Tag: retirement-planning

What’s in my retirement portfolio (May 2025)

RobH3 Comments

This is a (hopefully monthly) look at what’s in my retirement portfolio. The original post is here. Last month’s is here.

Portfolio Construction

The retirement portfolio is spread across a bunch of accounts:

  • 7 RRIF accounts (3 for me, 3 for my spouse, 1 at an alternative provider as a test)
  • 2 TFSA accounts
  • 4 non-registered accounts1, (1 for me, 1 for my spouse, 2 joint)

The target for the overall portfolio is unchanged:

  • 80% equity, spread across Canadian, US and global markets for maximum diversification
  • 15% Bond funds, from a variety of Canadian, US and global markets
  • 5% cash, held in savings-like ETFs.

The view as of this morning

As of this morning, this is what the overall portfolio looks like:

Retirement holdings by ETF, May 2025

The portfolio is dominated by my ETF all-stars; anything not on that page is held in a non-registered account and won’t be fiddled with unless it’s part of my monthly decumulation. Otherwise I’ll rack up capital gains for no real benefit.

The biggest changes were caused by two events that happened over the past 30 days:

  • I did a small rebalancing exercise to reduce my exposure to the Canadian equity market, selling VCN in favor of XEQT. (XEQT is only 23% Canadian equity per dollar invested; VCN was 100%). This sort of rebalancing happens whenever I drift more than 1% off of my target allocations.
  • I took some cash from a HISA and invested it in ZMMK; for reasons too boring to report here, that money was effectively not being tracked in these pages until this month — that anomaly won’t be repeated in subsequent months since ZMMK and ICSH are where I park the “cash” position of my portfolio.

Plan for the next month

The asset-class split looks like this

This looks to be pretty close to my target percentages which haven’t changed:

  • 5% cash or cash-like holdings like ICSH and ZMMK
  • 15% bonds (almost all are buried in XGRO and AOA)
  • 20% Canadian equity (mostly based on ETFs that mirror the S&P/TSX 60)
  • 36% US equity (dominated by ETFs that mirror the S&P 500, with a small sprinkling of Russell 2000)
  • 24% International equity (mostly, but not exclusively, developed markets)

So, the plan for next month is, do nothing out of the ordinary. Reinvest cash (dividends, TFSA contributions) in one of AOA, XEQT/XGRO, ICSH or ZMMK depending on the asset category most in need on the day of the reinvestment. All these ETFs are covered on my ETF All-Stars page.

One thing I may do is to try to make shifts2 to get a little more return out of my cash position. US interest rates are quite a bit higher than Canadian rates, and so if my cash position is held in USD, I stand to eke a few more points of return there. TBD.

Overall

My retirement savings had a nice bounce-back this month, looks like I can cancel the mega-pack of pot noodles I had on order.

Monthly retirement savings, as percentage of Jan 2025 value

The salary I collect month to month recovered a bit, too, although not as quickly. That’s the magic of using VPW’s cash cushion — neither boom nor bust months translate into large changes in the take-home pay.

Monthly salary, as percentage of Jan 2025 salary

  1. That’s up one from the previous month. In order to collect on Questrade’s transfer bonus, (which they have yet to pay me, they are apparently in a world of hurt on the IT front) you have to have a non-registered account to get paid into. The other 3 are “normal” — one non-registered account for me, one for my spouse, and jointly held one that serves as a cash cushion to smooth out month to month variations in my retirement salary. Read more about that over at https://moneyengineer.ca/2025/01/31/im-retired-now-how-do-i-get-paid/ ↩︎
  2. With Questrade, all ETF trades are free to make, so I don’t have any real reason not to make such changes. ↩︎

Death, Taxes and Estates: Part 3

RobH1 Comment

I am not a lawyer, accountant or tax expert. Your situation may be a lot different than mine. Seek professional guidance if needed.

Part 1 of this blog is found here, and Part 2 is here.

I’m in the tax season stage of wrapping up my Mom’s estate, who died a little over a year ago, a year and a bit after my father died.

Current status

I decided to hire a pro to do the Final Return and the Estate Return since I couldn’t figure out the fine details1 of doing an Estate Return. The Final Return (that’s the easy one, it’s just a regular tax return, except you have to inexplicably file it on paper) would have been within my skill set, but the Estate Return (the one that you have to file to deal with any income generated by the estate after death) was new and confusing to me.

I knew I was going to have to pay taxes on both returns, and using the tax calculators referenced here, I had a pretty good idea of what tax was going to be owed. In essence,

  • The Final Return takes the full value of the RRIF on the day of death as income. This will mean a lot of tax if the RRIF is sizable.
  • The Final Return also assumes any non-registered assets are liquidated on the day of death, which in the case of equity holdings, typically attracts capital gains and the associated taxes2.
  • The Estate Return is going to have to pay tax on any dividends, interest, or capital gains realized by the assets in the estate. Here the tax rate is high, because an Estate is treated as a Trust, and trusts don’t get personal deductions, meaning you get taxed on the first dollar of gains you manage.

A few wrinkles

Submitting the necessary paperwork to the accountant was the usual tedium of getting scans of T-slips, charitable donations and the like to the accountant. I did encounter a few problems.

BMO Investorline Problem 1: Sending T-slips to invalid addresses

My Mom’s assets were all held with BMO Investorline. Imagine my surprise when her retirement home let me know that snail mail from BMO (not BMO Investorline) had arrived at the home. I changed the address of all communications with BMOI to me nearly a year ago at that point, so you can imagine I was less than happy about having to drive across town to pick up what turned out to be a T-slip for the HISA I bought in her self-directed account. At that point, I was a few steps away from livid.

After spending some time with hapless agents who could not tell me why the mail ended up at an invalid address, I penned a note to the formal complaint department of BMO. I just figured that if there was some systemic issue at play here, that at least I could help those who followed me.

The complaints department ultimately admitted it was a screwup on their part and offered their apology. Whether or not it will happen to someone in my shoes in the future is unknown to me, but beware.

BMO Investorline Problem 2: Not providing an RC249 slip

The RC249 is a CRA slip that covers the losses incurred by a RRIF post-death.

It makes some sense: as mentioned above, the owner of the RRIF is assumed to get income equal the the value of the RRIF on day of death. But the RRIF assets aren’t automatically liquidated; they remain invested in whatever they were invested in. If that includes stocks/ETFs and the like, then it’s possible for the value of the RRIF to actually decline post-death. And that is what happened in my case. This loss becomes a tax benefit to the estate return, but only if you have an RC249 to prove it.

Now, the RC249 is clearly intended to be filled out by the issuer/carrier of the RRIF, in my case BMOI. And so, you would expect that to be automatically provided, wouldn’t you? Wrong again.

Another set of back and forth, first with the standard BMOI agents, and then the BMOI estate department, eventually produced a valid RC249 that I could send to the accountant.

Paying taxes owed

As much as I disliked the entire process of working with BMOI’s estate department, the one thing I did like about BMOI was that their non-registered accounts can be linked with a bank account (AccountLink) against which cheques can be written3. (This is something I set up months ago to help distribute some assets early to the beneficiaries). So once the accountants informed me of the eye-watering tax bill (which was pretty much aligned with what I expected), I was able to write the cheques and drop them off with little fuss. Thinking about how you will do that is something to consider in dissolving the estate.

Final Return Notice of Assessment

This was received in pretty short order, a few weeks after it was submitted, and the tax bill was correct.

Next steps

I await the Notice of Assessment for the Estate Account, at which point my accountant will be able to apply for a clearance certificate from CRA. This certificate essentially tells me that CRA considers all business with my mom and her estate closed. Once I have this, I can fully distribute all funds from the estate without having the CRA come after me for monies owed. This takes “up to 120 days” per the website.

  1. More accurately: I couldn’t bear spending hours reading arcane text on various CRA websites hoping I didn’t make a mistake ↩︎
  2. Note that unless directed, the liquidation doesn’t ACTUALLY take place. In my case, I moved all assets to HISA accounts once I gained control of the assets via probate, (a delay of a few months) and then liquidated the assets at the end of 2024. This I did to avoid earning any income from the estate holdings in 2025, which would have delayed the estate return. ↩︎
  3. No matter how hard I tried, I could not convince anyone at BMOI/BMO to send me a debit card for the account, which would have allowed me to “Bill Pay” CRA instead of writing cheques. ↩︎

What’s in my retirement portfolio (April 2025)

RobH3 Comments

This is a (hopefully monthly) look at what’s in my retirement portfolio. The original post is here. Last month’s is here.

Portfolio Construction

The retirement portfolio is spread across a bunch of accounts:

  • 7 RRIF accounts (3 for me, 3 for my spouse, 1 at an alternative provider as a test)
  • 2 TFSA accounts
  • 3 non-registered accounts1, (1 for my spouse, 2 joint)

The target for the overall portfolio is unchanged:

  • 80% equity, spread across Canadian, US and global markets for maximum diversification
  • 15% Bond funds, from a variety of Canadian, US and global markets
  • 5% cash, held in savings-like ETFs.

The view as of this morning

As of this morning, this is what the overall portfolio looks like:

Overall retirement portfolio by holding, April 2025

The portfolio, as always, is dominated by AOA and XGRO which are 80/20 asset allocation funds in USD and CAD, respectively. The rest are primarily either cash-like holdings in two ETFs: ZMMK in CAD and ICSH in USD) or residual ETFs held in non-registered accounts for which I don’t want to create unnecessary capital gains just for the sake of holding AOA or XGRO.

The biggest month over month change was a small decline in AOA and a small uptick in XEQT, about a 1% shift overall. This was because I shifted some of my USD assets to CAD assets in the RRIF using Norbert’s Gambit2. I chose XEQT over XGRO because the contribution of bonds in the portfolio was slightly over my asset allocation target3. XEQT is essentially XGRO, minus the bond holdings (it’s a 100% equity fund).

There was also a noticeable reduction in the contribution of ICSH to the portfolio; this was largely due to the unfavourable change in the USD/CAD exchange rate over the course of the month, and not due to any change in the holdings there.

Plan for the next month

The asset-class split looks like this

Overall retirement portfolio by market, April 2025

This looks to be pretty close to my target percentages which haven’t changed:

  • 5% cash or cash-like holdings like ICSH and ZMMK
  • 15% bonds (almost all are buried in XGRO and AOA)
  • 20% Canadian equity (mostly based on ETFs that mirror the S&P/TSX 60)
  • 36% US equity (dominated by ETFs that mirror the S&P 500, with a small sprinkling of Russell 2000)
  • 24% International equity (mostly, but not exclusively, developed markets)

So, the plan for next month is, do nothing out of the ordinary. Reinvest cash (dividends, TFSA contributions) in one of AOA, XEQT/XGRO, ICSH or ZMMK depending on the asset category most in need on the day of the reinvestment. All these ETFs are covered on my ETF All-Stars page.

Overall

My retirement savings declined 5.75% over the month (down 7% since January) due to the continuing meltdown in the equity markets. It’s not a pretty picture!

Net worth of retirement savings compared to start of retirement

This has not translated to a the same degree of change in my monthly salary. Why? My retirement payouts are calculated by Variable Percentage Withdrawal (VPW), which I cover here. VPW has a built-in cash cushion, which serves to dampen month to month swings in my net worth, either up or down. As you can see in the chart below, my monthly salary has stayed within a 1% band of the first salary I drew in January.

Month over month salary, as compared to start of retirement

  1. Since Questrade combines USD and CAD assets under the same account umbrella, I was able to reduce the number here. ↩︎
  2. I shift funds from the USD to the CAD side of the RRIF more or less quarterly since all RRIF payments are currently coming out of the CAD side of the portfolio. ↩︎
  3. That’s the optimistic point of view; it’s perhaps more accurately stated as “bonds haven’t melted down quite as much as the equity portion of my portfolio”. ↩︎

Death, Taxes and Estates: Part 2

RobH5 Comments

I am not a lawyer, accountant or tax expert. Your situation may be a lot different than mine. Seek professional guidance if needed.

Part 1 of this blog is found here.

I’m still wrapping up the estate of my late mother, who died a little over a year ago, a year and a bit after my father died.

My situation

All my mom’s worldly assets were held with BMO Investorline: RRIF, TFSA and a non-registered account. This was a self-directed account; the relationship with BMO (as I came to learn) was pretty informal. Me and my siblings were named as beneficiaries of the estate, and my Mom had taken steps to name us as beneficiaries for the RRIF and TFSA. More details about how that works were covered in a previous post.

First weeks

I had ready access to estate cash because I was named as a joint account holder on my Mom’s chequing account1. This is a very useful thing to have in place, since it can cover expenses incurred after death: funeral costs, moving expenses are two that come to mind. I treated this account as part of the estate, but it allowed me to spend the estate’s money instead of my own for these things.

DIY Estate Handling

Informing BMO Investorline2 of my mother’s death was required, and that took a single call to the general help desk. After about a week I had an initial meeting with their estate department.

Once I provided proof of death, all accounts were frozen and I could no longer even see what was in them. BMOI correctly noted that we were the beneficiaries of the TFSA and RRIF and we started the paper-intensive3work of liquidating and distributing the assets held in those accounts. I checked my notes — it took about 2 months for that step to be fully completed.

What was unexpected was that BMOI gave us ALL the money in the RRIF, with no taxes withheld. From a tax perspective, a RRIF is treated as income in the hands of the deceased on the day they die. For most people, that means a substantial tax bill for that tax year. So as an executor4, I had to be VERY sure that my Mom’s non-registered account could cover the tax bill that would eventually come. Using a tax calculator helped a lot.

The non-registered account, where the bulk of the assets lay, would require a probated will, as I expected. This account remained locked and frozen.

Probate and probate fees

In the very simplest terms, probate means getting a court to certify a will as accurate. And when you think about it, it makes sense that financial services companies want to be VERY sure that the executor (aka estate trustee) is in fact the correct person.

After doing a bit of reading (mostly this source) I decided I could tackle it on my own. This was made significantly easier by the fact that I lived in the same city as my mother, and I had access to a courthouse were I could take my completed forms.

When filing your probate papers, you also have to pay probate fees (aka Estate Administration Tax), which means you have to know the total value of the estate on the day of death. BMOI was able to provide me statements up to that day so I had a to-the-penny accurate assessment of the value held there. BMOI was also able to write a cheque to the Ontario Minister of Finance for these fees using funds available5 in the non-registered account. This meant I wouldn’t have to front the money myself.

Probate fees, in my Mom’s case, were not particularly large (not compared to the estimated tax bill), and since RRIF and TFSA were not part of the estate, they were also lower than they could have been.

After filing, the wait for the court-certified document began. I had very low expectations (I had conservatively estimated a 6 month delay here), but I actually had the probated will arrive in the mail a month later, which was about 4 months after my mother’s death.

Using the Probated Will

With a probated will in hand, I could now unlock the non-registered funds in my Mom’s estate. This required me to open an estate account with BMOI and then transfer the non-registered funds to it. After all that paperwork, I once again had full access to the assets that were formerly held in my Mom’s non-registered account — I could log in to the portal, see the holdings, and most importantly, perform transactions myself at the usual self-directed transaction fees.

I sold all the assets (mostly ETFs, naturally) and partially distributed them to the beneficiaries. Distributing the assets was admittedly (again) more challenging than I thought. Since I was quite familiar with how BMOI worked, I requested AccountLink cheques for the estate account, figuring this would be the easiest way to distribute the funds6. This resulted in a bit of a runaround, but eventually I got a box of cheques sent to me. I held some money back7 so I could pay the 2025 tax bill; this money I invested in a HISA.

Preparing for Tax Season

In late 2024, I removed the remainder of the estate from the HISA account. This was done so as to not have any income generated by the estate in 2025. This simplifies the tax filing considerably.

After doing a bunch of reading, I gave up on the idea of attempting to do the taxes myself. I knew there would have to be both a Final Return (for my Mom) and an Estate Return (aka a T3 return) but I wasn’t really sure about all the steps, and of course CRA’s website isn’t really designed for the layperson to figure this stuff out easily. There was also the matter of filing a CRA clearance certificate. I hired a pro to figure all this stuff out. As it turns out, my Mom’s estate qualified as a GRE Trust, which is, as I understand it, pretty typical. That would appear to offer some potential tax benefits, but I’ll have to wait and see and this point.

  1. It didn’t hold a significant amount of money. Larger sums could conceivably attract the attention of CRA as a bare trust. ↩︎
  2. Hereafter referred to as “BMOI”. Laziness. ↩︎
  3. Actually, mostly filling out PDFs and sending them back over secure messaging ↩︎
  4. If the estate can’t pay the taxes, then the executor is legally obligated to pay ↩︎
  5. Like all matters estate-related, this took a lot of effort. Having sufficient funds when my mother was alive was a very simple process: log on to the portal, sell some shares, wait a few days, get the money. In an estate scenario you have to write a letter of direction to indicate what, exactly, to sell. Then you wait a week or two. Then you get angry at the fact that they charged you $40/trade. Then you write another letter of direction to indicate who to write the cheque to. Then you wait a week for the cheque to arrive. ↩︎
  6. I’m not really sure how the mechanics would work with a broker that doesn’t have bank services. EFT I guess? ↩︎
  7. Probably more than I needed to hold back, but I wasn’t taking chances. ↩︎

What’s in my retirement portfolio (March 2025)

RobH4 Comments

This is a (hopefully monthly) look at what’s in my retirement portfolio. The original post is here. Last month’s is here.

Portfolio Construction

The retirement portfolio is spread across a bunch of accounts1:

  • 7 RRIF accounts (3 for me, 3 for my spouse, 1 at an alternative provider as a test)
  • 2 TFSA accounts
  • 5 non-registered accounts, (2 for me 1 for my spouse, 2 joint)

The target for the overall portfolio is unchanged:

  • 80% equity, spread across Canadian, US and global markets for maximum diversification
  • 15% Bond funds, from a variety of Canadian, US and global markets
  • 5% cash, held in savings-like ETFs.

The view as of this morning

As of this morning, this is what the overall portfolio looks like:

Overall retirement portfolio by holding, March 2025

The portfolio, as always, is dominated by AOA and XGRO which are 80/20 asset allocation funds in USD and CAD, respectively. The rest are primarily either cash-like holdings in two ETFs: ZMMK2 in CAD and ICSH3 in USD) or residual ETFs held in non-registered accounts for which I don’t want to create unnecessary capital gains just for the sake of holding AOA or XGRO.

The biggest month over month change is due to switching brokers. My old broker (QTrade) allowed the purchase of HISAs, but my new broker (Questrade) doesn’t seem to offer them4. So I replaced DYN6004 with ZMMK and DYN6005 with ICSH. I made these changes in my QTrade account to avoid any problems with doing an “in-kind” transfer to Questrade.

I’m still in need of USD to pay off some vacation bills, so there is a small hit to SCHF to help out.

Plan for the next month

The asset-class split looks like this

Overall retirement portfolio by market, March 2025

The international equity percentage is below my target of 24%, and so I’ll have to fix that5. VEU looks like it provides exposure to both developed and emerging markets at a rock-bottom price6. XEF would be a perfect fit in the Canadian market, although I should probably also consider XEC to get some emerging markets exposure.The cash position is artificially high because I already did the necessary transactions to get paid out of my RRIF and non-registered accounts (if I did this exercise at the beginning of the month, rather than mid-month, that would disappear). That extra cash will flow to my bank account in the coming days.

A quarterly activity that I’ll be performing this month7 is to shift some of my USD RRIF holdings into my CAD RRIF. I do this to make sure I’m not overexposed to changes in the CAD/USD exchange rate. My current provider reportedly allows me to make RRIF payments natively in USD, so that may be another option to consider. I’ll make an attempt at some point!

One final note: my retirement savings declined 3%8 over the month due to the wild (mostly downward) swings in the stock market, but this leaves me roughly even since my retirement started at the beginning of the year. Here’s the monthly returns for the 2 ETFs that make up the lion’s share of my portfolio9.

XGRO and AOA monthly returns so far
  1. The list is sort-of accurate. I’m in the middle of changing online brokers and since Questrade combines USD and CAD assets in one account, the number of accounts is diminishing. ↩︎
  2. Current 12-month yield: 3.6% ↩︎
  3. Current 30-day SEC yield: 4.61% ↩︎
  4. This specific topic addressed at https://www.financialwisdomforum.org/forum/viewtopic.php?t=125308. ↩︎
  5. The observant reader will note I also said this LAST month. That was before I decided to switch brokers. Once my holdings settle at Questrade, I’ll revisit. ↩︎
  6. MER = 0.04%. VEU has some Canadian exposure too, which isn’t ideal, but I don’t think there’s a USD ETF that excludes both Canada and the USA. ↩︎
  7. And should have done last month, sorry. ↩︎
  8. It would have been worse, except the USD also went up versus the Canadian dollar in the time period. Diversification works 🙂 ↩︎
  9. “Without dividends reinvested” since these two ETFs only pay out quarterly. There haven’t been any yet — next month! ↩︎