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Yeah, RRSP caps out at 18% of income. Also, I've only worked in 2013, so I don't even have my contribution limit breakdown yet. Our actual living incomes are combined, if that's what you mean. There's no distinction in the budget, it's all one giant pool of money. We effectively do live off of her income, and my income pads the savings. But for RRSP accounts, there are limitations.
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Feb 16, 2014 19:22
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Old Fart posted:Here's our situation. Of course a vanilla RRSP can't beat the MPP- you'd have to compare a RRSP with 4% ish employer match to it! The MPP takes about 12% of the 18% RRSP room you get per year- the pension adjustment.
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Feb 16, 2014 20:52
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Are there any minimum requirements/fees for having a TD DI account? I'm looking to get into e-series for a TFSA, and can't decide between opening a normal TD account and converting it to e-series, or just going straight for a brokerage account.
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Feb 17, 2014 00:30
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Grouco posted:Are there any minimum requirements/fees for having a TD DI account? I'm looking to get into e-series for a TFSA, and can't decide between opening a normal TD account and converting it to e-series, or just going straight for a brokerage account. A Direct Investing TFSA has no trading fees for e-series. ETFs, stocks, etc will be around  per trade, as of 10 days ago. The Basic RSP account is $25 per year and you can only get eseries and mutual funds with that, I believe, and no trading fees. All the details should be here: http://www.tdwaterhouse.ca/document/PDF/forms/521778.pdf
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Feb 17, 2014 00:37
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Great, thanks. Guess I'll just go with a DI TFSA, then keep Questrade for stocks and my RRSP.
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Feb 17, 2014 00:39
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Grouco posted:Are there any minimum requirements/fees for having a TD DI account? I'm looking to get into e-series for a TFSA, and can't decide between opening a normal TD account and converting it to e-series, or just going straight for a brokerage account. I think the scale has tipped pretty strongly in favour of DI with the recently announced $9.95 commissions. No real reason to get anything else IMO.
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Feb 17, 2014 20:12
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Can someone recommend an insurance provider to go through for disability insurance? I'm self-employed, and am therefore in a world of trouble if I get injured in a cycling accident or whatever.
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Feb 17, 2014 22:34
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Lexicon posted:Can someone recommend an insurance provider to go through for disability insurance? I'm self-employed, and am therefore in a world of trouble if I get injured in a cycling accident or whatever. Manulife has been good to me but I deal with them almost entirely through a specific department for injured soldiers, staffed entirely with injured soldiers. So ymmv.
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Feb 18, 2014 03:56
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OK so my wife went into labor the day my funds finally transferred over so I'm only just now getting around to tinkering with the IQ platform. After reading up on the larger ETFs out there it turns out the ones I'm leaning towards are exactly the same ones that CCP recommends, so my breakdown will look something like -30% Cdn Vanguard FTSE Canadian All Cap (VCN) -25% US Vanguard US Total Market (VUN) -20% Int'l iShares MSCI EAFE IMI (XEF) -25% Bonds Vanguard Canadian Aggregate Bond (VAB) I do have a quick question on monthly contributions: when buying additional shares would I want to buy so my overall allocation remains the same, or should I buy asset classes in the same ratio as my original investment? I'm thinking the difference would be insignificant, especially in the long term, but I'm not enough of an excel wizard to be able to prove it.
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Feb 21, 2014 23:14
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Guest2553 posted:OK so my wife went into labor the day my funds finally transferred over so I'm only just now getting around to tinkering with the IQ platform. After reading up on the larger ETFs out there it turns out the ones I'm leaning towards are exactly the same ones that CCP recommends, so my breakdown will look something like Do you believe in rebalancing? Most people recommend you rebalance once or twice a year (Questrade commissions may prevent this from being worthwhile). This would also mean that any new contributions should be in your original weighting allocation.
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Feb 21, 2014 23:41
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Kal Torak posted:Do you believe in rebalancing? Most people recommend you rebalance once or twice a year (Questrade commissions may prevent this from being worthwhile). This would also mean that any new contributions should be in your original weighting allocation. Why would it not be worthwhile? Simply a cost of investing.
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Feb 22, 2014 00:39
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Lexicon posted:Why would it not be worthwhile? Simply a cost of investing. Well, if you have a small account and a number of investment classes, is it worth paying commission to rebalance what could be a few tenths of a percentage? Maybe just less often.
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Feb 22, 2014 01:21
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Kal Torak posted:Well, if you have a small account and a number of investment classes, is it worth paying commission to rebalance what could be a few tenths of a percentage? Maybe just less often. I just come from the position that rebalancing is never not worthwhile - but one must always strive to minimize transaction costs, and that's especially true for small accounts.
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Feb 22, 2014 03:13
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Ugh, I'm going to miss the RRSP contribution deadline because the army takes like three weeks to transfer a pension. I was so pumped to dump like 8k into my TFSA too. 
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Feb 22, 2014 04:52
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Doesn't the pension count against your RRSP limits, anyway? And the TFSA can happen any time, right? I'm still new at this.
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Feb 22, 2014 06:45
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I don't know how the Army pension works but yeah, I would think any contributions made to it should result in a pension adjustment that is reported on your T4 and counted against your RRSP contribution room.
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Feb 22, 2014 06:49
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Kal Torak posted:I don't know how the Army pension works but yeah, I would think any contributions made to it should result in a pension adjustment that is reported on your T4 and counted against your RRSP contribution room. Looking over my account on CRA's website, that doesn't seem to be how it works because I contributed to the pension for a bit more than five years but have $0 in used RRSP room. Unless they just took it off the top and gave me less contribution room and now it's being double-counted as I transfer it out of the pension plan into my own RRSP.
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Feb 22, 2014 15:38
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tuyop posted:Looking over my account on CRA's website, that doesn't seem to be how it works because I contributed to the pension for a bit more than five years but have $0 in used RRSP room. Could you explain a bit about the logic behind transferring out pensions? I though the benefit to a gov pension was a fixed payment irrespective of how long you live - you must have a good reason to take it out. (Sorry if obvious - I know nothing about pension plans)
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Feb 22, 2014 16:00
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Lexicon posted:Could you explain a bit about the logic behind transferring out pensions? I though the benefit to a gov pension was a fixed payment irrespective of how long you live - you must have a good reason to take it out. I wasn't in long enough (10 years) to draw an actual annuity. The plan is incredible if you hit the 10, 25, and 35 year thresholds. If not, then you have to wait until you're 55 or 65 to receive an annuity or take a transfer of value out of the plan into a locked-in registered account and/or an RRSP and cash. The cash has a withholding tax and penalty. The deferred annuity at 55 and 65 will probably be greater than the sum of my premiums, but probably not greater than if I invest the current value into an 80/20 stock bond split and let it grow. In my case, I also don't trust the military at all. In the short time I served, the pension plan was changed three times to make the benefits less generous. Other benefits like severance and injured veteran services were also cut and there's no guarantee that my pension will exist in 30 or 40 years.
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Feb 22, 2014 17:48
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^ Interesting, thanks. I think your final point is widely applicable to anyone under 30 today. I wouldn't count on most pensions being around in the future in the current form as they are today, assuming you can even get one in the first place.
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Feb 22, 2014 18:14
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So my bank offered me a 2500 dollar Line of Credit to use towards an RSP at Current Rates+1% Prime. I'm 24, my retirement savings so far is 16k in a locked in RSP, but nothing to put towards my taxes this year. I'm probably going to owe a bit on this years taxes on top of the 5k I owe the government already. Is it a bad idea to accept the LoC?
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Feb 22, 2014 18:24
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Lexicon posted:^ Interesting, thanks. I think your final point is widely applicable to anyone under 30 today. I wouldn't count on most pensions being around in the future in the current form as they are today, assuming you can even get one in the first place. CPP is also looking like it will be gone by retirement as well.
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Feb 22, 2014 18:25
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DariusLikewise posted:So my bank offered me a 2500 dollar Line of Credit to use towards an RSP at Current Rates+1% Prime. I'm 24, my retirement savings so far is 16k in a locked in RSP, but nothing to put towards my taxes this year. I'm probably going to owe a bit on this years taxes on top of the 5k I owe the government already. Is it a bad idea to accept the LoC?
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Feb 22, 2014 18:57
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DariusLikewise posted:CPP is also looking like it will be gone by retirement as well. Yup. If you're reading this and are under, say, 35: we are on our own. Learn up.
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Feb 22, 2014 19:08
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It's just not savvy at all to spend all of your take-home pay and rely on something else to provide for you someday. Doing so won't even improve your life. There's no reason for it.
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Feb 22, 2014 19:38
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DariusLikewise posted:CPP is also looking like it will be gone by retirement as well. Count me in as one person who thinks all this CPP fear is a load of crap. It's one of the best run funds in the world and now has over 200B in assets and is expected to be 340B by 2022. Yeah, there will be a number of current 30 year olds who are going to be drawing on CPP in 40 years time but there will be even more 30 year olds at that time paying for it. The max contribution amount increases every year and the Federal Government will introduce whatever changes are necessary to keep the fund strong. That being said, anyone relying on CPP being there when they retire is an idiot.
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Feb 22, 2014 20:07
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Lexicon posted:^ Interesting, thanks. I think your final point is widely applicable to anyone under 30 today. I wouldn't count on most pensions being around in the future in the current form as they are today, assuming you can even get one in the first place. Most pension plans are DC now anyway unless you work in the public sector or the big banks. This isn't a concern for DC plans. edit: here's a good comparison for how DB in the private sector is moving towards DC. 
Kal Torak fucked around with this message at 20:15 on Feb 22, 2014 |
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Feb 22, 2014 20:10
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tuyop posted:In the short time I served, the pension plan was changed three times to make the benefits less generous. Other benefits like severance and injured veteran services were also cut and there's no guarantee that my pension will exist in 30 or 40 years. Five years ago I read only about 30% of vets get a full pension, and that number is probably lower now with increased burnout and minimum retirement age being raised to 25 years. I wonder how much such moves actually save. I signed a 25 year contract a couple years ago which was later ruled invalid over some arcane issue and won't get a chance to do so again until 2016/17. If anything major changes before then I'll be a little boned 
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Feb 22, 2014 21:21
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DariusLikewise posted:So my bank offered me a 2500 dollar Line of Credit to use towards an RSP at Current Rates+1% Prime. I'm 24, my retirement savings so far is 16k in a locked in RSP, but nothing to put towards my taxes this year. I'm probably going to owe a bit on this years taxes on top of the 5k I owe the government already. Is it a bad idea to accept the LoC? Yes, pay your debts first. I am guessing your marginal tax rate at 24 years old is quite low, so the benefit of contributing to the RSP right now is marginal, certainly not enough to justify a loan. Focus on paying your loans and trying to put what you can away in a TFSA invested in ETF or low MER funds. Congrats on having what you do have saved at your age already. Most people your age don't have a nickel. Keep saving when you can and you will be very happy later.
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Feb 22, 2014 21:51
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tuyop posted:I wasn't in long enough (10 years) to draw an actual annuity. The plan is incredible if you hit the 10, 25, and 35 year thresholds. If not, then you have to wait until you're 55 or 65 to receive an annuity or take a transfer of value out of the plan into a locked-in registered account and/or an RRSP and cash. The cash has a withholding tax and penalty. I'll add to this as well if anyone else is expecting to have to make this decision. I took the transfer value of my federal superannuation about 6 months ago. The actual annuity payments are based on a formula, normally some combination of average wages for x years, years of service and retirement age. The transfer value is based on the actuarial value of payments you are entitled to receive in the future. The actuarial value calculation is very complex, but key driver of value is a time value calculation in which they discount your projected annuity payments to present value. With interest rates as low as they are right now, it's entirely possible to have the present value of the annuity exceed the value of contributions. In my case the present value of the annuity, which was also the transfer value, was approximately double the sum of both my and my employer's contributions. Given my tenure this was as if they had approximately 25% ROI. Additionally, the growth rates are substantially different than what you can achieve on your own. The pension has to make payments every year and can't afford to have significant swings in asset value. I can take a longer term (and higher risk) approach by accepting higher short term variability in exchange for a significantly higher average growth rate. Over the 40 years until I retire, this will probably result in a very significant advantage. I had a slow day at work and modelled the possible outcomes. if I earned 3% return over the next 40 years I would still come out ahead on the transfer (barely). If I die sometime before I retire I have a designated beneficiary which will receive the full value of the assets in the Locked in RRSP (LIRA) instead of a modest death benefit. This is especially relevant 20-30 years from now where the asset value will be significant and I expect I would be leaving behind a wife and kids. It also goes outside my estate, leaving it out of touch of creditors. Regarding the pension adjustment. The adjustment is made every year. If you are in a job with a defined benefit plan you will see a pension adjustment box on your T4 every year and your RRSP amount will be reduced by that every year. Generally, transferring the pension to a LIRA won't have an impact on RRSP room as the adjustment has already been made (if you combine this with a past service buy back immediately before requesting the transfer, all bets are off). Obviously seek professional advice, as there are many other considerations as well. For instance, I had a long discussion with my financial planner and some family to determine what value the possibility of medical benefits has. Also, the LIRA is generally not accessible until 55-65 (it's under provincial legislation I believe, so the legislation varies).
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Feb 23, 2014 00:55
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That's interesting, the actuarial calculation estimate they did on mine in July had it lower in value by 26% than the estimate in October the year before. The reason was "interest rates".
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Feb 23, 2014 04:47
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Speaking of pension, I have a decent chunk of money in my previous employer's pension fund. How do I get that out, call the benefit provider and ask them to transfer it as a LIRA? I'm pretty happy with the returns so far, so I have no problems leaving it there, if that's an option.
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Feb 24, 2014 03:37
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FrozenVent posted:Speaking of pension, I have a decent chunk of money in my previous employer's pension fund. How do I get that out, call the benefit provider and ask them to transfer it as a LIRA? I'm pretty happy with the returns so far, so I have no problems leaving it there, if that's an option. I'm assuming this is a defined benefit pension. If it's defined contribution I'm not as familiar with the rules. Generally, you have a few options. You can leave it in the pension if you are vested (which it sounds like you are as the money is still there). this will get you an annuity at some future time. You can transfer it to a new employer's pension if you join a new employer that has a pension or you can take the transfer value. On a macro level those are the options, although they are not always available to you in all circumstances. Often you are only able to take transfer value within a certain time period after you depart from the employer. If you are considering one of the options call your pension administrator and they should be able to provide details like the transfer value, how it's calculated etc. Also keep in mind that the transfer value is probably not earning a great "return" in the traditional sense. Outside of interest rate fluctuations, it probably is actually earning a very return if you have a long time till retirement. If you want more details, which you probably should if it's a substantial amount of money, you may be able to track down an actuarial report and other information. See for instance: https://www.tbs-sct.gc.ca/reports-rapports/pspp-rrfp/2012/rpspp-rrrfp01-eng.asp.
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Feb 24, 2014 06:02
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Ok so I just dropped 11K on ETFs and am waiting for another 5k of transfers to go through so I can buy even more. It felt kinda good. No turning back now! 
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Feb 24, 2014 16:43
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Guest2553 posted:Ok so I just dropped 11K on ETFs and am waiting for another 5k of transfers to go through so I can buy even more. It felt kinda good. No turning back now! Nice. People are going to yell at you about dollar-cost averaging, though.
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Feb 24, 2014 17:14
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tuyop posted:Nice. People are going to yell at you about dollar-cost averaging, though. Counterpoint: opportunity cost of not investing  I don't know that there is ever a good time to heavily invest in anything (short of the trough of a bear market), and my time frame is long enough that it would be the negligiblest of negligibles 
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Feb 24, 2014 17:20
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Guest2553 posted:Counterpoint: opportunity cost of not investing With a long enough time frame, you should be fine. The S&P500 is at an all-time high though and the TSX is close to an all-time high.
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Feb 24, 2014 17:53
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I was hoping to buy a couple weeks ago when everything was down but oh well. I'm 28 now so if I don't touch it til retirement that's at least 37 years.
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Feb 24, 2014 18:02
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Kal Torak posted:With a long enough time frame, you should be fine. The S&P500 is at an all-time high though and the TSX is close to an all-time high. Yeah, it kinda sucks that this is the case, honestly. I've got some purchased planned, and emotionally, I really hate buying on "green days", no matter now much I try to logically convince myself about opportunity costs, etc.
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Feb 24, 2014 18:06
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So, what's the best way to invest regular contributions? Do you split the money according to your original balance or split it to restore balance to your portfolio? (assuming no transaction costs a la TD E-Series)
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Feb 25, 2014 01:31
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