ING Direct is known for high-interest savings accounts and low-interest mortgages. But it’s never made much of an impact with mutual funds, despite previous attempts to launch its own funds and distribute other funds.
So, ING has hopped onto the bandwagon of index funds and introduced its own version of the couch potato portfolio. The Streetwise Fund lets you bundle index funds together into a portfolio that suits you. The balanced fund, for example, is 40 per cent Canadian bonds, 20 per cent Canadian stocks, 20 per cent U.S. stocks and 20 per cent international stocks.
You can almost hear the conspiratorial whisper when you read ING’s advertising slogan, “the mutual fund ‘they’ don’t want you to know about.” You read about the high cost of everyone else’s actively managed funds, but you don’t see any reference to the cost of the passively managed Streetwise Fund.
Only when you read the 32-page prospectus do you find the MER is 1 per cent a year. That covers 0.8 per cent management fees and 0.2 per cent operating expenses. If you’re familiar with index funds, you’ll realize this is more expensive than other products.
I found a great discussion at the Financial Webring Forum. The conclusion seems to be it’s worth the cost if you’re a beginning investor who wants a no-hassle portfolio. Yes, you can bundle a few index funds together and pay about half of the Streetwise MER, but you have to keep track of them all and rebalance each year. As for exchange-traded funds, they’re definitely cheaper. But you have to pay trading commissions, which can really add up if you’re contributing a small amount each month.
So I think ING is on the right track with this product. But when the company says, “it’s about time you were given the straight goods when it comes to investing,” I wish its online promotion was more up front about disclosing and comparing costs.
Capital One is known for its “hands in your pocket” TV ads promoting credit cards. The latest Platinum MasterCard deserves attention. It’s billed as Canada’s lowest long term rate, not an introductory rate, at prime plus 0.9 per cent on purchases and balance transfers and no annual fee.
Canada’s prime rate is now 5.75 per cent, which makes the MasterCard rate 6.65 per cent. That’s definitely way below anything I’ve seen. The catch is that you need “excellent credit” to apply and be accepted.
So, what’s excellent credit? The U.S. spokeswoman said this:
You’ve had open credit such as a credit card, loan or line of credit for more than three years.
You’ve had no bankruptcies and no defaults on credit as a result of failing to pay debts back to creditors.
You have not been declined for credit more than once in the last six months.
You’ve made all your payments on your existing credit on time in the past six months.
The low rate never runs out, but you only get to keep it if you’re a prompt payer. You may find your rate bumped up to double-digit range if you’re more than 10 days late twice within a six-month period. However, you can have your prime plus 0.9 per cent rate restored if you pay on time for nine months in a row after you slip.
Monty Loree, who offers the new Capital One card at his Canadian Money Advisor blog, gave me a rundown of the best rates on credit cards in Canada.
MBNA Platinum at 14.99% – No Annual Fee
Scotia Value Visa – Fully secured 9.40% – (This card is secured against assets) – $29 Annual Fee
Scotia Value Visa – Non-secured 11.40% – $29 Annual Fee
TD Emerald – Prime+1.9% – Prime +6.9% – $25 annual fee
CIBC Select Visa 11.5% – $29 Annual Fee
National Bank of Canada – Prime +4% – $35 Annual Fee
CitiBank Silver Low Fee Card – 9.9% interest – $29 annual fee
(I called into customer service to get their lowest interest rate card.)
As a rule, to get the lower interest rates, you’re either going to need a very good credit score with Equifax and/or TransUnion or you’ll have to secure the credit card.
The American credit card companies that do business in Canada seem to be more aggressive with their rates.
It’s best to get the permanent low interest rate cards. The introductory rates are a hook to attract people. The companies are obviously interested in getting the customer to stick around and pay the higher interest rates.