To withdraw or not to withdraw, that is the question (TFSA)

[fb132]

So I opened up an account with Questrade 2 weeks ago, I invested about 8K$ in there already, but I also have a TFSA mutual fund with RBC that has 6K$ in it. Right now, I haven't made much profit from the RBC mutual fund due to the fact that I had opened it earlier this year. The reason for my move with Questrade is to lower my MER fee's and this year I made a courageous move (ok maybe not so courageous) to learn about ETF which made me affraid in the past. Thanks to the community and CCP (canadian couch potato) website, I have learned about them and I am eager to invest in ETF instead of the horrendous mutual fund I currently own at RBC (MER at 2,05%).

I have three options in front of me:
1) Do I withdraw my funds in the mutual funds in december and reinvest them while balancing my portfolio for january?
2) If my mutual funds are down by december, do I still withdraw the funds and reinvest them in January?
3) Since 6K$ has little impact when it comes to fees, should I keep them in my mutual funds and let it sleep there?
4) Simply withdraw them ASAP even if it means I lose money and not wait till december and simply reinvest them right away in my TFSA questrade account?

By the way, I don't think I will invest the maximum amount this year in the TFSA, well I don't think so anyways.

[Ziggurat]

I assume by the December/January comments that you are thinking about the fact that withdrawn TFSA amounts cannot be re-contributed in the same calendar year.  However, you can transfer accounts between financial institutions without actually withdrawing and thereby avoid that problem. 

I'm not sure what happens with the RBC mutual funds (whether they can be transferred as is), but worst case they can be sold to cash in the account before the transfer.  You could buy back a similar ETF (but with low management fees) in the new account and unless the market changes dramatically in the days while the account is transferred, you should be buying and selling at about the same level, so no loss except trading fees.  That's assuming there isn't a penalty for selling the RBC mutuals (deferred sales charge).

[fb132]

The problem with transferring is RBC is known to charge fees for transfers and Questrade only pays back the fees if the account is at 25k$ if I am not mistaken, so I am trying to avoid unecessary fees. If I were to withdraw, it wouldn't cost me much (I think). And I also don't think I would hit my maxim,um amount in the TFSA this year, so even if I withdraw now, I don't think I will hit my maximum contribution this year.

[RichMoose]

Just sell, withdraw and move to your new account. If that $6000 was put in RBC this year, just make sure you adjust your TFSA limit for this year by deducting that $6000. Don't worry about the loss, whatever category that fund was invested in (ie. Canadian stocks), chances are that related index is a bit cheaper now as well.

To figure out your new TFSA limit, if you started the year with $41,000 - $6000(RBC) - $8000 (QT so far) - $6000 (RBC move to QT) = $21,000.

[fb132]

I make under 40K$ and the most I will able to save until december 2015 will be at most 10 000$, so I am pretty sure I won't have more than 41K$ (even if I include my withdrawals). So I went ahead and did like you said, I withdrew all of it :) ....Deep down, I think it made sense to get rid of that.

[Retired To Win]

I make under 40K$ and the most I will able to save until december 2015 will be at most 10 000$, so I am pretty sure I won't have more than 41K$ (even if I include my withdrawals). So I went ahead and did like you said, I withdrew all of it :) ...Deep down, I think it made sense to get rid of that.

Good decision.  Because of the present relatively low balances in the accounts, any cost incurred for getting rid of that angst and stress was well worth it (IMHO).

Good luck.

[fb132]

In the end, I still made profits, I think when I withdrew all of it, they also included the dividends, not sure, but my amount was higher than I thought I was going to get.