Author Topic: Investment advice for a newbie mustachian in Canada.  (Read 7285 times)

Joseppi

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Investment advice for a newbie mustachian in Canada.
« on: September 30, 2015, 06:54:13 AM »
Hi everyone!

May I just say what a great resource this forum is. I get up every morning at 5am and, after I walk the dog, I find myself reading this forum until breakfast.

I am 37, living in Alberta, with a gross income of about $75k. My wife manages a bar and makes approx $30k. She is saving $1500/month but, rather than invest it, she is keeping it for our "baby" fund - we're working on it ;)

We have a small house that is not paid off yet - bought for $225k 3 yrs ago - we rent out our basement for $750/month

For the last 2 years my goal has been to save $3000 a month minimum.

As far as investments are concerned - I have $5k in a TFSA through TD, which is invested in the VFV fund. I have an RRSP through work and Standard Life with a 2% contribution and a 2% match by my employer (asset allocation set aggressive), which is at approx $10k and, other than that, I have $40k in a savings account (gathering dust) and another $10k in my chequing account, which serves as the emergency fund.

I realize that $40k sitting in a savings account is not doing much and have been looking at the Tangerine Investment funds for their simplicity. I'm also debating whether to take that $40k and buy another property.

The point is I am thinking about everything but not actually doing anything. I end up reading so much information that I end up not knowing what to do. Instead of clarity I end up with information overload.

What would you do if you were in my shoes?

Max out the TFSA? Invest in a different fund from VFV? Put everything in a Tangerine account? Just keep saving and piling up the $$$ (as my brother says)? Buy another property?

I will end up making a decision sooner or later lol, just thought asking some questions here would be a good start to see what you fine mustachians have to say!

Thanks for the comments and suggestions in advance.

Jo.

P.S. Any other mustachians living in Alberta?

Heckler

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #1 on: September 30, 2015, 08:38:19 AM »
My suggestion is to use MMM to drive up your savings targets, but to use Bogleheads and Canadian Couch Potato to learn about investing.

1. Learn about risk and asset allocation, bonds vs equities.  You don't want the next US crash to take your baby fund, but are currently loosing money to taxes and inflation. Your savings account interest is taxed as your income.

https://www.bogleheads.org/wiki/Bogleheads_investment_philosophy#Never_bear_too_much_or_too_little_risk

http://canadiancouchpotato.com/2010/11/10/ready-willing-and-able-to-take-risk/


2.  Create a plan.  If you go all in with your savings, it makes sense to use ETFs, but if you keep your $40k as cash, you might consider TD Eseries.

https://www.bogleheads.org/wiki/Bogleheads_investment_philosophy

http://canadiancouchpotato.com/2012/07/30/comparing-the-costs-of-index-funds-and-etfs/

3. Implement the plan.

Get that TFSA maxed, and open up your self directed RSP.  You can greatly reduce your taxes through maxing an RSP.   VFV is a great first step - I would diversify though with a CCP model portfolio of your choosing. VFV would slot in the place of VUN in the older 2014 Vanguard ETF model.

http://canadiancouchpotato.com/model-portfolios-2/

http://canadiancouchpotato.com/2014/01/06/remodelled-portfolios-for-2014/

Heckler

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #2 on: September 30, 2015, 08:39:53 AM »
Sorry for the additional overload, but you need to learn about this on your own, without a simple "do this".



Stasher

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #4 on: September 30, 2015, 08:53:59 AM »
Max out your TFSA with all those funds sitting in your savings account, get some real return on your cash rather than the dust.
Have your wife put her "baby" savings into her on TFSA as well.
(I suggest these all be in self directed trade accounts - I use Scotia iTrade)
Read all the links Heckler posted , they are great and the Canadian Couch Potato is a great resources.
SO AWESOME to see you mortgage isn't a typical AB $700k home and a basement rental is such a win for you.
For the work RRSP, did you look closely at the MER fees they are charging. Can you get a higher $ match if you deposit more?

Posthumane

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #5 on: September 30, 2015, 11:34:18 AM »
Hi dysonjonathan, I'm another Albertan and also in my 30's, and found myself asking myself similar questions. I decided to go with maxing out my TFSA and recommend you do to. There haven't been that many great property buying opportunities in the last few years (although a few rare ones do come up here and there).

The tangerine funds look pretty good although TD has a number of good funds as well. I would recommend you open up a discount brokerage TFSA account through TD, Questreade, etc. and go with an ETF portfolio like the one suggested on Canadian Couch Potato. Managing 3 ETFs is really not much more complicated than buying a single fund, and some of the discount brokerages offer free trades on ETFs.

Frugancial Advisor

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #6 on: September 30, 2015, 01:39:43 PM »
If you're invested in VFV with TD, then you already have a brokerage account open. (VFV is not offered by TD, it can only be purchased within their self-directed brokerage accounts.) This is a great head start, as you already have access to purchasing any ETF's you desire. I would recommend doing some research on TD's e-Series funds; essentially low-cost index funds. These are also recommended on the Canadian Couch Potato website - which is a great resource for Canadian investors.

My 2 cents though: With your income being $75k, your investing priorities should be to first max your RRSP contributions (preferably in a Spousal RRSP due to your wife's considerably lower income). After maxing the RRSP, you would then invest within your TFSA (considering you do not hold any unsecured debt). RRSP's are great for mustachians as you will be pulling them out well before your government pensions kick in, and at a level lower than your current income (i.e. hugely tax-efficient).

RichMoose

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #7 on: October 01, 2015, 10:15:28 AM »
Hi dysonjonathan

Another Albertan here. I wish I would be able to purchase a house with a rentable basement suite for $225k!

I would look at maxing your TFSA and RRSP before you invest in property or outside tax-advantaged accounts. This is smart from both risk and tax perspective. You have a long time line and a balanced portfolio will give you great returns.

In your TFSA, if you are using TD Waterhouse, make sure you purchase ETF's in lump-sum amounts like $2000 minimum per transaction. This will help dilute the commission costs. Not something you need to worry about if you use Questrade, but that's another story.

Check the MER fees of your work RRSP account. If they are high (more than 1%), I would open a separate self-directed RRSP with your brokerage and use it to invest the excess over the company match amount. As previously mentioned, a spousal RRSP is a good choice in your situation.

The CCP 3-fund ETF portfolio is ridiculously easy to manage and will save you a lot of money over your lifetime when compared to Tangerine funds.

dess1313

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #8 on: October 08, 2015, 07:01:48 PM »
read the boglehead's guide to investing, or the millionaire teacher.  I have ebooks if you're interested pm me
Canadian couch potato is awesome.  I've started with tangerine based on  his recommendations and information from the books above
Make sure you keep those few $ set aside for emergencies.  otherwise great saving rates!

Joseppi

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #9 on: February 05, 2016, 11:35:26 AM »
Well...since Sep 2015 when I originally posted, i have used all the advice given.

I opened a SDRSP through TD, investing in the CCP TD e-series model portfolio and have maxed out my contributions.

I added to my TFSA and have included VXUS. Contributions maxed out also.

Anything leftover went into a Tangerine fund  -the balanced growth portfolio.

I guess looking at it, I took the 3 recommended CCP one fund options and invested in all of them - Vanguard, TD-e-series and Tangerine. I feel that this is a pretty diverse portfolio and should stand me in good stead for the future.

Does anyone have any input?

How is everyone else doing? Hopefully well. It's all doom and gloom here in Alberta but, that just makes me think that there will be more opportunity.

RichMoose

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #10 on: February 05, 2016, 05:34:21 PM »
Well...since Sep 2015 when I originally posted, i have used all the advice given.

I opened a SDRSP through TD, investing in the CCP TD e-series model portfolio and have maxed out my contributions.

I added to my TFSA and have included VXUS. Contributions maxed out also.

Anything leftover went into a Tangerine fund  -the balanced growth portfolio.

I guess looking at it, I took the 3 recommended CCP one fund options and invested in all of them - Vanguard, TD-e-series and Tangerine. I feel that this is a pretty diverse portfolio and should stand me in good stead for the future.

Does anyone have any input?

How is everyone else doing? Hopefully well. It's all doom and gloom here in Alberta but, that just makes me think that there will be more opportunity.

Hey, always good to hear an update. Sounds like you made a lot of progress in the savings dept! Over time as you accumulate more in your taxable savings account it may be worthwhile to move to a lower-cost 3 fund portfolio (Would save nearly 1% annually in fees). However, I would do that when you can claim a capital loss which might be a reality here if the markets continue their slide for much longer.

Things are going well for me but I'm in a rather recession-proof job. I may be moving here in a few months so I might take a hit on the house. Not to worry though as I will be buying in a depressed market as well.

Considering you live in a lower cost housing market to being with, does investing in real estate pencil out in your area with the new lower prices? I know you were looking at RE investments earlier.

GreenQueen

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #11 on: February 05, 2016, 07:38:10 PM »
Following...

Stasher

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #12 on: February 05, 2016, 07:57:50 PM »
Looking forward to an update from you in another few months to see how your plans have settled out.
Honestly don't waste time and get into a self directed RRSP brokerage account to buy Vanguard ETFs , you won't regret it as you will have your funds there sooner than later.


<<<Heckler....fyi I transferred out my Sunlife employee contributions to my brokerage account yesterday like you mentioned last week. Im buying VCN like its going out of style :) >>>

Heckler

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #13 on: February 05, 2016, 08:51:32 PM »
Sweet Chris!  Ill bet you quartered your annual fees.

Stasher

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #14 on: February 05, 2016, 11:34:15 PM »
Sweet Chris!  Ill bet you quartered your annual fees.

The Sunlife group plan wasn't horrible but wasn't nice either 1.43% MER yikes
Now sitting in Scotia iTrade it will be at 0.27 in VXC which has the highest of the others VCN 0.11 and VAB 0.19
I've put everything in my iTrade account but always just let the company matched plan just ride , well now until you poked me and gave the idea to move it over.

Heckler

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #15 on: February 06, 2016, 02:36:21 AM »
Next tip : realize your $9.95 (or $4.95) ITrade trading fees actually account to a hefty MER if you contribute small amounts.  A $650 buy at $9.95 is a 1.5 MER.  Thus why I collect biweekly off my pay to Sunlife and once a year transfer and buy self directed ETFs in $10,000+ chunks. 

Heckler

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #16 on: February 06, 2016, 02:46:35 AM »

I am 37, living in Alberta, with a gross income of about $75k. My wife manages a bar and makes approx $30k. She is saving $1500/month but, rather than invest it, she is keeping it for our "baby" fund - we're working on it ;).

As far as investments are concerned - I have $5k in a TFSA through TD, which is invested in the VFV fund. I have an RRSP through work and Standard Life with a 2% contribution and a 2% match by my employer (asset allocation set aggressive), which is at approx $10k and, other than that, I have $40k in a savings account (gathering dust) and another $10k in my chequing account, which serves as the emergency fund.

Jo.

P.S. Any other mustachians living in Alberta?

Looking at your age, income and savings, I'd be surprised if you've maxed out your RSP limit, and if so, well done!  Remember it's cumulative for your life of income, 18% per year.  Your last years tax return will tell you your limit.    Mind you, I'm just guessing here. 

Heckler

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #17 on: February 06, 2016, 02:51:35 AM »
Oh, and as for your wife's baby fund, is that in a taxable high interest savings account?   If so, she's paying income tax ( or should be) on the measly interest.  Why not plop it into her TFSA and buy one year GICs, (or whatever term your comfortable with) and save on the income tax.

http://www.finiki.org/wiki/Short_term_cash_returns

Stasher

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #18 on: February 06, 2016, 11:13:27 AM »
Next tip : realize your $9.95 (or $4.95) ITrade trading fees actually account to a hefty MER if you contribute small amounts.  A $650 buy at $9.95 is a 1.5 MER.  Thus why I collect biweekly off my pay to Sunlife and once a year transfer and buy self directed ETFs in $10,000+ chunks.

Exactly

Joseppi

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #19 on: December 08, 2016, 12:28:57 PM »
Hi everyone. Hope you're all well. My god it's bitterly cold here right now. Put the long johns on for the first time and might need 2 pairs.

Anyway, here's an update on my finances...

TFSA (VFV and VXUS) - $33,637

RRSP (TD e-series TDB900, 902, 909 and 911) - $30,454

Tangerine (balanced growth portfolio) - $34,871

Work RRSP through Standard Life - $14,000

I continue to max out contributions for TFSA and RRSP and everything leftover goes into the Tangerine account. I feel like things are ticking along quite nicely, but I still think we could be saving more.

We also had a little baby girl named Lily in October, so I'm guessing my savings rate might have to decrease with the wife not working and the little nipper being formula fed.

At what point would you guys suggest moving the funds in the Tangerine account to somewhere else, to eliminate the 1% fee?

Retire-Canada

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #20 on: December 08, 2016, 01:23:56 PM »
At what point would you guys suggest moving the funds in the Tangerine account to somewhere else, to eliminate the 1% fee?

Today. No joke. Why would you want to keep paying fees?

Joseppi

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #21 on: December 08, 2016, 03:08:39 PM »
At what point would you guys suggest moving the funds in the Tangerine account to somewhere else, to eliminate the 1% fee?

Today. No joke. Why would you want to keep paying fees?

I hear you loud and clear Retire-Canada. I just figured the implications would be fairly minimal at this stage and any fees associated with moving from Tangerine to another account might not be worth paying at this point. I guess it all adds up though.

Thanks for the no nonsense advice.

Koogie

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #22 on: December 08, 2016, 03:29:02 PM »
Congrats on your daughter.  You are setting yourselves (and her) up for a fine future.

If you still have that 10K emergency fund kicking around, you should think about getting a HELOC instead and putting that 10K to work (assuming you have home equity).     HELOCs only cost if you use them and since it will be an emergency use only you needn't worry about it...

Retire-Canada

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #23 on: December 08, 2016, 03:50:57 PM »
Congrats on your daughter.  You are setting yourselves (and her) up for a fine future.

If you still have that 10K emergency fund kicking around, you should think about getting a HELOC instead and putting that 10K to work (assuming you have home equity).     HELOCs only cost if you use them and since it will be an emergency use only you needn't worry about it...

Yes. Smart.

You can also just get a straight up LOC as well if you want to avoid relying on home equity or both kinds. Like Koogie notes they only cost you if you use them which is hopefully rarely. Cash or low interest savings costs you everyday as it gets eaten up by inflation.
« Last Edit: December 08, 2016, 03:52:52 PM by Retire-Canada »

Joseppi

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #24 on: December 08, 2016, 03:51:37 PM »
Congrats on your daughter.  You are setting yourselves (and her) up for a fine future.

If you still have that 10K emergency fund kicking around, you should think about getting a HELOC instead and putting that 10K to work (assuming you have home equity).     HELOCs only cost if you use them and since it will be an emergency use only you needn't worry about it...

Thanks Koogie! Much appreciated. I do still have the $10k. So your advice is to get the HELOC to make up for the emergency fund and then invest the existing emergency fund? Makes perfect sense. I will look into that!

Thanks again!

Koogie

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #25 on: December 08, 2016, 04:04:19 PM »
Thanks Koogie! Much appreciated. I do still have the $10k. So your advice is to get the HELOC to make up for the emergency fund and then invest the existing emergency fund? Makes perfect sense. I will look into that!
Thanks again!

Yes, exactly. I to had an emergency fund for many years and I regret it (it was never used).  Better to get that money working for you.

A HELOC is best if you have home equity built up.  The interest rate is lower and it also serves as a form of title insurance (title fraud is harder if there is already a mortgage(heloc) registered against your home).  This second point was forcefully emphasized by our lawyer because title fraud is becoming rampant.

If you don't have equity or are uncomfortable with a heloc, get a regular LOC as Retire-Canada suggests.  The interest rate isn't that much higher and since you would only be using it in an emergency anyway, it will (hopefully) be a moot point.

You don't pay any ongoing fees with either unless you use them. Also, any opening fees are usually rebated back to you if you have a decent relationship with your bank (for instance, TD rebated our HELOC opening fees back to us).
 
Cheers.

Space Pickle

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #26 on: December 08, 2016, 05:20:28 PM »
At what point would you guys suggest moving the funds in the Tangerine account to somewhere else, to eliminate the 1% fee?

Today. No joke. Why would you want to keep paying fees?

I hear you loud and clear Retire-Canada. I just figured the implications would be fairly minimal at this stage and any fees associated with moving from Tangerine to another account might not be worth paying at this point. I guess it all adds up though.

Thanks for the no nonsense advice.

Yes, I was initially unsure about investing and was considering the Tangerine funds, but I ended up going whole hog into Questrade (I also bought VFV) and am glad I did.

Stasher

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #27 on: December 08, 2016, 08:51:20 PM »
At what point would you guys suggest moving the funds in the Tangerine account to somewhere else, to eliminate the 1% fee?

Today. No joke. Why would you want to keep paying fees?

Close and transfer ASAP I agree, get all your money in one place and working together.
Have you thought about opening a self traded ETF account at TD if that is the bank you want to stick with?
If you move into Vanguard funds you could drop to three VCN VXC and VAB which all have even lower MER fees than what you are paying. I would move the E-Series and Tangerine all into this. That takes you from 5 accounts in 2 locations to 3 accounts in 1 location. Much further ahead and optimized more efficiently for fees, consider doing this all at the same time on your next RRSP purchase. Move all the cash and transfers into the cash balance in the self traded account and make the 3 purchases at once to only incur three trading fees.

VCN currently has a MER of 0.06 , VXC is 0.27 and VAB is 0.13

Joseppi

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #28 on: December 09, 2016, 09:09:09 AM »
At what point would you guys suggest moving the funds in the Tangerine account to somewhere else, to eliminate the 1% fee?

Today. No joke. Why would you want to keep paying fees?

Close and transfer ASAP I agree, get all your money in one place and working together.
Have you thought about opening a self traded ETF account at TD if that is the bank you want to stick with?
If you move into Vanguard funds you could drop to three VCN VXC and VAB which all have even lower MER fees than what you are paying. I would move the E-Series and Tangerine all into this. That takes you from 5 accounts in 2 locations to 3 accounts in 1 location. Much further ahead and optimized more efficiently for fees, consider doing this all at the same time on your next RRSP purchase. Move all the cash and transfers into the cash balance in the self traded account and make the 3 purchases at once to only incur three trading fees.

VCN currently has a MER of 0.06 , VXC is 0.27 and VAB is 0.13

Thanks Stasher! That sounds like pretty damn good advice. Will update soon.

Joseppi

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #29 on: December 09, 2016, 09:17:43 AM »
At what point would you guys suggest moving the funds in the Tangerine account to somewhere else, to eliminate the 1% fee?

Today. No joke. Why would you want to keep paying fees?

Close and transfer ASAP I agree, get all your money in one place and working together.
Have you thought about opening a self traded ETF account at TD if that is the bank you want to stick with?
If you move into Vanguard funds you could drop to three VCN VXC and VAB which all have even lower MER fees than what you are paying. I would move the E-Series and Tangerine all into this. That takes you from 5 accounts in 2 locations to 3 accounts in 1 location. Much further ahead and optimized more efficiently for fees, consider doing this all at the same time on your next RRSP purchase. Move all the cash and transfers into the cash balance in the self traded account and make the 3 purchases at once to only incur three trading fees.

VCN currently has a MER of 0.06 , VXC is 0.27 and VAB is 0.13

Hey again Stasher. Would you recommend an equal allocation between VCN, VXC and VAB or maybe 40/40/20 or something?

Retire-Canada

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #30 on: December 09, 2016, 09:24:08 AM »
Hey again Stasher. Would you recommend an equal allocation between VCN, VXC and VAB or maybe 40/40/20 or something?

I hold 30% VCN and I think that's a lot. There is nothing about the CDN economy that makes me want to hold 40%. That said I own 0% bonds so I think 40% VAB is too much as well.

If you went 30% each VCN/VXC/VAB that wouldn't be crazy talk.

Joseppi

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #31 on: December 09, 2016, 09:37:25 AM »
Hey again Stasher. Would you recommend an equal allocation between VCN, VXC and VAB or maybe 40/40/20 or something?

I hold 30% VCN and I think that's a lot. There is nothing about the CDN economy that makes me want to hold 40%. That said I own 0% bonds so I think 40% VAB is too much as well.

If you went 30% each VCN/VXC/VAB that wouldn't be crazy talk.

Thanks Retire-Canada. Would you agree that VCN, VXC and VAB would slot in nicely with my TFSA invested in VFV and VXUS and my RRSP with TD e-series funds? Set it and forget it.

Joseppi

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #32 on: December 09, 2016, 09:45:20 AM »
Tangerine account closed...

EfficiencyNerd

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #33 on: December 09, 2016, 11:19:12 AM »
Thought I'd add in my two cents...

I invest entirely using Questrade, for the ability to buy ETFs free (or nearly free - when using a limit order, as suggested here: http://canadiancouchpotato.com/2014/12/15/the-limits-of-limit-orders/ they do charge a tiny ECN fee).

My allocation is at 55% VXC, 25% VCN, and 20% VAB. I rebalance every time I add more, which is every 2 weeks. I have both a TFSA and regular taxable account (no RRSP as of yet, long story... I just moved here personally this year, so I have no room, although my wife should have minimal room from working a little back in her highschool years. I figured I'd wait until I get the official assessments next year to open RRSPs for both of us).

Personally, I have no dedicated "emergency fund" to speak of. If I needed to, I would take some out of the TFSA first in an emergency. Our total balance is such that our entire investments would have to decline by about 70% before I would begin to get worried about not having enough in an emergency (we have no debts to speak of (including no house), so we'd also both have to lose our jobs before I'd get worried... technically all that is possible, but worth the risk to me).

Joseppi

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #34 on: December 09, 2016, 02:19:04 PM »
Thought I'd add in my two cents...

I invest entirely using Questrade, for the ability to buy ETFs free (or nearly free - when using a limit order, as suggested here: http://canadiancouchpotato.com/2014/12/15/the-limits-of-limit-orders/ they do charge a tiny ECN fee).

My allocation is at 55% VXC, 25% VCN, and 20% VAB. I rebalance every time I add more, which is every 2 weeks. I have both a TFSA and regular taxable account (no RRSP as of yet, long story... I just moved here personally this year, so I have no room, although my wife should have minimal room from working a little back in her highschool years. I figured I'd wait until I get the official assessments next year to open RRSPs for both of us).

Personally, I have no dedicated "emergency fund" to speak of. If I needed to, I would take some out of the TFSA first in an emergency. Our total balance is such that our entire investments would have to decline by about 70% before I would begin to get worried about not having enough in an emergency (we have no debts to speak of (including no house), so we'd also both have to lose our jobs before I'd get worried... technically all that is possible, but worth the risk to me).

Thanks EfficiencyNerd! I appreciate your 2 cents. Where did you move from?

Sounds like your 'stache is plentiful. Are you on the rent VS buy side, as far as a home is concerned?

EfficiencyNerd

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #35 on: December 09, 2016, 02:55:22 PM »
Thought I'd add in my two cents...

I invest entirely using Questrade, for the ability to buy ETFs free (or nearly free - when using a limit order, as suggested here: http://canadiancouchpotato.com/2014/12/15/the-limits-of-limit-orders/ they do charge a tiny ECN fee).

My allocation is at 55% VXC, 25% VCN, and 20% VAB. I rebalance every time I add more, which is every 2 weeks. I have both a TFSA and regular taxable account (no RRSP as of yet, long story... I just moved here personally this year, so I have no room, although my wife should have minimal room from working a little back in her highschool years. I figured I'd wait until I get the official assessments next year to open RRSPs for both of us).

Personally, I have no dedicated "emergency fund" to speak of. If I needed to, I would take some out of the TFSA first in an emergency. Our total balance is such that our entire investments would have to decline by about 70% before I would begin to get worried about not having enough in an emergency (we have no debts to speak of (including no house), so we'd also both have to lose our jobs before I'd get worried... technically all that is possible, but worth the risk to me).

Thanks EfficiencyNerd! I appreciate your 2 cents. Where did you move from?

Sounds like your 'stache is plentiful. Are you on the rent VS buy side, as far as a home is concerned?

We moved from Boston, where we met while in school. I grew up in upstate NY, she grew up just south of Toronto.

I wouldn't say my stache is "plentiful" per se, just that in the unlikely event that we'd need money in an "emergency", I'm comfortable that there would be enough in it, even if the market happened to take a pretty good plunge. From your finances posted recently, you have about $100k - granted, not all of that is easily accessible, but if you really needed to you could get it out. You also mentioned earlier having $10k in a checking account as an emergency fund (forgive me if that's no longer the case, I haven't read every reply on this thread). But if you ever needed $10k, why not just dip into your savings somewhere? Maybe I'm simplifying it too much, and it would suck in any event to need to take money out if the market happened to be down, but to me the risk of both of those events happening simultaneously (market plunge + needing emergency money) wouldn't be worth having that much sitting around in a checking account. Again, just my thoughts. Once you throw the HELOC option in there, that's definitely another good option if you have it, and I'll admit I know next to nothing about a HELOC.

As far as home prices.... damn they are expensive in Toronto. Eventually I'd like to buy, but at this point we wouldn't have enough of a down payment that I'd be comfortable doing that, regardless of the rent VS buy math. Ideally I'd like to end up further away from the city where home ownership is more feasible and realistic.

Actually, what I'd really like to do is build a super-efficient house... think Passivhous levels, with solar/geothermal to make it net-zero or even negative footprint. But that's a story for another day.

Retire-Canada

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #36 on: December 09, 2016, 04:03:37 PM »
Thanks Retire-Canada. Would you agree that VCN, VXC and VAB would slot in nicely with my TFSA invested in VFV and VXUS and my RRSP with TD e-series funds? Set it and forget it.

Personally I would keep it simple and stick with VCN/VXC/VAB across all your accounts in whatever ratio you decide is appropriate. It's not vital, but I like to have a core group of ETFs and not having too many different funds to think about.

I'm not familiar with the TD funds so I can't comment, but I'd decide where you want to keep all your investments and move them to the same broker. Depending how your work RRSP functions I would leave $$ there only as long as is required to get the match then transfer to TD or Questrade or whomever you want to be invested with.
« Last Edit: December 11, 2016, 12:30:49 PM by Retire-Canada »

Stasher

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #37 on: December 11, 2016, 10:51:34 AM »
Thanks Retire-Canada. Would you agree that VCN, VXC and VAB would slot in nicely with my TFSA invested in VFV and VXUS and my RRSP with TD e-series funds? Set it and forget it.

Personally I would keep it simple and stick with VCN/VXC/VAB across all your accounts in whatever ratio you decide is appropriate. It's not vital, but I like have a core group of ETFs and not having too many different funds to think about.

I'm not familiar with the TD funds so I can't comment, but I'd decide where you want to keep all your investments and move them to the same broker. Depending how your work RRSP functions I would leave $$ there only as long as is required to get the match then transfer to TD or Questrade or whomever you want to be invested with.

Yes to all of that.

As to your earlier question @Joseppi
My Asset Allocation is the following which I match in both my TFSA and RRSP
60% VXC
30% VCN
10% VAB
I chose the aggressive mix as I want my money working as hard as possible. I have $40,000 in emergency fund and I have a $60,000 line of credit. Although the LOC should be enough and I should have that 40K working in investments if I listened to @RetireInCanada

RichMoose

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #38 on: December 11, 2016, 01:42:10 PM »
If you own your home and a vehicle or two it might be smart to keep a moderate cash cushion on hand. Even just $5,000 can be a nice help if your furnace blows, your HWT needs a sudden replacement, you get into an at-fault collision, etc. I agree that an emergency fund should be quite minimal though and a HELOC is a smart choice for any bigger emergencies, especially given our current low interest rate environment.

As far as brokers go, I am a huge fan of Questrade because of their super-low fees. For your desired allocation, you may want to think about future tax considerations as well. Max the TFSA accounts first, top up the RRSP as you go especially if your taxable income is over $91,000, and then fill the cash investment account with tax-advantaged investments. Capital gains and Canadian eligible dividends go here first, interest income not so much.

Best of luck!

anisotropy

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Re: Investment advice for a newbie mustachian in Canada.
« Reply #39 on: December 11, 2016, 04:20:07 PM »
If you own your home and a vehicle or two it might be smart to keep a moderate cash cushion on hand. Even just $5,000 can be a nice help if your furnace blows, your HWT needs a sudden replacement, you get into an at-fault collision, etc. I agree that an emergency fund should be quite minimal though and a HELOC is a smart choice for any bigger emergencies, especially given our current low interest rate environment.

As far as brokers go, I am a huge fan of Questrade because of their super-low fees. For your desired allocation, you may want to think about future tax considerations as well. Max the TFSA accounts first, top up the RRSP as you go especially if your taxable income is over $91,000, and then fill the cash investment account with tax-advantaged investments. Capital gains and Canadian eligible dividends go here first, interest income not so much.

Best of luck!

I agree with Tuxedo, one thing to keep in mind is to leave room in your budget for the carbon tax that's coming, although the impact could be potentially offset via rebates.