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Hubert RRIF Questions and Answers
April 26, 2019
4:24 pm
Doug
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Briguy said

You might even want to cash it in to get a better rate somewhere else if it's only a month after you bought the GIC.  

Yes, that happened with me, with Coast Capital Savings, but it was the same issuer. I just wanted to switch terms, so they let me do it. sf-cool

But, that's one of the risks with GICs. A better rate may come along. Just have to suck it up if they won't let you out of it.

Cheers,
Doug

April 26, 2019
4:40 pm
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Interesting Oaken RRIF regulations as underlined.

100D2091-81DA-43E1-812D-155905BF8CB6.jpeg

April 26, 2019
4:45 pm
Briguy
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Doug said

Yes, that happened with me, with Coast Capital Savings, but it was the same issuer. I just wanted to switch terms, so they let me do it. sf-cool

But, that's one of the risks with GICs. A better rate may come along. Just have to suck it up if they won't let you out of it.

Cheers,
Doug  

Coast Capital Savings had over 100 customers in late 2018 have their accounts wiped out by cyber thieves and they took about 4 weeks to investigate and give the money back to affected customers. In the meantime they offered them interest free loans. Doesn't seem like an overly helpful credit union to me, so I'm not overly interested in waiting for their federal credit union effort.

April 26, 2019
4:52 pm
Briguy
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GICinvestor said
Interesting Oaken RRIF regulations as underlined.

100D2091-81DA-43E1-812D-155905BF8CB6.jpeg  

So if you have <10000 in a RRSP you can't get a RRIF? Or if you deplete your RRIF's down to <10000 you can't renew your RRIF GIC?

Sounds very restrictive, one more reason not to use Oaken for RRSP if you're at conversion to RRIF age. ( Or if you buy house and want to cash in a GIC RRSP for house ?? Oaken doesn't cash in GIC's )

April 26, 2019
5:59 pm
Doug
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Briguy said

Coast Capital Savings had over 100 customers in late 2018 have their accounts wiped out by cyber thieves and they took about 4 weeks to investigate and give the money back to affected customers. In the meantime they offered them interest free loans. Doesn't seem like an overly helpful credit union to me, so I'm not overly interested in waiting for their federal credit union effort.  

That was actually because people fell victim to phishing scams. Not due to a problem on Coast's end. Don't believe what you have read online - it's the complaints and protests by those affected. Their systems are sound and secure. An overseas scammer created a fake Coast website, which some people entered the banking details on, and then the scammer was able to get some of their funds from the real website. 🙁

Cheers,
Doug

April 26, 2019
6:02 pm
Doug
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Briguy said

So if you have <10000 in a RRSP you can't get a RRIF? Or if you deplete your RRIF's down to <10000 you can't renew your RRIF GIC?

Sounds very restrictive, one more reason not to use Oaken for RRSP if you're at conversion to RRIF age. ( Or if you buy house and want to cash in a GIC RRSP for house ?? Oaken doesn't cash in GIC's )  

If you only have $10,000 in a RRIF, you should be transferring it out to your other RRIF and co-mingling your assets. It doesn't make sense to have a bunch of paltry balance RRIFs. Alternatively, just withdraw it in a lump sum, or spread over two years.

Moreover, on $10,000, the difference between a 2.65% 1-year GIC and 2.30% on a HISA is not especially significant. So you could just park it in a RRIF.

Bottom line: RRIFs are a different animal than TFSAs. It doesn't make sense to have a bunch of tiny RRIFs.

I have only a Locked-In RRSP (federal legislation from former HSBC Bank Canada DC pension plan) and an RRSP, both at Scotia iTRADE. I personally would not use an RRSP for GICs. If I want a GIC, I'll buy what I can get through Scotia iTRADE, which, from the sounds of it, is what AltaRed might do as well. You miss out on some of the higher yielding GICs, yes, but I can still get ~2.40-2.50% on a 1-year GIC at Scotia iTRADE, which isn't bad.

Cheers,
Doug

April 26, 2019
6:08 pm
Loonie
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I had an email conversation with Oaken a few years ago on the subject of taking extra withdrawals from RIF GICs. There was no commitment from them to do so. It would at best depend on what they decided at the time.
If you wanted to cash in a GIC at 4% early, I'm sure they'd be accommodating! But if they have you locked in at 2.5, they probably won't be.
Based on my exchanges with them, I don't think there is any point in raising this question with them unless you have an immediate need.

Ys, the 10K minimum at Oaken for RIF is the highest one I know of. It is particularly problematic since they won't transfer it to RIF savings.
You might have to either cash it all in or transfer it somewhere else.

Coincidentally, I received a renewal notice from Oaken today regarding the RIF GIC which I am going to transfer to Motus. FYI, they offer to hold best rate within 30 days of renewal.

April 26, 2019
6:17 pm
Doug
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Loonie said
I had an email conversation with Oaken a few years ago on the subject of taking extra withdrawals from RIF GICs. There was no commitment from them to do so. It would at best depend on what they decided at the time.
If you wanted to cash in a GIC at 4% early, I'm sure they'd be accommodating! But if they have you locked in at 2.5, they probably won't be.
Based on my exchanges with them, I don't think there is any point in raising this question with them unless you have an immediate need.

Ys, the 10K minimum at Oaken for RIF is the highest one I know of. It is particularly problematic since they won't transfer it to RIF savings.
You might have to either cash it all in or transfer it somewhere else.

Coincidentally, I received a renewal notice from Oaken today regarding the RIF GIC which I am going to transfer to Motus. FYI, they offer to hold best rate within 30 days of renewal.  

For existing customers, they'll rate hold for 30 days before maturity? Nice! I missed out on a Coast 18-month GIC for 3.10% and then 2.85% because Coast doesn't offer any rate holds. They can only renew GICs on the maturity date. Is that common?

If Briguy's externally-initiated bank-to-bank transfer request from Meridian posts to his Meridian account by, at the latest, Tuesday end of day, we'll know they automatically post EFT DRs and CRs and thus I'm not sure what other forum users are talking about. As such, if that's the case, then despite them not saying you can do PADs on a Motus HISA, I will say with 99.9998% certainty that a Motus HISA can have PADs from it. sf-cool

Add that GIC rate hold to the "advantage: Motus" column. 😉

Cheers,
Doug

April 26, 2019
6:27 pm
Loonie
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On Oaken's renewal form, it says "Interest Rate: Best rate within 30 days prior to maturity."

April 26, 2019
6:28 pm
Briguy
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Doug said

If you only have $10,000 in a RRIF, you should be transferring it out to your other RRIF and co-mingling your assets. It doesn't make sense to have a bunch of paltry balance RRIFs. Alternatively, just withdraw it in a lump sum, or spread over two years.

Moreover, on $10,000, the difference between a 2.65% 1-year GIC and 2.30% on a HISA is not especially significant. So you could just park it in a RRIF.

Bottom line: RRIFs are a different animal than TFSAs. It doesn't make sense to have a bunch of tiny RRIFs.

I have only a Locked-In RRSP (federal legislation from former HSBC Bank Canada DC pension plan) and an RRSP, both at Scotia iTRADE. I personally would not use an RRSP for GICs. If I want a GIC, I'll buy what I can get through Scotia iTRADE, which, from the sounds of it, is what AltaRed might do as well. You miss out on some of the higher yielding GICs, yes, but I can still get ~2.40-2.50% on a 1-year GIC at Scotia iTRADE, which isn't bad.

Cheers,
Doug  

Did you realize you can buy and sell the all-in-one XGRO or XBAL ETF's for free now in Scotia Itrade? They don't show on their commission free ETF list. That's what I would do with some of my RRSP money in Itrade. I wouldn't be buying GIC's there unless that was the one FI I wanted to use for my RRSP ( since I like to keep my RRSP in one FI )

https://www.scotiaitrade.com/en/direct-investing-and-online-trading/why-scotia-itrade/special-offers/commission-free-etfs.html

April 26, 2019
6:59 pm
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Doug said

If you only have $10,000 in a RRIF, you should be transferring it out to your other RRIF and co-mingling your assets. It doesn't make sense to have a bunch of paltry balance RRIFs. Alternatively, just withdraw it in a lump sum, or spread over two years.

Moreover, on $10,000, the difference between a 2.65% 1-year GIC and 2.30% on a HISA is not especially significant. So you could just park it in a RRIF.

Bottom line: RRIFs are a different animal than TFSAs. It doesn't make sense to have a bunch of tiny RRIFs.

I have only a Locked-In RRSP (federal legislation from former HSBC Bank Canada DC pension plan) and an RRSP, both at Scotia iTRADE. I personally would not use an RRSP for GICs. If I want a GIC, I'll buy what I can get through Scotia iTRADE, which, from the sounds of it, is what AltaRed might do as well. You miss out on some of the higher yielding GICs, yes, but I can still get ~2.40-2.50% on a 1-year GIC at Scotia iTRADE, which isn't bad.

Cheers,
Doug  

I have over 50,000 in Oaken RRSP and I just renewed it along with some 3,000 (paltry?) GICs that will take me into the forced RRIF time age wise. I want the forced amount from those smaller GICs when they mature as they exceed the amount required and will take the balance with a 10% hold back. Will be interesting.

April 26, 2019
7:07 pm
Doug
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Briguy said

Did you realize you can buy and sell the all-in-one XGRO or XBAL ETF's for free now in Scotia Itrade? They don't show on their commission free ETF list. That's what I would do with some of my RRSP money in Itrade. I wouldn't be buying GIC's there unless that was the one FI I wanted to use for my RRSP ( since I like to keep my RRSP in one FI )

https://www.scotiaitrade.com/en/direct-investing-and-online-trading/why-scotia-itrade/special-offers/commission-free-etfs.html  

No, I hadn't realized that XGRO and XBAL were available commission-free on Scotia iTRADE. I wonder how long that will last? I was going to go with VGRO or ZGRO, but I see those are still subject to commissions. Nevertheless, the differences between XGRO, VGRO, and ZGRO are not especially significant. 😉

Curious your age, Briguy...you've mentioned RRIFs, but you may just be naturally curious about them like me. Are you of the age where you'd prefer to have most of your assets in GICs and HISAs, or are you particularly risk averse? I agree with having only one RRSP, or at least your RRSPs at only FI. And yes, I know some personal finance "experts" will recommend putting your "interest income" in tax-sheltered accounts, but I think that's short-sighted and a mistake to focus just on taxation. You're missing out on tremendous opportunity and potential for tax-sheltered capital growth. Consequently, I generally just prefer to keep my GICs in non-registered accounts.

I use ADS Canadian Bank and Bank of Nova Scotia HISAs at Scotia iTRADE for parking money (they're paying 1.60% still, net of the trailer fee, which is even higher than Scotiabank's branch-based HISA!). I'm contemplating putting them in a 180 day (6 month) short term ADS Canadian Bank and BNS GIC paying 2.10%. That's almost as much as the 1-year ADS Canadian Bank and BNS GIC! I'm just not sure if we'll get a significant enough correction for me to redeploy my cash in the market (have been waiting for several years now, since I left a former employer). When that happens, though, will definitely look at XGRO and see if it's still commission-free.

Also, Scotia iTRADE late last year finally offered U.S. Dollar RRSP accounts with no fees so that's one option is to buy the U.S.-listed iShares equivalents, to minimize withholding tax drag on buying Canadian-listed U.S. equity ETFs in an RRSP, and take advantage of that Norbert's Gambit trick for journaling the CAD version of the Horizons U.S. Dollar ETF onto the USD side of the ledger, to minimize FX commissions.

Cheers,
Doug

April 26, 2019
7:12 pm
Doug
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GICinvestor said

I have over 50,000 in Oaken RRSP and I just renewed it along with some 3,000 (paltry?) GICs that will take me into the forced RRIF time age wise. I want the forced amount from those smaller GICs when they mature as they exceed the amount required and will take the balance with a 10% hold back. Will be interesting.  

Are the $3,000 GICs in separate RRIFs, or the same Oaken RRIF? If the latter, I hadn't considered that yeah, they probably would still want you to have $10,000 for each GIC. That is kind of high. It should be $5,000, I think, which seems more reasonable.

If they're in a separate RRIF, or RRIFs, then have you considered transferring them out when they mature? Usually the bank RRIF transfer fee is $40-50, so much less than the $150 that the discount brokerages charge (at least the receiving discount brokerage will rebate transfer fees to $150 with minimum $15,000 transferred, though). You'd avoid having to take the tax hit.

Cheers,
Doug

April 26, 2019
7:25 pm
Briguy
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Doug said

No, I hadn't realized that XGRO and XBAL were available commission-free on Scotia iTRADE. I wonder how long that will last? I was going to go with VGRO or ZGRO, but I see those are still subject to commissions. Nevertheless, the differences between XGRO, VGRO, and ZGRO are not especially significant. 😉

Curious your age, Briguy...you've mentioned RRIFs, but you may just be naturally curious about them like me. Are you of the age where you'd prefer to have most of your assets in GICs and HISAs, or are you particularly risk averse? I agree with having only one RRSP, or at least your RRSPs at only FI. And yes, I know some personal finance "experts" will recommend putting your "interest income" in tax-sheltered accounts, but I think that's short-sighted and a mistake to focus just on taxation. You're missing out on tremendous opportunity and potential for tax-sheltered capital growth. Consequently, I generally just prefer to keep my GICs in non-registered accounts.

I use ADS Canadian Bank and Bank of Nova Scotia HISAs at Scotia iTRADE for parking money (they're paying 1.60% still, net of the trailer fee, which is even higher than Scotiabank's branch-based HISA!). I'm contemplating putting them in a 180 day (6 month) short term ADS Canadian Bank and BNS GIC paying 2.10%. That's almost as much as the 1-year ADS Canadian Bank and BNS GIC! I'm just not sure if we'll get a significant enough correction for me to redeploy my cash in the market (have been waiting for several years now, since I left a former employer). When that happens, though, will definitely look at XGRO and see if it's still commission-free.

Also, Scotia iTRADE late last year finally offered U.S. Dollar RRSP accounts with no fees so that's one option is to buy the U.S.-listed iShares equivalents, to minimize withholding tax drag on buying Canadian-listed U.S. equity ETFs in an RRSP, and take advantage of that Norbert's Gambit trick for journaling the CAD version of the Horizons U.S. Dollar ETF onto the USD side of the ledger, to minimize FX commissions.

Cheers,
Doug  

I'm 57, so am not at an age where I'm looking to buy RRIF's , but I'm just naturally risk averse.

I think you should have got into the market in Dec 2018 as 2018 was a losing year and market was quite low then. At this point if it was me I would park 3/4 my money in a 6 month GIC and 1/4 in a HISA at Scotia Itrade, and then if market corrects within next 6 months I would put 1/4 my money into XBAL ( or VBAL since Itrade fee has dropped to a more reasonable 9.99 and you like it better ) and after 6 months you can assess situation for the other 3/4. It'd be nice if Itrade let you put in a buy for the XBAL at a predetermined lower price with the amount in your HISA, but I assume they wouldn't let you do that, they'd want you to have the money in straight cash in the Itrade account.

April 26, 2019
7:30 pm
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Doug said

That was actually because people fell victim to phishing scams. Not due to a problem on Coast's end. Don't believe what you have read online - it's the complaints and protests by those affected. Their systems are sound and secure. An overseas scammer created a fake Coast website, which some people entered the banking details on, and then the scammer was able to get some of their funds from the real website. 🙁

Cheers,
Doug  

A lot of unhappy RFD'rs are posting their dislike of Coast Capital and jumping ship.

April 26, 2019
7:31 pm
Doug
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Briguy said

I'm 57, so am not at an age where I'm looking to buy RRIF's , but I'm just naturally risk averse.

I think you should have got into the market in Dec 2018 as 2018 was a losing year and market was quite low then. At this point if it was me I would park 3/4 my money in a 6 month GIC and 1/4 in a HISA at Scotia Itrade, and then if market corrects within next 6 months I would put 1/4 my money into XBAL ( or VBAL since Itrade fee has dropped to a more reasonable 9.99 and you like it better ) and after 6 months you can assess situation for the other 3/4. It'd be nice if Itrade let you put in a buy for the XBAL at a predetermined lower price with the amount in your HISA, but I assume they wouldn't let you do that, they'd want you to have the money in straight cash in the Itrade account.  

Well, ideally, I should've just bit the bullet and bought some passive index ETFs in February 2014 when my transfer out from Standard Life (HSBC's DC pension plan and group RRSP administrator at the time) instead of trying to "double dip" by waiting for the market to correct. It sucks that their pooled funds couldn't be transferred out in-kind, but c'est la vie. At this point, I'll take a 10% correction, but if XGRO and XBAL stay commission-free, I could dollar cost average a bit in every month or two. I'll figure it out, I'm sure.

Thanks for sharing your age, I had thought you were closer to my age (35, or I guess that should be 36 in 10 days 😉 ), but yes, 57 is still young. My parents will be 63 this year and I'm going to guess Loonie will be a young 75. sf-cool

Cheers,
Doug

April 26, 2019
7:49 pm
Loonie
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Oaken has a set formula for how they arrange the mandatory RIF withdrawals from your GICs.
First, they take it from interest earned to date in your GICs. They deplete the interest from the GIC with the lowest interest rate first. If the interest isn't sufficient, then they take it from the principal, starting with the one that bears the lower interest rate.
Financially, this is usually to your advantage. I doubt you could get them to do it any other way.
However, if your withdrawal coincides with the GIC's maturity, you would be able to take money out then. But I'm not sure if they would consider that part of the mandatory or not if you were doing it at your own discretion.

April 26, 2019
7:51 pm
Doug
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Loonie said
Oaken has a set formula for how they arrange the mandatory RIF withdrawals from your GICs.
First, they take it from interest earned to date in your GICs. They deplete the interest from the GIC with the lower interest rate first. If thateinterest isn't sufficient, then they take it from the principal, starting with the one that bears the lower interest rate.
Financially, this is usually to your advantage. I doubt you could get them to do it any other way.  

Oh wow, that's quite a methodical approach. I like it. I always thought FIs would wait for you to give them instructions on where to take your minimum withdrawal from and they'd give you until, say, December 1st, each year and by then they'd make a decision for you. Thanks for sharing that approach, Loonie! Sounds like if you dealt with them, you'd like that approach?

So basically, even if a GIC is a non-redeemable, they'll redeem a portion of the lowest interest rate, shortest remaining term GIC first, presumably without a penalty since it's a mandatory withdrawal? I guess I always assumed they'd withhold the interest on the amount withdrawn from the RRIF GIC from the day the GIC was started, but it sounds like maybe you'd only forgo future interest on that withdrawn amount?

Cheers,
Doug

April 26, 2019
8:10 pm
Loonie
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You do get to give an instruction as to the date of the mandatory withdrawal. There is no fee for this at Oaken, and I don't think there is a fee anywhere as it is a legal requirement, not your choice, so not something they can manipulate with fees.

I was content with this approach. However, it's difficult to figure out what it will be in advance and how much you'll have left in your various GICs after these withdrawals, and thus to calculate future interest accumulation; and I didn't appreciate that part. I will do better in future now that I understand their formula, but I am moving them out anyway due to lack of savings account.

The length of term remaining is not a factor; it's only the lowest interest rate.

Some FIs, particularly brokerages, do allow you to specify whence the money will come.

I don't understand your last question, Doug.

It's worth knowing that some FIs will not even sell you a RSP GIC if it will mature after you turn 71. Oaken is OK though.

April 26, 2019
8:15 pm
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Doug said

Oh wow, that's quite a methodical approach. I like it. I always thought FIs would wait for you to give them instructions on where to take your minimum withdrawal from and they'd give you until, say, December 1st, each year and by then they'd make a decision for you. Thanks for sharing that approach, Loonie! Sounds like if you dealt with them, you'd like that approach?

So basically, even if a GIC is a non-redeemable, they'll redeem a portion of the lowest interest rate, shortest remaining term GIC first, presumably without a penalty since it's a mandatory withdrawal? I guess I always assumed they'd withhold the interest on the amount withdrawn from the RRIF GIC from the day the GIC was started, but it sounds like maybe you'd only forgo future interest on that withdrawn amount?

Cheers,
Doug  

I always understood it that when they take money out of your GIC for your agreed upon withdrawals, that you'd only forgo future interest on that withdrawn amount.

The problem with Oaken is that since they don't have a RRIF HISA , you are forced to reinvest the money right away or cash in that GIC and take it out of the RRIF. If you change your mind on monthly or yearly withdrawal rate for their RRIF, I assume you'd have to close the RRIF and open a new RRIF with them. Not sure if Loonie has ever had to do that and how easy that process is.

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