Author Topic: What to do with inheritance(Canada)?  (Read 886 times)

Wrenchturner

  • Handlebar Stache
  • *****
  • Posts: 1300
  • Age: 33
  • Location: Canada
What to do with inheritance(Canada)?
« on: August 31, 2019, 08:22:34 PM »
Hello all,

I expect to receive an inheritance before the end of the year around $10k CAD - $15k.  I'm not sure what to do with it.  I already save about 1k a month and buy VFV with it inside a TFSA.  This inheritance money I'd rather keep in a safer short-term investment in case I decide to buy a house or condo in the next 5-10 years.  Right now I'm well arranged for meeting some travel goals so I'm not in a hurry to buy property but I think it will happen in the next 5-10 years.  I should probably start buying some bonds or something too to help balance my S&P investments.

I also have a employee-matching RRSP through Manulife, but it tops out at $1k annually and that's what I contribute, into an aggressive mutual fund with something like 1.35% or 1.75% fees, I don't recall precisely.

...I was thinking I would put it in the RRSP in case I made use of the first time homebuyer's thing that lets me withdraw from an RRSP, but now that I did some cursory reading, I'd have to claim it as income if I pull it out early for any other reason.

So I'd be better off just buying a lower risk ETF within a TFSA or something?  I'm not approaching the contribution limit for the TFSA.  Maybe a TD eSeries fund?

I haven't done much reading on Canadian investing so I don't really know the strategies.  Help would be appreciated, thanks in advance!

Goldielocks

  • Walrus Stache
  • *******
  • Posts: 6968
  • Location: BC
Re: What to do with inheritance(Canada)?
« Reply #1 on: September 01, 2019, 05:02:25 PM »
Definitely load up that TFSA.

Because you mentioned Bonds, wanting to have access to the money in 5 years, and low risk... take a look at Vanguard's VCNS fund.  It is a new wrap ETF fund that has a mix of fixed income and equities, but mostly fixed income, for very very low fees (0.22%) for what it is.
 
Vanguard has several asset allocation ETFs including one for  equities and a balanced ETF fund, too.

This (buying an ETF) is quite a bit easier than picking a 5 year bond fund that you hold until maturity, but that could work too.   After 5 years, you would need to decide how to reinvest it depending on your time horizon.  Before 5 years, you could take a capital gain or loss when you sell it before maturity, depending on prevailing interest rates at that time.

Again-- all of these suggestions are buy opportunities from WITHIN your TFSA.

Wrenchturner

  • Handlebar Stache
  • *****
  • Posts: 1300
  • Age: 33
  • Location: Canada
Re: What to do with inheritance(Canada)?
« Reply #2 on: September 02, 2019, 12:07:09 AM »
Awesome, thanks, that looks like the type of thing I'm interested in.

The Fake Cheap

  • Bristles
  • ***
  • Posts: 342
  • Location: Canada
    • The Fake Cheap
Re: What to do with inheritance(Canada)?
« Reply #3 on: September 03, 2019, 06:11:00 PM »
2nd what Goldielocks said.  TFSA that bad boy, and with the potentially short term ~5 yrs, you don't want to take a lot of risk.

max924

  • 5 O'Clock Shadow
  • *
  • Posts: 41
Re: What to do with inheritance(Canada)?
« Reply #4 on: September 05, 2019, 03:31:01 PM »
Yeah, add whatever you can to that TFSA with the suggestions above. Also remember EQ bank is offering 2.3% interest rate on a savings account as well, good for short term/ easy access cash.

Wrenchturner

  • Handlebar Stache
  • *****
  • Posts: 1300
  • Age: 33
  • Location: Canada
Re: What to do with inheritance(Canada)?
« Reply #5 on: September 06, 2019, 06:45:05 PM »
Thanks for the tips.  I'll assess this more carefully when I know the cheque is in the mail.  I'll probably go with a Vanguard product or the TD eseries.  Maybe I'll DCA in case I come up with something useful to do with the money in the short term.