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Email this4:25 pm
October 21, 2013
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Pewter said
Loonie said
I would forget about Oaken and Peoples. CDIC limits are lowish, and, with interest rates the way they are, you might exceed them sooner than you think and will have to continue to rearrange your investments regularly - a nuisance. That said, there is little to no growth to be had with RIFs due to mandatory withdrawals.I really appreciate your comments @Loonie.
I assume your comments about Oaken and Peoples are because of the low CDIC limits? Or do you have some other reasons?I have done well with GIC's over the years. I had numerous FI accounts and over the years I have closed some accounts and have never looked back and the ones I still have, I use them what they are good for, for me. ie. the only good thing about Accelerate, for me, is their Savings Account that has cheques, and ATM cards and can be the hub for push/pulls.
Because we live in Vancouver my preference is to keep Oaken and Peoples because they have offices, locally .... and their rates and level of services is good (ha ha I did not say excellent, though).
As far as BC credit unions blah!!! Coast Capital could be good but is a haywire outfit with real crappy service. I do use VanCity for my pension and bill payments .... all the freebies and the no fee ChaChing ATM's... but rates are not great. I did explore Blueshore Financial in North Van, but are not stable enough for good rates and ditto for Canada Western Bank. CWB could be a consideration and is CDIC covered but not sure if their rates are up and down too much.
Your no growth comment in regards to RRIF's with mandatory withdrawals could be correct but with some of the low rates we had vs today when I redid my wife's RRIF's in 5 yr GIC, I actual made enough "interest only" to cover her next 3 mandatory payments.
I have nothing against Oaken or Peoples that you don't already know.
It sounds like you are younger than I. The problem with the RIF mandatory withdrawals is that they increase as you age. Also, interest rates fluctuate. So it is hard to predict how it will go in future years, which may well be the point when one of you dies. At age 76, the withdrawal rate is 5.98% which, at present, cannot be matche by GICs. Something to consider anyway, The basic point about RIFs is that they are expected to diminish over time; when you hit 90, the rules make this absolutely clear with very high mandatory withdrawals.
I can appreciate that BC CUs are not a lot of help but you didn't mention need for better returns, so I didn't rule it out.
You might also consider whether periodic lump sum withdrawals (when GIcs mature) would be beneficial tax-wise. It will reduce amount needing to transfer at death and could reduce tax at death of last spouse. For some people, this is a useful strategy but it depends on individual circumstances. You have to consider OAS clawback too.
For TFSAs, I only consider CU GICs. This is basically because of the higher insurance. You have to assume that at some point one of you will become incapacitated and Power of Attorney will take effect. With annual contributions and interest, this can really add up over time. POA may be able to set up a new one for you but they cannot designate a beneficicary.
4:44 pm
May 11, 2023
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Winnie said
Pewter said
Did you pull funds from savings account or from an non matured GIC?
Just from savings account.
I think, that from an non matured GIC simple not possible.
I never tried or needed to do from an non matured GIC
Not sure about the RRSP... I imagine only from a matured RRSP with funds in an RRSP savings account. That is what I used to do. But now am "all in" RRIF.
I was going to put my RRSP into Accelerate, but didn't. I do know that at the time Accelerate would allow 20% more (than?) to be withdrawn from a RRIF though, as no matter what.....usually (unless you have cash savings) the RRIF payment always comes from the not yet matured GIC. But do check as most FI's all have different rules on where the funds come from GIC wise. Hubert has been lenient with me...but only if I fully cashed in a GIC that was not in the rule book to be picked from.
So YES I have had RRIF $ taken from an unmatured GIC. But never an RRSP.
Have you considered putting "some" of your RRSP $ into a RRIF? All that means is that there will be a mandatory withdrawal with NO tax withheld. If the no tax withhold is what you would like...consider it. But do remember, it all shows as taxable income. I always set aside 10% of a RRIF (or RRSP) for taxes.
There are some tables that show age and what % the withdrawal must be, to give you a better idea.
5:02 pm
May 11, 2023
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@loonie
I have nothing against Oaken or Peoples that you don't already know.
Good I hoped I had not missed something.
==
It sounds like you are younger than I.
Not by much.
==
The problem with the RIF mandatory withdrawals is that they increase as you age.
Yes and there is some talk that they should lessen the $ to allow more longevity.
==
Also, interest rates fluctuate. So it is hard to predict how it will go in future years, which may well be the point when one of you dies.
I use the odd table to show what my payment would be til 90 whatever. I use my correct age, balance, and use 3%. And has worked pretty good.
==
At age 76, the withdrawal rate is 5.98% which, at present, cannot be matched by GICs. Something to consider anyway,
Good point.
==
The basic point about RIFs is that they are expected to diminish over time; when you hit 90, the rules make this absolutely clear with very high mandatory withdrawals.
But in the 90's I believe the payments are much lower. That's something that every one should run...balance, age, average % of 3 or, and then see what to expect.
==
I can appreciate that BC CUs are not a lot of help but you didn't mention need for better returns, so I didn't rule it out.
There might be a few options but I am happy with the current rates. I forgot to mention Revelstoke CU as well.
==
You might also consider whether periodic lump sum withdrawals (when GIcs mature) would be beneficial tax-wise. It will reduce amount needing to transfer at death and could reduce tax at death of last spouse. For some people, this is a useful strategy but it depends on individual circumstances. You have to consider OAS clawback too.
Bang on!! So since I have been withdrawing RRSP/RRIF I have put all of those funds into RRIF. So, I have not touched any of it except the extra 10-20% that I removed from the withdrawal to pay income taxes. When needed I can then use a similar % like the for the RRIF withdrawal for my stored up TFSA's. I do take extra from my RRIF every year....but do not get into the next tax bracket "federally". Ok maybe 5-20 dollars but that's it.
==
For TFSAs, I only consider CU GICs. This is basically because of the higher insurance.
And that is my original point that I see no answers for. I plan to stay with Oaken and PT on their CDIC coverage. So if one of us dies...then the one left will have over the $100,000 limit. So I need to plan around that for both RRIF and more so TFSA.
And I may stay with Hubert and Accelerate or the new Huberate.
==
You have to assume that at some point one of you will become incapacitated and Power of Attorney will take effect. With annual contributions and interest, this can really add up over time. POA may be able to set up a new one for you but they cannot designate a beneficiary.
Good point. And yes I know a POA cannot set a beneficiary. And let's face it some of the FI's systems can be handled by a POA and now one would know the difference. It's only the FI's that you have to phone to set up the GIC to mature into a savings account.
==
Also keep in mind....will CDIC increase the archaic amount of $100,000. My last home was $350,000 and if sold today would be $1.5 mil. So I think the young folks and us too...need a higher limit.
My goodness. Do you know with the new contract for UPS in the USA are making $170,000?
5:07 pm
May 11, 2023
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Here is a table of payments. Age 70, balance $200,000, and 3% growth.
Roughly $10,00 per year then 95-100 hits some much lower payments. And all done at 100.
5:17 pm
May 11, 2023
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And just to mention. My strategy has always been to get out of RRIF or RRSP as soon as possible, at the lower tax rates, to avoid a huge tax hit on the funds if they go into the estate and as well for the remaining survivor to lessen their tax load as well.
6:39 pm
October 27, 2013
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At the risk of bringing this discussion up yet again, another option (to unlimited deposit insurance coverage in some provinces with CU offerings) is to hold the RRIFs et al at one of the major big bank discount brokerages which are the agents (brokers) for perhaps 15-25 separate GIC issuers, each of which is CDIC insured.
True one would not get the best return from all of the GIC issuers on a brokerage's list but perhaps at least half of them have competitive rates, PLUS when a GIC matures, one then has some flexibility to look down that list for the best competitive offering that doesn't put one over CDIC limits. If 15 out of 25 offerings provide competitive rates, that is up to $1.5M of coverage spread across 15 issuers. What becomes more important? Ease of management or slightly less interest return?
Additionally, one is only having to deal with one entity for a single POA document and a single Successor Annuitant document. I think people keep overlooking the simplicity and ease of use of discount brokerages from say one of the big 6 (or at least Scotia iTrade, BMO Investorline, TD Direct Investing and RBC Direct Investing that I am most familiar with).
7:09 am
November 18, 2017
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AltaRed: Very Well put! I may soon investigate brokers a bit more. They've seemed to complicated for me and I've been happy with my existing financial institutions so far. But the RRIF thing looms...
Pewter:
[Quoting someone else I can't find] At age 76, the withdrawal rate is 5.98% which, at present, cannot be matched by GICs. Something to consider anyway,
Good point.
I don't understand the comparison. Is this the idea that one would have to withdraw more (or less) than the RRIF is earning? Why?
Oh, and as someone else pointed out, PT&PB were sold by the "that West Edmonton Mall" company sometime in the last year or so to Smith. Neither company is publicly traded on stock markets, so they are described as "Private" or "Privately held."
RetirEd
RetirEd
7:57 am
May 11, 2023
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AltaRed said
At the risk of bringing this discussion up yet again, another option (to unlimited deposit insurance coverage in some provinces with CU offerings) is to hold the RRIFs et al at one of the major big bank discount brokerages which are the agents (brokers) for perhaps 15-25 separate GIC issuers, each of which is CDIC insured.True one would not get the best return from all of the GIC issuers on a brokerage's list but perhaps at least half of them have competitive rates, PLUS when a GIC matures, one then has some flexibility to look down that list for the best competitive offering that doesn't put one over CDIC limits. If 15 out of 25 offerings provide competitive rates, that is up to $1.5M of coverage spread across 15 issuers. What becomes more important? Ease of management or slightly less interest return?
Additionally, one is only having to deal with one entity for a single POA document and a single Successor Annuitant document. I think people keep overlooking the simplicity and ease of use of discount brokerages from say one of the big 6 (or at least Scotia iTrade, BMO Investorline, TD Direct Investing and RBC Direct Investing that I am most familiar with).
Good Point!!
Was with Manulife and rates were poor. But the guy we dealt with was very good and was local in Vancouver.
Was with Scotia iTrade and I found them to have so so rates but HORRIBLE customer service with little knowledge.
Good idea, get a broker and put my registered investments there. I need to re look at that.
Any suggestions of actual use of one?
7:59 am
May 11, 2023
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RetirEd said
AltaRed: Very Well put! I may soon investigate brokers a bit more. They've seemed to complicated for me and I've been happy with my existing financial institutions so far. But the RRIF thing looms...Pewter:
[Quoting someone else I can't find] At age 76, the withdrawal rate is 5.98% which, at present, cannot be matched by GICs. Something to consider anyway,
Good point.
I don't understand the comparison. Is this the idea that one would have to withdraw more (or less) than the RRIF is earning? Why?
Oh, and as someone else pointed out, PT&PB were sold by the "that West Edmonton Mall" company sometime in the last year or so to Smith. Neither company is publicly traded on stock markets, so they are described as "Private" or "Privately held."
RetirEd
As a PT customer I was never advised of that change. And a quick look shows
"Who owns the Peoples Trust Company?
Peoples Group operates as a trust company and also maintains a chartered bank subsidiary, Peoples Bank of Canada. It is a subsidiary of the Alberta-based holding company Triple Five Group and maintains offices in Vancouver, Calgary, and Toronto."
10:04 am
May 11, 2023
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AltaRed said
At the risk of bringing this discussion up yet again, another option (to unlimited deposit insurance coverage in some provinces with CU offerings) is to hold the RRIFs et al at one of the major big bank discount brokerages which are the agents (brokers) for perhaps 15-25 separate GIC issuers, each of which is CDIC insured.True one would not get the best return from all of the GIC issuers on a brokerage's list but perhaps at least half of them have competitive rates, PLUS when a GIC matures, one then has some flexibility to look down that list for the best competitive offering that doesn't put one over CDIC limits. If 15 out of 25 offerings provide competitive rates, that is up to $1.5M of coverage spread across 15 issuers. What becomes more important? Ease of management or slightly less interest return?
Additionally, one is only having to deal with one entity for a single POA document and a single Successor Annuitant document. I think people keep overlooking the simplicity and ease of use of discount brokerages from say one of the big 6 (or at least Scotia iTrade, BMO Investorline, TD Direct Investing and RBC Direct Investing that I am most familiar with).
Just an additional thought.
In the past our guy from Manulife. Not really Manulife but they used the Manulife system. He would give my wife and I both the same investment for registered accounts.
1. Would you not think that a good adviser would only give the same CDIC insured investment to each of us for an amount (princ. and int.) for no more than $50,000?
2. Or would that be up to me to enlighten him for good estate planning?
10:43 am
May 11, 2023
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Being all under one roof.
This is very appealing.
Look above and below at Home Trust (Oaken). I assume that Home Equity is not part of Oaken?
12:26 pm
October 21, 2013
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RetirEd said
AltaRed: Very Well put! I may soon investigate brokers a bit more. They've seemed to complicated for me and I've been happy with my existing financial institutions so far. But the RRIF thing looms...Pewter:
[Quoting someone else I can't find] At age 76, the withdrawal rate is 5.98% which, at present, cannot be matched by GICs. Something to consider anyway,
Good point.
I don't understand the comparison. Is this the idea that one would have to withdraw more (or less) than the RRIF is earning? Why?
Oh, and as someone else pointed out, PT&PB were sold by the "that West Edmonton Mall" company sometime in the last year or so to Smith. Neither company is publicly traded on stock markets, so they are described as "Private" or "Privately held."
RetirEd
It was me who posted the comment about mandatory withdrawal rates at age 76. It just means that if you are required to withdraw 5.98% (of the balance as of previous year end) but are earning less than that on your GIC (which would currently be the case), the balance in your RIF will decrease.
1:04 pm
October 21, 2013
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AltaRed said
True one would not get the best return from all of the GIC issuers on a brokerage's list but perhaps at least half of them have competitive rates, PLUS when a GIC matures, one then has some flexibility to look down that list for the best competitive offering that doesn't put one over CDIC limits. If 15 out of 25 offerings provide competitive rates, that is up to $1.5M of coverage spread across 15 issuers. What becomes more important? Ease of management or slightly less interest return?
There are merits in AltaRed's plan, but I have to disagree on "ease of management".
It is complicated compared to simply putting it all in a fully insured CU, setting up a GIC ladder, and letting the GICs roll over, never having to wade through a list of 15-25 options and never having to calculate when one should split up or recombine GICs to address CDIC limits. No extra work for POA. And you might even get a better overall return.
Pewter said
Just an additional thought.
In the past our guy from Manulife. Not really Manulife but they used the Manulife system. He would give my wife and I both the same investment for registered accounts.
1. Would you not think that a good adviser would only give the same CDIC insured investment to each of us for an amount (princ. and int.) for no more than $50,000?
2. Or would that be up to me to enlighten him for good estate planning?
I doubt you would find anyone at the level of the fellow you dealt with who would even think of the issue you are concerned about.
What you are looking at is retirement INCOME planning, and this is an underdeveloped field that the industry is just beginning to think about. You are mostly on your own.
Sorry; I can't read your charts due to vision loss.
1:39 pm
October 27, 2013
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Loonie said
There are merits in AltaRed's plan, but I have to disagree on "ease of management".
It is complicated compared to simply putting it all in a fully insured CU, setting up a GIC ladder, and letting the GICs roll over, never having to wade through a list of 15-25 options and never having to calculate when one should split up or recombine GICs to address CDIC limits. No extra work for POA. And you might even get a better overall return.
Going with a GIC ladder in one fully insured CU is easier (easiest?) but it also carries the risk that the chosen CU does not slide to an under performer in terms of GIC rates over time. The online brokerage with 15-25 issuers avoids that specific risk.
Either way, it is a compromise of return (yield and risk), deposit insurance and ease of management. I think we can align on consolidation into one "institution" is preferred. All of my registered funds are in one "institution".
2:23 pm
October 21, 2013
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Pewter said
@loonie... there is some talk that they should lessen the $ to allow more longevity.
==... in the 90's I believe the payments are much lower. That's something that every one should run...balance, age, average % of 3 or, and then see what to expect.
Also keep in mind....will CDIC increase the archaic amount of $100,000. My last home was $350,000 and if sold today would be $1.5 mil. So I think the young folks and us too...need a higher limit.
They did reconfigure the mandatory withdrawals for RIF a few years ago due to increased longevity so I doubt they will do it again for some time.
Payments in one's 90s may turn out to be lower, but the percentage goes up to 20%. It can be a sizeable amount if you still have a large RIF. At 90, it's 11.92%, but at 95+ it's 20%. Used to be 20% beginning age 90. Good idea to pare down judiciously over the years; I am also doing this.
I can't read your charts but am a bit puzzled. Results don't make obvious sense to me. I worked mine out manually a while ago, with different kinds of results. I don't know if yours are right or not but maybe double check that they were using current mandatory rates?
There will certainly be continued and increasing pressure to increase CDIC levels, but these have never come anywhere near matching inflation, so I would not hold my breath or make decisions base don it.
7:20 am
April 6, 2013
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Pewter said
Just an additional thought.
In the past our guy from Manulife. Not really Manulife but they used the Manulife system. He would give my wife and I both the same investment for registered accounts.
1. Would you not think that a good adviser would only give the same CDIC insured investment to each of us for an amount (princ. and int.) for no more than $50,000?
…
That depends on the issuer.
Issuer Manulife Bank of Canada currently has a DBRS debt rating of AA(low). So, its bonds and deposits have an estimated default risk around that of provincial government bonds. For example, Province of Ontario also has a AA(low) rating.
CDIC coverage is not really necessary with issuers like Manulife Bank.
10:46 am
October 21, 2013
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AltaRed said
Going with a GIC ladder in one fully insured CU is easier (easiest?) but it also carries the risk that the chosen CU does not slide to an under performer in terms of GIC rates over time. The online brokerage with 15-25 issuers avoids that specific risk.
Either way, it is a compromise of return (yield and risk), deposit insurance and ease of management. I think we can align on consolidation into one "institution" is preferred. All of my registered funds are in one "institution".
Actually, I have no problem with using more than one FI. One could, for example, use both Access and Achieva, MAXA, or a CU in another province etc. All are fully insured. You can still "set it and forget it" if you want. Yes, you can go with regularly choosing among 15-25 options at brokerage - if you want to go through all that.
There is no guarantee that rates will be better in one place than another. I suspect they might turn out about the same on average, just more work at brokerage and different insurance.
Another advantage of the CU approach is that there is no temptation to move RIF into riskier investments, which is always present in brokerage account. You and your POA will, perforce, stick to the plan. This is particularly useful when/if our mental faculties decline.
My RIF is at Hubert and will be completely liquidated in 2024; yay! I am relieved that I expect to be able to get rid of the damn thing while still mentally competent to do so! Spouse's will take a bit longer.
4:36 pm
September 11, 2013
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I agree that AltaRed's approach is easiest, I do the same. For me it's way easier to have one RRSP or RRIF account with the whole basket of investments with a big bank discount brokerage than a number of separate RRSP/RRIF accounts at various institutions.
Buying a GIC takes two secs, click on GIC term and the 15 - 25 choices appear, just pick the top one (if you've already exceeded CDIC limits with that issuer you can just go down to second on list) and you know you're getting a competitive rate that day.
My oldest discount brokerage account is with RBC Dir Inv and I don't think I've spoken to anyone there this century. So I've seen no evidence of being tempted to divert from a plan, discount brokers by definition are just order takers. I know what I want to do when I sign in, I do it and get out. I don't use the brokerage info re research, etc, (I'm a bit odd, I suppose, in that I don't really do traditional research, stock analysis, etc) so maybe that helps me stay away from temptation, I simply go in to buy or sell something that day.
Having it all in one account, especially with registered plans, and never having to use the phone has value to me. Thank you, big banks.
6:29 pm
October 27, 2013
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Loonie said
Another advantage of the CU approach is that there is no temptation to move RIF into riskier investments, which is always present in brokerage account. You and your POA will, perforce, stick to the plan. This is particularly useful when/if our mental faculties decline.
I suspect if one uses good judgement in picking a responsible POA, they are not going to stray from the IPS (Investment Policy Statement) that every one of us should have outlining, in a page or two, the investing strategies to use as well as the boundary conditions on what not to do. Regardless, we are not going to persuade each other to change our very different views. The OP can decide for him/herself how to position his/her RRIFs from the various options available.
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