Investing

New ETF from Vanguard

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  • Dec 16th, 2020 3:20 am
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Aug 4, 2014
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FarmerHarv wrote: Interesting, thanks for the article. I think we'll keep adding to HBAL (as per The Plan), although we might pick some of this up to replace a couple of high MER bond heavy advisor series balanced/income mutual funds that are getting sold as we move out of Scotia McLeod.
I don’t think we’ll need a monthly income from RRIF or any other account. We’ll keep 3-5 years of expenses in GICs and HISAs, so selling whatever ETFs we’ll end up with once a year for minimal withdrawals will definitely be cheaper :)
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freilona wrote: I don’t think we’ll need a monthly income from RRIF or any other account. We’ll keep 3-5 years of expenses in GICs and HISAs, so selling whatever ETFs we’ll end up with once a year for minimal withdrawals will definitely be cheaper :)
For higher net worth retirees, this product likely makes little sense if one does not have to do a "forced" monthly withdrawal / income. I suspect the real purpose of the product is for individuals that will require monthly income and have no interest in timing or sector selecting for sales/withdrawal. To be honest, in these days of $0-$10 discount brokerage trades, I don't see sales commissions on competing / alternate products a prohibitive issue.

Even for those using VRIF exclusively for a RRSP/RRIF, the 4% return on various sources (i.e. interest, dividends, capital gains, etc) will not meet the minimum RRIF withdrawal rates as prescribed by CRA. In other words, further annual RRIF sales/withdrawals (aka "commissions") will likely be required for most in retirement. At 71, withdrawal rates start at 5.26%.

CRA Prescribed RRIF Withdrawal Rates_71+
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Jul 16, 2020
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is it better to go with class B shares with some credit union? , they are promoting to receive 4.5% interest, payment are not guaranteed each yr
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May 11, 2014
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Onlyuo wrote: is it better to go with class B shares with some credit union? , they are promoting to receive 4.5% interest, payment are not guaranteed each yr
Noticed your question wasn't answered.

In a way, credIt union shares are safer in that the principle is set and no down movements in price. However from a tax perspective, it is fully interest, and not taxed as a dividend, so if you hold this non-registered, you will have higher taxes.

Also, you need to worry about the health of the credit union. If it is a large, healthy credit union, odds are it is fine, but even ones like PACE credit union, members lost on their preferred shares. These are not covered by deposit insurance.
Support your local Credit Union!

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Jul 16, 2020
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xgbsSS wrote: Noticed your question wasn't answered.

In a way, credIt union shares are safer in that the principle is set and no down movements in price. However from a tax perspective, it is fully interest, and not taxed as a dividend, so if you hold this non-registered, you will have higher taxes.

Also, you need to worry about the health of the credit union. If it is a large, healthy credit union, odds are it is fine, but even ones like PACE credit union, members lost on their preferred shares. These are not covered by deposit insurance.
Thanks
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Oct 14, 2015
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Informative review of VRIF by Justin.

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IrwinW wrote: Informative review of VRIF by Justin.

So from what I can gather after watching the video above VRIF seems to be best suited for a taxable account where the investor is automatically withdrawing 4% per annum from the portfolio. Is that others impression?
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Oct 14, 2015
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Stryker wrote: So from what I can gather after watching the video above VRIF seems to be best suited for a taxable account where the investor is automatically withdrawing 4% per annum from the portfolio. Is that others impression?
Yes, that's my understanding as well.

CCP wrote an in depth series of three articles on the topic.
Here is part one; link to the others is in the last comment at bottom of page.

https://canadiancouchpotato.com/2020/09 ... ncome-etf/

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