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

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[OP]
Deal Addict
Oct 1, 2006
2214 posts
1932 upvotes
Montreal
porticoman wrote: off the wall question for Germack - what would you expect to see in terms of the first 5-year performance of VGRO, minimum best guess without factoring in the distributions, just the growth?

and how 'in your opinion' would VGRO compare to VFV long term?

Thanks
The first 5-year performance of VGRO should be somewhere between -3% and +28% ;-p . I would be very happy with a long-term rate of return of 5% per year.

For the last 9 years S&P500 (VFV) performed significantly better than MSCI All Country ex-US (+302% vs. 115%) . Mean reversion will eventually correct this. --> VGRO > VFV over the long term in my opinion. Time will tell if true
Deal Addict
Jan 18, 2014
1464 posts
479 upvotes
Rouyn-Noranda
Germack wrote: The first 5-year performance of VGRO should be somewhere between -3% and +28% ;-p . I would be very happy with a long-term rate of return of 5% per year.

For the last 9 years S&P500 (VFV) performed significantly better than MSCI All Country ex-US (+302% vs. 115%) . Mean reversion will eventually correct this. --> VGRO > VFV over the long term in my opinion. Time will tell if true
Does the data show that all stock markets historically perform the same?

How do you evaluate emerging market stock markets in this?
[OP]
Deal Addict
Oct 1, 2006
2214 posts
1932 upvotes
Montreal
John47 wrote: Does the data show that all stock markets historically perform the same?

How do you evaluate emerging market stock markets in this?
Of course they do not behave all the same.

I have no clue how emerging market evaluate in this.
Member
Feb 14, 2017
226 posts
117 upvotes
Just curious about thoughts on the model portfolios still being relevant for 2018? I've been doing the TD eseries portiflio for over a year now as it seemed like the easiest DIY and I already bank with TD. I'm 30 and other than the TD e-series mutual funds I just put the rest of my money in a high interest TFSA.
Deal Addict
Jan 18, 2014
1464 posts
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Rouyn-Noranda
Germack wrote: Of course they do not behave all the same.

I have no clue how emerging market evaluate in this.
Right, but I'm referring to your belief that there will be a reversion to the mean, in terms of the performance of US vs world markets.

I understand that you see them performing basically equally going forward?
Deal Guru
Sep 2, 2008
11399 posts
1411 upvotes
Hi All,

Of course this depends on ones situation and risk tolerance, I am wondering what you all think of putting 100% of your ETF portfolio in equities. How long term would you would your goals need to be to do this? Do you have a plan to start buying more fixed at certain years?

I started an RESP for my 9 month old daughter and just bought VGRO.TO because it was easy. But...now I'm thinking that seems too conservative for such a long time frame.

I also find its a bit conservative for my own TFSA. I'm 35, stable job, married. I'm thinking of going 100% equities, but not sure what the plan would be to get more fixed as I get older.

Any suggested reading material on this topic would be appreciated.
Deal Addict
Mar 10, 2010
1382 posts
368 upvotes
slowtyper wrote: Hi All,

Of course this depends on ones situation and risk tolerance, I am wondering what you all think of putting 100% of your ETF portfolio in equities. How long term would you would your goals need to be to do this? Do you have a plan to start buying more fixed at certain years?

I started an RESP for my 9 month old daughter and just bought VGRO.TO because it was easy. But...now I'm thinking that seems too conservative for such a long time frame.

I also find its a bit conservative for my own TFSA. I'm 35, stable job, married. I'm thinking of going 100% equities, but not sure what the plan would be to get more fixed as I get older.

Any suggested reading material on this topic would be appreciated.
I like this chart when assessing the long-term risk/reward of different asset mixes. VGRO is a great choice for an RESP, and as you approach uni/college you should start switching your asset mix to more bonds and/or a GIC ladder.
Deal Addict
Jul 27, 2017
2180 posts
940 upvotes
Germack, a request - if you could please post an updated list of your portfolio mix of your CPP or other market investments by symbol, in percentages of those that you presently have?

The number of shares or value of each are not required to be posted, nor is real estate or cash/GIC/HISA

Thank you
Banned
Oct 12, 2017
239 posts
179 upvotes
Clacker wrote: I like this chart when assessing the long-term risk/reward of different asset mixes. VGRO is a great choice for an RESP, and as you approach uni/college you should start switching your asset mix to more bonds and/or a GIC ladder.
I don't think I can trust that analysis.

my portfolio is 100 percent equities in etfs but I'm only expecting 6.5 percent annualized. Is that too low of an
Expectation?

I'm okay with a 30 percent drop though... Yes I haven't seen it but I am confident I can handle it. I don't plan on touching the money.
Deal Addict
Mar 10, 2010
1382 posts
368 upvotes
serious8 wrote: I don't think I can trust that analysis.

my portfolio is 100 percent equities in etfs but I'm only expecting 6.5 percent annualized. Is that too low of an
Expectation?

I'm okay with a 30 percent drop though... Yes I haven't seen it but I am confident I can handle it. I don't plan on touching the money.
For a 100% equities portfolio (I'm assuming not just Canadian) yes, that is a low expectation. The tables in the article I provided showed the average returns over the past ~50 years and while the old adage that "past returns may not indicate future returns" the ~12% (before fees, seems quite reasonable). As long as you're planning on holding for 15+ years I wouldn't be surprised if your returns were in that range.
Banned
Oct 12, 2017
239 posts
179 upvotes
Clacker wrote: For a 100% equities portfolio (I'm assuming not just Canadian) yes, that is a low expectation. The tables in the article I provided showed the average returns over the past ~50 years and while the old adage that "past returns may not indicate future returns" the ~12% (before fees, seems quite reasonable). As long as you're planning on holding for 15+ years I wouldn't be surprised if your returns were in that range.
20 year annualized return here shows about 6.25 percent?

https://cdn.canadiancouchpotato.com/wp- ... s-2017.pdf

I'm all up for the 12 percent. That means money will double every few years.. But the ccp annualized return shows half the rate. Not sure why the huge discrepancy.


Just to put it into context, let's say in 3 years I'll have 700k invested and decide to no longer save anymore.

That means in ten years, my 700k will be worth 2.1 million. Realistic?
Deal Addict
Mar 10, 2010
1382 posts
368 upvotes
serious8 wrote: 20 year annualized return here shows about 6.25 percent?

https://cdn.canadiancouchpotato.com/wp- ... s-2017.pdf

I'm all up for the 12 percent. That means money will double every few years.. But the ccp annualized return shows half the rate. Not sure why the huge discrepancy.


Just to put it into context, let's say in 3 years I'll have 700k invested and decide to no longer save anymore.

That means in ten years, my 700k will be worth 2.1 million. Realistic?
Look at the shorter time-frames on the CCP returns (I think that 20-year annualized return is currently skewed by the dot.com and '08 busts, so its lower than the ~50 year returns). Also, that link was for S&P500 not entire world equities, so it's slightly higher than what the world returns were. I use an 80/20 (equities:bonds) mix but I still use 6% as my conservative returns average for planning. I posted that link to show you the likely differences you could expect by going 100% equities. The answer was, not much, while your volatility would likely be much higher.

The numbers you quoted would only be realistic if you hit a period of time exactly getting the predicted 12% returns, and then you would want to exit the market. So I would say it's well within the range of possibilities, but is it realistic to use it for expected returns, probably not due to the large standard deviation on equity returns.
[OP]
Deal Addict
Oct 1, 2006
2214 posts
1932 upvotes
Montreal
slowtyper wrote: Hi All,

Of course this depends on ones situation and risk tolerance, I am wondering what you all think of putting 100% of your ETF portfolio in equities. How long term would you would your goals need to be to do this? Do you have a plan to start buying more fixed at certain years?

I started an RESP for my 9 month old daughter and just bought VGRO.TO because it was easy. But...now I'm thinking that seems too conservative for such a long time frame.

I also find its a bit conservative for my own TFSA. I'm 35, stable job, married. I'm thinking of going 100% equities, but not sure what the plan would be to get more fixed as I get older.

Any suggested reading material on this topic would be appreciated.
I am not a big fan of going 100% equities. VGRO with 80% equities is already very aggressive. People tend to overestimate their risk tolerance in good times. Were you already investing in equities during the 2008 crash?There are in my opinion not very many people that can handle the volatility of an all equity portfolio.

Let's assume you were wrong with your risk assessment, the market crashes, you can't handle it and sell your investments. The damage to your portfolio will be enormous.

On the other hand, the "damage" will likely be small by going with a portfolio allocation more conservative than your actual risk tolerance could have handled.
[OP]
Deal Addict
Oct 1, 2006
2214 posts
1932 upvotes
Montreal
porticoman wrote: Germack, a request - if you could please post an updated list of your portfolio mix of your CPP or other market investments by symbol, in percentages of those that you presently have?

The number of shares or value of each are not required to be posted, nor is real estate or cash/GIC/HISA

Thank you
Canada (VCN, XIC): 17%
US (VTI, TDB902): 30.9%
International (TDB906, XAW, VGK): 24.2%
Emerging markets (VWO, XEM): 14.5
Real estate(HR, CHP, BEI, REI): 6.3%
Bonds (VAB): 7.2%
******************
VGRO:0.7%
Last edited by Germack on Aug 20th, 2018 11:59 pm, edited 1 time in total.
Sr. Member
Nov 17, 2014
807 posts
277 upvotes
Germack wrote: Hi RFD,

After reading several articles, forums, blogs and academic studies, I came to the conclusion that the best way to invest my money is in a low cost diversified portfolio.

I have been applying this investment strategy for the last 12 years and would like to share my progress with you. With this post I hope to inspire others who are thinking about following a similar approach.

I graduated from university 12 years ago and found a job shortly after graduation. My starting salary was around 60K. A bit more than half of my take home pay was invested each month in a low cost diversified portfolio using TD e-series index funds and ETFs.
I have prepared similar net worth and investment gain statements like yours since 2013 and for curiosity, I have tried to determine your annual stock returns.
For your young man, you have done well.

On Dec 31, 2012, you had about $500,000 Net Worth (Savings + Stock Gains).

YOUR ANNUAL STOCK GAINS % AGAINST PRIOR YEAR END NET WORTH BALANCE:
2013 - 21.87% (Net worth $ $698,441 at year end)
2014 - 9.98% (Net worth $ 794,906 at year end)
2015 - 5.66% (Net worth $873,722 at year end)
2016 - 4.79% (Net worth $ $952,538 at year end)
[OP]
Deal Addict
Oct 1, 2006
2214 posts
1932 upvotes
Montreal
Beefeater wrote: I have prepared similar net worth and investment gain statements like yours since 2013 and for curiosity, I have tried to determine your annual stock returns.
For your young man, you have done well.

On Dec 31, 2012, you had about $500,000 Net Worth (Savings + Stock Gains).

YOUR ANNUAL STOCK GAINS % AGAINST PRIOR YEAR END NET WORTH BALANCE:
2013 - 21.87% (Net worth $ $698,441 at year end)
2014 - 9.98% (Net worth $ 794,906 at year end)
2015 - 5.66% (Net worth $873,722 at year end)
2016 - 4.79% (Net worth $ $952,538 at year end)
Thanks. Here are my rate of returns according to TD.

2013: 19.8%
2014: 11.1%
2015: 5.7%
2016: 6.4%
2017: 13.3%
2018 YTD: 3.7%

Last 3 years: 7.21% annualized
Last 5 years: 10.15% annualized
Sr. Member
Nov 17, 2014
807 posts
277 upvotes
Germack wrote: Thanks. Here are my rate of returns according to TD.

2013: 19.8%
2014: 11.1%
2015: 5.7%
2016: 6.4%
2017: 13.3%

Last 3 years: 7.21% annualized
Last 5 years: 10.15% annualized
I think that has to do with the prior year closing balance, and I guesstimated yours to be about $500k in 2012 to begin with. Note also that the TD returns would account for the additions and withdrawals in your account during the year.
[OP]
Deal Addict
Oct 1, 2006
2214 posts
1932 upvotes
Montreal
Makes sense. What kind of investor are you and what have your rate of returns be?
Sr. Member
Sep 29, 2007
641 posts
169 upvotes
I think I'm done with indexing on the fixed income side. Nothing but losses the last year or so.....yea i have to take into account the interest income but still break even. I'm going fully with GIC's in my fixed income allocations
Sr. Member
Nov 17, 2014
807 posts
277 upvotes
I am a "chicken hawk" investor. It seems that I have higher risk tolerance than you, which may explain a bit higher returns.

My returns since 2012:
2013 - 30%
2014 - 11%
2015 - 18%
2016 - 6%
2017 - 15%
2018 YTD - 6%

My compound return is about 130% since Dec 31, 2012.

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