Rbc rrsp investing

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Dec 9th, 2019 1:20 pm

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Dec 3rd, 2019 12:20 pm

mlallany [OP]: Member; Dec 1, 2012; 245 posts; 28 upvotes; Calgary

Dec 3rd, 2019 12:20 pm

Rbc rrsp investing

Hi all, my employer is moving group RRSPs to rbc as of Jan 1st 2020 and I need some advice on what sort of portfolio to build. This is for retirement so I'll just to aggressive

We had 1hr sessions with an rbc investing person and a financial advisor (also from rbc) and after looking at my investments and risks they suggested the rbc a series funds and the select growth portfolio (https://www.rbcgam.com/en/ca/products/m ... 459/detail). He compared returns matching to Td e-series couch potato assertive approach (25% each) and they were pretty similar even though this fund has a higher MER. The historical performance he showed minus the fees were very identical to Td.

The other thing is the fund is actively managed and balanced so I don't have to worry about rebalancing.

Obviously if I was doing this with my own money I would go a different route but this is a group RRSP, the company will match 25% and I will be putting approximately $80 per stub and we get paid semi monthly. Please let me know if any info is needed I'll add.

7 replies

Dec 3rd, 2019 12:45 pm

xg3: Sr. Member; Nov 10, 2003; 748 posts; 138 upvotes; Concord

Dec 3rd, 2019 12:45 pm

Some information about your current and retirement age will be helpful.

That said, if you have 20-30 years to grow your money, i would suggest an aggressive growth portfolio.

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Dec 3rd, 2019 2:18 pm

mlallany [OP]: Member; Dec 1, 2012; 245 posts; 28 upvotes; Calgary

Dec 3rd, 2019 2:18 pm

xg3 wrote: ↑ Some information about your current and retirement age will be helpful.

That said, if you have 20-30 years to grow your money, i would suggest an aggressive growth portfolio.

Yeah sorry, I'm 36 years old and I don't have any retirement saving, I'm way behind. I'm obviously looking to go aggressive but I need help deciding which fund to choose or should I go index funds etc.

Dec 3rd, 2019 2:24 pm

xg3: Sr. Member; Nov 10, 2003; 748 posts; 138 upvotes; Concord

Dec 3rd, 2019 2:24 pm

Is never too late to start as long as you have it in sight.

Warren buffet had proved that index fund is the most for certain way to build wealth over any 20 years period. If that is the route you decide to go, you can just self manage by signing up to questrade (or something like that) and just buying a low cost index fund.

You don't want to pay for someone to to manage it over a mutual fund.

Do not over contribute with your company, contribute enough to maximize their matching. The rest, you can build your own portfolio outside. Also checkout wealthsimple.

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+1

Dec 4th, 2019 11:09 am

BlueSolstice: Deal Addict; Dec 4, 2016; 1872 posts; 892 upvotes

Dec 4th, 2019 11:09 am

How far back did he go, in term of matching TD e-series? RBC select growth goes back to 1986. Beating low cost index funds by 2% (which is their MER) over 30+ years is pretty impressive, but on the other hand, did he provide the total number of mutual funds RBC has started in the past 40 years? You might be looking at survivor bias, and not the talent of the manager.

At 2.04% MER, I want a rock star manager, one who's either a household name or someone I trust personally. Not just someone with an MBA with an office at RBC head quarter.

Edit: I didn't notice that it's employer sponsored. 25% matching is kinda low, and the 2% fees are kinda high. After ~12 years, the 25% employer matching would be completely eaten away by the MER. Personally, I would ask about penalties for transferring out your portion, and see what they say.

Just for reference, a lot of private sector companies use Manulife, and they have index funds that charge less than 0.5% MER. I'm paying around 0.35%.

Dec 7th, 2019 5:54 pm

xgbsSS: Deal Addict; May 11, 2014; 4413 posts; 5149 upvotes; Iqaluit, NU

Dec 7th, 2019 5:54 pm

Sorry, I wanted to make sure I am understanding your situation correctly. You have a Group RRSP and is this with RBC Direct Investing? If they are separate, can you detail the options you have from your group RRSP? If your Group RRSP is via RBC Direct Investing, then that is interesting.

Yes, you are correct. You should focus on maximizing as much of the company match as you can. Free money is always a good thing. 25% match isn't a lot compared to some companies, but it is always better to get free money where you can! And do not fret about not starting. You are in a similar situation to many Canadians and at least you do understand the importance of starting.
Now the advisor probably downplayed the ETF option as if you are to stay with RBC Direct Investing, it costs $9.99 to make a purchase and $9.99 to sell which is expensive (as per your PM you sent me). This is why I generally do not like big bank brokerages as they are very expensive when there are cheaper and free options available. That being said, if this is the only option you have, then there isn't much choice in the matter.
One option with RBC Direct Investing could be some well diversified cheap mutual funds that you can also get. For example, RBC and other mutual fund companies offer Series D mutual funds which should be free for you to purchase on RBC Direct Investing. Not all funds are available under this, but they can be another easy option for you to buy. Keep in mind, there is a TON of options, so we would need to look through this list to make a decent portfolio

https://www.rbcdirectinvesting.com/seriesd-mf.html

If you have a fairly good active fund priced cheaply, it might be much easier to manage with better diversification. We could discuss your risk tolerance and try building a potfolio from this list.

I wouldn't worry too much about rebalancing with mutual funds considering they are free to buy and sell in this case. ETFs are a bit trickier as you would need to be aware of commissions

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Dec 8th, 2019 10:47 pm

westcoastyvr: Deal Addict; Nov 30, 2011; 1022 posts; 400 upvotes; GTA

Dec 8th, 2019 10:47 pm

It sounds to me like OP was dealing with Reps from local branch (local to company office) that came in to do the info session. The clue to this was advising OP to go into an A series fund. Same thing happened at my company - but they recommended the Select Aggressive Growth fund. It has done well over the past 5 years but MER is over 2%.

+1

Dec 9th, 2019 1:20 pm

mlallany [OP]: Member; Dec 1, 2012; 245 posts; 28 upvotes; Calgary

Dec 9th, 2019 1:20 pm

xgbsSS wrote: ↑ Sorry, I wanted to make sure I am understanding your situation correctly. You have a Group RRSP and is this with RBC Direct Investing? If they are separate, can you detail the options you have from your group RRSP? If your Group RRSP is via RBC Direct Investing, then that is interesting.

Yes, you are correct. You should focus on maximizing as much of the company match as you can. Free money is always a good thing. 25% match isn't a lot compared to some companies, but it is always better to get free money where you can! And do not fret about not starting. You are in a similar situation to many Canadians and at least you do understand the importance of starting.
Now the advisor probably downplayed the ETF option as if you are to stay with RBC Direct Investing, it costs $9.99 to make a purchase and $9.99 to sell which is expensive (as per your PM you sent me). This is why I generally do not like big bank brokerages as they are very expensive when there are cheaper and free options available. That being said, if this is the only option you have, then there isn't much choice in the matter.
One option with RBC Direct Investing could be some well diversified cheap mutual funds that you can also get. For example, RBC and other mutual fund companies offer Series D mutual funds which should be free for you to purchase on RBC Direct Investing. Not all funds are available under this, but they can be another easy option for you to buy. Keep in mind, there is a TON of options, so we would need to look through this list to make a decent portfolio

https://www.rbcdirectinvesting.com/seriesd-mf.html

If you have a fairly good active fund priced cheaply, it might be much easier to manage with better diversification. We could discuss your risk tolerance and try building a potfolio from this list.

I wouldn't worry too much about rebalancing with mutual funds considering they are free to buy and sell in this case. ETFs are a bit trickier as you would need to be aware of commissions

Hey xgbsSS, yes for sure I'd love to work with you and build this out. This for RRSP so high risk, time horizon is probably 30 years (I'm 36 now, ok realistically 20-25 years then I start reducing risk), I could go 100% equities, but because I have an OCD at looking at my portfolio often I have pass out when there are major losses lol, so 90/10% may be a better split. I don't know about mutual funds, but an ETF like XGRO which is closer to an 80/20% split generates similar returns to a 100% equity ETF, so why go that much risk if you get the same returns with less volatility, if that's the same approach to mutual funds, sure dial down the risk.

I really could just go index funds, but the returns on my TD RESP portfolio have been mediocre so I'd be expecting the same at RBC as they track the same indexes. If we can mimic something like their Aggressive Growth Series A fund, with Series D funds with lower MERs. I wish I had other options but I don't and it sucks.

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