Best Place to Put Money After Selling a House
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Q:My wife and I recently sold our house here in the Vancouver surface area and are trying condo living past renting. We are both in our mid to late 50s with no debt. Nosotros have approximately $500k in RRSPs and TFSAs combined and those are invested in Tangerine balanced funds. My question is how to invest the $i.2 meg we received from the sale of our house? I am leaning towards a robo-advisor type of investment.
—David
A:I think ane of the first things to consider, David, is if you think that you and your married woman may be dwelling owners again, whether you ultimately similar the condo thing or not. If there's a chance you may demand some or all of the $1.2 million to buy a condo or a house, I would exist inclined to continue whatever housing budget you could need aside. Keep this in cash for the next vi to 12 months until you lot make a determination.
Your existing Tangerine solution is a pretty good 1 compared to nearly mutual fund investment options. Fees are virtually half the going charge per unit at i.07%, with other counterbalanced funds generally in the two% range.
From a strictly fee perspective, robo-advisors could more than cut that in half, especially given the potential size of your account. Robo-advisors follow the same indexing approach that you have presumably taken intentionally with your existing Tangerine savings.
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If you lot believe in passive investing, robo-advisors* offering a practiced solution, primarily because of the automatic rebalancing and the asset allocation oversight. Your risk tolerance may really dictate that you should have more or less stock exposure than your typical, plain vanilla counterbalanced mutual fund, David. Robo-advisors will ensure you are matched to an asset allocation accordingly.
Ane consideration that a robo-advisor may or may not exist able to assist you lot with unless y'all inquire them specifically relates to taxation. If you lot and your wife plan to be renters in retirement and you volition be investing all of this $1.two one thousand thousand, that's a lot of taxable investment income that will be generated – likely $25,000 or more than a year depending on how you invest information technology.
Ideally, yous would want to have more than tax efficient investments like Canadian stocks held outside your RRSPs* and less tax efficient investments like bonds held inside your RRSPs. With an investment advisor or as a DIY investor, y'all may exist better able to influence these decisions every bit compared to working with a robo-advisor. And so be sure to heighten this every bit a consideration when yous have the mandatory homo interaction if you do get the robo-advisor road.
One question I call up you need to inquire yourself is if you would invest this coin differently from your RRSPs and TFSAs*, why wouldn't yous alter how you invest that money every bit well? I often find clients feel invested money is married to an advisor or an investment or an arroyo. Be sure to look at your portfolio holistically, David, as information technology may be that you lot should make a wholesale alter to your investments.
For investors who believe in passive investing and who are not inclined to do it themselves, robo-advisors nowadays a good option.
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Jason Heath is a fee-merely, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto, Ontario. He does non sell any fiscal products whatsoever.
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Source: https://www.moneysense.ca/save/investing/selling-your-house-heres-where-to-invest-the-proceeds/
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