Investing

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

  • Last Updated:
  • Oct 17th, 2017 10:10 am
Tags:
None
[OP]
Deal Addict
Oct 1, 2006
1655 posts
585 upvotes
Montreal
Gweedz wrote:
Feb 13th, 2017 3:48 pm
Help - I am suffering paralysis through analysis! I can't figure out how I should be setting up my portfolio. With help from RFD I originally set up Option B, but now I'm thinking Option A may be better? I don't know.

I'll be starting from scratch (transferring from high MER MFs).

Image


I'm happy with TDDI, but have no issues going with Questrade if worthwhile. I plan on re-balancing as often as needed.
Both options are very good portfolios. It will not matter much which option you will chose in the end.

I would put US equities into your RRSP and not TFSA, though if you use VUN it does not really matter.
[OP]
Deal Addict
Oct 1, 2006
1655 posts
585 upvotes
Montreal
gekaizer wrote:
Feb 14th, 2017 1:03 pm
Hi RFDers,

I currently have the following portfolio in my TFSA:

CGR
VAB
VUN
WXM
XEC
XEF
XIC

I understand it's not the simplest passive portfolio, but I personally like the exposure.

I have to admit, I did not account for tax efficient allocations when I set this up as I was prioritizing time in the market. I do not have much in it; with my new lump sum contribution it would be just above 10k.

I had done some reading but I might be a little confused in my interpretation.

*
CGR directly holds US, International, and CDN Equities | Hold in any registered account since withholding tax apply regardless

VAB directly holds CDN Bonds | Hold in RRSP so that TFSA contribution room does not get used up

VUN directly holds US Equity | Hold in any registered account since withholding tax apply regardless

WXM directly holds CDN Equity | Hold in any registered account then when room runs out, first one to move to non-registered account

XEC holds a US-listed ETF (IEMG) | Hold in RRSP to reduce withholding tax (fine to have in TFSA?)

XEF holds US-listed ETF (EFA) and directly holds Int'l Equities | Hold in RRSP to reduce withholding tax (fine to have in TFSA?)

XIC directly holds CDN Equity | Hold in any registered account then when room runs out, first one to move to non-registered account
*

So would the above allocations be correct?

Thank you very much for your time and I would appreciate your valuable insights.

Investor Profile: mid-high 20s, 40 year investing timeline, registered accounts are not maxed.
A little bit too many ETFs for my taste, but overall your portfolio looks good.

VUN holds an US listed ETF (VTI). Because of this it does not matter if you hold it in your TFSA or RRSP.
Deal Addict
Nov 12, 2008
1882 posts
352 upvotes
Aurora
Germack wrote:
Feb 15th, 2017 8:37 am
Both options are very good portfolios. It will not matter much which option you will chose in the end.
Thanks.
Would one be easier to maintain/rebalance than the other? I'm leaning toward Option A with XAW, but am concerned that it gives me less flexibility of moving funds around each time I rebalance.
Germack wrote:
Feb 15th, 2017 8:37 am
I would put US equities into your RRSP and not TFSA, though if you use VUN it does not really matter.
Just for my knowledge, let's say I wasn't using VUN and it did matter.
So I would move 60k to RRSP. But to keep the proper balance I would have to move 60k of either International equities, or bonds back to TFSA. Would putting international equity and/or bonds into TFSA negate the benefits of moving US equities to RRSP? Just curious.
Newbie
Nov 7, 2016
37 posts
3 upvotes
Germack wrote:
Jan 24th, 2017 8:50 pm
Hi nutcrackergirl,

I hope you will get well soon. I wish you a speedy recovery.

Money that may be needed in the short term should not be invested into stocks. Instead I would park it into a HISA (e.g. Tangerine).
hi Germack, was wondering this question - if you can answer - for i feel you have insight - anyone else if you can answer, let me know too - appreciate it

i am currently on ei, trying to save money on that too, living quite frugally .. dare i say i try to live on between 800-$1400 per month for rent, food, transport, phone, and small amenities in between ... it is extremely hard and tight sometimes .. because rent in toronto is not like rent in montreal...

that said, i want to ask :

is it possible to put my entire life savings - which is about 25k - into ETFs? and expect the annual returns to be enough to support my well... annual living expenses? i know its a weird question .. something tells me the way the earnings are distributed, it might be no .. i am not sure however ..
Member
Jan 29, 2008
281 posts
16 upvotes
I have majority of my investments in TD - E series funds. I have a bit in questrade ETFs. My question to you guys is should I transfer all my money from my TD E - Series and put it in Questrade ETFs

what do you think.

Thanks.
Chad.
www.havejerseys.com - High quality, low priced throwback and movie jerseys😎
Member
User avatar
Mar 27, 2011
392 posts
166 upvotes
Toronto
nutcrackergirl wrote:
Feb 15th, 2017 3:20 pm
hi Germack, was wondering this question - if you can answer - for i feel you have insight - anyone else if you can answer, let me know too - appreciate it

i am currently on ei, trying to save money on that too, living quite frugally .. dare i say i try to live on between 800-$1400 per month for rent, food, transport, phone, and small amenities in between ... it is extremely hard and tight sometimes .. because rent in toronto is not like rent in montreal...

that said, i want to ask :

is it possible to put my entire life savings - which is about 25k - into ETFs? and expect the annual returns to be enough to support my well... annual living expenses? i know its a weird question .. something tells me the way the earnings are distributed, it might be no .. i am not sure however ..
Sorry to hear about your situation, I do hope it improves.

I think putting in the life savings to ETFs is quite risky since no one can predict what will happen in the market. This 25k is your emergency fund as well right? What happens if the market suddenly crashes and your ETFs drop by 40%.

As well, what happens if you need access to the 25k due to circumstances (i.e. you need to go on EI for extended period than originally anticipated due to prolonged illness, or tough job search)?

You will be in quite a bind.

I don't believe you can live off the ETF dividends alone, the common index ETFs don't really go above 5% and assuming a reasonable annual yield of 10% of your ETF portfolio, you'd only be getting 2.5k; which would support you for almost 2 months.

I assume you are trying to use this strategy for the short term, until you get back into routine, but I believe there are numerous financial risks involved.
[OP]
Deal Addict
Oct 1, 2006
1655 posts
585 upvotes
Montreal
Gweedz wrote:
Feb 15th, 2017 9:42 am
Thanks.
Would one be easier to maintain/rebalance than the other? I'm leaning toward Option A with XAW, but am concerned that it gives me less flexibility of moving funds around each time I rebalance.


Just for my knowledge, let's say I wasn't using VUN and it did matter.
So I would move 60k to RRSP. But to keep the proper balance I would have to move 60k of either International equities, or bonds back to TFSA. Would putting international equity and/or bonds into TFSA negate the benefits of moving US equities to RRSP? Just curious.
I prefer option A too. I like to keep it simple.

You could just move 60K of US equities to RRSP and 60K of international equities to TFSA
[OP]
Deal Addict
Oct 1, 2006
1655 posts
585 upvotes
Montreal
nutcrackergirl wrote:
Feb 15th, 2017 3:20 pm
that said, i want to ask :

is it possible to put my entire life savings - which is about 25k - into ETFs? and expect the annual returns to be enough to support my well... annual living expenses? i know its a weird question .. something tells me the way the earnings are distributed, it might be no .. i am not sure however ..
Unfortunately not. You need around 25 times your annual expenses to be financially independent. Assuming 16.8k of annual expenses you would need to invest around $420k.
Jr. Member
User avatar
May 3, 2015
141 posts
37 upvotes
fix23 wrote:
Feb 15th, 2017 4:37 pm
I have majority of my investments in TD - E series funds. I have a bit in questrade ETFs. My question to you guys is should I transfer all my money from my TD E - Series and put it in Questrade ETFs

what do you think.

Thanks.
Chad.
If you are comfortable with ETFs then it would make sense switching, as the MERs are generally much lower. Keep in mind that there can be early redemption fees for for funds like the e-series, so just be aware of that before cashing out. Obviously it also depends if this is in a registered or non-registered account.
Sr. Member
User avatar
Jun 27, 2007
565 posts
96 upvotes
Toronto
fix23 wrote:
Feb 15th, 2017 4:37 pm
I have majority of my investments in TD - E series funds. I have a bit in questrade ETFs. My question to you guys is should I transfer all my money from my TD E - Series and put it in Questrade ETFs

what do you think.

Thanks.
Chad.
Hi Chad,

If you do decide to transfer your money over and need assistance with the transfer, please don’t hesitate to reach out!
Newbie
User avatar
Sep 23, 2008
64 posts
113 upvotes
Barrie
Awesome thread, took a while but i've finally got through it...

Thank you all who contributed and congrats to Germack, you really inspired me to change my way of thinking about investing. Prior to this I tended to just invest in junior miners (pretty much speculating) on what I thought would do well based on quick analysis of the fundamentals (management, property, cash position). I'd do well sometimes and badly sometimes, but after too many ups and downs I need more stability in my investment strategy. I really like this couch potato method...

Anyway to keep it simple was thinking of to start:
VAB 20%
VCN 30%
XAW 50%

But ultimately I want to add some REITs and still keep some speculative money (to play) on the side so:
VAB 20%
VCN 25%
XAW 40%
XRE 10%
Speculative 5%

I have not maxed out my TFSA yet so it will all be in that and I'll be adding money probably, quarterly...

Thanks again...
Last edited by Campin on Feb 17th, 2017 1:34 am, edited 1 time in total.
Member
User avatar
Mar 27, 2011
392 posts
166 upvotes
Toronto
Germack wrote:
Feb 15th, 2017 8:46 am
A little bit too many ETFs for my taste, but overall your portfolio looks good.

VUN holds an US listed ETF (VTI). Because of this it does not matter if you hold it in your TFSA or RRSP.
Doesn't VUN directly hold the US Equities? Based on their holdings information, I see no mention of VTI?

As well, how much does one really lose out if the portfolio is not tax efficient?
Newbie
Jan 13, 2008
86 posts
27 upvotes
gekaizer wrote:
Feb 17th, 2017 12:30 pm
Doesn't VUN directly hold the US Equities? Based on their holdings information, I see no mention of VTI?

As well, how much does one really lose out if the portfolio is not tax efficient?
Vanguard Canada's website is a little confusing IMO. VUN holds VTI. From Vanguard Canada's website: Invests primarily in the U.S.-domiciled Vanguard Total Stock Market ETF.

As far as tax efficiency goes:
If $1000 of VUN pays $20 in dividends and there is a 15% withholding tax. Then you would lose $3 in taxes that you can't recover in a TFSA or RRSP.
The MER is $1.60 and the withholding tax is $3 for a total of $4.60 The "MER" would effectively be .46 vs .16

If I calculated all that correctly then tax inefficiency would cost you $300 per year per $100,000 invested in VUN vs VTI
Sr. Member
Jun 15, 2012
778 posts
60 upvotes
MB
Have you guys already contemplated a new strategy for investment in non reg accounts, since inclusion rate increase is regarded as highly probable (a new budget deficit is forecast to be over $25 billion, followed by one of at least $28 billion.).
Basically if 6% annually is a possible return in CCP portfolio after new taxes it will be reduced by almost a third to 4% before inflation. ( easier in the states where all amount of capital gains is taxed at 10-15% rate that's twice less compared to Canadian savers).
It is prudent to select the securities that will minimize necessities of future selling.
VTI probably one, must have.
Any ideas?
"I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful."
- Warren Buffett
[OP]
Deal Addict
Oct 1, 2006
1655 posts
585 upvotes
Montreal
Campin wrote:
Feb 17th, 2017 1:34 am
Awesome thread, took a while but i've finally got through it...

Thank you all who contributed and congrats to Germack, you really inspired me to change my way of thinking about investing. Prior to this I tended to just invest in junior miners (pretty much speculating) on what I thought would do well based on quick analysis of the fundamentals (management, property, cash position). I'd do well sometimes and badly sometimes, but after too many ups and downs I need more stability in my investment strategy. I really like this couch potato method...

Anyway to keep it simple was thinking of to start:
VAB 20%
VCN 30%
XAW 50%

But ultimately I want to add some REITs and still keep some speculative money (to play) on the side so:
VAB 20%
VCN 25%
XAW 40%
XRE 10%
Speculative 5%

I have not maxed out my TFSA yet so it will all be in that and I'll be adding money probably, quarterly...

Thanks again...
I am happy to hear that this thread inspired you.

This looks like a great plan. Good luck with your investments.

Top

Thread Information

There are currently 2 users viewing this thread. (0 members and 2 guests)