# Settling Retirement Portfolio Help appreciated!



## kalie (Jun 19, 2021)

Hi. I’m 65 next year and officially a senior so retirement planning is foremost in my mind now and want to ensure I’m making the most of my money going forward.

I have approx. $900,000 saved.
I started the self-directed route last year with TD brokerage and have $297,000 all in VBAL that’s split between cash account, RSP, and TFSA.
I also hold around $138,000 in RBC conservative mutual fund and $16,000 in RSP GICs. 
*Total invested $452,000*

It’s my cash holding that I’m most concerned about as that makes up the remainder. 
$100,000 is in a HISA with LBC and the rest spread out between RBC, TD, HSBC, and Tangerine at measly rates (jumped onto the promotional bandwagon with Tangerine which is now over). I am in Quebec so can't do some of the higher HISAs like EQ.
*Total cash $445,000*

I was planning to collect QPP and OAS at 70, drawing from my cash positions until then. 
I know the cash portion is not keeping up with inflation and I am fairly conservative, but I can’t decide if I have too much cash and what to do with it. I’ve been considering the following. 

a) Invest more into VBAL or other asset allocation ETF (VGRO, VRIF)
b) Ladder GICS (not sure for how long or how much?)
c) Buy silver or gold
d) Move some cash to Wealthsimple with their cash account paying 0.75% (more than the banks) and buy ETFs there. 
e) Open more accounts for HISAs (don’t really like having so many accounts open though)
f) Other suggestions welcome 

Cheers.


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## Ponderling (Mar 1, 2013)

some background? what were you invested with prior to two years ago? 

that might help us understand your current excess cash position. 

cash does feel safe, but its buying power gets eaten by inflation. and compounded inflation over few decades will likely cause more heart ache than an annuity bought too early.


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## Retiredguy (Jul 24, 2013)

Given your stated conservative profile and large amount of cash earning next nothing I strongly agree for you to take cpp/oas at 70. I expect you understand the pmt will increase yearly at 8.2% and 7.2% respectfully to age 70. They will also be indexed until age 70 and thereafter. So not unthinkable that cpp at 70 could be + 50% and oas + 45%. I would do some tax calcs and set aside enough cash to give you net after tax cpp/oas plus 2% indexing for the 5 years and keep it in a hisa making auto draw downs monthly. Also in case you didnt know the 10% announced for oas age 75 will be based on your age 70 amount not the age 65 amount....another reason to delay. I know what I would do with all of the rest but others here are better equiped to advise so i'll stop here. Hopefully you have a no mortgage home. Going into retirement with 900 k Ur in good shape to enjoy many happy years. Good luck.


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## kalie (Jun 19, 2021)

Ponderling said:


> some background? what were you invested with prior to two years ago?
> 
> that might help us understand your current excess cash position.
> 
> cash does feel safe, but its buying power gets eaten by inflation. and compounded inflation over few decades will likely cause more heart ache than an annuity bought too early.


A portion of the cash position was from a house sale a few years ago that I never did anything with. Are you suggesting an annuity? I never really considered that as I don’t know much about it.


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## kalie (Jun 19, 2021)

Retiredguy said:


> Given your stated conservative profile and large amount of cash earning next nothing I strongly agree for you to take cpp/oas at 70. I expect you understand the pmt will increase yearly at 8.2% and 7.2% respectfully to age 70. They will also be indexed until age 70 and thereafter. So not unthinkable that cpp at 70 could be + 50% and oas + 45%. I would do some tax calcs and set aside enough cash to give you net after tax cpp/oas plus 2% indexing for the 5 years and keep it in a hisa making auto draw downs monthly. Also in case you didnt know the 10% announced for oas age 75 will be based on your age 70 amount not the age 65 amount....another reason to delay. I know what I would do with all of the rest but others here are better equiped to advise so i'll stop here. Hopefully you have a no mortgage home. Going into retirement with 900 k Ur in good shape to enjoy many happy years. Good luck.


Thank you for your input. I don’t have a mortgage but nor do I own a house. I did not live in Canada for 16 years so don’t have the max OAS or QPP unfortunately so I think the extra by deferring to 70 will be needed.


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## Thal81 (Sep 5, 2017)

I think you should share how much you spend yearly so we get an idea on how much cash would be appropriate to keep on hand to mitigate some bad turns in the market. I don't think you need too much either way as you are mostly all in VBAL, so maybe 100k-200k at most, and that's really just to bridge you safely to 70 where QPP and OAS would bring stability to your income.

You could also consider getting rid of the RBC mutual fund and not renew GICs and just buy VBAL everywhere. VBAL + some cash is all you need for extra simple retirement.


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## kalie (Jun 19, 2021)

Thal81 said:


> I think you should share how much you spend yearly so we get an idea on how much cash would be appropriate to keep on hand to mitigate some bad turns in the market. I don't think you need too much either way as you are mostly all in VBAL, so maybe 100k-200k at most, and that's really just to bridge you safely to 70 where QPP and OAS would bring stability to your income.
> 
> You could also consider getting rid of the RBC mutual fund and not renew GICs and just buy VBAL everywhere. VBAL + some cash is all you need for extra simple retirement.


Thanks for your reply. Expenses right now run about 35,000 a year. I was thinking about getting rid of RBC fund but wondered about having a bit of diversity instead of all in VBAL. Like not putting all eggs in the same basket in case something happens. Also, and I know about not trying to time the market, but when I started buying VBAL last year it was around $28 and now has jumped to over $30!


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## CAP (Apr 20, 2021)

Kalie,

You're in GREAT shape.

VBAL is a great buy and hold fund, you can simply sell some VBAL units over time....no real need for other funds.

Interestingly, have you considered dumping the RBC fund and GICs - and simply keeping 12-months or so in cash in retirement, as an emergency fund? That would be more than the $16,000 GICs and you already have VBAL for your bond / fixed income component....

There are some great savings accounts outside of QC.








Best High-Interest Savings Accounts in Canada - Cashflows and Portfolios


Looking for the best high-interest savings accounts in Canada? We've got you covered the best rates available with no service fees.




www.cashflowsandportfolios.com





Also very smart to withdraw QPP and OAS at age 70. We had a case study here:








When to Take CPP in Retirement - A Case Study - Cashflows and Portfolios


When to take CPP in retirement is a decision many Canadians face and want answers to. This case study will help you with that decision.




www.cashflowsandportfolios.com





CAP


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## AltaRed (Jun 8, 2009)

High Interest Savings is the 'go to' source for HISA sources and rates. Everything else pales in comparison.


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## kalie (Jun 19, 2021)

AltaRed said:


> High Interest Savings is the 'go to' source for HISA sources and rates. Everything else pales in comparison.


Thanks. Yes I’ve been to that site. Sadly many are not available in Quebec. Got sucked into Tangerine for a promo, that I have to say was a good one for 6 months, but now lower or as low as banks. So I need to get out of that one and find another, was thinking Oaken. Already have the CDIC limit in LBC.


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## MrBlackhill (Jun 10, 2020)

kalie said:


> I was thinking about getting rid of RBC fund but wondered about having a bit of diversity instead of all in VBAL. Like not putting all eggs in the same basket in case something happens.


When investing in VBAL there is already diversification implied and it's already not putting all your eggs in the same basket.

Can you tell us about your understanding of VBAL? Other than being a balanced ETF? Do you understand what it means? Do you understand its components? How it's managed? Its cost? How it compares to your RBC conservative mutual fund?


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## AltaRed (Jun 8, 2009)

VBAL gives you global diversity so you really can't do better than that. However, if you mean you are concerned about committing everything to one Vanguard fund, hedge your bets by putting 50% in each of VBAL and XBAL to diversify across 2 providers.


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## kalie (Jun 19, 2021)

AltaRed said:


> VBAL gives you global diversity so you really can't do better than that. However, if you mean you are concerned about committing everything to one Vanguard fund, hedge your bets by putting 50% in each of VBAL and XBAL to diversify across 2 providers.


Yes sorry I understand the diversity of VBAL and I did mean putting all one provider Vanguard.


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## AltaRed (Jun 8, 2009)

I would not worry about Vanguard leaving Canada or dissolving ETFs like VBAL. From ETF Database Vanguard has $39B in AUM in Canada, third behind Blackrock and BMO with a strong growth rate. Worst case is they would sell their family of ETFs to another competitor.

That said, human nature is what it is and it doesn't cost much to spread the love.


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## Gruff403 (Jan 30, 2019)

Retirement is about secure cash flow. You require about 40K (35+5 tax) likely less. If you stop working now how much OAS + QPP would you actually receive? Now deduct that from 40K. You likely get full 3/4 of OAS at 65 so that's $5550. Add another $5000? for QPP and that's $10 550 of the 40K. That means your own personal portfolio has to create $29 550 Vanguard has a new fund VRIF that targets 4% payout annually. If you convert all your saving to VRIF that generates 36K. You have more money then you need. You do a split of VBAL and VRIF and forget about keeping GIC, mutuals and even cash. Don't wait to 70, you are in fantastic shape.


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## AltaRed (Jun 8, 2009)

I agree it can be kept simple. I'd hold one year of cash flow needs in HISA (LBC Direct) cash to handle the bumps in the road. The rest of it in VRIF or VBAL or some combination thereof. KISS principle.

In my view, it is a wash on whether to wait to 70 for take OAS and QPP given the factors involved versus market returns from VRIF and/or VBAL. By waiting, it will provide more longevity insurance and there is some value in it. OR consider a date somewhere between 65 and 70. It is not an either/or.


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## kalie (Jun 19, 2021)

Gruff403 said:


> Retirement is about secure cash flow. You require about 40K (35+5 tax) likely less. If you stop working now how much OAS + QPP would you actually receive? Now deduct that from 40K. You likely get full 3/4 of OAS at 65 so that's $5550. Add another $5000? for QPP and that's $10 550 of the 40K. That means your own personal portfolio has to create $29 550 Vanguard has a new fund VRIF that targets 4% payout annually. If you convert all your saving to VRIF that generates 36K. You have more money then you need. You do a split of VBAL and VRIF and forget about keeping GIC, mutuals and even cash. Don't wait to 70, you are in fantastic shape.


Thank you so much. You made me feel much better. You read about that you need at least 1 million in Canada for retirement but I guess I am not too far off, which is amazing for me who always felt like the poor cousin


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## kalie (Jun 19, 2021)

AltaRed said:


> I agree it can be kept simple. I'd hold one year of cash flow needs in HISA (LBC Direct) cash to handle the bumps in the road. The rest of it in VRIF or VBAL or some combination thereof. KISS principle.
> 
> In my view, it is a wash on whether to wait to 70 for take OAS and QPP given the factors involved versus market returns from VRIF and/or VBAL. By waiting, it will provide more longevity insurance and there is some value in it. OR consider a date somewhere between 65 and 70. It is not an either/or.


Thanks, I generally like to adhere to the KISS principle. I would feel more comfortable with a higher cash cushion though (always kind of been under the mattress type).


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