Tag Archives: Tangerine

Should I Buy Tangerine Investment Funds –Are They a Good Idea for My First TFSA?

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My young relative, who is now working for his second year and is depositing his cheques automatically into his Tangerine bank account, is now almost old enough to open a TFSA. You can start a TFSA when you turn 18 (19 in BC) if you are a Canadian resident and meet the other requirements. I’ve been thinking about where my relative should put his first TFSA contribution of $5500. (He will open his TFSA in 2018.) I’m wondering if he should buy some units of the Tangerine Investment funds for his first TFSA.

Does Tangerine Offer Any TFSA Promotions for Their Investment Funds in January?

What started me thinking was an advertisement I received in the mail in January from Tangerine. They were offering me a cash bonus for adding new money into a Tangerine TFSA Investment Fund before the end of March. I don’t intend to accept their offer because I have my TFSA at BMO InvestorLine these days.

But what about my young relative who is just opening his first TFSA ever the day after his 18th birthday?

Should I Invest My TFSA in Mutual Funds, ETFs, or Stocks ?

Most young adults who are opening their first TFSAs don’t have a lot of money saved up. Usually, they need to keep what savings they do have in cash ready to spend to pay for college, university, trade school, or other important firsts like first and last month’s rent or a first car or home.

Those people usually will open a high-interest-savings account form of TFSA. It won’t make much money for them, but the little interest it does earn will be tax-free.

My young relative is a bit different. He has a small stash of money from an inheritance, well under $20 000, but it’s money that is not meant to be used for his education or the usual first purchases. Some of that money could be invested for the long-term and not used for 10 or more years or even until retirement.

So there is a possibility he may want to invest $5500 with a 10-year-plus time frame before it’s needed or used.

That makes investing some of that money in stocks, ETFs or mutual funds a possibility if it suits his risk tolerance and his goals.

If I Only Have $5500 to Invest for the Next 10 Years What Should I Invest In: Stocks, ETFs or Mutual Funds?

So if he decides to invest the $5500 in his TFSA for the long term and if he likes the idea of risking the money in the stock market, where it can lose everything, how should he do it?
According to the Canadian Couch Potato, investing in individual stocks with a very small amount like $5500 does not provide much protection against a mistake. You could only buy a few shares in a few companies and you would have to pay annual brokerage fees and commissions on the purchases. It’s just not sensible.

Investing in ETFs which mirror an entire stock exchange is possible. There are some small online brokerages where you can make these purchases for no or low fees. It’s not ideal, though, because you usually will have to make more contributions or purchases to avoid annual account fees. (There are a few exceptions.) And if you intend to invest as a proper Couch Potato, you will need to re-balance your investments at least annually. That re-balancing could cost you more in commissions to sell and buy additional units in the ETFS.

What the Canadian Couch Potato recommends for very small investments, under say $50 000, is investing in mutual funds.

Not just any funds though! The recommendation is to use Tangerine Investment Funds or TD e-Series funds. You can read the details on the Canadian Couch Potato website.

Which Tangerine Investment Fund Should I Buy With My TFSA Contribution?

OK, so if my young relative decided to put his $5500 in a TFSA at Tangerine, in which Investment Fund should he buy units?

I looked at the Funds online. As of January 2018, the following funds were offered:

  • Tangerine Balanced Income Portfolio
  • Tangerine Balanced Portfolio
  • Tangerine Balanced Growth Portfolio
  • Tangerine Dividend Portfolio
  • Tangerine Equity Growth Portfolio

How much of each is invested in bonds?

  • The Balanced Income is 70% bonds.
  • The Balanced is 40% bonds.
  • The Balanced Growth is 25% bonds.
  • The Dividend is 0% bonds.
  • The Equity Growth is 0% bonds.

Many Couch Potato type investors recommend an asset allocation of about

  • 25% bonds
  • 25% Canadian stock market
  • 25% US stock market
  • 25% world stock markets

For someone who intends to stay invested for 10+ years. The actual percentages have to be chosen by the investor.

Should I Buy Bonds or a Bond Fund In My Couch Potato Portfolio?

The only problem is that right now, I’m a bit uncertain about investing 25% of a portfolio in bonds or bond funds. As interest rates climb, bond values can drop. And there is a lot of discussion of interest rates slowly increasing over 1-7 years.

Bonds are meant to be the “fixed income” part of the portfolio that does not react the same way as the stock market does to world events. There are other types of fixed income, though, including cash and GICs. Traditionally, bonds earn you more money on your investment than staying in cash or GICs. Given the uncertainty for the next few years, though, I think I’d recommend my young relative keep their 25% fixed income portion in cash or GICs.

With that criteria, only two of the Tangerine funds are still under consideration:

The Dividend and the Equity Growth Portfolios both do not have any bonds.

The Dividend Portfolio does not capture as many different companies as the Equity Growth Portfolio does.

What Do I Recommend My Young Relative Invest His TFSA Money In at Tangerine?

So if I was asked, my recommendation for my young relative for his $550 TFSA contribution which is to be invested for at least 10 years is:
$5500/4 = $ 1375

Invest $ 1375 in a TFSA high-interest savings account or a TFSA 1-year GIC. At Tangerine, these are called a Tangerine Tax-Free Savings Account or a Tangerine Tax-Free Guaranteed Investment (GIC).

He can also invest in a TFSA high-interest savings account or GIC at another institution if he finds a better rate. Investing in a GIC may cause a bit of trouble when it’s time to re-balance the portfolio next year, though, if it’s not at Tangerine. It may cost money to transfer a TFSA from one place to another, and the money cannot be withdrawn before December 31 and re-contributed on January 1 because the GIC will not have matured yet.
So for simplicity, I would suggest he invest in a TFSA GIC only at Tangerine, or in a TFSA HISA anywhere.

Then I’d suggest he invest the balance in units of the Tangerine Equity Growth Portfolio.

So

$1 375 into a TFSA high interest savings account, possibly the Tangerine Tax-Free Savings Account:

Or into a Tangerine Tax-Free Guaranteed Investment (GIC)

$ 4 125 into units of the Tangerine Equity Growth Portfolio

Then next year, I’ll explain to him how he needs to re-balance his investment so that it is still invested 25% in fixed income and 75% in the Equity Growth Portfolio.

Of course, knowing my young relative, he may never ask my opinion. I just hope he doesn’t go spend it all on a cryptocurrency like Bitcoin. There is a difference between speculating (also known as gambling) and investing!

Related Reading

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Where Do I Add or Delete a Bill Payee to Pay My Credit Card on the New Tangerine Website?

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In 2017, Tangerine “updated” its website and in many ways made it harder to find what you want and do the tasks that you need. Although I had previously written about how to set up bills for online payment at Tangerine, everything changed with this new design and I had to figure it out all over again. Here’s how I added my new credit card account as a bill payee and got rid of my old account on the 2017 Tangerine website.

NOTE: As a Kind Observant Reader pointed out, you can only pay bills from a Tangerine chequing account. You cannot pay bills directly from your Savings account. (You can instantly transfer cash from Savings to Chequing, though, and they pay from your Chequing account.)

Adding a New Account to Pay Bills on the 2017 Tangerine Website Design

When you sign in to your Tangerine account, you will notice a link at the top right of the screen called Pay Bills. If you click on it, you can send money to an existing Bill Payee to settle your bill. Unfortunately, though, it does NOT let you add a new account to pay or delete an existing account. So where do you have to click? Eventually I found out:

  1. Sign in to your Tangerine account/s.
  2. There are two rows of links across the top of the page.
    Look along the second one: Overview Insights Transactions Bills and click on the link: Bills

The Bills Page

Near the title of the page, click on the link: Add a Bill

The Add a Bill Popup Window

  1. Start typing the name of the bill you want to pay.
    For example, I started typing RBC to add my new Petro-Points linked RBC card.
  2. The system will prompt you with a list of possible matches. If you can find the one you need, click on it to select it.
  3. Click on the Next button.
  4. As prompted, type in the identifying number for the account you wish to pay. You will usually find this number on your bill.
  5. Click on the Next button.
  6. As prompted, you can type in a nickname for this bill which will show up on your list of Bill Payees.
  7. I typed in: Petro-Canada VISA
  8. Click on the Next button, or if you don’t want to use a nickname, click on the Skip button.
  9. You can now choose whether to pay the bill manually or whether to set up an automatic payment of the same amount each month.
    I don’t trust or like automatic payments so I won’t be testing that feature.
    Select Manually and then click on the Next button.

The Bill Payment Window

  1. It will ask if you would like to make a payment to that account right now.
    Personally, I like to test these online bill payment systems, so I will make a payment of $1 and check each business day to see if my billable account receives the payment. (It usually takes 2-3 business days for the payment to show up in my credit card statement.)
  2. To set a test, click on  Yes, set up first payment now

The Pay Bill from Window
You can generally only pay bills from a chequing account or line of credit. The choices will be listed.

  1. Click on the account from which to take the money to pay the bill.
  2. Click on the Next button.

The Select date Window
The system will prompt when you can make the payment, usually the current day or the next business day if you’re trying on the weekend.

Select a date, then click on the Next button.

The Add payment Window

  1. Type the amount you wish to pay.
    I typed $1.
  2. Click on the Next button.

The Review and Confirm your Payment Window
Read through the details of the proposed payment. If it all looks good, click on the Confirm button.

You’re done.

What Happens If I Set Up The Bill Payment Account with the Wrong Number?

I’d really suggest you be careful setting up a bill payment account. I doubt that it’s easy to get your money back or fix it up without a lot of phone calls to Tangerine and so on. I don’t work for Tangerine, nor do I know anyone who does, so I can’t help you, sorry.

Interestingly, when I was practicing for this article, I tried setting up a 16-digit account for RBC Visa as 1234567891234567. When I got to the Review and Confirm your Payment screen, I finally got an error message:
“Error
The Account number entered for the bill payee seems invalid. Please check your records and try again.”

So the system will TRY to spot errors, but it can’t really help if you enter two digits in the wrong order or something.

That’s why I like to do the $1 test before making a big bill payment.

How to Delete or Remove a Bill Payee from Your List of Bill Payment Accounts at Tangerine in 2017

Once I had set up my new RBC card to pay the gasoline bill, I needed to delete the old CIBC Petro-Canada card. Here’s how I did it.

  1. Sign in to your Tangerine account/s.
  2. From the second horizontal line of links across the top of the page, find and click on: Bills

From the list Name of Bill or Payee, click on the name of the one you want to delete.
NOTE: You may want to save the data about your monthly payments to that account as that summary will not be available again once you delete the Bill Payee!
Under the line about your monthly average payment, click on the button: Edit

The Edit Bill Payee Window

If you want to permanently delete this bill payee you can do it from this screen.
NOTE: If you delete the Bill Payee, you will lose the summary screen that shows all the payments made to that payee during the previous months. You may want to save that data BEFORE you delete the account.

Once you’ve captured any data you want, click on the red Delete Bill button.

The Delete Bill Payee Window
Review the proposed account to delete. If you’re sure it’s the one you want to get rid of, click on the red Delete button.

You’re done.

Log out of your account. Clear your browser history and cache and close your browser session for extra security.

So my new Petro-Canada account is set up and the test is scheduled to make sure the link is working properly before I get the new bill. And the old account info is stored safely and the account is deleted so I can’t pay to it accidentally. Time to go get gas!

Related Reading

  • [How to Set Up a Bill Payee and Delete a Bill Payee at Simplii Financial]

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Do you dislike the 2017 Tangerine website re-design? Me too! Please share your views with a comment.

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