Author Topic: [Canadian] Simple investing with CIBC index funds?  (Read 261 times)

Le Barbu

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[Canadian] Simple investing with CIBC index funds?
« on: July 16, 2017, 04:04:14 PM »
MIL asked me for investing advices for TFSA, RRSP and taxable. Everything was into GICs since 3 years (widowed) and she is ready to invest better now. No intention to transfer in another bank or self brokerage at CIBC.

CIBC have a "low fees" index funds line-up for investor who buy >50k$/funds. These funds are in the 0.4% MER range. The maximum exposure to stocks is about 25% (I would go up to 75% but, 25% stocks is better than 100% GICs...) Her pensions (employer + goverment) is in the 35k$ range and house is paid-off (worth 200k$) so, expenses are fully covered by theese including travels and luxuries. Investments are mostly for unknown future expenses (health issues, taking all the relatives to Disney, etc) or just grow inheritance stash!

RRSP worth 75k$, TFSA 52k$ and taxable is almost 100k$

Because of the difficulty level, I tougth about that less than perfect asset allocation: TFSA would be 100% invested in CIB587 (wich is a "balanced" index funds with 45%bonds, 35% Canadian stocks and the remaining 20% is US and Intl' stocks) and the same for the taxable account. The RRSP would go into CIB584 or CIB585 wich are respectively short and aggregate bond funds. The final split would look like this: 75% bonds, 15% Canadian stocks and 10% US & Intl stocks.

This is far from optimal to me but Probably the best I can do within boundaries and far better than 100% GICs or 2.5% MER mutual funds that professionnal financial advisor would push...

Any better idea?
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daverobev

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Re: [Canadian] Simple investing with CIBC index funds?
« Reply #1 on: July 16, 2017, 05:39:07 PM »
If she's 100% covered already, why not put it all into the balanced fund? I don't think it matters where you hold the bond fund vs the balanced, if she chose to split as you said.
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Le Barbu

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Re: [Canadian] Simple investing with CIBC index funds?
« Reply #2 on: July 16, 2017, 06:06:37 PM »
If she's 100% covered already, why not put it all into the balanced fund? I don't think it matters where you hold the bond fund vs the balanced, if she chose to split as you said.

This could be even simpler (I mean, holding the same balanced funds in all 3 accounts). What I do not really like about this "balanced" funds is the very high Canadian stocks vs US and Intl. Not easy to figure this out when you are used to work with ZCN, XAW, VAB and the like!
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daverobev

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Re: [Canadian] Simple investing with CIBC index funds?
« Reply #3 on: July 17, 2017, 06:18:05 AM »
If she's 100% covered already, why not put it all into the balanced fund? I don't think it matters where you hold the bond fund vs the balanced, if she chose to split as you said.

This could be even simpler (I mean, holding the same balanced funds in all 3 accounts). What I do not really like about this "balanced" funds is the very high Canadian stocks vs US and Intl. Not easy to figure this out when you are used to work with ZCN, XAW, VAB and the like!

Yes, but again, not really worth worrying about - if those are the tools you have to work with. Tax treatment of divis is better so in theory, all other factors aside, meh. I wouldn't, given the choice, but with no choice, it'll be ok. The fund will rebalance itself.
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Mr. Rich Moose

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Re: [Canadian] Simple investing with CIBC index funds?
« Reply #4 on: July 19, 2017, 10:53:28 AM »
I noticed basically all of CIBC's "balanced" type funds have enormous relative exposure to Canadian assets. Too bad she doesn't want to broaden her horizons a bit.

On the bright side, it probably doesn't matter much from a longer term perspective. Either way she will outperform GICs. If it were me in your situation and given the limitations, I would recommend she put 100% of everything into the balanced fund as daverobev suggested. It's easy to manage and easy for her to understand.
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Le Barbu

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Re: [Canadian] Simple investing with CIBC index funds?
« Reply #5 on: July 19, 2017, 12:28:02 PM »
I noticed basically all of CIBC's "balanced" type funds have enormous relative exposure to Canadian assets. Too bad she doesn't want to broaden her horizons a bit.

On the bright side, it probably doesn't matter much from a longer term perspective. Either way she will outperform GICs. If it were me in your situation and given the limitations, I would recommend she put 100% of everything into the balanced fund as daverobev suggested. It's easy to manage and easy for her to understand.

Thank you Rich Moose,

Anything else than GICs will be considered a victory!

This family use to buy new cars at the dealership every 4 years (trading in the previous car), put a few thousands into GICs (when accountant tell them to use RRSP room) and complain about how expensive everything has became (when they realise they loose purchasing power)!

Otherwise, they are nice people who just suck with money!
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