Author Topic: Should I use a Canadian robo-advisor? If so, which one?  (Read 50142 times)

GreatLaker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #50 on: April 02, 2017, 10:39:16 AM »
Welcome back BB. I am envious of your commitment to get out cycling. Living downtown TO the riding is kinda brutal so my 25 year old Fattie and roadie mostly collect dust in my storage locker.

Which brings me to the million dollar question:  What should I invest in my practice $38K in?  Canadian Couch Potato seems well respected.  Should I just use one of his portfolios?  Is that easy? 

Yes, it really can be that easy. A 3-fund Couch Potato ETF portfolio gets you thousands of stocks in dozens of countries plus a broad cross-section of Canadian government and investment grade corporate bonds at a very low cost. Well balanced, broadly diversified, easy to understand and easy to manage. You can add any number of segment or region or country funds, or individual stocks, junk bonds, etc, but you add cost, complexity and risk. And takes much more time to research and manage, which it seems like you would rather take care of the kids or get out and ride.

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I tend towards growth but my husband prefers balanced.  Perhaps halfway between those two CCP portfolios is the right answer for us.  This money needs to keep us in burritos and bikes for 40 or 50 years.

At a quick glance it looks like your portfolio is 20 to 25% fixed income. That's from a quick look at the images upthread for each of your funds. BMO Balanced ETF Portfolio Fund shows 39.2% fixed income and you hold $257k. BMO Tactical Dividend ETF Fund shows 22% fixed income and you hold $56k. All the other holdings look like equity. Multiply that out and that's where I get the 20 to 25% of your total account (excluding the RESP) in fixed income. Take a closer look at all your funds and your husband's funds to make sure I have not missed anything.

Asset allocation is something you just have to decide on by feel or experience. There are lots of rules of thumb. Ben Graham, the father of value investing (and Warren Buffet's tutor) said never hold less than 25% stocks or more than 75% stocks. Others say age in bonds, or age minus 20 in bonds (which looks like where you are). Some investors are risk averse and only hold bank deposits or GICs, yet many retired investors only hold equities and live off dividends. Pick something you are comfortable with, that matches your risk tolerance and timeline. Is your current portfolio too volatile?

Check the CCP ETF portfolios: http://canadiancouchpotato.com/wp-content/uploads/2015/01/CCP-Model-Portfolios-ETFs-2016.pdf

Look at the rows for standard deviation and lowest 12-month return. What level of volatility could you live with and sleep at night. Check the difference in returns between the conservative and aggressive allocations. NOTE: be careful using the 10 year and 20 year return numbers. They include 2 bear markets (dot.com crash and financial crisis) so are not indicative of typical equity returns. Somewhere between balanced and assertive makes sense, and given that this is a small amount of your $, the assertive allocation would help you learn about asset allocation and volatility.

This is a trial for you of index investing, so why not just buy a 3-ETF couch portfolio and give it a test drive?

Blissful Biker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #51 on: April 02, 2017, 11:30:55 AM »
Advisor or Adviser?

http://www.cbc.ca/beta/news/canada/british-columbia/bank-s-deceptive-titles-put-investments-at-risk-1.4044702

Fascinating article.  Makes me even more sure I am making the right choice to move into self directed investing.  I looked at my local BMO guy's email signature.  He is a "Financial Planner, Investment & Retirement Planning" with no professional designations shown.  So I am not sure if he is an advisor or adviser.  He does know where all the best huckleberry stashes are, so obviously no dummy, but likely not advice worth $20K/yr.

Yes, it really can be that easy. A 3-fund Couch Potato ETF portfolio gets you thousands of stocks in dozens of countries plus a broad cross-section of Canadian government and investment grade corporate bonds at a very low cost. Well balanced, broadly diversified, easy to understand and easy to manage. You can add any number of segment or region or country funds, or individual stocks, junk bonds, etc, but you add cost, complexity and risk. And takes much more time to research and manage, which it seems like you would rather take care of the kids or get out and ride.

This is a trial for you of index investing, so why not just buy a 3-ETF couch portfolio and give it a test drive?

You hit the nail on the head.  I am willing to accept normal market risk in exchange for reasonable returns, but I am not willing to accept risk associated with trying to pick stocks in between family bike rides.  The 3 ETF couch potato plan feels easy, low risk and low cost.  I will use it for my practice money and in parallel start a spreadsheet to better understand my current asset allocation within the big pot of money.

Your bikes miss you GreatLaker.  Downtown TO seems like the perfect spot to avoid driving.  Show them and yourself some love and get out in the sun.

daverobev

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #52 on: April 02, 2017, 12:40:52 PM »
The Advisor/Adviser thing means nothing. CBC are talking nonsense.

KMMK

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #53 on: April 02, 2017, 12:45:08 PM »
The Advisor/Adviser thing means nothing. CBC are talking nonsense.

Agree. I've never heard this from a knowledgeable source or any of the regulatory bodies I'm
familiar with.

Heckler

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #54 on: April 02, 2017, 08:52:17 PM »
Well, in my professional body its illegal to call yourself an engineer if you aren't registered. Even if you have a degree or are trained in another country. Why not for someone you trust your life savings too?

Goldielocks

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #55 on: April 03, 2017, 01:50:52 AM »
The Advisor/Adviser thing means nothing. CBC are talking nonsense.

Agree. I've never heard this from a knowledgeable source or any of the regulatory bodies I'm
familiar with.

Makes for interesting click bait news, though.   !  Maybe they know something about selling papers.  :-)

Blissful Biker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #56 on: April 03, 2017, 07:58:59 AM »
I stayed up late reading Millionaire Teacher.(https://www.amazon.ca/Millionaire-Teacher-Wealth-Should-Learned/dp/1119356296)

Holy smokes, I should have done this years ago.  There is so much hard data on how index funds perform better than actively managed funds in the long run.  And a good explanation on wny it is not in your advisors best interest to sell them to you.  I made it through the "why" part of the book, but still need to read the "how" part.

I am also working through reading and understanding an ETF fact sheet.  I choose VCN.  https://www.vanguardcanada.ca/individual/indv/en/product.html#/fundDetail/etf/portId=9561/assetCode=EQUITY/?overview

Some questions I could use your help with:
- What is the difference between a distribution and dividend?
- What is a 12 month trailing yield?

Thanks!

GreatLaker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #57 on: April 03, 2017, 09:18:15 AM »
Stocks pay dividends, which is a portion of profits paid out to investors.
Bonds pay interest.
Mutual funds and ETFs pay distributions, which are the sum of a number of types of payments:
  • Dividends for stock funds
  • Interest for bond funds
  • Interest on cash held. ETFs generally hold little cash so not a factor. Some actively managed funds may hold a lot of cash if it has not been invested.
  • Capital Gains. If a fund sells investments at a profit it may pass capital gains on to unit holders. Index funds like VCN and XAW only sell investments if the index changes or there are large redemptions, so this tends to be small with ETFs
  • Return of Capital which is a payment of capital back to investors. This is more common with real estate trusts, but equity funds sometimes pay small amounts of RoC

Mutual funds and ETFs are known as flow-through shares, so all of the above income types simply get paid out to unit holders as distributions and therefore taxed at the investor's tax rate.

12-month Trailing Yield (TTM) is what the stock or fund paid out over the last 12 months divided by its price. If a stock price is $60 and it pays $0.60 quarterly then its TTM is 4%. Another measure is distribution yield, which is the most recent distribution divided by the price.  Since the yield varies over time the trailing yield may be different than the distribution yield.

Bond funds usually pay distributions monthly. Equity funds usually pay distributions quarterly or semi-annually. Distribution yield will be indicated on the fund website or info sheet. Distributions will be paid in cash into your account, unless you choose to have them reinvested. Click the Prices & Distributions tab on VCN's web page to see distribution history.

Heckler

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #58 on: April 03, 2017, 09:30:38 PM »
One more thing to add to GL's excellent explanation.

Interest from bonds is taxable at your current income tax rate.  Same as the interest in your savings account.

Blissful Biker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #59 on: April 04, 2017, 09:20:46 AM »
Thank you so much GL and Heckler.

Distributions will be paid in cash into your account, unless you choose to have them reinvested.
I assume the right choice is to have the distributions automatically reinvested.  Correct?

I stayed up late again reading Millionaire Teacher and listened to Canadian Couch Potatoe Podcasts on my run with the dog yesterday.  The clouds are slowly clearing.  I understand much better why Heckler was focused on asset allocation.  And the power of rebalancing - means not only are you staying in line with your risk tolerance, you are buying stocks or bonds when they are on sale!  Wow.  Great stuff.

It turns out the Investor Line account is not fully operational until an individual at a branch verifies that you are who you say you are on the application.  So today my husband and I are going to the bank and seizing the opportunity for a lunch date.  The plan is to open the whole swath of IL accounts today.  But this is making me consider how each will be funded in the upcoming months.  We would move over the existing balances, but the biweekly contributions might make for a lot of trading fees.

Husband RRSP (no current contributions)
Husband Spousal RRSP (money piles up in Scotia GRRSP and I'll bring it over every few months, using it to rebalance)
Husband TFSA (contributing $210 biweekly)
My RRSP (no current contributions)
My TFSA (contributing $310 biweekly)
Kids RESP (contributing $200 biweekly)

So with a minimum of 6 monthly contributions trading fees would be $60/month.  Still less than I am paying my advisor but is there a better way?

Stasher

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #60 on: April 04, 2017, 09:48:12 AM »
Try not to overthink the whole thing though, you are getting amazing information here but it can be super simple.

I have a self traded brokerage account at Scotia iTrade
I hold 60/30/10 in VXC VCN and VAB Vanguard funds following the CCP ETF portfolio as outlined on his website
My VAB pays out a dividend monthly and VXC and VCN pay quarterly. (I just got my quarterly disbursements today!)
So basically I open up my excel spread sheet I have that I enter the current market of each ETF and the corresponding allocation % , the spread sheet then tells me how much to buy in each fund. I add any additional funds at this same time if I am buying more RRSP to mitigate trading fees. My cost like you mention is $9.99 per trade (x3) and then x2 in a 6 month period which is $60. Pretty damn awesome and minuscule fractions of what a mutual fund advisor would be charging.

I have maxed my RRSP and my TFSA accounts but don't have the level of cash you have therefore I don't have answers on your unique situation. What you need to think about is the sizeable amount of cash you will have in Non-Reg accounts and the best tax efficiency. So you will have to look at what funds you have across 3 account types (TFSA RRSP Non-Reg) and balance your desires asset allocation across them between stocks/bonds and CND/INT/US.

Stasher

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #61 on: April 04, 2017, 09:52:00 AM »
Just stole this from @Retire-Canada 's journal post this morning and is relevant to the MER fees your are paying currently and where you need to get. Not sure if you have played with the cFIREsim calculator yet in looking at your SWR and how your future retirement looks like yet. It is eye opening to show what affect MER's have on your portfolio success.

Quote
Leaving all the default values in cFIREsim, but varying the value for fees I get:

- 2% fees = 75% success
- 1% fees = 91% success
- 0.5% fees = 93% success
- 0.25% fees = 96% success
- 0.1% fees = 97% success

Reducing your fees can have a significant impact on your FIRE success without any change to your lifestyle/happiness.

WinterSkies

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #62 on: April 04, 2017, 10:09:34 AM »
Posting to follow - fellow Canadian here, and new to the game.  There is so much to learn!  I'm excited to dig through all of the information in this thread :)

Heckler

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #63 on: April 04, 2017, 01:03:14 PM »
ETF purchases through IL with tranactiins less than $2500 is not feasible. Your personal MER will be through the roof!

$9.95/$2500=0.4 MER!

RichMoose

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #64 on: April 04, 2017, 01:15:40 PM »
ETF purchases through IL with tranactiins less than $2500 is not feasible. Your personal MER will be through the roof!

$9.95/$2500=0.4 MER!

Don't forget to do this calculation based on your entire portfolio value. If you make 12 transactions a year, it costs you $120. Divide by $1 million in investments and your added MER is 0.012%.

The better way maybe of thinking about this is just deducting the trade commission off your contribution. Instead of contributing $1,500 of month you are actually just contributing $1,490. It costs you about $1,600 after ten years.

The best way to contribute to your accounts with InvestorLine or another brokerage that charges purchase commissions is to lump your contributions together.
For example, January make a $1,500 contribution to your TFSA, February add $1,500 to your husband's TFSA, March back to yours, and so on until your TFSAs hit their contribution limits. Then work on the RESP account until that's full to your target.

This way instead of making 6 purchases a month, you only make 1. Cuts your trading costs substantially.

Edited for clarification.
« Last Edit: April 04, 2017, 01:54:04 PM by Mr. Rich Moose »

Le Barbu

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #65 on: April 04, 2017, 01:49:57 PM »
I trade about once/account/year. Meanwhile, I invest through index funds @ 0.5-0.7% MER

My average outstanding balance of these funds is +/- 2,500$ wich cost me 25$ in fees. On the other hand, I save about 150$ of trades, I'm still ahead doing this.


Blissful Biker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #66 on: April 04, 2017, 10:26:55 PM »
Just stole this from @Retire-Canada 's journal post this morning and is relevant to the MER fees your are paying currently and where you need to get. Not sure if you have played with the cFIREsim calculator yet in looking at your SWR and how your future retirement looks like yet. It is eye opening to show what affect MER's have on your portfolio success.

Quote
Leaving all the default values in cFIREsim, but varying the value for fees I get:

- 2% fees = 75% success
- 1% fees = 91% success
- 0.5% fees = 93% success
- 0.25% fees = 96% success
- 0.1% fees = 97% success

Reducing your fees can have a significant impact on your FIRE success without any change to your lifestyle/happiness.
I googled and found the cFIREsim calculator.  Thanks!  Very interesting.  I look forward to playing around with it.  In my quick trial run I tested retiring with $1MM, spend of $40K per year for 50 years, 0.18MER to compare it to the 4%SWR rule of thumb and it gave me a 71% probability.   Yikes.  I was hoping for higher than that.

The best way to contribute to your accounts with InvestorLine or another brokerage that charges purchase commissions is to lump your contributions together. For example, January make a $1,500 contribution to your TFSA, February add $1,500 to your husband's TFSA, March back to yours, and so on until your TFSAs hit their contribution limits. Then work on the RESP account until that's full to your target.

This way instead of making 6 purchases a month, you only make 1. Cuts your trading costs substantially.
Edited for clarification.

This is a really good idea to limit trading fees.  I am thinking through the logistics of how to do it.  Likely can't be automated.  Perhaps an automatic withdrawal from the checking account of $750 biweekly on paydays to be deposited in an IL cash account.  Then once a month move the $1500 into a TFSA or RESP.  Are fees charged when you deposit or withdraw from a cash account?  The IL site was vague on the topic.

I can't let the money stay in our day to day checking account or it will be spent.  We do not budget but always make sure we tuck our savings away on payday and it all turns out fine.  Spare money in the checking account might just transform into a new paddleboard.  :)

I hold 60/30/10 in VXC VCN and VAB Vanguard funds following the CCP ETF portfolio as outlined on his website

I think I will do a CCP ETF portfolio too but maybe 35% bonds as opposed to your 10%.  I am 44, hubby is 53, but we do plan to live past 100. 

I have maxed my RRSP and my TFSA accounts but don't have the level of cash you have therefore I don't have answers on your unique situation. What you need to think about is the sizeable amount of cash you will have in Non-Reg accounts and the best tax efficiency. So you will have to look at what funds you have across 3 account types (TFSA RRSP Non-Reg) and balance your desires asset allocation across them between stocks/bonds and CND/INT/US.

I think there was a misunderstanding along the way.  We do not have any taxable accounts yet. Just $1M in RRSPs, TFSAs and RESPs that we keep close to max.  Trying to save to replace the rattiest of our ratty cars and then we will be embarking on learning how to structure a taxable account. 

Posting to follow - fellow Canadian here, and new to the game.  There is so much to learn!  I'm excited to dig through all of the information in this thread :)
Welcome WinterSkies!  Let's learn together.

I trade about once/account/year. Meanwhile, I invest through index funds @ 0.5-0.7% MER

My average outstanding balance of these funds is +/- 2,500$ wich cost me 25$ in fees. On the other hand, I save about 150$ of trades, I'm still ahead doing this.

LeBarbu - Until this week I thought index funds and ETFs were synonymous.  I now know they are different but haven't quite figured out how.  Would you recommend index funds?  The MER looks higher.

A general question - should I build a balanced ETF portfolio in each account with 3 ETFs per account (RRSP, husbands RRSP, Spousal RRSP, TFSA, husbands TFSA) or just maintain a good asset allocation across all of them combined as though they were a big pot.

The IL website was having trouble today but we did make to the bank with the paperwork for 4 of the accounts and afterwards enjoyed a tasty and child free donair.

Thanks again!

jambongris

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #67 on: April 05, 2017, 05:31:58 AM »
LeBarbu - Until this week I thought index funds and ETFs were synonymous.  I now know they are different but haven't quite figured out how.  Would you recommend index funds?  The MER looks higher.

People seem to use different terminology that can muddy the waters when it comes to index funds, mutual funds and ETFs.

An index fund is a fund that tracks an index (duh!). They are often available in the form of either mutual funds or ETFs.

Canadian Couch Potato has a quick run-down in his FAQ.

Le Barbu

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #68 on: April 05, 2017, 08:27:04 AM »
Blissfull Biker, I read the entire thread this morning and here is what I would do (not telling you to do so!)

Open accounts at BMO investor line for each of your actual account + a taxable account (joint)

Use an Excell sheet to manage all of your accounts like 1 big portfolio

Throw all of the money of every RRSP into XAW - 850k$ (2-3 trades)

TFSA & RESP should go into VCN - 240k$ (2 trades)

Use a HELOC for 200k$ and buy more VCN (1 trade). Take a 5 years variable rate @ 2.25% wich is deductible against your income for a net 1.5% (less than inflation rate). It's called Smith Manœuvre and Million Dollar Journey will tell you the way to do this.

Your actual situation brings 20k$/year (1.1M$ @ 4% - 2.1% fees*) so you are AT MOST 30% FI (20/65)

The plan I suggest would produce 50k$/year (1.3M$ @ 4% - 0.15% fees) for a better 75% FI (50/65)

Your asset allocation would be 35% Canadian stock and 65% splitted evenly between US and Intl stock. Your total leverage (through HELOC) would be less than 12% (200k$/1.7M$ assets) wich is ridiculous in your overall situation.

I dont care what people think about this (being 112% stock, etc) you can do this within few days and 6 trades (60$) + 1 trade/account/year. I did this myself and have no regrets. Our NW is 1.1M$ now (950k$ invested, 350k$ house, 200k$ HELOC) and our COL is 50k$/year. We are close to 75% FI (100% FI on a barebone budget) and you could be in the same situation in a blink!

Dont forget that the general rules do not apply to us, especially if you are still young enough and able to work for few years!

*I can help anyone on a full time basis for 22k$/year! 😜
« Last Edit: April 05, 2017, 08:31:09 AM by Le Barbu »

GreatLaker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #69 on: April 05, 2017, 09:16:31 PM »
You are starting to understand one of the reasons why DIY has such low fees relative to an adviser... it's more effort. Kinda like adjusting your gears and fixing flats instead of just dropping the bikes off at the shop and going for a Starbucks.

Quote
I assume the right choice is to have the distributions automatically reinvested.  Correct?
Check with BMO on their reinvestment policy for ETFs. Most brokers do "synthetic drips" with ETFs, where the ETF distributes cash then the broker buys the closest number of full shares, but there will be cash left over. Say your VCN distributed $120 into one of your accounts, and it's current price is $31.69. The DRIP would buy 3 shares for a total of $95.07, leaving you with $24.93 in cash. Unlike mutual funds that can  buy partial shares so can invest DRIPs down the penny. So even with ETF DRIPs some cash will still build up in your accounts. I don't drip with ETFs because I prefer to choose how to invest my distributions. Choice is yours.

Quote
So with a minimum of 6 monthly contributions trading fees would be $60/month.  Still less than I am paying my advisor but is there a better way?
Another drawback of DIY with ETFs. You are at the bottom of a steep muddy hill, and you need to plot the best route with least likelihood of crashing. Maybe even stop a bit and eyeball it to pick the best course. Hunker down, slow and steady, so you don't lose traction. (Actually I don't recall if you ride road or offroad)

There are alternatives. One is just suck it up and pay the commissions. Another is invest quarterly instead of monthly. You said cash magically turns into toys when not invested, so just transfer cash into your brokerage accounts as a holding zone. The way I prefer is to invest monthly in a low-cost balanced mutual fund then maybe every 6 months sell the mutual fund and deploy the cash appropriately into ETFs. I generally buy ETFs in minimum 100 shares so $2500 to $3500 minimum for most ETFs. The fund I use is TD Balanced Index Fund (TDB965). It's MER is around 0.9%, not super low but good for a balanced mutual fund. It might be available in BMO IL, as I know BMO sells TD funds.

If you choose this route look for a balanced fund with a reasonable MER, no fee to buy, low minimum purchase and short minimum holding period. BMO sells D-Series mutual funds which are same as regular mutual funds, but have a lower MER for sale only to discount broker clients. Check out these links to see if you can find anything you like:
https://www.bmoinvestorline.com/selfDirected/pdfs/SeriesD_EN.pdf
http://www.moneysense.ca/save/investing/mutual-funds/bmo-launches-series-d-mutual-funds/

Mutual funds are also easier to get your broker to do a monthly purchase plan.

Quote
A general question - should I build a balanced ETF portfolio in each account with 3 ETFs per account (RRSP, husbands RRSP, Spousal RRSP, TFSA, husbands TFSA) or just maintain a good asset allocation across all of them combined as though they were a big pot.
Your choice. I find it is easier to look at all my accounts as one big allocation, but put fewer funds in smaller accounts. Growth in TFSAs is never taxed, but withdrawals from RRSPs are taxed at highest marginal rate, same as salary and interest income. So put high growth investments (equities) into TFSA, and bonds into RRSP. Then put equities that don't fit into TFSA into your RRSP.

Once you get into a non-registered account, how you distribute asset classes across accounts is more important, since dividends from Canadian equities get preferred tax treatment. But until all your registered room is used up, just make sure to fill TFSA with equities and bonds in RRSP.

I have non-registered, TFSA, RRSP and 2 LIRAs. My non-registered is all equities, mostly Canadian. TFSA is all equities. Smaller LIRA is all bond ETF. Larger LIRA is mostly bonds. RRSP is mostly fixed income but has some of each asset class to give me ability to rebalance without tax considerations. I just find it easier to limit the number of holdings in small accounts.

Quote
Would you recommend index funds?  The MER looks higher.
There are not many low-cost index mutual funds in Canada, but they usually don't have any trade commissions to buy. ETFs are a better choice if you want to get the lowest cost / best return and are careful to manage trade commissions with some of the techniques other posters and I have suggested.

Your earlier idea of a CCP couch potato portfolio will serve you well.

Quote
I googled and found the cFIREsim calculator.  Thanks!  Very interesting.  I look forward to playing around with it.  In my quick trial run I tested retiring with $1MM, spend of $40K per year for 50 years, 0.18MER to compare it to the 4%SWR rule of thumb and it gave me a 71% probability.  Yikes.  I was hoping for higher than that.
Calculating all this accurately, especially considering tax impacts of withdrawals from various accounts plus avoiding the concerns of your RRSP getting too big driving higher taxes once you hit mandatory withdrawals is not a simple exercise. Consider getting a detailed plan done by a fee-only adviser with a professional planning designation such as CFP or PFP. A lot of people may object to that and say just do DIY, but for a couple of $k to get an objective expert to run detailed analysis is something I found worthwhile. Think about it for after you get the DIY portfolio set up.

Heckler

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #70 on: April 05, 2017, 09:32:56 PM »
IL will DRIP Canadian ETFs, but not US traded ones (like VTI). You just buy your ETF and then call them to set it up.

joonifloofeefloo

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #71 on: April 06, 2017, 11:12:53 AM »
Posting to play with you all.

Heckler helped me out big time. I was sick to learn about the fees I was paying (essentially $2k/yr on a small portfolio) but ultimately was able to bite the bullet, cut my losses, move forward. Better to pay fees once to get out from under them, than to pay them forever so we don't have to look.

It's been good. Everyone has covered perfectly the lessons and resources that were awesome for me.

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #72 on: April 06, 2017, 08:50:30 PM »
Good news.  I am now officially an ETF owner!  I own 155 shares of VCN in my RRSP with a value of $4,950.  Very exciting for me.  I tried to post the order confirmation but couldn't figure out how to post an image.  You guys can imagine it and it is beautiful.

My husband had an old Investor line RRSP account that went dormant years ago (after he learned his lesson on the perils of stock picking, the hard way).  In order to set up a Spousal RRSP he it still working on getting his account reactivated.  I need the spousal RRSP set up to transfer the $38K from the Scotia Spousal GRRSP over for practice money.  I grew tired of waiting and scraped together $5K to get up and rolling.

I finished the Millionaire Teacher book last night, except that I fell asleep partway through the last chapter "The 10% stock Picking Solution ... If You Really Can't Help Yourself".  But that is OK.  I am pretty sure I can help myself.  Great book.  Thanks again for the recommendation GreatLaker.  I have ordered The Real Retirement from the library as you suggested.  Le Barbu mentions Million Dollar Journey.  I'll try that one too. 

Also really enjoying the Canadian Couch Potatoe podcasts.  My podcast metrics are two episodes per run with the dog, or one episode per two pairs of skis waxed. 

I am going to layout an investment plan, as Heckler suggested, and post it for your feedback.  How would I share a spreadsheet?

I dont care what people think about this (being 112% stock, etc) you can do this within few days and 6 trades (60$) + 1 trade/account/year. I did this myself and have no regrets. Our NW is 1.1M$ now (950k$ invested, 350k$ house, 200k$ HELOC) and our COL is 50k$/year. We are close to 75% FI (100% FI on a barebone budget) and you could be in the same situation in a blink!

Dont forget that the general rules do not apply to us, especially if you are still young enough and able to work for few years!

You are bold Le Barbu!  I like that.  But I am not keen to take out a HELOC.  I wish you could see our home, a chalet style post and beam house with giant mountain views, a big kitchen table for family and friends, vegetable and flower gardens, a garage filled with bikes, skis and neighbourhood kids.  Owning it outright provides so much pleasure and a sense of security.   

Your comments do make me consider reducing the percentage of bonds I will put in my asset allocation.  Perhaps we can take more risk in our portfolio because the equity in the house is so safe.

You are starting to understand one of the reasons why DIY has such low fees relative to an adviser... it's more effort. Kinda like adjusting your gears and fixing flats instead of just dropping the bikes off at the shop and going for a Starbucks.
Love the bike analogies!  You are speaking my language.

Quote
There are alternatives. One is just suck it up and pay the commissions. Another is invest quarterly instead of monthly. You said cash magically turns into toys when not invested, so just transfer cash into your brokerage accounts as a holding zone. The way I prefer is to invest monthly in a low-cost balanced mutual fund then maybe every 6 months sell the mutual fund and deploy the cash appropriately into ETFs. I generally buy ETFs in minimum 100 shares so $2500 to $3500 minimum for most ETFs. The fund I use is TD Balanced Index Fund (TDB965).
This is a great idea.  I would be more relaxed letting money pile up a bit in a balanced index fund than cash.  But where would you hold this?  In a taxable account?  I can't move money between RRSPs / TFSA / RESPs, so presumably I would make automated biweekly contributions to a taxable index fund and then when it is large enough transfer into the TFSA / RESP ETFs. 

The only thing I am leary about is that I understand that taxable accounts are far more complicated to manage.  The couch potatoe podcast made it sound onerus and confusing.  I had assumed it was a problem for another day... unless I need to understand it for to implement this strategy.

Quote
Calculating all this accurately, especially considering tax impacts of withdrawals from various accounts plus avoiding the concerns of your RRSP getting too big driving higher taxes once you hit mandatory withdrawals is not a simple exercise. Consider getting a detailed plan done by a fee-only adviser with a professional planning designation such as CFP or PFP. A lot of people may object to that and say just do DIY, but for a couple of $k to get an objective expert to run detailed analysis is something I found worthwhile. Think about it for after you get the DIY portfolio set up.

Agreed.  We are going to ask our BMO financial planner to update our financial plan with current numbers before we move our money to InvestorLine.  And I will pay close attention to the details and ask far more question than I have in the past.  That needs to happen sooner rather than later as I am now seeing up close what we are squandering in fees.  We are paying $55/day in fees.  Ouch.

IL will DRIP Canadian ETFs, but not US traded ones (like VTI). You just buy your ETF and then call them to set it up.
Yes.  There was no ability to set it up when I bought VCN.  Thanks for clarifying that I have to call.

Thanks again gang.

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #73 on: April 06, 2017, 10:37:08 PM »
Attached is my draft plan.  Please take a look and let me know what you think.  What would you do differently?  It is based on the Assertive CCP portfolio.  I was debating the Balanced portfolio but the house is paid off (worth $450K) and that provides some stability outside the portfolio.  And we are healthy with good earning potential should we need to deploy it.

Thanks for encouraging me to lay it out on a spreadsheet Heckler.  And GreatLaker, thanks for the tip to load TFSAs with equities, as growth has no future tax implications.

All input is appreciated!


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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #74 on: April 07, 2017, 12:22:16 AM »
You can easily accumulate cash in any of your accounts.   contribute daily $5 for each coffee you don't buy, if thats your thing.  You're self directed now!   

I contribute to my RSP and spousal off my paycheck pretax to my work plan.  I  buy the same index as my self directed, but as higher MER, no commission Sunlife versions.  Once a year, I sell and transfer to my self directed, and buy large chunks of ETFs.  SL lets me transfer out once per year for free.  The second time costs $25,  but IL refunds me the SL fee once I move it to them and send the reciept.

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #75 on: April 08, 2017, 09:12:57 AM »
I contribute to my RSP and spousal off my paycheck pretax to my work plan.  I  buy the same index as my self directed, but as higher MER, no commission Sunlife versions.  Once a year, I sell and transfer to my self directed, and buy large chunks of ETFs.  SL lets me transfer out once per year for free.  The second time costs $25,  but IL refunds me the SL fee once I move it to them and send the reciept.

This is a smart plan Heckler.  I had thought about setting the Scotia GRRSP to a money market fund or something very low risk due to the short time frame, but using an index that you also hold in your self directed allows the money to grow without taking risks timing the market.  I will ring Scotia on Monday.  I am not sure if I can buy ETFs like VCN through them.  Thanks!

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #76 on: April 08, 2017, 02:20:20 PM »
You can easily accumulate cash in any of your accounts.   contribute daily $5 for each coffee you don't buy, if thats your thing.  You're self directed now!   

I contribute to my RSP and spousal off my paycheck pretax to my work plan.  I  buy the same index as my self directed, but as higher MER, no commission Sunlife versions.  Once a year, I sell and transfer to my self directed, and buy large chunks of ETFs.  SL lets me transfer out once per year for free.  The second time costs $25,  but IL refunds me the SL fee once I move it to them and send the reciept.

I continually pull out all my employee portion of my Sunlife company RRSP and dump into my Scotia iTrade Vanguard ETFs. That way I can build my savings into my own pool at that lower MER fee

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #77 on: April 09, 2017, 09:02:53 AM »
Attached is my draft plan.  Please take a look and let me know what you think.  What would you do differently?  It is based on the Assertive CCP portfolio.  I was debating the Balanced portfolio but the house is paid off (worth $450K) and that provides some stability outside the portfolio.  And we are healthy with good earning potential should we need to deploy it.

Thanks for encouraging me to lay it out on a spreadsheet Heckler.  And GreatLaker, thanks for the tip to load TFSAs with equities, as growth has no future tax implications.

All input is appreciated!
W00t! Now you know buying ETFs is not much harder than buying something on eBay, and the return is so much greater.

Good allocation plan.

Re the issues in your spreadsheet:

For the RESP, with $120k now and $4800 annual contrib, in 6 years at 2% return you would have $165k; at 5% return you would have $193k, so your goal is achievable. As you get closer to needing to withdraw the funds, the goal shifts from return on capital to return of capital. Gradually moving to a lower risk portfolio ensures you have the funds when needed. Imagine if it was Sept 2008 and you needed to start withdrawing money. GICs, short-term bond funds and savings deposits can be used to give adequate return and low risk.

For biweekly contributions, why not deposit them directly into each account you are saving in, and buy a mutual fund in each account? The fund I suggested has a $100 minimum purchase and no fee to sell as long as you hold for at least 30 days. The BMO d-series funds I linked to have a minimum $500 initial purchase and $50 subsequent purchase so they should be suitable too. As long as you are meeting the minimums there is no need to aggregate in a separate account. Buying mutual funds is easier than ETFs. With ETFs you need to take your purchase amount, subtract the commission, divide by the price to determine how many units to buy, and use a limit order or keep a cash cushion in case the price changes before your order gets filled. Mutual funds can be purchased in dollar amounts (right down to the penny), and the order will fill at the day's closing price.

For car savings, consider using a savings account with an online bank. EQ Bank pays 2%, Oaken pays 1.5%. Tangerine pays 0.8% but often has promos. https://www.highinterestsavings.ca/chart/. I have some "mad money" in Mawer Balanced fund in my non-registered broker account... easy to invest in the same broker account as my other savings, but using the Mawer fund segregates it from my retirement savings.

On the GRRSP, the short timeline will not matter as long as the GRRSP investments are similar risk profile to the RRSP you are moving the funds to. Even if the market tanks (nooooo!) you would be selling low, but then buying low, so no issue. And you must know this but it's worth a reminder you must do a registered transfer of any RRSP funds or you will lose that contribution room forever.

Re borrowing to invest... I borrowed money to invest in 1987, and shortly after that Black Monday happened https://en.wikipedia.org/wiki/Black_Monday_(1987) and the Dow fell 23% in one day. In 1995 I bought a property and just before closing the Mexican Peso Crisis happened https://en.wikipedia.org/wiki/Mexican_peso_crisis and mortgage rates shot way up. In 2000, just before the dot.com crash I bought a pre-construction condo, so I am glad i did not need to sell investments for my deposit money. I would not say never borrow to invest, but money you need at a specific time should be kept in very safe investments, and always consider a worst case black swan scenario.

Let us know your progress.

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #78 on: April 09, 2017, 09:47:08 AM »
I contribute to my RSP and spousal off my paycheck pretax to my work plan.  I  buy the same index as my self directed, but as higher MER, no commission Sunlife versions.  Once a year, I sell and transfer to my self directed, and buy large chunks of ETFs.  SL lets me transfer out once per year for free.  The second time costs $25,  but IL refunds me the SL fee once I move it to them and send the reciept.

This is a smart plan Heckler.  I had thought about setting the Scotia GRRSP to a money market fund or something very low risk due to the short time frame, but using an index that you also hold in your self directed allows the money to grow without taking risks timing the market.  I will ring Scotia on Monday.  I am not sure if I can buy ETFs like VCN through them.  Thanks!

I figure I am always holding the same index, but in different providers.  Regardless if it goes up or down when its time to transfer, I sell anyway and rebuy the same index a week or two later as soon as the funds have moved.  I don't transfer around known market influencing events like a US election or Brexit vote.   Stay methodical - no emotions.

Blissful Biker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #79 on: April 10, 2017, 09:23:57 AM »
For biweekly contributions, why not deposit them directly into each account you are saving in, and buy a mutual fund in each account? The fund I suggested has a $100 minimum purchase and no fee to sell as long as you hold for at least 30 days. The BMO d-series funds I linked to have a minimum $500 initial purchase and $50 subsequent purchase so they should be suitable too. As long as you are meeting the minimums there is no need to aggregate in a separate account. Buying mutual funds is easier than ETFs. With ETFs you need to take your purchase amount, subtract the commission, divide by the price to determine how many units to buy, and use a limit order or keep a cash cushion in case the price changes before your order gets filled. Mutual funds can be purchased in dollar amounts (right down to the penny), and the order will fill at the day's closing price.

For car savings, consider using a savings account with an online bank. EQ Bank pays 2%, Oaken pays 1.5%. Tangerine pays 0.8% but often has promos. https://www.highinterestsavings.ca/chart/. I have some "mad money" in Mawer Balanced fund in my non-registered broker account... easy to invest in the same broker account as my other savings, but using the Mawer fund segregates it from my retirement savings.

Thanks GreatLaker.  Does contributing to a mutual fund still incur the $10 fee, similar to buying ETFs?  If I am contributing $200 biweekly to a TFSA, or car savings, and incur a $10 fee every time, that is 5% lost.  I called Investorline to ask.  The lady's English was as bad as my financial vocabulary so all in all not very clear communication, but I left thinking that only biweekly deposits to cash would not incur fees.  Do you believe that to be true or should I call again?

I planned to practice with a small amount of money until the summer but can no longer stomach the fees so I am going to move large pot of money over by the end of the month.  We have an appointment with our financial advisor the end of next week.  He is updating our overall financial plan.  I will ask a lot of questions, particularly around his strategy for drawing down retirement funds in the most tax advantageous way.  We will then thank him politely for his guidance over the years, move our money and hopefully all remain friends.



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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #80 on: April 10, 2017, 10:10:06 AM »
Great work with how much your are learning and the readiness to make the change, you will do great!
I know for my Scotia iTrade there are zero fees for deposits to my brokerage RRSP and TFSA, just the fund purchases themselves.

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #81 on: April 10, 2017, 10:43:58 AM »
For biweekly contributions, why not deposit them directly into each account you are saving in, and buy a mutual fund in each account? The fund I suggested has a $100 minimum purchase and no fee to sell as long as you hold for at least 30 days. The BMO d-series funds I linked to have a minimum $500 initial purchase and $50 subsequent purchase so they should be suitable too. As long as you are meeting the minimums there is no need to aggregate in a separate account. Buying mutual funds is easier than ETFs. With ETFs you need to take your purchase amount, subtract the commission, divide by the price to determine how many units to buy, and use a limit order or keep a cash cushion in case the price changes before your order gets filled. Mutual funds can be purchased in dollar amounts (right down to the penny), and the order will fill at the day's closing price.

For car savings, consider using a savings account with an online bank. EQ Bank pays 2%, Oaken pays 1.5%. Tangerine pays 0.8% but often has promos. https://www.highinterestsavings.ca/chart/. I have some "mad money" in Mawer Balanced fund in my non-registered broker account... easy to invest in the same broker account as my other savings, but using the Mawer fund segregates it from my retirement savings.

Thanks GreatLaker.  Does contributing to a mutual fund still incur the $10 fee, similar to buying ETFs?  If I am contributing $200 biweekly to a TFSA, or car savings, and incur a $10 fee every time, that is 5% lost.  I called Investorline to ask.  The lady's English was as bad as my financial vocabulary so all in all not very clear communication, but I left thinking that only biweekly deposits to cash would not incur fees.  Do you believe that to be true or should I call again?

I planned to practice with a small amount of money until the summer but can no longer stomach the fees so I am going to move large pot of money over by the end of the month.  We have an appointment with our financial advisor the end of next week.  He is updating our overall financial plan.  I will ask a lot of questions, particularly around his strategy for drawing down retirement funds in the most tax advantageous way.  We will then thank him politely for his guidance over the years, move our money and hopefully all remain friends.

Move everything at once when you are ready. Over thinking is your enemy (I know engeneers a lot) and btw, with the kind of money you stash/year, make only few trades to top each account every year. I do TFSA first, then RESP and RRSP last. Your mileage can vary!

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #82 on: April 10, 2017, 08:23:10 PM »
Thanks GreatLaker.  Does contributing to a mutual fund still incur the $10 fee, similar to buying ETFs?  If I am contributing $200 biweekly to a TFSA, or car savings, and incur a $10 fee every time, that is 5% lost.  I called Investorline to ask.  The lady's English was as bad as my financial vocabulary so all in all not very clear communication, but I left thinking that only biweekly deposits to cash would not incur fees.  Do you believe that to be true or should I call again?

I may have misled you. :-(  I was basing my comments on my own experience with TDDI where I can purchase mutual funds with no commission and only a $100 minimum initial purchase and $100 subsequent purchase. If I try to order less than the minimum it gives me an error message. There are exceptions that have higher minimums like Mawer funds that have $5000 minimum. Sorry 'bout that.

I looked for the BMO IL fee schedule:
https://www.bmo.com/self-directed/fees-investment-account-types/fees
https://www.bmoinvestorline.com/selfDirected/pdfs/SDFeeSchedule_E.pdf
Check p.2 of the 2nd link above. The good news is it says no commission to buy or sell mutual funds. The bad news is BMO has higher minimum purchases. It looks like BMO funds have $500 minimum initial and $50 minimum subsequent purchase and other funds have $1000 minimum initial and $500 minimum subsequent purchase. Hopefully you can find something workable with a BMO fund where you can do your monthly or biweekly contributions.

Quote
I planned to practice with a small amount of money until the summer but can no longer stomach the fees so I am going to move large pot of money over by the end of the month.  We have an appointment with our financial advisor the end of next week.  He is updating our overall financial plan.  I will ask a lot of questions, particularly around his strategy for drawing down retirement funds in the most tax advantageous way.  We will then thank him politely for his guidance over the years, move our money and hopefully all remain friends.

Both of my former advisers took me off their Christmas card list immediately. Here's hoping you will have better luck staying friends.

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #83 on: April 10, 2017, 11:18:45 PM »
Both of my former advisers took me off their Christmas card list immediately. Here's hoping you will have better luck staying friends.

ha, yep!

Kid was just reminiscing about one yesterday, saying how nice she was, how he misses her and wants to see her again... She went from warm, gushing, loving, buying gifts for my kid to stern then nada. I broke the news to kid.

I couldn't be friendly for sales purpose no matter how hard I might try, so I actually kind of admire this ability, just as I do with the similar talent of TV actors. It's freaky, though, to realize how much of a person's warmth may merely be a business strategy.

My first one, though -who never wanted any money from me- has sent me a card every year for 15 years. I think she's probably just awesome.

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #84 on: April 11, 2017, 10:29:53 AM »
I talked to another another lady at Investorline and she confirmed that there are no trading fees to buy mutual funds.  The fees are embedded in the MERs.  So either solution would work ok:
 - biweekly contributions into mutual funds within RESP and TFSA accounts, to be moved into ETFs when sizable enough.
- or biweekly contributions into a mutual fund in a taxable account to then be moved into ETFs within RESP and TFSA accounts manually on a rotating basis.
Any suggestions on which mutual fund I should choose for this purpose?

I am still nervous about two types of accounts - taxable and RESP.

Taxable - I listened to a Canadian Couch Potato podcast that had a segment on the level of tracking required for ETFs in taxable accounts.  It sounded very onerous and potentially hazardous.  I think that as long as I stay in mutual funds in the taxable account I will receive a T3 and it will be as easy as pie.  Next year when we have maxed our non-taxable accounts and acquired a reliable vehicle, I will need to learn a lot more about taxable accounts as we will be able to start stockpiling money there.

RESP - I now understand that InvestorLine will arrange for the 20% grant from the government to be added to the account, which is welcome news.  What I am not  clear on is the level of effort and gov't interaction required when it comes time to withdraw.  We are 6 years away from first needing to access the RESP funds.  Is it worth the effort to become self directed? 

My husband and I are headed into town today to go to BMO and submit the paperwork to open the rest of the IL accounts.  When we opened the first 4 accounts last week the teller did not know what do to with the IL account application forms we brought it.  It took a couple of managers and a number of discussions for them to come up with a plan and accept our forms.  It would seem that by going self directed we are diverging from the crowd, and choosing the path less travelled by and that will make all the difference. I believe Robert Frost would approve.




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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #85 on: April 11, 2017, 10:58:44 AM »
Move everything at once when you are ready. Over thinking is your enemy (I know engineers a lot) and btw, with the kind of money you stash/year, make only few trades to top each account every year. I do TFSA first, then RESP and RRSP last. Your mileage can vary!

In defence of engineers everywhere: Einstein said: “If I were given an hour in which to do a problem upon which my life depended, I would spend 40 minutes studying it, 15 minutes reviewing it and 5 minutes solving it"

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #86 on: April 11, 2017, 11:29:44 AM »
Taxable - I listened to a Canadian Couch Potato podcast that had a segment on the level of tracking required for ETFs in taxable accounts.  It sounded very onerous and potentially hazardous.  I think that as long as I stay in mutual funds in the taxable account I will receive a T3 and it will be as easy as pie.  Next year when we have maxed our non-taxable accounts and acquired a reliable vehicle, I will need to learn a lot more about taxable accounts as we will be able to start stockpiling money there.

RESP - I now understand that InvestorLine will arrange for the 20% grant from the government to be added to the account, which is welcome news.  What I am not  clear on is the level of effort and gov't interaction required when it comes time to withdraw.  We are 6 years away from first needing to access the RESP funds.  Is it worth the effort to become self directed? 
Regarding ACBs in taxable accounts, I think CCP may have made it sound a lot more complicated than it really is--as long as you don't DRIP, don't buy REITs, and stay away from advanced strategy ETFs. While I can't speak for InvestorLine specifically, every brokerage I've been with automatically adjusts the cost basis of your ETF units and shows it as "book value". All other income is easy to report because your brokerage does up a T5 for you. If you still are wary, just use swap-based ETFs as they don't pay distributions.

Regarding RESPs, yes it is worth the effort. You're saving 1% plus in fees alone. That adds up to hundreds of dollars over 6 years. While I have no personal experience with this, by law the brokerage is required to keep track of your income types: non-taxable contribution withdrawals and EAP income. They should provide statements which separate these amounts for you. But you can check with them and even ask for a sample statement so you know what to expect.

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #87 on: April 11, 2017, 11:53:34 AM »
CCP says in various places that yes, most of us don't need to bother about some nuances. I don't, and all is well. Granted my portfolio is VERY different from yours, so some of the things might make a difference to yours specifically. But, worth it to keep in mind that even CCP says many of us needn't strategize to that degree. They just make the info available for ubergeeks, for people who want to tweak further after getting their ducks in a pretty awesome row, etc. As they emphasize, for most of us, simple is best and certainly good enough. You're already making the key moves.

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #88 on: April 11, 2017, 11:57:44 PM »
you've either:

1. Got too much money
2. Aren't spending enough
3. Are working too long

See attached a draft version of your life's financial plan.  For 2.8% of assets annual fee, I'll tell you how it works.  ;)

Caveat - I'm just an engineer who rides bikes and am not a financial advisor (er), accountant or mathematician.  The attached spreadsheet is full of errors, because I created it in 54 minutes, based on my spreadsheet I've spent three years developing and the information you've posted on this thread.  I assume no liability for the contents, result or outcome when you present it to your partner or financial advisor (er).  I have not perfected how ages 70+ works in terms of moving RSP minimum withdrawals over to TFSA or taxable - that's the next step.  Past Performance is not indicative of Future Performance.  Nor are the assumptions shown expected to result in your financial success.

Feel free to use it as you desire.

Note what happens at age 71 when minimum withdrawals from RSP's kicks in - your income and income tax kick up a notch. 




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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #89 on: April 11, 2017, 11:59:08 PM »
take at least 40 minutes to study it. 

ERTW

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #90 on: April 12, 2017, 09:14:15 AM »
Thanks Heckler!  I am excited to review it after work tonight.  If you are right, and we can retire earlier, I will kick my heels with glee!

Le Barbu

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #91 on: April 12, 2017, 10:30:39 AM »
Thanks Heckler!  I am excited to review it after work tonight.  If you are right, and we can retire earlier, I will kick my heels with glee!

My plan was superior and my fees lower! Like Heckler, I bike and DIY investor for many years. Thats about all of my knowledge.

It's a good thing you rejected my ideas because I do not want to be sued if you did it, mess things up and/or SHTF after few months/years afterward

Stasher

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #92 on: April 12, 2017, 10:59:34 AM »
Move everything at once when you are ready. Over thinking is your enemy (I know engineers a lot) and btw, with the kind of money you stash/year, make only few trades to top each account every year. I do TFSA first, then RESP and RRSP last. Your mileage can vary!

In defence of engineers everywhere: Einstein said: “If I were given an hour in which to do a problem upon which my life depended, I would spend 40 minutes studying it, 15 minutes reviewing it and 5 minutes solving it"

BOOM
Love this :) You are set to create an awesome new future for yourself Blissful Biker ~ own it and rock it !

Le Barbu

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #93 on: April 12, 2017, 11:19:19 AM »
Move everything at once when you are ready. Over thinking is your enemy (I know engineers a lot) and btw, with the kind of money you stash/year, make only few trades to top each account every year. I do TFSA first, then RESP and RRSP last. Your mileage can vary!

In defence of engineers everywhere: Einstein said: “If I were given an hour in which to do a problem upon which my life depended, I would spend 40 minutes studying it, 15 minutes reviewing it and 5 minutes solving it"


BOOM
Love this :) You are set to create an awesome new future for yourself Blissful Biker ~ own it and rock it !

Einstein was an engineer? Did'nt know ´bout that!

I can make an infinite list of them who would study the problem for 55 minutes, review for 10 minutes...oops! To late!

They are probably a lot more intelligent than me but many suffer from analysis-paralisis or the better-is-the-ennemy-of-good-enough syndrome.

This thread should be pretty straighforward with no real problems to solve, plenty of money, home equity and very smart people implied...

Blissful Biker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #94 on: April 12, 2017, 06:39:25 PM »
Move everything at once when you are ready. Over thinking is your enemy (I know engineers a lot) and btw, with the kind of money you stash/year, make only few trades to top each account every year. I do TFSA first, then RESP and RRSP last. Your mileage can vary!

In defence of engineers everywhere: Einstein said: “If I were given an hour in which to do a problem upon which my life depended, I would spend 40 minutes studying it, 15 minutes reviewing it and 5 minutes solving it"


BOOM
Love this :) You are set to create an awesome new future for yourself Blissful Biker ~ own it and rock it !

Einstein was an engineer? Did'nt know ´bout that!

I can make an infinite list of them who would study the problem for 55 minutes, review for 10 minutes...oops! To late!

They are probably a lot more intelligent than me but many suffer from analysis-paralisis or the better-is-the-ennemy-of-good-enough syndrome.

This thread should be pretty straighforward with no real problems to solve, plenty of money, home equity and very smart people implied...

Ha!  This made me laugh.  But ... ERTW

Heckler, what a great spreadsheet.  Thanks.  I have started reviewing still have a ways to go and am heading off to teach yoga tonight.  I teach the karma class, so the money goes to great causes in the community.  A fun way to counteract my relentlessly capitalistic day job.

So quick questions before I go:
- are the dollars all in 2017 dollars or future dollars?  Ie, does the rate of return include or exclude inflation?
- what is basis for your estimated returns?  5.2% and 5.8% for my RRSP, 2% for husbands (presumably due to heavy weighting in bonds) , and 3.2% for TFSAs?  I would have expected higher returns in the TFSAs because I set them at 100% international equitys based on GreatLakers tip.

Thanks again.  Namaste.


GreatLaker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #95 on: April 12, 2017, 07:15:18 PM »
I am still nervous about two types of accounts - taxable and RESP.

Taxable - I listened to a Canadian Couch Potato podcast that had a segment on the level of tracking required for ETFs in taxable accounts.  It sounded very onerous and potentially hazardous.  I think that as long as I stay in mutual funds in the taxable account I will receive a T3 and it will be as easy as pie.  Next year when we have maxed our non-taxable accounts and acquired a reliable vehicle, I will need to learn a lot more about taxable accounts as we will be able to start stockpiling money there.

RESP - I now understand that InvestorLine will arrange for the 20% grant from the government to be added to the account, which is welcome news.  What I am not  clear on is the level of effort and gov't interaction required when it comes time to withdraw.  We are 6 years away from first needing to access the RESP funds.  Is it worth the effort to become self directed? 

The only thing I will add for RESPs is the conventional wisdom says don't have money in equities if you will need it within 5 years.

Taxable accounts are not that hard, but they can be a PITA to track.

When you sell investments for a gain you need to report that as a capital gain on your income tax (currently taxed at half what salary and interest would be taxed at). So you need to track your cost. When you buy it increases your cost base. When you sell it decreases your cost base. Reinvested distributions are equivalent to taking cash distributions and using it to buy new shares, so that increases your cost. If you buy monthly and have quarterly reinvested distributions that's 16 transactions you need to track each year. It's easy to do in a spreadsheet. Taking distributions in cash simplifies record keeping.

ETFs are a little more complex because the commission on your buy order gets added to your cost and the commission on your sell order gets subtracted from the sale proceeds. And ETFs have wonky extra transactions called Return of Capital (appears on a box on your T3 tax slip) and Reinvested Distributions (not sure about all brokerages, but at TD they are on the monthly statements).

Finiki has a good explanation: http://www.finiki.org/wiki/Adjusted_cost_base

Canadian Capitalist has a good explanation and spreadsheet: http://www.canadiancapitalist.com/free-acb-capital-gains-tracker-in-excel/

If you really cannot sleep here is the government's explanation: http://www.cra-arc.gc.ca/E/pub/tg/rc4169/README.html

Nangirl17

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #96 on: April 12, 2017, 07:46:29 PM »
Posting to follow!
I'm fed up with paying >2% MER but have TONS to learn before/as I branch out on my own! (Going to start with my tax refund)
Thanks so much for sharing, everyone.

Heckler

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #97 on: April 12, 2017, 10:18:11 PM »
No inflation taken into account, but you can adjust by increasing income proportionally (the negative numbers under contributions to each account).

The annual increases are quick estimate based on all bonds in hubbies RSP vs all equities in another account. Adjust as you feel fit. This will help.  I calculated unique returns for each of my account's asset allocation, but I just threw out random numbers for yours.   

http://canadiancouchpotato.com/2016/03/21/what-returns-to-expect-when-youre-expecting/

Heckler

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #98 on: April 12, 2017, 10:19:42 PM »
  Namaste.

I just learned handstands at 43 btw.  awesome stuff.

Blissful Biker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #99 on: April 14, 2017, 02:53:04 PM »
Posting to follow!
I'm fed up with paying >2% MER but have TONS to learn before/as I branch out on my own! (Going to start with my tax refund)
Thanks so much for sharing, everyone.

Welcome!  I am receiving lots of great help on my journey.  Glad you can benefit too.

Finished our taxes today, thank goodness.  $6,200 refund coming our way, primarily due to RRSP contributions and medical expenses.  We have never had to track medical before because we never came close to the threshold but one set of braces on some crooked young teeth and BAM, we hit the threshold right there.  I think I'll use the refund to top up the RRSP and keep the tax return cycle continuing.  We have a 10K gap to close in both our TFSA's (5K each) and my RRSP to reach the limit but my salary is high enough that RRSP is the way to go. 

I have been working on reviewing the spreadsheet Heckler and updating with better information where I can.  It is going to be a solid long term tool for me.  Being able to see the formulas in the fields has helped me follow and validate the logic.  I'll share when complete.  So far it looks like we are not on track to retire in 7 years with income of $65K based on the 4%SWR (requiring 1.625 in investments in 2024), although if the assumptions hold true our net worth will grow beyond 2024.  There must be a delta in assumptions between the sheet and the basis for the 4% rule.

  Namaste.

I just learned handstands at 43 btw.  awesome stuff.
Very cool. Well done my friend.