I have also told my 27 yr old this. Just open it, then if a windfall occurs, the space is available
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Yes I will definitely do that. Thank you 
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We have our TFSAâs with Questrade, self invested, on a strategy that my husband found years ago on the other forum - the Couch potato strategy?
25% VAB
25% VCN
50% VXC
I have to rebalance myself, usually once a year.
I think husband âplaysâ with a few other funds, while using these three as the backbone. I canât be bothered in mine.
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Everything Iâve ever read has convinced me that the strategy presented is the best one, so my rrsp and TFSA are a jumble of whatever I thought was a good idea when I put the money in. Overall they match the market in performance, so that is fine. If I read less things Iâd have a more coherent portfolio. Oh well.
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I have most of my TFSA and RRSP in something⌠maybe VRGO? And RESP in something that might mirror it.
I also put
50-100 in each of a few things that seemed fun/an interesting risk of a meal out worth of money. So under 300 invested in those.
I basically just use my TFSA because it has so much room. One day maybe I max things out. Or not.
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Wealthsimple: final review
I switched from qtrade in July because they offered a very good promotion. Some % match of whatever I deposited, paid out over 12 mos. Iâve gotten a few hundred each month and I love the free money.
The platform itself is fine. Customer service is better, investment research is worse, they often have the charts and return % weirdly off. I canât self-administer the resp accounts. Probably a few other small complaints, if I think about it. I like the app, generally.
If there is a promotion that appeals to you, itâs a good platform.
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best use of money is exceptionally personal, depending on your goals and current situation. I am not sure what âhow much we trust the banks right nowâ is referencing and what your specific fear is. But understanding what risks you want to mitigate would inform my recommendations. (e.g. break money across several financial institutions including credit unions)
Also to what extent this few thousand is a meaningful percentage of your householdâs liquid assets.
in my opinion if you are very conservative and would pull out any money if it lost nominal value in the markets
-
pay down high interest debt
-
create an emergency fund in your TFSA with a high interest savings account (so you donât need to break a GIC to get to the first 2 or 3 months of money you need)
-
look at things in your life that could be replaced with a much higher quality of thing that would last (new mattress, new frying pans, good knives, DIY tools - our power drill paid for itself many times over). If you own a home, capital improvement projects like replacing drafty windows, attic insulation. These are very good inflation hedges because it reduces the amount your household needs to spend in the future. Since you are at high risk of losing money to inflation, finding hedges against that is good
-
look at things that would improve your personal household resiliency depending on what your fear is. e.g. at one point we looked at generators, solar. I personally could also look at canning supplies, camping stuff like water filtration, a crank radio. Other people should look at emergency kits for their car.
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fill your sinking funds in your TFSA, again HISA
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pay down low interest debt
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create a GIC ladder of multi year GICs so that you have some amounts rolling over every quarter or 6 months
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spend the money on learning, growth experiences, community building, however that looks for you
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donate the money to a local organization that creates greater community resilience
The past 25 years people who stayed in GICs left a lot of money on the table the vast majority of the time. However, if you know that youâd pull out money if it dropped by 10% and lock in the losses, then having GICs is better than having no money at all.
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if you wanted to optimize, given that you have good pensions, you might want to have all your VAB in RRSPs, and have VCX and VXC in TFSA (because you want the TFSA to grow more than your RRSP, since youâll pay taxes when you take it out of RRSP)
But it isnât that important for most people. Perfect is enemy of done, and you donât know optimal strategy until you are looking backwards.
And assumes you have bothered to do RRSPs, since again, pensions.
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If anyone wants entertainment the Canadian Teachers subreddit is full of hilarious posts about how undercompensated they are.
(I think they work hard and generally deserve their awesome compensation. But the whining is hilarious)
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We prioritize the TFSA, but have RRSPâs leftover from pre-pension employment
ie we fill the TFSAâs annually, but not the RRSPs
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so you could rebalance so that all the VAB is in RRSP, and then you split the other two across TFSA and RRSP, but you donât need to if contemplating doing that makes you feel a negative emotion.
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Can you ELI5?
This does sound very interesting Iâm just not following the strategy
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VAB is bond funds, they are expected to grow, but they are less volatile most of the time (they donât go down as much, but they also donât go up as much). So letâs say for math, that they go up 5% in a year.
VCN and VXC are matching the stock (equity) markets. They go up and down a lot, but are expected over the long term to go up quite a bit. Letâs say for math they both do exactly the same (which doesnât happen, but makes math easier), and they both go up 10% in a year.
TFSA money is pulled out without any tax implications.
RRSP money is pulled out at your marginal tax rate (say 25% for math, we will ignore the refund on the contribution at this time).
So, if you had $2000, and you put half into TFSA and half into RRSP with the 25/25/50 split
At the end of the year you have
RRSP VAB 250 x 1.05 = 262.50
RRSP VCN 250 x 1.1 = 275
RRSP VXC 500 x 1.1 = 550
RRSP = 1087.50
TFSA VAB 250 x 1.05 = 262.50
TFSA VCN 250 x 1.1 = 275
TFSA VXC 500 x 1.1 = 550
TFSA = 1087.50
And when you take out the 1087.50 from the RRSP, youâll get taxed on it ($272 in tax).
But what if you resorted and put all the VAB into RRSP
RRSP
VAB 500 = 525
VCN 250 = 275
VXC 250 = 275
= 1075 ($269 in tax at 25%)
TFSA
VCN 250 =275
VXC 750 = 825
= 1100
so you have the same amount of VAB, VCN, and VXC, but the higher growing stuff is in TFSA, where you wonât be taxed when you take it out, and the lower growing stuff is in RRSP where you will.
The $3 in tax obviously isnât much, but on more than $2000, or over more than one year of growth, you can see how it might become meaningful.
(Sorry, itâs not quite ELI5, lmk if you want to dive in more or a part untangled)
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oh very helpful!
I shall ponder and perhaps do some big rebalancing this January
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Thanks @Star and @plainjane . I guess I should have clarified. We are already retired. Hubbyâs main pension is a defined benefit pension that doesnât match inflation. He is quite a bit older than me. I just turned 65.
We have provincial drug coverage and I have the Seniors dental plan. No health insurance otherwise. We are basically self-insuring for health. Itâs one reason weâre conservative with our funds. I have had health issues since 1999 and Hubbyâs work health insurance would not cover me in retirement. Hubby is 7 years older and looking at future health issues. Preservation of capital is our focus.
We have an Emergency Fund of over $24,000 set aside. I am thinking the inheritance money might be better there, as thatâs where medical emergency expenses would come from. Itâs also a funeral expenses account for us. It is a high yield savings account at the TD. However, interest is not that high in it! 0.05%
We have no debt. We own our home outright - no mortgage. We own our car outright. We downsized and are busy getting rid of stuff. Not in acquisition mode. We are in the redistributing the wealth mode! Charity is a big issue this year. Hubby doesnât give to any charities and wonât. I doâŚfrom my business/personal account (explained below).
Otherwise we bank with RBC. They are having challenges moving our accounts from west to east. We moved five years ago and have repeatedly asked for this to happen. We have been given little guidance and a lot of dissuasion from proceeding.
However, the executor of our wills lives here on the east coast and wants everything east and preferably condensed a bit. We currently have 9 accounts at RBCâŚplus a savings account down east with absolutely nothing in it. HmmmâŚmaybe we should put the inheritance there? RBC accounts:
West:
- general chequing
- taxes and insurance savings
- car, house, travel savings
- TFSA - him
- TFSA - me
- RIFF - him
- SRSP - me
- chequing - me (I am self-employed as an artist and run expenses through here)
- savings - me
East:
- savings account
Anyways, I hope that clarifies the situation. I realize a forum like this canât offer specific financial advice per se. And maybe Iâm in the wrong group for this. Perhaps a seniors forum would be better?
Iâm just wondering how to negotiate this situation. Obviously BTDT experience with handling incoming lump sums of money is appreciated. As well as anyone in the know about how to deal with moving accounts from West to East with the RBC.
Thanks!
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So - I am not a financial advisor and I am especially not your financial advisor.
My Childrenâs RESP is with RBC in a âSelect Balancedâ fund. It has done adequately well over the years, and I have been happy with it. The MER is higher than with Questrade, but if your comfort zone means sticking with RBC, that particular investment has - I think moderate risk?
I would definitly put your emergency fund and inheritance into a TFSA, in either a GIC or some other fund. 0.05% is not enough. As a retired person, a TFSA is a good tool to use.
Also - PC financial just offered an account with I think 4% interest? that could be an option too
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Iâd move your emergency fund to the TFSA, and get it into an account that is offering a better rate. The EQ Notice (10 days to get your money out is fine in almost every situation since you can float many things on a credit card) or PC Financial seem like they would be good.
I would look at your housing and see if there are investments you could make now that would help you when you are experiencing medical challenges. Eg. we could ramp to the back door with a few thousand dollars. Or setting up a chest freezer with premade meals.
You should also look into what you could be doing to set yourself up for success if your husband dies before you - what percentage of his pension do you get, if any. What happens with GIS, OAS and CPP? What would that look like with some assumptions around inflation. At what point do you downsize?
Actually, you could take $2500 and get a financial plan done by someone independent. That could be a good use of that money as well.
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Okay, thanks @plainjane and @Star. I think my first move is to talk to Hubby about moving the EF and inheritance into a TFSA. There should be plenty of room for that.
@plainjane , we are currently budgeting about $15,000 per year to make our house suitable to live in should we have mobility issues. As well as updating to sell. Hubby is 73 and wants to sell the house at 80 yo. I donât know.
We have a chest freezer and upright freezer full of food right now! We garden and barter food for canning with relatives. They provide the jars and produce. I provide the lids and can stuff. I love doing this, and so do they. Itâs a win-win situation. 
ETA: hubby has set me up to get 100% of his pension.
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Most of you are probably eligible for $10.
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I am shocked by the Freeland news. That Trudeau has so lost the plot that he didnât respect the woman who has taken so much of the heat. omfg.
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