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edit: said something someone else did already
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Oct 6, 2020 14:04
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Cold on a Cob posted:Get a broker - you'll get a better rate if you don't go to the big banks, but yeah larger down payment doesn't mean much once you hit 20% unless you want to buy >1M. Maybe someone in the thread can recommend one if you mention the city you're looking in. Toronto.
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Oct 6, 2020 16:16
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redbrouw posted:I had the good luck of finding out my wife's parents are super keen on getting her into a home. They've pledged 220k and we've put together another 200k. I never thought I'd have anywhere near this kind of money so I learned NOTHING about real estate and put everything extra into a TFSA. And I live pretty lean, so we started to put together decent savings for retirement. But with her parents offering to jumpstart us, it seems like we could finally jump out of nightmarish 1 bedroom apartment living. I'm awake at night and now that she's working at home we have to tiptoe around to not cause noise while the other is sleeping and it's just no way to live, man. Can't even do our hobbies. Or barbecue. And both of our jobs are only ever going to be in the city, so we're here to stay. To answer your number one, I just did basically the same thing you did, albeit with higher income and less of a down payment (we put down 20%). My mortgage payment, including my property taxes, is $300 more a month than my rent used to be, and I'm in a MUCH better spot. Interest rates are so insanely low right now. Number two will depend on your lender. I'm with CIBC and can prepay 10% of my mortgage each year. With rates being so low I don't really want to prepay more than that (money put in the market will almost certainly earn more than the 1.9% I'm paying on my mortgage) so I'm ok with it, but I also am making some prepayments so in five years my balance will be a lot lower for my own peace of mind. I'm waiting until spring to get a BBQ.
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Oct 6, 2020 16:32
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Sassafras posted:The best card for the past decade (Capital One Aspire Travel, 2% on absolutely everything, great insurance benefits, and some extra stuff) just self-imolated by reducing rewards to 1.5% and everyone with the grandfathered $20 annual fee net of rewards now pays 120 ... That's with an effective date of Aug 5 everywhere but Quebec (Sept 6) and I'd expect similar fallout in the near future for the two or three other cards left that paid 2% with fewer perks due to general industry wide reductions in merchant fees. A few of the other cards that usually don't verify incomes have announced plans to downgrade you if your total annual spend isn't large enough, too. Take that, retired mother and also little sister who were just telling me they had the top tier President's Choice Financial one the other day! Capital One's followed up on this by eliminating the "multiple redemption" loophole in the last few days - it let you burn (for example) $200 of cashback against a $50 travel charge by repeating the redemption four times. I'm slightly ashamed to admit I've redeemed hundreds of dollars against a single airport parking charge from picking someone up on more than one occasion. (If you happen to have a really large travel charge, you appear to be able to do multiple partial redemptions against it until you hit the full amount.)
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Oct 6, 2020 21:42
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Our broker said that some providers actually give you better rates if you put less down since they'll be making more on the interest. I don't know that putting down >20% would necessarily get you any better rate
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Oct 6, 2020 23:27
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That said definitely put 20% down if you can, avoiding cmhc insurance fee is worth it.
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Oct 6, 2020 23:41
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Cold on a Cob posted:That said definitely put 20% down if you can, avoiding cmhc insurance fee is worth it. I wouldn't be so sure. I think it really depends. Looking on ratehub, cmhc charges a bank 60 bps to insure a loan with a LTV up to 65%. Effectively this means a bank might pay 0.6% to cmhc to cover the risks on loans that have only paid down less than 65%. So assume a bank wants very much for their loans to be insured. If you put down 19 percent the borrower pays 2.8% cmhc insurance bank pays nothing. If you put down 35% bank pays 0.6% borrower pays nothing (directly). High level, bank might be willing to give you a rate 0.6% lower to reduce your downpayment. You have to add 2.8% to your loan, but save 0.6% a year for 5 years. I know there's a lot of what ifs and assumptions that would go into that, but I do think it's worth looking into.
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Oct 7, 2020 01:03
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Optimal mortgage rates get slightly cheaper when you have 35% down instead of 20%, I imagine because lenders pay more for insuring at 78% LTV than 63% (and universally insure eligible loans - <1m - due to securitization / OSFI capital requirement reasons) Lower LTV (loan to value) means lower risk of lender loss, bigger down payment, etc.
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Oct 7, 2020 01:17
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Yeah, most of the money is contingent on it being for a house, even a chunk of my side of it. So, really, there's no opportunity cost for not throwing at least 370ish in cash at the house right off the bat. I could save about 50k of my own personal money as the emergency fund, but I doubt that's going to provide a better rate. As of right now, the monthly costs for a 400k 5 year fixed closed mortgage, plus property tax, utilities, etc would only be about 32% of our low side income (I technically could assume I have more since I have every year in the past, but, corona makes me wary) after tax. So we have plenty of time to build up a decent emergency fund. I think we'd have at least 5000 in emergency funds right off the bat, and we both have nearly perfect credit.
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Oct 7, 2020 01:19
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Sassafras posted:Optimal mortgage rates get slightly cheaper when you have 35% down instead of 20%, I imagine because lenders pay more for insuring at 78% LTV than 63% (and universally insure eligible loans - <1m - due to securitization / OSFI capital requirement reasons) This is good to know, thank you. In this case does amortization period matter e.g. 30 years vs 25?
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Oct 7, 2020 12:18
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Cold on a Cob posted:This is good to know, thank you. In this case does amortization period matter e.g. 30 years vs 25? I think yes because only 25 year amortizations are insurable through CMHC (when financial institutions are footing the insurance bill, too), but not 100% sure.
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Oct 7, 2020 14:05
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Sassafras posted:I think yes because only 25 year amortizations are insurable through CMHC (when financial institutions are footing the insurance bill, too), but not 100% sure. Does that matter with 35% down though? Is CMHC still insuring at that point anyway? I thought once you hit 20% they are out of the picture.
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Oct 7, 2020 14:09
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Cold on a Cob posted:Does that matter with 35% down though? Is CMHC still insuring at that point anyway? I thought once you hit 20% they are out of the picture. Out of the picture so far as the buyer is concerned but lenders still have reason to pay to insure loans, themselves. Beat thing I found quickly that talks about this ("portfolio insurance") is a bit old - https://www.canadianmortgagetrends.com/2012/02/changes-coming-due-to-cmhc-mortgage-insurance-limit/ Subsequently, in 2016, the rules changed so that only properties with a purchase price under a million were insurable, period.
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Oct 7, 2020 14:22
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I recall asking about this in the past but wanted to check if things have changed. I want to get away from my current broker that charges absurd management fees and move to Vanguard's balanced portfolio. I've read through the Canadian Couch Potato and I have some questions I'm hoping someone knows the answers to: 1. What's the best online broker to use? They all seem to require equivalent fees per trade and a similar minimum investment. 2. After I've set up my online broker account, how do I actually go about transferring to Vanguard? Do I have to buy a vanguard product first, then contact my current broker and tell them to transfer? I'm really not sure about this. 3. If I've read this correctly, with a Vanguard ETF Balanced item, if I transfer my current investments into the ETF, I can't actually add to the investment with additional dollars. I can, on the other hand, just buy more? I'm not sure I understand the difference. Unless it breaks apart the total invested? So, if I transfer, for example, $20,000 from current investments and buy $20,000 more, I have $20,000 x2 instead of $40,000?
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Oct 9, 2020 17:19
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Vasler posted:I recall asking about this in the past but wanted to check if things have changed. 1. I like Questrade because buy orders for ETFs (like the Vanguard balanced portfolio ETF, VBAL.TO) are free, and I'll rarely be doing sell orders until I retire. 2. You set up your account, transfer funds (cash) into your trading accounts from your bank, and then buy shares in the ETFs using the trading platform the same way you would buy a company's stock. 3. To increase your investment in the fund you buy additional shares in VBAL.TO
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Oct 9, 2020 18:37
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Vasler posted:1. What's the best online broker to use? They all seem to require equivalent fees per trade and a similar minimum investment. They're roughly interchangeable and you won't be trading often. I'm at Questrade for the cheap fees. quote:2. After I've set up my online broker account, how do I actually go about transferring to Vanguard? Do I have to buy a vanguard product first, then contact my current broker and tell them to transfer? I'm really not sure about this. You can transfer cash and/or investments "in kind" between brokerages. Either way requires contacting the brokerages to initiate the transfer. The most straightforward is probably selling investments at current brokerage, then transfer all the cash to new brokerage, then buy new investments at new brokerage. (If you're trying to min-max, it might end up being cheaper to transfer in kind and then sell, depending on fees at the respective brokerages.) quote:3. If I've read this correctly, with a Vanguard ETF Balanced item, if I transfer my current investments into the ETF, I can't actually add to the investment with additional dollars. I can, on the other hand, just buy more? You generally buy whole shares in an ETF. So you won't transfer your $20k invested, you'll sell your $20k of whatever you have now into cash, then buy $20k worth of shares in VBAL. You'll have some dollars and cents left over, the remainder after dividing by VBAL's current share price.
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Oct 9, 2020 19:30
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pokeyman posted:The most straightforward is probably selling investments at current brokerage, then transfer all the cash to new brokerage, then buy new investments at new brokerage. (If you're trying to min-max, it might end up being cheaper to transfer in kind and then sell, depending on fees at the respective brokerages.) If you do this, mind that you may realize gains/losses even if you end up with a very similar portfolio. If you’re careful to end up with exactly the same securities then I think it would be a wash sale under tax law, but because each institution will only see one side of the paired transactions they’ll issue and report T5s and then you have to clean it all up when you file.
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Oct 9, 2020 19:38
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Just want to clarify because this can be very important: if you have 20k invested in whatever already in some registered account (probably a TFSA or RRSP), and you're wanting to start a Questrade registered account of the same type, you get Questrade to transfer these assets into the new account for you when you start the account. Do not pull your current investment into cash and then put that cash in your new Questrade account to buy the shares with - this will count as a 20k withdrawl and then a 20k contribution. In a TFSA, this would mean you lose 20k of headroom for contributions until the next year when the +20k limit is credited from your withdrawl. You're able to sell the assets to cash within the registered account if you wanted (or if it was a type of investment for which Questrade can't hold it) and have them transfer those funds into the new account without actually withdrawing it. Questrade makes it very easy to transfer these assets and I think it's free when you start the account.
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Oct 9, 2020 19:44
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VelociBacon posted:In a TFSA, this would mean you lose 20k of headroom for contributions until the next year when the +20k limit is credited from your withdrawl. And if you’ve already contributed this year, or the numbers don’t work out well, it can put you into overcontribution and lovely fines territory.
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Oct 9, 2020 19:47
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Thanks everyone! I think the first step for me is to open a Questrade account and see how I get Questrade to transfer my existing investments over. Probably something I'm going to need to look at to understand in more detail. My current investments are with Credential and I have no idea how difficult it will be to get out of there.
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Oct 9, 2020 21:01
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Probably not difficult at all. You just give QT the account info and they do all the work.
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Oct 9, 2020 21:09
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Also, Questrade will rebate transfer fees from your current institution (up to $150) when you transfer accounts overhttps://www.questrade.com/about-us/programs-promotions posted:Transfer your account for free
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Oct 9, 2020 21:30
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I've done it a couple times when leaving employer funds that I had to use, and it's super easy. The QT support team is pretty good for this stuff.
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Oct 9, 2020 21:53
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I used to pimp VirtualBrokers from dusk til dawn, but now that I have both a VB and QT account, I can sincerely say that QT surpasses VB in terms of customer service, server reliability (you think video game bugs are stressful? TRY GETTING hosed ON BUGS IN STOCK PURCHASES), and general ease of use (VB doesn't have those paid-for transfer fee rebates that I've ever heard of). Day-to-day cost and fees are the same (aka functionally zero) though.
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Oct 10, 2020 00:32
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So.... Had a chat with someone over thanksgiving and found a relative of mine does their own self directed investing.. which I thought was cool as I had no idea anyone else in my family did. Problem though, they are to the point of having health issues with stress over the presidential election and the market effects wants to cash out most of their equity based investments (mostly ETF from the sounds of it) until January. Of course I mentioned long term, don't time the market, etc, but it's something they seem pretty set on doing. Is there an ETF that is relatively "safe" to dump non-insignificant sums of money (probably mid 6-figures?) into for the short/medium term? They could easily sell and keep as cash in the acct and sit on it of course, which is what I think the plan is, but buying *something* might be worthwhile.
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Oct 14, 2020 19:40
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Honestly just let them pull to cash for a couple months. Imagine if you give them advice and they follow it and they lose money.
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Oct 14, 2020 22:39
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slidebite posted:So.... They need to talk to an advisor because their portfolio doesn’t match their risk profile. Don’t be their advisor.
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Oct 15, 2020 01:00
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I think those are both good points and I will follow the advice. That said, for myself, is there such thing as a bond/GIC ETF? I've got some room and I'm on the fence until after the election in case god drat mayhem happens in the US.
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Oct 15, 2020 01:08
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cowofwar posted:They need to talk to an advisor because their portfolio doesn’t match their risk profile. Don’t be their advisor. Why do they need to pay 2% to take a short quiz that tells them they should be conservative-moderate not balanced-growth?
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Oct 15, 2020 01:21
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slidebite posted:I think those are both good points and I will follow the advice. Yes, off the top of my head I think VBND and XBND are the 100% bond ETFs
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Oct 15, 2020 01:27
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Jenkl posted:Why do they need to pay 2% to take a short quiz that tells them they should be conservative-moderate not balanced-growth?
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Oct 15, 2020 01:35
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Do bonds even outperform GIC or HISA right now? What is the risk free rate currently?
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Oct 15, 2020 02:09
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VelociBacon posted:Do bonds even outperform GIC or HISA right now? What is the risk free rate currently?
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Oct 15, 2020 02:17
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odiv posted:So that op can be clear of any blame. That's an expensive way to avoid blame, but I dig it. If ops relationship with relative is loose enough that they're just finding out it may not be strong enough to be mixing finance into it. Treasuries and highly rated bonds are not yielding more than a HISA like eq (@ 1.5% now). You'd need to be taking on at least some risk. Also I'd point out that bond etfs do not really behave exactly as you'd expect, and can be sensitive to interest rate movements and demand. If you're looking to lock in certain yields you may be better off looking to hold bonds directly. Edit: that sounds cool Luke I'd not heard of that! Gonna check it out.
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Oct 15, 2020 02:18
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Jenkl posted:Why do they need to pay 2% to take a short quiz that tells them they should be conservative-moderate not balanced-growth? They've honestly proved that they are not capable of assessing their own risk tolerance and portfolio; consequently, self-management is not for them. Yes they will lose 2% or whatever which is better than knee-jerk withdrawals that could lost them 20%.
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Oct 15, 2020 02:25
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Buy/hold wisdom notwithstanding, recognizing the effect one particular world event is having on your ability to make financial decisions and choosing to sit out for a specific timeframe does not prove anything. Back of the envelope (rough) math to make a point: average return is 7%. US elections happen once every 4 years. If they react this way, each time (sitting out 3 months) they give up 1.75% return, every 4 years, instead of 2% every year. Of course it's much more likely they have or will react emotionally to other factors and you're right. I just really, really hate the advisor industry - the incentives are completely hosed up.
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Oct 15, 2020 02:46
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Jenkl posted:Back of the envelope (rough) math to make a point: average return is 7%. US elections happen once every 4 years. If they react this way, each time (sitting out 3 months) they give up 1.75% return, every 4 years, instead of 2% every year. Returns are nowhere near uniformly distributed over time. You only get the average return if you stay invested. Being out of the market on the four days that effectively contribute the year's net return will cost you much more than 2%.
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Oct 15, 2020 06:48
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To be fair, I think this year has real potential to be extraordinary and peace of mind has a value that could easily outweigh the opportunity cost of sitting out for a couple months.
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Oct 15, 2020 07:14
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I mean, that's another way to say "this time it's different". And maybe it is! I have no way of knowing. I think cowofwar is right that they're learning that their risk tolerance isn't aligned with their portfolio. Maybe that suggests paid advice, maybe it means rethinking their asset allocation on their own (or with your advice).
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Oct 15, 2020 07:21
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pokeyman posted:I mean, that's another way to say "this time it's different". And maybe it is! I have no way of knowing. It sounds to me like they just overestimate their ability to avoid risk by active management of their portfolio. I've made the same mistake. I can't help but feel that if you administered a risk assessment tool to this individual they'd just answer it in such a way as to place themselves into a high risk tolerance group anyways.
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Oct 15, 2020 07:35
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