# A correction you can't refuse?



## Chris L (Nov 16, 2011)

So, looks like the correction is gaining some traction. At what percent decline do you start really shoving into the market? And no, not market timing, just at what level do you start buying? Eventually things go on sale right...

I feel that around 10-15% decline from peak makes sense from what I've been reading (stocks overvalued, etc.), but I'm new, so please be patient with me.

And yes, I'm itching to deploy a full TFSA and want to avoid buying more expensive than I need to. I don't feel like getting crushed right out of the gate. Looks like I'm about set to get going. Appreciate any thoughts.


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## Synergy (Mar 18, 2013)

Are you talking about buying the market or purchasing individual securities?


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## Chris L (Nov 16, 2011)

Synergy said:


> Are you talking about buying the market or purchasing individual securities?


Couch potato. So the entire market right...

I'm not trying to be prefect, but what's the big green light for you experienced investors? I want to just deploy the whole thing at once then rebalance in the new year with new contribution room. 

I'm see current around 7.4% decline from peak. For TSX....15,661 at 14,500 (about now).


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## Synergy (Mar 18, 2013)

I'm far from an "experienced investor" and I don't generally buy the index but I guess you could look at the P/E multiples for the TSX, S&P, etc. to determine at what price you'd be willing to jump in at. I'm not convinced that using an absolute % decline would be your best option. If I didn't have any skin in the game I'm not sure I'd be comfortable going "all in" at these levels. However, if you have a long time horizon and are able to stomach the ups and downs of the market you should be okay. Personally I prefer easing into a purchase even though some research suggests otherwise.


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## Time4earlyretirement (Feb 21, 2014)

Buy in increments on dips; no fees on ETF from Questrade. Buying some at 14500 wouldn't be a bad idea, it could go further down, it could go up. But 30 years from now, it would have most likely at one point be higher than 14500...


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## Chris L (Nov 16, 2011)

Right, I guess, PE is better. I found a nice link: http://www.investorsfriend.com/TSX Valuation.htm

I will just keep adding to it yearly...once I start, that is.

I have TD Waterhouse all set to go.


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## lonewolf (Jun 12, 2012)

Chris L said:


> So, looks like the correction is gaining some traction. At what percent decline do you start really shoving into the market? And no, not market timing, just at what level do you start buying? Eventually things go on sale right...
> 
> I feel that around 10-15% decline from peak makes sense from what I've been reading (stocks overvalued, etc.), but I'm new, so please be patient with me.
> 
> And yes, I'm itching to deploy a full TFSA and want to avoid buying more expensive than I need to. I don't feel like getting crushed right out of the gate. Looks like I'm about set to get going. Appreciate any thoughts.


 It is impossible to buy the market that is not a point in time. No matter how you slice it couch potato or what ever when buying & or selling the market "time" is part of the equation & the investor is always timing the market.


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## Tycho (Sep 27, 2014)

I'm in a similar boat, I have just started investing with my maxed out TFSA. I started with TD e-series; 40% Canadian Bonds, 20/20/20 mix of Canadian/US/international equity. I bought $10k of that mix yesterday, I've got a bit of cold feet with how the market has behaved he last few weeks, looking for the best time to jump in with the other $21k.


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## fatcat (Nov 11, 2009)

i would let go of your obsession with the market p/e
just look at your buy list and find stocks that you think are priced right and then pick away at them over time
your question of when to get in is unanswerable by anyone


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## lonewolf (Jun 12, 2012)

Chris
If you want to time the market based on size of correction. One way would be on a 5% correction put 5% of your money down, 10% correction put 10% of money down 15% correction put 15% money down etc or could start with a lower ratio of percentage increase as the market drops & increase the ratio of the money on the table as the percentage of drop increases i.e., 25% correction only 5% money on the table 50% correction 35% on money on the table, 75% correction 70% money on table, 99% correction 100% money on table. Of course 100% does not mean all your net wort but only the money set aside for speculation.


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## Chris L (Nov 16, 2011)

Yes, I understand. I guess I'm looking for a shove.

Portfolio

I will not ever have an RRSP as I plan to have a higher income in retirement. This portfolio is coupled with an investment property (paid off). In my portfolio I have lowered the Canadian bond portion (from couch potato by 10%) and split it with Canadian and US equity (for higher risk/reward).

I am mid-30’s. Will max out TFSA and add extra to the Non registered to balance out allocations. Portfolio will run about $41k or thereabouts.

Non = non registered

Have I got the locations correct for tax reasons (TFSA vs. Non)? 

Trading with TD, are there any ETF swaps you would make to avoid trading fees? (I know TD probably has some of their own products which they may allow purchase with a lower cost. 

Should I drop the bond portion any further? I plan to simply continue to add to this over the years. At last max out the TFSA. Long horizon here.

Any suggestions beyond “market timing?”



Canadian equity 25%	TFSA	Vanguard FTSE Canadian All Cap (VCN)

US equity 20%	Non	Vanguard Total Stock Market (VTI)

International equity	15%	Non	Vanguard Total International Stock (VXUS)

Real estate (REIT)	10%	TFSA	BMO Equal Weight REITs (ZRE)

Real-return bonds 10%	TFSA	iShares DEX Real Return Bond (XRB)

Canadian bonds 20%	TFSA Vanguard Canadian Aggregate Bond (VAB)


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## My Own Advisor (Sep 24, 2012)

Looks pretty solid to me but I don't own bonds myself. If you've got decades of investing ahead why bonds now - if only you are doing this to protect yourself from yourself when the market tanks.


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## Synergy (Mar 18, 2013)

fatcat said:


> i would let go of your obsession with the market p/e
> just look at your buy list and find stocks that you think are priced right and then pick away at them over time


The OP is interested in buying the market / index - I've already asked that question. So selectively picking different securities is out of the equation. That would however be my preference - seek out value in sectors / names that you like.


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## Synergy (Mar 18, 2013)

Chris L said:


> Canadian equity 25%	TFSA	Vanguard FTSE Canadian All Cap (VCN)
> 
> US equity 20%	Non	Vanguard Total Stock Market (VTI)
> 
> ...


Personally I'd drop the REIT allocation to 5% or less. That way you have some room to "nibble" should rates start to raise faster than some expect. I'm not a fan of bonds right now and if your goal is to reduce portfolio volatility you could consider using a combination of GIC's and HISA's instead of the bond funds.

edit: otherwise looks pretty good to me.


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## Butters (Apr 20, 2012)

Seems like you're buying ETFs
It will cost you $10 each time you buy with TD so be sure to spend at least $1000 dollars to keep your % lost to trading fees under 1%

Or you could start at questrade where it's free to buy ETFs

Or you could go completely hands off and do the monthly adding TD e-series as suggested on couch potatoe

I'm with MoA no bonds needed



As for timing the correction
Just wait until you see then trend reverse
It's better to jump in on the way up than the way down
Make sure to count the trading days

For example it went up large yesterday. But now today back down
You need at least a week of neutral or positive before dipping your toes in
It's a pretty strong downward trend right now
And like others said. You can start with 30% this month
30% next month
And top it up towards the end of the year


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## lonewolf (Jun 12, 2012)

Chris

I would drop the bond funds. When interest rates rise the bond funds will lose money. Keep it simple go with GICs check globe & mail for best rates


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## Chris L (Nov 16, 2011)

Okay, glad I asked. I will drop the bond fund and spread everything else out. I never liked the bond part anyway and with all time low interest rates, it seems silly.

Modified (dropped bonds). My asset allocations are kind just randomly bumped up. I feel the US is probably going to do better than CAN moving forward...but just a guess.



Canadian equity	35%	TFSA	Vanguard FTSE Canadian All Cap (VCN)

US equity	30%	Non	Vanguard Total Stock Market (VTI)

International equity	25%	Non	Vanguard Total International Stock (VXUS)

Real estate (REIT)	5-10%	TFSA	BMO Equal Weight REITs (ZRE)


REMOVED

Real-return bonds	0%	TFSA	iShares DEX Real Return Bond (XRB)

Canadian bonds	0%	TFSA	Vanguard Canadian Aggregate Bond (VAB)


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## lonewolf (Jun 12, 2012)

Chris

I think that's smart, The less money @ risk the easier to sleep @ night & follow a method. Its hard to buy stocks & put money on the table when your losing money in both stocks & bonds the mental stress is just to much.


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## My Own Advisor (Sep 24, 2012)

Looks better 

My last caution is the U.S. -listed stocks (VTI and VXUS), they will be inside the RRSP right? (Best place for them Chris, re: withholding tax)
http://www.myownadvisor.ca/indexing/


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## Chris L (Nov 16, 2011)

My Own Advisor said:


> Looks better
> 
> My last caution is the U.S. -listed stocks (VTI and VXUS), they will be inside the RRSP right? (Best place for them Chris, re: withholding tax)
> http://www.myownadvisor.ca/indexing/


Is it okay in non-registered? I CAN open a RRSP, lots of room, however, I'm planning to have a higher tax later on.

All else equal it's better to have the US out of TFSA right, even if it's in a non-reg account? I know I'll have to pay tax on them, but I think I'm okay with that.

I've done a bit of research, but its confusing. I'm apposed to open an RRSP. I'd rather stuff my TFSA, but I understand that withholding tax can not be recovered if it's in a TFSA, so ultimately, it makes sense to keep it out? That's a 15% hit guaranteed...that's pretty steep on gains. 

Basically I would put in Can Equity and REITs in TFSA and the US and Int into Non registered account.

Of course, as time moves forward, I can add some more CAN DIV stocks to the TFSA (chosen on value).

Is my thinking correct? Should those US and Int ever be in a TFSA?



Canadian equity	35%	TFSA	Vanguard FTSE Canadian All Cap (VCN)

US equity	30%	(Non)	Vanguard Total Stock Market (VTI)

International equity	25%	(Non)	Vanguard Total International Stock (VXUS)

Real estate (REIT)	5-10%	TFSA	BMO Equal Weight REITs (ZRE)


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## Butters (Apr 20, 2012)

Also if you have a larger amount say 5k+ to switch to US dollars use Norbit Gambit

Buy a stock inter listed stock on Canada. Get your broker to switch it over. Sell it on the NYSE
Usually DLR, but you could do it with a bank stock. 


VTI required US dollar

It's a violate market right now. Careful!

But I like it. Keep it simple

A few ETFs

But like I said before, every time you add with TD it will cost you 9.95 a trade
Questrade is free. 

So with Questrade you could set up yourself to pay that bill $200 monthly

And just remind yourself to log in once a month and top up whatever ETF isn't meeting your allocation. 

With TD you'd have to save that money for at least 5 months then top up a fund and be down 1% due to fees, Questrade definitely better for this.


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## GOB (Feb 15, 2011)

An RRSP is not only for retirement. I wouldn't be averse to funding one if I were you. If you're ever laid off or choose to take some time off with no income, you can withdraw from RRSP at very low rates and likely much lower than the marginal rates you contributed at - essentially free money not to mention the tax-sheltered growth you get. There is also the home buyer's plan if you don't own a home yet and are planning to buy sometime in the future.


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## CPA Candidate (Dec 15, 2013)

A correction would be the right term if stocks that were really expensive were getting hit, but lots of reasonably valued companies are getting slaughtered indiscriminately while Tesla and Facebook hang in there.


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## Spudd (Oct 11, 2011)

I don't know why you would put Canadian equity in the TFSA while leaving US/international in non-reg. Canadian equity is the most favorably taxed when it comes to dividends. 

While there is withholding tax on US & international that can be recovered in non-reg, the dividends are taxed by Canada as normal income instead of being favorably taxed like Canadian dividends. This should be a much larger factor for most people.

When deciding where to place what for US/international, take a look at this paper:
https://www.pwlcapital.com/pwl/medi...ithholding-Taxes_v04_hyperlinked.pdf?ext=.pdf


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## cainvest (May 1, 2013)

Chris L said:


> I CAN open a RRSP, lots of room, however, I'm planning to have a higher tax later on.


If you'll have no RRSP income in retirement are you sure you'll be in a higher tax bracket later on?


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## fatcat (Nov 11, 2009)

Synergy said:


> The OP is interested in buying the market / index - I've already asked that question. So selectively picking different securities is out of the equation. That would however be my preference - seek out value in sectors / names that you like.


right, for a guy in his thirties, he is unlikely to make a mistake however he does it ... i would go lump sum, who cares if it drops another 10-20% ? ... the op has a 40 year time horizon and he will do just fine over 40 years ... i would throw out all the bonds

and yes, i would prefer to buy best of class companies .. i have my doubts about a continuing renaissance in small businesses ... if you buy the index you get a lot of dreck with it

i think the large are going to be eating the small


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## Chris L (Nov 16, 2011)

I'm a RE investor by nature. In my early 20's I bought two rentals and paid them off over 10 years. I sold one (my primary) 2 years ago (moved into one unit of my rental) and waiting for a better deal. Money is sitting. I want to do a smallish-but-growing portfolio. I plan to reinvest in RE (minus my respectable portfolio) when RE appears more attractive. Should a bubble pop, I can scoop up many rentals. That's my main nature and what I am good at. However, at current prices, it's simply not worth it.

My plan would be to have two paid for rentals with my own paid for house coupled with the investments. Hence, I doubt I would have a lower income than now. In fact, my bracket right now is nearly nil as I live off proceeds from a paid for rental (recall I sold one off, halving my income, but doubling my liquid money). I wouldn't receive hardly any current benefit from an RRSP.

Still think I should put it in an RRSP?

I'll call my branch now and set one up just in case.

I like the questrade idea, that makes sense, but for I feel more confident investing through my bank. I don't plan on being terribly active with this account.

I think around 40k or so and add max TFSA+ a bit, maybe some DIV CAD companies for the favourable taxes. That plus two rentals and paid for house will be enough.

So that's my long horizon and maybe a little different than the avg guy.

Thanks for all the suggestions. 

I'm also not sophisticated enough to make up my own portfolio with IND stocks. Maybe in the future.

Just looking for clarification on where to put what. So given what I said, what do you think?

Canadian equity	35%	TFSA	Vanguard FTSE Canadian All Cap (VCN)
US equity	30%	Non or RRSP?	Vanguard Total Stock Market (VTI)
International equity	25%	Non or RRSP?	Vanguard Total International Stock (VXUS)
Real estate (REIT)	5-10%	TFSA	BMO Equal Weight REITs (ZRE)


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## Chris L (Nov 16, 2011)

Spudd said:


> I don't know why you would put Canadian equity in the TFSA while leaving US/international in non-reg. Canadian equity is the most favorably taxed when it comes to dividends.
> 
> While there is withholding tax on US & international that can be recovered in non-reg, the dividends are taxed by Canada as normal income instead of being favorably taxed like Canadian dividends. This should be a much larger factor for most people.
> 
> ...


Thanks for this. Read it, now my head is spinning lol. I'll have to re-read it.


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## My Own Advisor (Sep 24, 2012)

For what's it worth Chris L, recapping what I wrote earlier:
http://www.myownadvisor.ca/indexing/


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## mrPPincer (Nov 21, 2011)

Why ZRE and not VRE?
ZRE's annual management fee is 0.55%. VRE's is 0.35% and likely to come down in price as the fund grows if Vanguard Canada's other funds are any indication.
https://www.vanguardcanada.ca/individual/etfs.htm

BTW, in regards to whether to use an RRSP or not, yes you will pay dividend with-holding tax if you keep VTI and VXUS in your non-registered account, but it is recoverable against your income tax payable, so your original idea of not deferring tax through RRSP could still be a good one.

But as GOB mentioned upthread RRSPs can also have other uses besides retirement, like an occasional one-year sabatical or a home buyer's plan if you hadn't already owned your first home.


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## ShowMeTheMoney (Apr 12, 2009)

Spudd said:


> I don't know why you would put Canadian equity in the TFSA while leaving US/international in non-reg. Canadian equity is the most favorably taxed when it comes to dividends.
> 
> While there is withholding tax on US & international that can be recovered in non-reg, the dividends are taxed by Canada as normal income instead of being favorably taxed like Canadian dividends. This should be a much larger factor for most people.
> 
> ...


Thanks Spudd! That paper actually helps me a lot with my question on asset allocation I put in another thread


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## Chris L (Nov 16, 2011)

So I'm not successfully convincing anyone to keep them unregistered it seems! 

I've set up an appointment to open an RRSP. Will be mid-week before it's ready to go. My RRSP is not expected to be more than half of my overall portfolio including RE so I guess, that's cool in an RRSP anyway even if I do have to eventually pay higher marg tax.

Also talked with TD about Gambit. Complicated! The told me that in Nov or Dec they we won't be needing to do that anymore since USD will be tied into each acc.

Here's what I got now:

Canadian equity	35%	TFSA	Vanguard FTSE Canadian All Cap (VCN)
US equity	30%	RRSP	Vanguard Total Stock Market (VTI)
International equity	25%	RRSP	Vanguard Total International Stock (VXUS)
Real estate (REIT)	5-10%	TFSA	BMO Equal Weight REITs (ZRE) or VRE


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## cashinstinct (Apr 4, 2009)

VRE yield is so bad right now... around 2%
https://www.vanguardcanada.ca/individual/etf-distribution-history.htm?portId=9559

But it's a good thing apparently...
Found article to explain why: http://canadiancouchpotato.com/2013/12/19/why-has-vre-outperformed-its-rivals-in-2013/

There are companies with really low yield in the index they follow.


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## mrPPincer (Nov 21, 2011)

Here's an idea. 
If you're going to be putting money into RRSP anyway, why not save the resulting tax credits up until you are in a much higher tax bracket years down the road and use them then when they will make a much larger impact?

You'd still have the growth in the tax deferred account in the meantime, but if you plan to have a higher income later on you might be glad you saved the tax credits.


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## Cal (Jun 17, 2009)

Considering the tax rate on your rental property's income, I would consider an RRSP to defer some tax dollars.


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## My Own Advisor (Sep 24, 2012)

The thing is Chris L, if you max out your TFSA, then max out your RRSP, then you have a few hundred K (eventually) inside a non-registered account, getting taxed as a senior is VERY good problem to have 

Or you can retire early, wind-down the RRSP and move the money into the TFSA as contribution room rises or move money into non-registered for dividend tax credits!


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## Rusty O'Toole (Feb 1, 2012)

Buying at a discount of 30% to 40% is pretty safe, corrections seldom go farther than that. I don't think the stock market has seen a drop of more than 40% since 1930.

I am thinking of buying a little if stocks sell off more than 10% then more every 10% down, planning on a maximum of 50%.

I plan on selling OTM put options on ETFs and if I get exercised, keep them and sell OTM calls against them. With the idea of reducing my cost basis all the way down.


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## Chris L (Nov 16, 2011)

I'm still mulling this over. I don't think an RRSP is a good idea right now.

My income is very low ATM. I won't receive a big tax refund and won't save much on paying taxes. It will be higher once I buy another property as I will rent out my current unit, as just one example. I have a few other things planned which may change things moving forward.

I can always move it to an RRSP when my income increases right?

So hypothetically speaking, if I don't buy in RRSP, then do I put all of below in a TFSA or do I keep the US stuff unregistered, or the CAN stuff unregistered and the US stuff in?

Sorry, this stuff is really complicated for me. Thanks for all your suggestions thus far.

Canadian equity	35%	TFSA	Vanguard FTSE Canadian All Cap (VCN)
US equity	30%	RRSP or NON	Vanguard Total Stock Market (VTI)
International equity	25%	RRSP or NON	Vanguard Total International Stock (VXUS)
Real estate (REIT)	5-10%	TFSA	BMO Equal Weight REITs (ZRE) or VRE


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## humble_pie (Jun 7, 2009)

Chris L said:


> Also talked with TD about Gambit. Complicated! The told me that in Nov or Dec they we won't be needing to do that anymore since USD will be tied into each acc.



re currency gambit trading: many new investors confuse this manoeuvre with the TD auto-wash program, which will be phased out soon when they debut dual-currency RRSPs.

however, they are not the same thing. The need to gambit currencies will likely continue as before, as savers contribute their earnings in CAD from salaries & wages but then choose to hold US securities in their RRSPs.

without a gambit manoeuvre, the big green is going to apply its steep FX fee, currently around 1.50%.

it's also possible in the present RRSP to gambit in reverse, ie from USD to CAD. This function will likely also be lost in the new dual-currency RRSPs.

to make things even more opaque, TD has a lot of new hires among the licensed reps & sometimes the newer ones don't have a clear understanding of gambit trading either!


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## Chris L (Nov 16, 2011)

humble_pie said:


> re currency gambit trading: many new investors confuse this manoeuvre with the TD auto-wash program, which will be phased out soon when they debut dual-currency RRSPs.
> 
> however, they are not the same thing. The need to gambit currencies will likely continue as before, as savers contribute their earnings in CAD from salaries & wages but then choose to hold US securities in their RRSPs.
> 
> ...


Well this guy from TD just kept repeating himself. Okay so auto-wash is not the same. Okay, back to the drawing board.

Here's a good link which I was trying to follow: http://canadiancouchpotato.com/2013/12/03/norberts-gambit-the-complete-guide/


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## humble_pie (Jun 7, 2009)

TD developed the auto-wash feature so that people who already had US dollars could buy US securities in RRSP, then sell those securities, then wash the proceeds into US money market fund in order to prevent the TD monocurrency platform from converting those proceeds back into CAD. Bref, it was a way of streaming USD through an RRSP without paying an FX fee every time one bought or sold a few shares.

actually, before TD had the "auto" part of auto-wash going, a bunch of us clients used to do our own laundry (auto-wash isn't/wasn/t automatic) (auto-wash is actually a group of specialized TD reps in the ottawa call centre working every evening, doing each & every conversion manually, for each client's account)

but gambit trading is something different. It's actually plain old arbitrage, been around for centuries. It's what clients normally have to do when they contribute CAD from their salaries to their RRSPs, then choose to purchase a USD security. Clients who don't gambit/arbitrage will wind up paying the broker's FX fee on the currency conversion.

i did riff through your couch potato link & its linked PDF on gambitting at the TD. Ouf! is that guy ever wordy! the document looks overwhelming. Whatever you do, don't sign up for Intro to Trading 101 from him.

chris, do you have a gambit example firmly in mind that you would like to do? ie, in an existing RRSP or TFSA, do you have an amount in canadian dollars that you wish to convert into USD? if you'd care to post the details, we can comment. This - working from the specific - might be easier than reading so many abstract pages each:


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## GOB (Feb 15, 2011)

Chris, as mentioned before you can contribute to RRSP and take advantage of the tax sheltered growth without claiming the credits when your income is low. The credits can be carried forward indefinitely until you decide to use them (i.e. when your income is high). You may as well take advantage of the growth as soon as you can.


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## humble_pie (Jun 7, 2009)

GOB said:


> Chris, as mentioned before you can contribute to RRSP and take advantage of the tax sheltered growth without claiming the credits when your income is low. The credits can be carried forward indefinitely until you decide to use them (i.e. when your income is high). You may as well take advantage of the growth as soon as you can.



hey Gob i spotted this & can't resist passing on to you a brilliant optimization of this idea that was posted recently by member Guban. It's unbeatable, although possibly too fussy for some. Goes like this:

don't contribute the $$ to the RRSP, put the $$ instead in the TFSA. Meanwhile, the "room" in the RRSP will be carried forward, so those dollars can be contributed any time in the future.

in the TFSA, those same dollars will grow without any taxes whatsoever. Whereas there is a certain deferred tax liability when they grow in the RRSP, because eventually they will become taxable & at the highest possible rate.

when the time comes to use the RRSP room, withdraw the $$ from the TFSA & contribute to RRSP at that time.

in his final remark, Guban noted that this strategy will not work if the investment vehicle chosen in the TFSA goes down.


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## Chris L (Nov 16, 2011)

humble_pie said:


> hey Gob i spotted this & can't resist passing on to you a brilliant optimization of this idea that was posted recently by member Guban. It's unbeatable, although possibly too fussy for some. Goes like this:
> 
> don't contribute the $$ to the RRSP, put the $$ instead in the TFSA. Meanwhile, the "room" in the RRSP will be carried forward, so those dollars can be contributed any time in the future.
> 
> ...


THIS. 

I have lots of RRSP room because I have never owned an RRSP before and it has been accumulating. I think if no one can raise a major issue, I'm just going to max out my TFSA first with all the stuff (US and CAD) and then when my income increases, OR I want to buy more US securities and have no more TFSA room, I'll add them to my RRSP. Right now my marginal tax rate is so low, it's not going to help me to put in RRSP. 15% off the div isn't terribly inefficient at the current portfolio size. Besides, I should grow my TFSA and avoid any capital gains. 

I think I'm good with that. When things get bigger, or I earn more money yearly, I'll have to juggle things around. I'd like to get a larger sized TFSA than a larger RRSP. To me, the RRSP is kinda lame because it plans for a weaker future with weaker earnings which should not be the case for me. In anything, my income should be growing from now on. It's only low because I sold off one of my RE properties. 

If I really wanted to boost my income, I could simply buy another RE property. But I want to remain efficient and use the markets rather than be in just one local RE market.


Regarding the money wash...the guy said I really didn't need to do it until I planned on selling because that's when it goes into the money market account. However, I don't think he really understood what he was talking about.


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## GOB (Feb 15, 2011)

I agree that TFSA should be maxed out first, for sure. I was talking more about contributing to RRSP after the TFSA is taken care of. If only one can be funded, then TFSA all the way.


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## humble_pie (Jun 7, 2009)

chris i whizzed thru your thread & believe you have done an excellent job so far about diversifying your assets in life. I also think the ETFs you've chosen - the canadian, the 2 vanguard ETFs in USD - are good choices.

now there's a bit of a dilemma because, as Spud pointed out in her message No. 23 upthread, ideally one keeps one's USD securities in a RRSP, so there will be no US withholding taxes thanks to the tax treaty between the 2 countries.

but using the allocations you've worked out, that would mean having an RRSP about twice the size of the planned TFSA, oops.

one solution would be to reduce the size of the US/global component while increasing the size of the canadian allocation. I like this approach, myself.

another solution would be the one you've figured out, which is to eat the US 15% NR tax & hold nearly everything in a TFSA that is maxed to the $31k contribution limit. Especially since the TFSA is obviously the account you have been favouring, in your mind's eye. It's also the account i would prioritize, for a beginning investor with a growing income.

you could open a TFSA with all of the canadian ETF plus some of the US funds you've chosen. I myself would probably just stick to VTI, this is not a large account & i'd be wanting to keep it simple. I wouldn't worry about learning gambit trading at this point in time, i'd just pay the broker's FX fee to obtain those US dollars, which on 10k will not be intolerably severe.

i'd also increase the canadian portion of the total $41k portfolio. All of the CAD portion would be inside the TFSA. I'm not sure international stocks represent a bargain at present. Also i believe that beginning investors should learn from their actual investing experiences, beginning with items close to home that they can learn about more easily & progressing on from there to more complex investments that involve foreign taxation, etc.

maxing the TFSA will leave roughly $10k left over. This could go into an RRSP. However, i'd probably consider taking this to TD e-funds in order to avoid any $25 admin fee for small RRSPs that TD might have (check on this), plus with e-funds one would be able to contribute more from time to time without paying any commissions. There are e-funds for US securities & also for international securities.

one last proviso regarding that leftover $10k, though. You mentioned buying another rental property. Would you be needing that $10k for such a purchase? If so, this would mean a different scenario entirely. In such a case, imho the leftover $10k should be kept very conservatively in a simple HISA such as ING or people's trust offer. 

miscellaneous: i'd probably delay with putting the $10k into an RRSP. This would be a form of market timing in case the market correction gets more serious.


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## etfstrader (Sep 26, 2014)

*Buy The Dip*

It's time to buy the dip???


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## Chris L (Nov 16, 2011)

Thanks humble_pie this mirrors my thoughts.

For RRSP it's $25,000 lower limit to waive the $100 yearly management fee (at TD). I think that's what you are asking.

I don't need the $10k for RE, I have another allocation for that in a safe place 

Looks like the TSX may bottom out sooner than US stuff, but just a guess. Like you said, I'm not going to rush out and do the RRSP, BUT if things go on sale, yeah, I might commit to them as the tax refund might not justify waiting until I was in a larger tax bracket. Also...my wife has lots of room in hers and she currently has a much higher income, so if compelled, I can always work through hers and benefit from a better tax refund.

I'll check into the TD e-series stuff. When I asked they said it was a flat rate for trades, but I didn't ask if there were any specific funds that were free to buy. I'll check into that.

Thanks again for helping me work through this.

Let's see what this week brings! I'm itching to get started.


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## humble_pie (Jun 7, 2009)

Chris L said:


> I don't need the $10k for RE, I have another allocation for that in a safe place



that's excellent each:

re TD e-funds: their advantage is that they are free to buy & redeem, so they are great starters for small accounts where investors are contributing regularly from salary every couple of weeks. There is a broad selection of e-funds, look on the TD bank site for mutual fund investments.

to avoid all RRSP fees you might have to open an e-funds RRSP directly with the mutual fund subsidiary. That i know is free of RRSP admin fees. First make sure whether TDDI the broker would charge you anything for a small $10k RRSP, though. If they do have these evil intentions you'd go to the TD fund subsid. 

one can apply online; however there's a personally-signed form they have to receive at the TD branch. Evidently they are not always overly cooperative at the branch because they'd much rather sell expensive regular mutual funds to the client. There are ways to outwit them. How about cross that bridge later?

a tiny further suggestion if i may: keep the itch under control. Times are shaky. These big drops sound like heavy gongs to me. Thunder is rumbling. I for one am am not buying yet ...


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## Money We Have (Mar 20, 2014)

I've been quietly watching. In the last year or so I've been ignoring my RRSP on purpose due to the fact that I have a DB pension so I've been maxing out my TFSA. The drops in the indexes has me wondering if I should use what little room I have left in my RRSP to buy at "discount".

Even though my portfolio was approaching 6 figures I still preferred to use TD e-series due to the ease of switching funds / rebalancing. That being said I think it may be time to switch to ETF's full time.


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## Chris L (Nov 16, 2011)

About time to pile into the TSX? Or am I still being patient?

VCN is down about 11%....


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## OptsyEagle (Nov 29, 2009)

Chris L said:


> About time to pile into the TSX? Or am I still being patient?
> 
> VCN is down about 11%....


_ahhh, patience little sparrow. When waiting for your train to come, it is always best to stand in the passenger waiting room, then in the middle of the train tracks.
_


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## Chris L (Nov 16, 2011)

OptsyEagle said:


> _ahhh, patience little sparrow. When waiting for your train to come, it is always best to stand in the passenger waiting room, then in the middle of the train tracks.
> _


Well, that certainly paints a vivid image. I'm back in the terminal checking the itinerary


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## thepitchedlink (Feb 17, 2014)

Hi guys, I've been lurking for a bit as well. Certainly watching this correction with interest as I'm sitting on cash and debating when to enter the market again. Looking to start setting up the CP method after stupidly allowing IG to handle $ for a little while....ya, don't ask. Keep the good dialog coming


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## cainvest (May 1, 2013)

Buying time is starting to look good, both TSX and S&P500 should close be below the 300 day MA. I'll wait to see if/when the 50 crosses the 300 MA line, then I'll start to get interested.


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## pastorash (Feb 3, 2014)

_ahhh, patience little sparrow. When waiting for your train to come, it is always best to stand in the passenger waiting room, then in the middle of the train tracks.
_

Very funny, of course being in the waiting room you may miss the train whizzing through... :cower:


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## BoringInvestor (Sep 12, 2013)

I'm down 3.8% this month - but no buying or selling for me, it's steady as she goes with my boring couch potato portfolio.


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## OptsyEagle (Nov 29, 2009)

pastorash said:


> _ahhh, patience little sparrow. When waiting for your train to come, it is always best to stand in the passenger waiting room, then in the middle of the train tracks.
> _
> 
> Very funny, of course being in the waiting room you may miss the train whizzing through... :cower:


Your train came at 1:35pm. Did you catch it? lol

I should have pointed out. The biggest problem with this train station is that the trains do not run on any fixed schedule and there are no bells or announcements made.


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## My Own Advisor (Sep 24, 2012)

Happy to watch the correction...especially for oil and gas stocks. I need things to be lower as of Jan. 1 for my TFSA contribution. :biggrin:

Seriously though, if not buying some O&G stocks, I would wait. I'm guessing of course but things might go lower still. Let's hope!!!


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## Jon_Snow (May 20, 2009)

My Own Advisor said:


> Happy to watch the correction...especially for oil and gas stocks. I need things to be lower as of Jan. 1 for my TFSA contribution. :biggrin:
> 
> Seriously though, if not buying some O&G stocks, I would wait. I'm guessing of course but things might go lower still. Let's hope!!!



I'm having a hard time mustering up the apparent glee that you are feeling over this "correction" MOA.

Despite being "retired", I am still able to generate cash at a pretty good clip (thank you BIF). Maybe I need to look at this market differently.


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## larry81 (Nov 22, 2010)

I am standing still, no cash to deploy at the moment but i will buy at the end of the month as usual


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## leeder (Jan 28, 2012)

I have to honestly say that I've started to initiate or add to my existing positions. I may lose another 10% or Mr. Market may become happy again in the coming days. Either way, I have the time to wait and the money to contribute (I've sat on the sidelines with a quite a bit of money since May). If the market continues to drop, I'm willing to contribute more.


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## ChrisR (Jul 13, 2009)

Chris L said:


> Okay, glad I asked. I will drop the bond fund and spread everything else out. I never liked the bond part anyway and with all time low interest rates, it seems silly.


I'm sorry to inform you, but as a prospective passive investor... you've just failed the first test of passive investing! (That is, letting people on the internet tell you where to put your money!) If you want to be a passive investor, pick an asset allocation based on your needs, horizon and risk tolerance and ignore what other people think of it (including your friends, neighbors and the entire internet!)

There is so much going on in this thread, that I don't even know where to start. So I'll just try to answer the original question about market timing. And yes, what you are asking about is market timing! If you're planning to time your entry, the first thing you need to realize is that none of us (that is you, me, the people who have commented on this thread and professional money managers) have any idea where the market is headed.

My personal feeling is that it's headed down (and obviously this is also the feeling of most people here on CMF), but I realize that it is just as likely for this blip to reverse itself, and the markets keep trundling higher.

For that reason, I remain almost fully invested (~ 85%). And I'm letting new cash build up in my savings account right now, until I feel like the "blip" has run it's course. Because I'm a long term investor, I'm hoping for Armageddon, but I'm fully cognizant of the fact that I could be missing out, by being 15% out of the market.


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## sags (May 15, 2010)

Interesting to listen to Jim Cramer speak of his days on Wall Street......and other traders and insiders,.........speak of how the world of high level finance works these days.

We believe that hordes of small retail investors are cashing out and sending the markets lower........but in fact what they say is happening is that all the high capital hedge funds and investment banks use computer trading which are set to automatically sell off stocks when oil falls to a certain level.

The computer software doesn't consider "why" oil is falling in price......or who else is buying or selling.......it just triggers sell orders at predetermined levels.

Some of the wild swings in the stock markets could be explained as the battle of the "bots".


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## My Own Advisor (Sep 24, 2012)

Interesting...I haven't heard of that sags but it sounds about right "bots" duking it out and algorithms triggering a sell-off when oil / oil stocks fall below a certain threshold.

Like Chris, I'm usually fully invested all the time. So, I have to rely on my paycheck and then siphoning away some money from that to build up a cash position to buy more equities. It's times like these I wish I was more patient with my cash holdings and instead of being fully invested most of the time, keep 10% of my portfolio in cash for "times like these". I suspect older investors are doing this, and have learned to do this.


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## cashinstinct (Apr 4, 2009)

I have some $ but it's mostly emergency fund / future car fund / $ for automatic DCA investments scheduled in the next 2-3 months ... I have little $ I would be comfortable removing from this and investing right away, but not that much in terms of having an actual impact.

Since I am starting, $ level is kind of high in % of net worth, but that's what you get to be conservative in terms of margin of safety.

---

US Markets down in premarket

SPDR S&P 500 ETF (SPY) -NYSEArca
186.43 1.27(0.68%) Oct 15, 4:00PM EDT
*Pre-Market : 182.29 Down 4.14 (2.22%) *6:42AM EDT - Nasdaq Real Time Price


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## sags (May 15, 2010)

Just a guess, but I think you will have lots of time to buy some cheap stocks in the future.

Jim Cramer isn't my favorite analyst or commentator..........but he has developed an interesting 10 item list for identifying when the "bottom" will be reached and conditions will favor a market rally.

http://www.cnbc.com/id/102083953


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## Chris L (Nov 16, 2011)

Well, I'm not sure if I've failed the first test, but I understand your reasoning. I've been looking for the motivation to start my TFSA and it's finally here. The market run up has been so severe that it seemed like it was set to correct for a while. Once invested, I'm in. I see it much like setting a price for RE. Once you buy, you own it, for better or worse. I plan to be in, once I'm in. I'll just add my max TFSA limit each year and that will be it.


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## Chris L (Nov 16, 2011)

You'll be satisfied to know that I capitulated on 55% of my allocations this morning. I'm still watching the US stuff, but fully in XRE and VCN. I'm up $170. Time to cash out? Ha!


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