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Discussion Starter #1
My wife and I have had savings account TFSA’s since they were introduced and until now have been relatively satisfied with the return and security such accounts offer. However, with future returns looking limited, I am curious about the possibility of opening TFSA’s that would allow us to purchase a few ETF’s as an alternative to savings accounts.

Our primary investments are managed by a private firm. We are very happy with their performance and the TFSA’s are just a way of diversifying.


Initially I would be looking at two TFSA’s holding about $40,000 each ($80K total) (half of our current TFSA value). Over time might double this amount, plus add new TFSA contributions. I am thinking one or two equity ETF’s at most.

Questions

  • Does this make sense or would such low value accounts not be worth the trouble and I might as well stick with saving accounts?
  • I think I would prefer just one equity ETF in each TFSA as our primary investments have a reasonable fixed income percentage. Can you recommend one such ETF?
  • I don’t have a broker. What is the cheapest/easiest way to purchase ETF’s?
 

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Sorry misread your post so reedited
  • Does this make sense or would such low value accounts not be worth the trouble and I might as well stick with saving accounts?
Yes Getting an all in one ETF makes sense from ishares Vanguard BMO etc
  • I think I would prefer just one equity ETF in each TFSA as our primary investments have a reasonable fixed income percentage. Can you recommend one such ETF?
The ones listed below are all good
  • I don’t have a broker. What is the cheapest/easiest way to purchase ETF’s?
You will need a broker and to set up an account first. Questrade, Qtrade , TD etc are all good.
 

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you’ve Accumulated 160,000 in TFSAs through HISA accounts?

i would think one of the all-in-one ETFs would fit. Vgro, xgro, vbal,xbal.

I’m just a Little confused about your existing tfsa holdings......and no...accounts of 40,000 are not too small for anything.
 

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If you are looking for a single all-stock ETF for the equity portion of your TFSAs, then VEQT or XEQT contain both Canadian and global equities in one package. Broad-based and diversified. You could use VBAL/XBAL, which includes bonds too (about 40%), as a single ETF for your entire TFSAs.

My understanding is that 160k was accumulated in TFSAs belonging to 2 people (BC Eddie and wife) with a cumulative contribution limit of 139k (69.5k x 2). 21k is the gains from the HISAs, which is less than 2% per year.
 

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Discussion Starter #5
Thank you Jimmy, Money172375 & Topo for the quick replies and helpful advice.

Yes, Topo you are correct on how we accumulated the $160K. Of course, the annual rates were actually higher than 2%. But it does average to that due to fact larger catch up deposits were made later in time.

Thank you Jimmy for the broker suggestions.

From my brief research XBAL was the ETF I was considering only because our primary investments have a strong Canadian focus, so appreciate the reinforcement.

I am looking for diversification but I also seek simplicity so the single XBAL really appeals to me.
 

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From my brief research XBAL was the ETF I was considering only because our primary investments have a strong Canadian focus, so appreciate the reinforcement.

I am looking for diversification but I also seek simplicity so the single XBAL really appeals to me.
Your original post also said your primary investments had a reasonable fixed income allocation. If so, and it is all that you want, you may wish to go all equity in your TFSAs, using VEQT. TFSAs are the best place for the highest growth portion of your portfolio because it is never taxed. The only downside of this strategy is the inability to take capital losses should investments fail. But other than the likelihood of an off-year like 2020 for global equities, VEQT will likely give you strong positive returns over the long term.

Fixed income is best placed in a non-registered account......simply because there is next to nothing in return on fixed income. That could change in the distant future if fixed income ever has strong yields again but I think pigs will fly first.

Regarding discount brokerages, many simply select the one (of the big 5) where they do their primary banking, e.g. RBC, TD, etc. They are all reputable, as are some of the independents like Questrade. Commission costs can matter if one is a frequent trader, or buy holdings in small amounts....but they honestly do not matter one bit if trades are infrequent. Paying $10 to buy $6k worth of VEQT once a year in a TFSA is absolutely nothing to spend more than a nanosecond thinking about.
 

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Discussion Starter #7
Your original post also said your primary investments had a reasonable fixed income allocation. If so, and it is all that you want, you may wish to go all equity in your TFSAs, using VEQT. TFSAs are the best place for the highest growth portion of your portfolio because it is never taxed. The only downside of this strategy is the inability to take capital losses should investments fail. But other than the likelihood of an off-year like 2020 for global equities, VEQT will likely give you strong positive returns over the long term.

Fixed income is best placed in a non-registered account......simply because there is next to nothing in return on fixed income. That could change in the distant future if fixed income ever has strong yields again but I think pigs will fly first.

Regarding discount brokerages, many simply select the one (of the big 5) where they do their primary banking, e.g. RBC, TD, etc. They are all reputable, as are some of the independents like Questrade. Commission costs can matter if one is a frequent trader, or buy holdings in small amounts....but they honestly do not matter one bit if trades are infrequent. Paying $10 to buy $6k worth of VEQT once a year in a TFSA is absolutely nothing to spend more than a nanosecond thinking about.
All good comments AltaRed. Again appreciate the advice.

You convinced me about using VEQT instead of XBAL. Certainly makes sense as I do feel I have the fixed income portion covered elsewhere and this is a smaller part of our investments.
.

We use CIBC for primary banking and Tangerine, EQ Bank and Alterna for HISA. Would any of these be better (or even eligible) for an ETF holding TFSA ?
 

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We use CIBC for primary banking and Tangerine, EQ Bank and Alterna for HISA. Would any of these be better (or even eligible) for an ETF holding TFSA ?
You have to have a brokerage account to buy and hold ETFs traded on stock exchanges. Since you bank with CIBC, you already have a relationship with them, and the easiest solution would be to open a CIBC Investors Edge DIY brokerage account. I am guessing most of the application could likely be filled online and only the signature pages needing to be sent in to CIBC IE, or taken to a CIBC branch for mailing to Toronto. You can then easily fund the account by online transfer from your CIBC account.

You will need to decide whether you open an individual account, or a joint account, and whether the account is strictly called a Cash account (no margin possible) or a Margin account.
 
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