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TFSA Transfer Fees when Funds are over CDIC Limit
February 6, 2024
4:47 am
Alexandre
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bobwatford said

Different strokes for different folks I guess. If I was of that opinion I'd have about 20% of the money / net worth I currently have and wouldn't have been able to semi retire at 45.

I am happy for you that you managed to retire early, and also happy for me that you didn't need my money for retirement. The money that I could have put in equities, to up their value for people like you, but I did not.

The share of U.S. equities owned by people at or close to retirement age has surged to record level of 80%.
While you managed to cash in, people like me who haven't yet dipped into their nest egg to fund their post-employment lifestyle might not be able to.

There are too many people aged 60, 65, 70, 75 and up ahead of me, sitting on too high ratio of equities to fixed income thinking that in their lifetime the market will only trend up.

February 6, 2024
5:14 am
savemoresaveoften
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Alexandre said

bobwatford said

Different strokes for different folks I guess. If I was of that opinion I'd have about 20% of the money / net worth I currently have and wouldn't have been able to semi retire at 45.

I am happy for you that you managed to retire early, and also happy for me that you didn't need my money for retirement. The money that I could have put in equities, to up their value for people like you, but I did not.

The share of U.S. equities owned by people at or close to retirement age has surged to record level of 80%.
While you managed to cash in, people like me who haven't yet dipped into their nest egg to fund their post-employment lifestyle might not be able to.

There are too many people aged 60, 65, 70, 75 and up ahead of me, sitting on too high ratio of equities to fixed income thinking that in their lifetime the market will only trend up.  

Market will always trend up if the time line is infinite. The issue is time is everyone's enemy. Thus an appropriate level of 'timing the market' is needed, the keyword is not aiming for perfection, and have the stomach to weather today's low may be tomorrow's high.
Its also important to realize only a handful of stocks one can hold a very long time. Even something as big as Nortel or Blackberry may / will not exist over time, just like the Roman empire.

February 6, 2024
12:24 pm
Loonie
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Well said, savemoresaveoften!

Too many people have become vulnerable to bullying to push them into an unrealistic time horizon for equities.
The way I see it, unless you plan to never actually use the money you have invested, you will always have to either time the market or be at the mercy of market gyrations in order to get access to it.

February 7, 2024
9:03 am
Bill
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I don't know, wasn't at all complicated for me, just kept buying solid equities for about 30 or so years, sold them all some years ago, now I just dabble in and out with a bit for fun and keep the rest in fixed income, done, worked out great. Big bank discount broker accounts were the key to the whole deal.

P.S. I don't have any confidence in the next 30 years so I'm not recommending anything to anyone younger, just saying it's actually pretty simple if you keep it that way.

February 7, 2024
9:17 am
Norman1
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It's not complicated and timing is not needed.

Stock indices and the ETF's that track them don't do any timing, don't limit themselves to just a handful of worthy stocks, and don't do any of the nonsense described. They have done just fine over non-infinite periods of time and have outperformed 40% to 60% of the funds that claim to be actively managed.

S&P 500 has done just fine including the losses from Enron. TSX 300 has also done just fine including the losses from Nortel.

I used to believe that garbage about timing and needing to buy "undervalued" stocks when I started decades ago. People who believe those things today are decades behind.

February 7, 2024
10:53 am
savemoresaveoften
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Norman1 said
It's not complicated and timing is not needed.

Stock indices and the ETF's that track them don't do any timing, don't limit themselves to just a handful of worthy stocks, and don't do any of the nonsense described. They have done just fine over non-infinite periods of time and have outperformed 40% to 60% of the funds that claim to be actively managed.

S&P 500 has done just fine including the losses from Enron. TSX 300 has also done just fine including the losses from Nortel.

I used to believe that garbage about timing and needing to buy "undervalued" stocks when I started decades ago. People who believe those things today are decades behind.  

Except people that also believed buying Hang Seng in 2000, buying Nikkei in 1989 will be fine, as timing the market is nonsense and not needed in the long run. And those 2 are indexes not individual stocks.
Turns out if you buy the high in those 2 indexes, your long investment horizon may not be long enough to even get you to break even, let alone all the opportunities lost during those years.
Of course without a crystal ball, no one knows where the highs or lows are until after the fact.

February 7, 2024
5:04 pm
AltaRed
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That is sensationalism, i.e. cherry picking, to make a point. No one would invest all of their portfolio into just one country's or region's index, not even Canada. Countries mismanage their economies with inappropriate economic policy, sometimes over long periods of time, and slowly deteriorate like Argentina, Japan, Italy and Greece, and yes Canada is sliding into that abyss slowly too with declining GDP per capita data since the Liberals took over in 2015.

On a global basis, wealth and equity markets trend to the northeast over time....always. None the less, it is prudent to have a globally diversified portfolio that can bridge the valleys over business cycles, recognizing what one's needs are when.

P.S. The Financial Post article in which the 80% is quoted is fatally flawed in both its content and its conclusions. That is the stuff that is generated out of perennial doomsayers like Rosenberg. The majority of those people have been savvy investors for decades of their lives and 'know a thing or two'. It is an insult to the their intelligence to suggest otherwise. They will mostly stay the course throughout their retirement gradually reducing their equity exposures as they age.

That all said, each of us does what we are comfortable with. There is no need to denigrate the various perspectives.

February 7, 2024
6:40 pm
AltaRed
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I cannot edit, or add to, my prior post at this time, but I forgot to add the perpective of the MSCI World Index on a historical basis. https://curvo.eu/backtest/en/market-index/msci-world?currency=usd

The key points here are that, on a global basis, one can see 35-40% declines from time to time in the index, and it can take upward of 5 years to recover the losses from those downdrafts, but they will always recover. If one invests in such indices, one avoids individual stock picking disasters and if one has an appropriate equity/fixed income allocation for them, those valleys are mostly just speed bumps in one's investing journey.

It is up to each individual to determine what equity/fixed income ratio is right for them. My mother was conservative in her portfolio so it was never over 50% equity and by the time she passed some 20 years later at age 96, her portfolio was 15/85. The 15% equity component juiced her returns considerably (that 15% providing about 50% of the portfolio's return) while at the same time, that 15% would have made no difference in her lifestyle in later years had it imploded.

February 7, 2024
6:54 pm
AltaRed
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Back to the original intent of this thread, I would only worry about CDIC limits with BBB (or lower) rated institutions and to be conservative BBB+ or lower.

February 7, 2024
7:53 pm
Norman1
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savemoresaveoften said

Except people that also believed buying Hang Seng in 2000, buying Nikkei in 1989 will be fine, as timing the market is nonsense and not needed in the long run. …

Only the uninformed believed those.

The Hong Kong market has third-rate enforcement and is rife with insider dealing.

The Nikkei index is one of those junk price-weighted indices, like the Dow Jones Industrial Average. No-one invests like a price-weighted index, which weighs the holdings by stock price.

No timing is required with those as well. Just don't ever put any money into the Hang Seng and Nikkei index tracking. Same applies to the index of that former Vancouver Stock Exchange that Forbes once called the scam capital of the world.

February 7, 2024
7:54 pm
Loonie
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I doubt this line of inquiry will help OP in answering his/her questions. In any case, we've all heard these opinions many times before on this forum.

February 17, 2024
11:14 am
Doug
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Loonie said
Almost all provinces offer unlimited insurance on registered plans through credit unions.

Alternataively, move it to Oaken, which consists of two CDIC-insured outfits - HOme Bank and HOme Trust. You can divide between the two and each is CDIC insured. That will last you a few more years. They currently have no transfer out fee.

Transfers don't necessarily take two months  

Bear in mind that provincial deposit insurance schemes are not equal to each other and may not be equal to that offered by CDIC, simply because some provincial deposit insurance corporations' liabilities are not direct or contingent liabilities of the provincial government (some are; I believe FSRA in Ontario may be one such provincial deposit insurance scheme that is). Practically speaking, if required, would a provincial government bailout an in-need provincial deposit insurance corporation/fund that isn't a direct or contingent liability of that province? Maybe, or maybe even probably. But it still requires a "leap of faith". For some people, that's a deal-breaker. For me personally, I wouldn't worry about it.

It's just like exceeding CDIC limits with financially stronger, larger financial institutions.

So, on that basis, I'd ask the OP in which deposit issuer are they exceeding their CDIC limit in their TFSA? If it's an institution like Tangerine or a Big Five bank, I honestly would just wait until December, then move the funds out and re-contribute elsewhere in 2025. 🙂

Cheers,
Doug

February 17, 2024
2:26 pm
Loonie
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Arrangements may differ from province to province, but it is my understanding that no province explicitly guarantees the provincial insurer. It is my understanding that the insurance schemes must be self-sustaining while their rules of operation are set by provincial law.

That said, there may be some differences in the extent to which provincial governments may come to their aid voluntarily, but this cannot be known in advance.

Any additional gov't aid at any levol is going to be limited and/or will come with conditions.

CDIC is somewhat different in that it has some extended borrowing power and gov't top-up, by legislation, but still nowhere near enough to cover insured losses in all circumstances.

If I am wrong about any of this, please provide specific legal references, as I would really like to know if any more clarity is available..

February 19, 2024
11:24 am
for interest sake
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Doug said

... I'd ask the OP in which deposit issuer are they exceeding their CDIC limit in their TFSA? If it's an institution like Tangerine or a Big Five bank, I honestly would just wait until December, then move the funds out and re-contribute elsewhere in 2025. 🙂

Cheers,
Doug  

It was Motive. I've left a portion in their TFSA HISA, and have made arrangements to move the remainder into Tangerine for a 6% HISA and then maybe a short term GIC. Started the process Feb. 2, with funds leaving Motive Feb. 13 (took just a little more than a week -- not bad considering the comments I've read about Motive). Bank draft has yet to arrive at Tangerine. In the meantime, while it's 'in transit', neither FI pays interest. Didn't think that was fair, as the transfer process can still take another 4-6 weeks to complete. The manager I spoke with at Tangerine agreed with me and has offered to hold the 6% rate for another 150 days after the funds are deposited. He is also sending a recommendation that interest should be paid by FI 'B' once the funds leave FI 'A'. I've sent another e-mail to the Ministry of Finance to suggest this as well.

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