What else can you buy these days that gets you a 25% return? Automodular? Exactly. Financial Uproar — the blog that tells you how to get 25% returns. Uh, I mean, nothing I say is financial advice.