# Out of real estate and into … what?



## lindaphillipsbong

Hello new Money friends:
Thank you to the finance people here who created, moderate, and post to this forum. I am glad to have found you all. We are feeling a bit lost at sea, and need some guidance. 
My husband and I have worked hard, and over 30 yrs have managed to build up a decent net worth. However, most of the time, it was locked up in our home and a manufacturing business (which included its industrial building). After 2008, our sales plummeted to less than half of previous, and we limped along until 2014. A “silent”, yet deadly partner, who was unable to live within his means, was pulling too much money out of the company, and the decision was made to buy out/sell/shut it down. Even though this business could still have been viable in a smaller venue, with only one owner .... we were unsure if we should take that route. Perhaps we should share the costs of severance packages and lawyers, etc with the partner now, instead incurring all those costs ourselves in 6 years. Very horrible decision, very stressful. In the end, we sold to a competitor, and my husband took all his business and his employees to a new shop, and is now general manager there. Basically same poop, bigger pile. 
Sorry for the long winded story here, but I feel you need to know where our mindset is at.
In 2014, my husband was starting his new job, but simultaneously cleaning out his old building, selling the machinery, dealing with lawyers, realtors, accountants. He had two jobs for a long time. We were stressed, and busy, and did not learn anything about investing. The money from the sale of the building (about $750,000) was plopped into our bank, and put into mutual funds. The MERs are varied, but the overall cost is about 1.3%. We had some other savings, and so the total amount is about $900K. Most of it is in unregistered accounts. 
Due to a bad experience in the 80s with goofball advisers from Investors Group, we have always been leery of Mutual Funds. But now suddenly we are back into them, and out of our comfort zone .... trying to learn the best way to protect our life savings, and our retirement. We are both aged 55. 
Though I really like our bank advisor, I am starting to feel resentment about the future fees I will be paying for these funds. Who should we be looking to for advice? Should we be getting a fee-only advisor to teach us how to open a trading account and switch all this to ETFs? (There is a part of me that thinks we can do this ourselves.) What type of accountant should we be finding, as taxes will probably be an issue too? 
I know people would be thinking; “I wish I had your problems.” True, true. But please understand; when you have been frugal-ish for most of your life, and then suddenly blossomed into financial security, the last thing you want to do is accidentally piss a portion of it away due to ignorance. 
Thank you in advance for your time, and any advice.
Linda.


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## Moneytoo

If I suddenly came into money, I would most likely give Garth Turner and his team a try: http://www.turnerinvestments.ca. "Investment Advisor with a fee-based, no-commission practice serving clients across Canada." You can check out his blog: http://www.greaterfool.ca (at least to see if you like his personality )

But for now my husband and I are DIY-ing, aiming for 500K portfolio before 50 (we'll be 47 this year, so far on track) Switched last year from mutual funds to stocks and ETFs, but we only have registered accounts (RRSPs and TFSAs), so don't need an accountant yet


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## none

Consider these guys:

http://canadiancouchpotato.com/wp-content/uploads/2014/11/PWL-Managed-Service.pdf


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## GPM

none said:


> Consider these guys:
> 
> http://canadiancouchpotato.com/wp-content/uploads/2014/11/PWL-Managed-Service.pdf


Good idea None. I've checked them out myself. A great choice. They have The Canadian Couch Potato himself there. Also, Justin Bender is a CFA. Highest credentials you can get. Dan Bortolotti is especially approachable and an investor advocate, as they all are. Definitely no hard sell. I was impressed and nearly used them. My only concern is high fees. 1% + mers is what she is already paying. This is for some ETF's and dimensional funds. Pretty steep, considering with the posters money you can get a pension manager for 1-1.25% where the CFA is running a portfolio. Don't get me wrong, I'm 100% indexed and not to keen on active management. Just sayin, the active managers put together a plan as well, but are working for their money, just to underperform the index by exactly what PWL charges as well. After heavy consideration, I hired a fee for service (fee based planner, not asset based) to draw up a plan, and am forcing a broker to run the ETF's (trade only not fee based). After all, you can be involved in the decisions. I was DIY until a friend pointed out that if I die, my wife is lost. Huge capital gains in the non registered accounts if changes were made. Pity, the trade fees went from about $80 at my discount broker to $2500. However, at $800,000, PWL's fees are over $8000/year for the poster. Also, the performance of the portfolios, even over the long term, are relatively poor comparatively, especially with all the science behind dimensional funds. A more important factor is their limited ability to handle insurance. I needed a new agent. They are only licenced in Ontario were I do not reside. Unfortunate. I did find a few reputable planners in Jim Yih, Objective Financial Planners, and a few others I can't remember. Anyhow, even at 1% I don't think you can go wrong with them (They are still indexed).


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## lindaphillipsbong

Moneytoo & None: thank you for your info. I am reading Couch Potato, having discovered them last year in MoneySense. I am wondering if they took over my portfolio, the cost may be somewhat lower than my current MERs, but still might be 0.9% or something like that? And I assume that is an ongoing yearly cost. Over many years, the passive index route should theoretically outperform my managed bank funds …. though I wonder how "managed" they really are.
GPM: is it not possible to have a joint unregistered trading account? Are you meaning that only one of us can open a trading account and buy the ETFs?


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## OnlyMyOpinion

1. I would not go near Garth Turner (but this is a personal opinion)
2. Re/ your bank mf's - don't feel panicked. Act on the basis of a financial plan, not of the basis of being stuck in mf's. A 1.3% mer is better than many you could get into, and (hopefully) your funds are providing you with equity/fixed income exposure similar to a couch potato etf portfolio anyway. Personally, we still have some money in a TD mf and don't feel it has performed poorly at all. 
3. You don't mention TSFA's, retirement plans, a potential 'cash wedge' for retirement, appetite for volatility, how 'auto-pilot' you want it to be, etc. Those all need to be considered within the context of your investments. As business owners you will be used to uncertainty, but this may be money you want more 'bullet proof'. Some good mf(s) or CP portfolio should be able to meet this need.


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## Beaver101

lindaphillipsbong said:


> Hello new Money friends:
> ... What type of accountant should we be finding, as taxes will probably be an issue too?
> ...
> Linda.


 ... I think the starting point of your "issue" is the answer to this/your question - can your ex-accountant not provide recommendations to a financial planner/investment advisor, etc? perhaps him/herself as an extension? Financial planners/investment advisors are a dime by the dozen (eg. IG, all banks,) these days but not good accountants who also have investement advsiory credentials. Good luck.


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## GPM

lindaphillipsbong said:


> Moneytoo & None: thank you for your info. I am reading Couch Potato, having discovered them last year in MoneySense. I am wondering if they took over my portfolio, the cost may be somewhat lower than my current MERs, but still might be 0.9% or something like that? And I assume that is an ongoing yearly cost. Over many years, the passive index route should theoretically outperform my managed bank funds …. though I wonder how "managed" they really are.
> GPM: is it not possible to have a joint unregistered trading account? Are you meaning that only one of us can open a trading account and buy the ETFs?


Linda, you can definitely both have trading accounts, although it's likely simpler to have 1 account. There may Ben tax benefits to two though, depending on how you pay yourselves and if you are both working again. My wife and I had two until I was disabled. You have a lot of money, so a really good accountant (you likely have one due to the size of your business anyways) is as valuable as a financial planner now. Both will give you good advice on the tax side. I think you will be treated well by PWL (couch potato link). Their mer is 1%, but goes down to .8% at 1 million, I think. You can likely negotiate that number to .8% for you. Most private investment managers I spoke with are flexible that way to bring in clients that are close or will "make it soon". Example young professionals. Make sure to ask. As you noted above, " how many are actually managed. Grey stone private management is an index tracker for sure, as their results have beat there benchmark by 1% or less as I have followed them. Minus 1-1.5% for management fees and you are winning with indexing. I think most large firms have to be. Keep in mind index managers minus a percentage as well,and the mers, so you are looking at 1.1-1.3, but that includes dimensional funds, which are expensive. You can ask for pure indexing which can lower those mers significantly. Although I didn't use them, they seemed very honest, which unfortunately is hard to come by in the industry. I believe they are more thorough in their plan projections due to techniques you will eventually read about. 1 step at a time and all. The fellows above and everyone on this forum are very knowledgable. I only joined this year after reading for years. The couch potato you mentioned is a great way to get a good working knowledge. Indexing is great, even if you are paying a bit more as a non do it yourself, as you are,getting guidance and no guesswork about different active managers. Indexing is a sure return instead of guessing for a better a better return as warren buffet said in some similar way. Find a good insurance agent. You will have lots of estate taxes now which insurance can help with. Different discussion though.


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## GPM

I was slow writing and didn't see other posts. The best advice for us and my parents came from our accountant not a financial planner. This isn't to offend anyone but you want a chartered accountant not a general accountant. They are mixed under certified professional accountants now. Chartered accountants are the tax fellows and general accountants are more business oriented. Both very smart in their fields. Beaver is right, get a COMPLETE financial plan, start to finish is essential, including the wedge and various accounts, including a holding company if recommended for all your non registered funds (a layer of protection). I recommend a proper advisor - not from a bank and not selling products - CFP minimum credential for your money. Don't forget annuities. They are controversial, but the he wealthy barber likes them for PART of your retirement. He feels they are very under utilized. Garth Turner is controversial, but entertaining. I have seen comments here about his competency. Don't know enough about him, so would go with beaver.
Only my opinion is correct on a simple couch potato portfolio. That's what my wife and I have. Warren Buffet will do the same for his wife. You can't get any simpler or more diversified. Huge money managers in the states (think several endowment funds of Ivy League schools), the California pension plan, the wealthy barber, as well as Warren Buffet are recommending them. Also many Nobel prize winners. Learning and researching is most of the fun!


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## Moneytoo

GPM said:


> Garth Turner is controversial, but entertaining.


I love Garth' sense of humour, but don't agree with some things that he recommends. And while reading his blog last year, it seemed that I was going controversial to his recommendations. So it just cracks me up to imagine his reaction if I showed him our 300K+ portfolio consisting of 14 ETFs (no bonds) and 21 stocks, with some GICs (People's Trust TFSA) and gold! lol While he advices (in his usual super-authoritative manner) no individual stocks for under a million portfolios, no GICs in TFSA - and definitely no gold... 



GPM said:


> Learning and researching is most of the fun!


That's for sure!  But now that I've decided that I had too much fun with our portfolio while learning and researching and experimenting, it's somewhat balanced and my husband likes it and doesn't want to simplify it  So maybe I'll put it in my will, "Sell All and start over!" lol


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## lindaphillipsbong

Wow; thank you all; this is an outstanding start for us. What a great forum I have found. 
GPM: what I was wondering when I asked about joint accounts, is this; you mentioned the possibility of a capital gains problem if one spouse dies. Also, I am glad to hear there is a possibility of negotiating our fees. I asked our advisor if these figures were negotiable and he (naturally) said no. But maybe we can revisit this issue. Chuckle.
Beaver101: Yes! Indeed, we need to find a new accountant. We got hit by a big last minute "Alternative Minimum Tax", that kicks in when people exercise their Capital Gains exemption. My husband (thankfully) set aside some cash in case something "weird" happened, and sure enough, this AMT came out of the blue. Our accountant didn't seem to have anticipated it. "Don't shoot the messenger" he says. Ha! 
OnlyMyOpinion: Yes, we do have our TFSAs maxed out. I do not know what a "cash wedge" is, though it sounds like a good thing.  We are tentatively hoping to retire at 60, in five years. During our retirement, we would like to travel, and maybe spend about 8000/month. Not really sure though. We are not by nature too comfortable with volatility, even though we were business owners. This seems ironic. But, I think the lovely building which housed our business was kind of a comforting security blanket. We made some serious hay while the sun was shining pre-2008, and paid off all our mortgages as fast as possible. Currently, I think our portfolio leans on the conservative side, and probably the bond portion of it is a bit more than the equity part of it. 
Moneytoo: Thank you for your insights. You seem to be having the most fun while participating in this game of investing and saving. I look forward to watching and learning from you all.
Off I go into a sunny weekend; a rare treat.
Cheers.
Linda.


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## gt_23

Here's my advice (from being in the industry). It's based on keeping things simple, keeping fees low, and giving you the best shot for growth.

Don't go with an adviser from a small firm like someone already posted...their fees are usually higher and they typically only push limited products that compensate them in a certain way. Interview some potential advisers from big firms (BMO Nesbitt, TD Securities, etc.), check out their credentials, track record, and references. Pick one and go with a fee-based model, have them set up a portfolio of stocks/bonds/ETFs/alternatives based on your appetite for risk/desired growth. Give them the money, forget about it, and look forward to receiving your quarterly statements!

Also, you might want to check out a new Toronto firm called Wealth Simple. They're fairly new but have the backing of a number of industry veterans. Depending on your desired level of engagement with your Broker, this could definitely work for you, since they have very low fees.

I do not recommend DIY investing with $900k, particularly if it's not something you have no experience with in the past. Sure, you can probably manage to set up a brokerage account and buy individual ETFs, but at a portfolio level you will not be optimized and you're likely to make mistakes, which at that size, are going to be costly. Both of these things will lower your % gains, thereby defeating the purpose of trying to save the 50 bps advisor fee.

Hope that helps.


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## GreatLaker

Welcome to the forum

You could learn a lot by reading here and on the web:

If You Can - How Millennials Can Get Rich Slowly by William Bernstein is a good starting resource. The author says more about how to save and how much to save in 16 pages than many authors say in hundreds. It is a US book so uses American tax rules and investments, but the principles apply in Canada.
http://www.etf.com/docs/IfYouCan.pdf

There is the reading list on this site: http://canadianmoneyforum.com/showth...-New-Investors

Finiki (Canadian Financial Wiki) is a wonderful site for financial learning: http://www.finiki.org/

At the most hands-on end you could be entirely self directed, managing your own investments, ranging from ETFs or stocks, through index funds like TD eFunds, or low-cost actively managed funds like Steadyhand or Mawer. At the other extreme is a fully managed investment advisor, usually paid as a % of assets under management (AUM). In-between you could have a fee-only financial plan done by an independent advisor, then do your own investing. That’s the route I chose and have no regrets. 

Fee only planners are paid by you, not the investment company so they don't have the conflict of interest that may drive them to sell products that comp them well but are not best for you. Moneysense magazine has an online directory of fee-only financial planners. http://www.moneysense.ca/directory-of-fee-only-planners. Finiki has a section on finding a financial planner and questions to ask. http://www.finiki.org/wiki/Financial_adviser

You need to decide if you have the interest, time and personality to be a self directed investor. A lot of investors are their own worst enemy, letting emotions drive them to buy high and sell low, or have a badly balanced high-risk portfolio. There is a bit of work involved in rebalancing a portfolio and tracking cost base in non-registered accounts. Many busy people with families, careers, their own business and other interests are happy to outsource financial management to someone else. I could never find an advisor that I could agree with and had low enough costs for me to see the value in it.

As far as investing, check out the model portfolios at Canadian Couch Potato http://canadiancouchpotato.com/model-portfolios-2/. A simple 3 or 4 fund portfolio from iShares, Vanguard or TD e-funds are excellent starting points that over the long term should match and probably beat actively managed mutual funds from the big banks and investment companies.

A cash wedge refers to funding retirement by keeping enough money in cash or a GIC ladder to fund 3-5 years of expenses. Each year as one GIC matures, you put that money into a high-interest savings account for your yearly expenses and purchase another GIC from your equity or fixed income investments. If the stock market is in a bear market you can hold off on buying another GIC, to avoid selling equities at a low point. There is a good blog post on it here: http://www.moneysense.ca/retire/selling-etfs-to-generate-retirement-income

Hope this helps.


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## GPM

Hi Linda,
Your Queastion went waaaay over my head. Sorry. The reason I was speaking of one spouse dying and huge capital gains, is I also have a large non registered portfolio. 3 ETFs only. I am a do it yourselfer. My wife has no time or interest. So if I die, the positions would be sold and she would have to go with discretionary management. That's where the big tax bill comes in for capital gains! Whoever she goes with would sell the positions for sure.
Therefore, I am forcing a broker to do my trades. The costs may kill me, though, so I think it's a good move! gt23 is in the biz so his advice is good. Use a big bank. You can't be piddling around with a small brokerage with limited resources or could go under. A big bank is FULL SERVICE, right from a complete financial plan to insurance to investing. However, be aware brokers are very honest, but banks are criminal organizations (I credit union for free banking). They trade on a sliding scale. As my potential broker put it, the system is rigged to force you into a 1% yearly fee and he couldn't reveal the costs of bonds until next year (it's all still secret until the new legislation comes in). His minimum trade is $250. If I wanted to sell one of my positions of say $200,000, it will cost me THOUSANDS of dollars. I can do it now for $10. I think he is only taking my account out of curiosity and maybe the amount could look good on his books, because his commission will never exceed $2500/year for me. Unfortunate in a way because a brutally honest fellow that deserves a good client. He was concerned about my indexing, but didn't try to talk me out of it. Get good referrals. I was taken for a ten year joy ride by a Vice President at one big brokerage. Hence my DIY approach. 
Now discretionary management as he said is great, but keep on your toes. Banks have access to many money managers but try to guide you into theirs. Still, honest guys, but have to make a living and that is what the banks want. That having been said, I tried a small boutique, and they were not diversified enough and more concerned about my referring advisor than me!
I personally am having a fee only plan done before I see the banks plan. I am a 46 And this is my last move. I have seen my share of shenanigans. Just making sure, as a good four solid referrals for this fellow.
gt3 is also right about the size of your account. I spoke with a very prominent do it yourself blogger, and he himself said I need discretionary management. The more you have the more you need to know. 
For the negotiation, the bank won't budge on your mutual funds. However, a broker, bank based discretionary manager, boutiques, or large firm like mawer (mentioned above) may, and the discretionary managers will often dip below there 1 million mark to get you in. Interstingly, steady hand mentioned above has a sliding fee scale on their website. Mawer is a large manager that gets spoken of a lot here and has an excellent track record. They took on a friend for discretionary management at under 1 million. Example: an $850,000 portfolio brings them 8500 revenue and a 10% return puts a person close to 1 million. Don't pay more than 1%/year.
Sounds like you are close to retirement. Income Blue Print by Darryl Diamond (apparently an expert in the area) and Pensionize Your Nest Egg by Moshe Milvesky Ph.D. and Alexandra McQueen CFP, prepared me to evaluate these plans that are forth coming. They are thorough and the cash wedge is there in detail. Good Luck and enjoy your weekend!
(Jeez my posts even bore me they are so long. Will work on that).


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## lindaphillipsbong

gt_23, GreatLaker, and GPM: These are precisely the types of posts that I was needing for guidance and education. It sounds to me that we should probably find a good fee only person/organization …. and a new accountant. In particular, gt-23's last posted line is sobering, and of course, makes perfect sense. Gulp. 
Thank you all.


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## Financialplannerdude

doing this my ipad so pardon any thpos, like dube rather than dude. 

Just had a family member go through this and i suggusted meeting with several FP. They did that and it was very interesting. In the end they found a planner who did a full portfolio review a complete investment plan without them even being clients. They then had to chase after him to get another appointment. Most planners won't due this.

you guys have enough assests to be demandin!

please update us on how it goes


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## GPM

lindaphillipsbong said:


> gt_23, GreatLaker, and GPM: These are precisely the types of posts that I was needing for guidance and education. It sounds to me that we should probably find a good fee only person/organization …. and a new accountant. In particular, gt-23's last posted line is sobering, and of course, makes perfect sense. Gulp.
> Thank you all.


Not sure if I can say companies as new member. But I'm currently trying objective financial planners. The fellow appears in one of the major newspapers and in money sense. I also considered Jim Yih, a prominent planner. Both only recommend and aren't able to sell. Tried to find David Chilton, but must mostly lecture now. I am sure there are many others. These guys were just kind of "famous". I'm sure others. on the forum may know ones in you area or who have experience with, or are better.  Unfortunately, I'm going all the way across the country!!! However, will have a plan before I see the bank planner. Extra comfort zone and opinion.


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## lindaphillipsbong

Hello financial friends: We will be meeting with a potential advisor tomorrow. 
What type of questions should we be asking him? (I tried a search here, but with only limited success.)
I will do a google search as well, but would really appreciate any input from the members here.
Thanks in advance.
Linda.


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## humble_pie

_Edit: more posts appeared while i was writing this, so my 2 cents are probably too late. Still, it is a pity to drive a potentially talented self-investor into servitude with yet another popular financial salesman-to-the-masses, so i'll post anyhow._


over the years a number of successful business partners - often the wives - have visited cmf forum, wondering what to do with the hard-earned wealth & a bit taken aback by the number of $$ charged as fees, either by the bank-based financial advisors they have engaged or else by the managers of the mutual funds they are expected to buy.

all of these wives have shown a desire for greater financial autonomy, a healthy skepticism about financial advisors in general, plus the prudence before venturing out into do-it-yourself-land that one would expect from an experienced business professional.

so far, so good. What is unusual about this thread is the number of financial salesmen who are transparently in the business, visibly thirsting here to push you towards expensive advisors.

one even tries that old trick ... you must not invest in couch potato ETFs on your own, he insists, because you are a novice & you will make too many mistakes! tch

the other women executives who came to the forum were more fortunate. They were helped from the get-go by independently wealthy cmffers. Most opted for a transition time of perhaps a year, during which time they remained with their original advisors but gradually invested via discount brokers, first in ETFs & then eventually in a combination of individual stocks & ETFs.

if the fund MERs with your present bank advisor are in the 1% range, you will not find cheaper fees than these, unless you DIY. You mention that your total portfolio at present is weighted towards the fixed income/bond side, which is a good thing at the present time imho.

what, therefore, could be the reason to sprint so hastily towards some unknown new advisor? no matter whether garth-turner-bmo-nesbitt-pwl-capital-td-securities-et-al, why would you bolt from the frying pan into the fire? they will all charge you the same 1% or more - which on $900k is quite a lot of money - & they will all pick up on your wish to plan for retirement & they will all therefore weight fixed-income & conservative investments in your portfolio mix.

returning to the business partner wives who have graced this forum in the past, in every case my intuition was that these women would become excellent managers of their own portfolios. With some homework plus a learning period, they would be as successful with investments as they had been in their business enterprises, i thought.

the one suggestion upthread - from 2 parties i believe - that is worth its weight in gold, imho, is the accountant. Ideally you'd benefit from a chartered accountant with a practice that includes strength in estate & personal tax planning. The fact that your present accountant missed your vulnerability to the AMT is a red flag ... i've never even heard of an accountant who could miss a required AMT filing!

since your present fund investments seem to be sensible & since you are not presently being overcharged for financial advice & management, do you think you could hang in an exploration kind of mode for the next few months? ie stay where you're at, but embark on a campaign of logically discovering what all your options might be?

options ranging from discount-broker-DIY-build-your-own-ETFs all the way up the scale to gluskin sheff.


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## lindaphillipsbong

Hello Humble: the posts you spoke of have disappeared. So, as of this time, yours is the lone voice; the one slice of tasty pie on offer. 
Yes, we are thinking along these lines. Our plan was to just listen, but make no commitment. Part of our portfolio (the registered parts, are close to 2% fees) and every time we pull some from the "cheap" pile, and add to the expensive pile, the fees will slowly go up. Perhaps in the future, those registered funds can be converted to DIY ETFs. 
And yes! The more we read and assess the situation, the more we realize that we need a more talented accountant helping us with our tax planning. That should be our main focus in 2015 probably. 
Thanks so much for your time and learned advice.
Linda.


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## humble_pie

it would be hard to find the post sequences since the women posted in so many threads ... for example, asking questions & seeking information about not just common shares, bonds & ETFs, but also preferred shares & taxation of foreign allocations, which are specialized nuts to crack open.

a fair amount of knowledge is required to run a DIY portfolio, even a simple 4/4 division of asset categories. One might imagine that it might take roughly a year to accumulate the knowledge. Things become more critical as parties consider retirement & as the funds at stake become larger.

this is why the women mentioned moved gradually, one partial step at a time, towards DIY investing.

please be prepared, though. There are some advisors who will not tolerate a partial or gradually departing client. One of the women visitors on here experienced this, she was quite shocked.

i was also shocked, as the advisor behaved in a manner that was ill-tempered & rude. She & her husband had been ideal (read: high-paying) clients for 17 long years. Eventually she had a respite in her busy career as a post-doctoral chemist, so she had time to notice the high fees the family was paying, on simple conservative accounts of several million $$.

if i were a financial advisor & if one of my clients was seeking to gain knowledge plus some independence, i would stand up, embrace her on both cheeks, shake her hand, wish her well & tell her that my door, phone & e-mail would always be open! but alas some advisors don't operate like that.

we have a member on here who presently has a super-terrific angelic advisor. She (the member) manages some accounts, he (the advisor) manages others with wisdom, grace & good will. She is fortunate ...


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## lindaphillipsbong

Hello again CMF peeps: Just an update. Hubby and I have not yet retained the all-important new accountant. (We were incidentally, hit with another CRA bill after submitting our taxes .... in addition to the surprise AMT, we also were asked to pay an additional $31,000. When we mortgaged the house to buy the business, all those years ago, the interest payments were a tax write-off. Turns out, this is a type of Capital Gain. Who knew? Certainly not our wonderful accountant. In total, we were hit with over 40K of surprise tax bills this year .... but I digress.) 
Anyway, we have listened to a potential new financial advisor. He presents a package of info showing much more “options” than available at “just a bank”; supposedly better funds, or a collection of top stocks, or Nex-Gen funds (some type of patented investments which are very tax efficient). Everything sounds very “managed”. The cost is similar to our costs now; 1.5%
I did not mention the Potato Couch (or my desire to sit on it), but did tentatively mention Index funds. He responded that being at the “mercy” of the stock market was not wise, and managed money can mitigate losses. I quietly suggested that research did not support this, but he was undaunted, appearing to not detect any whiff of my doubt pheromones, and continued to plunge on with his information. 
But this idea of tax harvesting has intrigued me. I read some info on the CP site. And I wonder if this is why those of us with larger portfolios (especially if we have not yet retired) are advised not to manage our own money? This “harvesting” sounds tricky, and yet might be important for us as a way to lower our tax bill. And especially since we have a large chunk at this point, in unregistered accounts. 
It is this business of taxes, is it not, that makes it risky for rookies like us to consider crawling onto the couch unassisted?
Thanks again in advance for any comments.
Linda.


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## My Own Advisor

Hi Linda,

Sorry to hear about tax headaches...

As for the "new" potential advisor, I would be wary of jumping into a plan with them until you do some further reading. To be honest, you're not in a rush although I can appreciate it likely feels this way.

I would take an honest 1-3 months and simply read and read and read as much as you can.

There have been some books mentioned above, I'll provide my list here:
http://lsminsurance.ca/life-insuran...ooks-personal-finance-authorities-are-reading

What Personal Finance Books Are You Currently Reading?

I’m just finishing up a book by Peter Thiel entitled Zero to One. Thiel was the founder of PayPal and is a venture capitalist for many tech start-ups.

I just started reading One-Page Financial Plan by Carl Richards. This book tries to simplify the financial planning process for folks. I'm going to have a giveaway on my website in a few weeks so make sure to visit.

From All Of The Books You've Read, Which Ones Are Your Favourite?

My three favourite personal finance books are The Wealthy Barber and The Wealthy Barber Returns by David Chilton, Millionaire Teacher by Andrew Hallam and The Investment Zoo by Stephen Jarislowsky.

What Book Do You Recommend As A Good Primer For People Just Starting To Review Their Personal Finances?

I have two sets of recommendations depending upon your age group. For millennials, I recommend Wealthing Like Rabbits by Robert Brown, More Money For Beer and Textbooks: A Financial Guide for Today's Canadian Student by Kyle Prevost and Justin Bouchard. I also suggest reading The Value of Simple by John Robertson and How Not To Move Back In With Your Parents – The Young Person’s Guide to Financial Empowerment by Rob Carrick.

For all age groups, I would start reading The Behavior Gap by Carl Richards, Stop Over-Thinking Your Money by Preet Banerjee and MoneySense Guide to the Perfect Portfolio by Dan Bortolotti.

So, what you'll find after reading these books is likely this:

1. Investing can be very simple. You'll find you'll need a) a plan and then b) the products that fit into that plan are easy to select after you do a).
2. A financial plan can be simple to create. It simply takes a few deep questions to answer. Consider the following as starters:

_How do I feel about money? How do I feel about losing money when the stock market drops? 
Why am I saving money? Is protecting my existing money important to me? Why? How do I know?
Do I need to save more money? How do I know? 
Do I need my investments to make more money? How do I know?_

After doing a bunch of reading I think you'll find you can get your investment costs WELL BELOW 1% if you want to or keep them around 1% if you want someone else to help you manage your money.

Tax harvesting is fine but this is also a more advanced way of managing your non-registered accounts. I'd learn the basics first, understand your goals and your future potential products to help you meet your goals. Only then should you find a way to transition and "harvest" your way towards your new portfolio.

Good luck and keep the forum updated!


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## OurBigFatWallet

Hi Linda, regarding the accountant part - it sounds like you'll need adjustments on several prior years of returns if the gain wasn't calculated properly. If thats the case you'll want a Chartered Accountant with experience in small business to complete that - I'd go with a mid/small size firm in this case as you'll want someone who has experience in this area. I wouldn't correspond with CRA until you speak to an accountant. 

Also you should try to find an accountant that is able to best advise you on how to structure your investments. I don't know specifics or the numbers so I couldn't say but you'll need to find someone who takes a "big picture" look at your situation - structuring your investments in a way to minimize taxes. Where you're at in life is unique to you so your tax situation (and investments) will be different from others, and he/she should be able to recognize this. 

Regarding your advisor, sounds like he may be trying to sell you on ideas you don't buy (as you shouldn't) and may be out for his own best interests (either that or he just isn't experienced enough to know about market research). But the comment about being at the mercy of the stock market could potentially be a red flag. Also, I wouldn't invest in anything I didn't understand and it sounds like the "package" he presented could be complicated (but again, without knowing specifics, I could be wrong).

Best of luck and keep us posted!


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## GPM

humble_pie said:


> _Edit: more posts appeared while i was writing this, so my 2 cents are probably too late. Still, it is a pity to drive a potentially talented self-investor into servitude with yet another popular financial salesman-to-the-masses, so i'll post anyhow._
> over the years a number of successful business partners - often the wives - have visited cmf forum, wondering what to do with the hard-earned wealth & a bit taken aback by the number of $$ charged as fees, either by the bank-based financial advisors they have engaged or else by the managers of the mutual funds they are expected to buy.
> all of these wives have shown a desire for greater financial...
> Sorry, I have no idea how to make quotes blue!
> 
> 
> You may be interested with my results from objective financial partners. Very thorough. He felt I was fine running our portfolio still and my wife was knowledgable enough to do it, gave projections based on our goals and savings rates, insurance advice, and showed us how INADEQUATE OUR NEW WILL WAS. Now this was a surprise to me because my lawyer was a highly recommended by colleagues.
> 
> He also gave options like Jarislowski Fraser (.5% MER for a segregated portfolio - individual stocks, not mutual funds or pooled funds - tax advantages too this), nest wealth for indexing, and recommended using any fee/ trade stock broker as well to manage an ETF portfolio. No asset under management except Jarislowski Fraser. He likes for them because they are cheap. At that price he's not getting a cut. He said pretty much all discretionary managers are the same and has met many. Price was his reasoning. On the forum most people recommended MAWER when I asked what they would do if they died and their spouse had to manage the money. Now remember I'm changing in case something happens to me because my wife is too busy with work and kids.
> 
> My own advisors books are great. I've read many books (I'm a rookie compared to most posters though!)
> Wealthy Barber 1 and 2 (David Chilton), Millionaire Teacher, The Couch Potato Guide to the Perfect Portfolio, and The Little Book of Common Sense Investing (John Bogle who invented index investing). These are all short, clear and sometimes very funny reads, that teach you about all you need to know. They are summarized for my kids!
> 
> Tax loss selling to my knowledge is selling a stock that's dropped below purchase value to get a capital loss. This can be used against capital gains on ones you sell for profit. I thought about this a lot. My potential broker won't do it unless I call it, and the expense would be prohibitive with all my money in 4 ETF's. I decided against worrying about this, because the market would have to drop SIGNIFICANTLY, and the point is to stay invested. I would love to hear comments from the more senior members on its validity.
> 
> Your advisor - I read from an important author (I can't remember who-Chilton?) that if your advisor doesn't even consider indexing then run don't walk to someone else. You are right, no Nobel Prizes have been given for active management.
> 
> Get away from your accountant. These are inexcusable mistakes, on routine procedures. He may possibly be liable. Big Fat Wallet is a senior member and I'm sure is more experienced than me, so his advice is likely better. However, my experience in private business was with a chartered accountant who was a partner at KPMG. Sharp as a tack, and the company has specialists in all fields. I was surprised by the occasional internal referral. I think all the major firms are the same. I must say I feel a little naked with my new, younger accountant since I moved from Saskatchewan. However, our needs are less complex after closing my business to move, he's smart, and he's young. But a small to medium firm. Not sure if the knowledge base is there, and it's part of the reason for our failed will. I was lucky enough to stumble into a "big wheel" lawyer in Saskatchewan when I was young. Worth his weight in gold. Looking for someone new here with no regrets or looking back to get a new will. He made mistakes our Sask. lawyer didn't.
> 
> A final word on money management - I read an interview where there were three advisors, Rick Ferri being one of them. Ferri is an indexer but doesn't limit himself if a clients needs other products. The most interesting comment was from a fee only advisor who said use what's cheapest, period. If you find an active manager cheaper than an indexer, use them. Otherwise index. I felt that was interesting.
> 
> Ps. I dropped into your same position financially. It is daunting to suddenly be running that kind of money on your own. However, I've yet to have a good financial experience. So I DIY. Money doubled but still looking for a good experience for me to hand over the reigns.


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## lindaphillipsbong

Hello MyOwnAdvisor, BigFatWallet and GMP: Thanks for taking the time to respond. Yes! I will do some reading. That is the big "take away" that I get from these posts. I will get a couple books and start filling my brain, such as it is. And we will find a new accountant, most anyone would probably be better …. chuckle.
Thanks again.
Cheers.
Linda.


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## lindaphillipsbong

Hello Money Peeps:
I am reading. I have questions. 
I am hearing that a person with a "larger" portfolio like ours should not try DIY. So, I am trying to understand why that is, and what a rookie investor "can't" do easily, and thus justifying the fees given to a FP. 
Rookies make mistakes due to emotion, they don't easily adopt the "do nothing" approach of Passive investing; I get that. But let's for the moment assume that some rookies could assess their risk profile, and adopt the "do nothing" approach .... what things can a FP offer me? Tax harvesting sounds tricky .... that is something I would be happy to delegate to a professional. Then I read on the WealthSimple site that tax harvesting is not recommended for clients making less than $100,000. This is us; my hubby is probably making about $80K before taxes, and myself $45K. If we are in a lower tax bracket; this strategy is no longer as valuable? 
And what about utilizing a holding company? (We set one up during the sale of our business, just in case we might need it .... it is sitting uselessly in finance world limbo.)
Thanks in advance for any further advice.
Linda.
PS: we met a new accountant. I mentioned some of these things to him. He was youngish, and gave me a blank look. He did not seem to know what ETFs were, as he called them EFTs after the initial mention. And he did not know what tax-harvesting was. He said this only; "If you are paying taxes, that is a good thing, you are making money." Sigh.


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## RBull

Hi Linda, 

Where are you "hearing" that someone with a portfolio the size of yours or more should not DIY and why? It can be done as long as the person has the interest and knowledge. I am managing a good size portfolio and am still a DIYer, now in retirement. 

If you're starting out however the challenge will be greater with a steep learning curve, although a simpler portfolio such as a couch potato version will make it easier to build and manage. 

In your position I would seriously consider a good advisor from a larger well known firm that will manage everything for 1% range. They can help assess what is appropriate for you and set it up. There's nothing to say you can't do things on your own if in a few years of learning and following it closely you want to. In the meantime you can also learn about strategies on sustainable withdrawal amounts and income, and taxes in retirement. I think you mentioned 8000k/month which will take a much larger nest egg to sustain that kind of income in retirement from age 60 unless you have other good income sources, and/or can nicely capitalize on selling the new current business. 

Maybe you need to continue the search for an accountant that also has some knowledge of actual investments, tax harvesting, holding companies. 

Best wishes and good luck.


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## OnlyMyOpinion

I agree with RBull - there is no reason a large portfolio can't be DIY. As you point out, there are some caveats - you need to have a plan to guide your investing and you need to be disciplined. Remember that a fee-only advisor could also be considered in vetting and starting out on the DIY road.
I may misunderstand your intentions re/ tax loss harvesting? As I understand the term, it really has no connection to your income. Personally, we only sell investments at a loss when the quality/outlook no longer justifies keeping them (a recent example was TA). We sell the loser and re-deploy into a better investment. In the same tax year we take some profits on one of our good-performing stocks to net out the capital gain/loss. We don't sell investments that still make long term sense to hold, particularly an etf/fund.


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## uptoolate

humble_pie said:


> the one suggestion upthread - from 2 parties i believe - that is worth its weight in gold, imho, is the accountant. Ideally you'd benefit from a chartered accountant with a practice that includes strength in estate & personal tax planning.


So totally true. Could not begin to give this enough + votes. 

Couch potato DIY if you have the disposition for it while involving the experienced accountant is the surest road to wealth accumulation and preservation. If you need some hand holding then consider a fee-only planner but be sure that is what they truly are. Be very wary when people start talking about permanent insurance solutions and mutual funds. You can hold a very well diversified portfolio of index funds for much less than 0.5% and beat the vast majority of managers over the long haul.


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## tygrus

How about a little dose of reality here. OP, you sound like you had an awful time with your business venture, but to say things are going to now be smooth sailing in the equities markets - well its not going to happen. Diversified portfolios get slammed too as most will attest to in the last year. So you are jumping from the fire into the oven and are going to spend the next so many years of your life hooked to CNBC. 

Just like anything, your income should be diversified, and you shouldn`t have all your money in the markets. I only keep 10% of my net worth in equities and thats enough. Rest is in some fixed income (rentals) and I my business spins off the majority, then I attempt to pillage the markets a bit on the side with my LOC just like the vicious day traders do.

Fixed income to keep the lights on and more variable to top it up. 100% equities don`t fit that bill. Should have kept your industrial building and rented it out maybe.


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## OnlyMyOpinion

tygrus said:


> How about a little dose of reality here. OP, you sound like you had an awful time with your business venture, but to say things are going to now be smooth sailing in the equities markets - well its not going to happen. Diversified portfolios get slammed too as most will attest to in the last year. So you are jumping from the fire into the oven and are going to spend the next so many years of your life hooked to CNBC.
> Just like anything, your income should be diversified, and you shouldn`t have all your money in the markets. I only keep 10% of my net worth in equities and thats enough. Rest is in some fixed income (rentals) and I my business spins off the majority, then I attempt to pillage the markets a bit on the side with my LOC just like the vicious day traders do.
> Fixed income to keep the lights on and more variable to top it up. 100% equities don`t fit that bill. Should have kept your industrial building and rented it out maybe.


Agree fully. I didn't think anyone was suggesting 100% equities. They need FI/cash wedge as part of their plan if retirement might only be ~5 years away (as I recall?). I also wouldn't personally be dumping a single, large lump into the market right now (I know there are arguments pro/con) but would sleep better entering in stages over the next year or so. (after all we have a federal election coming this fall that might cause a large disturbance in the force )


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## lindaphillipsbong

Rbull; thank you for your reply. I have received the DIY warnings from a couple experts via email exchanges ... and also right here in this thread. So, consequently, I then began the process of trying to find out why that was .... what type of mistakes might I make?
OnlyMyOpinion; the reason I am asking about tax harvesting is because this has been offered to us on more than one occasion as a benefit that a FP can offer to us. It seemed to me a tricky thing, and I don't want to make any CRA mistakes, so a professional would be better for this. But then I read on WealthSimple's site that it is not appropriate for those in lower tax brackets .... and I had not heard that before, and was not sure how that worked. Hence the questions to you all. 
Uptoolate; Thank you ... yes, hopefully we will finally sniff out the right people. 
tygrus; last but not least. Chuckle. Thank you for your "dose of reality". Perhaps my posts have created a misunderstanding regarding our attitude and situation. The whole reason I am here is to learn about the frightening ocean of financial information at my doorstep. I do not expect the trip upon it to be smooth sailing. When you say I should not have all my money in equities, are you meaning the whole market, including all asset classes such as bonds/GICs? Do you mean I should buy some real estate? Yes, it would have been nice to have bought the other half of the building from our partner .... but we would now have a mortgage greater than one million. And then we would have a significant property to manage, while still running the old business out of a new shop. And I must say this; the business venture actually was not awful at all. Even when everything crashed in 2008, we (and the company) were debt-free and profitability was still possible. The only problem was the debt-ridden partner who needed to pull a big wage out. The only bad experience was the transition year of 2015. All in all, that company was (and still is) a good thing, and a great opportunity for us. 
Thank you everybody.


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## My Own Advisor

OnlyMyOpinion said:


> I agree with RBull - there is no reason a large portfolio can't be DIY. As you point out, there are some caveats - you need to have a plan to guide your investing and you need to be disciplined. Remember that a fee-only advisor could also be considered in vetting and starting out on the DIY road.
> I may misunderstand your intentions re/ tax loss harvesting? As I understand the term, it really has no connection to your income. Personally, we only sell investments at a loss when the quality/outlook no longer justifies keeping them (a recent example was TA). We sell the loser and re-deploy into a better investment. In the same tax year we take some profits on one of our good-performing stocks to net out the capital gain/loss. We don't sell investments that still make long term sense to hold, particularly an etf/fund.


+1 Another vote.

There is no reason why a $500,000, $1M or more portfolio cannot be DIY. I suspect there are many CMFers with > $500k managing their own portfolios. They likely use a couple, maybe a few ETFs; some ETFs and a mix of stocks; some ETFs, some stocks and a mixed of various fixed income. 

Maybe even some still invest in decent mutual funds (they still exist) like Mawer. 

Given some of the tax headaches you have incurred I would strongly advise you to sit down with a fee-only financial advisor and a tax accountant. 

I would also strongly recommend that all your RRSP account and TFSA accounts are maxed out first. This way, you don't have any current tax liabilities to worry about.

Good luck!


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## RBull

You're welcome lpb. I think the DIY warning should relate to the temperament and experience/knowledge level of the investor, and composition/complexity of the portfolio rather than just the portfolio size. 

The mistakes an individual investor (or an advisor for that matter) can make are many. I just finished reading a book by Larry Swedroe- 77 mistakes even smart investors make.


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## uptoolate

And +2 for DIY for large portfolios. More financial services fear-mongering and myth-making. I just finished reading Swedroe's 'The Quest for Alpha'. HNWIs are called 'whales' for a good reason. He points out repeatedly that the truly big money, institutional money, is almost all run using indexing. He discusses the 'Uniform Prudent Investor Act' passed in the US, which pretty much mandates that anyone who is in a fiduciary position should be using indexing as active management has been shown to negatively impact returns. RBull's caveat about 'the temperament and experience/knowledge level of the investor' is the key. If one is the sort who can set up a couch potato type portfolio and let it ride then that is the way to go. If not then a fee only planner with a fiduciary agreement (and preferably direction to index) is the way to go. And always with the counsel of a good accountant!


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## RBull

^100% agree. 

I'm seeing increasing evidence that the decision to index several years ago was the right way to go. 

My library doesn't have that book or the new one The Incredible Shrinking Alpha - a quick review by Dan Bortolotti. http://canadiancouchpotato.com/2015/08/


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## 1980z28

So much info out there

Pick your happy place

You do not know how cold or hot the water is or how deep

I have maybe 40% real estate and 60% stocks and such for a total of 100%

Retirement in 18 months 

Good luck

I personally shop every week,if I lose sum of the 60% I am ok with this as the kids can hold or profit after I am gone,I am sure there will be lots for everyone ,as how much do we really need


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## lindaphillipsbong

OK; I will look for Larry Swedroe books. Sounds very interesting. 
Congrats on your looming retirement Z28. 
Thanks very much, all of you.
Cheers.
Linda.


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