# What to do with $200 000.00?



## LuEm (Sep 3, 2010)

Hello all. After lurking around here for some time I've decided to seek your opinions...I have $200 000 that I need to invest in a non-registered account for an undetermined amount of time. I want to keep it liquid, maintain its value and not be killed by taxes. My current taxable income is $80 000. I was considering a GIC ladder, but am not sure of tax vs rate of return. The bank suggested BMO Selectclass Security Portfolio. I realize the bank wants its piece of the pie, however I'm not adverse to paying MER if it works for me. The MER is 2.19...Is there a way to make a comparison between these? Thanks in advance


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## Cal (Jun 17, 2009)

A fee only advisor would charge you about 1%....why pay them more....that is roughly $4500 every year before you make any money.

I don't own any GIC's....but I don't think they are they most tax efficient way to go either. Or how liquid a GIC ladder would be, I think you can only get them in 30 day increments.

In a non registered account, taxes will definitely be a factor. You have the right idea to be aware of that.

Not sure what the rest of your holdings are, so to make a recommendation on what to do with the money may not be a shot in the dark, without taking the other investments into consideration.

I would lean towards an equity with a low beta if you are highly concerned about maintaining its value on any given day.


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## dogcom (May 23, 2009)

You want to keep it liquid which means risk is out the door. The next thing is cost like MER or whatever which will eat what little return you can get so from there you are in a small box like RRSP, TFSA or high interest saving accounts.


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## Bupp (Nov 13, 2009)

Given the description byou gave of your goals the choice is between cashable GICs, savings accounts, and money market funds


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## ledtim (Sep 4, 2010)

If you are comfortable with the amount of stability offered by investment grade bonds, I'd consider Claymore CAB, which currently yields about 3.25% with 0.75% MER and pays out in Return of Capital (which defers tax until the shares are sold and the gain is capital gain which is only taxed at half-rate).


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## LuEm (Sep 3, 2010)

Thank you...sooo, general consensus is that downside of taxes on GIC earnings is better than upside of potential Portfolio earnings minus MER?

This money is from a life insurance pay-out. Im now a single parent with two kids and the funds are a huge safety net (ie. sickness, disability), if disaster never strikes then it will be their inheritance. This being said, I'm not sure how "liquid" I need the funds to be. Does this change any opinions? 

Also, my personal finances are OK - RRSP, TFSA, mortgage free, no debt. No fancy investments...GICs across the board.


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## ledtim (Sep 4, 2010)

It sounds like you are in pretty good financial condition. I'm assuming that the costs of raising the two kids to adulthood and your retirement is covered without the $200k, from your statement saying that the $200k would be the kids' inheritance. 

In that case, you probably don't need the 200k to be that liquid or have guaranteed returns in the short-term. Having everything in GICs carry risk of its own, in inflation-risk not to mention the unfavorable taxation. If I were you (and my assumptions above regarding your finances are true), I'd take out some disability insurance and life-insurance (if your kids have some years to go before independence), and get a discount brokerage account and then invest in some dividend and bond ETFs. Something like 30% CDZ (Canadian Dividend etf), 20% CPD (preferred shares), and 50% CAB (Bond fund), the combination of which would have fairly low chance of losing money in the long-term, and taxed much more favorably than GICs, with MER less than 0.7% per year. [Note: I'm not affiliated with Claymore in case anybody is wondering.] At least, that's what I'd do, but I also wouldn't take the word of one stranger on the internet. 

If you are set on GICs, look for best rates on GICs given out by the CDIC covered institutions at least. With the rates the big banks give these days, you'll be lucky to come out in front of inflation. And probably nobody on this forum would recommand investing with a mutual fund that has more than 2% MER, considering that people here are mostly DIYs divided between stock pickers and index fund investors.


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## hboy43 (May 10, 2009)

hi:

The new information you added suggests that the whole sum does not need to be liquid. The rule of thumb is 3 to 6 months living expenses in an emergency fund in liquid investments, so maybe up to $50,000 in your case.

What to do with the rest is a whole other issue.

Regards,

hboy43


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## Oldroe (Sep 18, 2009)

No fancy investments means things haven't changed. 

What I or anybody else would you is meaningless.


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## Scottlandlord (May 27, 2010)

I recently freed up about 200k.

The bulk of the money went towards a few new residential rental purchases. And a place in the sun.

I've very happy with the decisions.


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## kcowan (Jul 1, 2010)

Scottlandlord said:


> I recently freed up about 200k.
> 
> The bulk of the money went towards a few new residential rental purchases. And a place in the sun.
> 
> I've very happy with the decisions.


What kind of place in the sun did you get for a fraction of $200K?


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## Jungle (Feb 17, 2010)

Taking a wild guess, maybe it was Florida or Arizona.


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## furgy (Apr 20, 2009)

Jungle said:


> Taking a wild guess, maybe it was Florida or Arizona.


Or a real nice lawn chair.


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## alphatrader2000 (Aug 18, 2010)

LuEm said:


> Hello all. After lurking around here for some time I've decided to seek your opinions...I have $200 000 that I need to invest in a non-registered account for an undetermined amount of time. I want to keep it liquid, maintain its value and not be killed by taxes. My current taxable income is $80 000. I was considering a GIC ladder, but am not sure of tax vs rate of return. The bank suggested BMO Selectclass Security Portfolio. I realize the bank wants its piece of the pie, however I'm not adverse to paying MER if it works for me. The MER is 2.19...Is there a way to make a comparison between these? Thanks in advance


The question is

1. When you need the money?
2. how long you need to invest it?

And dont buy mutual funds or any ETF/Close end funds that takes more than 1% MER.


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## GeniusBoy27 (Jun 11, 2010)

I think there's a belief that you shouldn't invest in any funds with >1% MER. If you're doing index funds, ETFs, it may make sense. However, there's this article in MillionDollarJourney, that says there are times when you should invest, if your fund manager is an active trader. That means he/she goes and buys stuff against the norm.

A prime example over the past five years would have been Sprott's Gold Fund. It depends if you can spot who are the ones breaking the norms, and what your risk tolerance is.


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## mutzy (Jul 26, 2010)

*What to do*

I'd of went to the TSX venture Ex. and put it all on black.
Rental purchases = headache, place in the sun great.
Open up discount brokerage account, do a little DD.'
Buy good stocks that pay a dividend.
With an account you can mimic any mutual fund or EFT without 
Management fees.


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## Rox (Oct 17, 2010)

mutzy said:


> I'd of went to the TSX venture Ex. and put it all on black.
> Rental purchases = headache, place in the sun great.
> Open up discount brokerage account, do a little DD.'
> Buy good stocks that pay a dividend.
> ...


Can you guys name me a discount brokerage account ? Thanks,...


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## FrugalTrader (Oct 13, 2008)

@ Rox, here is a discount broker comparison that I wrote a while ago but try to keep updated.


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## humble_pie (Jun 7, 2009)

hello Rox

i don't believe any canadian discount brokerage is equipped to handle non-resident accounts.

td waterhouse has a london office under the same name, if you are living within their geographical catchment area.

there are td ameritrade and interactive brokers with US head offices. However it may be cumbersome & expensive for their clients to invest in canadian securities since these are US operations (interactive brokers canada is a subsidiary.)

in addition i feel it is unwise for any person living offshore, with little knowledge of canadian financial markets, to attempt to invest in canadian securities even though they may be planning to eventually move to this country. Investments contemplated pursuant to suggestions coming from an anonymous message board such as this forum are especially worrisome. In short, Rox, Do Not Do This.

surely you have an advisor or some sort of financial arrangements for your assets in the country where you are presently residing. Perhaps this party can help you set up a basic plan for the transition or moving period, or at least help you determine what sort of investments you should be making once you reach canada ... if indeed you do arrive & take up residence here.

from offshore, you could gather information from this forum; but i for one believe it would be a mistake to purchase any canadian security from offshore save and except for those that would be recommended to you by a highly trusted and expert advisor with experience in international investing (such advisors are expensive.)

there would be non-resident canadian taxes that an offshore investor must consider, for example. Such an advisor would know about these.

I also believe that, once you reach canada - if you do migrate here - it would be helpful to consider a skilled and experienced advisor for at least a short period of time, while you adjust to life in the new country.


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## Rox (Oct 17, 2010)

FrugalTrader said:


> @ Rox, here is a discount broker comparison that I wrote a while ago but try to keep updated.


FrugalTrader, 

Thank you. I will check which one is the most efficient in terms of cost and quality of service. Probably I shall feedback after having experienced them.

Hence, the saying.... " never start ever know ".


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