Investing

Newbie - RRSP investment

  • Last Updated:
  • Feb 27th, 2017 10:38 am
[OP]
Sr. Member
Apr 23, 2008
589 posts
78 upvotes
Toronto

Newbie - RRSP investment

Hi,
I would like to contribute to my spousal RRSP and would like to invest the RRSP in mutual fund - Global Iman (GLOBALIMAN.TO). I have done the same in the past through a financial advisor. However, this time I want to do it on my own (assuming it will be more economical and I will earn in the process). I have personal accounts in TD and RBC and a TD waterhouse account (for my previous RRSP; money is sitting, not invested, in this account). What would be the most economical way to make this spousal contribution into the said mutual fund on my own? Or should I stick with the financial advisor?
Thanks in advance!
Last edited by sillycat on Feb 23rd, 2017 8:28 am, edited 1 time in total.
11 replies
Sr. Member
Oct 11, 2010
980 posts
325 upvotes
Charlottetown
What do you mean by previous RRSP? If you still have an RRSP then can't you use those? If you have access to invest under those RRSPs you can simply buy the mutual fund under the existing rrsps. If not, all you need to do is open up a self directed RRSP investment account with a broker of your choosing, you could use TD investing, RBC, or whatever, contribute to it then buy the mutual fund under that investment account.

It sounds to me like you all ready have a TD waterhouse investing account open for an existing RRSP though so I'm not sure why you wouldn't just use that..

Side note, I don't know much about the mutual fund GLOBALIMAN.TO but I took a quick look at it and it does not seem to have very good performance (even in a strong market we have right now) and it has a high management expense ratio. I would strongly recommend that you reconsider your choice and instead look in to some other options such as

- A couch potato portfolio using either cheap TD eseries funds or ETFs as outlined here: http://canadiancouchpotato.com/model-portfolios-2/ -- Eseries may make the most sense if you all ready have a TD investing account. If you go with ETFs Questrade.com is a good choice since offer free ETF purchases.

- A better mutual fund with a lower management expense ratio such as the mawer balanced fund MAW104 http://www.mawer.com/our-funds/fund-pro ... nced-fund/ -- most mutual funds are TOO expensive and aren't worth it but Mawer is one that is generally regarded as an exception to that rule.

In fact, if you have other funds invested currently in GLOBALIMAN.TO I'd also seriously consider moving the funds out and in to something else. Unfortunately it sounds to me like your "advisor" sold you expensive funds they likely get a kick back on. This is common. Those high management expense ratios will kill your returns over the years, it's incredible how much they add up.

This is just my opinion but I would open up a self directed RRSP and move ALL funds in to it and follow one of the methods above. You will thank yourself for it doing it in the future, trust me.
[OP]
Sr. Member
Apr 23, 2008
589 posts
78 upvotes
Toronto
Thanks for your reply.
jfall wrote: What do you mean by previous RRSP? If you still have an RRSP then can't you use those?

It sounds to me like you all ready have a TD waterhouse investing account open for an existing RRSP though so I'm not sure why you wouldn't just use that..

My previous RRSP with TD waterhouse is not invested anywhere; money is just sitting in the account. Does all brokerages allow purchase of all mutual funds? I mean are some mutual funds can only be purchase by a particular brokerage(s)? Which brokerage is the best, in terms of cost, for mutual funds purchase?

Side note, I don't know much about the mutual fund GLOBALIMAN.TO but I took a quick look at it and it does not seem to have very good performance (even in a strong market we have right now) and it has a high management expense ratio. I would strongly recommend that you reconsider your choice and instead look in to some other options such as

What are the top few things to check to determine the fund performance?

- A couch potato portfolio using either cheap TD eseries funds or ETFs as outlined here: http://canadiancouchpotato.com/model-portfolios-2/ -- Eseries may make the most sense if you all ready have a TD investing account. If you go with ETFs Questrade.com is a good choice since offer free ETF purchases.

- A better mutual fund with a lower management expense ratio such as the mawer balanced fund MAW104 http://www.mawer.com/our-funds/fund-pro ... nced-fund/ -- most mutual funds are TOO expensive and aren't worth it but Mawer is one that is generally regarded as an exception to that rule.

In fact, if you have other funds invested currently in GLOBALIMAN.TO I'd also seriously consider moving the funds out and in to something else. Unfortunately it sounds to me like your "advisor" sold you expensive funds they likely get a kick back on. This is common. Those high management expense ratios will kill your returns over the years, it's incredible how much they add up.

This is just my opinion but I would open up a self directed RRSP and move ALL funds in to it and follow one of the methods above. You will thank yourself for it doing it in the future, trust me.

For spousal RRSP is the planholder my spouse? If I am the contributor and my spouse the annuitant do I or she opens the spousal RRSP account
Sr. Member
Oct 11, 2010
980 posts
325 upvotes
Charlottetown
Generally most brokerages will allow you to purchase almost any mutual fund available on the market but there are some exceptions. For example, In the case of the Mawer funds I pointed out, you can't purchase those through RBC but can through any other broker, RBC doesn't allow them because they don't offer a trailer fee.

If you are still interested in going mutual fund route after reading my last comment then you'd just want to look for a broker that offers free mutual fund purchases, most do. Questrade is a great discount broker but they charge $9.95 for mutual funds, so I couldn't recommend them for mutual funds. If you do ETFs that's another story, Questrade is one of the best choices there because of free ETF purchases.

This is general and you'd want to do more research but when looking at a mutual fund you obviously want to see how it has performed, year to date, 3 year, 5 year etc. now this performance is usually relative to the mutual fund's benchmark. Essentially this is comparing the mutual funds returns vs what the market returned. If the mutual fund is returning less than the market, then you are paying management fees for nothing. Which leads to management fees, all mutual funds have them but the fees vary. When you start seeing funds with >2% fees be wary, in odd cases they might be worth it but in most cases you are going to end up losing a lot of your gains in the future. Do some reading on how much mutual fund fees add up and you'll see: http://www.investopedia.com/university/ ... funds2.asp

It sounds like your spouse should open the account and you be the contributor
Deal Fanatic
Jul 1, 2007
8514 posts
1668 upvotes
The unfortunate side-effect of sharia-compliant investing is that, in an effort to avoid investing in usurious companies like BANKS (which should form a core of every proper investment portfolio), Muslims expose themselves to usury directly in the form of an underperforming mutual fund with a 2.82% MER.
Money Smarts Blog wrote: I agree with the previous posters, especially Thalo. {And} Thalo's advice is spot on.
Deal Fanatic
Jul 1, 2007
8514 posts
1668 upvotes
Correction: I guess it's not really usury if you lend your money to someone else, and that someone else charges you a fee.
Money Smarts Blog wrote: I agree with the previous posters, especially Thalo. {And} Thalo's advice is spot on.
Member
Oct 12, 2016
309 posts
73 upvotes
I have looked at Global Iman Fund and their fees are pretty high as compared to the rest of the Mutual Funds market. I am pretty are there are other options in the market which can be classed as Shariah compliant.

Have you looked at iShares ETFs for example? They have a good range of them from real estate to technology to precious metals.
[OP]
Sr. Member
Apr 23, 2008
589 posts
78 upvotes
Toronto
Thanks for your advise jfall!
Which broker would you recommend for mutual funds? Do brokerages usually charge if you want to transfer from one fund to another?
jfall wrote:
It sounds like your spouse should open the account and you be the contributor.
Spouse has no income; do I open the spousal account and name spouse as the beneficiary (or I believe they call it annuitant) and me as the contributor OR spouse opens a personal account and name me as the contributor and herself as the annuitant? A bit confused. Objective is: I get the immediate tax break and the money (when withdrawn from RRSP) should be taxed in spouse's hand as her income would be less than mine.
Last edited by sillycat on Feb 25th, 2017 10:42 pm, edited 3 times in total.
[OP]
Sr. Member
Apr 23, 2008
589 posts
78 upvotes
Toronto
Limited7 wrote: I have looked at Global Iman Fund and their fees are pretty high as compared to the rest of the Mutual Funds market. I am pretty are there are other options in the market which can be classed as Shariah compliant.

Have you looked at iShares ETFs for example? They have a good range of them from real estate to technology to precious metals.
That's exactly what I'm looking for - Shariah-compliant investment. Global Iman is marketed as shariah compliant, however, as jfall above pointed out it's not a good investment. Any recommendation on a good shariah-compliant investment? RRSP deadline is fast approaching...
Sr. Member
Oct 11, 2010
980 posts
325 upvotes
Charlottetown
smehmood wrote: That's exactly what I'm looking for - Shariah-compliant investment. Global Iman is marketed as shariah compliant, however, as jfall above pointed out it's not a good investment. Any recommendation on a good shariah-compliant investment? RRSP deadline is fast approaching...
Unfortunately I don't know much when it comes to Shariah-compliant investments but don't feel like you have to rush. You can still contribute to an RRSP and claim on taxes etc without investing the money. You can make the contribution and choose to invest it whenever you want.
Deal Fanatic
Jul 1, 2007
8514 posts
1668 upvotes
The best advice is to not let religion dictate how you invest, and to invest in a properly diversified portfolio, at an efficient cost.
Money Smarts Blog wrote: I agree with the previous posters, especially Thalo. {And} Thalo's advice is spot on.
Sr. Member
User avatar
Jun 27, 2007
579 posts
112 upvotes
Toronto
jfall wrote: Generally most brokerages will allow you to purchase almost any mutual fund available on the market but there are some exceptions. For example, In the case of the Mawer funds I pointed out, you can't purchase those through RBC but can through any other broker, RBC doesn't allow them because they don't offer a trailer fee.

If you are still interested in going mutual fund route after reading my last comment then you'd just want to look for a broker that offers free mutual fund purchases, most do. Questrade is a great discount broker but they charge $9.95 for mutual funds, so I couldn't recommend them for mutual funds. If you do ETFs that's another story, Questrade is one of the best choices there because of free ETF purchases.

This is general and you'd want to do more research but when looking at a mutual fund you obviously want to see how it has performed, year to date, 3 year, 5 year etc. now this performance is usually relative to the mutual fund's benchmark. Essentially this is comparing the mutual funds returns vs what the market returned. If the mutual fund is returning less than the market, then you are paying management fees for nothing. Which leads to management fees, all mutual funds have them but the fees vary. When you start seeing funds with >2% fees be wary, in odd cases they might be worth it but in most cases you are going to end up losing a lot of your gains in the future. Do some reading on how much mutual fund fees add up and you'll see: http://www.investopedia.com/university/ ... funds2.asp

It sounds like your spouse should open the account and you be the contributor
Hi jfall,

Thanks for the shoutout!

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