Canadian Couch Potato Method With Manulife

[nearu]

Hello fellow reddiors,

I have an RRSP/DPSP plan to get some extra free money from my employer. I'd like to invest using the CCP method and want to get some advice.

Here is the list of options I have currently:

Fund name
Fund code
MER

ML MIM Cdn Equity Index
7132
1.48%

ML JF Canadian Equity
7241
1.70%

ML CC&L Group Cdn Q Growth
7313
1.70%

ML Scheer Rowlett Cdn Eq
7601
1.80%

ML MMF Growth Opportunities
7122
1.90%

ML MIM U.S. Equity Index
8131
1.48%

ML US Div Growth Eq (Well)
8196
1.95%

ML BR Intl Equity Index
8321
1.60%

ML BP International Equity
8401
2.12%

ML MFS Global Eq Growth
8161
1.75%

ML Invesco Global Comp.
8181
2.00%

ML MIM Cdn Bond Index
4191
1.47%

ML PH&N Bond Fund
4271
1.70%

I am only going to be investing the amount to maximize my employer contributions, so $1,000 a year.

From what I see here, I am planning on selecting the Canadian equity index (7132), US Equity Index (8131), International Equity Index (8321), and the Canadian Bond Index (4191).

This minimizes the MER/IMF fees and diversifies globally.

I will be pulling out my own RRSP contributions annually to move to my own managed index funds and will be pulling out the DPSP funds as soon as I leave this place (probably within 3-5 years).

Appreciate any thoughts or advice.

 

[starspray]

@nearu Dont you have access to blackrock lifepath?

 

[nearu]

@starspray No, there are Manulife retirement date funds, but the MERs are at 1.8% and I don't plan to have this money in there for more than 5 years.

 

[davetownsend]

@nearu What you're planning seems fine.

Although if you are only investing $1000/year it may not be worth the hassle of transferring the funds every year. Especially if you are charged a transfer fee.

 

[nearu]

@davetownsend Yea I'll definitely do the math on the transfer fee vs the MER difference and see if it's worth the paperwork once that one year rolls around.

 

[ttcg52]

@nearu Do you have other investments? If you have decent investments elsewhere I'd probably just focus on one of these (say US market with lowest MER), and balance it out with your other investments elsewhere. For example, that bond fund has a pretty high MER, and what kind of returns are you going to be getting on it? And then how do you rebalance this group of 4 in future?

 

[nearu]

@ttcg52 Great points, my plan was to go 90% equities and 10% towards the bonds.

I do have investments in the 5 digits that I manage myself.

 

[zango11]

@nearu Your plan is perfect, you have done your homework.

Figure out what % you want in the bond fund and then split the 3 equity indexes 3 ways equally so that the whole thing adds up to 100%. Once every year or two, transfer the entire thing out to your self directed RRSP.

I personally like the simplicity of splitting all 4 funds 25% to each, but whatever works for you!

 

[nearu]

@zango11

 

[burningone]

@nearu Would you know what’s the average net return on these funds for the past 10yrs?

 

[nearu]

@burningone Their online docs summarize the fund performance over the past 5 years, and have graphs going back 15ish years. But past returns don't equal future gains.

 

[burningone]

@nearu Yes it doesn’t but it will give you a benchmark for comparison purposes. And in my case the performance of my funds are still consistent with historical averages.

 

[timothy2016]

@nearu Try to minimize the fees! The ones you listed are pretty huge and can destroy your gains over time.

 

[nearu]

@timothy2016 Fo sho. They are the lowest of the available options for this employer sponsored fund. And not taking the 100% extra contribution seems like a worse idea than not picking something from the list.