r/CanadaPersonalFinance • u/Ambitious_Salary_453 • 9h ago
Retirement plan without investing
My spouse (early 30s) does not want to invest in the stock market. I'm no expert but my plan has been to choose 1-2 diverse ETFs (ie. XEQT, HBNK) and just keep holding until retirement. My spouse finds the companies being traded in those ETFs morally reprehensible and doesn't want to participate. I've suggested that ESG ETFs or socially conscious ETFs like XUSR or XCSR might be a decent compromise but I don't want to find out I'm wrong 30yrs later. Right now she is investing with a CIBC advisor in socially conscious mutual funds and ETFs and I suggested that the fees are not worth her not having to make any decisions. What's the best move here? Is there a better option I'm not considering?
I have DB pension so I'm a little less stressed about my rrsp.
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u/Cambrufen 8h ago
An ESG ETF might not do as well as XEQT long term, but it will beat not investing at all. If she's opposed to XEQT, find the broadest ESG ETF you can and see if she can stomach that. She's already investing in the stock market, so it's not that she's opposed to investing.
The CIBC advisor isn't doing anything special. You can just invest the money in the same ETFs yourself and save the fees. You'll have to replace the mutual funds with a similar ETF, but that's probably going to save you even more on fees.
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u/Skates_n_Stocks 9h ago
Your last sentence sums up a lot of what’s going on in the relationship
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u/Ambitious_Salary_453 8h ago
Can you please just help me with my question? I think it would be good for both of us to know, it's just that my job will give me at least a basic pension whereas her rrsp is all up to her/us to decide where it's invested.
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u/Skates_n_Stocks 6h ago
Sure sure. You edited the post so it doesn’t look as bad now. But…. Sounds like she doesn’t care much about the returns as she is concerned about who her money is working for.
My advice is to create a socially responsible fund through wealth simple, questrade or similar style roboadvisor. Returns are good and MER is low. Or just grab the ETF’s you mentioned above. I think you’re on the right track. We could all be wrong in 30years but if history repeats you will be fine with either of those options.
Fire your advisor as the fees will definitely be eating into your gains.
Further you should look at your TFSA/rrsp/pension and determine where you should be putting your money first. There are some advantages to the rrsp now. But there are major advantages to the TFSA in the future.
Government pensions usually result in going hard into TFSA until you max it before getting into rrsp.
Best case is you find a financial advisor/planner who you can pay by the hour to take a good look at your situation.
Just my advice.
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u/Ambitious_Salary_453 5h ago
I hadn’t considered the robiadvisor angle. Thanks for giving a meaningful answer/offering suggestions.
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u/Beneficial_Ship7090 9h ago
I highly recommend you check our NEI and Addenda for ESG funds, they are a great ESG asset manager
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u/RespectSquare8279 8h ago
There are quite a few ESG (ethical, social, governance) funds but some of them are better than others (ie greenwashing). Also called SRI (social responsive investing) and for all I know there are other names of these products and realistically it is just branding by the folks who are selling them. That is what your spouse should be looking for. They have been around for a long time in one form or another. .
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u/Ambitious_Salary_453 7h ago edited 7h ago
Do you have any suggestions as to better vs less good ones? I mentioned a few etfs in my post. Do you have any info/experience with those?
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u/NeutralLock 8h ago
A couple of things here. First, what are the funds? About half of bank owned mutual funds outperformed their respective indexes so the fees may be irrelevant here.
But secondly if your spouse is unsophisticated when it comes to investing they may be the type to panic sell when things start dropping.
We recall seeing someone make a post saying they switched from VEQT to XEQT and now that XEQT had lost some money they regret making the switch... which is an objectively stupid thing to say but if you don't know better it doesn't matter. So if the market goes through a correction your spouse may blame you for losses.
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u/Beginning-March4347 8h ago
I run customized esg portfolios for clients but don't use cibc products because they are garbage.
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u/rhunter99 8h ago
Best move is not to try and change her mind. Are your finances separated? Can you invest your own money in what you decide?
Also where does she draw the line over what’s considered morally reprehensible?
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u/Ambitious_Salary_453 7h ago
I mean, there’s no such thing as a joint RRSP is there? Yes there is separation. But I’m not trying to convince her, I’m trying to learn more about the options that are out there. She’s unaware of any investment options that she feel happy with. I’m just trying to inform myself/us.
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u/rhunter99 6h ago
Well I'm not sure what exactly you're looking for. You can go with ESG funds and accept there will be times where you could be underperforming the broader market as well as paying a higher management fees. You can use https://stockanalysis.com/ to compare ETFs to see for yourself historical performance
another alternative is GEQT (global ESG), however even though it bills itself as an ESG fund it's top holdings includes Banks, chip companies, mining, or companies headed by problematic individuals like Oracle. So to does your examples of XUSR and XCSR. So that goes back to my original question - where does she/you draw the line?
https://www.blackrock.com/ca/investors/en/products/315678/ishares-esg-equity-etf-portfolio-fund
I suppose other options are investing in clean energy/climate ETFs or green bonds (XSAB) as alternatives
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u/Ambitious_Salary_453 6h ago
Thank you, I’ll take a look! I guess I’ve just heard so much about XEQT and others being sufficient enough for anyone to pump the money there and be ok, and I was wondering if these ESG ETFs can be trusted the same way. Im not sure if she even know where she draws the line, but if we’re aware of some options then we can talk about it at least!
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u/rhunter99 5h ago
What exactly do you mean by trust? The ones listed are managed by blackrock, the same institution that manages XEQT. If you look at the top 10 holdings they’re all multinational companies in primarily tech and financials.
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u/Mindless_Market5810 7h ago
Im in the literal exact situation. At least now shes spoken to a financial advisor and has directed her to GIC’s if shes not willing to invest herself. Her inheritance will cover her retirement more than enough though when the time comes.
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u/PhlegmBuilding 5h ago
I think it’s great that you are able to have conversations about this topic as a couple. Even though your perspectives and maybe some of your values about the reasons and ways to invest are different from one another, it bodes well that you’re seeking advice on what might meet her interests (reducing harm, ideally encouraging good social, environmental, governance outcomes) as well as yours (future financial security).
Anyway, like you I have an employer pension, but I also have some RRSPs and half are in what are generally termed “global balanced sustainable.” I went with a credit union, Desjardins, which seems to have more experience in this area than my bank (CIBC) or another credit union (Alterna) I have since left.
I do not have the confidence to invest directly on my own but maybe you do. In that case if you and your spouse do some research using Morningstar, I think that would be helpful. I just did a search on Morningstar for the term “sustainable investing” and lots of good articles came up.
BTW if you are in a province where Vancity, Meridian, or Desjardins operates, your spouse might be interested in switching to them for her regular banking needs, based on her values. There are also regional credit unions. Credit Unions are cooperatives. I switched away from retail banks after the 2008 financial crisis, which the banking sector had a big hand in. Even if Canadian banks were not as exposed, CIBC did get into the subprime market — booooo, CIBC (and is say that as a daughter of a long-ago CIBC loans manager).
The performance of my ESG investments has been meh since the start of the Iran war, though they recovered a few times. The trend since I started them (just this past March) has been steadily upward though. Not the high performance that some regular investments are reporting, but I will be interested to see what a full year will show. Steady is all right by me.
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u/Ambitious_Salary_453 5h ago
Thank you so much for the thoughtful response! I’m definitely feeling encouraged to do more research into how we can align our interests, with the ultimate goal of financial security with minimal harm. It’s a topic we’re discussing for sure.
Actually she had mentioned moving to a credit union which I initially thought wasn’t worth the trouble, but realized that’s mostly because I’ve never met anyone who used them and thought it would make banking difficult. Do you find you miss anything about the big banks?
Do you feel comfortable with the trends of your investments so far, after a few years of growth?
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u/magpiebyebye 7h ago
I think aligning with a cause is understandable but a blanket take on a mass number of companies reprehensible and therefore investable is a radical take. All good if that's what she believes in but I would hazard to guess that viewpoint applies not just to investing but a lot of other parts of life. I generally dislike exaggerating things but I think you and her would be well served to understand if you have a severe value misalignment as partners because that won't get any better if she isn't able to reconcile this to some degree.
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u/SnooOpinions5981 7h ago
You can choose your own ETFs in your RRSP, and she can keep doing what she's doing. The same goes for your TFSAs. All registered accounts are separate.
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u/Ok_Bench_1618 9h ago
She needs to invest in broad market ETFs, it’s obvious she wants to rely on your pension but that will not be enough money for 1 let alone 2 by the time you retire.
You are going to need to be more firm if you want to secure your financial future, I told my SO that unless she invests monthly we are not compatible as I don’t want to work and she happily started investing and now she’s killing it.
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u/Academic-Increase951 8h ago
She is investing, just in a socially conscious mutual fund. She just needs to understand that the performance is likely to be worst than what it could be and factor in a lower expected return. Ie, she could spend less and invest a bit more to make the difference.
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u/Ok_Bench_1618 8h ago
If she can’t benefit any morally reprehensible corporations then she also cannot drive cars, can’t use iPhones or android phones or anything with a microchip and cannot eat any form of meat (yes any, I was a butcher it’s all done dirty)
I’m not insulting your spouse or anything I’m just saying there are major holes in her logic, if you can’t support oil you also can’t get gas and therefore cannot drive a car, same goes for EVs they burn diesel to harvest lithium mined by slaves in 3rd world countries. Have far down the chain do we want to go? This is not logical
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u/Academic-Increase951 7h ago
It's not my spouse. But you don't need to live your life in black and white. It's ok to live in society and make efforts where you can.
Like I don't like animal cruelty and avoid abusing animals, but I still eat meat. I think most people are the same
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u/Ambitious_Salary_453 7h ago
She doesn’t drive, or eat meat…but believe me, I understand what you’re saying about the impossibility completely avoiding bad things in this world. She really just wants to minimize it as much as possible. But regardless, youre not really answering my question
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u/alzhang8 8h ago
hbnk is not diversified
and socially diversified funds are just a way to charge you higher fees
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u/CFMTLfan01 8h ago
GEQT is like XEQT but ESG (100% equity).
GGRO is like XGRO but ESG (80% equity/20% bonds).
GBAL is like XBAL but ESG (60% equity/40% bonds).