As I mentioned I found the following and want to crunch some of my own numbers so I get better asset allocation and “location” for DearWife and DearHusband. http://www.moneysense.ca/taxes/making-smarter-asset-location-decisions/
Current situation 95K TOTAL:
80K in two (yes only 2) Canadian stocks in an un-registered (face punch) joint account owned DW & DH (let’s assume book value 20K so lots of capital gains to pay.) One pays dividends the other doesn’t, both about 40K. Both are low right now but who knows when they will go up or down more.
20K TFSA room each DW & DH
20K RRSP room for DW
80K RRSP room for DH
Objective: Create a more balanced portfolio (Vanguard ~couch potato) and transfer into tax advantage accounts. http://canadiancouchpotato.com/wp-content/uploads/2015/01/CCP-Model-Portfolios-Vanguard.pdf
Vanguards I am interested in:
25% VAB (Canadian bond mix)
25% VCN (Canadian stock mix)
25% VXC (Global stock mix)
25% VDY (Canadian dividend stock mix)
Sell 20K of the stocks and add to 10K cash
OK now we each have 15K to invest
DW puts 15K into an RRSP: 10K VDY, 5K VAB
DH puts 15K into an RRSP: 10K VXC, 5K VAB
60K remaining in Stocks.
At the end of the year:
Sell another 20K stocks, bundle with new savings ~10K
Again we each have 15K to invest
DW puts 5K into and RRSP: 5K VXC (RRSP now full for her)
DW puts 10K into TFSA: 10K VCN
DH puts 15K into RRSP: 5K VAB, 5K VDY, 5K VCN
New picture January 2016
40K 2 Canadian stocks
60K in Vanguard (All in registered accounts!)
15K VAB (Canadian bond mix)
15K VCN (Canadian stock mix)
15K VXC (Global stock mix)
15K VDY (Canadian dividend stock mix)
Do the tax rules on ETF work the same as stocks and bonds? I guess what I am asking is are there any general rules that VAB should be RRSP and VDY should be unregistered provided the others are full? Where is the best place to build up VXC (global)?
I believe the total 2015 capital gains tax from the 40K stocks that we sell is roughly = ((40-10)/2 )*40% = 6000
But this will be more than offset by reinvesting 20K+30K = 50K in an RRSP.
Should we be putting more into our TFSA? DH’s parents have him convinced RRSPs are a waste of time because you still pay the tax later. I see them as a beautiful way of offsetting the capital gains at this point in time. My guess/hope is that our retirement income is about the same as today.
Thanks for looking into this. I am sure there are many opinions on my allocation. I am still Canadian stock heavy. I can tweek 5K here or there, it's not that I don't care but I feel selling a bit of the risky stocks and the LOCATION is really the most important thing I need to optomise right now.