Hi Le Barbu,
Thanks for the comments, ideas, and thoughts!
I do have very unique circumstances, and I'll present some of those below as responses to your specific queries.
I haven't presented the "bigger picture" yet, but we'll be getting there. When I jump straight to the end point ("I have this money, what do I do with it?"), the responses include a lot of language and concepts that I have no familiarity with, which leaves me entirely lost, thus handing my money off to bankers and salespeople that do weird things with it.
In this thread, I'm very intentionally noting the points in a given research phrase where my brain stops, asking about that stop-point, resolving it, and moving to the next.
This said, I'm happy you are here to help me, too! And am responding below to give some of the details that are perplexing you.
Dont make any move to fast because the ammounts involved are not big enough for you to rush and mess things arround. I mean, for a total of less than 50k over 3 accounts*, you can pay more in transaction fees than your 2% actual MER (150$/2 months)
The account I have broken out here so far has only $43,000, yes. However, I have two other accounts, one worth less, one worth more.
In any case, I won't be moving anything immediately, per the advice here.
I dont understand you have "no choice but to invest in a taxed account" ?
This is per provincial disability support payments. It gets complicated -even the bankers' heads spin!
Federal and provincial disability designations offer supports, but also have specific rules that we have to work within. Provincial disability supports allow us to have savings in an RDSP, an RESP or a trust, and
not in an RRSP, a TFSA, or any other type of account.
Provincial disability supports can provide my son and I with up to $6000/yr
if we honour their banking requirements, and that is more valuable to us than avoiding tax via the TFSA, for example.
Are you Canadian? Do you know about TFSA? TFSA only can hold 31,000$ for any Canadian who was 18+ back to 2009 (and 36,500$ by 2015 jan. 1st). 44k - 31k = 13k I cannot believe your RDSP and RSSP room is less than 13K !?!?
Yes, Canadian.
My TFSA room is the same as for all Canadians, of course, but if I put money in a TFSA, I cannot access provincial disability support.
There is one possible option regarding this, and TD Bank is looking into it: The provincial disability program will allow us to have money in a
TFSA Trust. Currently, only VanCity and RBC are set up for this, but TD is looking into whether they can and will. If they can't/won't, I could go with VanCity or RBC, though, for $31000 of the money.
RRSP, I have $54,000 in room, but if I use it, we are ineligible for the $6000/yr. (I would also then have no liquid funds with which to infuse the RDSPs, thus would lose out on the government matches.)
So, what I'm saying in this thread is that while as a Canadian I technically have all sorts of room in an (unused) RRSP and TFSA, I as a Canadian with disabilities and very low-income don't have room in the Registered accounts that are permitted by the provincial disability support program.
You gave the funds split with complete BMO names, MER etc but now, match this with the accounts
RDSP (??$ BMO Mothly High Income Fund II, ??$ BMO Money Market Fund, ??$ BMO Bond Fund
RSSP (??$ BMO Mothly High Income Fund II, ??$ BMO Money Market Fund, ??$ BMO Bond Fund
TFSA (??$ BMO Mothly High Income Fund II, ??$ BMO Money Market Fund, ??$ BMO Bond Fund
The info I gave is the dollar amounts, asset allocations, etc, for my son's RDSP.
For the others (RSSP and TFSA) unless you are in a very special situation, why would you want this kind of AA?
Yes, we are in a very special situation...
BUT, I don't want this kind of Asset Allocation. I handed everything over to a banker, and
she apparently wanted this Asset Allocation, lol.
I'm now in a process of learning all this stuff, so that I can make better decisions with all our money.
The typical 40/60 split is for average Joe, not for a Mustachian.
It's also for people who have never had and may never have the earning power to start over should financials go to crap, and/or continuously add to their portfolio every month over many years. My son and I both have disabilities, I was in severe poverty for a long time, homeless for stretches, etc. So, I'm being cautious that we don't over-risk the money I did manage to bring in (via house sale and two good work projects).
I dont want to start over the bond/stock debate but come on, if you are Mustachian, good at math and want you $$ to work for you, your AA should be closer to 75-90% stocks than 60%! Stocks are paying 2% dividends on average these days, about what you can expect from bonds net return (after inflation, taxes, MER etc).
For what it's worth, I'm not good at math. I have a diagnosed disability in math (and other things) :)
However, yes, I have every intention of bringing the investments far more in line with Mustachian principles, which is what this thread (and others) are intended to do. This one is just breaking it down so that I can understand it.
At some point, the thread will reflect the bigger picture. I'm just not there yet.
Last thing that make me clueless about your situation, you say disability tax break increase the ammount for the no-tax hit point. Normaly, tax hit at 15k in Canada, so this break is HUGE or your income is damn low?
Here I'm not sure which amount you're referring to (I had put a number in here, but took it out when I realized it might be wrong), so I'll go over my error, too, in case you saw that and are referencing that.
Until yesterday, I thought our specific tax credits (personal, single parent = child-equivalent-to-spouse, disability tax credit for me, disability tax credit for my son) had the stated numerical value, so I thought we don't get taxed on our first $40,000(ish).
Yesterday I learned that my understanding was wrong. Now I understand that the DTC credit is
stated to be $7000+ for each of us, but that it's
actually only 15% of this. So, now I'm figuring our pre-tax room is actually around [$11000 basic personal amount + $1600 DTC + $1600 DTC=] $14200. (Now I'm wondering if it's actually this
plus another $11000 basic personal amount for my kid, but I'll bring that to the tax thread.)
And yes, our income is damn low :)