How young is too young to be a Couch Potato investor?

Q: My son has a flyer route and wants to save $50 a month. I would like to teach him about the Couch Potato strategy, but can he put $50 a month straight into an investment? If so, where can he go to do that?

—Eden Daley, Regina

A: The Couch Potato strategy is a super-simple, low-cost way to invest. But when you’re just starting out and don’t have a lot of money to put in, you really need to watch transaction costs. For example, your son shouldn’t use exchange traded funds (ETFs) because the trading commissions he’d be paying could top $19 for every purchase. For small, regular contributions, the ING Streetwise Portfolios are probably the best bet. There are four different index mutual funds to choose from, each with a different mix of stocks and bonds, says Canadian Couch Potato blogger Dan Bortolotti. You can open an account online with no annual fee, no minimum account size and zero maintenance, since you’re buying a single fund that rebalances itself. The MER is 1.07%, which is high compared to ETFs but low considering the amount of money invested. However, there is one wrinkle: You will need to open the account for him, as he can’t do it himself until he reaches the age of majority.

Bruce Sellery is a frequent guest on financial television shows and author of Moolala. Do you have your own personal question? Write to Bruce at [email protected].

About Bruce Sellery

Bruce Sellery is the CEO of Credit Canada, the country’s longest-standing non-profit credit counselling agency. He is a former MoneySense columnist.