Maximizing Return on Short Term Investments

superping wrote: ↑I don't understand your logic. You don't want to take any risk but you're complaining that you're not getting good return. You cannot have both. Pick one.

If you want guarantee 1% return, then go GIC. Almost zero risk. Even with GIC, if the bank goes under, you may still lose it (but that risk is very low). If you want anything higher than that, then you'll need to take some risk. In this case, the possibility of having slightly lower than expected return. I looked at "Very Conservative" portfolio, it's mostly bonds. With Canadian interest going down (twice), it's amazing that the return is not negative yet. And I think that RBC advisor gave you the right advice, to go "very conservative". If you want to be more conservative, ditch the advisor and get GIC.

adilh53 wrote: ↑ convinced me that this particular investment portfolio is very low risk (even went as far as to say that when the stock market crashed several years ago - the investments in the very conservative portfolio didn't lose much of its value and showed me some kind of graph to back that up).

masterhapposai wrote: ↑If its this one, its already negative last 3 months and who knows where it will go:
https://www.google.ca/finance?cid=426520962058320

"RBC Select Very Conservative Portfolio"

The "financial planner" is gambling away his down payment.

superping wrote: ↑If you haven't notice, Op was already holding that fund. He already accepted the risk and enjoyed 5% return, many years earlier. Last year, nobody would have guess that interest rate will go down. Interest already went down. Lost already happened. What's wrong with recommendations to hold? The fund have decent mix. The MER is just a little too high. But OP should already knew this when he bought it, years ago.

On the other hand, if they adviced him to buy actively manage fund with 3%MER or something with say 50% equity mix, then he should fire that advisor.

In a down market, any advisor will advice you to hold, if not convincing you to put in more money. Crappy advisor sale you actively managed sector/risky fund. Then, when the market go down, recommend you to sale and move your money to another risky fund.

"Our plan at the moment is to make the 20% downpayment for the home we are planning on purchasing later this year "


"he continues to recommend investing in the same portfolio despite knowing that I will most likely be using most of the funds in these investments for our downpayment"

masterhapposai wrote: ↑Looks like you didn't notice yourself, the part where the OP said he's using the $ in that fund to put a down payment on the house this year.



He has 120k in there. He needs "most of it" to put the down payment. He believes the total costs will be 150k and he needs most of what is in the mutual fund. Granted, its mostly bonds. But, it can still go down a few thousand or more.

And the timeframe is a few months.

Do you still advise to hold?

adilh53 wrote: ↑I have around $120k currently invested in select very conservative mutual funds through RBC. The break down for the investments is...

TFSA - maxed (including the additional $4,500 that the Conservative government has proposed to have the TFSA limit increased by)
RRSP - I've invested just over $25,000 - but I've been contributing to this for the last about ~3 years (current value is around 28k). The rationale behind me not maximizing my RRSP contribution is because my wife and I are planning on buying our first home by the end of this year and as a first time home buyer (I qualify for the HBP whereas my wife will not qualify this year), I did not want to tie up more money in my RRSP than I absolutely needed to (over the last 3 or so years, I've been contributing 7-10k into RRSP each year to lower my income bracket and get a tax return).
Non-registered investments - Currently invested around $50,500

As I mentioned above, my wife and I are planning on purchasing our first home later this year so my risk tolerance is next to nothing for obvious reasons. Both of us do not have any debt, we pay our credit card balances in full and the only other savings I personally have is around $10 k (5k each in both TD and BMO chequing accounts to take advantage of their respective all inclusive/premium plans). My wife has another $50-60 k in her savings as well but we are relatively newly married and have not combined bank accounts yet - we plan to do so soon (her savings are primarily in TFSA - same very conservative portfolio).

Our plan at the moment is to make the 20% downpayment for the home we are planning on purchasing later this year (I'm estimating that on top of the down payment, the addition of closing costs/property taxes/furniture and other costs), that we should be able to do so comfortably with around $150k. The car I'm driving at the moment is also quite old and may need to be replaced within the next few years (I try to maintain it but you never know)...

I was recommended by a financial planner at RBC (who was recommended to me by family) to invest in the very conservative mutual funds portfolio several years ago (he continues to recommend investing in the same portfolio despite knowing that I will most likely be using most of the funds in these investments for our downpayment etc). I have to admit that I didn't research the risks/benefits of mutual funds as much as I should have and over the last few months, I've noticed that my mutual funds investments haven't been doing so well - basically I haven't seen any real growth since around Feb 2015 (haven't lost much value either however). I'm not expecting huge returns (categorize myself as being risk averse in general) but is it realistic to expect 3-5% return on investments without taking huge risks or locking the money into for long periods of time? The FP at RBC told me I should expect around ~5% return on my investments and convinced me that this particular investment portfolio is very low risk (even went as far as to say that when the stock market crashed several years ago - the investments in the very conservative portfolio didn't lose much of its value and showed me some kind of graph to back that up). I know that FP's that work for financial institutions generally tend to sell products that will earn them their commission but I'm unsure with my situation (and short term savings at my current life stage), that shelling out for an independent financial planner is worth it either. I've heard about several recent promotional interest rates (3% etc) for savings account at other banks (as well as high interest GIC accounts for TFSA/RRSP's) which has got me considering possibly switching to some of these no risk/better return products but I was hoping to get some feedback before I make a decision. I should also add that prior to 2015, I was seeing approximately 3-5% return on my RBC investments in this portfolio but the returns just haven't been there so far this year (I'm also aware that for mutual funds, the general rule of thumb is that they are meant for investments that won't need to be cashed out for at least 5 years which is not my situation - I will be the first to admit that I did not know enough about mutual funds before I invested and theres no excuses for that).

superping wrote: ↑This year, not this month. He is "going to " buy a house, not he already bought a house and it's closing next month. Lol.

My personal recommendation, hold. At least for another month until the dust Settle. Again, at you own risk. It might recover or might take another drop. Lots of panic out there. China melt down. European uncertainty. Dropping oil price. Low commodity demand. Dropping CDN ...

Intricated wrote: ↑ Tactically, that leaves you with HISAs and short-term GICs (3 or 6 months). Tangerine is offering new clients 2.1% in HISA (registered and non-registered) for 6 months. GIC rates across Canada for 3/6 months are mostly <0.8%.