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Hello, I'm hoping someone can give me some ideas. I've been sitting on a bit too much cash since the pandemic began and would like to move about $60k into my TFSA. My RRSPs are maxed and are invested in a couch potato portfolio. My defined contribution plan from work is in a black rock life plan. I have no debt and my kids education is mainly covered. This is the first time I've really had anything to move to my TFSA which currently sits at $0. I could move the money into my retirement plan but I wanted to keep it available. As you can see I'm a fairly conservative investor and prefer a simplistic approach. Aside from another couch potato strategy can you think of any other plan that would align with my investment style? I'm looking for average returns without a lot of risk, not to get rich quick. Any ideas would be greatly appreciated.

Thank you,

Si~
 

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Look at your overall plan, and either.
Put similar allocations in the TFSA, or put a part in the TFSA.
I'd suggest moving a portion of your cash/fixed & Canadian equity in the TFSA.
 

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Aside from another couch potato strategy can you think of any other plan that would align with my investment style? I'm looking for average returns without a lot of risk, not to get rich quick.
All-in-one asset allocation ETFs come in different flavors and you could probably find one that fits your risk-return profile. VBAL/XBAL/ZBAL are classic 60/40 portfolios, but other allocations also exist. They are generally not that different from a couch potato strategy, all wrapped in one package.

I am assuming this is investment for the long term and you have a separate emergency fund. If not, that would be a priority and should be kept in a liquid no-risk vehicle such as a HISA.
 

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I would second Topo's suggestion of an all-in-one Asset Allocation ETF since TFSA cumulative contribution amounts are still relatively modest. I'd likely be a bit more aggressive in the TFSA vs RRSPs, if for no other reason than a TFSA is after tax dollars and that is where you should want to get your largest total return performance (optimized aggression is what I'd call it). Examples include VGRO/XGRO/ZGRO for an 80/20 equity/fixed allocation.

My TFSA is currently all MAW104 (60/40) but am considering a market timing move to VGRO (80/20) after 1/1/2021 post-covid simply because: a) I won't have to touch it and it will be a legacy for my heirs, and 2) fixed income will likely under perform going forward...at least for the next 10 years. Re-visit back to 60/40 in the distant future when interest rates hopefully eventually normalize somewhat.
 

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good article by rob carrick last week, pg B6 Globe and Mail, Sat Aug 1.
If you are interested in past performance as an indicator of future performance HBAL and HCON both performed better than either VBAL, XBAL, ZBAL or VCNS or ZCON. HCON is 50/50 (unlike the others which are 40/60), and HBAL is 70/30 (unlike the others at 60/40). F.I, and rates have favored higher equity to FI in these kids of funds.
 

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I agree w AltaRed and you may want to consider that tax issue. You want your lower growth assets in the RRSP as they and all their gains are taxed at regular tax rates on withdrawal (similar to the tax deduction on purchase). So what you could do is go 60 or 80% equities in the TFSA in an all in one like XBAL or VGRO and 20 or 40 % in the RRSP w VCNS or VCON etc
 

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Discussion Starter #7
Thank you all for the great info, I'm going to dig in and digest each of your replies. @Topo - We do have a separate emergency fund which could cover us for about 6 months in a HISA, this is just the extra I've been hanging on to waiting to see how things stabilize. Thanks again everyone!
 

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We do have a separate emergency fund which could cover us for about 6 months in a HISA..
You could have kept the emergency fund in your TFSA, given you have the room unused (assuming you were living in Canada those years, the funds were not in your spouse's TFSA, and your emergency fund is not a line of credit). Switching investments in a TFSA does not have tax consequences and if you withdraw the money, you will not lose the room (you can re-contribute next year). Nevertheless, it may not have made a big difference given how low rates have been.
 

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Nevertheless, it may not have made a big difference given how low rates have been.
I think that is the relevant point. Why waste TFSA space on a 1.5% HISA if you have the funds to invest in better returns in the TFSA? My HISA funds stay outside in non-registered.

It would be different if all available TFSA space could not be put to good use.
 

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I think that is the relevant point. Why waste TFSA space on a 1.5% HISA if you have the funds to invest in better returns in the TFSA? My HISA funds stay outside in non-registered.

It would be different if all available TFSA space could not be put to good use.
I totally agree with you that it is better to put higher return assets in the TFSA. Most equity funds are paying more interest/dividends than HISAs, so it is almost always better to keep the HISA outside. I was commenting on the assumption that the TFSA was never used and possibly the emergency funds were outside a tax-sheltered account, in which case that little tax break may have been of some help. But reading the OP again I see that:

This is the first time I've really had anything to move to my TFSA which currently sits at $0.
So there may have been some investments in there that were later taken out. In that case, my comment on emergency funds in the TFSA would be irrelevant.
 
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