If you have Money

Starting out in building your Wealth


Vast legions of financial companies will fall at your feet if you’ve got a big amount of money to invest, but what if you or one of your children is just starting out?

Investing newcomers have two ways to go – try to build up an investing fund the safe-but-slow way using a savings account, or find a way to invest in the markets with next to nothing. Let’s say you or one of your kids wants to put some money in a registered retirement savings plan right away, with just a few hundred dollars in hand.

An obvious place to go would be your bank. Almost every bank branch has someone who can sell funds, and it happens that most bank fund families include some pretty good products, notably Canadian equity, Canadian dividend and income funds. At TD Canada Trust branches, you can buy into TD Canadian Equity, a very solid performer, for as little as $100 in a registered retirement savings plan account, or $1,000 in a cash account. You can buy BMO Dividend and Scotia Canadian Dividend for as little as $500 upfront in either an RRSP or cash account, while RBC Dividend requires $500 for an RRSP and $1,000 for a cash account.

A pair of insurance companies, Great-West Life and London Life, have a $300 minimum for their funds. The mainstream fund company with the lowest upfront minimum is AIC Funds, at $250. Companies such as AIM-Trimark, CI Funds, Dynamic, Fidelity and Mackenzie Financial have $500 minimums.

The challenge isn’t just finding a fund company with a low minimum. If you’re dealing with a fund company that doesn’t sell directly to the public like the banks do, then you also have to find an investment adviser willing to accept a tiny start-up account. For young people or those just starting out in the workforce, the best approach is to hook up with the adviser their parents use. Alternatively, new investors may find they can only interest an adviser in their account if they commit to making sizeable and regular contributions. Small independent advisers may be most open to this sort of account, whereas advisers at big firms would likely be much less interested.

Another option is to buy funds through an on-line broker, where you have access to hundreds of funds and the commissions are minimal or non-existent. Be sure to check to see if there are any minimum account sizes – some firms have them, others don’t.

If you decide to save up before getting into the markets, use the sort of no-fee, high-interest savings account offered by ING Direct, Altamira Investment Services, President’s Choice Financial, Citizens Bank of Canada and many others. The returns aren’t great at 2.5 to 3.25 per cent, but at least you’re doing better than a regular bank savings account.