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Couch potato investing for the last 12 years - tracking my progress

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  • Jan 18th, 2018 3:30 pm
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[OP]
Deal Addict
Oct 1, 2006
1725 posts
716 upvotes
Montreal
Interesting article from Bloomberg:
https://www.bloomberg.com/gadfly/articl ... ystal-ball

"According to Morningstar data, investors in U.S. stock index mutual funds captured on average 96 percent of their funds’ returns over the last 10 years through July, whereas investors in actively managed U.S. stock funds captured just 71 percent of their funds’ returns."
Newbie
Nov 24, 2016
87 posts
24 upvotes
Germack, congrats. You're inspiring me to follow up with what I've been thinking about for a while now. I've been toying with the idea of selling my Vancouver condo and throwing all the money in the market. I'm thinking of following one of the couch potato ETF plans. My parents think it's a stupid idea because my condo is currently rented out and paying for itself. I'm 29 and next year I'll probably be moving to Alberta for school. I'll be in school for 3 years, which means I won't have an income. The condo is cash-flow negative every month, but technically what comes out of my pocket goes into principle payments, while my tenant is paying the interest + other expenses. The condo makes me 5000 a year before appreciation (which has been crazy since I bought it not even two years ago) in income. If I sell the condo, I can pocket anywhere from 150-200k (I've deducted all the taxes and misc. selling expenses).

So, to make this short, I'm thinking of throwing 150k+ into an etf portfolio by following one of the couch potato plans. I'm leaning towards the "assertive" ETF plan:
http://canadiancouchpotato.com/wp-conte ... s-2016.pdf

Any critic is appreciated. I see that you've diversified your portfolio a lot more than what's recommended in that link. Also, are the recommended ETF's in the link the way to go? Or should I look into other ETF's?

Thanks.

P.S. I've never used any of my TFSA room, so a good chunk of that money would go into my TFSA if I go through with all this. The rest will probably all go into an RRSP account. I will take out a loan at prime to pay for my education during the three years I won't be working.
[OP]
Deal Addict
Oct 1, 2006
1725 posts
716 upvotes
Montreal
MashGhasem wrote:
Aug 29th, 2017 2:59 am
Germack, congrats. You're inspiring me to follow up with what I've been thinking about for a while now. I've been toying with the idea of selling my Vancouver condo and throwing all the money in the market. I'm thinking of following one of the couch potato ETF plans. My parents think it's a stupid idea because my condo is currently rented out and paying for itself. I'm 29 and next year I'll probably be moving to Alberta for school. I'll be in school for 3 years, which means I won't have an income. The condo is cash-flow negative every month, but technically what comes out of my pocket goes into principle payments, while my tenant is paying the interest + other expenses. The condo makes me 5000 a year before appreciation (which has been crazy since I bought it not even two years ago) in income. If I sell the condo, I can pocket anywhere from 150-200k (I've deducted all the taxes and misc. selling expenses).

So, to make this short, I'm thinking of throwing 150k+ into an etf portfolio by following one of the couch potato plans. I'm leaning towards the "assertive" ETF plan:
http://canadiancouchpotato.com/wp-conte ... s-2016.pdf

Any critic is appreciated. I see that you've diversified your portfolio a lot more than what's recommended in that link. Also, are the recommended ETF's in the link the way to go? Or should I look into other ETF's?

Thanks.

P.S. I've never used any of my TFSA room, so a good chunk of that money would go into my TFSA if I go through with all this. The rest will probably all go into an RRSP account. I will take out a loan at prime to pay for my education during the three years I won't be working.
Hi MashGhasem,

Sounds like a good plan. The ETFs recommended by the candadiancouchpotato blog are the way to go. I used more ETFs than are recommended now, but this is mostly due to the fact that broad based ETFs such as XAW did not exist when I started my investing 12 years ago.

If you have never invested in stocks you may want to use a more conservative asset allocations such as balanced. People tend to overestimate their risk tolerance in good times and the difference in returns between assertive and a balanced portfolio will likely be small.

Good luck with your investments.
Newbie
Nov 24, 2016
87 posts
24 upvotes
Germack wrote:
Aug 31st, 2017 8:14 pm
Hi MashGhasem,

Sounds like a good plan. The ETFs recommended by the candadiancouchpotato blog are the way to go. I used more ETFs than are recommended now, but this is mostly due to the fact that broad based ETFs such as XAW did not exist when I started my investing 12 years ago.

If you have never invested in stocks you may want to use a more conservative asset allocations such as balanced. People tend to overestimate their risk tolerance in good times and the difference in returns between assertive and a balanced portfolio will likely be small.

Good luck with your investments.
Thanks for the critic Germack. What you explained about risk tolerance has indirectly been on my mind. One thing I've noticed about successful investors is that they have a lot of self-control. I don't think I do. I can see myself "**** with the plan" if things go south. So yeah, you're right. Over the long term a more balanced plan is probably better for me.

I've also been looking at MAW 104. Seems like a very respected fund. Thankfully I have lots of time to educate myself (condo won't be sold until spring/summer).
Newbie
Nov 7, 2016
37 posts
3 upvotes
hello
i need some serious wisdom and advice
i've been investing in xaw, xic, (30%) zag, xbb (60%) and some reits (10%) about
and each day i log on i see pretty big numbers under the heading "Unrealized gains (losses)"

- for example, today it read : Unrealized gains (losses) ($1,656.16) (CAD)
- yesterday it read : Unrealized gains (losses) ($672.39) (CAD)

i am under the understanding that these bracketed numbers are fluctuating each day, as in i am not losing each amount each day, culmulatively ...

however these numbers still scare the shit out of me regardless

can someone give me some wisdom on this? like in a year will these become gains? for right now they are almost always all losses each day ... its been about a few months, i have only checked them once or twice in the past few months

i know i am not suppose to look at them, but i also know that the whole bank of canada raising interest rates are maybe affecting those zag/xbb purchases? i want them to at least hold value ... not lose ...

i also know that the three year return rate of these two bond ETFs are about 3%
but like are they suppose to be fluctuating like this so much? to the point where it feels like (note: "feels like") i am losing money daily?

will it eventually have some positive days?

i have no experience with this

it is one thing to read, another to feel
Deal Addict
Feb 4, 2015
2735 posts
502 upvotes
Canada, Eh!!
Yes, will rebound... CAD strength not helping XAW for sure.

Why so much in bonds? Due to age, mkt risk aversion, etc.?
Sr. Member
User avatar
Feb 1, 2012
709 posts
626 upvotes
TORONTO
Nutcrackergirl take a look at the information at this link. It shows results of a Canadian ETF portfolio with 60% fixed income, similar to yours, over the last 25 years.
http://www.ndir.com/cgi-bin/downside_ad ... D=Canadian

Nobody can predict the future, but over an investor's lifecycle, it's likely that the future will not be too different than the past. Note that over 25 years the average portfolio gain was 7.5%, but there were individual years as low as -7.8%, and there were 3 years where return was negative. Despite those bad years, the total portfolio gain was 506% and a $1000 investment would have grown to $6060.

This link is a good explanation if how and why good investors stay invested and stick to their plan through good times and bad:
http://jlcollinsnh.com/2012/04/19/stock ... s-goes-up/

It will get better, we just don't know when, how much and how far down it might go first.
Invest your time actively and your money passively.
Deal Addict
Sep 13, 2003
1211 posts
85 upvotes
Yes.
Guess what? Everyone with a CPP is seeing red these days, so you're not the only one. There's a bit of a turbulence now but history has proven that the trajectory over time is upwards.


Maybe we can look at as a good buying opportunity. If you missed out on the gains from Jan to June, it could be an opportunity to buy while it's down?
Member
Jan 20, 2007
451 posts
101 upvotes
Niagara
drey wrote:
Sep 11th, 2017 10:18 pm
Yes.
Guess what? Everyone with a CPP is seeing red these days, so you're not the only one. There's a bit of a turbulence now but history has proven that the trajectory over time is upwards.


Maybe we can look at as a good buying opportunity. If you missed out on the gains from Jan to June, it could be an opportunity to buy while it's down?
I thought the point of all this was to not to try and time the market. You need think like a machine and buy regularly regardless of what the market is doing, adjusting once or twice a year to keep your asset ratios in check.
God always forgives. Man often forgives. Nature never forgives.
Deal Addict
Sep 13, 2003
1211 posts
85 upvotes
ancodia wrote:
Sep 12th, 2017 8:43 am
I thought the point of all this was to not to try and time the market. You need think like a machine and buy regularly regardless of what the market is doing, adjusting once or twice a year to keep your asset ratios in check.
Yes you're right. I was thinking that my comment may be applicable if you have some money to add (to your whole portfolio).
Member
User avatar
Oct 19, 2016
440 posts
141 upvotes
Toronto
Appears you made a decision to invest heavily in Bonds and World stock markets.

I dont understand enough about Bonds so personally so I stay away from them but they are known to be relatively stable.

World stock market indexes performance is probably going to be LOW even over the long term. So I think you made the wrong choices of investment if you want performance.





nutcrackergirl wrote:
Sep 9th, 2017 3:05 pm
hello
i need some serious wisdom and advice
i've been investing in xaw, xic, (30%) zag, xbb (60%) and some reits (10%) about
and each day i log on i see pretty big numbers under the heading "Unrealized gains (losses)"

- for example, today it read : Unrealized gains (losses) ($1,656.16) (CAD)
- yesterday it read : Unrealized gains (losses) ($672.39) (CAD)

i am under the understanding that these bracketed numbers are fluctuating each day, as in i am not losing each amount each day, culmulatively ...

however these numbers still scare the shit out of me regardless

can someone give me some wisdom on this? like in a year will these become gains? for right now they are almost always all losses each day ... its been about a few months, i have only checked them once or twice in the past few months

i know i am not suppose to look at them, but i also know that the whole bank of canada raising interest rates are maybe affecting those zag/xbb purchases? i want them to at least hold value ... not lose ...

i also know that the three year return rate of these two bond ETFs are about 3%
but like are they suppose to be fluctuating like this so much? to the point where it feels like (note: "feels like") i am losing money daily?

will it eventually have some positive days?

i have no experience with this

it is one thing to read, another to feel
Deal Addict
Jan 20, 2016
1505 posts
583 upvotes
Houston, TX
nutcrackergirl wrote:
Sep 9th, 2017 3:05 pm


i am under the understanding that these bracketed numbers are fluctuating each day, as in i am not losing each amount each day, culmulatively ...
You're under wrong impression. Number in brackets are UNrealized gain/losses - it's not "material" till you sell it. And it's not "losing each amount each day" - it's your "balance" on current day, once you decide completely liquidate ALL your holdings.

Moreover it do NOT include dividends/distributions, only price gains imo. In case of re-investing dividends this numbers become even more confusing as it do not track returns properly...

Until you're already on "spending" phase, bonds portion a bit high imo. Even with (quite) conservative "years in bonds" 60% is a bit of overkill if you have at least 5 years ahead to invest, imo. 40 (bonds) 60 (stocks) portfolio is very conservative but will have better returns. Buying XBB (long-term bonds) right now is not the best idea (as well as un-hedged world and US stocks on peak of USDCAD ratio), as it will have a SHORT term price drop (in bonds due to raising rate, in XAW due to USDCAD drop). However in few years horizon higher rates will mean higher distributions from bonds and as CAD is close to historic level to USD, XAW will be more "positive" from now
Make the Trudeau drama teacher again!
[OP]
Deal Addict
Oct 1, 2006
1725 posts
716 upvotes
Montreal
ancodia wrote:
Sep 12th, 2017 8:43 am
I thought the point of all this was to not to try and time the market. You need think like a machine and buy regularly regardless of what the market is doing, adjusting once or twice a year to keep your asset ratios in check.
Amen!
Deal Addict
Jul 15, 2009
1084 posts
267 upvotes
drey wrote:
Sep 11th, 2017 10:18 pm
Everyone with a CPP is seeing red these days, so you're not the only one.
I'm not seeing red. Anyone who started their CPP anytime before the beginning of 2017 is almost guaranteed to be in the black right now.
Deal Addict
May 31, 2007
4657 posts
1778 upvotes
Even 25% split between xbb, xus, xic and xef is about +3.13% YTD according to morningstar
It was up to about 8% YTD before currency took some gains out, then tsx basically went flat for the year it seems.

Most analysis still bullish on profits and markets growing ,this bull may not be dead for a while yet.

I think the tsx will catch up as it always does.

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