Investing

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

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  • Sep 23rd, 2017 2:07 pm
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Newbie
Aug 24, 2017
1 posts
This is a feeler request for information on getting started in the couch potato management model . My search is driven by the realization of how much my managed fund is taking as fees,as well as the fact that the the couch potato model out performs my managed fund. I am thinking i'm not the first person to follow down this road, so i'm looking for any advice on how to transfer my existing managed fund value and move it to couch potato model . Wondering if there are any fees in removing my funds from my existing managed fund, also wondering if there are any agencies that set up the initial couch potato model .
Any first hand knowledge would be appreciated
Sr. Member
User avatar
Apr 16, 2009
786 posts
162 upvotes
Vancouver
jay81k wrote:
Aug 25th, 2017 9:54 am
Yes I agree it's terrible if you are following the CCP model which I was when I first started investing. What I don't get is why keeping your money frozen in something that's only going down is a good idea instead of putting it into a stock that's actually making money ?
Because you're looking at a very short period in time. The past few months have been bad, for sure. But if you compare it to the 20-30-40 year timeline that most people invest in CCP, that's what, <1% of the overall timeline? Peanuts. Absolutely peanuts in the grand scheme of things. You're wasting more time, effort, and money, trying to time the market and catch the upswings than the overall benefit it will net you. So invest. Let it sit. Relax.
Jr. Member
Mar 29, 2015
123 posts
25 upvotes
Westmount, QC
DefconZero wrote:
Aug 25th, 2017 10:28 am
Because you're looking at a very short period in time. The past few months have been bad, for sure. But if you compare it to the 20-30-40 year timeline that most people invest in CCP, that's what, <1% of the overall timeline? Peanuts. Absolutely peanuts in the grand scheme of things. You're wasting more time, effort, and money, trying to time the market and catch the upswings than the overall benefit it will net you. So invest. Let it sit. Relax.
Ok thanks for the input !
Deal Addict
Jul 23, 2007
3196 posts
1063 upvotes
islanderr37 wrote:
Aug 25th, 2017 10:15 am
This is a feeler request for information on getting started in the couch potato management model . My search is driven by the realization of how much my managed fund is taking as fees,as well as the fact that the the couch potato model out performs my managed fund. I am thinking i'm not the first person to follow down this road, so i'm looking for any advice on how to transfer my existing managed fund value and move it to couch potato model . Wondering if there are any fees in removing my funds from my existing managed fund, also wondering if there are any agencies that set up the initial couch potato model .
Any first hand knowledge would be appreciated
There may well be costs involved if your fund company charges to do a transfer to another financial institution. Also if it's a no-load fund you own there may be no other costs incurred, but if it's a fund with a deferred sales charge, then depending on how many years you've held it, that may be another cost to you.

Canadian Couch Potato gives you some model portfolios to consider if you decide to move to another financial institution.

"The Millionaire Teacher" Second Edition by Andrew Hallam is also a very good resource for Canadians. You could try to find it in your library first.
Sr. Member
User avatar
Feb 1, 2012
590 posts
464 upvotes
TORONTO
imclumzy wrote:
Aug 25th, 2017 9:52 am
May I ask, why go for an "all-in-one solution" fund like MAW105? Why not simply do a CCP mix using TD e-Series or ETFs? Is there a special consideration for this situation when investing in a non-registered account with the intention of moving in-kind to registered accounts?

Sorry, I'm an investing n00b with just enough knowledge to be dangerous. :)
One reason is simplicity, owning one fund instead of four or more, so fewer finds to buy and no need to rebalance. This works well for elderly people or very busy people.

Another reason, for me, is to segregate a part of my portfolio. I have a chunk of mad money in MAW105, that is for a different use than my retirement savings, yet I can keep it in the same account.

Also Mawer is a small fund company with a focused strategy that has very good performance results.

Nonetheless, for me I would not keep all or even most of my money in a single actively managed fund.
Invest your time actively and your money passively.
Sr. Member
User avatar
Feb 1, 2012
590 posts
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TORONTO
funnykiddy wrote:
Aug 24th, 2017 12:05 pm
Will probably pull the trigger today. Advice much appreciated!!

I understand the principle behind buy and hold for long-term growth, I guess I'm having trouble putting it into practice what with all the worrisome news around the world.
There is pretty much always some worrisome news somewhere. The trick for index investors is to ignore it. The stock market is a random walk short-term and an upward trend long term.
It is helpful to look at history to understand how the stock market recovers from corrections and bear markets:

May 1946 to May 1947. Stocks plunge 28.4%.
June 1948 to June 1949. Stocks decline 20.6%.
June 1950 to July 1950. Stocks fall 14%.
July 1957 to October 1957. Stocks fall 20.7%.
January 1962 to June 1962. Stocks plunge 26.4%
February 1966 to October 1966. Stocks fall 22.2%.
February 1966 to October 1966. Stocks fall 22.2%.
November 1968 to May 1970. Stocks plunge 36.1%.
April 1973 to October 1974. Stocks plunge 48%
September 1976 to March 1978. Stocks fall 19.4%.
February 1980 to March 1980. Stocks fall 17.1%.
November 1980 to August 1982. Stocks fall 27.1%.
August 1987 to December 1987. Stocks fall 33.5%.
July 1990 to October 1990. Stocks fall 19.9%.
July 1998 to August 1998. Stocks fall 19.3%.
March 2000 to October 2002. Stocks plummet 49.1%.
November 2002 to March 2003. Stocks fall 14.7%
October 2007 to March 2009. Stocks plummet 56.8%.
April 2011 to October 2011. Stocks fall 19.4%.
June 2015 to August 2015. Stocks fall 11.9%

Stocks gained +1,100-fold during this 70-year period.
Source

Lesson learned: Stay-the-Course
Invest your time actively and your money passively.
[OP]
Deal Addict
Oct 1, 2006
1635 posts
568 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
57 posts
17 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
1635 posts
568 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
57 posts
17 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
2405 posts
394 upvotes
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
590 posts
464 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
1204 posts
83 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
User avatar
Jan 20, 2007
429 posts
71 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.

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