# Recently retired and holding 25% cash. Wait or invest now in…?



## Ben Tunite (Aug 30, 2016)

I retired this spring and have put 
40% of nest egg into Mawer (1/2 fixed income, 1/2 equity) 
35% in medium to higher risk higher-dividend paying stocks (eg. AD, ALA, CJR.B, D.UN, GEI, HOT.UN, GRC, DIV, HHL.UN, KWH.UN, ONR.UN, TF, SPB, ZWE) and 
25% in HISA cash earning 0.8%. 
We are living only on savings so far. Was initially thinking to use most of cash to either buy blue chip divy payers during the prophesied summer market drop, or maybe put more into Mawer and let them steward it, but now am left holding cash. 

any thoughts on this strategy so far and on best way and timing to deploy cash? thanks...


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## OnlyMyOpinion (Sep 1, 2013)

It looks like you have 20% FI MF, 20% Equity MF, 35% income tilt reits/equity, 25% cash.
Do you have a retirement income plan? That is, do you know how much your fixed and discretionary expenses have been going into retirement; and how much you plan to spend on a monthly/annual basis during retirement; and where that income will come from - CPP, OAS, dividends, interest, cash, maturing GIC's, etc.; in topped up TSFA's, etc.
That is what I would use to tell me whether I have sufficient income. I don't think there is anything wrong with 25% cash right now if you can afford it - you may not need to 'stretch' for additional income. There may be merit in building a 5yr fixed income ladder with your HISA cash and continue to live off of it and let your other funds grow.


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## My Own Advisor (Sep 24, 2012)

I just wrote about this recently...at least my plans:
http://www.myownadvisor.ca/have-you-considered-unbundling-your-canadian-etf-for-income/

I think keeping a sizeable cash wedge is smart now, and always, in retirement. My plan for FWIW:
http://www.myownadvisor.ca/cash-wedge-opening-investment-taps/

Mawer has some great products.


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## Ben Tunite (Aug 30, 2016)

OnlyMyOpinion said:


> It looks like you have 20% FI MF, 20% Equity MF, 35% income tilt reits/equity, 25% cash.
> Do you have a retirement income plan? That is, do you know how much your fixed and discretionary expenses have been going into retirement; and how much you plan to spend on a monthly/annual basis during retirement; and where that income will come from - CPP, OAS, dividends, interest, cash, maturing GIC's, etc.; in topped up TSFA's, etc.
> That is what I would use to tell me whether I have sufficient income. I don't think there is anything wrong with 25% cash right now if you can afford it - you may not need to 'stretch' for additional income. There may be merit in building a 5yr fixed income ladder with your HISA cash and continue to live off of it and let your other funds grow.


thanks and yes, have done a budget and met with fin planner to scope out basic forecasts and our budget is covered approximately 25% by Mawer funds (FI yields 1.6%, equity yields only 2.2%) and 50% by the more risky dividends (paying about 7% avg). The remaining 25% of budget each year will be covered by cash. Even if I keep 4 years of budget cash on reserve I have ~70% of this cash untouched. I need to do a spousal loan (at 1%) and move this cash into my wife's account so am not keen on her earning 0.8% in a HISA so she can pay me 1% interest. Since the markets keep going..and going... I am leaning to hold cash anyway and wait for the next drop before deploying it. It will be an interesting day if Trump gets in.


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## Ben Tunite (Aug 30, 2016)

My Own Advisor said:


> I just wrote about this recently...at least my plans:
> 
> I think keeping a sizeable cash wedge is smart now, and always, in retirement. My plan for FWIW:
> 
> Mawer has some great products.


I think the unbundling approach is tremendous and am considering to do a home-made DIY blue-chip fund with a large portion of the remaining cash. I went with Mawer to have some safety and portfolio advice as i can meet with them quarterly. Also, if i die before my wife or lose my reason she has a fallback position to steward the estate. 

I like Daryl Diamond's cash wedge or bucket approach but in this era a bucket of 1% GIC's is sadly impotent. One financial planner i met with said to put ALL my cash into bank stocks as then I get 4-5% dividends from the very institute I am trusting to give me only 1%. I have not done that especially in today's toppy market. But is it wise to wait for a market correction? 

thanks, and i enjoy your excellent website


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## james4beach (Nov 15, 2012)

lol why not put all your money in financial stocks? Have you looked at XFN performance lately? It's outperformed the TSX every year since 2008 ... the annualized performance since inception in 2001 is an incredible 9.3%/year. I'm kind of joking/trolling there. I'm not a big fan of bank stocks because they are highly leveraged institutions that are effectively profiting (amplified, leveraged) from a strong real estate market & central bank stimulus. If either of those reverse, I think bank stocks will fall very hard. Plus, the TSX already has enough bank exposure. It's not like anyone needs more than the 38% financial exposure of XIU.

About cash --

I don't think it's at all crazy to have 25% in cash, though personally I include GICs in my definition of "cash". Consider for example the permanent portfolio allocation style, which calls for 25% in cash but also (long term) has similar performance to a balanced fund.

Compared to your 25% entirely in an HISA, my goal is a 25% "cash" allocation but I am spreading mine across

- 5 year GIC ladder staggered to have one maturing every 6 months or sooner
- HISAs and mostly at Outlook Financial paying 1.7% interest
- some in VSC and XSH (or BSV in US$), short-term corporate bond funds with decent yields

The performance of the above combination is around 1.8%


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