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

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  • Mar 22nd, 2024 3:36 pm
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Deal Addict
Oct 1, 2006
3249 posts
4472 upvotes
Montreal
retireat50 wrote: US market up third of a percent while XIU down by about that lol. You have to guess right on both currency and market direction to make money on this dog
retireat50 wrote: Anyone expecting a positive return on CCP this year is delusional. Your beloved XAW will get hammered with rising CAD$ (fairly obvious why oil will rip higher in the next 3-9 months). US markets still very over-valued and bonds will decline with 1-3 rate hikes in 2019.
My dear retireat50. We are buy and hold couch potato investors. We do not try to predict what the market will do.

I suggest you give couch potato investing a try. This strategy seems to work much better than your predictions from last December/January. XAW did not get hammered (up >12%), US markets are up (>20%), oil did not rip higher and bonds did not decline and are up >7% instead.
Deal Addict
Mar 16, 2018
1530 posts
2457 upvotes
Hamilton
retireat50 wrote: Anyone expecting a positive return on CCP this year is delusional. Your beloved XAW will get hammered with rising CAD$ (fairly obvious why oil will rip higher in the next 3-9 months). US markets still very over-valued and bonds will decline with 1-3 rate hikes in 2019.
Yikes this did not age well!
Sr. Member
Sep 29, 2007
762 posts
247 upvotes
ownthesky wrote: Yikes this did not age well!
Actually it did....xaw severely underperformed unhedged us markets as predicted.
Deal Fanatic
Mar 24, 2008
6278 posts
2753 upvotes
Toronto
retireat50 wrote: Actually it did....xaw severely underperformed unhedged us markets as predicted.
retireat50 wrote: Anyone expecting a positive return on CCP this year is delusional. Your beloved XAW will get hammered with rising CAD$ (fairly obvious why oil will rip higher in the next 3-9 months). US markets still very over-valued and bonds will decline with 1-3 rate hikes in 2019.
Don't deflect the point that pretty much none of what you posted happened:

- XAW on Jan 3rd (date you posted): 23.76, XAW today: 26.40, that's an over 10% return
- CAD/USD exchange rate is still hovering around 1.3x
- there has been no significant downturn in equities or bonds (yet)
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Deal Guru
Feb 4, 2015
10332 posts
6699 upvotes
Canada, Eh!!
ksgill wrote: Don't deflect the point that pretty much none of what you posted happened:

- XAW on Jan 3rd (date you posted): 23.76, XAW today: 26.40, that's an over 10% return
- CAD/USD exchange rate is still hovering around 1.3x
- there has been no significant downturn in equities or bonds (yet)
Alternative facts vs your REAL facts!! :)
2022/3: BOC raised 10 times and MCAP raised its prime next day.
2017,2018: BOC raised rates 5 times and MCAP raised its prime next day each time.
2020: BOC dropped rates 3 times and MCAP waited to drop its prime to include all 3 drops.
Deal Addict
Sep 19, 2009
2280 posts
991 upvotes
Toronto
ksgill wrote: Don't deflect the point that pretty much none of what you posted happened:

- XAW on Jan 3rd (date you posted): 23.76, XAW today: 26.40, that's an over 10% return
- CAD/USD exchange rate is still hovering around 1.3x
- there has been no significant downturn in equities or bonds (yet)
USD went down 2.5% since June and that is affecting the value of all US securities Canadians are holding. It is not USD weakness as US Dollar Index changed very little over the same period.
Deal Fanatic
Mar 24, 2008
6278 posts
2753 upvotes
Toronto
andrew4321 wrote: USD went down 2.5% since June and that is affecting the value of all US securities Canadians are holding. It is not USD weakness as US Dollar Index changed very little over the same period.
2.5% is insignificant in the grand scheme of things if you are a long term investor. It's a far cry from the drop that the other poster was predicting.
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Deal Fanatic
Mar 24, 2008
6278 posts
2753 upvotes
Toronto
Looking at things, retireat50 better change his name to retireat70. :lol:
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Member
Mar 20, 2018
263 posts
169 upvotes
Hi,

A question to everyone on the thread. How did your lifestyle change after entering the real estate market (buying a principal residence)? Do you regret it (for doing so too early)? Did it drain your budget a lot and decreased the efficiency of the CP investing?

Thanks,
Stan
Deal Addict
Oct 20, 2011
1164 posts
442 upvotes
Mississauga
stanleyinfrared wrote: Hi,

A question to everyone on the thread. How did your lifestyle change after entering the real estate market (buying a principal residence)? Do you regret it (for doing so too early)? Did it drain your budget a lot and decreased the efficiency of the CP investing?

Thanks,
Stan
I'll answer your questions based on my situation being:

Living in the same 4 bedroom two storey home (35 years) and only using two bedrooms (one daughter still living at home) and paying off the mortgage in 5 years. As well, my wife and I lived well below our means and it allowed me to able to retire early.

Our lifestyle changed, by entertaining much more at home, (cost effective), having much more freedom to do as we please with the home we purchased. We reduced our takeout, going out, vacations slightly until the mortgage was paid off at which point we went back to our regular lifestyle. I never regretted it for a second, as a matter of fact our son bought a home before getting married and already upgraded and renovated there new home and he's never regretted it. They're expecting their first newborn this years.

In the end, it allowed me to FIRE, which is what I always dreamed of.
Last edited by MyDream1 on Oct 19th, 2019 12:39 pm, edited 1 time in total.
Deal Addict
Feb 22, 2013
1579 posts
1542 upvotes
stanleyinfrared wrote: Hi,

A question to everyone on the thread. How did your lifestyle change after entering the real estate market (buying a principal residence)? Do you regret it (for doing so too early)? Did it drain your budget a lot and decreased the efficiency of the CP investing?

Thanks,
Stan
Definitely a lot less money to invest but a mortgage made me think twice about my purchases. I don’t regret buying a home as it’s where I sleep and not part of my investment portfolio.
Deal Addict
Oct 25, 2007
3032 posts
1083 upvotes
Mississauga
stanleyinfrared wrote: Hi,

A question to everyone on the thread. How did your lifestyle change after entering the real estate market (buying a principal residence)? Do you regret it (for doing so too early)? Did it drain your budget a lot and decreased the efficiency of the CP investing?

Thanks,
Stan
Initially i regretted having difficulty maintaining pre-house life style but after 5 years with careful budgeting and double payments, we successfully paid off the mortgage (500k).
Now more relaxed knowing i am staying for free (home expenses are offset with basement rental income) and all the savings are going to Questrade ETF's and hoping to get FIRED in few years (aiming for 500k portfolio and expecting 6% returns which is sufficient for our current expenses)
Member
User avatar
May 3, 2015
401 posts
160 upvotes
Toronto, ON
A few of my friends are talking about hedging to block out the effect of Canada-US currency fluctuations on returns. Hedging isn't really something I'm looking to get into, I like to stick to my basic CCP ETF portfolio. However, I have been seeing quite a few articles talking about the prospect of the Canadian dollar appreciating against the US dollar. Out of interest, is anyone here doing this? Which ETFS are you investing in? One such article below.

https://www.theglobeandmail.com/investi ... -exposure/
Deal Addict
User avatar
Feb 1, 2012
2214 posts
3798 upvotes
Thunder Bay, ON
Not this cowboy. I ride the buck up and down like a bucking bronco. :)

I think if you hold US and international stocks for long enough, and buy regularly over many years then fluctuations in the dollar should even out over time. It would be reasonable for a retiree whose expenses are all in C$ to move to some hedged investments to lessen exposure to increases in the C$ relative to other currencies. But moving in and out of hedging based on forecasts of currency movements is market timing.

Canadian Couch Potato has some good articles on currency hedging.
When I was young, I was poor. Now, after years of hard work, I'm no longer young.
Deal Fanatic
User avatar
May 11, 2014
6582 posts
9090 upvotes
Rankin Inlet, NU
MikeZ13 wrote: A few of my friends are talking about hedging to block out the effect of Canada-US currency fluctuations on returns. Hedging isn't really something I'm looking to get into, I like to stick to my basic CCP ETF portfolio. However, I have been seeing quite a few articles talking about the prospect of the Canadian dollar appreciating against the US dollar. Out of interest, is anyone here doing this? Which ETFS are you investing in? One such article below.

https://www.theglobeandmail.com/investi ... -exposure/
I have a friend I helped select ETFs using hedging ETFs. The reason we decided to structure the investments with hedging is because he is a bit closer to retirement. Additionally because the Canadian dollar is low at the moment, and there isn't a huge amount more the Canadian dollar could go down relatively from here, we decided hedging was better to protect from currency movements. Of course, if the Canadian dollar were to fall further into say the 60s, this strategy will not do well, but it was mostly for hedging the small portion of his portfolio that is in foreign currencies.

If you are looking long term, what one could do is hedge, try to see if the Canadian dollar goes back to par and switch at that point, but this is trying to time and assuming that occurs again.
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Member
User avatar
May 3, 2015
401 posts
160 upvotes
Toronto, ON
xgbsSS wrote: I have a friend I helped select ETFs using hedging ETFs. The reason we decided to structure the investments with hedging is because he is a bit closer to retirement. Additionally because the Canadian dollar is low at the moment, and there isn't a huge amount more the Canadian dollar could go down relatively from here, we decided hedging was better to protect from currency movements. Of course, if the Canadian dollar were to fall further into say the 60s, this strategy will not do well, but it was mostly for hedging the small portion of his portfolio that is in foreign currencies.

If you are looking long term, what one could do is hedge, try to see if the Canadian dollar goes back to par and switch at that point, but this is trying to time and assuming that occurs again.
Which ones did you end up going with?
Sr. Member
Sep 29, 2007
762 posts
247 upvotes
So no browbeating of the folks talking about hedging? Funny, when I do it the pitchforks come out.
Sr. Member
Sep 29, 2007
762 posts
247 upvotes
Deepwater wrote: Not this cowboy. I ride the buck up and down like a bucking bronco. :)

I think if you hold US and international stocks for long enough, and buy regularly over many years then fluctuations in the dollar should even out over time. It would be reasonable for a retiree whose expenses are all in C$ to move to some hedged investments to lessen exposure to increases in the C$ relative to other currencies. But moving in and out of hedging based on forecasts of currency movements is market timing.

Canadian Couch Potato has some good articles on currency hedging.
So in other words, market timing? Think of the tax implications as well for someone holding hundreds of thousands in xaw at time of retirement. It's not feasible to do what you propose.
Sr. Member
Sep 29, 2007
762 posts
247 upvotes
andrew4321 wrote: USD went down 2.5% since June and that is affecting the value of all US securities Canadians are holding. It is not USD weakness as US Dollar Index changed very little over the same period.
So if you had a million in this stuff just a 25,000 currency impact or about 10 times the management fee. Yup no big deal. Anyone who buys xaw is a currency trader by default. That's fine, it's your choice just be aware of how fx will impact this investment

Imagine 2008 scenario where cad goes to par or more vs usd. You would be down 30 percent on fx and down 40 or whatever we ended up down on the stocks themself in those dark years. Nearly wiped out if you had saved for decades

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