Investing

Investment Advice and where to open RRSP

  • Last Updated:
  • Jan 1st, 2020 10:10 pm
[OP]
Member
Jul 17, 2018
217 posts
120 upvotes

Investment Advice and where to open RRSP

I'm kind of late to the game. This past year, I paid off all my debts and started contributing to my TFSA. I'm a relatively high income earner. I have a TFSA account with Scotia Itrade. I bank at Tangerine and may one day switch to Scotia or TD (less likely).

My main questions:

1) Should I focus on maximizing my TFSA first and then contribute to my RRSP or should I make at least some contribution to RRSP for the 2019 tax deductions. I anticipate that I will be in a lower income bracket in retirement.

2) If my spouse is in a lower tax bracket and plans to retire early, is spousal RRSP a good option?

3) If I was to open an RRSP, which brokerage account should I go with? I'm considering Itrade, TDDI, or IB.

For question #3, I intend to hold US stocks in my RRSP. I am not an active trader. Maybe 1-2 trades a month? Sometimes 0.

Forex fees are important. Ideally I can contribute to the account using US funds but I don't believe that is possible. IB for it's low forex and commission is a consideration but I'm not sure if it makes up for their administration fees. If I go with Itrade, can I see both my TFSA and RRSP account with one login? Does Itrade or TDDI have administration fees?

Thanks in advance for your help.
5 replies
Deal Addict
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May 11, 2014
4627 posts
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1) If you are a higher income earner and as you say anticipate having lower income during your retirement, focusing on RRSP contributions makes sense. Honestly, the best answer would be contribute to both. I max both of my accounts.

2) Yes. You want to try to split your spousal income to try to be close to even. By doing so, you potentially reduce your taxable income during retirement. With income splitting, you are more likely to reduce the taxation rate of the realized income when withdrawing from the RRIF later on.
Regardless of whether your spouse wants to retire earlier or not, it is likely a good idea to contribute to a Spousal RRSP. Your spouse retiring early will work even better as there will be more years to spread out withdraws possibly leading to tax savings

3)That is a personal preference which I cannot answer for you. It would probably be easy to stick to iTrade as you already use it. It would really depend on the type of investments you hold. If you are an ETF holders using the list Scotia iTrade provides commission free, I would say Scotia iTrade. IB is better for large assets and individual stocks. TD DI sucks in general fee-wise IMHO, althogh TD e-Series wouldn't be a bad bet, but if you are already using iTrade, I fail to see the benefit going with TD.
With US Stocks, with low trading volume, the commissions are not as big a deal, although IB will probably be the cheapest depending on your balance. However, since you have little trades, if you carry the Ultimate Package with Scotiabank for your banking, you will get 10 free trades the first year and 5 after that. This means if you switch your banking to Scotia, you will have essentially free trading for the most part. For forex spread, using Norbert's Gambit will avoid most of this anyway.
https://www.scotiabank.com/ca/en/person ... ckage.html

Other alternatives...
-Questrade for ETFs, but you already use Scotia so little benefit switching here.
-CIBC Investor's Edge. Lowest of the big 6 bank brokerages for stock trades $6.95. Also, the $100000 investment balance will also mean free banking with their Smart Plus bank account.

For depositing US Dollars, I think it is possible, but don't quote me on that. I would ask Scotia direct. You could open a US Dollar Savings account to fund it and it will be no monthly fee with the Ultimate Package chequing anyway. I know Questrade you can transfer US Dollars so fail to see the others not being able to. But again, just ask
https://youngandthrifty.ca/how-to-trans ... e-account/

For Admin fees, if you have $25000 across all accounts, Scotia iTrade is free, otherwise $100 per year. TD is $15000 and $25 a quarter.Don't know about IB but I think you can look this us yourself ;) (I think it is a high minimum balance to avoid the fee).
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Member
May 2, 2019
475 posts
543 upvotes
Vancouver
Normally I'm a fan of IB, but they are hardly a fit for this case.

There is no way around IB's CAD $50/year RRSP fee ($12.50/quarter, rather). Plus, you'd be on the hook for the monthly activity fee (USD $10 / month, less commissions for that month which don't help you enough); waived for larger accounts (over $100K USD). Also, the data feeds you'd get for free are quite limited unless trading more often.

There could be significant savings with IB if you had to exchange the currency a lot. But if you already have USD to deposit, it appears one of other brokerages would work better, just ensure you can deposit USD directly to an RRSP account. I only know Questrade and IB can do that.

On the 1st question, do try to make an RRSP contribution for 2019. The benefit is very obvious, as it helps to get money back from CRA and invest it (in TFSA, if you wish).
Spousal RRSP is better, assuming you are fine with the idea you are giving that amount to your spouse.
[OP]
Member
Jul 17, 2018
217 posts
120 upvotes
xgbsSS wrote: 1) If you are a higher income earner and as you say anticipate having lower income during your retirement, focusing on RRSP contributions makes sense. Honestly, the best answer would be contribute to both. I max both of my accounts.

2) Yes. You want to try to split your spousal income to try to be close to even. By doing so, you potentially reduce your taxable income during retirement. With income splitting, you are more likely to reduce the taxation rate of the realized income when withdrawing from the RRIF later on.
Regardless of whether your spouse wants to retire earlier or not, it is likely a good idea to contribute to a Spousal RRSP. Your spouse retiring early will work even better as there will be more years to spread out withdraws possibly leading to tax savings

3)That is a personal preference which I cannot answer for you. It would probably be easy to stick to iTrade as you already use it. It would really depend on the type of investments you hold. If you are an ETF holders using the list Scotia iTrade provides commission free, I would say Scotia iTrade. IB is better for large assets and individual stocks. TD DI sucks in general fee-wise IMHO, althogh TD e-Series wouldn't be a bad bet, but if you are already using iTrade, I fail to see the benefit going with TD.
With US Stocks, with low trading volume, the commissions are not as big a deal, although IB will probably be the cheapest depending on your balance. However, since you have little trades, if you carry the Ultimate Package with Scotiabank for your banking, you will get 10 free trades the first year and 5 after that. This means if you switch your banking to Scotia, you will have essentially free trading for the most part. For forex spread, using Norbert's Gambit will avoid most of this anyway.
https://www.scotiabank.com/ca/en/person ... ckage.html

Other alternatives...
-Questrade for ETFs, but you already use Scotia so little benefit switching here.
-CIBC Investor's Edge. Lowest of the big 6 bank brokerages for stock trades $6.95. Also, the $100000 investment balance will also mean free banking with their Smart Plus bank account.

For depositing US Dollars, I think it is possible, but don't quote me on that. I would ask Scotia direct. You could open a US Dollar Savings account to fund it and it will be no monthly fee with the Ultimate Package chequing anyway. I know Questrade you can transfer US Dollars so fail to see the others not being able to. But again, just ask
https://youngandthrifty.ca/how-to-trans ... e-account/

For Admin fees, if you have $25000 across all accounts, Scotia iTrade is free, otherwise $100 per year. TD is $15000 and $25 a quarter.Don't know about IB but I think you can look this us yourself ;) (I think it is a high minimum balance to avoid the fee).
Thanks for your post and advice. Do you know if the admin fee is based on calendar year or based on account opening? If I open an RRSP account with Scotia, I won't have $25,000 across initially but probably within 3-6 months I will have that. Would the RRSP account be free then?

I should mention that I do prefer to buy individual stocks rather than ETFs. My thinking is that I'll buy Canadian stocks in my TFSA and mostly US stocks in my RRSP. I don't actually have a supply of US funds. I'll probably exchange money using VBCE or do NG. I have read that IB's forex are low which would make it simpler to deposit Canadian and then convert to US and not worry about whether I am over-contributing.
[OP]
Member
Jul 17, 2018
217 posts
120 upvotes
yvrbanker wrote: Normally I'm a fan of IB, but they are hardly a fit for this case.

There is no way around IB's CAD $50/year RRSP fee ($12.50/quarter, rather). Plus, you'd be on the hook for the monthly activity fee (USD $10 / month, less commissions for that month which don't help you enough); waived for larger accounts (over $100K USD). Also, the data feeds you'd get for free are quite limited unless trading more often.

There could be significant savings with IB if you had to exchange the currency a lot. But if you already have USD to deposit, it appears one of other brokerages would work better, just ensure you can deposit USD directly to an RRSP account. I only know Questrade and IB can do that.

On the 1st question, do try to make an RRSP contribution for 2019. The benefit is very obvious, as it helps to get money back from CRA and invest it (in TFSA, if you wish).
Spousal RRSP is better, assuming you are fine with the idea you are giving that amount to your spouse.
Thank you for your advice. I'm not too worry about the monthly commission requirement of IB since I will probably make a monthly trade anyways and the savings in commission should work out to be the same. The admin fee is a big one though. Sounds like I would be better off going with another brokerage if I meet the requirements of fee waivers.
Deal Addict
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May 11, 2014
4627 posts
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Iqaluit, NU
GooseAkuma wrote: Thanks for your post and advice. Do you know if the admin fee is based on calendar year or based on account opening? If I open an RRSP account with Scotia, I won't have $25,000 across initially but probably within 3-6 months I will have that. Would the RRSP account be free then?

I should mention that I do prefer to buy individual stocks rather than ETFs. My thinking is that I'll buy Canadian stocks in my TFSA and mostly US stocks in my RRSP. I don't actually have a supply of US funds. I'll probably exchange money using VBCE or do NG. I have read that IB's forex are low which would make it simpler to deposit Canadian and then convert to US and not worry about whether I am over-contributing.
I don't know. I do not have accounts with them. However, I do know Scotia and most brokerages are pretty happy to void fees such as these if requested as a way to attract customers. Before you open, see if a CSR can refund such fees. If you say you are hesitant to go with iTrade due to this maintenance fee, they often will refund it as to attract a long term customer.

Again, I would look at Norbert's Gambit to do US Dollar purchases. When using this, you get rid of the spread. If you use your free trades at Scotia iTrade, it's basically free.
https://www.pwlcapital.com/resources/no ... /?ext=.pdf
Support your local Credit Union!

Sask Pension Plan Upto $6600/yr in Credit Card spending on RRSP contributions
http://forums.redflagdeals.com/sask-pen ... ns-2167222

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