Canadian Finance and Investing Thread - Paying More is our National Pastime

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Canadian Finance and Investing Thread - Paying More is our National Pastime

Koskinator: Nov 4, 2009; MOURNFUL: ALAS,
POOR YORICK

I have a RDSP with RBC that I've been contributing for a year or so now. It's up to $26k, and it's just sitting there. I know I should be doing something with it, but I'm overwhelmed by all the financial info out there (and in this forum) and I'm terrified of doing something wrong and screwing myself out of thousands of dollars in the long run. I know the basics from those forums - low management ratios are good, TD e-series are the best (but unfortunately that's not my bank), and ETFs appear to be overall a better choice than mutual funds in general, but not much else. I've met with an advisor a year ago and he seemed at least okay, talking about options for where to put my money. But where do I go from here?

# ¿ Aug 16, 2015 16:58

Adbot: ADBOT LOVES YOU

# ¿ Apr 28, 2024 21:30

Koskinator: Nov 4, 2009; MOURNFUL: ALAS,
POOR YORICK

spoof posted:

Is that the only account in your portfolio?
What are the commissions to buy and sell ETFs in your RDSP account?
How often are you contributing?
How hands-on do you want to be?
Does your RDSP have to be at RBC?

I'm not really familiar with RDSPs and their tax treatment but you're on the right track, and just need to put it all together. Generally, mutual funds have a higher MER and no commissions to buy/sell, and ETFs have a lower MER but some fixed commission to buy/sell that depends on your broker. RBC has a pair of Candian and US index MFs now with MERs of 0.72%, which isn't good, just not as bad as it used to be. You'll need to work out what works cheaper for your situation, but let's ballpark out a naive example.

$1000 contribution buying RBC's RBF1015 (Series A) @ 0.72% MER assuming no growth to make the calcs easier will cost you $7.20 to hold for 1 year (and leave you with $992.80), $14.40 to hold for 2 years, $21.60 to hold for 3 years
$1000 contribution buying TD's TDB900 (e-Series) @ 0.33% MER assuming no growth to make the calcs easier will cost you $3.30 to hold for 1 year, $6.60 to hold for 2 years, $9.90 to hold for 3 years
$1000 contribution buying iShare's XIC @ 0.05% MER assuming no growth to make the calcs easier will cost you $0.50 for the MER + (say) $10 for the buy commission for a total of $10.50 to hold for 1 year, $11.00 to hold for 2 years, $11.50 to hold for 3 years

The numbers are a bit off because I didn't factor in our decreasing balance from all of the fees, but the differences only get bigger once you factor in growth. Commissions can be anywhere from $10 to $30, so check that. If you are disciplined and want to be more hands-on, you can save up 2 contributions and buy, say $2000 of ETFs at a time to spread out the commission over more money.

There's no single 'right' allocation. Some model portfolios you've probably already seen based on eSeries and Vanguard ETFs.

If you can switch to TD Waterhouse for your RDSP, do so and follow one of the eSeries model portfolios above. Once you get above $50k when you qualify for cheaper commissions, you can think about switching to ETFs. If you can't, things get more complicated. Try to match up the eSeries model portfolio using Mutual Funds that RBC offers as closely as you can, then compare it against the model ETF portfolio like we did in the example above but using your costs for commissions and MERs for the funds you've chosen.

You're almost there.

Thanks a lot, this helps me out quite a bit!

It looks like RDSPs are not transferable, so my options seem limited to RBC's offerings. I'm thinking that I will diversify my current RDSP account into smaller chunks - some for long term GICs and some for mutual funds or ETFs. Besides looking at MER ratios, how do I assess mutual funds and ETFs to figure out what is right for me? What are the important things to look up on their info sheets besides MERs? Is it necessary to have a complete understanding of how mutual funds and ETFs work to invest, because at the moment my knowledge doesn't go far past 'invest in funds, pay the MER and/or commissions, and hope you get a profit years down the road'.

edit: It seems that generally speaking, RDSPs cannot invest into ETFs unless they are with TD. Is it possible to transfer my RDSP from RBC to TD? I know there is a form for transferring RRSPs and other similar accounts, but it doesn't list RDSP as an option.

Alternatively, is it possible to have a solid to good investment strategy using only bank-approved mutual funds and GICs? The restrictions on what RDSP money can be invested in are frustrating, but it is still essentially a free pile of money from the Canadian government. I've invested about 6-8k and that was enough to get up to 26k with more grants still available.

Koskinator fucked around with this message at 22:36 on Aug 30, 2015

# ¿ Aug 30, 2015 21:18

Koskinator: Nov 4, 2009; MOURNFUL: ALAS,
POOR YORICK

2016 was the first year I actually did anything with my registered saving accounts. I have a RDSP that I invested into low-MER index funds in the summer of 2016, that has produced a nice return since then. Will I receive a T5 slip or some other tax form for this or need to do anything differently for my taxes?

# ¿ Feb 18, 2017 04:35

Koskinator: Nov 4, 2009; MOURNFUL: ALAS,
POOR YORICK

Kalenn Istarion posted:

You will not get a t5 as the investment gains are not taxable but you will get a slip which details your contribution. You will need to report any contributions on your tax return and these will be deducted from your income meaning rrsp or rdsp or reso contributions save you near-term taxes.

Checking my RDSP records again, it seems that I did not in fact make any contributions in 2016. I made some small contributions in earlier years, and the government put in bonds and grants. What I did in 2016 was switch all that money from a saving account to index funds with no additional contributions. Will I still be getting a slip? This is the only thing holding up my taxes right now. (that and the NETFILE deadline)

# ¿ Feb 18, 2017 20:08

Koskinator: Nov 4, 2009; MOURNFUL: ALAS,
POOR YORICK

Does anyone know of a mortgage calculator that handles irregular extra payments? I want to (for example) calculate the effects of making lump sum payments for the first 5 years only, but all the calculators I've found will only calculate making the payments every single year.

# ¿ Feb 24, 2021 23:30

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Canadian Finance and Investing Thread - Paying More is our National Pastime