Fourth Year Resident with Small TFSA and RSP and Wants a DIY Model

Maria had a well-paying job before Medical School and thus has investments managed at her old company and now only modest debts in her fourth year of residency. She is not impressed with the returns on her investments and wishes to manage them herself. We discussed her goals which included more direct control over all her finances.

Maria is highly confident and used to being in control. She contacted her previous employer and had her TFSA and RSP accounts transferred to a discount brokerage she chose; the accounts were moved as cash and not “in kind” which meant that the manager of her accounts sold the stocks and mutual funds they had acquired on her behalf and moved the cash proceeds instead of the securities. She then selected exchange traded index funds with 70% of her RSP in a US index fund and 30% in a high paying dividend fund, Her TFSA was then all put in a CND high paying dividend fund to avoid US withholding tax that applies to TFSAs but not RSPs. Maria plans to contribute monthly and rebalance annually. Obviously, she may change her mind about this allocation over time, but this makes sense to her at present.

KEY CONCEPTS:

• A DIY approach is not for everyone but can suit certain individuals.

• Those who chose this model can still have a very simple technique.

• Consistency is always important, but modifications to fit changing circumstances and interests often make good sense.