# What to do with tiny RRSP?



## JosephK (Nov 7, 2012)

I recently quit a job that provided me with matching contributions to an RRSP, right now the account has ~$1000 in it that I need to find a new home for. I was not planning on contributing anything to it for awhile as I expect that my income will significantly increase within the next few years. I've got about 90K in TFSA/Nonreg investments at my brokerage (virtual brokers), but shifting the money to an RRSP with them is a non starter due to a $50/yr fee for RRSPs under 15K. Anyone got any advice on where the best place to stash this money for a few years would be? 

Thanks, 

-K.


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## james4beach (Nov 15, 2012)

There's not much point in putting 1k into a self-directed brokerage RRSP, and as far as I know all discount brokers have annual fees for this anyway. I also wouldn't put it into a traditional mutual fund account because those MERs are going to be high, plus mutual fund companies do a great job at trapping you in and preventing you from leaving.

This is a tricky problem. Can you leave it where it currently is?

If you have to move it, go to a high interest savings kind of place that doesn't charge an annual RRSP fee. Examples would be Outlook Financial or PC Financial. Perhaps you can keep accumulating in there until you reach the 15k or whatever threshold. Outlook pays pretty good rates (5 year GICs at 2.8%). Consistently adding to your RRSP while putting the money into 5 year GICs is going to give you good results.


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## MrMatt (Dec 21, 2011)

Move it to a bank Mutual fund RRSP account, not a brokerage account.
They shouldn't have an admin fee, and the MER of 1% or so for an index fund is only $10/year.
Then just ignore it until you have more money. That's what I did with my smaller LIRA.

You can get cheaper (TD eFund) but really for the $5/year you'll save, it's not worth the trouble.


If you have 50 or 60k in nonreg investments (assuming 90 total - 30 in TFSA), why don't you put that money in an RRSP?


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## bgc_fan (Apr 5, 2009)

james4beach said:


> There's not much point in putting 1k into a self-directed brokerage RRSP, and as far as I know all discount brokers have annual fees for this anyway. I also wouldn't put it into a traditional mutual fund account because those MERs are going to be high, plus mutual fund companies do a great job at trapping you in and preventing you from leaving.


I don't see why you couldn't use the TD mutual fund RSP account, as the index funds are less than 0.5% in some cases. Once you have $25k, you can transfer it into a self-directed RRSP account. That's pretty much what I did, and the index funds are pretty cheap when it comes to the MERs.


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## james4beach (Nov 15, 2012)

bgc_fan said:


> I don't see why you couldn't use the TD mutual fund RSP account, as the index funds are less than 0.5% in some cases. Once you have $25k, you can transfer it into a self-directed RRSP account. That's pretty much what I did, and the index funds are pretty cheap when it comes to the MERs.


That sounds like a reasonable idea but double check the fee situation (minimums). If you can in fact get the index funds and you meet the minimum purchase amount requirements, for sure


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## bgc_fan (Apr 5, 2009)

james4beach said:


> That sounds like a reasonable idea but double check the fee situation (minimums). If you can in fact get the index funds and you meet the minimum purchase amount requirements, for sure


I don't recall any fees for the mutual fund only account (otherwise why bother), and you could make pre-authorized purchases of $25. But it never hurts to double check if things have changed since I did that.


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## RBull (Jan 20, 2013)

Try Tangerine with one of their index funds. Should be lower MER, no fees.


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## Eder (Feb 16, 2011)

My daughter had the same problem....she is only 31 so I put her into this awhile ago....

http://www.theglobeandmail.com/glob...?id=17876&companyName=HSBC Small Cap Growth-I

I told her not to check it more than once a year though. I know the MER is high but there are some great growth holdings in there and I hope it can outperform an index fund.

(So far she thinks I'm a genius even though I would never own this fund myself )


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## rikk (May 28, 2012)

Well ... what is that "RRSP"... is it a GIC, does it provide interest? anything? is there a fee? If it was me, and the $1K wasn't doing anything for me, I'd just pay the fee and cash it in ... put it into an HISA, investment account, whatever.


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## protomok (Jul 9, 2012)

Remember you can always move your money from the non reg account to the RRSP but claim the deduction a couple years down the road if you suspect your income will be rising. That way you could meet the minimum requirements (15k, 25k, etc.) of the institution of your choosing to avoid fees while also reducing taxes on investment growth...and your 1K RRSP will no longer be lonely


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## MrMatt (Dec 21, 2011)

The mutual fund accounts offered by the big banks tend to have no minimum.

The MER of a simple index fund should be around 1% or $10/year. If you go to TD eFunds, or the competitors equivalent (which is a bit more work), you might save an extra $5/year.
Low MER matters, but remember to put it in perspective, we're talking very little money.
There is a big difference between a delta of 2% on a 100k portfolio, and 0.5% on $1k.

For simplicity, I'd just stay at your current bank, make an appointment and they'll sort it all out. Let them have their extra $5 for all the service they're providing you.

Disclaimers, I did exactly that with my LIRA, and I hold big-5 bank stock, but quite honestly a few minutes of their time costs the bank more than the $5/yr in excess MER you're gonna pay them.


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> That sounds like a reasonable idea but double check the fee situation (minimums).
> If you can in fact get the index funds and you meet the minimum purchase amount requirements, for sure


I can understand making sure that the bank based MF RRSP allows buying the index funds.

For the other two, unless something has changed - the one I setup had no fees for a set list of MFs (other than the MER). There were others that were back end loaded but I don't recall any that had a fee. As for minimums - the bank noload funds I was using, it was $25 a purchase.

I'd recommend making sure that whatever bank is being considered - the appropriate MFs are offered by the related financial group. Using a bank and then wanted third party funds is the most likely spot for fees/high minimums.


Cheers


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## MrMatt (Dec 21, 2011)

Eclectic12 said:


> I'd recommend making sure that whatever bank is being considered - the appropriate MFs are offered by the related financial group. Using a bank and then wanted third party funds is the most likely spot for fees/high minimums.
> 
> Cheers


The bank no-fee mutual fund account will restrict you to only their funds, but they're not bad, just a few bucks a year.
The TD Canadian Index has a MER of 0.88%, RBC is 0.72%


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## Butters (Apr 20, 2012)

You could also put it in Questrade broker

To get around questrade's under 5k inactivity fee, you just need to buy 1 ETF(free) per quarter, so you can add say 20 bucks a month, and buy an ETF every second month

ETF's have the lowest fees, and if you have like 3 different ETF's it could be a fun little game to add and buy 1 stock each month, and help you with saving

also if you switched your other funds to questrade, the inactivity 5k is over all accounts, so there would be no fee... they would likely waive your transfer cost as you have lots of $$$


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## My Own Advisor (Sep 24, 2012)

I'd move it to a bank Mutual fund RRSP account, not a brokerage account, and wait until your mutual fund RRSP account is >$10k or >$15k to avoid the min. charges, associated with a self-directed RRSP. 

Put the money into an indexed fund product. Smaller MER and shouldn't be any transaction costs to do so.

Keep it simple.

Also, suprised you don't max. out your TFSA and RRSP first, before building up a non-reg. position.


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