Author Topic: Canadian Resident working in the US - 401K vs TFSA vs RRSP - Asset Alocation  (Read 1830 times)

HappyCanuck

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Hello all
Long story short, I’m a Canadian resident working in the US. My employer matches %4 for 401K if I contribute %4.  I usually do %10 of my income to reduce US taxes.
The money goes to Fidelity Inv. And I can choose from a list which doesn’t make any sense to me. So far it has given me an average %8 return though.
I file taxes in the US first. I usually get a good return because my company taxes me as single but I’m married....
I have to also file Canadian taxes which puts me in a higher bracket and I always owe to CRA, so I HAVE to buy 4-5k RRSP to wash it. (But I have 50k unused room left in my RRSP.)
So these are my confusing, messed up investments:
A- My 401K has $65k invested all in Fidelity stocks.
B- My TFSA is empty and nothing in it. I have empty Questrade and RBC-INV accounts
C- RRSP:
Scotiabank RRSP: Canadian Dividend Stocks $27K – one time deposit $12K in 2012, grown to $27k in 2017
Questrade RSP   : Maw104 ($10K –recently purchased)) + Riocan REI.TO ($3500 including %2 loss)  + AQN.TO ($10K including %50 return)

That’s it. I’m the only bread bringer and I’m 47 years old. I have filled up my wife's TFSA in the big banks but as for asset allocation and strategy I am confused as hell. and many years of self employment has set me back so I need to invest heavily to make a nest egg for retirement....

I am planning on investing aggressively in my TFSA only in ETFs such as VAB/ZAG/VCN/VXC and keep it all Canadian to offset my US investments……

What should I do to figure out my asset allocation? I am so confused. Tried Quicken, Mint, Personal Capital but they don’t cover all accounts and I cant figure out where Im standing!

Any help on any point is very much appreciated as I am pulling my hair…  Thanks

RichMoose

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Hello all
Long story short, I’m a Canadian resident working in the US. My employer matches %4 for 401K if I contribute %4.  I usually do %10 of my income to reduce US taxes.
The money goes to Fidelity Inv. And I can choose from a list which doesn’t make any sense to me. So far it has given me an average %8 return though.
I file taxes in the US first. I usually get a good return because my company taxes me as single but I’m married....
I have to also file Canadian taxes which puts me in a higher bracket and I always owe to CRA, so I HAVE to buy 4-5k RRSP to wash it. (But I have 50k unused room left in my RRSP.)
So these are my confusing, messed up investments:
A- My 401K has $65k invested all in Fidelity stocks.
B- My TFSA is empty and nothing in it. I have empty Questrade and RBC-INV accounts
C- RRSP:
Scotiabank RRSP: Canadian Dividend Stocks $27K – one time deposit $12K in 2012, grown to $27k in 2017
Questrade RSP   : Maw104 ($10K –recently purchased)) + Riocan REI.TO ($3500 including %2 loss)  + AQN.TO ($10K including %50 return)

That’s it. I’m the only bread bringer and I’m 47 years old. I have filled up my wife's TFSA in the big banks but as for asset allocation and strategy I am confused as hell. and many years of self employment has set me back so I need to invest heavily to make a nest egg for retirement....

I am planning on investing aggressively in my TFSA only in ETFs such as VAB/ZAG/VCN/VXC and keep it all Canadian to offset my US investments……

What should I do to figure out my asset allocation? I am so confused. Tried Quicken, Mint, Personal Capital but they don’t cover all accounts and I cant figure out where Im standing!

Any help on any point is very much appreciated as I am pulling my hair…  Thanks

A good place to start would be figuring out what your Fidelity Investments actually are. If they're mutual funds, choose low-fee index funds and you may as well stick to US stock funds to prevent any withholding taxes.

Next, I would consolidate your accounts. Move your Scotia RRSP into your Questrade account if you can. Do a transfer-in-kind. Close your RBC TFSA. This will give you clarity on your financial picture as all your accounts will be either with Fidelity or Questrade.

Once these first two steps are done, then figure out a portfolio strategy and stick to it. Low-fee index funds in a Lazy Portfolio strategy are great because they are easy to manage, maintaining purchasing discipline and rebalancing.

Of all the Canadian fund companies, Mawer is arguably the best active manager so buying all MAW104 in your Questrade accounts is not a bad choice either. But if that's your pick there's no need to buy individual stocks like dividend payers, etc because you are already trusting the talent at Mawer to make great picks for you.

HappyCanuck

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I talked with a company assigned financial advisor and after going through my details, he suggested I only hold a Target Date Retirement Institution Index balanced Fund (to 2035) which is called:
State Street Target Retirement 2035 Non-Lending Series Fund Class M - Exp ratio %0.08 (Gross) %0.07 (Net)
It seems it under performs S&P500 , Asset allocation:
Cash  4.15%
Convertibles 0.00%
Domestic Bond 17.84%
Preferred Stock 0.02%
Foreign Bond 0.80%
Foreign Stock 31.17%
Others 0.47%
Domestic Stock 45.55%

The Fund's custom benchmark is comprised of 34.9% S&P 500® , 31.8% MSCI AC World Index ex USA IMI Index, 12.8% Russell Small Cap Completeness® Index, 10% Bloomberg Barclays U.S. Long Government Bond Index, 7% Bloomberg Barclays U.S. Aggregate Bond Index and 3.5% Bloomberg Roll Select Commodity IndexSM.

How does it sound?

RichMoose

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I wouldn't go with that fund. It's too complicated and the total expenses seem to be much higher than 8bps.

Just stick to simple Fidelity Index funds. The Fidelity Four-in-one Index Fund (FFNOX) is pretty decent for a balanced fund option.

What are your plan options for balanced index?

HappyCanuck

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Thats what I thought after I saw the top holding funds. I actually started another thread and I posted the content and an alternative of a bslanced fund portfolio fidelity robo advosor proposed.

HappyCanuck

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This is the balanced portfolio alternative

Plan2: Model balanced Portfolio

OJ6Z BLKRK US DEBT INDEX               Intermediate-Term Bond       25.00%
OFG1 SS LG CAP INDEX                       Large Blend               16.00%
OJLE SS INTL INDEX                            Foreign Large Blend         11.00%
OFGW INCOME FUND                           Stable Value            10.00%
OJLM PIMCO CORE PLUS BOND             Intermediate-Term Bond      8.00%
NRSRX Neuberger Berman Socially Rspns R6     Large Growth           6.00%
3717 FID CONTRAFUND POOL               Large Growth                 5.00%
ARAIX Ariel Fund Institutional               Mid-Cap Blend          4.00%
OJLD SS EMRG MKTS INDEX                 Diversified Emerging Mkts      4.00%
OJLN PIMCO REAL RETURN                   Inflation-Protected Bond           4.00%
3716 FID GROWTH CO POOL                Large Growth                3.00%
OJLC SS MID/SMALL INDEX                  Mid-Cap Blend            2.00%
FNMIX Fidelity New Markets Income Fund           Emerging Markets Bond    1.00%
NRHIX Neuberger Berman High Income Bond R6    High Yield Bond 1.00%

RichMoose

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Thats what I thought after I saw the top holding funds. I actually started another thread and I posted the content and an alternative of a bslanced fund portfolio fidelity robo advosor proposed.

You only have two options in your entire plan? Or are these just the recommendations of the guy on the phone?