Author Topic: Starting to get things in order - Newbie questions - Canadian  (Read 12402 times)

Cookie78

  • Handlebar Stache
  • *****
  • Posts: 1893
  • Location: Canada
Starting to get things in order - Newbie questions - Canadian
« on: January 06, 2015, 07:12:26 PM »
I started out investing about 12 years ago using a financial adviser who I now know didn't know what he was doing. I started when I was young and knew nothing, but at least I started doing something. Or so that was what I told myself. About 2 years ago I took a closer look at my investments and wondered why they weren't growing much more than my monthly contributions (at that time 200/month)

I switched over to a different company and upped my contributions to 500/month automatically. Also, I drop a couple thousand in at a time when my bank account gets too high. I immediately noticed a significant difference in growth from interest with the new advisers. Right now this is ALL going to my TFSA. This year I want to max my TFSA. I have $17,500 contribution room. (I have my RRSP with them too, but I'm working on one thing at a time and not contributing to the RRSP. There's also a pension at work that has nothing to do with this company)

I was planning on bumping my monthly contributions to $1000/month, then coming up with the remaining $5500 in a lump sum or two, but it occurred to me (because of you fine folks) that I should actually pay attention to what I'm investing in, and what the MER is.

20.21% is here:
http://globefunddb.theglobeandmail.com/gishome/plsql/igf.fund_pro?fundname=Investors+Global+Dividend-B
MER 2.37%

79.79% is here:
http://www.theglobeandmail.com/globe-investor/funds-and-etfs/funds/summary/?id=58226
MER 2.73%

Those MER's are pretty high, ya?

So, as a newbie, what should I do? Open a Vanguard account and find an index fund? Stay where I am until I learn more? Move my existing investments to Vanguard too?

I don't mind learning and I have a pile of books I'm going through right now, but I don't want to get in over my head too soon. I'd also like to max my profits and I'm willing to take some risk, I'd just like it to be educated risk!

What do you suggest?

dividendman

  • Handlebar Stache
  • *****
  • Posts: 1128
  • Age: 37
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #1 on: January 06, 2015, 07:36:28 PM »
Holy fuck man! Those MERs are devastating.

What I suggest is immediately liquidating those investments and getting your cash back. Once you do that open up a vanguard account like you said (or even questrade or something else... anything!) and basically what that breakdown is after looking at the funds is 75% stock and 25% bond. It's also kinda shitty that's it's only Canadian exposure to both stock and bonds.

What I would do, if i wanted to keep the 75% stock 25% bond is just put 75% of your money in VTI which is the vanguard total US market which you can buy on the exchange once you open your brokerage account (or buy through vanguard once you open that account) and the 25% put in BND which is the vanguard total bond US bond fund.

Note that the weighted MER of doing what I suggest is about 0.06%... which means it's about 42x less expensive than your current "investments".

Then as you add money just add it to whatever is most behind the 75/25 split I mentioned above. But get out of those current funds immediately!!!!

EDIT: Oh, as for TFSA/RRSP vs other, depending on your income, if it's fairly high I'd max out the RRSP first and first max out the BND portion in the RRSP. Then max out the BND portion in the TFSA. Then do the same with the stock portion (VTI). If you have any extra money to invest after the RRSP and TFSA are maxed put it in a regular taxable account...so basically you want your stock holdings to be the ones that are taxed (if anything spills out of the tax advantaged accounts).

EDIT #2: I was in such shock over those MERs I poked a bit more at those links you had up there. For the stock fund, they helpfully provide a comparison graph to show you how much you're being screwed instead of investing the the S&P 500 or VTI or something: http://globefunddb.theglobeandmail.com/gishome/plsql/igf.show_chart?fid1=61634&period=120&indx1_id=25&fid2=0&pi_mov_type=SMA&pi_mov_avg1=&pi_mov_avg2=&pi_mov_avg3=&iaction=%A0Go%A0&pi_universe=IGF_FUNDS&comp_id=2581. Unbelievable that this actually happens. A lot of their top holdings are in the S&P 500 too.
« Last Edit: January 06, 2015, 07:53:09 PM by dividendman »

Cookie78

  • Handlebar Stache
  • *****
  • Posts: 1893
  • Location: Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #2 on: January 06, 2015, 07:58:42 PM »
Thank you so much for the reply.

I thought that it was pretty high and I didn't know if I was being rash wanting to move everything. But I'll get on it. ASAP. Is it possible to transfer the TFSA instead of liquidating it? If I remove the cash I won't be able to repay that amount to the TFSA until next year.

I'm not going to worry about taxable accounts just yet, it'll be two years before I get that far. I have lots of time to learn about that between now and then. I'd looked into Questrade too after seeing a thread on here and that's what I was planning on doing. :)


dividendman

  • Handlebar Stache
  • *****
  • Posts: 1128
  • Age: 37
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #3 on: January 06, 2015, 08:04:57 PM »
Since those aren't ETFs and they are proprietary funds you're going to have to sell them and keep a cash position in your current broker's TFSA.

Then what you can do is transfer the cash from the TFSA/RRSP you have with these guys to questrade or whomever. If you call up the questrade guys they'll tell you how to do it as you're opening your accounts. Basically what they will do is open a TFSA/RRSP at their end and talk with your current broker and get the funds moved. This way it won't be a TFSA withdrawal, it will be an "in-kind" transfer and you won't lose any room.

You'll have to fill out a bunch of forms and things but the questrade people should guide you through the process - they'll want a new account so they should be pretty eager.

Cookie78

  • Handlebar Stache
  • *****
  • Posts: 1893
  • Location: Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #4 on: January 06, 2015, 08:10:58 PM »
Fantastic news!!!

Thanks so much. I'll let you know how it goes. :)

Cookie78

  • Handlebar Stache
  • *****
  • Posts: 1893
  • Location: Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #5 on: January 06, 2015, 08:13:49 PM »
Regarding your second edit: Yeah, I didn't see the graph before, but they listed the index amounts beside their returns and they were lower every single time.

Glad I'm figuring this out now instead of never. :)

Dee

  • Pencil Stache
  • ****
  • Posts: 748
  • Location: Ottawa, Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #6 on: January 06, 2015, 08:28:12 PM »
Not sure if I'm reading the info in the links right, but it looks to me like these are not limited to Canadian exposure;  while the first fund -- Alto Conservative Portfolio Srs B -- seems largely Canadian ("The Portfolio invests primarily in Underlying Funds that invest in Canadian fixed income securities. The Portfolio also has limited exposure to equities through investment in Underlying Funds that invest in Canadian, U.S. and international equity funds"), the second fund -- Investors Global Dividend-B -- seems much more mixed geographically ( United States --36.47%; Canada -- 17.97%, followed by UK, Switzerland, France etc.).

So perhaps putting it all in US stocks and bonds would be less geographic diversification.

I would suggest looking at Canadian Couch Potato's model portfolios for some suggestions: http://canadiancouchpotato.com/model-portfolios/.

I use Questrade myself -- no fees for trading ETFs. You can buy the Vanguard ETFs through the Questrade platform.

So I concur with the first suggestion of making the switch, but would encourage you to give a bit more thought to whether the entirety should go into US stocks and bonds.
   

Cookie78

  • Handlebar Stache
  • *****
  • Posts: 1893
  • Location: Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #7 on: January 06, 2015, 08:38:16 PM »
Thank you. :)

Canadian Couch Potato is near the top of my list of things to read too.



dividendman

  • Handlebar Stache
  • *****
  • Posts: 1128
  • Age: 37
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #8 on: January 06, 2015, 08:46:18 PM »
Not sure if I'm reading the info in the links right, but it looks to me like these are not limited to Canadian exposure

Yep! I stand corrected. I was going to throw in yet another edit after I noticed it but decided not to. Then I got caught :P

While I agree that the portfolio I suggested is less geographic exposure I still think it's a good place to start for most folks then as they learn they can optimize. But yes, the key is getting the the hell out of those funds listed and into something basic and cheap.

I use the 10-speed portfolio from here:http://assetbuilder.com/couch_potato/couch_potato_cookbook

But any of the choices on either of the links I or Dee posted will be far superior to what Cookie78 is doing now.

Cookie78

  • Handlebar Stache
  • *****
  • Posts: 1893
  • Location: Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #9 on: January 06, 2015, 08:52:28 PM »
Thank you once again.

Seriously, you are taking the stress away from all my decision making. :)

As much as it sucks I didn't figure this out years ago, I'm glad I started when I did and I'm super excited to be improving it now.

PEIslander

  • Stubble
  • **
  • Posts: 170
  • Age: 58
  • Location: Prince Edward Island, Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #10 on: January 07, 2015, 03:58:55 AM »
I use Questrade myself -- no fees for trading ETFs. You can buy the Vanguard ETFs through the Questrade platform.

Actually at Questrade there are commissions when you sell ETF's. None when you buy.

Looking at how conservative your existing funds are I'm wondering what your conversations were with the advisor who helped you with them. If at the time you seemed scared of losing any of your investment they would tend to put you into conservative funds as a service to you & your fears. They didn't necessarily put you in bad investments (although the fees are high) if at the time you stated you didn't want to worry. With less risk comes less returns.
 
One thing about Questrade and other discount brokers is they don't give you advice. With them you manage your own account. You seem like you could benefit from talking to an advisor to help figure out what risk you'd really be comfortable with. An alternative to doing that would be to dive into the Canadian Couch Potato site and read some articles on risk etc. - then when you understand more about the inherent risks choose the Couch Potato's recommended portfolio that provides the guidance on asset allocation that seems right to you. I personally like the MoneyGeek site (http://www.moneygeek.ca/) more than the Couch Potato one. MoneyGeek also has recommended portfolios and lots of great high-quality educational materials. I'd suggest looking at both sites. Then when you are comfortable with your knowledge & the resources available to you you can decide if managing your own accounts is the right thing for you. Note it may be possible to stay with your present advisor and just switch your investments into a new asset allocation that suits you now using ETF's or Index Funds that have lower MER's.

Bytowner

  • 5 O'Clock Shadow
  • *
  • Posts: 26
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #11 on: January 07, 2015, 07:26:24 AM »
A thought on diversification: I'm pretty down on the Canadian market, but the current currency situation gets me nervous about throwing everything at the S&P500. The way down is fun, but the loonie's climb back up can be painful.

Mr. Captain Cash

  • 5 O'Clock Shadow
  • *
  • Posts: 38
    • www.mrcaptaincash.com
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #12 on: January 07, 2015, 07:37:19 AM »
Bytowner,

If you decide to go with the Couch Potato Strategy you might be interested in checking out my investment portfolio as it resemlbes the advice of the Couch Potato Strategy. I have information on the Canadian index funds I have in my portfolio and my desired allocations. Along with updates on my rebalancing and to get my portfolio in the desired allocation targets.

You can check it out here;
http://www.mrcaptaincash.com/cash-accumulators/

I have my investments through CIBC Investors Edge. If you have any questions send me an email Mrcaptaincash@hotmail.com

Always happy to help a fellow Canadian investor!

Mr. Captain Cash

Cookie78

  • Handlebar Stache
  • *****
  • Posts: 1893
  • Location: Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #13 on: January 07, 2015, 08:57:36 AM »
I use Questrade myself -- no fees for trading ETFs. You can buy the Vanguard ETFs through the Questrade platform.

Actually at Questrade there are commissions when you sell ETF's. None when you buy.

Looking at how conservative your existing funds are I'm wondering what your conversations were with the advisor who helped you with them. If at the time you seemed scared of losing any of your investment they would tend to put you into conservative funds as a service to you & your fears. They didn't necessarily put you in bad investments (although the fees are high) if at the time you stated you didn't want to worry. With less risk comes less returns.
 
One thing about Questrade and other discount brokers is they don't give you advice. With them you manage your own account. You seem like you could benefit from talking to an advisor to help figure out what risk you'd really be comfortable with. An alternative to doing that would be to dive into the Canadian Couch Potato site and read some articles on risk etc. - then when you understand more about the inherent risks choose the Couch Potato's recommended portfolio that provides the guidance on asset allocation that seems right to you. I personally like the MoneyGeek site (http://www.moneygeek.ca/) more than the Couch Potato one. MoneyGeek also has recommended portfolios and lots of great high-quality educational materials. I'd suggest looking at both sites. Then when you are comfortable with your knowledge & the resources available to you you can decide if managing your own accounts is the right thing for you. Note it may be possible to stay with your present advisor and just switch your investments into a new asset allocation that suits you now using ETF's or Index Funds that have lower MER's.

Thanks for your input and the link :)

I questioned why they were in conservative funds also. It could be because I was using my TFSA also as an emergency fund? Two meetings ago I asked him about the possibility of putting that money in more aggressive funds. He said 'No'. I asked why not and got a vague half-answer. I'm pretty sure they aren't 'advising' me very much. You are correct in that I may not know enough myself to go at it without an adviser, but the advice I am getting from these guys isn't worth the cost.

My risk tolerance is med-high, but I do need to consider that currently my emergency funds are also in the TFSA. If it's important to have emergency fund in a more conservative investment I could leave what I currently have (a good emergency fund amount) in conservative investments and start contributing the rest to something more aggressive. Correct?

The last meeting I had was with someone new. He'd emailed and said something about 'moving some stuff around'. In the meeting I dropped off a check for $4k, we didn't move anything around. I asked him how much contribution room was in my TFSA. He calculated the max minus the value of my TFSA including accumulated interest. I asked him 'shouldn't the interest accumulated not count in that calculation?'. He said he'd have to talk to the boss to find out my actual contribution room. I never heard back from him about that. I had to email the much more helpful assistant 2 months later to get that info.

Shooter_D

  • Stubble
  • **
  • Posts: 125
  • Age: 34
  • Location: Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #14 on: January 07, 2015, 09:07:03 AM »
Hey Cookie,

I thought I'd chime in because this thread resonates with me. A few years ago I started investing my RRSP and TFSA with an advisor to get the ball rolling with investing. After a year or so and a lot of research later, I decided I wanted to try it on my own, but wasn't yet confident enough with the idea to move everything over from an advisor to Questrade so I just moved my RRSP (which was invested in the type of mutual funds you found yourself in...high MER, mediocre returns compared to the rest of the market). My advisor still had control over my TFSA which was invested in a few dividend paying stocks, as well as a Canadian bond ETF and US share ETF. I have watched my global couch potato-type portfolio (inspired by Canadian Couch Potato) perform comparably to my advisor-managed TFSA. I've started making the move to open a TFSA at Questrade so I can fully take control of my investing. I'm still learning a lot about what I want my asset allocation and location (for tax reasons) to be, and also whether I should invest in Canadian versions of US ETFs, or go through currency conversion and get the American version, etc... That being said, it's liberating to know I have my money working for me and no longer have to worry about paying the fees for the mutual funds I was in and I will soon not have to worry about the 1% my advisor charges for the minimal amount of managing he does in my TFSA.

I wish you luck on your self-directed investing! There are a lot of good online resources for Canadian investing, and the forum is a great place to get help as well. I will echo what dividendman said and encourage you to make sure you transfer your TFSA by filling out the proper paperwork to have your advisor sell your holdings and transfer the whole account to whichever broker you choose to avoid the issues with TFSA withdrawal and deposit rules. I did this through Questrade for my RRSP and it was very easy, though I did feel slightly guilty when my investor called me to make sure I was doing what I wanted... I'm happy with my decision though, and not relying on an advisor has really increased my drive to learn more and figure out how to do things on my own.

Cheers,

Shooter

RichMoose

  • Pencil Stache
  • ****
  • Posts: 966
  • Location: Alberta
  • RiskManagement
    • The Rich Moose | A Better Canadian Finance Blog
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #15 on: January 07, 2015, 10:32:06 AM »
Hi Cookie, Looks like you got sucked in by Investors Group (or one of their affiliated companies). You are definitely making a good choice leaving them, in general they tend to employ mediocre advisors and charge exorbitantly high fees. I think you should first look at the process of changing to a new broker. Personally I use Questrade because their platform and site are decent and relatively easy to use, I currently do not use a USD RRSP account and purchase only Canadian listed ETFs, and they have commission-free ETF purchasing. If you do choose to go with Questrade, take a careful look at their promotions page. They often will reimburse you partially or fully for account transfer costs. Whatever broker you choose, do a proper transfer and fill out all the forms. You could have avoided this for the TFSA by using the calender year rollover, but that opportunity passed a few weeks ago.

Without a doubt, one of the best resources out there for beginning investors is the Canadian Couch Potato. CCP will help point you in the right direction as far as which ETFs to use. In general, Vanguard ETFs are the best and lowest cost. Other worthwhile blogs for investing information include MoneyGeek.ca and MillionDollarJourney.ca. Although with the latter, I wouldn't get too sucked into the dividend strategy.

How much money do you have in your RRSP? If it's more than $50,000, it may be worthwhile opening a US dollar RRSP with RBC Direct Investing instead of Questrade. They easily accommodate no cost, no hassle currency changes through the Norbert's Gambit trick. The trading commissions are really quite minimal for buy and hold investors, especially if you invest in lump sums of more than $2000 at a time. Don't forget, trading commissions are not compounding, advisor fees are. Having a USD RRSP account allows you to purchase US listed ETFs. Often they have slightly lower MERs and they are more liquid than comparable Canadian ETFs. You will also pay less tax on dividends, although that is currently quite minuscule at todays dividend payouts.

Good luck with the change, don't turn back!

Cookie78

  • Handlebar Stache
  • *****
  • Posts: 1893
  • Location: Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #16 on: January 07, 2015, 03:38:36 PM »
Thanks Shooter_D, I'm glad I'm not the only one! :)


Hi Cookie, Looks like you got sucked in by Investors Group (or one of their affiliated companies). You are definitely making a good choice leaving them, in general they tend to employ mediocre advisors and charge exorbitantly high fees. I think you should first look at the process of changing to a new broker. Personally I use Questrade because their platform and site are decent and relatively easy to use, I currently do not use a USD RRSP account and purchase only Canadian listed ETFs, and they have commission-free ETF purchasing. If you do choose to go with Questrade, take a careful look at their promotions page. They often will reimburse you partially or fully for account transfer costs. Whatever broker you choose, do a proper transfer and fill out all the forms. You could have avoided this for the TFSA by using the calender year rollover, but that opportunity passed a few weeks ago.

Without a doubt, one of the best resources out there for beginning investors is the Canadian Couch Potato. CCP will help point you in the right direction as far as which ETFs to use. In general, Vanguard ETFs are the best and lowest cost. Other worthwhile blogs for investing information include MoneyGeek.ca and MillionDollarJourney.ca. Although with the latter, I wouldn't get too sucked into the dividend strategy.

How much money do you have in your RRSP? If it's more than $50,000, it may be worthwhile opening a US dollar RRSP with RBC Direct Investing instead of Questrade. They easily accommodate no cost, no hassle currency changes through the Norbert's Gambit trick. The trading commissions are really quite minimal for buy and hold investors, especially if you invest in lump sums of more than $2000 at a time. Don't forget, trading commissions are not compounding, advisor fees are. Having a USD RRSP account allows you to purchase US listed ETFs. Often they have slightly lower MERs and they are more liquid than comparable Canadian ETFs. You will also pay less tax on dividends, although that is currently quite minuscule at todays dividend payouts.

Good luck with the change, don't turn back!

Yup. Investors group. After going to the last appointment where I seemed to know more about TFSA contribution limits than he did was the last straw. I knew I needed to get off my ass and do something. Continually improvement and all that. :)

Right now there is about 25k in my RRSP, and 20k in my TFSA. I've been reading the Couch Potato website on and off today at work, and will dig a little deeper tonight at home. It seems I fall into the 'start with index funds' category at first glance.
- Less than 50k
- Small regular contributions (what counts as 'small'? I'm aiming for 1000/month at least)
- Simple portfolio (maybe best for now)
- Not comfortable buying and selling ETFs in a discount brokerage account (this one may not really apply to me)


Can you please elaborate on this comment. I don't understand 100%
"Don't forget, trading commissions are not compounding, advisor fees are."


Also regarding ETFs. Is it suggested for people contributing large sums irregularly because of the fees usually associated with buying and selling them? Which doesn't apply with Questrade? Or are there other reasons?

AJDZee

  • Stubble
  • **
  • Posts: 240
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #17 on: January 07, 2015, 03:50:41 PM »
The investment fees are compounding, you pay 2.5% (or whatever) each year, and it obviously compounds along with the value of your portfolio. That's all they meant... The fees you'll be paying will compound over time.

When you buy stocks or ETFs yourself you pay a commission each time ($5-20) depending on the order and brokerage you pick, but that's all you pay. Forever. No other fees. With Questrade they're business model to attract clients is to offer no fees when buying ETFs. You can buy every day, week, month, doesn't matter you don't pay any comission. Only pay the regular comission when you sell.
I assume different brokerages offer different things to attract clients, that's just Questrade's thang.

Mr. Captain Cash

  • 5 O'Clock Shadow
  • *
  • Posts: 38
    • www.mrcaptaincash.com
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #18 on: January 07, 2015, 03:59:23 PM »
Can you please elaborate on this comment. I don't understand 100%
"Don't forget, trading commissions are not compounding, advisor fees are."

Let Assume the following

In 2015 your portfolio value is $50,000
Your mutual fund management expense fee is 2.5%
The total cost you would pay in management expense fees in 2015 is $1250

In 2016 your portfolio's value is $75,000
Your mutual fund management expense fee is 2.5%
The total cost you would pay in management expense fees in 2016 is $1875

In 2017 your portfolio's value is $100,000
Your mutual fund management expense fee is 2.5%
The total cost you would pay in management expense fees in 2016 is $2500

Hope that explains your question. It means as your portfolio value grows in value so does the management expense fee you are required to pay. Where a trading commission in 2014 in my situation $6.99 and is still $6.99. It will most likely be $6.99 in 2017 or very close to it if not lower judging by previous performance.

Yes to purchase mutual funds it is often free to purchase where if you are just getting started and paying a trading commissions some as high as $28 but we will use $6.99 for this example and only contributing $100/month the trading commission fee is eating up 6.99% of the investment. Generally I shoot for the trading commission to consume less than 0.01% of my investment purchase. Starting off with a little portfolio in that case of $5,000 and an mutual index fund management fee of 0.50% (5,000X0.005) will cost you $25 where throughout the year trading at $6.99 would only be 4 trades you could be before you exceed the $25 in management expense fees from the mutual fund.

Hope this helps,

Mr. Captain Cash


« Last Edit: January 07, 2015, 04:01:05 PM by Mr. Captain Cash »

Cookie78

  • Handlebar Stache
  • *****
  • Posts: 1893
  • Location: Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #19 on: January 07, 2015, 04:10:01 PM »
Yes. Both those answers make perfect sense. :)

So if I want to invest in ETFs through Questrade it doesn't matter if I'm investing smaller amounts regularly, because there's no cost to buy. It'll only matter when I'm selling. Correct?

Just want to make sure there's no additional reason those with smaller investments should stick with ITFs, as explained by Couch Potato.

On my way home to read all of the things. I'll hold off on any more questions until I've done more of my own research.

Thanks again!

Mr. Captain Cash

  • 5 O'Clock Shadow
  • *
  • Posts: 38
    • www.mrcaptaincash.com
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #20 on: January 07, 2015, 04:22:41 PM »
I do not use Questrade myself, but if there is no commission charged for buying ETFs through Questrade then it will not matter how little your investment amount is as you are not losing a significant amount of your investment contribution due to trading commission fees.

As for selling I am unsure, hopefully someone else can touch on that.

No problem,

Mr. Captain Cash
« Last Edit: January 07, 2015, 04:44:46 PM by Mr. Captain Cash »

RichMoose

  • Pencil Stache
  • ****
  • Posts: 966
  • Location: Alberta
  • RiskManagement
    • The Rich Moose | A Better Canadian Finance Blog
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #21 on: January 07, 2015, 04:36:33 PM »
Yes. Both those answers make perfect sense. :)

So if I want to invest in ETFs through Questrade it doesn't matter if I'm investing smaller amounts regularly, because there's no cost to buy. It'll only matter when I'm selling. Correct?

Just want to make sure there's no additional reason those with smaller investments should stick with ITFs, as explained by Couch Potato.

On my way home to read all of the things. I'll hold off on any more questions until I've done more of my own research.

Thanks again!

This is correct, with Questrade you can purchase one ETF unit at a time if you like and it won't cost you a thing. You can ignore the CCP advice on accounts under $50,000 if you use Questrade.

Cookie78

  • Handlebar Stache
  • *****
  • Posts: 1893
  • Location: Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #22 on: January 09, 2015, 06:11:22 PM »
So I have a Questrade account now! Almost. I'm in the process of getting a TFSA account and and RRSP account, but the esignature didn't work and I have to wait 72 hours, or maybe call on Monday.

One more question.
If I go with Global Couch Potato option 4 http://canadiancouchpotato.com/model-portfolios/ and I'm only investing in tax free or deductible accounts (TFSA and RRSP) does it matter which funds are in which account?

Other than...
US listed ETFs should be in an RRSP account so you aren't paying withholding tax, but this doesn't apply in the case of a Canadian listed ETF holding a US ETF such as https://www.vanguardcanada.ca/individual/etfs/etfs-detail-overview.htm?portId=9557 correct?

So either you are paying for currency conversion, or withholding tax?

Are there any other things to consider when deciding where to invest which funds?

PEIslander

  • Stubble
  • **
  • Posts: 170
  • Age: 58
  • Location: Prince Edward Island, Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #23 on: January 10, 2015, 05:09:19 AM »
Note that many US-listed stocks & ETF's do not pay dividends. Those US-listed securities can be held in a TFSA without concerns about withholding taxes. I personally have in my Questrade TFSA some US-listed growth-oriented ETF's that pay small dividends. I don't worry about the withholding on those.

Here's a small caution! Do not be tempted to buy a penny stock in TFSA! (Note this caution applies to RRSP's and other registered accounts too). If you do the Canada Revenue Agency will eventually tax you 50% of the value of the stock based on the fair market value at the time it was acquired. With a full-service broker such a purchase is unlikely because they'd more than likely tell you it was not a qualified investment. Questrade (and likely other discount brokers) may allow you to purchase unqualified investments. Questrade does have an automated system to help avoid such purchases but it is not foolproof. I got caught on this because when I started I read almost everywhere that you can hold stocks in a TFSA -- with no mention that only "qualified" stock investments are allowed. What are qualified & unqualified seem to be largely unknown in the world of TFSA's and I doubt most advisors are aware that there are restrictions. You can find the official list here: http://www.fin.gc.ca/act/fim-imf/dse-bvd-eng.asp . If the security (of any kind) is not listed on one of those exchanges do not buy or transfer it into a TFSA or at some point you'll be assessed that tax. [Let's say you bought $2000 in a hot penny stock in your TFSA but then the company goes bankrupt - as can happen. Then the Canada Revenue Agency (months later) sends you a letter advising that you now owe them $1000. So in this example your original $2k investment cost you $3000 and you have nothing to show for it. I'd recommend avoiding this situation).

With regards to currency conversion note, as Tuxedo pointed out earlier, there is a "trick" called "Norbit's Gambit" that can be done with a brokerage account to reduce the costs of currency conversion. At the MoneyGeek website (http://www.moneygeek.ca/) you can find tutorials on doing a Norbit's Gambit using Questrade.

One last thing is there has been advice in this thread for the OP to sell their investments inside the existing registered account and then transfer that cash to the new registered accounts. The other approach that may be possible is to have the existing investments transferred over "in kind" to fund the new account. Questrade will help with the paperwork to have that transfer happen. Talking to the original advisor may not even be required - although it is likely they'll give a call to whine about you leaving them and perhaps telling you what a big mistake you are making.

Have fun with your Questrade accounts. I do!

Heckler

  • Handlebar Stache
  • *****
  • Posts: 1346
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #24 on: January 10, 2015, 08:27:33 PM »
why on earth would you transfer mutual funds "in kind"?  You'd still then own those high MER mutual funds.

Be aware of FEL (front end load) vs DSC (deferred service charge).  Depending on the mutual fund you own, you might get hit with 6% DSC when you sell them.  If you've held them for a long time already, check if you can change your DSC funds to a FEL fund (mine can do 10% per year, which is how my mutual fund sales person, er, adviser, sold us on "no fees".  Just gotta hold for 10 years at 2.8% annual MER. 

PEIslander

  • Stubble
  • **
  • Posts: 170
  • Age: 58
  • Location: Prince Edward Island, Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #25 on: January 11, 2015, 03:50:53 AM »
why on earth would you transfer mutual funds "in kind"?  You'd still then own those high MER mutual funds.

My thought is they'd then be sold when in the new brokerage account. I was making the suggestion because I know many investors dread the idea that they need to talk to the advisor they are unhappy with --- wanting to avoid any confrontation or awkwardness. The sad reality is some people will stick with an advisor (or doctor or dentist) they no longer like just because they don't want to explain/defend why they are switching. With Questrade I believe you can transfer in-kind into your account without personally contacting the company/advisor currently holding your account. (They will in all likelihood call but at least at that point the decision has already been made and the conversation can be cut short).

Heckler raises a very important point about the fee loading of any mutual funds the OP already owns. If there is a back-end load (DSC) it should definitely be taken into consideration before the funds are sold. DSC's typically reduce by a fixed schedule. You may need to own the fund for several years (or up to ten in some) before the DSC is reduced to zero. So if you bought the funds years ago with a DSC then there may be no fee charged when you sell. On the other hand if you bought monthly with a DSC figuring out the current fees if you were to sell would be tricky. I don't know if units bought with any reinvested dividends are also subject to a DSC? Before selling, the advisor can be asked to provide the actual (DSC) fee amounts that would apply. I think they get this info from the mutual fund company as it is that company who actually gets those fees. (With a DSC, the advisors & their company still get an up-front commission paid by the mutual fund company. The mutual fund company may or may not later recover that money through the deferred sales charge).

Here's a link to info about mutual fund fees: http://www.getsmarteraboutmoney.ca/en/managing-your-money/investing/mutual-funds-and-segregated-funds/Pages/Mutual-fund-fees.aspx#.VLJPiCvF98E

Cookie78, do you know if your mutual funds were sold to you with a front-end load or a DSC?

Cookie78

  • Handlebar Stache
  • *****
  • Posts: 1893
  • Location: Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #26 on: January 11, 2015, 08:38:02 AM »
I didn't know, but I checked both the links in the OP and they both say "Sales Fee Type: No Load". Is that what you are referring to? I'll have to check the two funds in the RRSP also.

I don't mind talking to the current advisers to sell the funds, so long as it's still within my 'TFSA', if that makes things easier. If they question why I don't want to work with them anymore I have some very solid reasons!!

dividendman

  • Handlebar Stache
  • *****
  • Posts: 1128
  • Age: 37
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #27 on: January 11, 2015, 10:58:53 AM »
Just remember that you don't need "solid reasons" to stop working with them. You're under no obligation to have concrete reasons for leaving. You want your money out of where it is and into QuesTrade. It's as simple as that.

It really pisses me off when anyone starts interrogating me for making a change. I get that they want to know why they're losing the business. But if I don't want to talk about it that should be the end of the discussion.

Cookie78

  • Handlebar Stache
  • *****
  • Posts: 1893
  • Location: Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #28 on: January 11, 2015, 12:39:46 PM »
Just remember that you don't need "solid reasons" to stop working with them. You're under no obligation to have concrete reasons for leaving. You want your money out of where it is and into QuesTrade. It's as simple as that.

It really pisses me off when anyone starts interrogating me for making a change. I get that they want to know why they're losing the business. But if I don't want to talk about it that should be the end of the discussion.

Very true.

I took a look at the RRSP funds and they may have back end loads. One of them I can't find clear info yet, but the other I think is 7 years before I can sell without the fee. I'm almost at 2 years now. I have not been contributing to that one monthly, just one lump sum at the start. I'll call tomorrow and find out the details. I need to call anyway to cancel my monthly automatic contributions, and to switch the tfsa to cash so I can transfer it.

If I'm paying 2.5% MER is it worth it to stay to avoid 5% sales fee? There's about $25k in 2 different funds.

dividendman

  • Handlebar Stache
  • *****
  • Posts: 1128
  • Age: 37
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #29 on: January 11, 2015, 12:59:56 PM »
Get out even if there is a 5% fee. You're just going to have to eat it.

5 years @ 2.5% is > 5%

Cookie78

  • Handlebar Stache
  • *****
  • Posts: 1893
  • Location: Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #30 on: January 13, 2015, 12:11:21 PM »
Automatic monthly contributions have been cancelled and my Questrade accounts are set up! :D I'm just filling out the paperwork to have the accounts transferred over.

MY RRSPs have a DSC. There are two of them, split nearly 50/50. Currently the DSC for both is 5.5% with 5.5 more years until they are 0%. The MERs are 2.61% and 2.31%

http://prod.bowne.ca/fundexpressweb/investorsgroup/files/en/F142_ATCVA.pdf
http://prod.bowne.ca/fundexpressweb/investorsgroup/files/en/F145_ATMAA.pdf

It'll cost me ~$1375 in sales charges, but hopefully the MUCH lower MER will make up for it.

I'm going to go with Global Couch Potato option 4

BUT...

I was thinking of putting less into Bonds for now and splitting it 4 ways at 25% each. I know risk tolerance is a personal thing, but is this a reasonable plan?

Vanguard FTSE Canada All Cap (VCN) 25%
Vanguard US Total Market (VUN) 25% 
iShares MSCI EAFE IMI (XEF) 25%
Vanguard Canadian Aggregate Bond (VAB) 25%

And lastly, does it matter which ones I put in my TFSA and which ones I put in my RRSP?

Goldielocks

  • Walrus Stache
  • *******
  • Posts: 6445
  • Location: BC
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #31 on: January 13, 2015, 04:23:17 PM »
Cookie78

Deja vu --  on Sunday, I spent the day double checking my IG funds.   We have been unwinding / transferring them out for about 5 years now..!  I own the same fund, in a A series and a C series....

Watch out for their 7+ years of back end fees on anything with a B or C at the end of the fund name.  IG had a fun time trading within our account, keeping some funds always with in the back end fee range.   We stopped investing with them (new money) in 2006 but I am still facing back end fees on my Investors Dividend C fund.

Hey, to make you feel better, we have IG funds with MERs of 2.9% AND a 7 year backend fee.  UGH.  And it is still better to wait it out for another year before transferring.   Also,  even with the high MER's, your fund (Investors Dividend) has been average or better performance, so that is good news, it is well managed, if expensively managed.

Advice
Coupled with commission costs in brokerage accounts, IG Back End Fees,  and a learning curve (which could result in a lot of funds sitting as cash while you start investing), I would advise you against transferring out immediately.  Start a new account with your 500 per month (or any new money).  Transfer it all when you know more about the fees.

My personal move forward action plan (since 2010) -- trying to ditch IG

1)  Canadian Couch potato and ETF's -- with much less in bonds than they recommend (I am having tremendous trouble putting myself into 40% bonds, especially bond funds, but at least I own some now.)

2)TD Discount Brokerage -- no fees on the TD fund trading, great for monthly investing smaller amounts, although MERs are slightly more.   Questrade is actually my first recommendation, but TD is almost as good, their call-in desk persons are very good.  TD had a lot of paperwork hassle to open, so be forewarned (lost documents, signatures, etc).

3)  Rebalance annually by myself or when it hits 5% off the portfolio target.  This was really hard for me to do, as I don't like selling when high to buy when low, but I am getting over it.   Investing new money is easier.

4)   Get the employer match at work, then invest the extra myself in my own TD account.  Work's MER's are between 1.9% and 2.2%, but the rebalancing transfers are free, if you need / are required to keep some money locked in there, that is one small advantage.

This year, I am finally in the top income bracket, and will max out my RRSP contribution room.   If I there had been TFSA's when we were younger (and less income), I would have definitely used them, to save the RRSP room for my higher earning years... (I was not maxing out everything back then -- my retirement goal was age 55 and partial contributions were plenty to achieve that).   

Now I only have TFSA room left, and a high tax bracket, which is a much bigger bummer to me than I would have thought.  So my advice, is, if your income is under $100k, and likely to increase:
a) get employer or any other matching 
b) max out TFSA with income under $100k  (I used to say under $75k, but this lack of RRSP room is real downer!)
c) then RRSP
d)  throw in some free govt money for RESP's if that applies to you too.

And for all you US citizens out there -- having zero commissions on trades does not exist in Canada like in the good ol USA.  I would love to have my 100 free trades a year back that I had with WFC....

Shooter_D

  • Stubble
  • **
  • Posts: 125
  • Age: 34
  • Location: Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #32 on: January 14, 2015, 08:20:15 AM »

I was thinking of putting less into Bonds for now and splitting it 4 ways at 25% each. I know risk tolerance is a personal thing, but is this a reasonable plan?

Vanguard FTSE Canada All Cap (VCN) 25%
Vanguard US Total Market (VUN) 25% 
iShares MSCI EAFE IMI (XEF) 25%
Vanguard Canadian Aggregate Bond (VAB) 25%

And lastly, does it matter which ones I put in my TFSA and which ones I put in my RRSP?

Your asset allocation sounds good to me. People on this forum seem to have pretty heavy equity allocation vs. bonds. I like the idea of some bonds to help with re-balancing especially during market dips, and also tempering the blow of big downward swings. I haven't really experienced one of these in my investing experience so I will see how it goes when it happens.

I have a similar asset allocation, though I will be adding in emerging markets, some REITs, and lowering the bond allocation (20%). I'm not sure how I will spread these accounts across my RRSP and TFSA, though right now it's looking like I will keep Canadian accounts in my TFSA  (bond, equity, and REIT) and foreign in my RRSP (VUN, VEE, XEF). This is due to the future benefit of investing in VTI in my RRSP and not having to pay withholding taxes, though now I am in VUN so have to pay withholding tax anyway. My choice of asset location also has something to do with the fact that I currently have my foreign accounts in my RRSP in Questrade so don't want to sell them all and re-buy in my TFSA. I have heard some Canadians choose to place the assets most likely to appreciate the most (e.g. foreign equities) in the TFSA because these will never be taxed at the marginal rate like their returns will eventually be upon withdrawal from an RRSP. I wasn't decided on this so am following the ideas of Canadian Couch Potato.

http://canadiancouchpotato.com/2010/03/05/put-your-assets-in-their-place/
http://canadiancouchpotato.com/2013/10/30/making-smarter-asset-location-decisions/

I'm learning as I go, and will see how the rebalancing across accounts goes. I will be putting in my TFSA contribution at the start of the year, and investing in my RRSP monthly. That may make maintaining my allocation across accounts difficult. Does anyone do things this way or stick to monthly contributions for all accounts?

falcondisruptor

  • Stubble
  • **
  • Posts: 151
  • Location: Ottawa, ON
    • Simple Cheap Mom
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #33 on: January 17, 2015, 07:10:12 AM »
I woke up and decided to put together a plan to switch from my 2% MER mutual funds.  Oh man, this thread has been helpful! 

Ziggurat

  • Stubble
  • **
  • Posts: 125
  • Age: 54
  • Location: Toronto area
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #34 on: January 17, 2015, 07:41:44 AM »
I don't think it was mentioned yet ... Canadian Couch Potato just updated their model portfolios and simplified their recommendations -- their Vanguard choice now has just three ETFs.

Having gone through quite a few headaches based on their previous portfolios, trying to balance across multiple accounts with three different types of bonds, etc., I think this new simpler way is well worth considering.

Cookie78

  • Handlebar Stache
  • *****
  • Posts: 1893
  • Location: Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #35 on: January 17, 2015, 10:29:16 AM »
I don't think it was mentioned yet ... Canadian Couch Potato just updated their model portfolios and simplified their recommendations -- their Vanguard choice now has just three ETFs.

Having gone through quite a few headaches based on their previous portfolios, trying to balance across multiple accounts with three different types of bonds, etc., I think this new simpler way is well worth considering.

Thanks for the heads up.

scottish

  • Handlebar Stache
  • *****
  • Posts: 1430
  • Location: Ottawa
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #36 on: January 17, 2015, 03:48:25 PM »
Pay attention to what you put in the TFSA.   If you hold US stocks or ETFs (on the NYSE for example) and they pay dividends, you get stuck paying US withholding taxes.   I learned this the hard way.

See also   http://forum.mrmoneymustache.com/ask-a-mustachian/can'eh'dian-tax-you-have-questions-i-have-answers/msg517859/#msg517859 on page 4.

PharmaStache

  • Bristles
  • ***
  • Posts: 260
  • Location: Canada
  • Peg City 'Stache
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #37 on: January 17, 2015, 05:08:24 PM »
Pay attention to what you put in the TFSA.   If you hold US stocks or ETFs (on the NYSE for example) and they pay dividends, you get stuck paying US withholding taxes.   I learned this the hard way.

See also   http://forum.mrmoneymustache.com/ask-a-mustachian/can'eh'dian-tax-you-have-questions-i-have-answers/msg517859/#msg517859 on page 4.

This doesn't apply to a US mutual fund that pays dividends, right?

Another newbie over here.  Current Tangerine fund owner, will be opening a TD direct account too to try the couch potato plan on my own.
« Last Edit: January 17, 2015, 05:11:55 PM by Nuke »

scottish

  • Handlebar Stache
  • *****
  • Posts: 1430
  • Location: Ottawa
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #38 on: January 17, 2015, 07:39:47 PM »
I think it might apply to normal mutual funds as well, but I don't know for sure.   I understand that the cause of all this is that the TFSA isn't included in the current tax treaties with the states.

Try asking on the Canadian tax thread I posted above.

BTW, if you're looking at TD direct they have some low MER index funds called e-series.

RichMoose

  • Pencil Stache
  • ****
  • Posts: 966
  • Location: Alberta
  • RiskManagement
    • The Rich Moose | A Better Canadian Finance Blog
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #39 on: January 18, 2015, 07:31:06 PM »
I can confirm that you will be paying withholding taxes on all US investments in a TFSA. This can be in the form of holding a Canadian listed ETF that holds US stocks (like VFV.TO), a US listed ETF purchased with US dollars on a US exchange (VTI), or any type of mutual fund. It basically gets deducted from the dividend you receive at a rate of 15%. So, if each unit normally pays a $1 dividend each year, your account will actually be credited only $0.85. You can get around this by purchasing what are called "tax efficient investments" like HXS.TO, but then you will pay what's called a swap fee which costs just as much.

Just remember, you only get taxed on the dividend, so it's really not a whole lot of money given the average dividend payout of an ETF that holds US index.

PEIslander

  • Stubble
  • **
  • Posts: 170
  • Age: 58
  • Location: Prince Edward Island, Canada
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #40 on: January 19, 2015, 04:44:28 AM »
I can confirm that you will be paying withholding taxes on all US investments in a TFSA. This can be in the form of holding a Canadian listed ETF that holds US stocks (like VFV.TO), a US listed ETF purchased with US dollars on a US exchange (VTI), or any type of mutual fund. It basically gets deducted from the dividend you receive at a rate of 15%. So, if each unit normally pays a $1 dividend each year, your account will actually be credited only $0.85. You can get around this by purchasing what are called "tax efficient investments" like HXS.TO, but then you will pay what's called a swap fee which costs just as much.

Just remember, you only get taxed on the dividend, so it's really not a whole lot of money given the average dividend payout of an ETF that holds US index.

US withholding taxes do not affect all US investments in a TFSA as Tuxedo suggests - just most of them. You can hold US investments that pay no dividends/distributions and not be effected by those withholding taxes. You could for instance buy Berkshire Hathaway Inc. (Ticker: BRK-B) that historically has not paid dividends. It is up 29.58% in the last 12 months. There are countless other choices in stocks that pay no dividends. There are relatively few ETFs that pay no dividends. There are more that pay so little you may find the withholding inconsequential. The ones with low to no dividends tend to be sector oriented and not the usual big index oriented ETFs that most people gravitate to in their TFSA.

I personally have in my TFSA Vanguard Canada's VFV.TO which Tuxedo noted. It tracks the S&P500 but is sold on the TSX exchange in Canadian dollars. In the last year it had a dividend yield of 1.44%. If it were in my RRSP I'd have kept that whole 1.44% but in my TFSA, because of the withholding, my effective yield was instead 1.22%. I can accept that reduction in yield. In the last year VFV.TO performance has been 19.95% which is significantly better than the index it tracks. That enhanced performance relates to how much the Canadian dollar has fallen against the US dollar. This raises the point that any time you own foreign holdings (even if in a Canadian-denominated ETF or mutual fund) you are subject to currency risks. In the case of VFV.TO you might say that risk has worked in my favour this past year -- but then remember all our Canadian net worth is worth approximately 8.5% less relative to the US dollar than a year ago. The Canadian dollar has declined 8.5% in the last 12-months relative to the USD.

Interestingly if I had bought BRK-B with US dollars converted from Canadian a year ago and sell it now and convert back to Canadian --- the investment would have returned about 27.6%. I wish I had bought some!

cjottawa

  • Stubble
  • **
  • Posts: 152
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #41 on: January 19, 2015, 10:29:36 AM »
Here's the best brief I've seen on foreign withholding taxes for Canadians:
https://www.pwlcapital.com/pwl/media/pwl-media/PDF-files/Justin%20Bender%20Assets/Foreign_Withholding_Taxes.pdf

As others have pointed out, TD makes low MER index mutual funds available and they should be strong contenders for your portfolio.
Canadian Couch Potato lays out recommended asset allocation here:
http://canadiancouchpotato.com/2015/01/15/couch-potato-model-portfolios-for-2015/

"Perfect is the enemy of good." (Voltaire) Don't get caught up in tweaking your portfolio; complexity adds its own set of risks. Find a set of low MER funds, contribute, rebalance, forget about them.


Goldielocks

  • Walrus Stache
  • *******
  • Posts: 6445
  • Location: BC
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #42 on: January 19, 2015, 01:22:58 PM »
My head is spinning now.   I think I will double down, and just focus on contributing as much as possible into the TFSA's....  just keep it in CDN and complete my international investing in the other investments.

On another note, reading a few financial articles lately, I realized that Canada tends to have four asset allocations: Canada, Bond, US and International, but the US writers only talk about US / International.  A few mention Bonds as a separate strategy.... but many leave that to other articles.

cjottawa

  • Stubble
  • **
  • Posts: 152
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #43 on: January 20, 2015, 11:31:02 AM »
If your head is spinning but you want to cut your MER in half... switch to the Tangerine StreetWise single funds. MER is about 1% and they rebalance for you. (they're basically "lightly managed" index funds) This is assuming someone is in a similar position as the OP, with north of 2% MER managed funds.

Details on CCP here: http://canadiancouchpotato.com/2013/09/12/the-one-fund-solution/
...and here: http://canadiancouchpotato.com/model-portfolios-2/

« Last Edit: January 20, 2015, 11:33:39 AM by cjottawa »

Goldielocks

  • Walrus Stache
  • *******
  • Posts: 6445
  • Location: BC
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #44 on: January 20, 2015, 09:06:34 PM »
If your head is spinning but you want to cut your MER in half... switch to the Tangerine StreetWise single funds. MER is about 1% and they rebalance for you. (they're basically "lightly managed" index funds) This is assuming someone is in a similar position as the OP, with north of 2% MER managed funds.

Details on CCP here: http://canadiancouchpotato.com/2013/09/12/the-one-fund-solution/
...and here: http://canadiancouchpotato.com/model-portfolios-2/

thanks for the recommendation.  I have mostly couch potato portfolio, so RRSP's are all set. 

The spinning head is about what investment types to carry in which account, e.g., us dividends are taxable in a TFSA or have with-holding, or whatever.. ..  I am still a ways from having enough $$'s that I need to optimize what money goes where just yet.  TFSA won't have more than $20k in it over the next year or so.

Stasher

  • Handlebar Stache
  • *****
  • Posts: 2021
  • Age: 45
  • Location: Cowichan Valley, Vancouver Island
  • Power through Positivity
    • Mindful Explorer
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #45 on: January 23, 2015, 05:12:28 PM »
Wow!!!
Have you guys every helped out Cookie78 , very lucky to have smart sensible no BS support on this forum.
I myself got sucked into IG about 10 years ago and got nailed with trailing fees when I clued in and transferred all out, this is where Tuxedo is on the ball with his comments.

cjottawa

  • Stubble
  • **
  • Posts: 152
Re: Starting to get things in order - Newbie questions - Canadian
« Reply #46 on: January 30, 2015, 07:04:20 AM »
If your head is spinning but you want to cut your MER in half... switch to the Tangerine StreetWise single funds. MER is about 1% and they rebalance for you. (they're basically "lightly managed" index funds) This is assuming someone is in a similar position as the OP, with north of 2% MER managed funds.

Details on CCP here: http://canadiancouchpotato.com/2013/09/12/the-one-fund-solution/
...and here: http://canadiancouchpotato.com/model-portfolios-2/

thanks for the recommendation.  I have mostly couch potato portfolio, so RRSP's are all set. 

The spinning head is about what investment types to carry in which account, e.g., us dividends are taxable in a TFSA or have with-holding, or whatever.. ..  I am still a ways from having enough $$'s that I need to optimize what money goes where just yet.  TFSA won't have more than $20k in it over the next year or so.

More info on that:

http://canadiancouchpotato.com/2015/01/30/the-wrong-way-to-think-about-withholding-taxes/

TL;DR:

Quote from: article
So let’s be clear: most investors should take full advantage of tax-sheltered accounts before investing in non-registered accounts, period. While there are exceptions to this rule of thumb, none of them have anything to do with avoiding foreign withholding taxes.
« Last Edit: January 30, 2015, 07:06:00 AM by cjottawa »