Category: Topic

a man with bruised knuckles having a headache

The ongoing struggle to simplify getting paid in retirement

RobHLeave a comment

Last week, I sat with my spouse and let her take the wheel in performing the steps to getting paid in retirement1. And although I’ve built an impressive2 set of tools and spreadsheets in an effort to make the steps easy to follow, it’s clear the process involves too many logins, too many screens, and too many manual steps to make this a true DIY project for my spouse. I’ll list a few of the issues I’m facing here.

RRIF withdrawals are automatic. Cash availability is not.

Problem: Both Questrade and Wealthsimple allow the recurring withdrawal of RRIF payments on a monthly basis. Both assume that I have taken steps to ensure that cash is available to enable that withdrawal.

I initially thought that Questrade’s Flow feature was going to solve this problem for me. And, in theory, it could. There are practical limitations with Flow right now that prevent me from using this in its current state, but at least the product team is listening to feedback.

One other possibility came to the forefront of my crowded mind courtesy of a recent post by one of my favourite bloggers, The Loonie Doctor. BMO’s Target Cash Flow ETFs were discussed last year in ZGRO versus ZGRO.T, and I did mention that ZGRO.t would actually be a pretty good idea in a RRIF. ZGRO.t provides monthly payouts (currently targeting a 6% yield) and it pays them out on the 2nd working day of every month:

From https://bmogam.com/ca-en/products/exchange-traded-fund/bmo-growth-etf-target-cash-flow-units-zgro-t

In order to take advantage of this, I’d have to

  • confirm that the monthly payout from ZGRO.t would cover my RRIF minimum payments in each RRIF account
  • convert my XGRO into ZGRO
  • turn off DRIP for ZGRO in my RRIF account
  • monitor cash in RRIF accounts to deal with excess cash

I did a quick check; unfortunately this wouldn’t work in all my RRIF accounts. The current payout of $0.058/unit wouldn’t be enough to cover RRIF minimums in every RRIF account I have. So unfortunately, this isn’t an option either.

Anthropic’s Claude is another possible pathway but it’s limited to Questrade. Most of my monthly payments use Questrade, but there is that one Wealthsimple RRIF account I still have. I could bring that account to Questrade, but I like keeping an eye on a few brokers to make sure I’m getting a good user experience.

But a bigger problem is the non-registered account portion of my monthly salary

My RRIF is only paying about 35% of my monthly salary. The rest comes from two non-registered accounts held by me and my spouse. These accounts will hang around for at least a few more years; the current decumulation is shown in the chart below:

It’s clear my non-registered accounts will be hanging around for a while yet.

What I choose to sell every month in my non-registered accounts depends on:

  • How far my asset allocations have drifted from their targets: most of my holdings in the non-registered account are a single asset class (Canadian equity, US Equity, International equity) so if any of those asset classes get too large, that’s a factor to consider
  • What my forecast is for my net income versus that of my spouse: this is the more important consideration since it impacts my tax bill. The idea is to keep our net incomes as close as possible. Capital gains are realized every time a sale in made in the non-registered account, but if I’m careful, I can split those capital gains such that our net income becomes pretty close by the end of the year3. Right now, I’m playing catchup — my spouse’s net income is currently forecast to be below mine, so I need to generate capital gains from her investments for the remainder of the year.

And then, there’s the broker UIs

Questrade is terrible when it comes to trying to use one login to do trades. Accounts for which you have trading authority are only visible for trading if you use the Questrade Edge interface, which is a lot less welcoming than the default web interface.

And then there are the infuriating limitations placed on trading authority. This is only a problem when we have to use my spouse’s non-registered accounts to pay our monthly salary.

  • You can’t move money between accounts unless you are the primary owner. For joint accounts on Questrade, that effectively means one spouse (the secondary owner) can’t get money out of a jointly held account. And since my monthly routine generally makes changes to our jointly held cash-cushion, I have to be the one to make those changes, or I have to do weird things like moving money out of Questrade to a bank account, and then moving money back in. It’s so silly.
  • Trading authority does not extend to withdrawing money. So if we need to sell my spouse’s non-registered investments, I can. make the sale, but then my spouse has to login with her own credentials to actually withdraw the money.

Wealthsimple has recently added trading authority support, but I haven’t tested what can and can’t be done from this feature.

I don’t have answers to my issues at this moment in time. I will have to continue experimenting; I will spend some time revisiting passiv.com to see if that makes things better.

  1. The monthly steps are described in detail over at The Mechanics of Getting Paid in Retirement: 2026 Edition ↩︎
  2. To me, at least ↩︎
  3. I use https://moneyengineer.ca/tools-i-use/#:~:text=Canadian%20Tax%20Calculators to help me figure this out ↩︎

workers carrying ladder in street

News: Rogers Red Mastercard Changing

RobHLeave a comment

The Rogers Red World Elite Mastercard, the anchor of my cheapskate credit card strategy, is undergoing some changes that give me some pause.

Effective in November, the Rogers Mastercard will remove the 1.5x bonus for Rogers services.  I’ve effectively been using it to pay for my Internet, phone and TV services every month since acquiring the card. I’ll still be able to do that, but I’ll need to spend more money on the card to get the same benefit.

The new rules are such that you get 5% cashback for spending money on Rogers services, which on the face of it sounds like a pretty good deal; what disappears is the (effectively) 3% cashback on anything else you buy when applied to Rogers services. For most people1 this is actually a less rewarding strategy. Here’s an example:

Expense chargedAmountCashback
Anything$1000$20 or $30 if applied to Rogers service
Rogers Service$100$2 or $3 if applied to Rogers service
total$22 or $33 if applied to Rogers service

In other words, by spending $1100 a month, you can earn $33 of free Rogers services. Or $22 of other free things.

With the new scheme, the same table looks like this:

Expense chargedAmountCashback
Anything$1000$20
Rogers Service$100$5
total$25

In the new scheme, you can spend the same amount and get $25 cashback which you can spend on whatever you like. For me, this is a downgrade since the total amount I can apply to Rogers services drops significantly. (From $33 to $25 for the exact same spend). Put it another way: to pay for a $100/month Rogers service, in the old scheme you would have to spend $3333.33. In the new scheme, you’d have to spend $48502 or 45% more!

There’s also the demise of trip cancellation insurance for the World Elite versions, which wasn’t a big deal to me. I carry separate insurance for this sort of thing since the credit card benefits are generally pretty meagre.

So here is my current credit card strategy:

Expense chargedCard to useCashback
Restaurants or Costco GasCIBC Costco Mastercard33% cashback for these services4
Rogers serviceRogers Red Mastercard5% cashback5
Foreign currency transactionsWealthsimple Visa card2%, and no FX fees6
anything elseRogers Red Mastercard or Wealthsimple Visa, no real difference72% cashback

What this table tells me is that I could easily start using my Wealthsimple card for the majority of my transactions without really thinking about it.

  1. Who use Rogers, of course. I don’t think the card makes much sense if you’re not a Rogers/Fido customer. ↩︎
  2. $4750 of general spending gets you $95, and the $100 Rogers charge gets you the other $5. ↩︎
  3. I could also use CIBC Costco for Costco.ca or other gas since those are also 2% categories for this card. After a while, it gets to be too much to remember… ↩︎
  4. I don’t buy Costco gas much, but my spouse does. I settle with buying gas at Shell which gives me 0.03 off a litre thanks to CAA membership. ↩︎
  5. I don’t need to remember to do this since I set up Rogers autopay via credit card. ↩︎
  6. Part of my airport ritual is switching my default payment card to Wealthsimple so I don’t inadvertently make a “bad” FX transaction. ↩︎
  7. Small difference: Wealthsimple Visa pays cashback monthly, and it goes directly to an interest-earning account. With Rogers, I have to bill pay the card, and then apply cashback earned to charges on the card. A bit more work. ↩︎

people exchanging money in cantor

Retirement Portfolio is now USD-free

RobHLeave a comment

On September 4th, I sold my last units of DLR1 within my RRIF account and completed my multi-month activity of kicking USD out of retirement portfolio. I ended up doing this about 3 months faster than I anticipated, but that’s because Questrade offered a free two-month trial for Questrade Plus, which included as many free journaling activities2 as you wished during the trial. And since I’m a cheapskate, I figured saving the journaling fees was worth me upping the pace of my USD to CAD conversions.

I asked Claude to take a look at the various gambits I undertook3 and evaluate them. Claude was quite upbeat:

  • Claude calculated an effective blended rate of 1.39946.
  • Claude said I beat the spot rate by roughly +0.15% overall
  • And, as expected, Claude assessed that every single gambit landed within a few basis points of the spot market, much better than what Questrade would have charged me (1.5% or so).

So now, here’s what my various account types look like, in terms of assets. There’s no USD listed ETFs anymore. Here’s what the three kinds of accounts look like.

Let’s recap the major changes, per account type.

Non-Registered accounts

I’m always a bit reluctant to mess around with non-registered accounts since making trades here inevitably lead to capital gains. But the impact in the end was pretty minor.

There’s actually three separate accounts being considered here. Two are legacy investment accounts that have long-term holdings. The other is my so-called “cash cushion” account that is an integral part of my decumulation strategy, called “VPW”. You can read about the mechanics of it here.

So for the cash cushion, I had to get rid of ICSH in favour of ZMMK. I’m giving up roughly 1.2% in annual return by doing this, but I figure at some point the Bank of Canada and the US Federal Reserve will get closer in terms of their interest rates. This had a minor capital gain impact, which was as expected. Both ICSH and ZMMK keep a pretty stable price point (around $50/unit) and pay out monthly.

The bigger issue was getting rid of SCHF from my non-registered holdings, which I had held for a very long time. Selling that was going to trigger a large capital gain that I hadn’t accounted for in my tax calculations. The solution I came up with was pretty nifty, if I do say so myself. SCHF in my model is largely “International Equity” so clearly I was going to have to replace that international equity contribution somewhere. I ended up replacing SCHF with VCN (a Canadian equity holding) and replacing XIC (a slightly different Canadian equity holding than VCN) with VFV in the TFSA account. In essence, I moved my international equity stake out of my non-registered accounts and put it in the TFSA instead.

By buying VCN (a new fund for me) in my non-registered account, I reset the ACB of that fund so selling units a few months from now shouldn’t really attract too much in the way of capital gains. In fact, the first month4 I sold VCN to pay my monthly salary, I took a small loss. So my tax planning should also stay intact.

TFSA accounts

There were no USD assets in my TFSA to begin with, so no changes were needed on that account. I had to do some asset class shifting here while maintaining 100% equity allocation in the TFSA. As mentioned above, XIC (Canadian Equity) was dismissed from the TFSA, and replaced with VIU (which is international equity).

I do have a small desire to convert the TFSA into a custom index (a Questrade feature) to save a bit on the MER imposed by XEQT here. I may yet do this. It will expand the number of ETFs in these accounts since I’ll need to decompose XEQT into its constituent components. This is again a case of me adding complexity in order to save a few bucks…But don’t I owe it to my readership to give it a try?

RRIF accounts

Mainly, the RRIF accounts replaced AOA with XGRO and ICSH with ZST. But since XGRO holds a lot less US Equity than AOA did, the AOA to XGRO conversion wasn’t exact. I had to replace some of the AOA with a US Equity holding (VFV). I chose to use ZST instead of ZMMK in the RRIF for two reasons:

  • I wanted a different ETF in my RRIF as compared to my non-registered. This helps me avoid CRA superficial loss rules.
  • ZST is ever so slightly riskier than ZMMK, which is fine, since the cash position in the RRIF is much more static than the cash position in my non-registered account.

The way ahead

Getting rid of USD assets has simplified my portfolio and my workflow thinking. I no longer have to worry about USD/CAD exchange rates, and my need to use Norbert’s Gambit should be over. It also opens up my universe to other DIY brokers. I’ve been a fan of Wealthsimple, but couldn’t use them for my RRIF accounts since they contained USD assets. Now I can consider Wealthsimple for all my investing needs5.

Working through the mechanics of slowly moving my assets to an all CAD lineup has caused me to probably spend way more time than is healthy looking at my portfolio and making trades. This should come to an end — with DRIP set up across all registered accounts6, the holdings should be more or less on autopilot with only monthly checkins to make sure my asset allocations haven’t drifted too far from my targets.

I’ve updated my posts that talk about ETF all stars and the “Magnificent Seven” ETFs as well, for reference.

  1. Selling DLR is the last step of a Norbert’s Gambit when you’re converting USD to CAD. You can read about the gambit on Questrade here. ↩︎
  2. “Journaling” is the step that turns units of DLR.u (which are priced in USD) into units of DLR (which are priced in CAD). If you’re not a Questrade Plus subscriber, journaling costs $9.95 plus HST every time you do it on Questrade. ↩︎
  3. Ok, not all of them — Claude only connects to the accounts I own, and not those of my spouse. And the last trades haven’t settled yet, so the one I did on September 4th wasn’t showing up in my transaction history. I don’t expect the story is too different if I include the gambits I ran in my spouse’s RRIF account. ↩︎
  4. After making sure 30 days had passed in order to avoid a “superficial loss” in CRA’s parlance. ↩︎
  5. And if they offer a promotional offer that throws free money my way, I’d seriously consider switching brokers again. ↩︎
  6. I don’t use DRIP in non-registered accounts because non-registered transactions need to be logged for adjusted cost base adjustments; I’d prefer to keep these fully under my control to minimize the number of transactions. I don’t mind carrying a bit of cash in non-registered accounts in order to avoid excess trades. ↩︎