Author Topic: one (investing) question at a time  (Read 73987 times)

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #250 on: May 27, 2015, 12:21:30 PM »
Question: Is there risk in moving investments laterally while market is down?

The bulk of my savings (investments) are in one account.
Ideally, I would contribute $11,000/yr -not more, not less- to our various Registered accounts.
Right now I can do that from income, but that may not always be so.
When the contributions need to come from savings, I could move the required amount from the non-registered to the Registered.

At first glance, I thought this might not be wise: If markets are down, I don't want to withdraw.
But in this case I wouldn't really be withdrawing; I would be moving it from one set of Intl/US/CAD index funds to different Intl/US/CAD index funds. e.g. From RBF556 to TDB900. Are these funds close enough in profile that the move is essentially neutral? Or is there a risk even in this "lateral" move?

forummm

  • Walrus Stache
  • *******
  • Posts: 7396
  • Senior Mustachian
Re: one (investing) question at a time
« Reply #251 on: May 27, 2015, 12:30:37 PM »
The risk is either none or minimal. If your funds post the same day (i.e. it sells at the market closing price and buys at the market closing price the same day), then there's no risk if you're buying/selling the same fund. If you're buying a different fund that's closely related, the risk is minimal, and will probably average out to zero over time.

I don't think you should look at when the markets are up and down. Just keep investing based on your availability of funds. Looking at the market will drive you crazy.

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #252 on: May 27, 2015, 12:43:27 PM »
The risk is either none or minimal. If your funds post the same day (i.e. it sells at the market closing price and buys at the market closing price the same day), then there's no risk if you're buying/selling the same fund. If you're buying a different fund that's closely related, the risk is minimal, and will probably average out to zero over time.

Thank you, forummm! That's what I wanted to confirm.

I don't think you should look at when the markets are up and down.

Agreed. I'm not aiming to look at the market, but rather to develop a sensible plan which recognizes that the market goes up and down.

i.e., Up to this point, I'd planned on keeping $40,000 in cash, money markets, or bonds so that I could still fund the Registered accounts (without selling stocks) even during a "perfect storm" of personal worst-case scenario plus down-market lasting four years. I'd rather have the $40,000 in stocks, though, and only this morning realized that I could maybe have both: Invest the $40,000 in stocks and simply move it laterally if necessary. No need to keep the emergency contribution amounts in bonds/mm/cash in the meantime, if a lateral move at any point has essentially no cost no matter what the market is doing.

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #253 on: May 27, 2015, 02:40:47 PM »
Question: Reasonable to keep project savings, etc, in stocks?

Further to the previous question, if I'm selling stocks while the market is higher than when I put the money in, this is better than a no-interest savings account, right?

e.g., If I want $10,000 as "project money", I can put that in a savings account or in stocks. If when I want it, the $10000 I put in stocks happens to be worth only $7000, this would be a poor move. But if the $10000 I put in happens to be worth $10500, all is well. It's perfectly reasonable to take it out at that point to do other stuff, right?

If I'm in 3-5 different index funds, at least one might have a market value of more than I put in on any given day, no? (So far, that's how it's been. Between CAD/US/Intl, in five different index funds, at least one is up at any given point.) I could take it from the "up" one with no loss.

I think this is essentially what people do with their non-immediate needs, and similar to the idea of putting some in bonds, etc, so that there is always something "up" that can be drawn upon if needed.

Am I understanding this aspect right?

forummm

  • Walrus Stache
  • *******
  • Posts: 7396
  • Senior Mustachian
Re: one (investing) question at a time
« Reply #254 on: May 27, 2015, 02:56:14 PM »
What is "project money"?

forummm

  • Walrus Stache
  • *******
  • Posts: 7396
  • Senior Mustachian
Re: one (investing) question at a time
« Reply #255 on: May 27, 2015, 03:00:46 PM »
Generally, people think about the money in terms of how long until they need it.

If there's money you are saving for retirement, that can be invested according to your asset allocation strategy (with a significant proportion in stocks presumably. This is because you won't need it for a long time.

If there's money for an expense in, say, 5 years, and you *know* you need the money (like for tuition or a house or something), then you probably want that in a 5-year bond or a 5-year CD--something safe because you *need* the money in 5 years.

If you have some money to spend in the short term, typically that's a short-term CD or savings account if you *need* to spend that money.

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1050
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Re: one (investing) question at a time
« Reply #256 on: May 27, 2015, 04:26:52 PM »
You could split your 40k$ between TDB909 and TDB900, this way, you get some return and some security. Once a year, do the contribution "lateraly".

Just reduce your bonds and Canadian stock holdings accordingly.

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #257 on: May 27, 2015, 05:35:35 PM »
Yeah, I have things allocated according to time needed/available. e.g. My son won't need his education money for at least 7 years, if we touch the Registered disability money before ages from now we lose a bunch of it, etc.

But once in a while I invest $2000-$20000 in a new idea (self-employment project). I may have an idea tomorrow, I may have no ideas for 8 years. I don't want that earning nothing in the meantime. I'm thinking that as long as my stock index investments are split between 3-5 funds, and across all sectors and most regions, at least one is likely to be "up" in any given moment, and scooping it from that is smarter than leaving it in savings for the unknown period (or locking it in to anything term, etc).

Sometimes the things I'm saying here seem obvious, but sometimes I miss something critical, so I want to make sure I'm not off the mark here.

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1050
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Re: one (investing) question at a time
« Reply #258 on: May 27, 2015, 05:49:03 PM »
Even if you're split accros 5 différents funds, they can all be down at the same time. Markets are more and more locked together now. The advantage of investing a part of it is to get return over the long run. Stop thinking "what if I got a project when markets are down" if this situation arrives, then you just have to decide if you wait or sell with a loss (or a gain!)

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #259 on: May 27, 2015, 06:36:25 PM »
Stop thinking "what if I got a project when markets are down"

But wait...that's what planning is! i.e., The purpose of the question isn't to fret; the purpose it to develop a sound plan that prepares a family for variables that are reasonably likely to arise.

If all markets across the globe are sometimes down all at the same time, that makes more sense to me, then, of having project money -and enough for matching grants in Registered accounts- in bonds, money market, or cash vs all in stocks.

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1050
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Re: one (investing) question at a time
« Reply #260 on: May 27, 2015, 07:35:54 PM »
Right, but depending of you're situation, your liquid assets should match your goals and confort level. Meantime, if you really plan to use this money within 1-5 years, thats something, if its more like a "what if I got a project", thats something else. In some cases, having the money tied in some way can even protect yourself from the urge to use it. It gives you some more time to think twice a out the necessity of it.

When I told you markets act together now, I mean someone could perform exactly the same*with stocks splitted 20-50-30 or 40-40-20 or 35-35-30 (can-us-int)

*or within some decimals, its not rocket science. At this point, MER, transaction fees and taxes (foreign and local) are more important

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #261 on: May 28, 2015, 08:01:35 AM »
Question: Is 2.23% MER on $20000 really $436/yr?

Government doesn't mind where/how we invest Registered Education Savings Plan.
We can put it in high-cost funds, direct investing, GICs, whatever.
Govt provides 1-3 grants per year, depending on income level, contributions, etc.

However, the govt allows each bank to make its own policies.

TD Bank has decided to not allow 2 of the 3 grants (the ones for lower-income families) in direct investing.
Of its investment options, TD will only allow the grants in their highest-fee ones.

The maximum extra grants (technically "additional grant" and "learning bond") are $200/yr.
TD's investment option is 2.23% MER.
On the $20,000 we have in there, would that seriously be $446/year????

In other words, TD would be charging $246 more in fees than the lowest-income family would receive in grants??? (i.e., The government would essentially be giving the grant "for low income families" to TD, not the kid.)

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28234
  • Age: -999
  • Location: Seattle, WA
Re: one (investing) question at a time
« Reply #262 on: May 28, 2015, 08:09:02 AM »
Question: Is 2.23% MER on $20000 really $436/yr?

446.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1050
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Re: one (investing) question at a time
« Reply #263 on: May 28, 2015, 08:23:42 AM »
Question: Is 2.23% MER on $20000 really $436/yr?

Government doesn't mind where/how we invest Registered Education Savings Plan.
We can put it in high-cost funds, direct investing, GICs, whatever.
Govt provides 1-3 grants per year, depending on income level, contributions, etc.

However, the govt allows each bank to make its own policies.

TD Bank has decided to not allow 2 of the 3 grants (the ones for lower-income families) in direct investing.
Of its investment options, TD will only allow the grants in their highest-fee ones.


The maximum extra grants (technically "additional grant" and "learning bond") are $200/yr.
TD's investment option is 2.23% MER.
On the $20,000 we have in there, would that seriously be $446/year????

In other words, TD would be charging $246 more in fees than the lowest-income family would receive in grants??? (i.e., The government would essentially be giving the grant "for low income families" to TD, not the kid.)

RBC Direct Investing do the same, but make sure you cannot use the e-serie (TDB900, TDB909, etc) MER are between 0.33% and 0.5% that is still hight but better than 2.23%!

Actually, I'm stuck with RBC index funds @ 0.70% for my RESP :(

KMMK

  • Handlebar Stache
  • *****
  • Posts: 1472
  • Age: 42
  • Location: Edmonton, AB, Canada
    • Meena Kestirke Insurance
Re: one (investing) question at a time
« Reply #264 on: May 28, 2015, 08:29:53 AM »
Question: Is 2.23% MER on $20000 really $436/yr?

Government doesn't mind where/how we invest Registered Education Savings Plan.
We can put it in high-cost funds, direct investing, GICs, whatever.
Govt provides 1-3 grants per year, depending on income level, contributions, etc.

However, the govt allows each bank to make its own policies.

TD Bank has decided to not allow 2 of the 3 grants (the ones for lower-income families) in direct investing.
Of its investment options, TD will only allow the grants in their highest-fee ones.

The maximum extra grants (technically "additional grant" and "learning bond") are $200/yr.
TD's investment option is 2.23% MER.
On the $20,000 we have in there, would that seriously be $446/year????

In other words, TD would be charging $246 more in fees than the lowest-income family would receive in grants??? (i.e., The government would essentially be giving the grant "for low income families" to TD, not the kid.)

Ridiculous and useful for me to know for future reference. I looked into Tangerine but it appears they aren't set up for RESPs. There aren't a lot of good easy and cheap options.

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #265 on: May 28, 2015, 08:31:25 AM »
...make sure you cannot use the e-serie (TDB900, TDB909, etc) MER are between 0.33% and 0.5% that is still hight but better than 2.23%!

The rep said that at TD, for RESP to be in stocks and receive the grants for low income, the following are not options: ETF, direct investing, eSeries, iSeries, any other bank's funds, etc. Just the most expensive TD funds. Unbelievable. This makes me very angry. I mean, I'm figuring out my options and will be fine with them, but it is pissing me off to high heaven that TD would trick low-income families who don't have the resources to realize their ruse. Charging low-income families the entire cost of their grants PLUS another $246/yr, if they invest properly!?? Horrible. Honestly, I'm about spitting mad right now.

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #266 on: May 28, 2015, 08:42:04 AM »
Ridiculous and useful for me to know for future reference. I looked into Tangerine but it appears they aren't set up for RESPs. There aren't a lot of good easy and cheap options.

If a family with low-income is willing to forgo the "additional grant" and the "learning bond", they can have their RESP in TD direct investing, in which case there are low-cost options. Since I want my son's in index funds, and the grants would be eaten up in fees to get them, I'll be doing one of two things:

1. Use direct investing only, forgoing the two grants, OR

2. Have one account in-branch to receive the bond and, if I contribute $500 there, to receive the additional grant. Then have a second account in direct investing, contribute my $5000 annual amount there and receive the basic grant (all families) there. While the government allows this approach, some reps at TD are saying TD will facilitate this and some reps at TD are saying they won't, so the viability of this remains to be seen. If TD won't, though, perhaps RBC or another will?

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1050
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Re: one (investing) question at a time
« Reply #267 on: May 28, 2015, 08:50:43 AM »
You could get the option that allows you to receive all the grants and contribute the minimum ammount each year to do so. Your goal here is to get the "free money" from governments. Remember that the RESP is limited timeframe account (compared to other registered accounts) so...you could invest this money in GICs and be more aggressive (stock) with your other investing accounts.

backyardfeast

  • Pencil Stache
  • ****
  • Posts: 899
  • Location: Vancouver Island, BC
    • My journal
Re: one (investing) question at a time
« Reply #268 on: May 28, 2015, 11:13:46 AM »
Hi scrubby, I'm not sure if the "project money" accounts and the RESP account questions are in the same line, but I just wanted to point out (and probably you know this already), that the best place to invest your money that you might want to access on a more unpredictable timeline is your TFSA.  If, for instance, your $10000 became $10500 and you decided to cash in; you'd be paying capital gains tax, so the gains may suffer a serious dent.  In the TFSA, you don't have to worry about accessing the money when you need it, regardless of what else is going on in your life income-wise.

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #269 on: May 28, 2015, 04:29:19 PM »
Hi backyardfeast. The TFSA would be awesome, but it's not permitted with some of the programs we access (off and on). I just returned from a three-hour appt at the bank as we began exploring a related route, though, and I think it might work out.

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #270 on: June 03, 2015, 08:35:52 PM »
Question: Is MMM not invested in Canada (according to this post)?

http://www.mrmoneymustache.com/2014/08/20/how-to-invest-in-overvalued-market/   The first is US stocks. I looked up VGTSX, which is "international" but cannot find a list of more than the top 10 holdings, none of which I recognize as Canadian. (I'm mostly just curious as to whether some feel Canada is worthless, while learning how to read a portfolio and the holdings within.)

forummm

  • Walrus Stache
  • *******
  • Posts: 7396
  • Senior Mustachian
Re: one (investing) question at a time
« Reply #271 on: June 03, 2015, 09:55:57 PM »
Question: Is MMM not invested in Canada (according to this post)?

http://www.mrmoneymustache.com/2014/08/20/how-to-invest-in-overvalued-market/   The first is US stocks. I looked up VGTSX, which is "international" but cannot find a list of more than the top 10 holdings, none of which I recognize as Canadian. (I'm mostly just curious as to whether some feel Canada is worthless, while learning how to read a portfolio and the holdings within.)

I don't know what exactly MMM's holdings are. The reason you don't see Canadian companies in the top 10 is because the largest Canadian company is smaller than the 10 largest companies from outside the US. That fund is weighted by the total value of the companies. So it's going to be stuff like Nestle and Toyota, etc, which are much larger than Canadian firms. Canada is still valuable.

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #272 on: June 03, 2015, 10:46:48 PM »
...the largest Canadian company is smaller than the 10 largest companies from outside the US.

That's what I imagined, that there might be some Canadian content further down the list. I looked up three websites for this fund, and only found the Top 10 holdings on any. I'm curious to see how far down the list Canada appears, and to what degree. I'm a little concerned that I'm 30% in Canada, and MMM is only US and "everywhere else, with Canada further down the everywhere else list". I explored this Canadian content concern a bit on another thread, and I'm remembering that info (basically, folks in Canada should have some Canadian content, and sometimes Canada does very well), but I'm still thrown by how little most people outside of Canada seem to want of us :(

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1050
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Re: one (investing) question at a time
« Reply #273 on: June 04, 2015, 06:56:26 AM »
The biggest co. in Canada is RBC and it's ranked 65th world wide (including US). The rational for us Canadians to invest in Canada is to lower the currency risk. Historical datas show that every markets return about 8-10% and it's the same for Canada. Everything between 20% and 70% invested in Canada is ok, depending of your own situation. Some Canadians who doesnt want to buy Canadian stocks hold some Canadian bonds instead and buy US and/or International stock. Its another way to spread the risk.

seattlecyclone

  • Walrus Stache
  • *******
  • Posts: 5130
  • Age: 35
  • Location: Seattle, WA
    • My blog
Re: one (investing) question at a time
« Reply #274 on: June 04, 2015, 11:28:21 AM »
If you look at the "Portfolio" tab of Vanguard's Total International index fund information page, you can see the regional breakdown. 6.9% is invested in "North America," which basically means Canada since US companies are excluded from the fund and Mexico is considered an "emerging market" (emerging market stocks make up 19.1% of this fund).

Do be aware that the Vanguard Developed Markets Index fund does not contain any North American stocks, so if you planned to buy VTSAX for US exposure and VTMGX for international stocks, you would be leaving Canada and the emerging markets out of your portfolio.

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #275 on: June 04, 2015, 11:38:36 AM »
If you look at the "Portfolio" tab of Vanguard's Total International index fund information page, you can see the regional breakdown. 6.9% is invested in "North America," which basically means Canada since US companies are excluded from the fund and Mexico is considered an "emerging market" (emerging market stocks make up 19.1% of this fund).

Thank you!! Yes, I had seen the "North America excluding US = 6.9%" but was left wondering about Mexico vs Canada. You've now answered that piece.

forummm

  • Walrus Stache
  • *******
  • Posts: 7396
  • Senior Mustachian
Re: one (investing) question at a time
« Reply #276 on: June 04, 2015, 02:12:58 PM »
If you look at the "Portfolio" tab of Vanguard's Total International index fund information page, you can see the regional breakdown. 6.9% is invested in "North America," which basically means Canada since US companies are excluded from the fund and Mexico is considered an "emerging market" (emerging market stocks make up 19.1% of this fund).

Do be aware that the Vanguard Developed Markets Index fund does not contain any North American stocks, so if you planned to buy VTSAX for US exposure and VTMGX for international stocks, you would be leaving Canada and the emerging markets out of your portfolio.

And being Canadian, you would want to have some Canada exposure--perhaps much more than 7%. This will help decrease your portfolio's currency risk (when the CAD fluctuates to other currencies). Fortunately you have great Vanguard Canadian funds available to you.

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #277 on: June 09, 2015, 04:48:17 PM »
Question: How to "make up for" stuck money?

Govt of Canada provides up to three grants per year, per each RESP account.
It allows each bank to make extra rules.
TD direct investing does not allow two of the grants into its direct investing account.
Because I received all three grants in the past, the govt will not allow me to move the amount into direct investing.
I must leave $15,000 in a higher-fee, lower return account or return money to the govt.

I have now set up a new RESP direct investing account for all new amounts.
I have $5000 ready to allocate, and was going to divvy it up 10/30/60 bonds/Canada/all world (my preferred allocation).

Is there a way for me to compensate for the $15,000 being stuck in a higher-free, lower return account? I kind of think there's not: So far I think the wise/appropriate/MMM/CCP thing to do is allocate the same way in each account, i.e., that I cannot adjust this one to somehow "make up for" the crap option.

smilla

  • Stubble
  • **
  • Posts: 145
  • Location: Canada
Re: one (investing) question at a time
« Reply #278 on: June 09, 2015, 06:43:33 PM »
What is the current allocation in the old account?  What are your options within it?

Y

seattlecyclone

  • Walrus Stache
  • *******
  • Posts: 5130
  • Age: 35
  • Location: Seattle, WA
    • My blog
Re: one (investing) question at a time
« Reply #279 on: June 09, 2015, 07:30:33 PM »
Is there a way for me to compensate for the $15,000 being stuck in a higher-free, lower return account? I kind of think there's not: So far I think the wise/appropriate/MMM/CCP thing to do is allocate the same way in each account, i.e., that I cannot adjust this one to somehow "make up for" the crap option.

You say TD Direct Investing won't let you invest $15,000 of your account. Is there any way to transfer your account to a company that will let you invest the whole amount? Sorry if this is a stupid question, I'm quite ignorant about Canadian savings options.

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #280 on: June 09, 2015, 08:50:08 PM »
What is the current allocation in the old account?  What are your options within it?

Right now it's not invested. It's been in limbo (cash) since I moved it from RBC to TD.

The rep said the options are very narrow, I believe he said just the Comfort Portfolios, of which the aggressive is 2.23% MER.
https://www.tdassetmanagement.com/fundDetails.form?fundId=6324&prodGroupId=15&lang=en&site=AssetManagement

You say TD Direct Investing won't let you invest $15,000 of your account. Is there any way to transfer your account to a company that will let you invest the whole amount?

I can't invest it via TD direct investing, but I can invest it with regular TD -just at high fees (or medium fees with lower expected return). When the RESP dept of the govt opens tomorrow morning, I'm going to call them and ask if I can move just the portion that received only the basic grant, as that's allowed at direct investing. I'm pretty sure last time they said I can't move just the portion that received the basic grant, and leave the amount that received the second and third ones, but I'm going to double check.

Yes, I can also move it to another investment institution, but likely with similar restrictions. I think it's weird to be restricted re: how I invest the entire amount I've put in based on $100 they give a person when he was born 10 years ago. (I knew nothing about investment options then.)

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #281 on: June 10, 2015, 09:26:17 AM »
Posting this to keep track of it...

Called govt, here's what they said:

1. If I transfer even one penny of the RESP -including from the amounts I've contributed, or amounts receiving even the basic grant or nothing at all- to a financial institution which chooses not to allow the learning bond and add'l grant, then I must return $3550 to the govt.

2. In future, maximum add'l grant and learning bond I might receive is $200/yr, for six more years.

Waiting to hear back from TD on lowest-cost index funds option. So far, the only option they've pointed to offering aggressive growth* would cost ~$450/yr, or GIC maximum return of 8% not per year but per lifetime of account.

* An asterisk on their website said mutual funds are not eligible to receive the extra grants, which would mean $3550 would have to be returned to the govt. Does this mean, in the end, that the GIC rate of 8% over the lifetime of the RESP is the only thing I can move the $15000 to within TD??? Will research that with TD.

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1050
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Re: one (investing) question at a time
« Reply #282 on: June 10, 2015, 10:05:32 AM »
I am almost in the exact same situation actually with RBC Banking and RBC Direct Investing

Scrubby, to be the most effective in your accounts, sometime you got to shift one account toward Canadian, US or International assets (depending of the ammount you got in each of your accounts)

ex. in my own situation, my RRSP is 70%US and 30%Internationnal, wife RRSP is 35%Canadian, 35%US and 30% Internationnal and RESP is 100% Canadian. The reason is because US and Internationnal investments are less "efficients" in RESP and TFSA. RRSP are very efficient for US and Internationnal, especially when you hold the ETF in US dollars.

To minimize the impact of MER and taxes for the 15k$ you got to leave into TD Banking RESP, I would recommend TDB900 and TDB909 only and increase US and International exposure in your other accounts (RRSP) accordingly.

Allie

  • Handlebar Stache
  • *****
  • Posts: 1884
Re: one (investing) question at a time
« Reply #283 on: June 10, 2015, 11:27:45 AM »
I'm following this thread and, quite honestly, think this all sounds crazy.  You get grants from the government?  They track all that money forever?  Institutions change insane fees to keep the money? 

I'm going to keep following along and maybe glean some new information, but your system seems quite ridiculous.  Does the US system seem as bizarre to you?

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1050
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Re: one (investing) question at a time
« Reply #284 on: June 10, 2015, 11:40:28 AM »
Our income taxes are pretty high and governements pay for a lot of services, grants, tax break etc. Fees are high for reasons, 5-6 Big Banks covers 95% of the market, Canadians (and especially Québec) dont care about paying to much for anything. Socials programs are generous (health, school, pension) you cannot be fucked-up unless you smell gas vapor all day and spend everything penny over lottery tickets.

I went through the border once in a while and think "If one kicks his but here, theres no way you cannot be rich withing 10 years".

Do you believe most peoples dont manage to get the grants and tax break available? (probably over 75% dont)

KMMK

  • Handlebar Stache
  • *****
  • Posts: 1472
  • Age: 42
  • Location: Edmonton, AB, Canada
    • Meena Kestirke Insurance
Re: one (investing) question at a time
« Reply #285 on: June 10, 2015, 12:06:07 PM »
I'm following this thread and, quite honestly, think this all sounds crazy.  You get grants from the government?  They track all that money forever?  Institutions change insane fees to keep the money? 

I'm going to keep following along and maybe glean some new information, but your system seems quite ridiculous.  Does the US system seem as bizarre to you?

The grants are crazy especially because there are so many different ones. They can't just make it simple. I've been learning about this stuff lately (I do two financial planner tests this Saturday) and the administration costs must be mind-boggling. For education there are 3 federal govt grant programs - all with different rules, and the banks deal with them differently. Then just for having kids there are at least 3 grants, or whatever you want to call them, plus various tax credits. Again, all with slightly different rules for who gets them, taxation, etc.

And for seniors there are at least 4 different income supplementation things - again all with slightly different rules, and a variety of tax credits.

That being said, the US system seems super confusing to me as well. I don't like how you can't withdraw your retirement funds whenever you want, mortgage interest deductions for your taxes, and healthcare often related to your jobs. That's about all I know. Trying to wrap my mind around Canadian stuff is bad enough, so I'm not thinking about the US at all at the moment.

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #286 on: June 10, 2015, 12:31:22 PM »
You get grants from the government?  They track all that money forever?

Grants - Yes, the Canadian government is trying to get people to invest long term for
  • post-secondary education,
  • disability costs, and
  • retirement.
So, it gives these incentives. Some are for all income levels, some depending on income level (by gradation). Some are outright gifts (e.g., Canada Learning Bond, at up to $100/yr for low income families). Some are matching grants (20% in RESP, up to 300% in RDSP, etc), up to a maximum per year and per lifetime.

The RDSP (available to relatively few people with disabilities) is very new, so rules are constantly being tweaked to address new variables they think of.

Yes, government tracks its gifts and matching grants forever.

Most people -especially those with disabilities- don't have the cash to optimize these, though.

Institutions change insane fees to keep the money?

Yes. Canada is famous for this :)

We do have (very few) lower fee options, but then we're not necessarily allowed by the banks to use those for the funds receiving government matches and gifts. So, the banks push people into higher fee options by tricking them with the (lower net) govt gifts. Most of us don't know to do the math on it.

And then, most of the programs conflict with one another, so if you access one option you make yourself ineligible for another, so you have to research ahead and make a massive spreadsheet that no one person can make heads or tails of because no one person knows more than 1-3 programs and how they potentially merge or conflict. In my case, I've been on top of a lot of that, but I needed to have researched the RESP 10 years ago, sigh.

Does the US system seem as bizarre to you?

US system seems infinitely more flexible and potentially lucrative to me. But our health care [insurance] is often cheaper, I think.

Socials programs are generous (health, school, pension) you cannot be fucked-up unless you smell gas vapor all day and spend everything penny over lottery tickets.

I agree that some social programs are generous, but the latter is unfortunately not the case. It's very, very, very easy for a person to slip right through the cracks because of any one -usually irrelevant- variable that makes them ineligible for a service, or to be rejected even though eligible. This might be because of getting a worker who was sleepy one day, or crabby, or for having had $102 in interest income 16 months ago, etc. The navigation involved to access some programs is absolutely insane, and very difficult for many people with illness or disability to pull off.

smilla

  • Stubble
  • **
  • Posts: 145
  • Location: Canada
Re: one (investing) question at a time
« Reply #287 on: June 10, 2015, 03:51:22 PM »
So far, the only option they've pointed to offering aggressive growth* would cost ~$450/yr, or GIC maximum return of 8% not per year but per lifetime of account.

* An asterisk on their website said mutual funds are not eligible to receive the extra grants, which would mean $3550 would have to be returned to the govt. Does this mean, in the end, that the GIC rate of 8% over the lifetime of the RESP is the only thing I can move the $15000 to within TD??? Will research that with TD.

How do you get the $450/yr?  I'm calculating approximately $330 for the first year (15K * 2.23%). 

Do they have a high interest savings option?  What is the rate?  What is the approximate lifetime of your account?  1% a year over 10 years wins over a max total of 8%.  Also then you leave it open to check GIC rates in the future or see if better options within the account have opened up.

smilla

  • Stubble
  • **
  • Posts: 145
  • Location: Canada
Re: one (investing) question at a time
« Reply #288 on: June 10, 2015, 04:01:54 PM »
Probably the thing to do is make a spreadsheet to see what you would end up with by the end of the lifetime of the account depending on which option you choose.

So if you choose to lose the government grant and move it all to a self-directed account and follow your planned asset allocation vs if you use the high MER TD allowed options vs if you do the GIC option vs. if there is a high interest savings account option.

Not sure what info you'd want all in there but I don't see any other way of figuring out what will be best.

Also I'm with Le Barbu:  try to balance across accounts rather than within each account - it will hopefully be easier to maintain, especially with all these different rules for different accounts and grants.   

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #289 on: June 10, 2015, 06:10:20 PM »
How do you get the $450/yr?  I'm calculating approximately $330 for the first year (15K * 2.23%).

Sorry, I'm jumping around :)    Until a couple of days ago, the RESP had $15000. I just added $5000. So sometimes I've referenced the $15000 and sometimes I've referenced the $20000. But the $5000 I ultimately decided to put into the low-fee direct investing, so that MER will now only apply to the $15000 part.

seattlecyclone

  • Walrus Stache
  • *******
  • Posts: 5130
  • Age: 35
  • Location: Seattle, WA
    • My blog
Re: one (investing) question at a time
« Reply #290 on: June 10, 2015, 06:24:18 PM »
Do be aware that the Vanguard Developed Markets Index fund does not contain any North American stocks, so if you planned to buy VTSAX for US exposure and VTMGX for international stocks, you would be leaving Canada and the emerging markets out of your portfolio.

I came across this Vanguard press release from just last week where they announced plans to add Canadian stocks to the Developed Markets Index fund. Nice to see that happen!

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #291 on: June 10, 2015, 07:40:03 PM »
Talked with TD and with RBC.

TD first said a high MER is no problem, and costs me nothing, and that I don't understand MERs. Yes, I do: It's the way you guys have stolen thousands and thousands of dollars from my disabled child over the last six years. He then said I can have add'l grant and bonds in eSeries. When I pushedpushedpushed for this in writing (because if I do the transfer and they're wrong, I lose all that money), and then read to him from their website that says TD allows this only in Term GIC, he ultimately came back, apologized, and said that yep, Term GIC (maximum 8% on lifetime of account) is the only option at TD. So, if I had believed him and transferred it, I would have just been out another $3500?!?!?!

Called RBC. They said they don't have this restriction at all, lowest fee option is .72%. I now have appt to move two accounts there.

Le Barbu

  • Handlebar Stache
  • *****
  • Posts: 1050
  • Age: 47
  • Location: Québec
  • I really didn’t say everything I said - Y. B.
Re: one (investing) question at a time
« Reply #292 on: June 11, 2015, 12:35:59 PM »
Talked with TD and with RBC.

TD first said a high MER is no problem, and costs me nothing, and that I don't understand MERs. Yes, I do: It's the way you guys have stolen thousands and thousands of dollars from my disabled child over the last six years. He then said I can have add'l grant and bonds in eSeries. When I pushedpushedpushed for this in writing (because if I do the transfer and they're wrong, I lose all that money), and then read to him from their website that says TD allows this only in Term GIC, he ultimately came back, apologized, and said that yep, Term GIC (maximum 8% on lifetime of account) is the only option at TD. So, if I had believed him and transferred it, I would have just been out another $3500?!?!?!

Called RBC. They said they don't have this restriction at all, lowest fee option is .72%. I now have appt to move two accounts there.

I'm not sure I understand wath you can/cannot do at TD banking within your actual RDSP. Can you hold some TDB900 and TDB909 or not. Those 2 are a lot better than RBF563 and RBF556 from RBC...

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #293 on: June 11, 2015, 03:36:47 PM »
I'm not sure I understand wath you can/cannot do at TD banking within your actual RDSP. Can you hold some TDB900 and TDB909 or not. Those 2 are a lot better than RBF563 and RBF556 from RBC...

This one is RESP (not RDSP).

According to several TD reps in the last 24 hours, no I cannot hold TDB900, etc. If an RESP received even $100 ten years ago from the government in learning bond or additional grant, TD requires that the entire RESP be in Term GIC for its lifetime. So, I am moving it to RBC.

smilla

  • Stubble
  • **
  • Posts: 145
  • Location: Canada
Re: one (investing) question at a time
« Reply #294 on: June 11, 2015, 04:12:24 PM »
Make sure you get RBC's clearly stated options in writing too before you move those accounts.

It seems to me that the government should require all banks to follow the same rules for all these registered accounts and all grant money.  It shouldn't be this hard.

Scrubbyfish, maybe you should email your local MLA and MP and let them know the how difficult the government and the banks make it to take advantage of the options available.  I would even suggest that you let CBC Go Public or similar know about these issues, even if you don't want to be part of their report.  They would likely easily find other people that would be happy to speak up about the problem once they are aware that there is a problem.

KMMK

  • Handlebar Stache
  • *****
  • Posts: 1472
  • Age: 42
  • Location: Edmonton, AB, Canada
    • Meena Kestirke Insurance
Re: one (investing) question at a time
« Reply #295 on: June 11, 2015, 04:45:20 PM »
I can't remember if I posted this link in this thread or in another one. Anyhow, as other people may be following along to learn more about RESPs, here's the list that shows what banks offer what:
http://www.esdc.gc.ca/en/student_loans/resp/promoters_list.page

It's a confusing system, this list is hard to find, and people don't know to ask the bank these questions until it's too late, as Scrubbyfish is unfortunately finding out.

scrubbyfish

  • Guest
Re: one (investing) question at a time
« Reply #296 on: July 21, 2015, 09:15:28 AM »
Am I doing this math correctly?

Assuming an annual interest of 8%, and no additional contributions along the way...

Start with $10
After 10 years, have $21.59

Start with $1000
After 10 years, have $2158.92

Start with $10,000
After 10 years, have $21,589.25

And is 8% a reasonable assumption in MMM land?

MDM

  • Walrus Stache
  • *******
  • Posts: 9791
Re: one (investing) question at a time
« Reply #297 on: July 21, 2015, 09:20:43 AM »
Am I doing this math correctly?
Yes.

Quote
And is 8% a reasonable assumption in MMM land?
It's "not unreasonable".  As you know, that number can fluctuate quite a bit from year to year.

GardenFun

  • Bristles
  • ***
  • Posts: 459
  • Location: Packers Hell - they're everywhere!
Re: one (investing) question at a time
« Reply #298 on: July 21, 2015, 12:00:42 PM »
Am I doing this math correctly?
Yes.

Quote
And is 8% a reasonable assumption in MMM land?
It's "not unreasonable".  As you know, that number can fluctuate quite a bit from year to year.

That is a good question and would be curious to see what other members use.  I've been using 7%, my best friend uses 6%.  We are both the type who would rather save extra $$ just in case.  But there comes a point where we are irrationally conservative. 

Run the numbers with 7% and 8%.  Over a 10 year time horizon, they will not look too different.  After 30 years, it can add up to be a noticeable difference. 

Heckler

  • Handlebar Stache
  • *****
  • Posts: 1347
Re: one (investing) question at a time
« Reply #299 on: July 21, 2015, 12:30:53 PM »


And is 8% a reasonable assumption in MMM land?

that depends on your asset allocation and timeframe now, doesn't it?

http://canadiancouchpotato.com/wp-content/uploads/2015/01/CCP-Model-Portfolios-TD-e-Series.pdf



PS - I use 5% in my models for the next 40 years.