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We’ve gotten some pretty good feedback from our readers on this new mailbag feature so we’re excited to keep answering your questions.  Please don’t be shy about hitting up our contact page and letting us know what’s on your mind.  Sometimes I think the internet is like one big high school classroom (sorry, I’m a teacher, my analogy bag might be somewhat limited), lots of people have the same question you do, but no one wants to seem vulnerable by asking it.  As always, these are actual questions given to us by real readers.  The only thing we edit is people’s name to protect their privacy.

Hello Kyle,

I really appreciate the e-book and the website I feel it is important for us to have a site to source from and educate individuals, after reading through a good amount of the e-book. I had a question about mutual funds I had invested in select conservative mutual funds at [insert large Canadian bank here] and have been losing money for over a month now. I am now thinking that I should switch my investments or perhaps wait a little longer to see what happens. Please let me know what you think would be better. I am new to investing and prior to this had only invested in GIC’S as I am planning on purchasing a home within 3 years.

Thank you,


There are actually a few levels to your question of “Should I get out of big bank mutual funds?” here Ritchie.  Here is what you need to take into consideration before making any choices:

1) Why did you suddenly change your investing strategy from GICs?  Was there a change in the goal you were investing for?  Did you suddenly develop a much higher risk tolerance?  How does this change fit into your long-term plans?

2) Why are you saving for a home down payment with equity-based mutual funds?

3) How much time and research have you done on these mutual funds specifically?  How much research are you comfortable doing in the future?

4) Finally, have you read anything about market timing?  If not, take a look at that before rushing into anything else.

Long story short, I almost always advise people to get out of bank mutual funds immediately because of their extremely high MER fees and their underperformance over the long term.  Check out this article for more information.

On the other hand, I’m very nervous about answering your question on mutual funds given how you’ve phrased it here.  You should NEVER get out of an investment just because it has lost money for a month or two.  If you understand why you got into the investment, a month of losses should not matter at all.  No matter what investing product or style you choose to use, there will always be down months, years, and even five-year stretches.  So don’t get out because of that.  This mindset will do all kinds of damage to your investment portfolio in the coming years if you succumb to it.

Then we get into the whole issue of should you be in equities altogether?  If your main financial goal is saving for a housing down payment with a 3-year window, I don’t know very many financial advisors that would have you in equities at that point.  Some basic bonds and/or GICs that come due when you’re looking to make the purchase make the most sense to me.  If you need that money soon, you shouldn’t put it in equities of any kind, be they ETFs, mutual funds, or individual stocks.

Ultimately Ritchie I wouldn’t put any more money into equities until you fully understand what your goals are in the short-, medium-, and long-term.  GICs aren’t paying a ton right now, but if you put them in your TFSA they’ll do a little work you.  You may also want to examine the Home Buyers Plan and your use of RRSP funds and see if it makes sense for you.  You need to do a little reading, decide on a plan you can be confident in, and then see it through without micro-managing it into oblivion.  Good luck!

Article comments

Toan says:

I get these questions all the time and I’ve found it always has to do with the fact that people don’t know how to plan their goals properly.

Also, selling when your investments are down is like locking in your losses.

I agree with Kyle, Ritchie should try to get out of bank mutual funds when possible, be concrete about his goals, and plan his strategy around that.

And definitely do some more reading around on this site.

Kyle says:

Thanks for the back up Toan!