Author Topic: Transferring from Tangerine to Vanguard  (Read 2890 times)

Legsofsteel

  • 5 O'Clock Shadow
  • *
  • Posts: 38
Transferring from Tangerine to Vanguard
« on: April 26, 2019, 03:46:39 PM »
Hello all,

I had a Tangerine RRSP and non-registered cash account for a while. I was disciplined and maxed out the RRSP as well as contributing monthly to the non-registered account. Both have increased nicely thanks to the current market. However, the 1.07% MER (gasp) is exorbitant considering the amount I have in these accounts (especially the RRSP).

My plan for the RRSP once it has been transferred to my brokerage account is to invest in VUS. This is currently on the TSX. I did however notice the VTI is basically the same thing, but on the AMEX. I assume it would be best to stick with VUS even though the management fee is slightly higher at 0.15%, instead of 0.05%. Am I correct in thinking it is best to go with the one on the TSX due to currency fluctuations? It is the better option in a RRSP?

For my non-registered cash account, I will be investing in the VCN. I live in BC, so it is to my understanding that it will be beneficially to invest in Canadian investments for tax benefits. This part of my portfolio will be less than 10%.

However, hypothetically, let's say I came into $200,000. Considering the Canadian market isn't as diverse as the US, I assume it would be best to not invest in just VCN for my non-registered account (even with the beneficially tax implications). In this hypothetical situation, the CAD side would now account for a big chunk of my investments. I wouldn't feel comfortable having such a large chunk of change in such a small economy. At this point, would it best to invest in something more diverse? Such as a worldwide market fund? I guess what I'm wondering is even with the tax benefits, surely having such a large part of your portfolio in Canadian (VCN) would be very risky.


Thanks for reading!

Prairie Stash

  • Handlebar Stache
  • *****
  • Posts: 1804
Re: Transferring from Tangerine to Vanguard
« Reply #1 on: April 29, 2019, 10:47:33 AM »
Hypothetically yuo would switch your RRSP to hold non-CDN and balance with your taxable.

Its the balance across your RRSP, TFSA and taxable accounts that matters. You do not try to achieve a balance in each acount. If you had $200,000 in CDN stcoks in your taxable and $400,000 in American stocks in your RRSP your NW would be $600,000 and you would have 33.33% exposure to CDN.

I've ignored TFSA for the moment, you should have a lot of money in your TFSA; your TFSA should be maxed before starting an investment account.

Make sense?

Legsofsteel

  • 5 O'Clock Shadow
  • *
  • Posts: 38
Re: Transferring from Tangerine to Vanguard
« Reply #2 on: April 29, 2019, 03:33:31 PM »
Hypothetically yuo would switch your RRSP to hold non-CDN and balance with your taxable.

Its the balance across your RRSP, TFSA and taxable accounts that matters. You do not try to achieve a balance in each acount. If you had $200,000 in CDN stcoks in your taxable and $400,000 in American stocks in your RRSP your NW would be $600,000 and you would have 33.33% exposure to CDN.

I've ignored TFSA for the moment, you should have a lot of money in your TFSA; your TFSA should be maxed before starting an investment account.

Make sense?

My TFSA is fully maxed out. First thing I do at the start of the year. And yes, having a balance makes sense, even with tax implications of holding it in a non-registered account.

Mighty Eyebrows

  • 5 O'Clock Shadow
  • *
  • Posts: 41
  • Location: Vancouver Island, Canada
Re: Transferring from Tangerine to Vanguard
« Reply #3 on: May 03, 2019, 01:50:50 PM »
Canadian Portfolio Manager blog has some good articles about "asset location", including pro/con of using US listed ETFs.
https://www.canadianportfoliomanagerblog.com/blog/

CCP is always good, but he doesn't go into as much detail on that:
https://canadiancouchpotato.com/

There is always a trade-off between MER, tax, and complexity. Think about rebalancing issues as well (once you stop your saving cycle).

Which broker are you using?

Goldielocks

  • Walrus Stache
  • *******
  • Posts: 6679
  • Location: BC
Re: Transferring from Tangerine to Vanguard
« Reply #4 on: May 05, 2019, 08:58:33 PM »
A good rule of thumb is to think about what investments or asset allocation you want, before figuring out which accounts to put each investment into.

So.. Do you really want that much CDN (if it is a lot)? 
The key advantage to having CDN in your non-taxed account is if your total income earned for the year is under $46k (approx) and you have CDN dividends being generated by it.

If no (income is over $46k, VCN dividends are minor compared to the cap. gains).. then the only very important tax concept is to max out TFSA, and put the USA assets into the RRSP.  Put anything generating interest (bonds,etc), into a registered fund.

Get an investment plan/ strategy, write it down and stick to it over the years.

After that, (assuming no kids / complexities) the impact of each tax choice is minor compared to your maximizing the accounts, and minimizing fees.

Legsofsteel

  • 5 O'Clock Shadow
  • *
  • Posts: 38
Re: Transferring from Tangerine to Vanguard
« Reply #5 on: May 06, 2019, 11:15:44 AM »
Canadian Portfolio Manager blog has some good articles about "asset location", including pro/con of using US listed ETFs.
https://www.canadianportfoliomanagerblog.com/blog/

CCP is always good, but he doesn't go into as much detail on that:
https://canadiancouchpotato.com/

There is always a trade-off between MER, tax, and complexity. Think about rebalancing issues as well (once you stop your saving cycle).

Which broker are you using?

Using Qtrade.

After reading that first link, it seems to indicate that VTI would be better for my RRSP than VUN.

Actually just found this article which explains the situation:

https://www.moneysense.ca/columns/ask-the-spud-when-should-i-use-us-listed-etfs/



« Last Edit: May 06, 2019, 11:20:35 AM by Itrembac »

Legsofsteel

  • 5 O'Clock Shadow
  • *
  • Posts: 38
Re: Transferring from Tangerine to Vanguard
« Reply #6 on: May 06, 2019, 12:53:28 PM »
A good rule of thumb is to think about what investments or asset allocation you want, before figuring out which accounts to put each investment into.

So.. Do you really want that much CDN (if it is a lot)? 
The key advantage to having CDN in your non-taxed account is if your total income earned for the year is under $46k (approx) and you have CDN dividends being generated by it.

If no (income is over $46k, VCN dividends are minor compared to the cap. gains).. then the only very important tax concept is to max out TFSA, and put the USA assets into the RRSP.  Put anything generating interest (bonds,etc), into a registered fund.

Get an investment plan/ strategy, write it down and stick to it over the years.

After that, (assuming no kids / complexities) the impact of each tax choice is minor compared to your maximizing the accounts, and minimizing fees.

Which Vanguard/Ishares ETF would you use for this though?



Stasher

  • Handlebar Stache
  • *****
  • Posts: 2218
  • Age: 45
  • Location: Cowichan Valley, Vancouver Island
  • Power through Positivity
    • Mindful Explorer
Re: Transferring from Tangerine to Vanguard
« Reply #7 on: May 08, 2019, 10:13:21 AM »
I agree with Goldielocks, why so much VCN which is heavily tied to energy and resource sector (oil&gas,coal,etc) in Canada often being somewhat volatile. Diversify a bit...
Now just for me and 100% explore the best for you, what works best is the CCP ETF portfolio in my case. I hold the exact same funds in my maxed out TFSA and my RRSP which I maxed out before reaching FIRE.
I'm 10% ZAG , 30% VCN and 60% XAW which is the aggressive mix over at CCP
https://canadiancouchpotato.com/model-portfolios/
https://cdn.canadiancouchpotato.com/wp-content/uploads/2019/03/CCP-Model-Portfolios-ETFs-2018.pdf


I agree with PrairieStash as well, max out that TFSA every single year !

Legsofsteel

  • 5 O'Clock Shadow
  • *
  • Posts: 38
Re: Transferring from Tangerine to Vanguard
« Reply #8 on: May 08, 2019, 11:08:08 AM »
I agree with Goldielocks, why so much VCN which is heavily tied to energy and resource sector (oil&gas,coal,etc) in Canada often being somewhat volatile. Diversify a bit...
Now just for me and 100% explore the best for you, what works best is the CCP ETF portfolio in my case. I hold the exact same funds in my maxed out TFSA and my RRSP which I maxed out before reaching FIRE.
I'm 10% ZAG , 30% VCN and 60% XAW which is the aggressive mix over at CCP
https://canadiancouchpotato.com/model-portfolios/
https://cdn.canadiancouchpotato.com/wp-content/uploads/2019/03/CCP-Model-Portfolios-ETFs-2018.pdf


I agree with PrairieStash as well, max out that TFSA every single year !

Thanks Stasher. I max out my TFSA at the beginning of the year. First thing I do. RRSP is next. Then my non-registered account. My VCN will make up less than 10% of my holdings to begin with. I expect this to grow a bit though. My question was more if for whatever reason I came into a significant amount of money. From the responses, diversifying even in my non-registered account would make sense. I figured this was the case, but wanted to see what others around here thought. 

Goldielocks

  • Walrus Stache
  • *******
  • Posts: 6679
  • Location: BC
Re: Transferring from Tangerine to Vanguard
« Reply #9 on: May 08, 2019, 03:12:33 PM »
If you think you will come into quite a bit of (taxable) money -- bonuses, sale of a business, sale of rental property, then try to keep some room in the RRSP to absorb it.   

Getting a single year tax hit for a one time "windfall" takes some of the joy out of it.  Better to use the RRSP room to spread it across a few years.