# Investing 150k at 70



## jamesbe (May 8, 2010)

Hi all, 

So my parents recently sold their house and should get the funds soon. They are both over 70 and live off cpp and oas. They have a little money in their rrsps but not much as they have zero investing knowledge. Their broker has lost them money for 30 years so they are not sure what to do. 

I'm trying to get them on board with my idea. Here is what I propose for them. 

First step max out both of their TFSA accounts. 

The remaining should be split between some emergency savings and an investment account. 

Considering their age and my mom's poor health I recommend putting 70% in fixed income in a 5 year gic ladder. They are very risk adverse. 

The remaining 30 % should be invested in dividend paying stocks with good return 3-6% such as bce, . Cnr etc. 

Thoughts? 

This is a lot of money for them and equals a considerable part of their wealth. 

I believe perhaps it would be prudent to amalgamate this money with their current holdings to create that 70/30 split.


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## OhGreatGuru (May 24, 2009)

If their broker lost them money for 30 years, they should have fired him a long time ago.

70/30 is reasonable in my opinion. But if they are truly risk averse, they should probably be all fixed income. This is more conservative than I would recommend, but it's not my risk tolerance that has to be considered.

You haven't said how large the rest of their holding are, but amalgamation makes sense. But if they (or their broker) were unable to make money on the market in 30 years, I wouldn't put them in stocks directly. Put it in appropriate mutual funds.


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## jamesbe (May 8, 2010)

I don't know how big their total portfolio is but I'm guessing it is less than 100k.

They should have fired their broker, but they just don't understand. They just yelled at them every year, they are financially illiterate. Apparently they made 3% last year, the first year ever. Last year was a huge year for gains, sounds like they are either all in fixed now or in horribly overpriced funds.


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## OnlyMyOpinion (Sep 1, 2013)

Jamesbe, I like your plan - make sure they have short term certainty of funds and a smaller wedge invested for some future growth. 
I've noted in some other threads that we recently went through this with my folks as well. Make sure you/they have a good handle on their expected future expenses and that the plan will cover them - you indicate that your folks currenlty live off of CPP/OAS. Where are they going to live now and will their living expenses require that they spend some % of their house money on an ongoing basis? My folks expenses went up substantially (now in a retirement apartment). To cover that we did exactly what you are proposing - a 5 yr GIC ladder (with plans to reinvest half the maturing amounts into a 5yr to cover yrs 6-10). I sat down with them and their bank's 'financial adviser' to ensure they weren't steered elsewhere (market-linked GICs were his first salvo). We insisted on their discretionary bump above the posted rate (+0.4%). They also have a reasonable amount in max'd out TFSA's and a savings acc that are all in a monthly income fund (about 60/40 Eq/Fi) and we have left that drip'ing to provide some growth and money beyond 10yrs.


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## jamesbe (May 8, 2010)

Thanks for that info. Good ideas and thoughts.

Currently my Dad is renting an apartment as they moved out of a house. My Mom was moved into an assisted living centre. I'll have to find out the costs for all this.

I know that their apartment rent was only $800 a month which includes heat / hydro. Their house was paid for but heat and hydro was expensive and taxes as well. Once you add all those items in, they aren't far off their current expenses.

My Dad also receives a small pension from Ontario Teachers, but he didn't work as a teacher long so it's not a large sum, a few hundred a month, but certainly helps.


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## AltaRed (Jun 8, 2009)

I guess we don't know if the plan is to have discount brokerage accounts OR investment accounts elsewhere. That would be helpful to know.

I agree with the 70/30 fixed income/equity split for risk adverse individuals, with the FI in a 5 year GIC ladder. I also agree the equity should not be in individual stocks, but in a low cost index mutual fund OR low cost dividend ETF (if with a discount broker).

For about 20 years, my bro and I had my mother in a 5 year GIC ladder and a few RBC mutual funds in RBC DI. She is now 96 and still in the same mix, but with increasing amounts in the GIC ladder. Her 2 mutual funds have provided most of the 'beef' the last few years in particular notwithstanding the 2008/2009 crisis which she could weather, but your parents may have difficulty with.

Added later: If starting a GIC ladder, it may be best to just commit to the 5 and 4 year pieces for now given current interest rates and put the rest in a CDF or PT HISA at 1.9% and 1.8% respectively since the HISAs pay more than 1-3 yr GICs at discount brokerages. You can always commit 3 yr money later if HISA rates drop... Conversely, wait until a year from now and buy the next 5 year tranche with HISA money, and so on. IOW, it takes 4 years to get a 5 year GIC ladder fully operational.

I would limit the number of institutions as well to avoid complicating matters, i.e. investment accounts at one insitution and HISA at another (if necessary).


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## jamesbe (May 8, 2010)

The plan would be to use a discount brokerage. I like the idea of ETFs , I've had nothing but bad luck with RBC Mutual funds, all seem to underperform and charge huge rates.

I fired my broker for underperforming just over a year now, everything was in RBC mutual funds at RBC DS. On the last 3 years which were huge gains in the markets my accounts LOST money.

I moved all my money to self directed and I've gained back 10% in 1 year with rather safe ETFs.


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## AltaRed (Jun 8, 2009)

Not to argue about RBC funds but their D series with lower MERs at RBC DI and sticking to tried and true like the Canadian Dividend fund and Balanced Fund served my mother well. The key iwas NOT to get into boutique crap.

Anyways, going to a discount brokerage using a GIC ladder and an equity ETF would be a good choice. I would stick to the discount brokerage associated with the bank your parents are affiliated with already. The KISS principle.


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## humble_pie (Jun 7, 2009)

i'm glad altaRed has appeared here, he recently authored most of a classic thread on this very same issue. The thread focused on obtaining best income possible for parents in their 70s whose house had just been sold, while they did not have pensions other than CPP & OAS.

it's a high quality thread with full discussion of many issues that could affect such seniors. It's worth reading from beginning (linked here) to end. You'll notice that several cmffers, also facing situations with aging parents, no pensions & perhaps limited savings, said that they, too, found this thread very helpful.

http://canadianmoneyforum.com/showt...conservatively?p=340601&viewfull=1#post340601

re your specific plan, it looks good. The only question in my mind is the 30% allocation to dividend stocks. You'll note that in the model thread cited above, altaRed holds to a 20% equity allocation for conservative seniors. Since your parents' planned investment accounts seem to be a wee bit smaller than the above-mentioned example - & since 20% was thought to be a prudent proportion for them - i find myself wondering if your 30% allocation for dividend stocks might be too high.

have you considered annuities, although your parents are still somewhat too young to receive a high annuity payout. You might want to investigate several annuities, to see how annuity income will compare to what you might obtain from a 5-year GIC ladder.

do your parents really need TFSAs? they should have almost no income tax payable, particularly if your mother has a medical disability. If TFSAs are to be utilized, i'd turn these into the HISA accounts, which your parents should have anyhow (those locked-in GICs are a bit scary.)

for the 20% (or 30%) in a dividend or equity ETF, a discount broker is good. I'm kind of against mutual funds. Red's suggestion to choose the broker where your parents already bank is very sensible.


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## My Own Advisor (Sep 24, 2012)

I also think you should investigate annuities...doesn't cost anything to compare.

Otherwise, for risk-adverse folks and little investing knowledge, I think your 70/30 split is good.

If little investing knowledge, why not 70% fixed income + 30% dividend ETF? (ZDV, VDY, XDV come to mind.) This way, only two products to worry about.


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## humble_pie (Jun 7, 2009)

My Own Advisor said:


> Otherwise, for risk-adverse folks and little investing knowledge, I think your 70/30 split is good.
> 
> If little investing knowledge, why not 70% fixed income + 30% dividend ETF? ... This way, only two products to worry about.




(teasing) MOA as in the other thread for conservative seniors ref'd above, here you go again advocating what i believe is too high an allocation of risk-bearing securities for conservative & vulnerable seniors! these folks need every single guaranteed penny of income they can obtain, imho.

another reason why *not* to split 70% GIC ladder, 30% equity: they need a HISA emergency fund IMHO. Anything can happen while those GICs are locked in. Giant crash in the stock market = very bad time to be forced to sell the tiny equity portion. Therefore the HISA emergency fund.

the HISA could be the TFSA if they truly need a TFSA, which they may not. Otherwise they could go 20% HISA, 60% ladders (with an annuity in this category if useful), 20% core ETF equity. One should keep in mind that some HISAs are paying higher than one-year GICs, depends on the institution.

if they can benefit from a TFSA, ie they have some income taxes payable, they could put the equity/dividend ETF in the TFSA & DRIP distributions if possible, in order to benefit from anticipated tax-free growth.

will these folks have RRIFs? if so, mandatory withdrawals will commence soon. Investments need to be structured so the withdrawals can be made sensibly. Another reason for the HISA.


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## My Own Advisor (Sep 24, 2012)

Shouldn't seniors, even at age 70, have some growth HP - upwards of 30%, 40% or even 50%? 

I have no idea of what the future holds but I couldn't imagine missing out on the last 5+ years of equity run-ups.

I know, I'm a bit biased with my investing approach (stocks and ETFs) and no bonds...so this speaks to me: put the equity/dividend ETF in the TFSA & DRIP distributions if possible, in order to benefit from anticipated tax-free growth.

Having such a high % in GICs isn't what I would do but then again, I will likely invest differently in 10 years let alone 30 from now.


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## RBull (Jan 20, 2013)

My Own Advisor said:


> Shouldn't seniors, even at age 70, have some growth HP - upwards of 30%, 40% or even 50%?
> 
> I have no idea of what the future holds but I couldn't imagine missing out on the last 5+ years of equity run-ups.
> 
> ...


I will be very interested in seeing if your idea of equity only changes as your portfolio value rises and your age increases. As you say it probably will. At your age I was the same as you 100% equity and now roughly 15 years later retired am in the 55% equity range.

I'm with AltaRed on the approach.


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## humble_pie (Jun 7, 2009)

My Own Advisor said:


> Shouldn't seniors, even at age 70, have some growth HP - upwards of 30%, 40% or even 50%?
> 
> I have no idea of what the future holds but I couldn't imagine missing out on the last 5+ years of equity run-ups




imho we need to remember that these particular seniors have limited capital, are described as risk averse plus they have an investment history that has not turned out well. It's necessary, now, to conserve every penny, because the likelihood is high that every penny will be needed & used. I don't see very much room for risk. I think a 20% allocation will fill the growth bill nicely, without impairing safety of the principal too much.

the fact that equities & dividend-paying equities have boomed over the past 5 years doesn't mean the happy story will continue. If anything it might suggest that a serious correction could occur. Possibly one has started already, in sector rotation.

long-term, from a historical perspective, a 100% equity portfolio would be a mistake. We are at freakish low interest rates, so fixed income has been looking dismal when compared to dividend payouts. But only in recent years. Historically this is an aberration. There are those who say that either interest rates will have to rise to historic levels, or else dividends will have to shrink & disappear. This latter scenario means a broad market collapse.

it's protection from such a broad market collapse that i'd want to place around seniors with small portfolios. Rather than looking for growth when there's no capacity to deal with its twin brother risk, i believe it's necessary to deal instead with the possibility that the capital itself may have to be invaded, little by little, in order to provide for this pair of seniors.

won't you please do the simple math, advisor. 80% of 150k is 120k. At roughly 2.5% per annum, that's going to return 3k a year, or roughly $250 per month. This is perilously little money in the vast scheme of things. I don't see that there's room to put more than a nickel or 2 at risk.

incorporating an annuity in the 80% fixed income sector could boost the monthly yield.


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## OnlyMyOpinion (Sep 1, 2013)

humble_pie said:


> incorporating an annuity in the 80% fixed income sector could boost the monthly yield.


Indeed, we tend to discount annuities because of the current low interest rates and lack of residual value upon death, but if a maximum monthly income during your remaining years is the key criteria, it seems worth exploring: globeinvestor.com annuity lookup shows a rate of $469/mo for a $100k annuity, age 70, non-registered, joint, no guarantee. Or $536/mo for age 75 (Sun Life).


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## fatcat (Nov 11, 2009)

OnlyMyOpinion said:


> Indeed, we tend to discount annuities because of the current low interest rates and lack of residual value upon death, but if a maximum monthly income during your remaining years is the key criteria, it seems worth exploring: globeinvestor.com annuity lookup shows a rate of $469/mo for a $100k annuity, age 70, non-registered, joint, no guarantee. Or $536/mo for age 75 (Sun Life).


this article: http://www.theglobeandmail.com/glob...-gold-plate-a-silver-pension/article23132652/ shows a high of 592 for 100K at 70

i am no annuity expert but from what i have read you really shouldn't start an annuity until age 75


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## fatcat (Nov 11, 2009)

humble_pie said:


> imho we need to remember that these particular seniors have limited capital, are described as risk averse plus they have an investment history that has not turned out well.


i agree and would like to see something like a self made guaranteed gic where you put 90% in a gic ladder (or i would be okay with a AAA corporate bond ladder) and the other 10% in growth equities


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## AltaRed (Jun 8, 2009)

HP, I avoided getting into too many details on my first post (I can be verbose!) and risk losing sight of the forest. That said, I did note how little money this couple has AND the current circumstances of the parents. We don't know how much of a drain, if any, assisted living is. Perhaps that is fully gov't funded (given the financial status of the couple) and thus we are talking mostly about the father's 'retirement home'. Either way, finances are on a shoestring.

I was going to suggest a lower equity percentage (20%) originally based exactly on your thinking. A 2008 type downturn could be devastating IF capital had to be touched. If they could survive not touching the equity capital and discipline themselves to the income stream only during that period, that would help. 

Also, I did not mention an emergency fund making an (albeit silent) assumption there would already be an HISA emergency fund in place. Indeed, recognizing it takes 4 years to get a 5 year GIC fully operational, it only makes sense to buy the 5 and 4 year GICs at this time, keeping the rest in a high rate HISA, e.g. 1.9% at CDF (if not the 1% alternative at discount brokers) until more of the money can be deployed next year for the next allocation into a 5 year GIC. That said, it IS important to keep an emergency fund (HISA) to handle what are likely going to be some curve balls along the way.

Ultimately, this portfolio probably needs to be handled with a 3% (or less) SWR approach. An 80/20 portfolio with an HISA emergency fund will not likely generate sufficient income by itself for a 3% SWR so there will be capital depletion over time, including taking some capital each year from maturing GICs and shaving some capital gains off the equity ETF/MF in good years. That is how it should be.

I do agree an annuity should be looked at for the bulk of the capital available, perhaps holding $50k back for one time emergencies. Quotes should be obtained for interest sake as an optional plan to what the OP is planning. The big question would be by whom and what survival provisions should be considered. It might sound 'cold' but it seems the mother isn't the one the OP should be considering here, i.e. a lifetime annuity should be bought by the father with minimal survivor provisions, perhaps none beyond a minimum 10 year guarantee.

Added later: On the equity side, dividend ETFs are not created equal. One should look at ZDV, VDY and ZDV of course and consider the sector allocations of each, but one should also give serious consideration to XEI and ZLB. ZLB in particular is not nearly as volatile as the others but has a relatively low dividend yield and is pretty expensive currently because of the flight to low volatility/stability. Timing might be bad (if one believes the TSX will gain significantly with a recovery in commodities) or good (if one believes NA markets are due for a significant correction).


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## jamesbe (May 8, 2010)

Wow thank you all. I have a lot to read now. I hadn't considered an annuity and will look at them as well.

I have to get all the info, incl income / expenses and planned changes going forward. From what I understand they want their income to be limited as my Mom is now in a long term care facility which is charged based on your annual income, so the less they have the less they pay for that.

I will read everything posted here and come up with some kind of plan, might require a lot more calculations and thought than I originally considered but I'm sure I can figure something out that helps them.


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## humble_pie (Jun 7, 2009)

jamesbe said:


> I will read everything posted here and come up with some kind of plan, might require a lot more calculations and thought than I originally considered but I'm sure I can figure something out that helps them.



as with Siwash's parents - the other family mentioned upthread - your parents already have a form of wealth that's not quantifiable. This is a loving & devoted son who is financially capable. Everyone should be so fortunate!

a passing thought occurs to me. In the calculation of annual income for the assisted living facility, is a TFSA included? or is it omitted?

if omitted, then all the more reason to put the dividend-paying equity ETF into one or 2 TFSAs.


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## james4beach (Nov 15, 2012)

I agree with the 20% (or less) equity allocation.

I'm curious by the way, why such a poor 30 year return? I thought we were all supposed to get rich in the stock market... why did this not materialize for them? People on this forum keep telling me I'm crazy to not own more stocks and seem positive they'll see good returns in as little as 5 or 10 years, so how did these folks invest for 30 years and not get ahead? I would like you to share any details you know because it could be a cautionary tale to others. I want people to understand that equity investment does not automatically lead to positive returns, as we're often led to believe.


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## cainvest (May 1, 2013)

james4beach said:


> I'm curious by the way, why such a poor 30 year return? I thought we were all supposed to get rich in the stock market... why did this not materialize for them? People on this forum keep telling me I'm crazy to not own more stocks and seem positive they'll see good returns in as little as 5 or 10 years, so how did these folks invest for 30 years and not get ahead? I would like you to share any details you know because it could be a cautionary tale to others. I want people to understand that equity investment does not automatically lead to positive returns, as we're often led to believe.


I believe it already is a cautionary tale, know what your investment money is doing and check on it (at least) once a year. Why anyone would wait 5, 10 or more years before they say "Hey, what's going on here?" especially when dealing with a financial advisor.


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## humble_pie (Jun 7, 2009)

james4beach said:


> I'm curious by the way, why such a poor 30 year return? I thought we were all supposed to get rich in the stock market... why did this not materialize for them? People on this forum keep telling me I'm crazy to not own more stocks and seem positive they'll see good returns in as little as 5 or 10 years, so how did these folks invest for 30 years and not get ahead? I would like you to share any details you know because it could be a cautionary tale to others. I want people to understand that equity investment does not automatically lead to positive returns, as we're often led to believe.



this would be an outlying case, one that suggests severely poor performance by the "advisor" plus investors who were not willing or able to check up on things after a few years of going wrong.

i don't believe it's a cautionary tale to others, nor should it be singled out. A decent basic couch potato over 30 years would have produced splendiferous returns.

if anything, it's a caution that citizens have to take responsibility.


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## james4beach (Nov 15, 2012)

Good point. You have to be involved with your money... can't just hand it over to an "expert"


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## OhGreatGuru (May 24, 2009)

My Own Advisor said:


> I also think you should investigate annuities...doesn't cost anything to compare.
> 
> ....


I thought of suggesting that, but didn't because I misread OP's post to say both his parents were in poor health. But it's only his Mom. They're in the right age bracket, and annuities are secure. If his father's health is good, then JWROS annuities may be worth looking at.

You can get an estimate of annuity rates here: http://www.lifeannuities.com/articles/2014/annuity+rates+canada+2014+20140102.html


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## MoneyGal (Apr 24, 2009)

Just a mild technical detail: annuities are just "joint" or single-life - there is no "right of survivorship."


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## OhGreatGuru (May 24, 2009)

Thanks for the correction MG.


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## tygrus (Mar 13, 2012)

Why would they need to invest this money at all? They are in their mid-70s, are they going to live to 100?

if you invest the 70/30 like you mention, you will make about about $300 per month. Is that going to make a difference. Your parents don't sound well off so they should forget about leaving an inheritance.

Assume they are going to live another 15 years, so they could hit 90, then apportion the money out at that ratio. Stick it in a 2% HISA and withdraw $10,000 per year and enjoy it. By my calculations, the money should last almost 17 more years.


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## humble_pie (Jun 7, 2009)

that's exactly what this thread has suggested. A modest, mostly fixed income senior financial plan with significant tweaks, benefits, income boosts & embellishments. Plus the possibility of sustained withdrawals whenever necessary.

the 80% fixed income portion would include an annuity for the husband, possibly not purchased for a few more years. It would include substantial HISAs since these rates are often superior to one-year GICs, especially if promotions are sought out. It would include a GIC ladder.

the 20% equity allocation would be the hedge against inflation & rising cost of living. Ideally this should go into TFSAs, one for each parent, in order not to impair any refundable tax credits for which the parents may now be eligible.

TFSAs become even more strategic once it is known whether they are included in the income assessment for assisted living or not.

in short, what has been developed in this thread is an efficient low-income senior financial plan, with benefits. It shows a way to manage forward in challenging circumstances. Thanks to another recent thread on the same theme, where many of the ideas were developed. It's cited above, but here's the link again.

http://canadianmoneyforum.com/showth...l=1#post340601


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## MoneyGal (Apr 24, 2009)

No matter the age they live to, due to their age the yield on an income annuity will be higher than anything they could get with similar guarantees. So if maximizing sustainable income while alive is the goal, vs. leaving a legacy, an income annuity (with some portion of their investable assets) is an efficient way to meet that goal.


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## humble_pie (Jun 7, 2009)

mGal you're right about annuity income, although there's something to be said for the hand-crafted *shoestring* approach which has surfaced in this thread.

that something is the possibility of withdrawing - encroaching upon capital - when necessary, at any time during the years to come.

a small equity allocation in a tax-sheltered TFSA is not a bad idea as a hedge against inflation, either.

in addition, the OP had mentioned trying to keep income down for the purposes of qualifying for the assisted living program. There seemed to be a desire not to inflate income beyond actual present needs, at least for the time being.

all this being said, annuities would be the premier choice for situations where the capital might be foolishly invaded or mismanaged. There is already a very long history of poor "advisor" services, while the parents in the situation were apparently not able to recognize what was going on or rescue themselves.

a hand-crafted *shoestring* financial plan might provide a little more flexibility than 100% annuities, but it does require disciplined management, either by seniors who could adopt & stick austerely to such a plan, or else by a responsible adult offspring who would remain involved in his parents' financial affairs.


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## MoneyGal (Apr 24, 2009)

I'm not recommending anything, but I'm specifically not recommending 100% annuities. 

An annuity can be structured to provide mostly ROC, which is tax-free.

My point was just that if the goal is maximizing income while alive, vs. leaving a legacy, the yield from an annuity will be higher (potentially much higher) than the yield from other guaranteed investments.


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## MoneyGal (Apr 24, 2009)

p.s. By annuitizing a fraction of the nest egg, the parents could actually take *more* equity risk with the remaining portion of the portfolio - if desired.


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## jamesbe (May 8, 2010)

So my parents finally got their money from the sale of their house.

They went to the bank and the bank of course recommended they buy a mutual fund. RBC recommended the VERY conservative fund. which is:

Category % Assets	
Cash 6.0	
Fixed Income 67.6	
Canadian Equity 11.6	
US Equity 8.0	
International Equity 6.5	
Other 0.4

The MER on this is 1.7% I tried to explain to them that, if the fund makes no money they still have to pay that 1.7%. In contrast a VERY simple Canadian Couch Potato Vanguard ETF setup is only 0.16% MER

But the Vanguard ETFs worry me a bit at 70% Bond index with interest rates so low that can't be a good idea can it?


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## OhGreatGuru (May 24, 2009)

I am an RBC client, and like some of their funds, But I wouldn't suggest the Select Very Conservative Portfolio. For one thing it is not structured to make regular monthly distributions. Secondly I think RBC puts too much foreign equity in what is supposed to be a Very Conservative fund (presumably on the grounds it is for long-term investors) And some of the underlying funds are not exactly the best rated in their class. Given the profile you have described for your parents, IMHO they should be looking more at the 3 Managed Payout Solutions (Managed Payout; Managed Payout Enhanced; or Managed Payout Enhanced+) (at least of the RBC products). Probably the most conservative one. It's 75/25 Fixed Income/Equity.

The monthly distributions can be paid out automatically to their bank account, rather than re-invested. (You probably can't do this if they are in a registered account such as a TFSA though.) 

Yes, you could emulate a similar asset allocation at lower cost with eFunds or ETFs. But we are dealing with people who admittedly know little or nothing about investing. They are better off being guided to a good mutual fund or two.


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## jamesbe (May 8, 2010)

Would be a one time deposit of 150k then withdrawals after that.

I just hate for them to be paying nearly 2% in fees. When an ETF can be had and the dividends alone from the BOND funds pay out 2.5% which would be a good income for them $300 monthly.

More thought is needed I guess. I know the ETF might be a tiny bit more work, but I think I can explain this too them. I'm not sure they are adverse to letting me manage this for them, they have mentioned power of attorney, my brother has it currently but lives 3000km away, it should be switched to me and then this wouldn't be an issue.


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## jamesbe (May 8, 2010)

Also found out they have their TFSAs maxed at 30k each around, so this is good. I think they can live without touching this other money for awhile which should help considerably and give more options like doing a GIC ladder.


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## OhGreatGuru (May 24, 2009)

If they already have 2 x 30K+ in TFSA (and I am assuming the TFSA's are in something low-risk) than I would suggest the RBC Monthly Income Fund for the $150K of new money (50/50 Income/CDNEquity). Have it arranged to pay out monthly distributions to improve their cash-flow. If income exceeds their expenses, they can use the excess to add their TFSA's each year.


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## jamesbe (May 8, 2010)

Low risk is right. Cash...


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## jamesbe (May 8, 2010)

That fund is a good suggestion. Thank you. 

Currently paying out 3.48% distro and dividends are tax efficient.


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## jamesbe (May 8, 2010)

Finally got all the numbers today and hatched a plan that they will be implementing. Thanks for the tip on that monthly income RBC fund. It was just the ticket that made sense. It is a little higher risk 50/50 instead of 70/30. But what I did was created a GIC ladder with some further cash to make up the difference in order to balance out closer to 70/30 by buying a large potion of the income fund a few GICs.

They have also enough cash in their TFSA in order to weather a year of bad returns on the fund. We will reassess in 1 year time and rebalance as necessary and continue the GIC ladder if it makes sense at the time.

I think they are happy with what they will have, it is simple and they liked the idea of monthly deposits of the dividend to their account, it should cover groceries on average per month.


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## OnlyMyOpinion (Sep 1, 2013)

Glad it has all worked out.
Sounds similar to the plan we came up with for my folks (post #4 of this thread). They were already in CIBC's monthly income fund and stayed in that while the sale proceeds went into a 5 yr GIC ladder. Not the cheapest or highest return solution but one they understand and are comfortable with.


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## My Own Advisor (Sep 24, 2012)

To clarify James, you put $150k into the RBC Monthly Income Fund?
http://fundinfo.rbcgam.com/mutual-funds/rbc-funds/fund-pages/rbf448.fs

Looks like it's more 60% FI vs. 40% stock.


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## lonewolf (Jun 12, 2012)

jamesbe said:


> I don't know how big their total portfolio is but I'm guessing it is less than 100k.
> 
> They should have fired their broker, but they just don't understand. They just yelled at them every year, they are financially illiterate. Apparently they made 3% last year, the first year ever. Last year was a huge year for gains, sounds like they are either all in fixed now or in horribly overpriced funds.


 It seams that those that step up to the plate & take responsibility for their financial independence do the best. Blaming others simply does not work.

The market is like a poker game not everyone is your friend & is after your money


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## humble_pie (Jun 7, 2009)

great work, jamesbe.

great foundation-building. You've got the all-important trust from the parents, broadly speaking you've got the right investment approach, you've even said there are ample opportunities for fine-tuning later.

please don't forget that annuities exist, we hear they even come in all different stripes & sizes. One might work well in future years, when your dad becomes a little older.


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## OhGreatGuru (May 24, 2009)

My Own Advisor said:


> To clarify James, you put $150k into the RBC Monthly Income Fund?
> http://fundinfo.rbcgam.com/mutual-funds/rbc-funds/fund-pages/rbf448.fs
> 
> Looks like it's more 60% FI vs. 40% stock.


Not according to my addition.

Cash 1.9%
FI - 49.3%
CDN Equity: 43.9%	
US Equity: 4.7%
International equity: 0.2%


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## My Own Advisor (Sep 24, 2012)

Corrected! I was looking at the benchmark. Needed more coffee this morning - thanks OhGreat


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## jamesbe (May 8, 2010)

Only 120k in that fund. It's 50/50. Then putting the rest in cash and GICs to work out to about 70/30 mix if my math is right. It's not dead on but close enough and I didn't want to pull too much from their TFSA.

Looks like you can't hold this fund in a TFSA unfortunately, but the dividend income is tax advantages so I'm not sure it really matters.

I talked to them about annuities they didn't want one.


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## Vicjai (May 15, 2015)

jamesbe,

I won't recommend putting a lot into GICs. Theres plenty of safe investments out there that produce a higher yield. Blue Chip stocks are a way to go if the money is in it for the long run. Do the math: even if you put it all into 1 stock 120K @ 5% dividend = 6000 = 500/month free money. Think about what your return would be if you lock it into a GIC. Another reason i don't recommend GIC is that its locked into terms. Any kind of stock is more liquid. Questions to ask yourself: are you an active trader? how involved do you want to be in your investments? How long do you plan your money to be in investments for? All these are questions to think about before deciding where to put your money. Most of my assets are in real estate and stocks, 0% in GIC.


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## Eclectic12 (Oct 20, 2010)

^^^^

Where the 5% is eligible dividends @ $500 a month - for the OAS income test, that's something like $690 of income to report. It's not clear to me if it matters or not but is something to keep in mind.

Then too ... where the parents are risk adverse - whatever means *they* can sleep at night is probably more beneficial.


Cheers


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## tappers (Apr 15, 2012)

jamesbe said:


> Hi all,
> 
> So my parents recently sold their house and should get the funds soon. They are both over 70 and live off cpp and oas. They have a little money in their rrsps but not much as they have zero investing knowledge. Their broker has lost them money for 30 years so they are not sure what to do.
> 
> ...


I read your post with interest. I would suggest "maximizing" their TFSA room here. I personally have no investments in stocks, bonds or Equities. I believe the financial markets are in for a day of reckoning and when this happens it won't be pretty. I have my resources in mortgage investments and they have paid me consistently 12% annually, and my principal grows at 2-3% per year, I'm a very happy camper that way. There are very viable alternatives to stock investments etc.


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## OhGreatGuru (May 24, 2009)

My Own Advisor said:


> Corrected! I was looking at the benchmark. Needed more coffee this morning - thanks OhGreat


The benchmark used to be 60/40 Fixed Income/Equity. In 2014 they changed they changed it to 55/45. In practice, the actual asset allocation has been closer to 50/50 for a while due to the prolonged period of low interest rates we have been having. I guess shifting the benchmarks by 5 points last year recognized they didn't expect this to change any time soon.


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