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No dividends?
You want to enter your expected yields  not actual current yields,  and I wouldn’t want to assume long term future rates based on the current rates.  We show you the past 1 year yields in the tooltips from the data we get from Fundata if we have it for that security, (Wealthica doesn’t give that, just the price). 
 
You might want to use the “Change all rates for all investments at once” to set all your rates. It’ll set the rates for each investment according to the expected rates you input on that form and the asset association of the investment. It’s convenient but a little dangerous, so I suggest you save your current rates by running a TIME MACHINE and saving the scenario so you can retrieve it with your current rates if necessary.
No dividends?

Make sure you have set an expected dividend yield for all the investments.

Optimizing expenses
The Withdrawal Optimizer does not optimize expenses, only withdrawals. It maximizes the Legacy doing just what you describe (see https://www.moneyreadyapp.ca/blog/post/8 for details). If we were to allow it to optimize expenses, it would set them to 0 in all years! We can only optimize withdrawals given a known level of consumption, and in all years since it optimizes over your whole retirement.
 
The approach to take is to first use the Choose your Legacy tool to determine the spending level that gets you close to what you want in terms of legacy. That algorithm also considers taxes, clawbacks and RMDs in every year (see https://www.moneyreadyapp.ca/blog/post/10 although I don’t go into quite as much detail in that post ). It does not assume the amount to increase/decrease expenses will be the same every year, so you may see jumps up and down in the suggested expenses depending upon the scenario. It does try to minimize the number of times you would need to change the spending to make it easier for you to plan, but it will change it if it has to, particularly to avoid running out of money in any year. For example it might be financially advantageous even after tax to not spend a dime until the day you die and spend it all then, but that would not be a very useful plan. 
The Choose your Legacy tool  does not optimize the account withdrawals, it just uses your set strategy given your PRIORITIES and AUTOMATIC deposits/withdrawals.
 
Use the Withdrawal Optimizer as a second step to optimize the withdrawal strategy that meets that level of consumption suggested. If that gives you a much higher legacy, then use those results to check them against the results with your set strategy (your PRIORITIES and AUTOMATIC deposits/withdrawals) to see if you can improve it. It’s best to understand what the plan is doing, and if you can match the Withdrawal Optimizer, then you can be confident your plan is optimal.
 
Those two tools are sophisticated and work well, and their combination is powerful. I’m always looking for better optimization algorithms,
Entering GICs
When you manually add an account, if you enter the asset allocation for it where it asks (%Fixed income, %Equities) instead of leaving those fields blank, it will automatically create a Portfolio investment for you with that asset allocation. This is convenient for people who do not want to enter individual securities but just keep track of the balance of their portfolio. In that case, they are done.
 
You can still add individual securities to the account. Go to the investments for the account and below the table are the buttons to Add investments in different currencies. Clicking on + Add CAD investment will then ask for the Investment Type, and you can select the "GIC, Bond or Term deposit” from all the types, and add a name for it. Then it will ask you for the information for the investment including rate and maturity.
 
So you can add those GICs manually, and delete the Portfolio investments. 
GICs are a little tricky to manage for the TIME MACHINE. It will respect their maturity date and never sell them before then even if money is required. You can also set future renewal dates and rates for each GIC in RATES/YIELDS/CURRENCIES. Once their term is up however it might get reinvested automatically anyway if money is not needed.
Sankey Cash Flow Diagrams

I'm happy to announce a new visualization for cash-flows you can find for every year in the TIME MACHINE by clicking on the year in the first column of the TIMETABLE.

These are called Sankey Diagrams and here is an example of what that can look like:

Sankey Cash Flow Diagram

From left to right, we first separate out Income sources as External income and Withdrawals from accounts.
From income you then get Spending, which is then broken down by your entered Expenses, grouped by type if you set up types. Then  Deposits to accounts, which are broken up by account, then Loan payments and Lastly Taxes.
This makes it easy to see where the money is coming from and where it's going without looking at numbers. The numbers are still shown below as tables, and you can click also on the graph to get details (not the one shown here, it's just an image).
 
Because it required changes to the TIME MACHINE the feature is not entirely backwards compatible with old runs, but if it can get a plot that makes any sense,  you should be able to see it even on old runs, otherwise some years may not show one. Best to get fresh runs.
You can even see 2 plots side-by-side in run comparisons.
 
I hope you like these new diagrams. Please let me know if you see any issues or have suggestions.
Major update for RESPs
  1. We’ve added support for Family RESPs.
  2. We’ve added support for naming the same beneficiary to multiple RESPs (Individual or Family).
  3. We’ve added support for the Québec Education Savings Incentive (QESI).
  4. We’ve added support for RESPs from which funds have been previously withdrawn.
Please the RESP Help page or eBook for details. Let me know if you have any questions
 
Do ETF investments automatically deal with foreign withholding taxes?

Yes. The app considers foreign witholding taxes for US investments in Non-Registered, TFSA, RESP and RDSP accounts. For Non-registered accounts the app considers the foreign tax credit that can be used to recover them.

Do ETF investments automatically take into account MER fees?

All investment return yields should be entered net of fees.

We have not yet implemented a reporting feature for MER fees but the feature is planned for.

Must read on Permanent Life Insurance

White-paper on permanent-life-insurance. From PLW (an investment advisor firm):

Life insurance is a financial contract that pays out when the life of the insured ends. This paper is designed to give an overview of life insurance as a concept, including an analysis of life insurance as an investment. We observe anecdotally and empirically that some types of life insurance are sold more as investments than as risk transfer contracts. We call this practice into question through analysis of after-tax returns for traditional investments and life insurance. We suggest that the motivations to sell insurance as an investment are, in many cases, related to conflicts of interest.

 

 

Current year

Yes that make perfect sense. Unfortunately the Withdrawal Optimizer algorithm only works for full years after retirement, so for the current year there is no optimization (I'm working on it  but is not a trivial problem). The TIME MACHINE will always withdraw the minimum required from RIF accounts, which is why the app asks you for those accounts, your balance at the end of last year and how much you've already withdrawn this year, if any (you can enter that in the ACCOUNT's properties, you may need to click submit to see that on the next screen). 

To plan this year, you can set to have withdrawals in AUTOMATIC SAVINGS/WITHDRAWALS as I said before. If the amount is higher than what was already mandated to withdraw it will take that much more.  You will always see what has been withdrawn from today in the reports of the TIME MACHINE.

Current year

1.  For a planned withdrawal from an account (entered in AUTOMATIC SAVINGS/WITHDRAWALS), just enter the amount you intend to withdraw specifying the same start and end date for the withdrawal on the date you are planning to do it. It won't be prorated that way. If the start and end dates are not the same, the amount is assumed to be an annual amount and will be prorated in any partial years covered between the two dates.

2. I'm not quite sure what you are asking. You set the inflation rate in RATES/YIELDS/CURRENCIES, the default rate is set to 2% (the long term target), but you can click Update on that rate and get the latest rate we obtain nightly from the Bank of Canada. You can set it up to change the rate to anything you like at any dates today and in the future. The results of your March run are not modified if you look at it again in September, it has used your assumed inflation rate at the time and the today's dollars results are for March dollars for that run. For many scenario entries we ask you for amounts in today's dollars, and a dollar is worth a dollar today. For amounts that start in the future, you can specify if you want that to be in today's dollars or future dollars when they start.  Future dollars are usually worth less today due to inflation. The TIME MACHINE uses your inflation rate(s) and will show you results in both future dollars and today's dollars.

 

 

What happens when ACB hits 0 in a NR account?

This will happen with investments that provide Return of Capital distributions (ROC). These distributions reduce the Adjusted Cost Base (ACB) of the investment. The ROC distributions are tax free until the ACB reaches zero, then the ROC distribution are taxed as capital gains.

You can enter a ROC yield for mutual funds and ETFs in MRA. The TIME MACHINE keeps track of the ACB starting from the book-value it has for the investment (you enter it manually or get it automatically from Wealthica). It will treat the distribution either as tax-free or capital gains based on the ACB it calculates. The ACB is reduced by the ROC distributions and any selling of the investment, and increased by any additional buying or re-investment of distributions. Only if the ACB is zero will it add to your realized capital gains on which it will calculate taxes.

Some additions to reports
  1.  A new graph. A graph of TFSA and RRSP room at the end of each year in the TIME MACHINE is now shown in the results. This is in addition to the graph of TFSA and RRSP room at the beggining of each year. These will help you determine how much room you have and how much room you used up each year.
  2. The TIME MACHINE's results large table shows net-deposits to accounts (total deposits minus withdrawals) in the year. The individual year reports now break down the deposits and withdrawals to accounts. Instead of just the net amount seen in the Cash IN or Cash OUT sub-tables, you might have an entry for the same account in both, ie. the total withdrawals  for the year, and the total deposits for the year separately.
  3. The Excel download of all investments in all acccounts now has an additional column showing the owner of the account (useful if there is a spouse).

The first 2 changes will only apply to new TIME MACHINE runs as they can't be made retroactively.

These changes were made due to user suggestions, so thanks for your feedback!

CPP estimates

The MoneyReady App follows the methodology of the CPP legislation and its estimates are very accurate and also transparent as you can check the calculation in two ways.

First, where you enter your statement of contributions in the app, it will show its estimate of your CPP amount if you start it at age 65. You can check that this amount is very close to the estimate given to you at the CRA website. Unfortunately that estimate is not very accurate for planning, as for that calculation the CRA assumes your current average earnings stay the same until 65.

The MoneyReady App TIME MACHINE makes a more accurate estimate by considering not only your earnings to date but also your future earnings as you entered them in INCOMES. It will also consider the child-rearing provision if you entered DEPENDENTS, and it considers years you collected CPP disability payments and also the Post Retirement benefit when appropriate in your scenario. If a spouse pre-deceases the other, the combined benefit to the survivor is also calculated.

Once you have run the TIME MACHINE you can check the accuracy of the calculation by looking at the REPORT. The pdf report shows the calculated Pensionable table in all years. The table shows earnings, first additional earnings, second additional earnings and the months for the year included in the calculation. Average earning are shown at the bottom, those are used to get the final CPP amount. If you haven't run a TIME MACHINE yet, you can still see an example of that in the Sample plan that can be downloaded.

How to get TM to withdraw TFSA Distributions and recontribute to TFSA from RRIF and NR accounts in new year
I finally got a chance to look at your scenario in detail and everything checks out. Both spouse have indeed enough money in the other accounts to make the TFSA contributions. The points of confusion are:
1. The TFSA room graph shows the room at the beginning of the year, so will include your previous year’s withdrawals plus the additional room added every year. 
2. The reports shows net deposits to the accounts (deposits minus withdrawals). For your regular TIME MACHINE run, I have checked that you do indeed make the maximum deposit of all your TFSA room in every year as instructed. However you also then withdraw the distributions, also as instructed, which increase you room for the following year. The net deposit amount in the year varies due to the yielded distributions that change with the account balance, and the yearly added TFSA room, which due legislation is indexed and rounded to the nearest $500, it does not increase evenly. Sometimes the room deposited is higher and sometimes lower than the distributions withdrawn in a year, so you may end up with either a deposit or a withdrawal from the account in any year.
 
The Optimized run in your case makes very few withdrawals from the TFSAs, on the contrary it deposits the max room to it mostly every year, so the deposits and the room at the beginning of each year stays about even.
Should I use the OPTIMIZER?

The TIME MACHINE on its own does not optimize at all, it just follows your orders for your scenario that you set with AUTOMATIC WITHDRAWALS and your Withdrawal PRIORITIES, still enforcing tax rules along the way.

The WITHDRAWAL OPTIMIZER does optimize for tax efficiency over the retirement years indirectly. The optimizer algorithm considers more than just taxes and considers all those years together to maximizes your legacy and tries to beat the original TIME MACHINE scenario you set.  It does not matter whether you want to leave a legacy or not.

So yes you should use the optimizer to determine if your set withdrawal strategy is optimal, and if not, to consider the results of the optimal strategy obtained by the program.

 

Managing Foreign income in multi-country ETFs

I'll look into capturing that better for these types of funds. In the meantime, you can just enter your expect foreign dividend yield as income yield, since the tax treatment is the same. Reduce the eligible dividend yield by the same % as they are additive.

How to get TM to withdraw TFSA Distributions and recontribute to TFSA from RRIF and NR accounts in new year

Try increasing your TFSA contributions amount in AUTOMATIC deposits, if there’s room and other sources of cash it will make the contribution, but won’t go over the limit. Also check there is money to cover it in the accounts of the same spouse that has room.

How to get TM to withdraw TFSA Distributions and recontribute to TFSA from RRIF and NR accounts in new year

Hi,

You can set up to withdraw all distributions from the TFSA accounts in AUTOMATIC WITHDRAWALS. Once started these withdrawals will never end, and will add to your contribution room for the following year.

You can then set up AUTOMATIC DEPOSITS to the TFSAs. To cover the fact that you have that extra contribution room due the previous distribution withdrawals, enter a larger amount than the yearly allowed increase in TFSA room (currently, $6,500). For example enter $10,000, indexed. The TIME MACHINE will only make contributions up to the contribution limit it calculates in every future year.

Set up your WITHDRAWAL PRIORITIES to your RRIFS as the top priority, then the Non-reg accounts, then the TFSAs.

That should achieve the scenario that you want. Once you run it, can also try running the WITHDRAWAL OPTIMIZER to see if it can beat it.

 

 

 

Credit Balance on a Credit Card

The form does not allow you to enter a negative amount for the balance of a credit card loan. The issue is what would you want te TIME MACHINE to do with it? A credit balance on a credit card card is not a a good investment so usually insignificant and temporary.