Author Topic: Canadian Employee RRSP and RPSC  (Read 1520 times)

max9505672

  • Bristles
  • ***
  • Posts: 287
Canadian Employee RRSP and RPSC
« on: June 28, 2017, 03:34:36 PM »
Hi!

My company is switching the investment company it deals with from Manuvie to Industria Alliance (here in Quebec, Canada) for RRSP and RPSC.

I now have to choose between pre-made funds (around 0.7% fees) depending on my ''investor profile'' and hand picking my funds.

Obviously, I'm here because I'm more interested in hand picking my funds with lower management fees.

The lowest management fees available are for index funds at 0.4%. It is higher than the ETF's I have on Questrade, but still not that bad.. and I can't ignore the company's 4% contribution over my 2% contribution :)

I am interested in 3 index funds (all at 0.4% management fees) :

- US index fund : Aims to closely track the S&P 500 Index
- CAN index fund : Replicates the performance of the S&P/TSX
- International index fund : The Fund aims to closely track the MSCI EAFE Index by investing in securities from Europe, Australasia and the Far East.

So my question is, should I try to stick to my AA with those investments too? I currently aim at 50%US / 20%CAN / 20% ROW / 10% bonds and plan on leaving that money there for a very long time..

But, looking at the compound returns of those funds, historicaly, the US index fund has better return over a long period so I'm tented to put more than my AA in this fund, but I'd like to get opinions before I do it.

Actually, I was thinking 80% US index fund, 10% CAN and 10% International..

Or should I even bother look at the other proposed funds..?

Thanks !

RichMoose

  • Pencil Stache
  • ****
  • Posts: 971
  • Location: Alberta
  • RiskManagement
    • The Rich Moose | A Better Canadian Finance Blog
Re: Canadian Employee RRSP and RPSC
« Reply #1 on: June 28, 2017, 06:07:00 PM »
Hi!

My company is switching the investment company it deals with from Manuvie to Industria Alliance (here in Quebec, Canada) for RRSP and RPSC.

I now have to choose between pre-made funds (around 0.7% fees) depending on my ''investor profile'' and hand picking my funds.

Obviously, I'm here because I'm more interested in hand picking my funds with lower management fees.

The lowest management fees available are for index funds at 0.4%. It is higher than the ETF's I have on Questrade, but still not that bad.. and I can't ignore the company's 4% contribution over my 2% contribution :)

I am interested in 3 index funds (all at 0.4% management fees) :

- US index fund : Aims to closely track the S&P 500 Index
- CAN index fund : Replicates the performance of the S&P/TSX
- International index fund : The Fund aims to closely track the MSCI EAFE Index by investing in securities from Europe, Australasia and the Far East.

So my question is, should I try to stick to my AA with those investments too? I currently aim at 50%US / 20%CAN / 20% ROW / 10% bonds and plan on leaving that money there for a very long time..

But, looking at the compound returns of those funds, historicaly, the US index fund has better return over a long period so I'm tented to put more than my AA in this fund, but I'd like to get opinions before I do it.

Actually, I was thinking 80% US index fund, 10% CAN and 10% International..

Or should I even bother look at the other proposed funds..?

Thanks !

Stick to your desired AA for your whole portfolio. Remember, the RRSP is a great place for bonds.

Don't get tempted to fall for a fund just because it has recently outperformed. The U.S. stock market has been unbeatable since 2009, but that's no reason to believe it will continue to outperform in the future. In the last 6 months to 1 year, EAFE has actually done better.

I wouldn't even look at funds that charge over 0.50%. Fees matter first!

max9505672

  • Bristles
  • ***
  • Posts: 287
Re: Canadian Employee RRSP and RPSC
« Reply #2 on: June 29, 2017, 06:55:23 AM »
Stick to your desired AA for your whole portfolio. Remember, the RRSP is a great place for bonds.

Don't get tempted to fall for a fund just because it has recently outperformed. The U.S. stock market has been unbeatable since 2009, but that's no reason to believe it will continue to outperform in the future. In the last 6 months to 1 year, EAFE has actually done better.

I wouldn't even look at funds that charge over 0.50%. Fees matter first!
Yes, that makes sense. It's hard not to get influenced by the U.S. stock market results in the last 10 years..

I'll stick to my AA :)

The IA website also offers an automatic rebalancing option, any reason why I shouldn't use it and do it by myself?
« Last Edit: June 29, 2017, 07:26:45 AM by max9505672 »

Heckler

  • Handlebar Stache
  • *****
  • Posts: 1347
Re: Canadian Employee RRSP and RPSC
« Reply #3 on: June 29, 2017, 08:09:52 AM »
What are your "transfer out" options?   I collect RRSP with employer match and once per year sell and transfer the funds to my self directed for free.  Just make sure your match is vested before doing so.  Since they are index funds, the company nly difference between my work fund and self directed are the fees

In this case, I simply keep the added funds going to whatever is lowest in my AA each year, except I dont buy bonds from my work provider as they are buy and hold for the duration.

max9505672

  • Bristles
  • ***
  • Posts: 287
Re: Canadian Employee RRSP and RPSC
« Reply #4 on: June 29, 2017, 09:51:33 AM »
What are your "transfer out" options?   I collect RRSP with employer match and once per year sell and transfer the funds to my self directed for free.  Just make sure your match is vested before doing so.  Since they are index funds, the company nly difference between my work fund and self directed are the fees

In this case, I simply keep the added funds going to whatever is lowest in my AA each year, except I dont buy bonds from my work provider as they are buy and hold for the duration.
That's a very good question that I haven't thought about to be honest. I know there's a flat 25$ for withdrawals or transfers, but I'm not sure if there's any other fees.

If there aren't, I could transfer once a year (or any other period that makes sense to absorb the 25$ fee) like you do.

But could I transfer both RRSP and RPSC? And would I absolutely have to keep an equivalent index fund or could I buy any other products such as ETF's for example?