# Mawer Tax Effective Balanced Fund



## Sasquatch (Jan 28, 2012)

Hi, I haven't posted for a long time even though I read and learn from this forum quite often.
My wife and I both have RRSPs and we are 2 and 4 years respectively away from the mandatory age of 71 where you have to liquidate/convert your RRSP.

I started the process last year and plan to have most if not all of her RRSP money taken out by the end of 2016 and mine by the end of 2018. I am taking out just enough each year to stay under the OAS clawback amount for each of us.

Our RRSPs consist of the Mawer Balanced Fund and PHN Balanced Fund, both of which have been doing very well complete with a low MER.

Last week I opened non reg accounts for both of us with my discount broker, into which I plan on transferring the RRSP money that's left, after paying our dues like withholding tax, HST and withdrawal fees.... GRRRRRRR !!
I like Mawer Balanced Funds because I can't be bothered with stocks, ETFs and the like and the diversification suits me fine.

My plan is to buy shares of the Mawer Tax Effective Balanced Fund after doing some reading about it. It seems to be effective in reducing taxes payable in a non reg account on top of being well diversified,having reasonable returns and low MER. 

I wish I'd have known what I know now about investing in RRSPs during my working years. I would not have done it!
We are in the fortunate position not to have to depend on an income from them and it seems almost like a penalty for saving and investing in RRSPs during most of our working lives. This is just an observation, not a complaint!!!

Thoughts??


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## OnlyMyOpinion (Sep 1, 2013)

Hmm, we may face a similar future. It looks like we'll face OAS clawback as well when the time comes. Also that we'll be blowing down our RRSP funds before RRIF lockup time and facing the withholding tax consequences as well. 
So really curious whether our thoughts below have any resonance with you? They are how we are trying to look at things right now but maybe we'll feel differently when the time comes (esp. at tax time each year):
i) 'If our income isn't low enough to qualify for OAS that is a good thing'.
ii) 'We did have the benefit of the tax reduction when we contributed to the RRSP and the tax deferral on growth', so as long as we're withdrawing at a somewhat lower marginal tax then we're happy'.
iii) 'We couldn't know then what we know now, so saving to be safe, especially since it didn't require us to do without, was still the prudent choice'.
iv) 'We've done what we can to tax-optimize our retirement income, so we'll consider this a good problem to have' (well we haven't 'gifted' our taxable dividend portfolio to the kids quite yet - we'd like to see a bit more light at the end of the tunnel first).
And your thoughts?


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## Sasquatch (Jan 28, 2012)

OnlyMyOpinion said:


> Hmm, we may face a similar future. It looks like we'll face OAS clawback as well when the time comes. Also that we'll be blowing down our RRSP funds before RRIF lockup time and facing the withholding tax consequences as well.
> So really curious whether our thoughts below have any resonance with you? They are how we are trying to look at things right now but maybe we'll feel differently when the time comes (esp. at tax time each year):
> i) 'If our income isn't low enough to qualify for OAS that is a good thing'.
> ii) 'We did have the benefit of the tax reduction when we contributed to the RRSP and the tax deferral on growth', so as long as we're withdrawing at a somewhat lower marginal tax then we're happy'.
> ...


Of course, you are absolutely right. Hence my comment that this is just an observation, not a complaint.
Having said that, it just peeves me off a little bit that we are being penalized (in a way) for being prudent savers during our working years.
Everyone kept saying that we would be in a lower tax bracket during retirement, therefore coming out ahead when we have to cash out our RRSPs.
We are in exactly the same tax bracket as we were in our working years with pensions and other investments (excluding RRSPs) so we are paying the piper now rather than when we worked. The OAS clawback just adds fuel to the fire.
But you are right of course. It is a good dilemma to be in and many folks would love to have this problem. I wish that charitiy donations would get the same tax break as political contributions, I'd have several good causes in mind. I'll be damned if I contribute one cent to any political party, no matter how good the tax break. I'd rather burn the bills!


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## OnlyMyOpinion (Sep 1, 2013)

Not sure we're 'absolutely' right, but we're hoping not to be too wrong  It all seems a bit final when the last paycheck had been deposited.
Hopefully someone has a comment on your Mawer Tax Effective fund. They (Mawer) seem to be looked on favourably on the CMF.


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## Ponderling (Mar 1, 2013)

I have looked to Mawer for a number of years like maybe 10 , but yet to buy any. 

I started looking back when I was with a bank branch RRSP plan, and 'surprise' Mawer' could not be found in the system by the rep I dealt with. I think I first heard of them from reading one Gordon Pape book or other in the mid 90's. 

Then I moved to SDRSP at a brokerage arm of another bank/trust. Advisor steered me into some more reasonable products, but still, mentioned Mawer and it was like 'who'.

By then I was sophisticated to start reading the prospectuses of everything that I owned or was pitched my way or I was intersted in.

Guess what. Mawer has very low MER's for a mutual fund. One of the ways they do this is by paying out much lower trailer fees to the advisors than other funds.
I guess that is why the industry selling industry keeps things quiet around them.


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## MoreMiles (Apr 20, 2011)

Actually, Mawer does not pay any trailer fee so some brokers refuse to sell them and provide free work. 

Mawer Tax Effective Balanced fund is not suitable for income as its distribution is only about 1.5%. All the rest is kept as the fund value itself. It also does not generate capital gain slip so you have very little tax paid until you sell it. Keep in mind though, its largest holding is small cap so it can somewhat be risky. 

Mawer fund is also available in Series O, with MER even less than the current 1%... it may be only 0.5%. The catch? You need $2 million minimum purchase to qualify for that.


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## OptsyEagle (Nov 29, 2009)

For the others that are reading and perhaps reformulating a strategy, it is my opinion that the OP is simply observing that for people who contribute to an RRSP, in a similar tax bracket as they are in during retirement, the net benefit is the simply the tax deferral of the taxes owed on the contributions and on the growth of the RRSP, until they take it out.

Although tax deferral can be an enormous benefit if given enough time, it is difficult for the average person to quantify. All they see are the tax savings when the money goes into the RRSP and they definitely observe the tax owing when they remove it. I liken this effect to a person who goes on a once in a lifetime trip. They have a great time and put every expense of it on their credit card. A month later when the bill comes in, it is a little like paying for a dead horse. The trip is over, and now you got the bill. It doesn't change the fun of the trip and many people would still do it again, it is just a little disappointing that they now have to pay for it.

For the vast majority of Canadians, RRSPs will ensure they have more money in their lifetimes, by using them, then by not using them. If the OP has a pensions income, where he needs to worry about OAS clawback, it is safe to assume he was in a reasonably high tax bracket while working. Using an RRSP when in a high tax bracket, will usually provide the maximum benefits. The positive benefits however, are the highest as one contributes money into the RRSP and a little more benefit over time as the taxes on the growth, get deferred. Unfortuneatly, by their design. a subtraction of benefit is then incurred as one withdraws from the RRSP. When one adds up all the pluses and minuses, one will usually be ahead by using an RRSP, but since most seniors are in the benefit subtraction phase of their lives, you hear a lot of complaints, like the ones in this thread.

Since we don't have enough info on the OP to determine if RRSPs made sense, I will leave it aside, but I just wanted to let others who hear these same complaints over and over again, that in most cases a full analysis has not been done. In most cases, all you are hearing is the complaint when the bill arrives, and not the details of the entire trip itself.


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## Sasquatch (Jan 28, 2012)

Again, I'm not complaining, just making an observation.
During my working years all I saw was the immediate tax deduction gratification of RRSPs, which prevents one from thinking this thing through a little more. Both of us always had well paying jobs with very generous pension benefits, which should've called out to us that there may not be that much or any change of our tax brackest in retirement. Well, we didn't hear that call.
All I'm saying is that at the end of the day, we are paying the piper now rather than having it gotten over with earlier on in our lives.
It also comes down to the basic fact that one should be grateful to be paying taxes because it really means that one has an income to pay taxes from and I can assure you that we are!!


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