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Couch potato investing for the last 18 years - tracking my progress

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Feb 29, 2008
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Germack wrote: ]



Could you provide which ETF will be accomplish this opportunity

Thanks,
Canadian equity --> VCE
US Equity --> VTI (US) or VUN (CDN)
International --> XEF (CDN) or VEA (US)
Emerging markets --> VWO (US) or VEE (CDN)
[/quote]

Why the pref for VCE over VCN?
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Oct 1, 2006
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mr_raider wrote:

Why the pref for VCE over VCN?
Sorry, typo. VCN is the preferred option because it is more diversified and also tracks smaller companies.
Last edited by Germack on Aug 20th, 2016 4:12 pm, edited 1 time in total.
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Jun 15, 2012
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The only one thing I don't fancy about VCN is its high exposure to financial sector over 36% .

I wish there would be similar ETF but ex finances .
No need to type thank you; upvote=thanks.
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ukrainiandude wrote: The only one thing I don't fancy about VCN is its high exposure to financial sector over 36% .

I wish there would be similar ETF but ex finances .
That's a disease that afflicts any Canadian fund. Energy and financials. That's the main argument to diversify outside of canada. If you remove finance and energy, nothing left in canada, except maybe the big telecon companies.

Some schlub in the RE sub forum was arguing with me about how vancouver and Toronto are brimming with high tech and "life science" corps, but the sad reality is that canada is NOT a diversified market. Investor beware.
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May 2, 2006
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mr_raider wrote:
ukrainiandude wrote: The only one thing I don't fancy about VCN is its high exposure to financial sector over 36% .

I wish there would be similar ETF but ex finances .
That's a disease that afflicts any Canadian fund. Energy and financials. That's the main argument to diversify outside of canada. If you remove finance and energy, nothing left in canada, except maybe the big telecon companies.

Some schlub in the RE sub forum was arguing with me about how vancouver and Toronto are brimming with high tech and "life science" corps, but the sad reality is that canada is NOT a diversified market. Investor beware.
The amount of our economy that revolves around RE is indeed troubling, especially if you add the related financial services.

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STP123 wrote: That's great...looks like everything is falling in place for you. I don't know about your employment situation; are you self-employed or do you work as an employee for a large or small company? Because of your mortgage, you are still a few years away from complete financial independence, but you are almost there. Because of that, do you find your perspective at work has changed at all? I know you said that you like your work, but situations change very quickly. Do you find that you don't have the same incentive to climb that corporate ladder now, or take the sh*t, back stabbing and typical office politics because you have reached, or nearly reached that state of independence? Because really, you are miles ahead of most people your age and there is really nothing that can stop you from reaching your goals now.
Hi STP123,

I work for a small biotech company (~150 employees). My goal was always to become a director and have a team of scientist reporting to me. I achieved this goal and since then I do not want to climb that corporate ladder anymore. I love science and climbing that corporate ladder would mean less science and more people management, which I do not want.

Reaching that state of financial independence made me feel much more relaxed and less stressed. I stopped caring about the back stabbing and typical office politics.
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Interesting book excerpt: Charles Ellis on why active managers "could" add value 50 years ago , but cannot today:
http://www.institutionalinvestor.com/ar ... 7Gi5JMrLEY

"To beat the market by a worthwhile margin, a manager would have to outperform the best work of over half a million smart, experienced, creative, disciplined and highly motivated experts - all trying to beat each other after costs and fees. All these experts have superb educations and years of experience working with the best practitioners on a level playing field with the same wonderful technology, the same exposure to new concepts, the same immediate access to all sorts of superb information and the same interpretations and advice from the same experts.... This was feasible 30 or 50 years ago, but not today."
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Apr 19, 2010
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Because of this thread, I plan on setting up a 60k Couch Potato portfolio in Feb 2017...consisting of RRSP and TFSA...both my wife and I.

How should I split it?

It sometimes worries me maxing out my RRSP every year...due to the fact that I don't want it to become a RIFF later on. I have a really good work pension as well.
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Apr 16, 2006
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kanewtz wrote: Because of this thread, I plan on setting up a 60k Couch Potato portfolio in Feb 2017...consisting of RRSP and TFSA...both my wife and I.

How should I split it?

It sometimes worries me maxing out my RRSP every year...due to the fact that I don't want it to become a RIFF later on. I have a really good work pension as well.
If you don't want an RRSP, then you should contribute it all to TFSA accounts. The limit next year will be about $50,000 or so per person, assuming you were at least 18 and resident of Canada since TFSA came into being.

In terms of how you should split it, that depends on your risk tolerance and whether you are investing in mutual funds or ETFs.

How much longer do you have before you retire?
Is your work pension DB or DC?
Is it guaranteed (government)?
How much are you likely to get monthyl at retirement for your pension?

The answer to these questions should help you figure out your couch potato allocation.
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Apr 19, 2010
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Octavius wrote:
kanewtz wrote: Because of this thread, I plan on setting up a 60k Couch Potato portfolio in Feb 2017...consisting of RRSP and TFSA...both my wife and I.

How should I split it?

It sometimes worries me maxing out my RRSP every year...due to the fact that I don't want it to become a RIFF later on. I have a really good work pension as well.
If you don't want an RRSP, then you should contribute it all to TFSA accounts. The limit next year will be about $50,000 or so per person, assuming you were at least 18 and resident of Canada since TFSA came into being.

In terms of how you should split it, that depends on your risk tolerance and whether you are investing in mutual funds or ETFs.

How much longer do you have before you retire?
Is your work pension DB or DC?
Is it guaranteed (government)?
How much are you likely to get monthyl at retirement for your pension?

The answer to these questions should help you figure out your couch potato allocation.
TFSA's currently maxed out for wife and I.

My pension is DC....expected amount at retirement is $1M. My wife should have about $750k

I have 25 years before retirement as does my wife. We both have good jobs.

Im' pretty sure some of my investing will have to be done as registered (and pay capital gains) as I will not have enough room in my RRSP/TFSA
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"Im' pretty sure some of my investing will have to be done as registered (and pay capital gains) as I will not have enough room in my RRSP/TFSA"


Did you mean to say non-registered (and pay capital gains) ?
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Dec 23, 2006
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Germack wrote:
georvu wrote: Would you put the following first in RRSPs or not necessary:

US Equity --> VTI (US) or VUN (CDN)
International --> XEF (CDN) or VEA (US)
Emerging markets --> VWO (US) or VEE (CDN)

Thanks and great thread.
RRSP
US equity > International = Emerging markets

TFSA
International/Emerging markets > Us equity
Hey Germack i dont really understand what you are saying here - which funds would you put in RRSP/TFSA?
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Oct 1, 2006
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o1Jeff wrote:
Germack wrote:
georvu wrote: Would you put the following first in RRSPs or not necessary:

US Equity --> VTI (US) or VUN (CDN)
International --> XEF (CDN) or VEA (US)
Emerging markets --> VWO (US) or VEE (CDN)

Thanks and great thread.
RRSP
US equity > International = Emerging markets

TFSA
International/Emerging markets > Us equity
Hey Germack i dont really understand what you are saying here - which funds would you put in RRSP/TFSA?
US equity should be held in an RRSP and not in a TFSA. International/emerging market equities can be held in a TFSA or RRSP account. It does not matter tax wise.

See the following white paper for more information:
https://www.pwlcapital.com/pwl/media/pw ... f?ext=.pdf
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Dec 23, 2006
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Germack wrote:
o1Jeff wrote:
Germack wrote:

RRSP
US equity > International = Emerging markets

TFSA
International/Emerging markets > Us equity
Hey Germack i dont really understand what you are saying here - which funds would you put in RRSP/TFSA?
US equity should be held in an RRSP and not in a TFSA. International/emerging market equities can be held in a TFSA or RRSP account. It does not matter tax wise.

See the following white paper for more information:
https://www.pwlcapital.com/pwl/media/pw ... f?ext=.pdf

ahh okay so that means the currency the funds are trading in doesnt matter, anything that holds US equity should be invested in an RRSP to with hold taxes.
for example VTI (US) or VUN (CDN) despite one in Canadian and one in US dollars should both be held in an RRSP and not a TFSA

what about a fund such as VXC since it carries both US and international exposure?
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Jun 10, 2008
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o1Jeff wrote:
Germack wrote:
o1Jeff wrote:

Hey Germack i dont really understand what you are saying here - which funds would you put in RRSP/TFSA?
US equity should be held in an RRSP and not in a TFSA. International/emerging market equities can be held in a TFSA or RRSP account. It does not matter tax wise.

See the following white paper for more information:
https://www.pwlcapital.com/pwl/media/pw ... f?ext=.pdf

ahh okay so that means the currency the funds are trading in doesnt matter, anything that holds US equity should be invested in an RRSP to with hold taxes.
for example VTI (US) or VUN (CDN) despite one in Canadian and one in US dollars should both be held in an RRSP and not a TFSA

what about a fund such as VXC since it carries both US and international exposure?
I don't think holding VUN in RRSP saves withholding taxes.... currency/stock exchange matters.... so VTI will save withholding taxes VUN will not( since it trades on the TSE).

Edit: See Category C on on the link Germack quoted for confirmation.
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o1Jeff wrote:
ahh okay so that means the currency the funds are trading in doesnt matter, anything that holds US equity should be invested in an RRSP to with hold taxes.
for example VTI (US) or VUN (CDN) despite one in Canadian and one in US dollars should both be held in an RRSP and not a TFSA

what about a fund such as VXC since it carries both US and international exposure?
The currency stock/exchange does matter. VTI should be held in an RRSP (estimated costs: 0.05%) instead of a TFSA (estimated costs: 0.32%) account.

For a Canadian-domiciled ETF that holds US equity (e.g. VUN) it does not matter if held in RRSP (0.44%) or TFSA (0.44%).

It's all quite complicated. Just have a look at the white paper I linked to.
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Unexpected :) Last year John Bogle said you won’t make much money from stocks:
Bogle predicts that a balanced portfolio (roughly half in stocks and half in bonds) should return around 3.5% for the next decade. Adjusted for inflation or in “real” terms, Bogle thinks a balanced portfolio will return 1.5%, barely increasing purchasing power.
Today Canadian Couch Potato talks about indexing like it's the thing of the past:
Remember when index funds simply tracked the broad markets? I do, but I also remember renting movies on VHS and watching the Leafs in the second round of the playoffs.
Smart Beta ETFs: Your Complete Guide

And I used to joke that it'd be funny to read 20 years from now "Passive investing myth debunked!" back-tested academic studies.. lol Well, since about half of our portfolio is in broad-based index ETFs - guess the joke'll be on us.. :)
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Quite almost talking about smart beta shmeta etc. and that index investing will not outperform them just forgetting the vital part of the equation "...after fees and taxes". Trading fees to buy multiple funds and quite high fees for "smart" etfs on 20-30y horizon could eliminate the "smart" performance.


And back testing works well on them, yes. The only problem so far no any backtested model managed to predict future performance :)
Just my personal experience , my friend construct back-tested model which outperform any passive portfolio in 2008 etc and even managed to timed the market entering it January 20th (just at bottom). Quite same date I entered it with my index one. Well, first month he was ahead but next volatility of individual stocks played against him and now we have quite same % return but he lost on fees and usdcad drop (he bought us listed companies so here -10% comes, I bought hedged index)

"Equities are dead"...I think we heard that before...
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asa1973 wrote: And back testing works well on them, yes. The only problem so far no any backtested model managed to predict future performance :)
What was that book, "Things that work until they don't"? :) About how the more people start following a particular strategy based on the successful back testing results - the less successful the strategy will become in the future? :) Wonder if the same will happen to the passive index investing - but also don't want to keep buying "ETF du jour" every time there's a new "winner"... :)

Wonder (just out of curiosity :)) if he'll change his CCP model portfolios next year based on those "beta scmeta" ETFs analysis... :)
Last edited by freilona on Aug 30th, 2016 1:57 am, edited 1 time in total.
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freilona wrote:
asa1973 wrote: And back testing works well on them, yes. The only problem so far no any backtested model managed to predict future performance :)
Wonder (just out of curiosity :)) if he'll change his CPP model portfolios next year based on those "beta scmeta" ETFs analysis... :)
Yes, he will... on April 1 Smiling Face With Open Mouth
When I was young, I was poor. Now, after years of hard work, I'm no longer young.

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