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

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Sr. Member
Jun 14, 2018
777 posts
820 upvotes
retireat50 wrote: People on this thread are bizarre, someone even said I should not post if I am not an ardent supporter. Can this thread not have both positive and negative comments?

Markets are once again surging, S&P up nearly 1%, QQQ up 1.5% and XAW is flat lol. You can't make this stuff up. To address certain comments

1) Why not just go 100% SPY. I would face a massive tax liability so still have some of this stuff as legacy positions. I am slowly getting rid of this junk when I have some tax losses to offset but will take awhile
2) Someone mentioned they looked at some passive index funds and they had international and bond holdings. Huh??? I am talking about the equity side only. I have no issue with CCP bond holdings and infact have VSB, ZAG,etc on the fixed income side
3) Someone said I was cherry picking. Cherry picking SPY??? When someone says stock market, the Average Joe and Jane think of THE S&P 500. It is the gold standard in terms of an index the world throughout. I would agree with their point if I picked TSLA, Amazon, etc
4) Someone mentioned that this is lower risk. No, XAW/VCN dropped more than SPY during the March lows

Again, I go back to my question which remains unanswered. Under what macro environments will CCP outperform a 100% SPY (S&P 500) holding on the equity side? If the answer is none (which I assume is the case given noone has answered me) then what is the point of anyone following CCP? You get to share when it underperforms but have no prospect of outperformance. You must be compensated for holding equities given there is an assumption of equity risk premium and you must maximize that during the good times. CCP holders are not
CCP isn't meant to be a better performing investment strategy than, say 100% US equities. It's meant to be a low-MER investment strategy to keep people stay invested, even amidst the dips. It's to give investors a sense of security with diversification.

Think of it like losing weight. Which method is the best? Calories in, calories out? Keto? Intermittent fasting? It doesn't matter. Just do the one that works best for you and keeps you on the path as long as possible. That's essentially what CCP is. It's just another investment strategy that is a lower cost alternative to the typical mutual funds that have been around forever.

It's bizarre that this is triggering you so much. I started doing CCP as well, then have switched to higher US equities myself, but I certainly don't have the same vitriol for CCP as you do.
Deal Addict
Mar 31, 2017
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Burnaby
I obviously can't speak for others nor am I particularly well versed in this topic but here's why I follow CCP:

A) It's simple - I don't wanna deal with investing in USD/forex and I don't wanna focus on "maximizing" my returns (otherwise I should be investing in stocks anyways)

B) No tax melodrama - I have enough stress in my life already and certainly don't need more and to have to start worrying about tax implications of investing in S&P

C) Local - I like the comfort of knowing that atleast a portion of my investment stays local to Canada. If I can help this country develop more (even if it's just a tiny bit) then I'm happy to do so

D) Easy - CPP is an easy to follow guide that doesn't require much grunt work on my end. It's also far easier to get advice on it in forums (such as this one) than to pivot and do my own thing, where I'll undoubtedly end up messing a thing or two (or, as is usual for me, ten!)

E) And finally, it works! - While I don't doubt that S&P could make me more money long term, I have (or atleast I think I do!) a well thought out plan of how I can retire in the next 15-20 years. S&P investment may or may not lead me to the same position but I'm not about to start that research and planning all over again...just to do what I intend to do anyways (I.E. Semi-retire in 20 years~)

Anyways those are my reasons for sticking to CPP. I honestly don't see the need/greed to fix what ain't broken.
Sr. Member
Jun 14, 2018
777 posts
820 upvotes
sparkaction wrote: @MarinersFanatik I think @retireat50 bring up some good points and allows CCP investors an opportunity to reflect on why we've adopted this approach.
Yes, there's good reasons to steer away from CCP, as I have, but there's no reason to trash it as much as he has. It's for beginners and/or people who don't want to spend a lot of time dealing with investing, but still want to build a reasonable portfolio.
Deal Expert
User avatar
Dec 12, 2009
19850 posts
7973 upvotes
Toronto
retireat50 wrote: People on this thread are bizarre, someone even said I should not post if I am not an ardent supporter. Can this thread not have both positive and negative comments?

Markets are once again surging, S&P up nearly 1%, QQQ up 1.5% and XAW is flat lol. You can't make this stuff up. To address certain comments

1) Why not just go 100% SPY. I would face a massive tax liability so still have some of this stuff as legacy positions. I am slowly getting rid of this junk when I have some tax losses to offset but will take awhile
2) Someone mentioned they looked at some passive index funds and they had international and bond holdings. Huh??? I am talking about the equity side only. I have no issue with CCP bond holdings and infact have VSB, ZAG,etc on the fixed income side
3) Someone said I was cherry picking. Cherry picking SPY??? When someone says stock market, the Average Joe and Jane think of THE S&P 500. It is the gold standard in terms of an index the world throughout. I would agree with their point if I picked TSLA, Amazon, etc
4) Someone mentioned that this is lower risk. No, XAW/VCN dropped more than SPY during the March lows

Again, I go back to my question which remains unanswered. Under what macro environments will CCP outperform a 100% SPY (S&P 500) holding on the equity side? If the answer is none (which I assume is the case given noone has answered me) then what is the point of anyone following CCP? You get to share when it underperforms but have no prospect of outperformance. You must be compensated for holding equities given there is an assumption of equity risk premium and you must maximize that during the good times. CCP holders are not
Let me try to give you an answer to your question. The S&P 500 went through a lost decade in 2000s. From 2000 to 2009, the index gained all of 6%. There you go, if the economic conditions in that decade were to repeat in the current decade, another lost decade could result. Of course, I have no crystal ball and so this is projecting past performance to future results.

You really have to understand that investing in all in on the S&P 500 means a portfolio with 100% in stocks. By all measure, 100% equities is risky. Google search sequence of returns risk. What if your investment profile is that you need to bleed down your investment account for income over the next decade, can you afford to be all in on the S&P 500? You really need to internalize the fact that CCP is lower risk than any 100% equity portfolio. As such, it's long term returns will likely be lower. In the long term, risk and reward are somewhat correlated. If you investment profile is such that 100% equities is suitable, then by all means get 100% S&P 500. The CCP portfolio is not suitable for you. Not suitable for you = bad investment for everyone.
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Member
Nov 16, 2013
365 posts
198 upvotes
Toronto
Those of you who hold XAW - have you done anything about the tracking error issue? I am not sure I feel comfortable buying any more, but I don't want to spend the $10 to switch to something else either in Questrade (in my TFSA).
Deal Addict
Dec 3, 2014
2325 posts
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Ontario
n31290 wrote: Those of you who hold XAW - have you done anything about the tracking error issue? I am not sure I feel comfortable buying any more, but I don't want to spend the $10 to switch to something else either in Questrade (in my TFSA).
Can you explain what the tracking error issue is? I have XAW and am not aware of this.
Sr. Member
Sep 29, 2007
664 posts
179 upvotes
llpresident wrote: Can you explain what the tracking error issue is? I have XAW and am not aware of this.
Ah yes another issue with CCP is the tracking error. 1.7% in 2020. Yikes, only $17,000 on a million $ portfolio lol
Sr. Member
Sep 29, 2007
664 posts
179 upvotes
will888 wrote: Let me try to give you an answer to your question. The S&P 500 went through a lost decade in 2000s. From 2000 to 2009, the index gained all of 6%. There you go, if the economic conditions in that decade were to repeat in the current decade, another lost decade could result. Of course, I have no crystal ball and so this is projecting past performance to future results.

You really have to understand that investing in all in on the S&P 500 means a portfolio with 100% in stocks. By all measure, 100% equities is risky. Google search sequence of returns risk. What if your investment profile is that you need to bleed down your investment account for income over the next decade, can you afford to be all in on the S&P 500? You really need to internalize the fact that CCP is lower risk than any 100% equity portfolio. As such, it's long term returns will likely be lower. In the long term, risk and reward are somewhat correlated. If you investment profile is such that 100% equities is suitable, then by all means get 100% S&P 500. The CCP portfolio is not suitable for you. Not suitable for you = bad investment for everyone.
I'm so glad you brought this up. Yes indeed, in fact if you go back to TSX inception it outperformed the S&P up until just a few years ago on a cumulative basis. Let's take a time machine back to 2000 shall we. Oil was $12...in 2009 it was $140. During that time we also had relatively high interest rates. Obviously in a commodity boom period (mainly due to oil but things like copper also surged) TSX will outperform. Also Financials love high interest rates and TSX has a ton of exposure to financials. So do you think that 1) we are returning to a commodity boom period or 2) we are going back to relatively high interest rates?

If neither, then no the TSX will not outperform and 25% of your portfolio will lag (CCP calls for 25% Canadian exposure). And no, it will not be lower risk just look at the beta of VCN or whatever TSX proxy you want. US indices will continue to outperform with lower rates (lower for longer hurray!) as tech loves low interest rates. So why not ditch something that is guaranteed to underperform? We could also easily return to a decade like 2000 to 2010 for all stocks so if you are not keeping up with SPY now then things like the 4% rate are not valid as it is based on the US markets. 4% SWR needs to be 2% if you are following CCP, this has actually been brought up by Wade Pfau the founder of the 4% rule. It only works for US investing!!
Deal Addict
Jul 8, 2013
1572 posts
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Red Deer, AB
n31290 wrote: Those of you who hold XAW - have you done anything about the tracking error issue? I am not sure I feel comfortable buying any more, but I don't want to spend the $10 to switch to something else either in Questrade (in my TFSA).
My TFSA is full of XAW. However, I'm not concerned about the one-time tracking error as I'm looking at a long-term view.

Note that the tracking error was 'cuz of Tesla, as VXC had a lot more exposure to Tesla than XAW. Now that Tesla is part of S&P500, the tracking error will not be an issue going forward.

Therefore, switching just for what happened in the past does not make sense. Now, if you feel that there will still be more tracking errors in the future then by all means switch.

For me personally, I'm not bothered about this and will keep adding to XAW on a yearly basis.
TFSA: XAW | RRSP: VEQT + VAB | Non-Reg: Dividend-paying individual stocks (tax purposes)
Jr. Member
Dec 5, 2017
188 posts
149 upvotes
kooltilltheen wrote: I obviously can't speak for others nor am I particularly well versed in this topic but here's why I follow CCP:

A) It's simple - I don't wanna deal with investing in USD/forex and I don't wanna focus on "maximizing" my returns (otherwise I should be investing in stocks anyways)

B) No tax melodrama - I have enough stress in my life already and certainly don't need more and to have to start worrying about tax implications of investing in S&P

C) Local - I like the comfort of knowing that atleast a portion of my investment stays local to Canada. If I can help this country develop more (even if it's just a tiny bit) then I'm happy to do so

D) Easy - CPP is an easy to follow guide that doesn't require much grunt work on my end. It's also far easier to get advice on it in forums (such as this one) than to pivot and do my own thing, where I'll undoubtedly end up messing a thing or two (or, as is usual for me, ten!)

E) And finally, it works! - While I don't doubt that S&P could make me more money long term, I have (or atleast I think I do!) a well thought out plan of how I can retire in the next 15-20 years. S&P investment may or may not lead me to the same position but I'm not about to start that research and planning all over again...just to do what I intend to do anyways (I.E. Semi-retire in 20 years~)

Anyways those are my reasons for sticking to CPP. I honestly don't see the need/greed to fix what ain't broken.
I have a CCP portfolio but here are some contradictions to what you said. I'm not saying it has to be one way or the other, but doing a CCP we have options.

a) I agree it's simple, but most of my portfolio is in a USD account.
b) How does investing in the S&P complicate taxes? It doesn't (in your RRSP).
c) Canadian vs US vs world content, this is not set in stone, use the content you want. My portfolio is mostly US content.
Deal Expert
User avatar
Dec 12, 2009
19850 posts
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Toronto
retireat50 wrote: I'm so glad you brought this up. Yes indeed, in fact if you go back to TSX inception it outperformed the S&P up until just a few years ago on a cumulative basis. Let's take a time machine back to 2000 shall we. Oil was $12...in 2009 it was $140. During that time we also had relatively high interest rates. Obviously in a commodity boom period (mainly due to oil but things like copper also surged) TSX will outperform. Also Financials love high interest rates and TSX has a ton of exposure to financials. So do you think that 1) we are returning to a commodity boom period or 2) we are going back to relatively high interest rates?

If neither, then no the TSX will not outperform and 25% of your portfolio will lag (CCP calls for 25% Canadian exposure). And no, it will not be lower risk just look at the beta of VCN or whatever TSX proxy you want. US indices will continue to outperform with lower rates (lower for longer hurray!) as tech loves low interest rates. So why not ditch something that is guaranteed to underperform? We could also easily return to a decade like 2000 to 2010 for all stocks so if you are not keeping up with SPY now then things like the 4% rate are not valid as it is based on the US markets. 4% SWR needs to be 2% if you are following CCP, this has actually been brought up by Wade Pfau the founder of the 4% rule. It only works for US investing!!
When it comes to investing, the word guarantee only applies to investments such as GICs. There is no guarantee that the TSX will outperform or underperform the S&P 500 in the next few years or the this decade. Maybe you know, but I will admit I don't. Anyway, if you are certain of a future outcome to the point of using the word guarantee, then run with it. I have do have exposure to the S&P 500 as well as the TSX. So my approach is "guaranteed" to underperform in your words. This is the price I pay for a balanced portfolio.
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Burnaby
Spiritwalker2222 wrote:
I have a CCP portfolio but here are some contradictions to what you said. I'm not saying it has to be one way or the other, but doing a CCP we have options.

a) I agree it's simple, but most of my portfolio is in a USD account.
b) How does investing in the S&P complicate taxes? It doesn't (in your RRSP).
c) Canadian vs US vs world content, this is not set in stone, use the content you want. My portfolio is mostly US content.
Sure but that's your prerogative. I have no interest in investing in USD (which is what I wrote).

As for taxes, I was talking about margin account. RRSP, you're correct, but again S&P investment doesn't interest me so not really anything I'm gonna fret over

My portfolio is pretty spread out too but does have some Canadian content (which was one of my reasons - albeit very minor - for following CCP)
Newbie
Dec 27, 2020
26 posts
57 upvotes
Couch Potato Portfolio Returns for 2020
https://canadiancouchpotato.com/2021/01 ... -for-2020/

The returns for the more popular all in ones:
VBAL- 10.2%
XBAL- 10.6%
VGRO - 10.8%
XGRO -11.4%

Will the bond bull run ever end?
8.6% - Vanguard Canadian Aggregate Bond Index ETF (VAB)
8.6% - iShares Core Canadian Universe Bond Index ETF (XBB)

Food for thought:
There’s another factor to consider as you ponder the events of last year. Many investors opt to build their own diversified portfolios using multiple ETFs rather than embracing the simplicity of the asset allocation funds. While this decision saved few a few basis points in MER last year, it would also have required you to do some major rebalancing—twice.

The first opportunity was in March, when you would have been selling bonds and buying stocks when it looked like the world might end. If you had the stomach to do that, you may have had to rebalance in the other direction, selling stocks to buy more bonds late in the year, following the amazing recovery.

Neither of those decisions was easy. However, if you were using an all-in-one ETF, this was all done for you, and you would have endured a tumultuous year with a return between 8.4% and 11.4%, with zero work, no matter what your asset allocation. It’s another reminder that successful investing isn’t about scratching and clawing for every basis point in fees and taxes. It’s about getting the big decisions right and avoiding crippling mistakes.
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Oct 25, 2007
1624 posts
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Mississauga
department50 wrote: Couch Potato Portfolio Returns for 2020
https://canadiancouchpotato.com/2021/01 ... -for-2020/

The returns for the more popular all in ones:
VBAL- 10.2%
XBAL- 10.6%
VGRO - 10.8%
XGRO -11.4%

Will the bond bull run ever end?
8.6% - Vanguard Canadian Aggregate Bond Index ETF (VAB)
8.6% - iShares Core Canadian Universe Bond Index ETF (XBB)

Food for thought:
After 4 years of DIY investing with 80Eq20B ((VAB/VCN/VUN/XEC/XEF), not sure is it too late for me move to VGRO (sell all the 5 funds and buy VGRO) or keep the current funds and start buying VGRO going forward..
Newbie
Dec 27, 2020
26 posts
57 upvotes
mkannuri wrote: After 4 years of DIY investing with 80Eq20B ((VAB/VCN/VUN/XEC/XEF), not sure is it too late for me move to VGRO (sell all the 5 funds and buy VGRO) or keep the current funds and start buying VGRO going forward..
If it's in a registered account might as well sell everything and buy VGRO, even though the selling costs might sting a bit. If it's a taxable account, yeah it's best not to sell and start buying VGRO.

If you're disciplined and able to stick to your current strategy without market timing, keep doing what you're doing. Only switch if the auto rebalancing is enticing enough.
Deal Addict
Oct 25, 2007
1624 posts
396 upvotes
Mississauga
department50 wrote: If it's in a registered account might as well sell everything and buy VGRO, even though the selling costs might sting a bit. If it's a taxable account, yeah it's best not to sell and start buying VGRO.

If you're disciplined and able to stick to your current strategy without market timing, keep doing what you're doing. Only switch if the auto rebalancing is enticing enough.
thanks for the feedback.. for now i dont have any issues As i am in accumalation phase, but i am only thinking when it comes to my retirement (in few years), probably i need to start selling and buying to rebalance which might be useful having only VGRO rather than 5 ETF's

As already maxed out all of my registered account, i would stick to my regular funds as not much of difference other than inconvenience when i stop accumalating.
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Jul 23, 2007
4326 posts
2716 upvotes
mkannuri wrote: thanks for the feedback.. for now i dont have any issues As i am in accumalation phase, but i am only thinking when it comes to my retirement (in few years), probably i need to start selling and buying to rebalance which might be useful having only VGRO rather than 5 ETF's

As already maxed out all of my registered account, i would stick to my regular funds as not much of difference other than inconvenience when i stop accumalating.
In retirement I switched our four index funds and four ETF's into an all-in-one ETF in the registered accounts early last year to make it easier for my wife. With age, I may lose my own mental faculties or pass away before her.
Deal Addict
Oct 25, 2007
1624 posts
396 upvotes
Mississauga
Stryker wrote: In retirement I switched our four index funds and four ETF's into an all-in-one ETF in the registered accounts early last year to make it easier for my wife. With age, I may lose my own mental faculties or pass away before her.
May i know which four index funds and four ETF's converted into an all-in-one ETF ??

You are right about losing mental faculties with age, thought i am not going to be in that state soon (still few decades left if every thing goes well) but my wife is not financial savy and it would be easy for her to manage all-in-one (VGRO or safe side VBAL/VCIP with more bond exposure)

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