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Author Topic: TFSA ETFs: what to do from 55-65?  (Read 28951 times)

Fintentional

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TFSA ETFs: what to do from 55-65?
« on: March 12, 2019, 04:13:13 pm »
Greetings all,

I'm new to this forum and to investing. Unfortunately I wish I could say that I am new to the workforce. I'd certainly have done a few things differently from a financial literacy and planning point of view. I'm now in my mid fifties and am pretty bleak that TFSAs weren't around when I started my first job. My husband and I have invested in traditional RAs from the start (through a broker - groan when I think of all those 1-2% charges we've paid down the years). We've always been frugal, but with two kids to raise and educate, on a teacher's salary (SGB, so minus many of the perks that government employees get), there is a limit to what we've been able to put away for our retirement. I've done the numbers, using the formulae I've found on this site (thanks Patrick) and suffice it to say that we are probably only a third of the way towards what we need. Our focus now is to do all we can to improve our situation.

So, I've signed up on the Satrix and Easy Equity platforms and am ready to invest in my first TFSA ETF.  Given the short timeframe to retirement (8 years), what advice would you give re. selection/blend of ETFs? I'd really appreciate any advice y'all could give me.  Thank you! 
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gcr

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Re: TFSA ETFs: what to do from 55-65?
« Reply #1 on: March 12, 2019, 07:49:46 pm »
Hi Fin - be very cautious in using competitors on this site to map out your future investing options as by and large many of the competitors buy/sell shares to gain the No.1 spot for bragging rights.
You case is distinctly different you want pointers as to what you should do to alleviate financial burdens in retirement and TFSA's may not be the answer for you, especially given that any capital removed from a TFSA can't be replenished so it will affect your total investment.

So if you are going to be the administrator and investor of your "pension funds" you need to read a lot, attend seminars or talks on investing (Simon Brown runs regular sessions through JSE and presents in some of the large centres and listen) - he also has a website JustOneLap which you can read up back presentations. No I'm not a disciple of Simon's but I do value his mix of ideas; Warren Ingram is another who adds value to the mix.

Many people advocate investment advisors and quite honestly they are all well and good to listen to but find a creditable one who isn't hooked to any of the large investment houses otherwise they will want to sell their home breed as best of breed,

As a suggestion maybe you need to do a few sums like:- What's your monthly income now and what % do you want as a pensionable income when you go on pension, this could give you an indicator of how much you would need to put away now for your future "pension". It is not going to be easy as you would want to look to achieving at least a 70% pension replacement of your current salary incrementing/escalating over the next 8 - 10 year

As I said at the get go - this is my opinion, and is not a sure fire answer to your dilemma, and, others will also give their opinions - so sift through them and make you own call   
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Fintentional

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Re: TFSA ETFs: what to do from 55-65?
« Reply #2 on: March 13, 2019, 10:41:29 am »
Thanks very much for the sound advice and cautions, GCR. I've worked out what we need on a monthly basis using the 300 Rule and have also been following a number of personal finance sites, including Simon Brown's Just One Lap, for a while. He gave an interesting talk a while ago on investing in ETFs within the framework of a TFSA. I definitely have a lot more reading and studying to do to find the best option/s. We own our own property and have rental income coming in, but we need to diversify our assets. We do already have a financial advisor, but quite frankly, the fees are nibbling away at our nest egg. BTW, I have no intention of retiring at 65 myself, but my husband has to retire from his fulltime teaching job (Dept. of Education policy).  Thanks again.
 
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IndustryGuy

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Re: TFSA ETFs: what to do from 55-65?
« Reply #3 on: March 13, 2019, 01:34:33 pm »
If you don't mind me asking, what is your financial advisor charging you in fees?
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Fintentional

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Re: TFSA ETFs: what to do from 55-65?
« Reply #4 on: March 13, 2019, 02:25:22 pm »
Two percent. And then on top of that are the costs of the various provider platforms that our RAs are housed in. Don't even get me started on what the broker fees are on my husband's mandatory school pension plan. Close to 8 percent.
« Last Edit: March 13, 2019, 02:31:37 pm by Fintentional »
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IndustryGuy

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Re: TFSA ETFs: what to do from 55-65?
« Reply #5 on: March 13, 2019, 03:15:12 pm »
That is a lot. Way too much. But I sent you a private message.
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gcr

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Re: TFSA ETFs: what to do from 55-65?
« Reply #6 on: March 13, 2019, 04:28:12 pm »
Quote from: Fintentional on March 13, 2019, 02:25:22 pm
Two percent. And then on top of that are the costs of the various provider platforms that our RAs are housed in. Don't even get me started on what the broker fees are on my husband's mandatory school pension plan. Close to 8 percent.
I would seriously recommend that you call in this broker and ask to him/her to explain how the 8% is arrived at and then get the person to take a scalpel to the costs and pare them back significantly - remember its your future income you are shedding funds from
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Patrick

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Re: TFSA ETFs: what to do from 55-65?
« Reply #7 on: March 13, 2019, 05:03:17 pm »
Quote from: Fintentional on March 13, 2019, 02:25:22 pm
Two percent. And then on top of that are the costs of the various provider platforms that our RAs are housed in. Don't even get me started on what the broker fees are on my husband's mandatory school pension plan. Close to 8 percent.
Holy sh!t, that's a lot of money being given to your broker. He must love you!

Welcome to the site, I'm a huge fan of easy equities for their low costs and easy entry into investing. I'm not the best person to give advice on which ETFs to use, because I like a simple low cost, low maintenance 1 ETF strategy. I just put everything into the Satrix MSCI world ETF and forget about it.
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Fintentional

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Re: TFSA ETFs: what to do from 55-65?
« Reply #8 on: March 14, 2019, 10:30:32 am »
Thanks Patrick - I am a huge fan of your blogs and your steady approach to investing. I'm going to do the same with the Satrix MSCI. Yup, there really does need to be more policing of the financial advice sector. But I guess "caveat emptor" applies. I just wish I'd woken up years ago. Anyway, a major course correction is in place in my household. In addition to investing monthly, I'm going to see just how much we can save from "low hanging fruit" like bank charges. What do you think of Tyme bank? Or are you still a big Capitec fan? 
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Fintentional

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Re: TFSA ETFs: what to do from 55-65?
« Reply #9 on: March 14, 2019, 10:33:10 am »
Thanks GCR - that is exactly what I am going to do. No doubt there will be all sorts of convoluted "explanations", but if I'm not satisfied, "heigh ho, heigh ho, off to the ombudsman I go"...
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gcr

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Re: TFSA ETFs: what to do from 55-65?
« Reply #10 on: March 14, 2019, 04:45:26 pm »
Quote from: Fintentional on March 14, 2019, 10:33:10 am
Thanks GCR - that is exactly what I am going to do. No doubt there will be all sorts of convoluted "explanations", but if I'm not satisfied, "heigh ho, heigh ho, off to the ombudsman I go"...
I am an ex banker so am very familiar with the financial fraternities eye watering charges. When negotiating on pricing always establish what their pricing is, if they tell you if you add a feature to our portfolio they must declare each cost component. You will find that they have no clue as to how costs are derived and will merely point out that that is the cost structure they work to. You will find that they won't be empowered to make decisions to cut back on fees, so if they can't make the decision get them to call in their boss and continue the discussion around the fees. Many operations will tell you that they don't have a mandate to effect meaningful changes, so the right question is "bring the decision maker here" don't accept a further future meeting to resolve the matter. If they are prepared to waive certain fees they will tell you "that they have reviewed your case and as a special concession they will lower the fees" don't stop there tell them to sharpen their pencils again and again and come up with fair and equitable fees that both parties can live with.
I could caution you on RA's but I think it is probably too late - when I retired at 58 I drew down my RA's rapidly via living annuities and move all away from Old Mutual - where I am getting better returns on the single LA that I have. You may want to look at investing in ETF in a TFSA as another option if interested earned in your portfolio exceeds the SARS deduction limits   
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Patrick

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Re: TFSA ETFs: what to do from 55-65?
« Reply #11 on: March 14, 2019, 05:54:23 pm »
Quote from: Fintentional on March 14, 2019, 10:30:32 am
What do you think of Tyme bank? Or are you still a big Capitec fan?
My emergency fund is now in Tyme, purely for the up to 9%-10% interest with near instant availability. I'm keeping Capitec because I travel so often, so converting currencies at spot value is worth it's weight in gold to me!

It's also useful when shopping from overseas sites as you get the real rand/dollar exchange there too rather than the usual rand+2.75% currency conversion fee.
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Fintentional

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Re: TFSA ETFs: what to do from 55-65?
« Reply #12 on: March 15, 2019, 10:22:27 am »
GCR: "I could caution you on RA's but I think it is probably too late - when I retired at 58 I drew down my RA's rapidly via living annuities and move all away from Old Mutual - where I am getting better returns on the single LA that I have".

Thanks for the suggested approach, GCR. I fully expect a battle, but feel better equipped ;}  Two questions for clarification: was it a deliberate strategy to draw down your RAs rapidly post retirement? Did you move everything away from, or to, OM? I wasn't quite clear on this bit. My reason for asking is I'm weighing up what to do with one of my RAs which matures earlier than the others.     

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Fintentional

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Re: TFSA ETFs: what to do from 55-65?
« Reply #13 on: March 15, 2019, 10:24:20 am »
Quote from: Patrick on March 14, 2019, 05:54:23 pm
Quote from: Fintentional on March 14, 2019, 10:30:32 am
What do you think of Tyme bank? Or are you still a big Capitec fan?
My emergency fund is now in Tyme, purely for the up to 9%-10% interest with near instant availability. I'm keeping Capitec because I travel so often, so converting currencies at spot value is worth it's weight in gold to me!

It's also useful when shopping from overseas sites as you get the real rand/dollar exchange there too rather than the usual rand+2.75% currency conversion fee.

Thanks Patrick. I'll take a closer look at Tyme.
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gcr

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Re: TFSA ETFs: what to do from 55-65?
« Reply #14 on: March 15, 2019, 02:09:42 pm »
Quote from: Fintentional on March 15, 2019, 10:22:27 am
GCR: "I could caution you on RA's but I think it is probably too late - when I retired at 58 I drew down my RA's rapidly via living annuities and move all away from Old Mutual - where I am getting better returns on the single LA that I have".

Thanks for the suggested approach, GCR. I fully expect a battle, but feel better equipped ;}  Two questions for clarification: was it a deliberate strategy to draw down your RAs rapidly post retirement? Did you move everything away from, or to, OM? I wasn't quite clear on this bit. My reason for asking is I'm weighing up what to do with one of my RAs which matures earlier than the others.     
I moved my RA's away from OMSA as their charges were horrendous and they weren't open to negotiations - one was moved to Coronation as a L.A. the other small one I drew down and invested directly into the market
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