Tuesday, June 23, 2009

RRSP Manager Change

A couple of months ago, my employer announced that it was switching manager for our group RRSP. Our former plan manager (Fidelity) is pulling out of Canada for the management of group plans. A few weeks ago, we got more details regarding the new manager (Sun Life) and the plan features, including the products that will be available.

Here's a summary of the changes, and how they impact me.
  1. Employer's Contribution: Currently, my employer provides a 50% match to the contribution we make under the group plan, up to 4% if the employee contributes 8% of their salary.
    This won't change, except for a little detail. Previously, the employee's contribution would be in increments of 1%, and the employer's contribution would match in increments of 0.5%. Now, the employer's contribution will be in increments of 1% (rounded down).
    This doesn't impact me, since I contribute 8% to fully take advantage of the employer's contribution.
  2. Products Available: With Fidelity, we had a limited list of mutual funds available, none of which were index funds. The funds' total expense ratios were reduced because of the group plan, but were still between 0.75% (money market fund) to 1.25% (foreign stock funds).
    With Sunlife, the range of funds offered is a little bit broader and includes some index funds from Barclays Global Investors (BGI). The total expense ratios for the index funds are from 0.36% (bond index fund) to 0.56% (EAFE index fund).
    Good news for me, since it will allow me to move towards an index strategy in this part of my RRSP.
  3. Fees: With Fidelity, there was no additional fees -- everything was included in the expense ratios of the funds. Transferring money out of the plan to another (possible only for the employee's contribution) was also free. So I was doing this once or twice a year, transferring money from my group plan towards my self-directed RRSP at my discount broker.
    With Sun Life, there will be heavy fees and penalties -- 100$ for each transfer and the employer's contributions will be suspended for 1 year.
    This has a big impact on me, since I will no longer be able to transfer money from my group RRSP towards my self-directed RRSP.
    To reduce the impact of the additional fees, I decided to transfer most of the money from my contributions towards my self-directed RRSP. Since the transfer was processed before the switch to Sun Life, there will be no fee. And transfers before the switch does not trigger the suspension of the employer's contributions.

So the news were mixed for me. On one hand, the new fees and penalties on transfers threw a wrench in my usual way of handling my different accounts. On the other hand, the availability of index funds made it easier and less expensive to implement an index strategy.

Wednesday, June 10, 2009

Closed my CSI Account

I've finally closed my Canadian ShareOwner Investments brokerage account. I opened this account in 2006 when I began my adventures with dividend reinvestment plans (DRiPs), but stopped using it when I discovered a more cost-efficient way to purchase starter shares for my DRiP portfolio.

I had mentioned doing thisin one of my 2009 financial goals (Reorganize my Investment Accounts). This will be one less account to keep track of.

It is still my intent to open anothe brokerage account, to take advantage of tax-free growth in a TFSA. At this time, TD Waterhouse has to most appeal to me.

Tuesday, June 9, 2009

Share Purchase: PG

I just purchased some shares of Procter & Gamble (NYSE: PG) in my RRSP, at $52.50 per share. The company currently pays out dividends of $1.76 per year, for a yield of 3.35% on my purchase price.

Procter & Gamble has products in every house -- it certainly is quite present in ours! The company owns some of the best-known brands in North America, such as Tide, Gillette, Olay, Crest, Oral-B, Duracell, Always and Pampers.

I have been keeping an eye on the company for some time now, and it seemed like a good time to initiate a position. The stock currently trades at a P/E ratio of 14 (it is usually around 20) and the company has recently announced a 10% increase to the quarterly dividend (from $0.40 to $0.44). Over the last 10 years, the dividend growth has averaged 11% per year, so I think we can expect more increases in the future.

This is a company that I plan on keeping for a very long time, adding more money as time goes by.

Monday, June 1, 2009

Net Worth Update

As of June 1st, my net worth was $78 372 (up 3% from $76 057). If I exclude house-related assets and liabilities, my net worth is $51 352 (up 4.7% from $49 057).

The market recovery continues, and that accounts for most of the rise in my net worth. I am far from convinced that the current rise will prove to be solid -- I expect the summer to bring another fall (no pun intended). In fact, I hope it does, for times of pessimism are great for investors looking for quality companies selling at a discount.

The rise of the Canadian dollar has also been fast and pronounced. It rose 10% in the month of May alone. I've started buying some U.S. dollars in April to feed my U.S. DRiPs, and I will continue now that the terms are more interesting. Some economists are expecting parity again by the end of the year. My guess is that as long as the current wave of optimism continues, the U.S. dollar will continue to fall. However, it should have a revival if (or rather when) another wave of pessisism hits the markets. We shall see.

Assets ($142 605, up 1.7% from $140 259)
  • Bank Accounts $3 227 (down 20% from $4 038)
  • Emergency Funds $2 595 (down 14% from $3 007)
  • RRSP Accounts $35 051 (up 7% from $32 751)
  • Non-Registered Investments $13 550 (up 10% from $12 290)
  • Home $88 050 (stable)

Liabilities ($64 233, up slightly from $64 202)

  • Credit Cards $3 051 (up 0.6% from $3 034)
  • Mortgage $61 050 (down 0.2% from $61 172 -- revised number)
  • Line of Credit $0 (stable)


  • Debt / assets: 0.45
  • House value / total assets: 0.62

I had to revise the amount outstanding on my mortgage, since I had made a small mistake last month. My liquidities went lower this month because I paid some bills outrights (such as the second installment of this year's municipal taxes). That was planned for, so this caused no problem at all.

Things are proceeding well. There is some slow-down at the company I am working for, due to delays in the start of some projects. But I should not be impacted since I work on a billable project for a client.