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Advice needed - Investments (TFSA, RRSP and non-registered)

  • Last Updated:
  • Mar 15th, 2018 12:00 pm
[OP]
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Jul 30, 2015
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Advice needed - Investments (TFSA, RRSP and non-registered)

Good afternoon,

I am looking for advices in order to maximise returns over long term for my TFSA, RRSP and Nonreg. I feel like I am paying unnecessary fees currently.

I am currently investing in this portfolio at National Bank https://www.nbc.ca/content/dam/bnc/en/p ... es/982.pdf

Both TFSA and RRSP maxed and around 40K in non registered account. Total amount is 150K. Total fees is 1.60% for all accounts.

Now... I am interested in the new Vanguard ETF VGRO(that I would be buying using my TD Direct Investing account) OR Wealthsimple(black?) Growth Profile because of the lower fees.

Time horizon is 20years+(maybe 30years... I am 26 years old) so 1%+ less in fees would make a big difference I bet over that period of time. I will be making contributions regularly (around 3K per month).

What would you guys do ? Stay at National Bank ? Switch to Wealthsimple ? Or buy VGRO ETF ? Keeping in mind I already have a TD Direct Investing account ?

Thank you !!
Never argue with stupid people, they will drag you down to their level and then beat you with experience.
43 replies
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Latitude57 wrote: What would you guys do ? Stay at National Bank ? Switch to Wealthsimple ? Or buy VGRO ETF ? Keeping in mind I already have a TD Direct Investing account ?
Out of these choices, I’d pick VGRO. But, since you already have a TD DI account (and one of the accounts is non-reg) - did you consider TD eseries (at least for regular contributions): https://maplemoney.com/td-e-series-funds/ ?
[OP]
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I did, with CCP model but thing is, I have to manually rebalance the portfolio which I don't think I have the patience doing. I like the fact that I don't need to do anything with Wealthsimple or VGRO ETF. Do you think following CCP with TD Eseries would give better return over long term? Is it ''safer'' than putting everything in VGRO ETF ?

There's another issue, I think there is a 9.99$ fee with TD every time I'll be buying VGRO..... 9.99$ every 3000$ is a lot ? I saw that National Bank Direct Brokerage has 0$ commission on ETF purchases, if I go with that option I may have to buy them using National Bank Direct Brokerage, Questrade, etc.

On non registered account, does Tax loss harvesting make a big difference ? Is it something worth paying 0.5% fee ? (with Wealthsimple?) soon the non registered account will be over 50 000$ in balance

Sorry if I'm all over the place..
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Latitude57 wrote:
There's another issue, I think there is a 9.99$ fee with TD every time I'll be buying VGRO..... 9.99$ every 3000$ is a lot ?
Its not great but its a one time expense of 0.33% on a 3000 purchase. That commission plus the 0.24% mer would still be just 0.57% in year 1 which would be lower than wealth simple.
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Feb 9, 2018
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I would suggest opening Registered and Non-Registered self-directed account at Questrade. Should take 10-15 minutes. All account documentation including signatures will be digital. No commission to buy ETFs. They should cover your existing accounts transfer fee up to $150 from other bank. Then you can either buy ETFs as per CCP model portfolio or simply buy VGRO. If all this is still too much of a hassle, then as another user mentioned, go with TD e-series. Little more MER but peace of mind.
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With regards to non-reg acount, here’s the post I remembered: http://canadiancouchpotato.com/2017/01/ ... ng-easier/
Investing in a non-registered account involves a lot more hands-on work than RRSPs and TFSAs. While there’s no such thing as a maintenance-free taxable portfolio, you can certainly make your life easier with a few simple strategies:

1. Consider alternatives to ETFs. Make no mistake: ETFs are generally tax-efficient and they can be a great choice in non-registered accounts. But if you’re a novice index investor, consider other good products that require a lot less recordkeeping. Mutual funds, for example, track your adjusted cost base at the fund level, rather than relying on you or your brokerage to do all the work. In most cases, you won’t have to make any manual adjustments for return of capital or reinvested capital gains. So if you use the TD e-Series index funds in your taxable portfolio, you will find them easier than ETFs.

Another option, if you’re holding fixed income in your taxable account, is to use GICs instead of a bond ETF. There are some tax-efficient bond ETFs available, but again, you will have to do a little work to ensure the book values are accurate. Whereas with GICs there are never capital gains or losses: all you need to do is report the interest indicated on your T5 slip.
[OP]
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Ok thanks all. Well, with that last post, I kind of got scared so I might go with TD e-Series for Non Reg and go VGRO for TFSA and RRSP ? I'll rebalance my Non reg account once a year. This way I stay with TD for all accounts, and there will only be one transaction for TFSA and one for RRSP, so barely 20$ in transaction fee.

I don't get how e Series index funds are easier to deal with than ETF tho ? Can someone explain or post a link ? Is it because you get more details on fees, dividends, etc. at the end of the year on your ''statement'' ?

Also, why go with TD e Series and pay 0.42% MER(following CCP) while Wealthsimple is 0.5% and 0.4% over 100K ? What makes one more attractive than the other excluding fees?
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Latitude57 wrote: I don't get how e Series index funds are easier to deal with than ETF tho ? Can someone explain or post a link ? Is it because you get more details on fees, dividends, etc. at the end of the year on your ''statement'' ?
The only explanation I can think of is because ETFs might have “phantom” distributions that would have to be calculated manually: https://www.theglobeandmail.com/globe-i ... e29574794/ . VGRO is too new to know if it’ll have them or not.

Does Wealthsimple provide these ACB bookkeeping services for you? If it does, maybe it’s a better option than e-series.

How was your non-reg account handled by National bank? If it’s easier there, maybe you can keep the non-reg with them for the time being - and only move RRSP and TFSA to TD? At least until you get a hang of buying ETFs - and VGRO gets some history :)
[OP]
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Thank you very much for your help.

With National Bank everything is calculated on the statement, I pretty much have nothing to do. Problem is, if I keep it, I'll be stuck again with 1.6% fee... Even worse, if I transfer RRSP and TFSA balance, fee will increase to around 1.8% (the less you have, the more you pay in %)

So the only downside of ETF would be that I need to calculate ACB manually. I'll read a bit more on that, those 0.2% or less fees are tempting and your link helps me a lot understanding. As for Wealthsimple, according to their website, ACB is calculated automatically. Honestly I didn't even know ACB wasn't provided with ETF Crying Face it adds a bit of work.

So, you need to calculate ACB in order not to get taxed on reinvested distribution or dividends, which would be seen as capital gain otherwise?
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Latitude57 wrote: So, you need to calculate ACB in order not to get taxed on reinvested distribution or dividends, which would be seen as capital gain otherwise?
Yep, in a nutshell - and it only matters when you sell :) You seem to be catching up quickly, maybe you’d want to consider swap-based Horizon ETFs? No dividends or distributions, perfect for non-reg accounts (in fact, designed for them!), low(er) MERs - and for people who don’t need the income (yet). This way you’d be buying VGRO in TFSA and RRSP and 3-4 more ETFs in non-reg (I think you can skip the bonds one for now :)) See if this makes sense: https://www.milliondollarjourney.com/a- ... ccount.htm

(I’m buying HXT in our non-reg if it helps :))
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Le portfolio n'est pas approprié pour ton profil --- 26 ans, pas besoin de l'argent pour longtemps. Beaucoup trop de "fixed income". En plus, les frais sont très élevés.

La recommandation de t'ouvrir un compte Questrade m'apparaît bonne.

Ensuite, tu mets tout dans un portfolio "couch potato", genre 80% XAW, 20% VCN.

Pour la question du "re-balancing", quand tu as de l'argent à ajouter à tes comptes, tu le mets dans l'un ou l'autre des ETFs en fonction de la diversification que tu veux. Tu n'as pas besoin de vendre un ETF pour mettre dans l'autre. Tu ajustes ta proportion au fur et à mesure en fonction de tes nouvelles contributions.
Last edited by John47 on Feb 18th, 2018 1:41 am, edited 1 time in total.
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John47 wrote: Tu mets tout ton REER dans XAW pour éviter les "foreign withholding taxes".

You put all your RRSP in XAW to avoid "foreign withholding taxes".
(Thanks to google translator.. :)) Sorry, but the only way to avoid paying foreign withholding taxes is to buy US-listed ETFs in RRSP. With XAW they’re still payable:
For investors who use XAW, the drag caused by foreign withholding taxes is somewhat smaller, because not all of its stocks are held via US-listed ETFs. But the overall cost is still substantially higher than it would be if you held the underlying funds directly in your RRSP.
http://canadiancouchpotato.com/2016/06/ ... nada-etfs/

(No arguments with your advice otherwise.. :))
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Feb 2, 2018
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The fixed advisor fees should be tax deductible so if you have a high income tax bracket + a fast increasing portfolio, they will drop a lot. The National Bank fees looks pretty good; RBC's start off higher and the next bracket is 500K. At that point, it's lower overall fees than the CCP Tangerine method, but still higher than self-directed ETF purchasing. Of course, the advisor is also supposed to create and adjust a investment plan depending on what's happening in your life, synergize the banking and investing (budgeting, auto-contributions), as well as provide general financial/tax advice.

What I don't like is that the bank affiliated advisors tend to suggest products by their own institution. Though I've been told that at a certain level of accreditation, the advisor should be able to offer products from any institution.

Kinda on the subject with the CCP strategies for retirement savings, is anyone concerned with the long-term implications of index investing? It's growing at a tremendous pace and it's already starting to distort the market. Companies who can make the cut instantly jump in value, and tend to see gains as long as they stay high enough to attract the index investors. Short-term, looks to be a terrific for anyone subscribing to CCP, but if we're talking about 35 years down the road...
[OP]
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freilona wrote: Yep, in a nutshell - and it only matters when you sell :) You seem to be catching up quickly, maybe you’d want to consider swap-based Horizon ETFs? No dividends or distributions, perfect for non-reg accounts (in fact, designed for them!), low(er) MERs - and for people who don’t need the income (yet). This way you’d be buying VGRO in TFSA and RRSP and 3-4 more ETFs in non-reg (I think you can skip the bonds one for now :)) See if this makes sense: https://www.milliondollarjourney.com/a- ... ccount.htm

(I’m buying HXT in our non-reg if it helps :))
This is really interesting, are you only buying HXT ? I would think a 3 ETF portfolio with HXT, HXS and HXDM is better over long term ?
Never argue with stupid people, they will drag you down to their level and then beat you with experience.
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CloudReader wrote: The fixed advisor fees should be tax deductible so if you have a high income tax bracket + a fast increasing portfolio, they will drop a lot. The National Bank fees looks pretty good; RBC's start off higher and the next bracket is 500K. At that point, it's lower overall fees than the CCP Tangerine method, but still higher than self-directed ETF purchasing. Of course, the advisor is also supposed to create and adjust a investment plan depending on what's happening in your life, synergize the banking and investing (budgeting, auto-contributions), as well as provide general financial/tax advice.

What I don't like is that the bank affiliated advisors tend to suggest products by their own institution. Though I've been told that at a certain level of accreditation, the advisor should be able to offer products from any institution.

Kinda on the subject with the CCP strategies for retirement savings, is anyone concerned with the long-term implications of index investing? It's growing at a tremendous pace and it's already starting to distort the market. Companies who can make the cut instantly jump in value, and tend to see gains as long as they stay high enough to attract the index investors. Short-term, looks to be a terrific for anyone subscribing to CCP, but if we're talking about 35 years down the road...
They will drop but it is still in the 1.5% range, which, I think, is a lot over long term. I know it is much easier, I just have to put money in it and everything is automated, but I would like to pay 0.5% fees or less, even if it requires a bit more work... I do have access to a financial planner for free, but I feel like he's selling his products... I spoke to him about ETFs and he doesn't like the idea, well...
Never argue with stupid people, they will drag you down to their level and then beat you with experience.
[OP]
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John47 wrote: Le portfolio n'est pas approprié pour ton profil --- 26 ans, pas besoin de l'argent pour longtemps. Beaucoup trop de "fixed income". En plus, les frais sont très élevés.

La recommandation de t'ouvrir un compte Questrade m'apparaît bonne.

Ensuite, tu mets tout dans un portfolio "couch potato", genre 80% XAW, 20% VCN.

Pour la question du "re-balancing", quand tu as de l'argent à ajouter à tes comptes, tu le mets dans l'un ou l'autre des ETFs en fonction de la diversification que tu veux. Tu n'as pas besoin de vendre un ETF pour mettre dans l'autre. Tu ajustes ta proportion au fur et à mesure en fonction de tes nouvelles contributions.
Je suis surpris de lire une réponse en français ahaha! Merci. C'est ce que je pensais, je paye non seulement trop, mais le ratio est également inapproprié. Par contre j'ai un peu peur d'y aller 100% actions... J'hésite entre Questrade et la plateforme Banque Nationale, car elle offre également l'achat et la vente d'ETF sans frais. Comme je suis déjà avec eux, ça simplifierait les choses, mais la plateforme n'est pas aussi perfectionné et capable que Questrade cest certain.
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Latitude57 wrote: This is really interesting, are you only buying HXT ? I would think a 3 ETF portfolio with HXT, HXS and HXDM is better over long term ?
We have enough room in our registered accounts for Fixed Income, US and International ETFs, so are only moving over Canadian part to the non-reg - for now. Once we're out of the registered room, will start buying the other two in the non-reg :)
[OP]
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freilona wrote: (Thanks to google translator.. :)) Sorry, but the only way to avoid paying foreign withholding taxes is to buy US-listed ETFs in RRSP. With XAW they’re still payable:



http://canadiancouchpotato.com/2016/06/ ... nada-etfs/

(No arguments with your advice otherwise.. :))
Thank you. I was thinking of going the following;

TFSA & RRSP: VGRO(very similar returns with CCP ETFs portfolios) using TD, National Bank or Questrade since there is no need to rebalance, no need to calculate ECB
Non registered: TD e series following CCP aggressive portfolio OR ETFs with the following HXT,HXS and HXDM from Horizon OR ETFs following canadian portfolio manager 80EQ/20FI https://cdn.canadianportfoliomanagerblo ... -12-31.pdf

I'm thinking of going TD e series for non registered since I have the account and for simplicity... I need to find if purchasing certain ETFs will give better return over long term than TD e series.

What do you think ?

I'm also debating whether I use TD, Questrade or National Bank for investing. There is a 9.99$ fee when purchasing ETF with TD, none with Questrade and none with National Bank. TFSA and RRSP accounts i don't mind paying 9.99$ since there will only be 1 transaction per account for now.
Never argue with stupid people, they will drag you down to their level and then beat you with experience.

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