RRSP or TFSA. Where to put more $$

[Xtrema]

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You're only considering tax at inception but also have to be mindful of tax efficiency on redemption.

What happens if those investments grow to $450K and you need to withdraw?

Depends on the stage of your life. If you need money to start home ownership or business, TSFA is better. If you know you are a lifer salaryman in one way or another, do up your RRSP and then put tax refund and then some into TFSA.

Most people work til 60 and live til 90+, you got plenty of time to empty out your RRSP to see lowest possible income tax. And if you are so fucking loaded and still end up in same bracket as $ you put into RRSP, you still got the compound gain.

End of the the day RRSP:TFSA allowance is ~ 5:1 right now. You can max out TFSA quite easy. I can understand some don't leverage RRSP if their income in the lowest 2 brackets, but once you hit $100K+ it's hard not to put at least some into RRSP.

[killramos]

Yea the commercials make them seem super desperate.

It’s just generic advice, I also seldom ( and in this case don’t, I use RBC DI personally ) follow my own advice.

All I know is if you have all your money parked in some manulife corporate group savings plan mutual fund portfolio you are almost certainly paying too much in fees and there ARE better options out there that are dead simple to use.

[riander5]

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Yea the commercials make them seem super desperate.

It’s just generic advice, I also seldom ( and in this case don’t, I use RBC DI personally ) follow my own advice.

All I know is if you have all your money parked in some manulife corporate group savings plan mutual fund portfolio you are almost certainly paying too much in fees and there ARE better options out there that are dead simple to use.

100%

Those commercials are targeted at people one step above folks that are hunting for the best high interest savings account

[suntan]

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Yea the commercials make them seem super desperate.

It’s just generic advice, I also seldom ( and in this case don’t, I use RBC DI personally ) follow my own advice.

All I know is if you have all your money parked in some manulife corporate group savings plan mutual fund portfolio you are almost certainly paying too much in fees and there ARE better options out there that are dead simple to use.

Other than GUI and availability of no-load MFs (Mawer) there's very little difference between them all. Having said that CIBC's interface is horrible and everybody should avoid them.

I guess the only thing you might want to worry about is with the low-fee sites you have to be careful when buying stocks that you don't take liquidity away otherwise you'll get dinged.

[birdman86]

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It's simpler and you don't have to worry about possible issues with your funds like foreign withholding taxes or a whole bunch of other complexities? I don't personally hold any mutual funds but ETF's are not exactly for everyone either. That and certain ETF's are orders of magnitude riskier than holding individual securities...

It's worth looking into robo-advisors, RBC has InvestEase...also WealthSimple I think - I haven't used one but when it seems like its about a 1% fee all in, including the ETF fees. Answer a short questionaire to establish risk tolerance and needs, contribute cash, they allocate automatically to a bunch of iShares ETF's. No commissions either.

Or Couch Potato investing if you want to go even cheaper and skip active management fees entirely. Just pick your bonds vs equity allocation and buy the matching ETF's. At its worst you only own two ETF's, VEQT and VAB. But there's literally one single ETF to buy for the major allocations (ie VGRO = 80% equity, 20% bonds). Do it in Questrade to get no commissions on ETF's too (I think? I don't use QT)

They're so simple a monkey could do them, and both methods will be under 1% fees. All Canadian listed ETF's so no tax issues to worry about.

[holden]

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Those god damn quest trade commercials! Their product is fine, and sure you save some fees, I just hate their commercials every time I see them

'The amount we save.... could be life changing'

Ok Betty, the 1% fees you save on your 500k retirement account isnt going to change your life why don't you chill out

Maybe not life changing, but 1% of 500k compounded for 25 years is over $140k. I'd rather have it, then not have it.

[mazdavirgin]

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It's worth looking into robo-advisors, RBC has InvestEase...also WealthSimple I think - I haven't used one but when it seems like its about a 1% fee all in, including the ETF fees. Answer a short questionaire to establish risk tolerance and needs, contribute cash, they allocate automatically to a bunch of iShares ETF's. No commissions either.

Or Couch Potato investing if you want to go even cheaper and skip active management fees entirely. Just pick your bonds vs equity allocation and buy the matching ETF's. At its worst you only own two ETF's, VEQT and VAB. But there's literally one single ETF to buy for the major allocations (ie VGRO = 80% equity, 20% bonds). Do it in Questrade to get no commissions on ETF's too (I think? I don't use QT)

They're so simple a monkey could do them, and both methods will be under 1% fees. All Canadian listed ETF's so no tax issues to worry about.

You're proving my point... There's foreign withholding tax on VGRO. The MER is not the only thing you have to worry about. If you hold VGRO in a registered account the MER + foreign withholding tax on the US/international component brings the annual cost to ~0.50%. Does that matter? Depends but if you think your annual cost is just the MER when holding the above ETF you're dead wrong.

I'm not saying don't buy ETF's just that they are arguably more complex as shown...

[killramos]

I feel like debating the detailed tax efficiency of foreign holdings within ETF’s is so far and gone past the point when discussing overly high mutual fund and portfolio fees it’s not even worth bringing up.

[msommers]

I was paying nearly 2.5% MER and now just tossed everything in VGRO. I arguably do even less than I did before and have better returns.

[rx7boi]

So what I got from this thread update is all of you like ETF's more than hookers and blow.

[88CRX]

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why would you buy a mutual fund when you can buy an etf?

That is literally the question being asked LOL. When I was young and dumb (or at least younger and dumber) I just threw monthly contributions into some random/shitty RRSP to get started... well now its grown and I need to figure out WTF I'm doing with it.

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Really? Because they have funds with ridiculously low fees that are only available to company group plans. My wife's employee fund used them too and I was jealous - their bond fund had an insane MER of like 0.01% or something.

The Sunlife mutual fund my works been dumping into has a "Fund Management Fee" of 1.99%. And all the different funds vary between 1.7-2% roughly.



EDIT: thanks the feedback everyone else. Guess I know what I'm doing this weekend. ETF research haha

[suntan]

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The Sunlife mutual fund my works been dumping into has a "Fund Management Fee" of 1.99%. And all the different funds vary between 1.7-2% roughly.

Gah, somebody at your work screwed up hard. They have super-mega-low MER funds for corporate clients. They should be available to your company.

[88CRX]

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Gah, somebody at your work screwed up hard. They have super-mega-low MER funds for corporate clients. They should be available to your company.

Its a small company if that makes any difference.

There are also other 'fees' that are based on the companys setup with sunlife (according to google). Regardless I'll be checking with our accountant next week.

[ExtraSlow]

Seems like some people don't understand the difference between the TYPE of account and the PRODUCT you purchase inside that account. That's a pet peeve.

[Euro_Trash]

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EDIT: thanks the feedback everyone else. Guess I know what I'm doing this weekend. ETF research haha

Rob Carrick does a decent analysis every year on ETF's - would recommend googling. Takes a lot of the leg work out.

[msommers]

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So what I got from this thread update is all of you like ETF's more than hookers and blow.

I'm a Couch Potato Whore

[killramos]

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So what I got from this thread update is all of you like ETF's more than hookers and blow.

ETF’s keep us in hookers and blow

[blownz]

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End of the the day RRSP:TFSA allowance is ~ 5:1 right now. You can max out TFSA quite easy. I can understand some don't leverage RRSP if their income in the lowest 2 brackets, but once you hit $100K+ it's hard not to put at least some into RRSP.

I totally agree with you. Most people retired will be in one of the first two tax brackets which means you are at 25% or 30.5%. And while working will be at least two brackets higher. If you make over $98k you are in the 36% plus range and it makes sense to get the return at that rate and later pay less.

Although if you make ~$95K and have a really good pension and expect to make ~$60K when retired (so same tax bracket) it doesn't make sense to focus on RRSP's. Better TFSA and tax efficient unregistered account to help keep you from getting too close to OAS clawback.