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Couch potato investing for the last 14 years - tracking my progress

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  • Jan 24th, 2020 7:09 am
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Sr. Member
Feb 22, 2013
574 posts
427 upvotes
@TuxedoBlack I believe the SM is a low risk technique to purchase investments so long as you can play down the debt by the end of the year. I just completed a SM. I took stock (XAW) in my cash account and transfer the shares in-kind to my TSFA and RESP accounts. On the same day I used my LC to buy back the same ETF.

This is a good way to fund your RRSP, TSFA, RESP and incur only 1 trade commission. Although I will pay tax on the deemed disposition on the shares transferred.
Newbie
Jun 30, 2019
47 posts
68 upvotes
TuxedoBlack wrote:
Jan 7th, 2020 5:15 pm
But most middle class also don't want to have $2M+ net worth before 40. It takes a lot of time and effort to hit the millionaire status and any middle-class family can achieve it by persevering.

Just not at 40 unless they have high income.
I was drawn to this thread originally because I felt like it is a story that any low-middle class can achieve. I understand that OP did live like a poor student for more than 10 years (and had a much lower salary) so the amount of wealth he generated in the early years (~1 million in 10 years) is definitely relatable. This is what inspired me to follow his exact footsteps.

Sometimes you need some form of relatability to help inspire the masses. It worked for me :)
Member
User avatar
Dec 11, 2009
496 posts
104 upvotes
Toronto, ON
serious9 wrote:
Jan 7th, 2020 8:01 pm
...so the amount of wealth he generated in the early years (~1 million in 10 years)...
Other than having started early (probably as soon as he graduated at ~21) I feel like there is some good timing involved here. I'm skeptical that this performance can be replicated in the next 10 years.
Newbie
Jun 30, 2019
47 posts
68 upvotes
MoreDealsPlease wrote:
Jan 8th, 2020 7:37 am
Other than having started early (probably as soon as he graduated at ~21) I feel like there is some good timing involved here. I'm skeptical that this performance can be replicated in the next 10 years.
The goal of this thread is not to replicate his performance Maybe it might take 20 years to replicate. Maybe 30 years. The goal of this thread (and the same message that Germack has repeated) is about staying passive and being consistent. That is all that matters. Everything else is just noise.

Even buying individual ETFs as opposed to all-in-one like VGRO and worrying about a 0.37% extra cost is considered noise in this thread.
Member
User avatar
Dec 11, 2009
496 posts
104 upvotes
Toronto, ON
@serious9 I can see that I hit a nerve a while back that triggered you and now you are very aggressive, are we able to move past that? I feel that you are the one adding noise to the thread by constantly targeting me.

My comment is simply cautioning against expecting similar performance over the next 10 years (based on your comment). I bet most here haven't been investing for much longer than 10 years so it's a relevant comment. IMO couch potato is unlikely to perform as well in the next decade and one of the reasons is that bonds are unlikely to yield the same returns.

Buying individual ETFs vs all-in-one is definitely not noise, that's more dependent on the size of the portfolio and personal preference/comfort, it's just a tradeoff between efficiency and convenience. In fact you can see that Germack's portfolio does have multiple types of ETF and this is a prominent topic for Couch Potato blogs, some examples:

- Multiple ETF portfolio: https://canadiancouchpotato.com/model-portfolios/ (see Option 3: Individual ETFs)
- another one: https://cdn.canadianportfoliomanagerblo ... -06-30.pdf
- https://www.canadianportfoliomanagerblo ... ation-etf/
- https://www.canadianportfoliomanagerblo ... tion-etfs/

Please consider taking a less absolute stance.
Deal Addict
User avatar
Aug 4, 2014
1894 posts
1187 upvotes
Toronto, ON
MoreDealsPlease wrote:
Jan 8th, 2020 3:15 pm
@serious9 I can see that I hit a nerve a while back that triggered you and now you are very aggressive, are we able to move past that? I feel that you are the one adding noise to the thread by constantly targeting me.
I think it's 9th life of @serious8 who comes back every couple of years but keeps forgetting his password so levels up his seriousness.. don't worry, he'll move on soon if yes Smiling Face With Open Mouth And Smiling Eyes
Sr. Member
User avatar
Jun 12, 2010
676 posts
142 upvotes
Vancouver
Hi all - here for my annual rebalancing advice. Hoping to get some pointers on how to best proceed with my CCP portfolio.... I've been thinking lately of moving forward with a mixed VGRO / VEQT portfolio (50/50 split) as opposed to buying individual ETFs to simplify my portfolio. My question is: do I sell all of my existing ETFs and convert those to VGRO or rebalance those as I would have previously but put all future funds into my VGRO/VEQT mix? Are there particular pros/cons of converting vs. keeping it the same?
Deal Addict
User avatar
Feb 1, 2012
1144 posts
1409 upvotes
Thunder Bay, ON
People that started investing in the 1970s had an awful time. So bad that Business Week had a cover story "The Death of Equities" in 1979 that concluded "Today, the old attitude of buying solid stocks as a cornerstone for one’s life savings and retirement has simply disappeared. ... The stock market is just not where the action’s at.”

Those that started investing in 1980 had a great time, as the market rocketed up in a bull market until 2000.

2000 was an awful time to start investing. The dot.com crash in 2000 and the 2008 financial crisis resulted in what is called a lost decade.

Investors beginning in 2009 have had a great time with a massive bull market still going after 10 years.

This thread's first post was in 2014 entitled "Couch potato Investing for the last 14 years", so started investing in 2000... the beginning of the lost decade. An awful 9 year start followed by a decade of good returns. So it was actually a horrible time to start investing that would have driven a lot of people away, and demonstrates the wisdom of sticking consistently to a plan, diversifying and not giving in to short term market fluctuations or trying to guess where the market is going.
Invest your time actively and your money passively.
Newbie
Jun 30, 2019
47 posts
68 upvotes
Deepwater wrote:
Jan 8th, 2020 8:37 pm
People that started investing in the 1970s had an awful time. So bad that Business Week had a cover story "The Death of Equities" in 1979 that concluded "Today, the old attitude of buying solid stocks as a cornerstone for one’s life savings and retirement has simply disappeared. ... The stock market is just not where the action’s at.”

Those that started investing in 1980 had a great time, as the market rocketed up in a bull market until 2000.

2000 was an awful time to start investing. The dot.com crash in 2000 and the 2008 financial crisis resulted in what is called a lost decade.

Investors beginning in 2009 have had a great time with a massive bull market still going after 10 years.

This thread's first post was in 2014 entitled "Couch potato Investing for the last 14 years", so started investing in 2000... the beginning of the lost decade. An awful 9 year start followed by a decade of good returns. So it was actually a horrible time to start investing that would have driven a lot of people away, and demonstrates the wisdom of sticking consistently to a plan, diversifying and not giving in to short term market fluctuations or trying to guess where the market is going.
This is a great post that shows how OP successfully maneuvered through two downturns.

In times like that, people might want to tinker with their investments. Maybe they might change their allocation to bonds/international stock/us stock/ etc etc. Emotions can cause people to sell their holdings and they eventually miss out on massive returns. I know too many people that have held cash the last two years thinking there is a crash coming but they lost out on almost 18-28 percent in returns...

Germack stayed consistent in his allocation and ignored all the noise.
Deal Addict
Mar 10, 2010
1159 posts
247 upvotes
Deepwater your posts are consistently on point and insightful. Must be all that great Tbay air!
[OP]
Deal Addict
Oct 1, 2006
2004 posts
1341 upvotes
Montreal
MoreDealsPlease wrote:
Jan 8th, 2020 7:37 am
Other than having started early (probably as soon as he graduated at ~21) I feel like there is some good timing involved here. I'm skeptical that this performance can be replicated in the next 10 years.
Starting early definitely helped. Hower, the returns for my investing period have been nothing out of the ordinary. 10-year and 20-year annualized returns of an aggressive couch potato portfolio have been 9.57% and 5.25%, respectively as of 31DEC2018 (Could not find newer data). These are not abnormal high returns as can be seen in the graph below showing rolling 35-year returns of the S&P 500 which have surprisingly been quite stable over almost 100 years now.
S&P 500 retunrs.jpg
Member
User avatar
Dec 11, 2009
496 posts
104 upvotes
Toronto, ON
Germack wrote:
Jan 8th, 2020 9:08 pm
10-year and 20-year annualized returns of an aggressive couch potato portfolio have been 9.57% and 5.25%
That's what I mean, I think the last 10 years have been better than average and it's unlikely we will see that performance in the next 10 years. I've been a couch potato investor for a while now(but less than 10 years, therefore biased by great returns), I'm not gonna change my strategy but I'm adjusting my expectations because 9.57% is high. I know someone will say "the performance over the next 10 years shouldn't matter, this is a long term strategy", but that's a pretty long period of time and you never know what life brings you so I think it's important to not count on that high of a return.
Sr. Member
Feb 22, 2013
574 posts
427 upvotes
Just my 2 cents. I don't think it's wise to rely on any ABSOlUTE expected return data. Investors should only rely on the fact that the RELATIVE expected return of a global stock ETF is greater than a global bind ETF. For newer investors building a portfolio, it's most important to understand your risk tolerance because you will not achieve your projected returns (say as outlined by Canadian Portfolio Manager) unless you stay the course and remain fully invested. Unfortunately you will not truly understand your risk tolerance until you go through a Black Monday, Dotcom Bubble, Financial Crisis...
[OP]
Deal Addict
Oct 1, 2006
2004 posts
1341 upvotes
Montreal
sparkaction wrote:
Jan 9th, 2020 9:57 am
For newer investors building a portfolio, it's most important to understand your risk tolerance because you will not achieve your projected returns (say as outlined by Canadian Portfolio Manager) unless you stay the course and remain fully invested. Unfortunately you will not truly understand your risk tolerance until you go through a Black Monday, Dotcom Bubble, Financial Crisis...
This is a very valid point. Most investors tend to overestimate their risk tolerance in good times.
Member
Jan 4, 2017
339 posts
182 upvotes
The point of indexing is you're buying the market, so you get whatever the market return happens to be, which may very well be negative at times. The point was never to set any expectations about it going up a certain amount over the next few years. Even 10 years is not at all a long time in the context of long-term passive index investing. Pretty sure most people following this thread understand that what makes Germack's story remarkable and relatable has nothing to do with whether or not the market did well over the past 10 years, nor whether or not it will do well in the next 10, but instead, everything to do with his success specifically with sticking to his plan no matter what even during recessionary periods.

Nice to see you still keeping this thread updated Germack. I've started buying VGRO as well, even though I like picking stocks (big fan of Rodbarc's method). But it's now time to reduce the likelihood of human error on my part as much as possible. You've repeated a few times that most investors tend to overestimate their risk tolerance in good times. I feel like this really can't be overstated.

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