Portfolio Advice for Elderly Relative (Early 90s)

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
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GreatLaker
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Re: Portfolio Advice for Elderly Relative (Early 90s)

Post by GreatLaker »

Our current objective is to consolidate all the asset accounts at one FI, mainly for simplicity but also to get better rates. Currently have 4: TD, TDDI, CIBC and Tangering. The RRIF is at TDDI, and have a chequing account at TD, so TDDI is the target for all the asset accounts.

Is TDDI the best choice? Dunno. Is TDDI a good choice? Absolutely.

TDDI's HISA (TDB8150) currently has 1.1% interest rate. Tangerine also has 1.1%, whereas best non-promo rates at CIBC and TD Canada Trust are 0.9%. CIBC has a special for 2.3% for new money up to end of March, and Tangerine has promo rates for new money quarterly. We don't want to start shuffling money around for higher rates or 3 month promo rates, not with any of the current FIs and not with any of the other online banks.

TDDI currently offers 3 year GICs up to 2.7%, compared to 2.3% at Tangering and much lower at TD and CIBC.

YTM on XSB is 2.29, and BXF is 2.18. So expected return on GICs at today's rates is higher than s/t bonds (at the expense of liquidity). I suppose if rates go up then a bond fund's yield will benefit faster than a ladder of GICs.

So this brings me back to the same conclusion of diversification into GICs for best safe low-volatility return, HISA for best liquidity, and some s/t bond fund for in-between.

It won't give the ultimate in return and it's not what I do in my own accounts, but it will be both simpler and better return than the current mish-mash.
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AltaRed
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Re: Portfolio Advice for Elderly Relative (Early 90s)

Post by AltaRed »

GreatLaker wrote: 17 Feb 2018 12:43 YTM on XSB is 2.29, and BXF is 2.18. So expected return on GICs at today's rates is higher than s/t bonds (at the expense of liquidity). I suppose if rates go up then a bond fund's yield will benefit faster than a ladder of GICs.
I'd suggest they are pretty much the same over a rolling 3-4 year period. XSB will lag during interest rate increases simply because of older bonds in the mix, but so would a 5 year GIC ladder IF it was in full operation today. IOW, a 5 year GIC ladder in full operation today would have at least one 5 year GIC in it that was bought a few years ago with about a 2% interest rate.
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Ken
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Re: Portfolio Advice for Elderly Relative (Early 90s)

Post by Ken »

Thanks for this thread. I am in a similar situation but some differences.
- 3 heirs.
- currently all of the elderly persons accounts are 3-way joint accounts between the elderly person and 2 of the heirs.
- no real need for the joint accounts as we are all in Alberta with negligible probate costs so the accounts are joint for simplicity of processing the will and for accountability in the meanwhile.
- The senior and to some extent the other heirs are not interested in maximizing returns or opening a joint brokerage account or understanding index funds so all the funds are currently in joint cash accounts at online banks plus a local joint chequing account. No GICs even. They would all go with anything I suggested but I am not willing to accept that responsibility. The senior could live out their days on the current savings even if they produced ZERO income.
- currently the senior is living in their paid off personal residence and CPP/OAS/etc. more than pays monthly costs.

But a big change is coming as the senior will soon be moving into a care facility, monthly costs will increase (but still managable), and the personal residence will be sold.
I am currently using Achieva and Tangerine for the 3-way joint accounts but with the sale of the residence and my desire to limit each bank to $100K, I'll be looking for more online banks that support 3-way joint accounts. If any of you know of any please let me know.
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Re: Portfolio Advice for Elderly Relative (Early 90s)

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Would the senior be amenable to gifting, say the proceeds of the house now, if it is certain they don't need the money?
I'm wondering if the intent of these joint accs is spelled out in their will or codicil? As I understand it, setting up inter-generational joint accounts does not guarantee the FI won't require probate before making the funds available. Having the estate spread out amongst multiple FI's seems like a lot of work to me once the estate needs to be settled.
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Re: Portfolio Advice for Elderly Relative (Early 90s)

Post by BRIAN5000 »

I almost hurt myself yesterday thinking about this

Option 1
100k HISA TDDI
100 3% Oaken GIC
No good need a new bank account

Option 2
100k HISA TDDI
100K VCNS
Can all be done at TDDI, easy, no GiC's to renew, use UP TFSA room for VCNS, 20/80 total portfolio which IIRC is at the optimal point on some curve, lol

Option 3
100k HISA TDDI
1-3 YEAR GIC'S AT TDDI
Short term bond fund

Had a fourth option but can't remember what it was now.
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Re: Portfolio Advice for Elderly Relative (Early 90s)

Post by GreatLaker »

BRIAN5000 wrote: 18 Feb 2018 16:12 Had a fourth option but can't remember what it was now.
LOL. Nice to know that there are other people that over-analyze obsessively while suffering short-term memory loss. Thanks for the laugh Brian. :rofl:

I have decided on your option 3.

VCNS + HISA is something I thought about. It does have a couple of drawbacks compared to option 3. It has some equity, which I'd rather avoid for such a risk averse senior. Its bond component has a duration of ~8 years which is very long for someone that is 92. Plus with GICs at TDDI I get to call in and talk to the nice agents at the call centre once a year. Hopefully their hold times will become shorter. I heard they are backed up with calls from neophyte traders buying pot and crypto-currencies. It's a wonder everyone is not a millionaire by now.

Another option I considered is just stuff it all in one of TD's conservative Comfort Portfolios or Retirement Portfolios. but that's like VCNS with an MER 10 times higher.

Option 3 it is.
When I was young, I was poor. Now, after years of hard work, I am no longer young.
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