pmj wrote:One of the minor complications of NG at TDW (my experience is in an RRSP) is that the sale on the US side is recorded in C$ at TDW's rate after vig - and this is corrected later when the wash is applied. The effect of this is that if you sell, say US$10k of RY-N you won't appear to have US$10k available - you'll only have about 98.5% of that (assuming 1.5% vig) - and that would notionally be in C$ - so if you were trying to buy a US stock the system would be reserving itself another 1.5% - so the system will only let you have about 97% of the funds. So although you should immediately be able to buy US$10k, you won't be able to until after 3 days. Except - if you have some cash or MM funds (either CA or US) sufficient to cover the difference, you would get away with a US$10k purhase immediately.
Thanks, I would have sufficient in cdn MMF to cover the 3% temporary shorfall. I assume that that 3% would be converted using tdw's conversion rate, which is minor compared with subjecting the whole amount to the fx fees.
BRIAN5000 wrote:How much can you save per year?
What kind of lifestyle are you living or want to live?
Are your TFSA's maxed?
If you choose a moderate lifestyle and save half your income it matters very little what you do as far as investing, 18% CAN or 20% won't make much difference, GIC's will get you where you want to go if its a moderate early retirement.
Yeah yeah your wife should be convincing you to lower your risk tolerance. Your taking risk with money that can't be replaced inside your RRSP and you can't add it back in if you lose it because of your DB pension.
Why don't you start building a non-registered portfolio and take less risk in your RRSP ?
Save per year: we finished paying off the house last year. since we're saving about 20-25k/year. i'll finish paying off car next year (bought last year, but financed due to very low rates) and wife will return to work 5 days a week (she took 4 days this year as it was first year after mat leave) then we'll save about 40k-45k/year. that's about 20-25% of gross. this savings rate excludes monthly money we put aside to buy next cars cash (we expect to keep them about 7-8 years). It also excludes our DB plans.
Out TFSA are maxed and kept in bonds/gics as that's part of our emergency fund.
Thank you for the suggestion re: risk. My thinking is that DB acts as a bond allocation. If I include my DB present day value into my rrsp portfolio I have a roughly 50/50 split between bonds and equities and that is called to further grow in favour of bonds as future contributions will almost all be towards the DB. My wife is in a similar position (with even less exposure to equities). She also has parents with very high net worth (over 5M$) that keep everything in gics. I'm actually trying to offset the conservative portions of our portfolios (DB pensions, out of rrsp savings in F.I., our equity in the paid off house, her parents conservative investment, etc.) with a reasonable exposure to equities. We could probably put everything in gics and still retire at 55 with the DB plans, but I'm also thinking of my daughter. Our goal is to lead balanced lives (same level as we do now) and retire or semi-retire relatively early (around 50-55), but beyond that, and particluarly taking into account her parents assets, we are thinking of building for our daughter (and in that sense the investment horizon is very long -she's turning 2-) and hopefully turn her into a responsible money manager that will also preserve assets and grow them.
I realize that 18% vs 20% cdn exposure doesn't change much, neither do 600$ fx fees and so on, but I'm trying to build my investment knowledge to make reasoned decisions that are optimal based on underlying reasoning. What I learn today will serve me today and tomorrow, so I'm trying to increase my understanding.
I've seen a number of marginal effective tax rate curves (that take into account tax credits and other factors not included in straight tax brackets) that show that my effective marginal rate now and at retirement will be essentially the same. Therefore, the advantage of rrsps are that returns compound sheltered from tax. Since I think equities will likely return more than double (to account for tax treatment of cap gains) what fixed income will return in the long run, I figured it makes sense to keep equities in tax sheltered space over taxable accounts. Does this make sense? I mean in the end, there is only "how much money we have overall"...what to put in rrsp, tfsa, non registered is just a question of tax planning.
I appreciate all suggestions and thoughts. I'm learning lots and consider myself quite lucky to benefit from the knowledge of this forum.