Canadian Finance and Investing Thread - Paying More is our National Pastime

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Canadian Finance and Investing Thread - Paying More is our National Pastime

chang with a k: Sep 11, 2006

Lexicon, I'm curious about why/how you're contributing weekly into your index funds, but rebalancing yearly. Isn't your cash just sitting idly in your account until you rebalance? Or do TFSAs that are setup for something like TD eSeries also get interest? I've already invested in some index funds, but I'm wondering what to do between rebalancing, like putting it into a good HISA such as People's Trust or maybe into GICs.

For those who want some more information on couch potato investing and a general intro to investing, I'd recommend The MoneySense Guide to the Perfect Portfolio. It's written by Dan Bortolotti, the same guy who runs canadiancouchpotato.com.

# ¿ Sep 13, 2013 14:56

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# ¿ Apr 29, 2024 01:34

chang with a k: Sep 11, 2006

Lexicon posted:

I contribute weekly as a "savings" mechanism - the source of that money is basically out of my monthly earnings. I quite like dollar-cost averaging, which is why I contribute weekly as opposed to monthly or quarterly - and with eSeries, there's no transaction costs. My actual longer-term savings is held in ETFs.

Come rebalancing time, I'll look at the mutual fund / ETF combination, and get stuff moved over to [lower-cost] but equivalent ETFs as appropriate. But that has transaction costs, so I do it infrequently.

Does that make sense?

So you're purchasing eSeries weekly, and come rebalancing time, selling some of those off and buying more into your ETFs?

# ¿ Sep 13, 2013 15:14

chang with a k: Sep 11, 2006

Demon_Corsair posted:

I also have some money in RRSPs, does it makes sense to leave that there, or move it to my TFSA? Also is there a way to tell how much is left in your cap? I have sporadically contributed to it, so I have no idea how much room I have left in it.

It's generally not a good idea to withdraw from your RRSP early:

Investopedia posted:

http://www.investopedia.com/university/rrsp/rrsp7.asp

Taking money out of an RRSP account before retirement can be very expensive because withholding taxes often apply. If you have an RRSP and you want to take money out of it for anything other than retirement, post-secondary education expenses or the purchase of a home, you'd be well advised to think twice before you run to the bank and make a withdrawal.

...

If you're still thinking about taking money out of an RRSP early, consider this: once you've taken money out of an RRSP through an early withdrawal, you'll never be able to recontribute that amount. For example, let's say that your lifetime contributions to your RRSP total $15,000. Because you have not always made the maximum allowable contribution, you have also accumulated $30,000 in additional contribution room. If you withdraw the $15,000 and want to re-contribute that $15,000 at a later date, the re-contribution will reduce your $30,000 unused contribution room down to $15,000.

I think transferring from RRSP to TFSA is considered a withdrawal.

You can check your contribution limits on CRA's system: http://www.cra-arc.gc.ca/esrvc-srvce/tx/psssrvcs/menu-eng.html.

# ¿ Sep 14, 2013 01:02

chang with a k: Sep 11, 2006

I ran into some trouble initially trying to open a Self-Directed TFSA online through TD, using CIBC to transfer my funds.

In the end, phone support just told me to go to a branch and open the accounts that way. So all I did was go to a local TD branch, told them I wanted to open a chequing account and TD Waterhouse Self-Directed TFSA (and RRSP; note: RRSP accounts have annual fees). I had to meet with a TD financial advisor and answer a few questions about my employment, assets owned, etc., sign some papers, but the accounts were basically open by the end of the meeting. Depositing the cheque from CIBC to my TD account took a few days, but after that, everything's very easily managed through TD's online banking. I transferred the cash from my chequing account into the investment accounts, and bought the eSeries as mutual funds using their codes (TDB9xx). The orders took maybe a day to go through.

I went with the model global couch potato portfolio: Canadian, US, and International equities, and Canadian bonds, except with a different distribution, leaning more heavily on equities than bonds. Pretty, pretty, pretty good returns so far.

Baronjutter, I'd recommend reading the MoneySense Guide to the Perfect Portfolio. It's pretty good if you're new to this, and will discuss index investing in more detail. It's better than trying to piece together all the blog posts and poo poo on the couch potato website and on here, anyway.

# ¿ Oct 31, 2013 00:21

chang with a k: Sep 11, 2006

Some decent news after logging into TD Web Broker this morning:

quote:

Starting February 7 � All online and TD app trades for $9.99 flat!

Beginning February 7, 2014, it�s $9.99 flat for all Canadian and U.S. equity trades placed online through WebBroker and the TD app for mobile and tablet. Our new, low-cost and straightforward pricing means everyone qualifies.

No minimum trading activity requirements
No minimum account balance requirements
No share quantity limitations
If you�re trading more than 150 times each quarter, you�ll continue to receive additional savings of just $7.00 flat per trade.

At TD Direct Investing, we are committed to providing you with everything you need to make better, smarter investment decisions so you can achieve your financial goals. Low-cost and straightforward pricing is just one more way we�re demonstrating this commitment to you.

Thanks for investing with us!

# ¿ Feb 7, 2014 16:55

chang with a k: Sep 11, 2006

Grouco posted:

Sorry if this has been asked before, but I'm a little confused. If I can purchase ETFs for free from Questrade, and am investing for retirement, is there any reason for me to consider purchasing index mutual funds? Overall, ETFs just seem like a better deal with the lower MER.

If you already do your banking with TD, eSeries index funds are super convenient in my experience, but with TD lowering their trade fees, I'm definitely switching over to ETFs. Free ETF buys from Questrade are attractive, but I've read enough disappointing stories about their service and delays, and have been content enough with TD to stick with for now.

On a separate note, how do you guys manage your emergency funds? I have a HISA with CIBC and I've diverted all the funds towards maxing my TFSA, so I'm starting fresh and looking for a better place to stash my cash. The CIBC HISA provides decent interest (1.5%), but that's only when they decide to offer the deal on new balances. Would it be crazy to open a non-registered account, investing in index funds/ETFs, is that just too risky and/or not liquid enough for an emergency fund? I'm leaning towards an ING Direct HISA for this, but I'm interested to know what everyone else here does for an emergency fund.

# ¿ Feb 9, 2014 18:18

chang with a k: Sep 11, 2006

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 :10bux:

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

# ¿ Feb 17, 2014 00:37

chang with a k: Sep 11, 2006

Mr. Apollo posted:

I've had a few people suggest to me that I go with a TD e-series account. I currently have an RRSP account in my name with TD. It has about $18,000 in it as a mutual fund. I barely make any money with it so I figure anything I can do to lower my fees would be great. Since I have an RRSP account with money in it can I still fill out that conversion form and switch over to an e-series account? I read something about there being a $100 per year fee on RRSP accounts under $25,000.

A quick Google tells me that you can buy eSeries in a regular mutual fund account, though not sure if that includes their RRSP offering. I would assume it does, but you will have to confirm it with the bank. You might be able check it yourself by trying to purchase one of the eseries funds through online banking: TDB900, TDB902, TDB909, or TDB911. My account is with TD Waterhouse, so I don't know if the mutual fund account interface from TD is the same.

Edit: Keep in mind, TD offers two sets of index funds, eSeries and Investor series. Guess which one has higher MER? Just make sure you're buying the ones with the codes I listed above for eSeries.

As for the RRSP account fees, a self-directed RRSP will charge $100/year, but a basic RSP will charge $25/year. Both plans have no fees if you hold more than $25000. You can buy eSeries with the basic account (and other mutual funds), but if you ever plan to switch over to ETFs for the lower costs, you will need the self-directed one.

chang with a k fucked around with this message at 12:53 on Mar 10, 2014

# ¿ Mar 10, 2014 12:41

chang with a k: Sep 11, 2006

HookShot posted:

I want to get some TD E-series and use my existing TFSA contribution room (I've never had a TFSA, my contribution room is either $16,000 or $21,000, not sure which, but I wouldn't even be putting 16k in so either way I'm good).

How do I go about doing this? I went to the TD website and downloaded the application form to do it through EasyWeb, but there's only the option to do it as an RSP or non-registered. Do I have to go into the branch to get it done as a TFSA?

Thanks!!

From my own experience, the easiest thing was to book an appointment at a branch to open a TFSA with TD Waterhouse/Direct Investing. Once you've transferred the money in, you can start buying eSeries right away. I tried applying online, and it was a complete hassle ending with my account being frozen and me having to go into a branch anyway to straighten things out.

# ¿ May 22, 2014 18:38

chang with a k: Sep 11, 2006

HookShot posted:

Ok, awesome, thanks. Hopefully the branch up here will know what to do despite not being specialized Waterhouse.

Just to confirm, I'll be able to buy e-series through EasyWeb this way, right?

Yeah, I opened mine at a regular TD branch, but do make sure to tell them you're opening a self-directed brokerage account, as has been said.

You'll be able to buy the funds through WebBroker, which is quickly accessible through EasyWeb. You'll actually see your TFSA balance in EasyWeb, but clicking on the account link will take you to their WebBroker system. The interfaces are pretty similar, and you only login once through EasyWeb.

# ¿ May 22, 2014 19:24

chang with a k: Sep 11, 2006

I use Amazon.ca Chase Visa: https://www.chase.com/online/canada/amazon-ca-home.htm
2% cash back from Amazon.ca purchases, 1% everywhere else. The $20 every "2000 points" gets subtracted from your card's balance. I don't recall if there was an option to get a $20 cheque instead, if that's more your thing.
Plus if you're travelling, or purchasing something in another currency, you're only paying Visa's exchange rate.

I've been considering getting the MBNA Smart Cash, too, though, for the 2% on gas/groceries.

# ¿ May 22, 2014 20:07

chang with a k: Sep 11, 2006

reflex posted:

I want to open a TFSA TD e-series to start dabbling in the couch potato models. I do all my banking through TD and my 1% TFSA savings account has no more contribution room until January 1. Here is how I understand it to work. Can somebody please correct me where needed?

1. Go to TD branch, open a TFSA mutual fund account. Do not buy any funds yet.
2. Fill out the account transfer form and mail it in. In a week or so my TFSA mutual fund account will be converted into a TFSA e-series.
3. I can then use the money in my 1% TFSA to start purchasing products for my TFSA e-series. Would this count as a TFSA to TFSA transfer, or would it count as a withdrawal and deposit elsewhere (leading to over contributions)? I assume this is all handled over EasyWeb?

I think this was asked before in this thread, but there never was an answer. My assumption is you just need a TFSA mutual fund account. You will be allowed to purchase e-series through EasyWeb without the need to convert anything. You should probably just go to a branch and ask TD about transferring between TFSAs, and also confirm that you don't have to convert the account to e-series in order to buy them.

But you might as well just open a DI/Waterhouse TFSA instead, if you think you'll switch into ETFs down the road.

Rime posted:

Man, I made like 6% gains on my Canadian Bond E-series this month but everyone says the Canadian bond market is sketchy to put money into right now due to poo poo like the housing bubble. Second best performing was TDB911 at 3%. TDB900 & 902 were 1% and .032% respectively.

Can you actually have a trading TFSA and a High-Interest TFSA? I thought you could only have one, period, so I just went and opened a TD Direct Investing TFSA from the outset.

CRA posted:

You can have more than one TFSA at any given time, but the total amount you contribute to all your TFSAs cannot be more than your available TFSA contribution room for that year.

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/sttng-eng.html

# ¿ May 27, 2014 19:42

chang with a k: Sep 11, 2006

mik posted:

You could withdraw the $200, and you'd pay your marginal tax rate on it, which would certainly be less than $150. Then close the empty account. Other brokerages will often foot the transfer fee when transferring to them, but only when it's above a certain amount.

I did this recently with a CIBC RRSP savings account. Withdrew $25 and had to pay a 10% withholding tax. And the advisor at the branch said I would have to report the withdrawn amount when I file my tax return.

It's outlined here:
http://www.getsmarteraboutmoney.ca/...you-retire.aspx

As suggested, you should call Scotia, or head into a branch to sort out any details.

# ¿ Jun 20, 2014 22:54

chang with a k: Sep 11, 2006

Rick Rickshaw posted:

Ok, I have my TD WebBroker account setup and my RSP money transferred to my new TD RSP account. Still waiting on my TFSA money to transfer in.

I only have $3,000 in my RSP at the moment, as I used that money to buy a house. My TFSA has $8,000. However, I have roommates, so my savings rate is quite high now. Will have about $1,500 per month to invest going forward.

I'm very new to this. What do I buy? TD eSeries mutual funds? Vanguard ETFs? How long until I become a baller?

Bitcoin is coming back up up up again. We're basically at a new ground floor, so it's time to get in! Everyone's recommending ETFs? Well, wait until the Winklevii release their Bitcoin ETF! From ground floor to the moon and back again! :v:

Start reading the literature referenced in this thread if you haven't already: CCP's blog posts, the MoneySense guide to the perfect portfolio. I've seen a lot of recommendations elsewhere for the Wealthy Barber and Random Walk Down Wall Street, but can't comment on them myself.

Since you're with TD, you might as well start with eSeries allocated in some variation of the Global Couch Potato portfolio, as ETF trade commissions would be too costly for your current portfolio size.

# ¿ Jul 3, 2014 19:07

chang with a k: Sep 11, 2006

slidebite posted:

Am I misunderstanding something?

Where's that from?

Here's the direct one from iShares: http://ca.ishares.com/product_info/fund/overview/XIC.htm

BMO matched theirs to Blackrock's MERs, too. CCP posted it a few months ago: http://canadiancouchpotato.com/2014/04/22/how-low-can-etf-fees-go/

code:

Equity asset class 	BMO		iShares		Vanguard 

Canadian 		ZCN 	0.05% 	XIC 	0.05% 	VCN 	0.12%
US 			ZSP 	0.10% 	XUS 	0.10% 	VFV 	0.15%
International 		ZEA 	0.20% 	XEF 	0.20% 	VDU 	0.28%
Emerging markets 	ZEM 	0.25% 	XEC 	0.25% 	VEE 	0.33%

# ¿ Jul 10, 2014 01:32

chang with a k: Sep 11, 2006

Lexicon posted:

26 is sufficiently low that it may not be worth sheltering right now, especially if you know you have a floor on your retirement marginal in the form of a pension.

But once you're in the 40+ territory - get that poo poo sheltered.

The key, of course, is not to squander the refund on bullshit as most people do, but to treat it as the cash flow today, to be invested, that was received in exchange for giving the CRA a stake in the RRSP account in future.

Where the are you getting this 40+% tax bracket? The highest federal rate after 26 is 29, and that's it. And provincial taxes are even lower. What am I missing here? I fully admit that I know poo poo about Canadian taxes beyond the basic brackets for payroll and the capital gains rate deduction.

# ¿ Jul 14, 2014 23:05

chang with a k: Sep 11, 2006

Thanks, guys. I'm a dum dum and should've just done the math.

# ¿ Jul 15, 2014 01:49

chang with a k: Sep 11, 2006

Grouco posted:

I currently live in Alberta, and will have $48,600 taxable income this year. I'm enrolled in my companies ESPP for a 10% gross contribution, with 50% matching, for a total monthly contribution equalling $562.50. The ESPP purchases are made in an RRSP. The only options for the ESPP are RRSP or taxable.

Obviously since it's an RRSP, it is more tax efficient to contribute at a higher tax bracket than you will be making withdrawls. My tax rate is 32% for over $43,953 up to $87,907, and I expect to be in this bracket for the next few years.

Am I correct in thinking that I do not want to claim RRSP deductions to bring me below $43,953? In other words, should I make sure my 2014 taxable income stays at $43,954 or above? I can change my contribution location and % once per quarter, but it seems like such a pain to track the contributions and modify the %, or direct them into a taxable account, just to keep my taxable income at the desirable level. I'm thinking it would be easier just to let some of the deductions carry over to the next year....

Does any of this make sense? I know the gains I'm making on the shares through the match and capital gains far outweigh any minute changes in tax efficiency, but I'd at least like to make it as efficient as possible.

I would carry over some of the deductions to the next year. That link Lexicon posted to the Michael James blog about RRSP myths and taxable accounts is a good one to look over.

# ¿ Jul 30, 2014 19:11

chang with a k: Sep 11, 2006

It's less painful to just open a Waterhouse account(s). You can start buying eSeries funds as soon as you've transferred in your cash. No account conversion applications necessary. If you're opening an RRSP, just make sure it's the Basic RSP, and not the Self-Directed RSP. It's a $25/year fee and you can buy only mutual funds (including eSeries) in the Basic RSP account. For the SDRSP, it becomes $100/year, though you can buy ETFs and stocks (*Hint: open a Questrade account when you're at that stage). The fee is per account, I think. I had my TFSA maxed at $31k, but still got charged for my RSP. Not sure if having a LIRA and RSP is any different, but you should ask TD.

I spent a couple months in limbo trying to open an account through mail-ins and online applications until TD phone support just said gently caress it, go to a branch, which took about an hour of sitting with the advisor (and that included opening a chequing account and signing up for credit cards in addition to a Waterhouse RSP and TFSA). YMMV, as always.

chang with a k fucked around with this message at 01:51 on Sep 10, 2014

# ¿ Sep 10, 2014 01:47

chang with a k: Sep 11, 2006

Aagar posted:

I was in Costco on Saturday and they were handing out applications for the Capital One card, but when I said I already had a MasterCard they admitted that they would accept all Mastercards. I assume the Capital One card will just offer the tiered cash-back reward the old AMEX card did.

I asked when they would start accepting it in-store and the cashier thought it would be in a couple of weeks (the time it would take to get the Capital One cards in the mail), but she didn't sound confident. Anyone hear exactly when they will start accepting Mastercard in-store? I can't find anything definite in the press releases.

From RFD:

Exactly the same perks as the AMEX card.

A bunch of posters from RFD have also claimed to have used their MC at the warehouse and gas bar without any problems since the announcement. I don't think there's anything official from Costco out there yet, though.

Speaking of Mastercard, what's the ideal MC around here? I've been looking at MBNA SmartCash, MBNA Rewards World Elite, and Capital One Aspire Travel World. The SmartCash would be great if Costco was classified as groceries and gas, but I don't think it is?

# ¿ Sep 22, 2014 15:12

chang with a k: Sep 11, 2006

Bucswabe posted:

I see that the Canadian Couch Potato model portfolios weigh a lot heavier towards Canada. But I know there have been a lot of (convincing) arguments in this thread against putting too much weight in Canada. Is there a counter argument about why it would justified to lean almost 50% or more in Canadian funds?

Here's what CCP has to say about it:

Canadian Couch Potato posted:

Q: The Global Couch Potato has one-third of the equity allocation in Canadian stocks, but Canada makes up only about 4% of the world markets. Aren�t you guilty of home country bias? � Jeremy D.

I�m actually pleased that I�ve received this question several times in the last few months. Not long ago, it wasn�t unusual for investors to ask why anyone would invest in any country but Canada. Our domestic market was one of the world�s top performers during the first decade of the new millennium, but that�s changed: Canada has now lagged the MSCI All Country World Index by 3.4% annually over the last three years, and we�ve trailed the US over the last five.

That�s a reminder that the long-term expected returns in any developed country are more or less the same. (Since 1970, the average return on Canadian, US and international stocks are almost identical.) However, since each country�s stock market moves along a different path, a globally diversified portfolio should have lower volatility than any single country, and it should boost returns by providing opportunities for rebalancing.

It makes theoretical sense to build an equity portfolio that assigns weight to every country based on the size of its stock market. That would mean allocating about 46% to the US, about 8% each to the UK and Japan, and just 4% to Canada. Why, then, does the Global Couch Potato allocate equal slices to Canada, the US and international stocks?

I�ll admit there is some home country bias in my model portfolios. This simply acknowledges that investors all over the world feel safer holding domestic stocks, and Canadians are no different. A recent survey found they concentrate 74% of their equities in Canadian stocks, which is in line with investors in other countries. So recommending that investors go from 74% to 4% would make the Couch Potato an awfully tough sell. But there are more rational reasons for Canadians to overweight their own country:

Less currency risk. Holding foreign stocks introduces currency risk into a portfolio. Some currency exposure is a good diversifier as it lowers overall volatility, but investors who plan to retire in Canada should probably not have 96% of their equity investments in foreign currency. You can use currency hedging, of course, but this strategy is expensive and imprecise: over the long-term, currency hedging is a significant drag on returns.

That said, it�s important to consider your overall asset allocation when measuring your currency exposure. Most investors hold all of their fixed income in Canadian dollars, with good reason. So if you have a large bond allocation in your portfolio, you can afford to take more currency risk on the equity side.

Lower costs. Canadian equity ETFs and index funds are generally the cheapest to trade and to own. All Canadian ETF providers charge much more for US and international equity funds. While Canadians can (and should) use US-listed ETFs with very low management fees to get exposure to foreign stocks, the cost of trading in US dollars can be high. If you go this route, you certainly need to make an effort to reduce the cost of currency conversion.

A fund�s internal trading costs are also higher in some international markets (especially emerging countries) where stocks may not be as liquid as they are in Canada and the US. Foreign withholding taxes also take a bite out of international funds. This helps explain why the tracking error on international equity ETFs are often higher.

More favourable tax treatment. Because of the tax credit on eligible Canadian dividends, there is an excellent case for overweighting Canadian stocks in a taxable account. Foreign equities are not only ineligible for this credit, they are also subject to withholding taxes on dividends, often in the range of 10% to 15% (these may be recoverable).

If you�re investing in an RRSP, you probably know you�re exempt from the withholding tax on US securities. However, if you hold US stocks through a Canadian-domiciled mutual fund or a Canadian-listed ETF, you will still pay the withholding tax, even in an RRSP. It�s also important to know that RRSP investors are not necessarily exempt from the withholding taxes of countries other than the US, so the returns on international stocks will suffer slightly in an RRSP.

Simplicity. Remember that asset allocation is not about precision. It�s important for Canadians to get significant foreign equity exposure because our market is so poorly diversified, but the exact proportions are not that important. The equal allocation in the Global Couch Potato is a simple solution that gives you plenty of diversification and still keeps rebalancing easy.

I'm still trying to get my head around currency risk, but the other three reasons are kind of moot if you're using eSeries in a registered account.

# ¿ Sep 25, 2014 00:13

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# ¿ Apr 29, 2024 01:34

chang with a k: Sep 11, 2006

Bizarro Buddha posted:

Quick question to see if anyone thinks I'm making a mistake here. I bank with TD and they suggested I open TD Waterhouse accounts instead of opening a mutual fund and converting to e-Series, because the Waterhouse account can trade e-Series funds and other things, and I don't have to do the conversion process. Has anyone else done this?

Yup. A TFSA with Waterhouse won't have the annual admin fee, but with an RRSP you'll be charged until your balance is over $25K . Full schedule here: https://www.td.com/ca/document/PDF/forms/521778.pdf

# ¿ Oct 28, 2015 18:34

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Canadian Finance and Investing Thread - Paying More is our National Pastime