Investing

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

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  • Oct 19th, 2017 9:20 pm
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Newbie
Feb 5, 2017
78 posts
39 upvotes
And I think that the CCP model portfolio can and should be tweaked a little bit once your portfolio reaches a certain amount.

My net worth is 3M with 1.6M invested in the stock market at the moment.

With XAW, VCN and ZAG it is impossible to reach certain % for emerging and international indexes.

Also, I have added preferred shares, REIT ETFs to my portfolio... and my TFSA is only TD bank at the moment.

I add 200K each year to my portfolio so my contributions far exceed the returns and it should stay the same til I retire.

In conclusion, you can and should tweak the CCP model so that it will suit your investment profile and your goal, especially once you have reached a certain amount of money.
Member
Jul 27, 2017
426 posts
98 upvotes
GTA
I find the whole concept of CCP fascinating from the point of the age of a person starting out, the moment in time, their wage income, contributions to their investments & of course any returns/yield.

It's an age thing for me as I measure myself & my wife to our parents & not to other peoples education, career, wealth, investments or net worth.

Ok, I'm a dinosaur, the fact that we are immigrants, our parents lived through the depression - my parents married at the start of the depression, my wife parents in 1944.

Each of them had a different starting point

My wifes family I consider middle class, while my family were working class blue collar.

My Mother & Father with three children (born between 1931 - 1947), they worked from pay cheque to pay cheque, lived in only two houses their entire life & when they passed left zero in financial wealth.

My in-laws after the second world war started from a 'financial zero' they also with three children (born between 1944 - 1947), he worked in trades, she worked PT till her mid-40's. They invested in simple HISA/GIC, scrimped & saved, paid off their mortgages (their own version of CCP). When my MIL passed at age 85 in 2005 their net worth was just over one-million dollars.

At that point my wife commented..wow, what a lot of money/assets !

After 60 years of marriage, three children & one-million, that is quite an achievement in my books

Whenever I read financial blogs such as RFD I reflect back to my parents & my in-laws, the times they lived through to try to compare them to today's youngish people with three children to figure out how anyone can retire with a nest egg.

I understand it takes money & skill, some life changes, frugal helps as does smart investing

Then there are the CCP (rich by any standard) that have the ability to contribute what smilingly is a huge wad of cash to a retirement/investment portfolio, especially when stats Canada publish the average wage by profession is $X

http://www.statcan.gc.ca/tables-tableau ... 3a-eng.htm

where the numbers get skewed is the population earning minimum wage or those in the service/food industry that average $387/wk
Member
Sep 29, 2007
410 posts
49 upvotes
For me a big thing was ditching the mortgage ASAP. I know technically the math works better to extend the mortgage but sorry the peace of mind of owing $0 to anyone is worth it. Then once mortgage is paid off dump those savings into CCP - for most people that will be 20K+ per year once the mortgage is gone. Granted i bought my house in 2002 when they were actually reasonably priced.
Member
Jul 27, 2017
426 posts
98 upvotes
GTA
retireat50 wrote:
Sep 16th, 2017 3:38 pm
For me a big thing was ditching the mortgage ASAP. I know technically the math works better to extend the mortgage but sorry the peace of mind of owing $0 to anyone is worth it. Then once mortgage is paid off dump those savings into CCP - for most people that will be 20K+ per year once the mortgage is gone. Granted i bought my house in 2002 when they were actually reasonably priced.
Thats one approach, well done retireat50

I suppose 15 - 20 years of minimum $20k/year mortgage payments getting rid of it as fast as possible then the next 15 -20 years when one is mortgage free just keep max'ing the RRSP/TFSA will hopefully get folks to their final destination nicely.

My take (old school) is to always get rid of the 'noose around your neck', the biggest being the mortgage. An example of at least 2x the original mortgage amount in payments over 25 years, so why not crash that first. It just takes away the pressure leaving time to contribute to RRSP & TFSA that you put on hold till after the mortgage is paid off.

Delaying contributions to an RRSP till the mortgage is paid off makes sense, all that available contribution room as well as a bigger tax return. Take that tax return, plough it into the room available in the TFSA + keep on contributing to the RRSP. Anything after that could be in a non-registered investment.

Of course some folks like to leverage to doing all three, four or more at the same time ...mortgage, HELOC, RRSP, TFSA, alternative investments.

At the end of the day is takes money to do these things - lots of it, as well as a certain amount of skill & good luck.
Jr. Member
Jan 16, 2009
150 posts
67 upvotes
Germack wrote:
Sep 16th, 2017 9:43 am
I would keep it simple and just go with the Canadiancouchpotato model portfolio (ZAG, VCN and XAW). Max your RRSP and TFSA first. ZAG should be in your RRSP, VCN and XAW can be in your RRSP or TFSA. Once these accounts are maxed you can hold VCN/XAW in your non-registered account.
Hey Germack. Whats your take on Justin Bender's approach to asset location? In one of his recent blog posts he mentions that certain securities should be held in tax fee/ advantaged accounts for as a long as possible.

I am actually thinking of going with the XAW/ VCN approach in a non-registered account to keep things super simple but posts like his have really got me thinking that maybe holding emerging and international markets in registered accounts for as long as possible would be better tax-wise down the line.
[OP]
Deal Addict
Oct 1, 2006
1655 posts
585 upvotes
Montreal
jsn23 wrote:
Sep 16th, 2017 9:11 pm
Hey Germack. Whats your take on Justin Bender's approach to asset location? In one of his recent blog posts he mentions that certain securities should be held in tax fee/ advantaged accounts for as a long as possible.

I am actually thinking of going with the XAW/ VCN approach in a non-registered account to keep things super simple but posts like his have really got me thinking that maybe holding emerging and international markets in registered accounts for as long as possible would be better tax-wise down the line.
Very good blog posts. Why do you want to hold them in your non-registered account? Your RRSP /TFSA are maxed?
Deal Addict
Sep 13, 2003
1205 posts
83 upvotes
For some of you managing your family's CCP as one whole portfolio for retirement, do you manage and rebalance your significant other's account separate from your own even though you managing everything as one CCP?

Say for example, let's say you need to add 50K to bonds, 50k to cad, 50k to ex-cad.

tfsa1, rrsp1 - yours
tfsa2, rrsp2 - husband/wife
non-reg - joint

Would you add 25k each to tfsa1 and tfsa2, and 25k to rrsp1 and rrsp2 and 50k into non-reg?
Or do you add 50k to either tfsa1 or tfsa2, 50k to either rrsp1 or rrsp2 and 50k into non-reg?

What do you guys recommend?
Jr. Member
Jan 16, 2009
150 posts
67 upvotes
Germack wrote:
Sep 18th, 2017 9:01 am
Very good blog posts. Why do you want to hold them in your non-registered account? Your RRSP /TFSA are maxed?
That's correct. My TFSA and RRSP are maxed with the majority of my Canadian equity in the non-registered. I have to decide if I should follow Justin's suggestions and begin to purchase US Equity in the Non-reg while keeping the International and Emerging Markets in the RRSP or leave the RRSP as is and purchase both International and US Equity in the non-reg. Good problem to have I know but makes things a bit tricky with regards to taxes.
Deal Addict
Jan 20, 2016
1211 posts
431 upvotes
Burlington, ON
porticoman wrote:
Sep 16th, 2017 8:48 am
So true & I guess I missed that simple point of how to go from $15,000 to $1.1 million in 12 years like the OP has done

CCP as I now understand it is a) about slow steady growth investing in indexed funds/mutual funds & b) that if someone wants to get there faster with a huge 'pot of gold' that they must keep continuously adding in huge top up's to the investments + a certain amount of luck may add a part to it

It really is that simple
I'm really confused with your point...

OP several times showed distribution between savings and income (50/50 roughly)

One can see that 1M is achievable with average 8% return (CCP site) over 12 years with 40K yearly addition (0.5M over 12 years) in reg (10k TFSA, 30k RRSP) accounts

http://www.moneychimp.com/calculator/co ... ulator.htm
(or any other compound calc)

Current Principal: $
50,000.00
Annual Addition: $
40,000.00
Years to grow:
12
Interest Rate:
8
%
Compound interest
1
time(s) annually
Make additions at start end of each compounding period

Calculate
Results
Future Value: $
945,720.37
Deal Addict
May 31, 2007
4237 posts
1374 upvotes
drey wrote:
Sep 18th, 2017 9:34 am
For some of you managing your family's CCP as one whole portfolio for retirement, do you manage and rebalance your significant other's account separate from your own even though you managing everything as one CCP?

Say for example, let's say you need to add 50K to bonds, 50k to cad, 50k to ex-cad.

tfsa1, rrsp1 - yours
tfsa2, rrsp2 - husband/wife
non-reg - joint

Would you add 25k each to tfsa1 and tfsa2, and 25k to rrsp1 and rrsp2 and 50k into non-reg?
Or do you add 50k to either tfsa1 or tfsa2, 50k to either rrsp1 or rrsp2 and 50k into non-reg?

What do you guys recommend?
For me, every account has a couch potato, 25% weighting for 4 funds. (CAD, US, INT, BONDS). So much easier and simpler to manage. (8 accounts). Plus if something happens to me, very easy for my wife to seek guidance and understand each account's asset allocation.

Advantages:

1.No account grows too big- all growth balanced and even with other accounts. (think of holding s&p 500 in your RSP since 2008, VRS your TFSA!)
2. Very easy to allocate contributions
3. Simple and easy



If contribution goes in, very easy calculation for allocation. No need to balance multiple accounts, or end up with unattended account balances. (like large RSP vs small TFSA)
[OP]
Deal Addict
Oct 1, 2006
1655 posts
585 upvotes
Montreal
Interesting article. Research by Vanguard shows that a total-return approach is superior to one that focuses on dividend strategies.

http://ow.ly/NXKy30ff1bK
Deal Addict
May 31, 2007
4237 posts
1374 upvotes
Germack wrote:
Sep 18th, 2017 4:06 pm
Interesting article. Research by Vanguard shows that a total-return approach is superior to one that focuses on dividend strategies.

http://ow.ly/NXKy30ff1bK
I believe dividend strategy increases behaviour risk (buying and selling at wrong time), improper portfolio management and higher chance of choosing bad stock picks.

Just don't pick one of these "biggest stock collapses of all time" or future bankrupt company. Good luck trying to figure out which one is next, or coming in 10-20 years:

http://www.dividend.com/dividend-educat ... -all-time/

"The dividend stock world is littered with its fair share of recent disasters. The factors that led to the downturn of once mighty dividend payers vary greatly. Some companies simply failed to change with the times, while others have incompetent management to blame. Still others took on massive risks that eventually came back to bite them. Most of these companies exhibited at least one of the following signs before their massive dividend cuts: a sharply falling share price, or a lack of dividend raises over a long period of time. If investors do their homework and heed these warning signs, they should be able to avoid dividend blow-ups like the ones profiled above."

I don't believe the last statement is possible for most without being extremely lucky.
Deal Fanatic
Jul 4, 2004
7152 posts
530 upvotes
Toronto
bubak wrote:
Sep 12th, 2017 7:50 pm
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.
Yes, the tear we were on earlier in the year is just dampened in the last few months, largely due to the gains in the CAD vs USD. Crappy, but it's cheaper to buy from Amazon USA now, so..............
Sr. Member
Jan 14, 2010
501 posts
95 upvotes
drey wrote:
Sep 18th, 2017 9:34 am
For some of you managing your family's CCP as one whole portfolio for retirement, do you manage and rebalance your significant other's account separate from your own even though you managing everything as one CCP?
We do the asset allocation over all account per person (ie separate between spouses) It works for us, because one spouse's risk tolerance is lower than the other's.
[OP]
Deal Addict
Oct 1, 2006
1655 posts
585 upvotes
Montreal
retireat50 wrote:
Sep 16th, 2017 3:38 pm
For me a big thing was ditching the mortgage ASAP. I know technically the math works better to extend the mortgage but sorry the peace of mind of owing $0 to anyone is worth it. Then once mortgage is paid off dump those savings into CCP - for most people that will be 20K+ per year once the mortgage is gone. Granted i bought my house in 2002 when they were actually reasonably priced.
Exactly, I think the same. A lot of our money goes towards paying down the mortgage instead of investing it in a CCP. We should be done with the mortgage in 2.5 years and then we should be truly financially independent.

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