Change in investment strategy | Investing | Discussion forum

I can see you've put a lot of thought into your plan.

Have you considered just closing out the TD TFSA and re-depositing at EQ or elsewhere in January? It's possible the fee for closing might be less than for transfer (at some FIs this is the case), and you might be able to make it happen faster. It's worth looking into anyway. TD is notoriously slow at transfers, I have to say from experience and by reputation. We waited from early November or so until mid-January for TDDI to make a transfer of RSP which was in cash. Keep on their case regularly, calling them and taking notes about your conversations. In our case, since it took too long, they agreed not to charge the fee, but you have to ask for that.

Bond funds are not really fixed income, although commonly thought of that way, precisely because they can decrease in value. If you want to invest in bonds as fixed income, you are better to buy the actual bonds and hold to maturity, in which case there will be no decrease. Bond funds normally move inversely with interest rates, so I would say you might wait a long time before they will make good sense as rates now are quite possibly at bottom. Personally, I would avoid them. This inverse relationship happens because, as rates rise, the bonds previously purchased at lower rates become less desirable.

I have found EQ to be one of the least cooperative with people who are not good with computers. I have a serious, limiting, vision problem, and a CSR at EQ tried to tell me I should take my business elsewhere when I said they lock their clients out online too quickly so we have to try again, which doesn't accommodate those of us who are slower. Some FIs will deal with you by phone or mail, and I think it's worth looking around for that. You might ask forum member RetirEd for suggestions as he avoids online banking if I remember correctly. I don't think it's wise for your wife to be completely dependent on you to do her banking. What happens if you are sick or disabled? I'm the same age as you and I wouldn't leave spouse with this vulnerability. You might look into bricks-and-mortar CUs; some are better than others; depends where you live.

You probably have worked this out but I just want to flag the critical importance of ensuring that the income you need, and will need in future, for necessary expenses is guaranteed before you invest in any kind of funds or stocks. Sources for that could include CPP, OAS, GIS, RIFs, workplace pension, annuities, and possibly capital in the form of GICs etc.

I agree that it's wise to cash in all funds and investments before attempting to transfer the TFSA. It will have to happen anyway, and if you do it first you can choose the date that suits you.

I could say more on some of these topics if you want more info. I hope this is helpful.

Good luck!

Note that EQ does not offer jointly owned GICs. I would think you would want that for you and your wife in any non-registered account.

Loonie: Many financial institutions will deal with us by phone or mail. Living in Vancouver, I also have the option of a visit to storefronts or head offices to do things quickly and with hard-copy confirmation. The downside is that some smaller outfits have almost no staff to service clients, and one has to play telephone tag or get info from head offices or customer service centres, and then relay it back to clueless staff who rarely deal with clients directly.

I'm almost completely ready to shut down Wealth One because of such problems, but waiting for some of their good rates. My existing GIC matured too late for the 2.88 5-year promo.

Peoples Trust is top-notch for phone, mail and in-person service save for their limited hours (and the temporary COVID-19 appointment requirement). They now have two sets of CDIC limits so I have more cash in there.

Tangerine USED to be great but they have blown up their telephone service centre. Not using.

Hubert told me not to rely on phone or mail service because they didn't want to to deal with customers directly. Not using.

Coast Capital was okay with drop-in service, except that I have to visit suburban branches to get parking. Rates sucking, though, unless they keep adding blend-and-extend plans.

BlueShore (if one is qualified for no-fee status) is good for phone, mail or drop-in, and promotional rates are often worth it. They have Saturday hours, too.

I'm planning a visit to Oaken soon. No parking, though, and I don't relish taking transit in a pandemic!
RetirEd

ronjoh said

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I am trying to make our investments as simple as possible. My hope is that in two or three years we will move everything back to TDW and have all our investments in one globally balanced ETF such as XCNS. I apologize for getting a little off the topic of HIS.

You may wish to consider handling the equity/fixed income balance yourself to get a better return. Owning bonds directly or indirectly will give a lower return than GIC deals one can find oneself.

Instead of 100% XCNS to get 42% equity and 58% fixed income, one could put 42% in iShares Core Equity ETF Portfolio (XEQT) for the equity portion and do GIC's oneself with the remaining 58%.

I wouldn't invest in XCNS as it holds significant amount in bond ETF's. For example, its top holding is 36% in iShares Core Canadian Universe Bond Index ETF (XBB).

XBB has a current yield to maturity of only 2.02% per annum. I would lose 0.18% of that and net only 1.84% if I held it indirectly through XCNS. I'm certain I can do better than 1.84% through GIC's with no chance of capital loss.

Then, there is the 5% of XCNS in iShares U.S. Treasury Bond ETF (GOVT) with yield to maturity of 1.17% will end up being 0.99%, after the 0.18% management fee of XCNS.

Bonds and bond ETF's still won't make sense later when rates stabilize.

The underlying bonds paid less even when interest rates were higher.

rodeworthy said

Loonie said
As far as I can recall at present, only EQ and Saven don't allow joint savings accounts.
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We have a Joint Savings Account at EQ Bank.  

What I meant was that they don't offer joint GICs. Sorry for the confusion.

One can't really compare high interest savings accounts with either (1) a ladder of GIC's or (2) a bond ETF that's a ladder of bonds. The savings account is quite different from the latter two.

Bonds have paid less than the GIC's one shops around for. A ladder of bonds in a bond ETF or bond mutual fund will produce a higher return only when interest rates fall and there is a capital gain from the rise in the value of the bonds. Essentially, they are good for speculating in the fall of interest rates. If one shorts them, then they are also good for speculating on the rise of interest rates.

The convenience of not having to add a few numbers together can be significant. With XCNS, one is paying 0.18% per annum not only on the equity part but also on the fixed income part.

If one buys GIC's through the same discount broker for convenience, then one will end up with significantly lower rates. One can see that in a survey I did a while back.

For $20,000 of bonds/GIC's, a 0.18% to 0.7% difference is only $36 is $140 a year. But, for $300,000's worth, it becomes $540 to $2,100 a year.

savemoresaveoften said
If the cash is inside a registered discount brokerage account, not much option but to accept the inferior rate that the investment dealer offers (even for 3rd party names) when it comes to GIC unfortunately.
That’s the issue I face when I don’t want my rrsp to be 100% equities / bonds.  

I would look on it as a hidden cost of owning those equities.

I imagine that when the commentators line up the returns of equities vs GICs and always find the latter wanting, they are likely looking at GICs issued by the big banks, not at Oaken, let alone promo rates.