Retirement Investing on My Own

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
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Turkey1
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Retirement Investing on My Own

Post by Turkey1 »

I am 57 years old, (single, one adult son) own my own home, I have no debt. I find it easy to save money, and a lot harder to invest this money.
I will have a small work pension of maybe $1,200.00 per month.
I have $135,000.00 in an online waterhouse account. ( within this account I am sitting on $21.000.00 cash)
I have $20,000.00 in my regular savings account
I have $175,000.00 in a raymond James account, I have $5,000.00 cash here, as well as $9,000.00 in a mutual fund that has come due, so I can cash out without incurring penalty fees. I plan on transferring the total account over to my Waterhouse account in 2017 when I can escape from the clutches of my investment adviser.
I have RRSP room
TSFA room
A lira that I understand must be kept till the age of 65, (no problem, I do not need this money)

I have been all over this forum for the past week, trying to get as much knowledge as possible.(my head is swimming!)
1. From this forum I have found out that I should get the mutual fund transferred over to my Waterhouse account "In Kind" to avoid incurring high fees for having an adviser sell it?
2. the Stingy Investor feels that even the low fees charged by ETF's are still too much, and feels that a person should be buying say the top 50 percent of the stock that a ETF has to replicate that investment:

copied from Stingy Investor site
Cost Comparison: ETF vs Stocks in the ETF
Canadian ETF ETF Cost Stock Cost
iShares CDN Tech Sector (XIT) $2155.00 $140.00
iShares CDN REIT Sector (XRE) $2120.00 $300.00
iShares CDN Financial Sector (XFN) $2120.00 $520.00
iShares CDN Dividend (XDV) $1945.00 $600.00
iShares CDN Gold Sector (XGD) $2120.00 $920.00
iShares CDN Materials Sector (XMA) $2120.00 $1120.00
iShares CDN Energy Sector (XEG) $2120.00 $980.00
iShares CDN Jantzi Social (XEN) $1945.00 $1200.00
iShares CDN LargeCap 60 (XIU) $650.00 $1200.00
iShares CDN Growth (XCG) $1945.00 $1020.00
iShares CDN Value (XCV) $1945.00 $1540.00
iShares CDN Completion (XMD) $2120.00 $3580.00
iShares CDN SmallCap (XCS) $2120.00 $4420.00
iShares CDN Composite (XIC) $965.00 $4780.00
iShares CDN S&P 500 (XSP) $895.00 $10020.00
iShares CDN MSCI EAFE (XIN) $1770.00 $18340.00
3. when to "sell at a loss for tax purposes" , I am not sure I would know when to bite the bullet and get rid of something.
4. I understand it is better to buy US stock, unhedged.
5. I HAD been buying $400.00 per month in TD E series Can, US, International indexes, but put a stop to that a few months ago when everything was going in the toilet.
6. I am hoping to get Waterhouse to pay my transfer fees to move the Raymond James $14,000.00 (cash and next edge ahl), some people to seem to pay no transfer fees, so not sure if I will be successful, is there a secret for getting them to pay?
7. once I have the the "next edge:MCC208" in my Waterhouse account how do I sell it?
8. some ETF's I had considered;
VCN
XAW
VTI
VUN
HXS
VFV
HR.UN
REF.UN
CAR.UN
Any suggestions? ETF vs Stock? Which ETF's?
Thanks for all the free advice put out there, it is all appreciated.
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AltaRed
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Re: Retirement Investing on My Own

Post by AltaRed »

I think the first thing you need to do is to sort out what asset allocation you want (need). Only then can you start to pick products to meet that asset allocation.
1. It is not clear to me how much of your overall investments are in mutual funds, and whether they are actively managed mutual funds, index mutual funds or TD efunds. The MERs of each of those groups varies widely.... the TD efunds being the least and therefore the most competitive with ETFs (with even lower MERs most of the time). If you are into DSC mutual funds, with a number of years left on the 6-7 year payout schedule, you cannot escape redemption fees (for the most part) since they are assigned by the mutual fund company rather than your investment advisor. IOW, we need to know quite a bit more about your mutual funds to advise further.
2. Don't get hung up on ETFs with low MERs versus Stingy Investor's mantra that you can essentially hold stocks for free. Few retail invstors have the interest, skill or time to stock pick and a Couch Potato portfolio of low cost ETFs serves them best. I chafe at the suggestion that stock picking is 'best' It simply is not so for most investors.
3. Tax loss selling is a judgement call. Basically you decide whether you an investment you hold is in a loss situation for a number of years and if you have lost hope in it recovering in a number of forward years, sometimes it is best to move on. Sell it at a losss to offset some cap gains you might have elsewhere. There is no golden rule.
4. The point of buying unhedged non-CAD assets is that you are not putting all your eggs in the loonie. If the loonie tanks a lot relative to other currencies such as the USD, it is really nice to know some of your assets in unhedged USD are thus performing very well on a CAD basis. A good majority of our Canadian purchases are based on the USD whether we like to admit it or not. Gasoline, autos, fruits and veggies, electronics, etc, etc.
5. That is market timing. That suggests to me that you have not dealt with your risk tolerance as it pertains to equities, etc.
6. Most discount brokerages will cover up to $150 in transfer fees for accounts from another broker. It is just a matter of asking for that and getting iit in writing such as an email. However, moving $14,000 from RJ is likely not enough for TDDI to pay that much. It is different if you are transferring $100k or so. I don't know what 'next edge' is. If that is a proprietary RJ product, then you cannot transfer it in kind. You will have to sell it at RJ first.
7. See 6. above.
8. A good list of broad based ETFs to choose from, except HR.UN, REF.UN and CAR.UN are not ETFs. They are REITs, i.e. equities. You cannot ask which ones are best without the context of coming up with an asset allocation, and advising what your whole portfolio is, or not. We also don't know whether some, or all, of this is in registered accounts like RRSPs and TFSAs.
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Re: Retirement Investing on My Own

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Turkey1 wrote:I am 57 years old, (single, one adult son) own my own home, I have no debt. I find it easy to save money, and a lot harder to invest this money.
I will have a small work pension of maybe $1,200.00 per month.
I have $135,000.00 in an online waterhouse account. ( within this account I am sitting on $21.000.00 cash)
I have $20,000.00 in my regular savings account
I have $175,000.00 in a raymond James account, I have $5,000.00 cash here, as well as $9,000.00 in a mutual fund that has come due, so I can cash out without incurring penalty fees. I plan on transferring the total account over to my Waterhouse account in 2017 when I can escape from the clutches of my investment adviser.
I have RRSP room
TSFA room
A lira that I understand must be kept till the age of 65, (no problem, I do not need this money)

Thanks for all the free advice put out there, it is all appreciated.
Remember free advise is worth what you pay for it!!

What kind of investments are you holding in your various accounts?

Is your Waterhouse account outperforming your Raymond James account?

You are paying an advisor, how much advise are you getting?

Keep asking yourself "Why".

Why are my accounts not performing to my expectations? You will answer "Because of they do this" Then ask "Why do they do this?" Be like a curious child, keep asking why to every answer. Then when you get down to the underlying reason ask yourself what am I going to do about it?

Do you have a Personal Investment Plan? It is something your financial advisor should have helped you develop. If not start writing one yourself.
this link is a start.http://www.wikihow.com/Write-a-Personal-Financial-Plan
"And the days that I keep my gratitude higher than my expectations, well, I have really good days" RW Hubbard
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Re: Retirement Investing on My Own

Post by pmj »

If you already have a TD account it's unlikely that you'll get any help with the transfer fee from another account, esp for only $14k. The fee rebates are designed to attract new clients, not to help existing clients ....
It's not a given that you can't hold apparent broker-specific funds at another broker. A friend was recently able to transfer a CIBC HISA to BMO. Check the specific fund with TD. TD may charge a selling commission - there's a list at the website / check with TD.
Peter

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Turkey1
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Re: Retirement Investing on My Own

Post by Turkey1 »

Thanks for the response;
-my Ray James stuff is a mix of about 6 different mutual funds, (Sentry, and Dynamic, of course everything is DSC!) with one year remaining (total 7 year term) MERS range from 2.14% to 4.5%, total value is $175,000.00. I assume the $6,000.00 in this account showing as `cash`would be from dividends. I have the Next Edge AHL Fd-J-DSC, $9,231.00 ,this was bought from CIBC Wood Gundy more than seven years ago, the MF name at that time was Man AHL Alpha Cl A-DSC, originally bought for $10,000.00, so in 7 years this had lost $769.00 and had a name change. So my question on this fund is: Ray James will charge me to cash out of this. (sorry my question mark is not working). Do I get it transferred out ìn kind``, and sell myself through my waterhouse account.
My Waterhouse account has the 3 Td e series markets (CAN' US' International) and a bunch of stocks, most are down(SU' CU' WJA' IPL), some are OK, or a slight increase (thank god for my National Bank!) GE, MacDonalds
I had stopped buying the TD E series several months ago when everything was free falling in a downward spiral, I am going to start up again with the buying e-series dollar cost averaging as I can buy for free. Would you consider these any better or worse than the huge selection of ETF`s out there, all the same. Who knows!
For ETF`s I was going to buy maybe 4, (for diversification, hence the REIT`s). One of you had said to buy $5,000.00 at a time to make better use of the fees involved in buying. If it only costs $9.99 to buy, is this really a consideration..

How low should I be looking for MERS on ETF`s. I had considered I Shares US Fundamental Index= mer .71%, mngmt fee .65%
HXS .10 mer
VFV
VCN .06
I probably have 25 different ETF`s written down to consider,(how to chose 4) they all seem to buy different stocks. Warren Buffet says `` buy Vanguard, tracks S&P 500 index. Do you think any of the ETF`s do any better that the TD E-series.
I am not interested in Bonds or GIC`s, My Ray James has made me a profit, I just don't care to pay the large MERS anymore, ( I also do not feel they were honest about how they actually make the compounding fees through their mers and DSC. She told me that it is actually the MF that pays her, she neglected to say they pay her with MY money!) Now that I have a trading account and see how easy it actually is to look after my own money. It just irks me that my portfolio that I manage is not doing better. I do expect oil to recover, and west Jet to start to climb again. So I DO realize the stock market will climb again.
One more thing, I am a bit thick in the head, are certain things better to be held in my RRSP account as opposed to my TSFA or regular waterhouse account.
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Re: Retirement Investing on My Own

Post by deaddog »

Turkey1 wrote: , My Ray James has made me a profit, I just don't care to pay the large MERS anymore, ( I also do not feel they were honest about how they actually make the compounding fees through their mers and DSC. She told me that it is actually the MF that pays her, she neglected to say they pay her with MY money!) Now that I have a trading account and see how easy it actually is to look after my own money. It just irks me that my portfolio that I manage is not doing better. I do expect oil to recover, and west Jet to start to climb again. So I DO realize the stock market will climb again.
One more thing, I am a bit thick in the head, are certain things better to be held in my RRSP account as opposed to my TSFA or regular waterhouse account.
If your Raymond James account is outperforming your Waterhouse account then maybe the funds and your broker are earning their fees.

I would not be in a hurry to change everything over to self directed until you prove to yourself that you can manage your own account. Sure you can invest in a portfolio of index ETFs and have market performance but if your high MER mutual funds are outperforming your self managed portfolio are you really gaining anything.

What are your objectives? Do you want to pay the lowest fees possible or do you want market beating performance. I’m not saying that high fees translate into superior performance but you should look at the relative performance of each portfolio after fees are deducted.

Have you sat down and discussed your concerns with your advisor? You’ll be surprised at the concessions they may make to keep your account.

Next Question is why isn’t the portfolio you manage doing better. Do you have a written plan that you follow?
"And the days that I keep my gratitude higher than my expectations, well, I have really good days" RW Hubbard
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Re: Retirement Investing on My Own

Post by Turkey1 »

Thanks Dead Dog,
I think my investing hasn't given me great returns because almost everything I have invested in has dropped in value (oil, pipe lines) , I do expect these stocks to recover, and I did not have a big enough position in my stocks that DID do well, GE, Nation Bank, McDonald's.
I was hoping by buying ETF's (as Warren Buffet promotes) I could cut my fees, when investments are only typically making 4-6 %, it seems a shame that the advisor is making more money than I am.
I know I can buy most of what she is selling me in the "F" series, (she sells in "A" series).
Everything on this forum goes against having an adviser look after your money, I have the online brokerage account set up, and have no problem executing the "buys", I feel I could use some advise on which ETF's might have a chance of performing well.
I am not interested in having conversations with advisers that are only looking at selling me funds that they get the biggest kick back from.
Thanks for your responses.
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Re: Retirement Investing on My Own

Post by AltaRed »

Turkey1 wrote:I think my investing hasn't given me great returns because almost everything I have invested in has dropped in value (oil, pipe lines) , I do expect these stocks to recover, and I did not have a big enough position in my stocks that DID do well, GE, Nation Bank, McDonald's.
Such are the lessons learned from stock picking. You might have a 50% chance of being right in your picks/sectors/geographic regions. Buy the broad based indices and you take away the temptation to believe you are smarter than the market.

Even us seasoned investors get our heads handed back to us despite 20-30 years of learning. Some of us recently thought we couldn't lose with fixed reset preferred shares back in 2013-2014 because the GoC 5 year bond yield just 'had' to go up from the 1.5% range. So much for that theory.
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Re: Retirement Investing on My Own

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Turkey1 wrote:Everything on this forum goes against having an adviser look after your money, I have the online brokerage account set up, and have no problem executing the "buys", I feel I could use some advise on which ETF's might have a chance of performing well.
I am not interested in having conversations with advisers that are only looking at selling me funds that they get the biggest kick back from.
Thanks for your responses.
Well Buffet has suggested the Vanguard S&P index fund. 90% and 10% in a bond fund.

Are you going to take your losses and start over?
"And the days that I keep my gratitude higher than my expectations, well, I have really good days" RW Hubbard
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Re: Retirement Investing on My Own

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Are you going to take your losses and start over?
Hell No! Keep what I got, buy new stuff, I'm a pack rat!
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Re: Retirement Investing on My Own

Post by cannew »

Our preference is stocks. We invested in dividend growth stocks during our accumulation phase and now we are retired and living off a small portion of the income our portfolio generates. The rest gets reinvested to continue to generate a growing income and grow the portfolio.

The current trend is towards etf's to get full diversification, at a low fee and close to market returns. If that's ones goal than it may be a good choice. However, we've found a concentrated portfolio of solid DG stocks has done what we wanted, which is a growing income during our retirement, without having to touch capital.
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Re: Retirement Investing on My Own

Post by Dakota435 »

I started looking into my own portfolio after seeing two investment advisors. I will have about half a million to invest when I retire at the end of the year and intend to generate somewhere around half my retirement income with it (on top of 34k/yr company pension). One advisor with Dominion Securities offered me a portfolio that consisted to giving all my money, with DS getting a cut, to a US based wealth management firm called Russell Asset Management, which would put it into a zillion mutual funds they run. The other one proposed a typical stock and bond mutual fund portfolio. I don't want to be invested in bonds with interest rates at the bottom of the long term range. I've decided to forget about those guys.

As a former real estate agent I am very comfortable with the world of income real estate and mortgages, and my plan is a largely real estate based dividend income portfolio of REITs, Mortgage Investment Corporations, and major bank stocks.

My preliminary plan is:

100k in a couple of private REITs like Centurion and Skyline yielding around 6-7%.
100k in 4 or 5 public REITs like Can Tire, Northview, Smart, etc yielding around 6%.
100k in 5 or more public MICs, Timbercreek, Eclipse etc yielding around 7%.
100k in 2 or 3 private MICs, Frontenac, Westboro etc, yielding around 6-7%.
The last 100k would go into major bank holdings, life insc company stocks, yielding around 4-5%.

My target is an overall yield of 6%, with just enough growth to cover inflation. I could draw 35-40k from the fund each year and it would take 30 years to draw it down. I don't expect to need to draw CPP until 65.

I'm really keen on MICs and had no idea they even existed until a year ago. Yields of 7% and the public ones have extremely low volatility (probably the lowest Betas of any dividend stock). One private one, Frontenac, has been paying prime plus 4% to its unit holders for 30 plus years, focusing on 1st mortgages in eastern Ont, far away from the Toronto bubble. If interest rates go up, the MIC payouts rise with about a 1-2 year lag because of the mortgage rollovers. They are effectively short term high yield bonds that are secured by (mostly) 1st charge on title to Canadian real estate.
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