Seeking Advice for Idle Cash and Current Investments

[theFroogs]

Hello everyone,

I'm a long time lurker, posting for the first time, as I would like to gather some independent opinions on how to allocate some idle cash that is sitting in savings accounts and how to best reallocate current investments.  I’ve not been happy with our bank’s financial advice for a long time, but I’ve mostly been too lazy to do anything about it.  Our TFSAs are very underperforming because our financial advisor plays on our fears of losing money.  Several months ago I asked her about ETFs (Through RBC Direct Investing) and she immediately got offended and would not offer as much as a simple opinion.

My wife and I are frugal and risk averse by nature (she a little than I.)  The concept of FI is very appealing to us, but with such meager investments, we may never be truly RE.  We're both 36 and currently have no debt. Student loans slowed us down but we paid those off a few years ago.  We also own our car.  Our only outstanding liability is a $157,000 mortgage, on a home with a market value of approximately $265,000.  We have two young children that are 5 and 3 years old, and the oldest was recently diagnosed with type 1 diabetes, which has created some out of pocket expenses for us, but also positions us for a disability tax credit, and the option of opening an RDSP for him.  I should note that we live in Canada.  Here is our current (rounded to the nearest zeros) financial snapshot:

•   Combined Regular Savings Accounts: $62,000
•   TFSA 1 (low risk mutual fund)- $61,000
•   TFSA 2 (18 month GIC) - $61,000
•   Locked In RRSP 1 - $25,000
•   Locked In RRSP 2 - $6000
•   RESP - $20,000
•   Our current employer offers a Defined Benefit pension plan which we have been paying into for 5 and 7 years.  Yes we have the same employer (I’m IT, she’s Accounting). Our salaries are $84,000 and $77,000.

We each have $6000 in TFSA contribution room, so that will eat up some of the regular savings. 

Mustashians, what is your advice on how we should proceed?

Thanks!

[techwiz]

Welcome, looks like you are off to a great start.

My first advice would be to setup a Investment Policy Statement. https://www.finiki.org/wiki/Investment_policy_statement creating this you will be able to set your goals and be able to make a proper plan.

It is also great idea to start tracking your spending and mapping out all your finances. By doing this you will be able to work with the overall big picture and track your progress and make aligning to your goals easier.   

For investing my advice is to switch from high fee mutual funds and get some low cost index funds. A great resource for index investing for Canadians is herehttps://canadiancouchpotato.com/. I would suggest looking at the all-in-one asset allocation ETF's as they are simple and rebalance for you.  https://canadiancouchpotato.com/model-portfolios/

[Rosy]

There is a permanent "Order of investments" thread - for US and another for Canada ... that may be helpful to your decision making.

[ejmyrow]

One other thought is that if your savings are in standard bank accounts, you could move it into a high yield savings account and get 2%. I like Alliant because it's a credit union, but not sure if it's available for Canadians.