# Ten Years into Retirement



## Emma (May 18, 2013)

I joined the forum when I was widowed in 2014, very risk averse, so invested in a GIC ladder. I have been drawing down RRSP/RRIF and adding to TFSA, gifting to kids, travelling before Covid. I have cash sitting at .25% because I am reluctant to lock it in for 5 years at such low rates. I have a defined benefit pension, CPP, OAS and a paid for home. I am looking for an investment to keep up with inflation but low risk. Is that even possible?


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## MrBlackhill (Jun 10, 2020)

Do you have HISA at rates above 1%?


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## cainvest (May 1, 2013)

You should be able to get much better then 0.25 for a 1 year GIC if you shop around.


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## Emma (May 18, 2013)

MrBlackhill said:


> Do you have HISA at rates above 1%?


No BMO is .25


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## Beaver101 (Nov 14, 2011)

^ My answer to the OP's question is "unlikely". 

But more of the question "*why would you?*" ...as you seem to be financially set with ... drawing down RRSP/RRIF and adding to TFSA, gifting to kids, travelling before Covid. Plus have a defined benefit pension, CPP, OAS and a paid for home.

*Ie. why take on more risk(s) than you need to? * given where you're at in life.


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## cainvest (May 1, 2013)

Beaver101 said:


> *Ie. why take on more risk(s) than you need to? * given where you're at in life.


There should be many options to get better than 0.25% that have no risk for the short term. Even at scotiabank I can get 0.65% in a savings account over a 1 year period.


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## Beaver101 (Nov 14, 2011)

^ Don't disagree that .65% is better than .25%. But what's the rate of inflation currently? >1% but <2% as per Stats Canada? [Seems more than 2% to me in the real world]. 

Anyhow, as OP's question was about keeping up with inflation with "low" risk and 5 years GIC is out of the question, sounds to me she would like a more than 1% "low" risk (not risk-free) investment.


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## cainvest (May 1, 2013)

Beaver101 said:


> Anyhow, as OP's question was about keeping up with inflation with "low" risk and 5 years GIC is out of the question, sounds to me she would like a more than 1% "low" risk (not risk-free) investment.


Looking at ratehub it appears a 1 yr GIC (CDIC insured) can get you into the 1.3-1.5% range but those may not be available directly throught the OPs bank.


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## Spudd (Oct 11, 2011)

Personally, I would buy something like VCIP, which is a conservative asset allocation ETF, or VRIF, which is designed for retirees and generates about 4% per year in income. However, if you really don't want any risk at all, neither of these would be suitable since they both invest in stocks and bonds and there's no guarantee.


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## agent99 (Sep 11, 2013)

To stay ahead of inflation, you need something that will yield over 2%. There are many ways to do this, but as you earn more than GICs are paying, your risk goes up. But with a pension, CPP, OAS and a paid for home, perhaps some risk is tolerable?

You could look at an etf that holds say Canadian Bank stocks. The value of the etf may fluctuate or even drop if interest rates rise. But you will still get the yield based on your initial investment (they seldom cut dividends) and you may get some growth in the etf value.

Another option would be preferred shares. Rather than choose them, perhaps an ETF like ZPR. It too will likely lose value if interest rates go up. But it will be re-investing in new preferreds so may eventually catch up.

A bond fund might be something similar, although yield might be lower than preferreds.

For better GIC yields, you have to go outside of big banks. Not always that easy (but not impossible) if your RRIf is with your bank. Here are some GIC rates. 5yrs are over 2%!








Best 5-year non-registered GIC rates | Ratehub.ca


Compare the best long-term, unregistered GIC rates available in Canada with 5-year terms.




www.ratehub.ca





Good Luck


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## ian (Jun 18, 2016)

At the very least move monies to an on line bank like EQ. Today, CIBC pays 1/2 percent on our small eSavings account. EQ bank pays 1.25 percent. It takes about 3 key stokes for us to move any monies over to EQ.


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## Emma (May 18, 2013)

Thanks for replies. I consolidated my banking to BMO as I wanted to streamline my assets and make it easier for my children (and me). I know that is not always the most profitable. I will take a look at the ETF suggestions.


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## Mechanic (Oct 29, 2013)

I'm in the EQ group. Got tired of the low interest at the banks. Opened EQ several years ago when it was much better interest and just moved spare cash there as it was easy access. There have been several juicy short term GIC's along the way and it's so easy. Rates are currently very low but much better than a brick and mortar bank. You can link it to your BMO bank account and easily move funds back and forth. There's usually an intro bonus of $20 if you get a referral from a friend or family member too....who doesn't want free cash ?


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## ian (Jun 18, 2016)

The only money we have in our bank is day to day monies in a seniors cheque account (free) plus a very small eSavings account. We transfer all monies to EQ. We moved everything away from the bank. Low interest rates, high fees, poor service.

We do not have any term deposits. Rates should go up soon but our inflation rate means that we essentially loose money on every dollar in our bank.

IF you are looking at funds, especially from the bank, pay close attention to the MER, ie the management percentage fee.. Bank advisors like to recommend those funds with high MERS. That is how they get goaled. They love to place you in funds that have a 2 or 3 management percent fee. They get paid before you do.


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## My Own Advisor (Sep 24, 2012)

First of all, congrats Emma on doing well since a devastating time....re: drawing down RRSP/RRIF and adding to TFSA, gifting to kids, travelling before Covid, etc.

Have you considered a small cash wedge? I.e., putting your cash in a savings account (EQ Bank, etc.) getting 1%+ and then investing in a balanced fund thereafter?

It could mimic your "defined benefit pension" and you could certainly keep up with inflation longer-term vs. GICs.


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## Mechanic (Oct 29, 2013)

The banks are sneaky, well ours is ? Any time we want to change an account or add anything, they make it so difficult and tell us we have to make an appointment to see an advisor. What a joke, We told them a few years ago that I handled our own investments and wasn't interested in their savings plans because they are so low. I think they see our investments and transfers etc and think they can keep trying.


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## Emma (May 18, 2013)

I am assuming I would need to open both a TFSA and a RRIF account with EQ?


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## ian (Jun 18, 2016)

No. We only have a HISA, high interest daily savings accounts at EQ-individual and joint. Have no idea about the transfer costs at your institution.

We did however decide to move my our TFSA's away from CIBC a few years ago.

There was a service charge of $150. per TFSA if we transferred to another financial institution. There was no fee if we simply cashed it and deposited the monies in our account. This is what we did.

We waited to do this until mid December. Then, in January placed that cash in another TFSA. Saved us $300 in fees and took 10 minutes.

The bank did not volunteer this information......it was buried in their on line TFSA data sheet.

We stopped dealing with our bank years ago-with the exception of a no charge seniors cheque account, a very low balance HISA, and a safety deposit box. Their service charges were incredibly high, their interest rates were low, their investment advice was poor.


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## scorpion_ca (Nov 3, 2014)

ian said:


> There was a service charge of $150. per TFSA if we transferred to another financial institution. There was no fee if we simply cashed it and deposited the monies in our account. This is what we did.
> 
> We waited to do this until mid December. Then, in January placed that cash in another TFSA. Saved us $300 in fees and took 10 minutes.


Most of the brokerages reimburse the transfer out fee and offer various promotions too. I transferred from TD to Questrade a couple of years ago and received around $750 including transfer out fee.


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## ian (Jun 18, 2016)

scorpion_ca said:


> Most of the brokerages reimburse the transfer out fee and offer various promotions too. I transferred from TD to Questrade a couple of years ago and received around $750 including transfer out fee.


Yes. RBC Direct reimbursed us the $700. fee that National Bank charged us when we moved our equity accounts. All we had to do was ask beforehand.

It is surprising what you can get when you simply ask. Better rates, upgrades at hotels, etc, discounts, you name it. Never be shy to ask. The worst possible outcome will be a polite no.


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## Eder (Feb 16, 2011)

Emma I think if you prefer using BMO for everything you would be wise to approach * BMO Private Wealth* that will tailor your retirement taking care of taxes, income,budgeting,insurance,inheritances etc. Perfect if you are hesitant about DIY .


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## AltaRed (Jun 8, 2009)

Emma said:


> I am assuming I would need to open both a TFSA and a RRIF account with EQ?


Like some others, I have a plain old non-registered HISA account at EQ Bank currently paying 1.25%. That is where my cash reserve is. You can set up 'linked accounts' at EQ Bank where you can pull, or push, funds to your BMO chequing account. I have both Scotia chequing and BMO chequing linked with EQ Bank. You can do the same with LBC Digital if you wish (as I do) but I prefer EQ Bank.


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## Emma (May 18, 2013)

I did meet with a BMO Adviser who referred me to Private Wealth in 2015. I was reluctant as we had a not so great experience with mutual funds in 2008. Maybe I have been too obstinate. I will look at EQ for cash sitting in my non registered account.


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## My Own Advisor (Sep 24, 2012)

I would absolutely ask about reimbursements to take any assets under management, if you really decide to move any assets at all. Like Ian, the worse folks can say is "no".

EQ Bank and a few others are likely best for the cash/interest savings accounts these days. 

As for RRSP/RRIF investments, I think there are a gazillion things you can invest in and if it ain't broken maybe you don't need to fix it?


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## Eder (Feb 16, 2011)

Emma said:


> I did meet with a BMO Adviser who referred me to Private Wealth in 2015. I was reluctant as we had a not so great experience with mutual funds in 2008. Maybe I have been too obstinate. I will look at EQ for cash sitting in my non registered account.


BMO Private wealth will not put you into mutual funds . They are very good at servicing high net worth clients needs. Just a thought.


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## smihaila (Apr 6, 2009)

Emma said:


> No BMO is .25


EQ bank awaits you. Do it. A modern bank, in step with 21st century. Money is easy to move around with them, and much better interest rates.


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## Retiredguy (Jul 24, 2013)

Deleted... found the answer to my Q.


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## gardner (Feb 13, 2014)

agent99 said:


> Another option would be preferred shares. Rather than choose them, perhaps an ETF like ZPR. It too will likely lose value if interest rates go up. But it will be re-investing in new preferreds so may eventually catch up.


I would not recommend preferreds at all. They are very much a specialist item and not a set-it-and-forget-it proposition. ZPR even less so.



> A bond fund might be something similar, although yield might be lower than preferreds.


Yes. Particularly registered, allocating a portion to a bond fund makes sense -- ZAG or XQB maybe.


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## agent99 (Sep 11, 2013)

gardner said:


> I would not recommend preferreds at all. They are very much a specialist item and not a set-it-and-forget-it proposition. ZPR even less so.
> Yes. Particularly registered, allocating a portion to a bond fund makes sense -- ZAG or XQB maybe.


I personally totally avoid bond funds. Even moreso at a time like this.

Regarding preferreds, I did not understand your comment about ZPR (which I had suggested rather than individual pfds). . You said "ZPR even less so" What does that mean?

To quote:"_ ZPR is a laddered fund based on the Solactive Laddered Canadian Preferred Share Index that includes Canadian preferred shares that meet size, liquidity, listing and quality criteria._" Like all ETFs, unit values may fluctuate, but it has a much higher yield than most alternatives presently available. I have a very small amount - I personally would rather buy individual pfds.

You may not like preferreds. They do take some effort to understand. However, I like them! My preferred portfolio has had double digit returns since I bought most of them last Spring. Going forward, my mix of perpetuals and rate resets will not likely see further capital gains. Prices may even retract, but holdings will continue to yield in the region of 6% based on my cost. If they keep doing that (no reason not to), market price can fluctuate as much as it wishes! If called, as some will be, I make a nice gain. 

Nevertheless, performance like this can't be expected going forward, given current pricing. But if a total return of say 3X what you can get in fixed income is OK, ZPR could still be a viable option for at least part of fixed income allocation.


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## Eder (Feb 16, 2011)

Not to mention the tax advantaged yields of preferreds.


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## gardner (Feb 13, 2014)

This is my experience with ZPR, ZAG and XQB. During the time I owned it, ZPR was a dog and it will always have the potential of being a dog on any time horizon. Bond funds are far from perfect, but have less potential for volatility.

Registered, tax treatment means nothing.


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## agent99 (Sep 11, 2013)

As always, those comparisons can be misleading depending on the time frame chosen. If you looked at past 5 years Total Returns, there is not much to chose with ZPR actually marginally ahead. What is important, is what will happen over the next 5 years. How do you think bond funds will do?

Market price of ZPR is currently about what I paid for it in late 2016. It has distributed about 4+ % on cost. 5.5% Total Return over 4 1/3 years vs 3% or less for those bond funds. ZPR is actually no big favourite of mine Just have $10k in it, more for curiosity than anything. I prefer to hold individual pfds. Not recommended for everyone


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## My Own Advisor (Sep 24, 2012)

Eder said:


> BMO Private wealth will not put you into mutual funds . They are very good at servicing high net worth clients needs. Just a thought.


Yes, avoid the pricey mutual fund route for sure and any cash savings should likely be liquid - re: EQ bank. Just seems to make sense to me and then you can invest in stocks/ETFs for equities with BMO Private Wealth. They have some great low-cost ETFs. e.g., ZCN for CDN, and ZDY for U.S. equities.


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## kcowan (Jul 1, 2010)

Emma you need to better define risk. Risk of loss of principal is just one risk. Risk of loss of purchasing power is the one most people miss.


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## Emma (May 18, 2013)

I am going the EQ route with sitting cash. That one was easy. I was disappointed they do not have USD accounts. On days like today I am happy with my puny interest rates! I think lately I have the “fear of missing out” and need to be reminded that I am not in the accumulation phase of life. That said I do not need or plan to spend the cash in my TFSA so a little risk there is more tolerable. I am leaning towards VBAL or ZBAL.


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## Eclectic12 (Oct 20, 2010)

ian said:


> ... There was a service charge of $150. per TFSA if we transferred to another financial institution. There was no fee if we simply cashed it and deposited the monies in our account. This is what we did.
> 
> We waited to do this until mid December. Then, in January placed that cash in another TFSA. Saved us $300 in fees and took 10 minutes.
> 
> The bank did not volunteer this information......it was buried in their on line TFSA data sheet ...


It's another recommendation for forums such as this and financial blogs. IIRC, I read about this back in 2010.

No date on this article but I can find ones dated 2012.








TFSA December manoeuvre


If you have money deposited in your TFSA and want to move some of that money elsewhere (to a TFSA at another financial institution), it can be advantageous to make a withdrawal as late in the year as possible, essentially late in December. TFSA withdrawals are added back to your...




www.highinterestsavings.ca





Cheers


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## Eclectic12 (Oct 20, 2010)

Emma said:


> I am assuming I would need to open both a TFSA and a RRIF account with EQ?


Open what you need from the list of what they offer. It is up to you.

I started with a bank account then years later have added a TFSA. 
It will be a while before I need to think about a RRIF.


Cheers


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## Retiredguy (Jul 24, 2013)

Emma said:


> I am going the EQ route with sitting cash. That one was easy. I was disappointed they do not have USD accounts. On days like today I am happy with my puny interest rates! I think lately I have the “fear of missing out” and need to be reminded that I am not in the accumulation phase of life. That said I do not need or plan to spend the cash in my TFSA so a little risk there is more tolerable. I am leaning towards VBAL or ZBAL.


FYI

I see a note when I log in to EQ that they're having a maintenance shut down on May 16th to get set for having US$ accounts.


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## Gruff403 (Jan 30, 2019)

Emma said:


> I am going the EQ route with sitting cash. That one was easy. I was disappointed they do not have USD accounts. On days like today I am happy with my puny interest rates! I think lately I have the “fear of missing out” and need to be reminded that I am not in the accumulation phase of life. That said I do not need or plan to spend the cash in my TFSA so a little risk there is more tolerable. I am leaning towards VBAL or ZBAL.


If you have room in your TFSA hold everything you can there. If your HISA or GIC is not held inside TFSA then the interest earned by EQ bank is fully taxable at your marginal rate. Enjoy each day.


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## AltaRed (Jun 8, 2009)

Deleted... Was responding to dated post...


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## Kilbarry20 (Aug 19, 2020)

“Very risk averse” you defined yourself. Therefore, it is very difficult to push the investment boundaries. You have not mentioned how much cash you have to invest- not that you have to. But, from personal experience, on about $350k divided into TFSAs and an investment account, it is reasonable easy to make $10k per quarter, simply on the swings of Canadian Blue Chip equities, like the Banks and BCE. Of course, during the periods where you are under water, you must be in a position of not needing the money. Cheers.


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