Personal Finance

Looking for long term financial planning advice

  • Last Updated:
  • Sep 12th, 2019 4:33 pm
Newbie
Oct 16, 2017
52 posts
47 upvotes
xgbsSS wrote: I concur. @sdutta6 that number doesn't add up. Looking at these funds even on the most expensive Series A still yields healthily over 5% if you were to split those 5 funds 20% each. The worst performing Symmetry Conservative Portfolio's 10 year average is 4.9% annualized, so even if you meant 2.78% annualized, that number seems quite low.
https://www.mackenzieinvestments.com/en ... 912-en.pdf

While some of these don't even have 11 years in history. Did the portfolio ever change funds by your manager? Were funds switched? Were any of the funds you have segregated versions? Or is the 2.78% return not correct. Something isn't adding up.
Hi

This might be helpful. Yes I believe there is an average of 2.80% per year since 2011 (and apologies, this is a 8-year period not 11, just mislabeled the 2011)

Summary Since 2011/01/01
Assets Held at Edward Jones
Beginning Value $103,019.72
Assets Added/Withdrawn -$26,144.47
Return in $ $26,115.80
Personal Rate of Return % 2.80%
Ending Value $102,991.06
Total Value (2019/09/09) $102,991.06

Gains have been withdrawn in the past to place in the TFSA.
Newbie
Oct 16, 2017
52 posts
47 upvotes
Doebird wrote: your returns don't seem right and I think you may be miss-reading your statement. That needs to be investigated.



1-With regards to 1, a balanced portfolio should bring in around 4-6% rate of return per year. Any bank, including edward jones, primerica, CI, etc, they should easily be able to give you a balanced portfolio that can achieve these returns. If you want to do it yourself, it's not hard either. A group of 5 ETFs will get you a nice balanced fund. Or you can just buy XBAL and call it a day.

2- Assets seem to be building, so focus on maxing out your wife TFSA as well. Unsure how your family deals with joint finances and if you are comfortable doing that, but should be considered. Unclear if you are doing that already.

3- Saving $20,000-$30,000 per year now is great. You need to attach a goal to that then. You said you want to retire by 60. What does retirement look like for you, what income do you think you will need in retirement in today dollars?

4- Kids + house in 2-3 years:
house - ok you will need 20% down payment. On $500,000 you need at least $100,000 (if you don't want to go high-ratio CMHC/GE/Canada gurantee). Your income, assuming your T1 employment income is actually $100,000 a year, should easily qualify you for that. You will also need closing costs. A good rule of thumb is around 2% closing costs of purchase price. So $10,000. Land transfer taxes/legal closing/etc. If you go high-ratio insured, then you can obviously go with a larger mortgage and a smaller down payment. In addition to legals/land transfer, you will need HST on whatever the CMHC premium is. So if you go 95% loan to value, e.g. 5% down, your mortgage will be $475,000 + CMHC premium. There is HST on the CMHC premium which you pay out of pocket at closing usually to your lawyer - who forwards to the lender.
You can use first time home buyer to take out $35,000 from your RRSP which you will need to repay in the 2nd year of withdrawal $35,000/15 years would be your annual repayment into RSP. If your wife has an RSP you can take out same for her. You may want to consider starting to contribute into her RRSP to take advantage of this benefit.

kids - you will need to factor impact of mat leave. Your wife will get EI and as well you (assuming you are paying into EI.) However probably doesnt make sense if youre self employed.
When shes back at work, factor in child care expenses. Unsure costs in your neck of the woods.

5- retirement 60. As per above, what does retirement look like, what income in todays dollars do you tihnk you will need. AS you dont have a house now, maybe it's paid off by then?
Then factor in:
a) your wifes pension assuming she gets full time and vests with them. You would need to determine this.
b) your CPP - at age 60, assuming you are maxing out your contributions (not taking dividends) and YMPE is $57,400. So if you're at least claiming this at employment income then youre maxing out CPP. At age 60 you get -36% of the max benefit. That's assuming from age 18 to 60 you work 35 years meeting the MAXIMUM CPP contributions you will get -36% of max CPP which is roughly $13,800 right now = $8832
b) your wife CPP - seems like she just started working. CPP average is like $8000 at age 65, so -36% of that assuming you both retire at 60 = $5120
c) your OAS = assume max = $7200 at age 65
d) your wifes OAS = assume max = $7200 at age 65

Good rule to guess what you will need in retirement is 70% of income. So if you're making $100,000 now, $70,000 would be good starting point + Wife = $90,000
So you need roughly $90,000 - $8,832 - $5120 at age 60
At age 65 you need $90,000 - $8,832 - $5120 - $7200x2
Assuming you live till 90.

Im sure you arleady have an accountant you work with? So you will need to discuss with him in more detail if its worht taking dividends or paying eomployment income. It may be worth splitting it because the CPP pension is pretty good and is 1 less thing you need to worry about... and it's inflation adjusted. So it's a no brainer to at least MAX OUT your employment income at YMPE and take the rest dividends in my opinion.
You need to discuss topping up RRSP for spouse for home buyers plan as I think that's a good opportunity to get some extra cash flow.
Flow of money = RRSP contributions ==> tax return ==> tfsa
and then obviously repayment in 2 years but it's tiny. $2,333 annual repayment.
You are correct in identifying an error. It averages out to 2.8% return annually over the period. My wife just became a permanent resident in August, so I believe we can now start contributing to her TFSA.

There are quite a few extra costs in purchasing the house in your breakdown. We would have enough for a 20% downpayment however to avoid insurance. I am trying to understand the benefit of taking this money out of my RRSP if we have already saved for it separately?

I am also debating whether it is worth it to hold off on claiming CPP until later on to maximize that benefit, however obviously want to enjoy something I'd been paying into.
Deal Fanatic
User avatar
May 11, 2014
6582 posts
9090 upvotes
Rankin Inlet, NU
I'm still not understanding the return calculation you have. It doesn't make sense. Something tells me either you have had funds traded in and out or you have some sort of segregated product. Regardless at your age and income, the returns and types of investments the Edward Jones has you in are both too expensive, too low of return and too conservative. I champion self-service options. Whether these interest you or not, however I would recommend you take a look here at a few different options...
passive-investment-comparison-thread-su ... d-2218030/

If you could tell us your plan, how much money you plan to use for your home purchase, what assets you have in your RRSP, TFSA and non-reg, a plan can be made with those assets.

In general, the best approach in your case would be to prioritize your TFSA as a long term investment toward your retirement. The tax free growth of your TFSA will be a great tax-free cash source in the future. Feel free to ask any questions about self-service options as a way to grow your assets. You can also PM me if you prefer.
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Deal Fanatic
Oct 1, 2004
6651 posts
995 upvotes
GTA
Can anyone recommend a good fee only financial planner in Ottawa that have good knowledge of family trusts? Went to see few that really had no knowledge in the area. Also anyone dealt with PWL?
Sr. Member
Aug 15, 2013
881 posts
419 upvotes
Guelph
I am surprised at so many recommendations for "Fee only advisors". I see most times this is based on the assumption that because they are not making any commission on the sale, their advice is always good. I think more important question should be how have they performed rather than who is paying them. Most big fund managers fail to beat the market returns, am not sure how you can rely on a small time "fee only advisor" to do that for you. I see some need of these advisors if your situation is too complicated with a big estate / inheritance / very high income + taxes etc and even this can be managed with some education and a good accountant.

To the OP, i don't think your situation is complicated enough or you have capital enough to justify a fee only advisor. That is the easy, but lazy approach. I think your complication is more towards what you want to achieve and how you will achieve that. I mean.. did you discuss your objectives with your current advisor and did they have a plan in place to achieve it? I suggest you do this one step at a time instead of overwhelming yourself.

1. Figure out the short and long term objective.
2. Lay out an investment plan to achieve the objective.
3. Plan the savings to fulfill the investments.

I understand this is easier said than done, you need to do some reading and make yourself aware of the investment opportunities, regulations etc but if you don't make yourself aware, you run the risk of coming here 10 years later and putting this same post again.
Deal Addict
Apr 17, 2014
1129 posts
525 upvotes
Corunna, ON
Read these books in this order.

A random walk down WallStreet
Winning the losers game
Common Sense on Mutual Funds

Make sure to get most recent copies.
Deal Addict
Apr 17, 2014
1129 posts
525 upvotes
Corunna, ON
MK1986 wrote: Hi Folks,
I'm in a similar situation but just opposite of OP, I have a full time job and earns around $105K, my wife is self employed and earns around $30-35K part time and we have three small kids (older one is 6 year's old). None of us have any pension plans. I have already saved $15K in RRSP and around $7K in RESP with TD direct investing but didn't start investing any money anywhere. Own a house with mortgage balance of around 350K. No other debts, we have around 80K in our checking and savings account..... I'm 33 and she is 31 year's old. Thinking of real estate investments but scared to jump in as the market is crazy and unpredictable. Kindly advice or share your experiences or thoughts.
Open a Questrade account.

Move $70 k of your ch/save money to them

Put as much as you can in RRSP and TFSA as you are allowed.

Put 25% in S&P 500 ETF (VFV)
Put 25% in U.S Dividend ETF (VGG)

Put 15 % in FTSE Canada index ETF (VCE)
Put 15 % in FTSE Canadia Capped REIT ETF ( VRE)

Put 10% in Developed Asia Pacific ETF (VA)
Put 10% in Developed Europe All Cap ETF (VE)

Rebalance once a year as % gets out of wack due to wins and losses. Put percents back.
Take money from the winners and add to the losers. Buy low sell high.

Once you are 12 years from retire start buying bonds. 4% a year until you reach a 60/40 split. Of Stock/bonds.

Add monthly to your quest retirement.

Make bank.

Fees are ridiculously low on ETF Index Funds

If you make 7% in a year and an advisor who has you in mutual funds makes 10% theirs fees will make either you even or you ahead.
Deal Addict
Apr 5, 2017
1115 posts
233 upvotes
proplayer44 wrote: Open a Questrade account.

Move $70 k of your ch/save money to them

Put as much as you can in RRSP and TFSA as you are allowed.

Put 25% in S&P 500 ETF (VFV)
Put 25% in U.S Dividend ETF (VGG)

Put 15 % in FTSE Canada index ETF (VCE)
Put 15 % in FTSE Canadia Capped REIT ETF ( VRE)

Put 10% in Developed Asia Pacific ETF (VA)
Put 10% in Developed Europe All Cap ETF (VE)

Rebalance once a year as % gets out of wack due to wins and losses. Put percents back.
Take money from the winners and add to the losers. Buy low sell high.

Once you are 12 years from retire start buying bonds. 4% a year until you reach a 60/40 split. Of Stock/bonds.

Add monthly to your quest retirement.

Make bank.

Fees are ridiculously low on ETF Index Funds

If you make 7% in a year and an advisor who has you in mutual funds makes 10% theirs fees will make either you even or you ahead.
Thanks a lot for the detailed explanation. Do I have to open a new RRSP with Questrade again or can i start investing with my TD direct investment as well based on what you have suggested ?
Deal Addict
Apr 17, 2014
1129 posts
525 upvotes
Corunna, ON
If TD is personally driven then yes. The fees will probably be more though.
Deal Fanatic
User avatar
May 11, 2014
6582 posts
9090 upvotes
Rankin Inlet, NU
dundeal wrote: I am surprised at so many recommendations for "Fee only advisors". I see most times this is based on the assumption that because they are not making any commission on the sale, their advice is always good. I think more important question should be how have they performed rather than who is paying them. Most big fund managers fail to beat the market returns, am not sure how you can rely on a small time "fee only advisor" to do that for you. I see some need of these advisors if your situation is too complicated with a big estate / inheritance / very high income + taxes etc and even this can be managed with some education and a good accountant.

To the OP, i don't think your situation is complicated enough or you have capital enough to justify a fee only advisor. That is the easy, but lazy approach. I think your complication is more towards what you want to achieve and how you will achieve that. I mean.. did you discuss your objectives with your current advisor and did they have a plan in place to achieve it? I suggest you do this one step at a time instead of overwhelming yourself.

1. Figure out the short and long term objective.
2. Lay out an investment plan to achieve the objective.
3. Plan the savings to fulfill the investments.

I understand this is easier said than done, you need to do some reading and make yourself aware of the investment opportunities, regulations etc but if you don't make yourself aware, you run the risk of coming here 10 years later and putting this same post again.
Not at all. The OP is in a situation where incorporation should be considered. This means he needs to set up estate planning to avoid huge taxation problems when it comes time to collapse it. While he doesn't have lots of assets, going to one with experience in incorporation and estate planning is prudent. After getting this, the OP can pretty much set his investments in accounts according to the tax strategy set up.

I would say fee-only advisor with accountant in this case not for the investments, but rather the corporate structure.
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