New Canadian Investor - Questions

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
pmj
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Re: New Canadian Investor - Questions

Post by pmj »

Is the pension plan with your new employer an RPP - an employer plan - or an RRSP - where, in effect, the employer makes contributions on your behalf to a group RRSP?
If it's an RPP, I don't believe that you need "contribution room" - hopefully someone can confirm / correct this.
If it's an RRSP, I believe you can delay claiming the contribution until a later year when you will have contribution room.
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Re: New Canadian Investor - Questions

Post by brucecohen »

pmj wrote:Is the pension plan with your new employer an RPP - an employer plan - or an RRSP - where, in effect, the employer makes contributions on your behalf to a group RRSP?
Technically, there is no such thing as a "group RRSP." It's just a collection of individual RRSPs administered together. If Paulie's new employer sponsors a group RRSP, no contributions can be made until 2015 when he has "deduction room." Actually, as I think about it, there could be a $2,000 penalty-free over-contribution but it would not be tax-deductible until it's applied against deduction room in a later year.
If it's an RPP, I don't believe that you need "contribution room"
Correct. RRSP room works on a one-year lag. RPP room doesn't.
If it's an RRSP, I believe you can delay claiming the contribution until a later year when you will have contribution room.
As long as the contribution is no more $2,000. With no room, contributions over $2,000 would face a penalty tax of 1% per month.
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Re: New Canadian Investor - Questions

Post by pauliec84 »

Thanks for all of the info from everyone. It has greatly helped to reduce the stress surrounding the tax implications of the moving.

I think I will just sort out the 401K issue by not contributing to much.

I will also just avoid Canadian mutual fund entirely, and Norbit gambit everything into American ETFs.

Now onto regular investment issues...
- With $10 a trade. It will take $30 to use Norbit's to actually get into a US ETF. I need to decide how often I want to pull this off to minimize my transaction costs relative to the amount I am inventing (maybe everytime I save up 7 - 10K?).

- I will have a minimum defined pension which will replace ~50% of my salary upon retirement. I see this aas very close to a risk free asset, and need to think how this will change my investment policy. I feel like combined with a stable job, it will give me the ability to take a lot more risk with my non investment portfolio. Lots more small value funds.
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Re: New Canadian Investor - Questions

Post by AltaRed »

pauliec84 wrote:Now onto regular investment issues...
- With $10 a trade. It will take $30 to use Norbit's to actually get into a US ETF. I need to decide how often I want to pull this off to minimize my transaction costs relative to the amount I am inventing (maybe everytime I save up 7 - 10K?).
That makes a lot of sense and what most people would do to keep costs down.
- I will have a minimum defined pension which will replace ~50% of my salary upon retirement. I see this aas very close to a risk free asset, and need to think how this will change my investment policy. I feel like combined with a stable job, it will give me the ability to take a lot more risk with my non investment portfolio. Lots more small value funds.
Many of us here would count the DB pension as an annuity, and hence part of the fixed income component of their asset allocation. The tricky part is valuing that component at any given point in your career and the probability you will be with that employer long enough to collect that pension many years hence. Obviously that crystal ball gets more clear as you near retirement. Only you can decide how much weight you want to count on for that annuity at various points in your career.
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pauliec84
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Re: New Canadian Investor - Questions

Post by pauliec84 »

Many of us here would count the DB pension as an annuity, and hence part of the fixed income component of their asset allocation. The tricky part is valuing that component at any given point in your career and the probability you will be with that employer long enough to collect that pension many years hence. Obviously that crystal ball gets more clear as you near retirement. Only you can decide how much weight you want to count on for that annuity at various points in your career.
Thanks for the help. I just read the S&P report of my employer. It has a AA rating, but sites the pension obligations as a concern, and sites possible future revisions to the plan. Well I guess I can count the amount contributed each year as fixed income at least, if not annuity value.

Anyway thanks for all the help from everyone. I think most of my immediate questions have been answered. Hope to be able to contribute to investment topics more going forward.
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Re: New Canadian Investor - Questions

Post by fundamental »

Q: For a new Canadian Permanent Resident arriving to Canada mid-year from China, do they qualify for a $5500 TFSA contribution in that tax year? Or do they need to wait until the following tax year ?
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Re: New Canadian Investor - Questions

Post by OhGreatGuru »

According to this source: http://tfsahelper.ca/for-foreigners/new ... to-canada/ it doesn't matter if you arrive part way through the year. You are entitled to the full amount of the year's TFSA contribution room for the year of your arrival. But you must wait until you are officially resident and have received a Social Insurance Number before opening a TFSA and making contributions. (You will be penalized if you make contributions while still a non-resident.)
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Re: New Canadian Investor - Questions

Post by fundamental »

OhGreatGuru wrote: 01 Aug 2017 15:53 According to this source: http://tfsahelper.ca/for-foreigners/new ... to-canada/ it doesn't matter if you arrive part way through the year. You are entitled to the full amount of the year's TFSA contribution room for the year of your arrival. But you must wait until you are officially resident and have received a Social Insurance Number before opening a TFSA and making contributions. (You will be penalized if you make contributions while still a non-resident.)
Thanks O Double G !
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