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

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  • Oct 2nd, 2022 8:17 am
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Deal Addict
Oct 25, 2007
2581 posts
885 upvotes
Mississauga
cheapshopper wrote: Account fully open and funded.

Made the purchase this morning.
I end up did actually flip a coin and got XEQT instead.

🤣

In the long run, I feel there wont be any big difference anyway.

It just a start and is a very small account, so wouldn't worry too much about it.
haha.. i dont have any more funds (kitchen reno is pending for a while) to buy XEQT.
Hope this down turn lasts few more months until i have some cash to buy in again.
Jr. Member
Nov 27, 2014
161 posts
232 upvotes
Vaudreuil-Dorion, QC
mkannuri wrote: Thank you for the CTFS tip and i am counting on it and recently requested for CL increase too :-)

very valid point on backup profession as getting into med school is slim to non after speaking to lot of people. Thats the reason we kind of torn between IBioMed vs life science.
In the end, opted to Life science for better change of gettign into Medschool as doing biomedical engineering and preperation to medschool seems to be very tough itseems
Anyways, i will PM you for some details about other courses you have mentioned, if i continue OP will kick me out :-)
As xgbsss wrote, get a professional degree in the healthcare field as a backup. There aren’t many prospects in science. You always need to have a job in mind. Too often I see students who want to got to med school keep applying after completing undergrad, masters and then PhD. In the end they don’t get into med school. At the end you have a PhD grad working in a research lab making 1/3 what a medical technologist profession would make who just did a 3 year professional degree. And even with a PhD in research (with some 8+ years working in a lab), you would still have to go back and do a 3 year certificate if you wanted to work as a medical/laboratory technologist.
Deal Addict
Jan 31, 2007
4445 posts
4360 upvotes
Richmond Hill
mkannuri wrote: haha.. i dont have any more funds (kitchen reno is pending for a while) to buy XEQT.
Hope this down turn lasts few more months until i have some cash to buy in again.
I know how it feel, I done major reno right before COVID lockdown as well.
This is my first time buying XEQT or any All-in-one (I know, no bonds). My feeling is a good start till it get to bigger size.
Don't need bonds for a 15 year old as well.

I will actually open 2nd Trust account for my 10years old to get the ball rolling for my 2nd one as well.
******************************************************
Bright side of RFD: Often find good deal
Dark side of RFD: Tons of stuff that I don't need but still got them because of RFD
******************************************************
[OP]
Deal Addict
Oct 1, 2006
2486 posts
2805 upvotes
Montreal
Ben Felix is looking for a fight again: The Relevance of Dividend Irrelevance. Great video as usual.

Deal Addict
Jul 8, 2013
2706 posts
4187 upvotes
Red Deer, AB
Germack wrote: Ben Felix is looking for a fight again: The Relevance of Dividend Irrelevance. Great video as usual.

One thing that is missing from his analysis is investor psychology. I mean when every single retiree that I've spoken with tells me how happy they are with regular dividend income, that tells me something.

He also merely glossed over the massive tax advantage that we get with Canadian dividend-paying stocks. This is another huge reason for having a decent part of your portfolio in the regular blue-chip Canadian stocks. My portfolio now has that and I'm quite happy with this additional sector allocation, fully understanding the risks that this entails.
Be Balanced. Be Diversified. Stay Invested.
Deal Addict
Nov 13, 2013
3527 posts
2138 upvotes
Ottawa
hpsims wrote: As xgbsss wrote, get a professional degree in the healthcare field as a backup. There aren’t many prospects in science. You always need to have a job in mind. Too often I see students who want to got to med school keep applying after completing undergrad, masters and then PhD. In the end they don’t get into med school. At the end you have a PhD grad working in a research lab making 1/3 what a medical technologist profession would make who just did a 3 year professional degree. And even with a PhD in research (with some 8+ years working in a lab), you would still have to go back and do a 3 year certificate if you wanted to work as a medical/laboratory technologist.
Isnt better move post undergrad to go overseas. Our borderline racist policy of giving cancits foreign grads access to residency spots seems like a good shortcut.
Deal Expert
User avatar
Dec 12, 2009
24730 posts
14298 upvotes
Toronto
Germack wrote: Ben Felix is looking for a fight again: The Relevance of Dividend Irrelevance. Great video as usual.

This is a retread video from September 2019. Actually I find the old video to be done better than this one. This one seems to be more confrontational as if dividend investors are morons for dismissing the Modigliani- Miller Theory on Dividend Policy.



Here is another dividend investing video from the past. The key takeaway is being able to stay the course which dividend income supports. It it unfortunate that he dismisses the outperformance of dividend focused index funds in US and Canada.



As a both a dividend investor and index investor, I am not necessarily trying to chase return as a primary motive when buying dividend stocks. I am chasing income security plus prospects of income growth. The expectation is not to have the rate of dividends control spending but rather to be able to at least sustain a levelized spending due to dividend security with possibility of increased spending from dividend growth. In his video he shows how selling equities while triggering a higher marginal tax rate for capital gains does not necessarily result in significant tax disadvantage over eligible dividend income. I respect the comparison. However, the problem with selling equities for income is that we are at the mercy of sequence of returns risk. Harvesting dividend income does not involve a comparable risk. The beta of an index ETF is higher than the volatility of dividend from a dividend aristocrat. 2022 is a great example of the challenges of income harvesting via selling equities. The TSX composite is down about 3%, S&P 500 is down about 16% and the Nasdaq is down a whopping 25% year to date. The RFD favorites VEQT and VAB are down about 11% and 13% year to date. Decumulating any of these holdings will trigger sequence of returns impact, not to mention temperamental challenges associated with loss aversion. I will visit the food bank before I sell a single share of QQQ for income! For my dividend portfolio which I consider to be typical, not a single holding had cut the dividend in 2020, 2021, 2022. In fact the cap weighted dividend growth from 2021 to 2022 stands at 9.8% with some stocks yet to report their 2022 increase. I really like theoretical stuff from the rational reminder podcasts and I respect Ben immensely, but on how best to secure my retirement income I will simply agree to disagree. I would suggest to the Bens of the world to think about the dichotomy expressed in the Supertramp's Logical Song between theory and the practical world.

I will end my rant by going back to returns of dividend stocks vs index ETFs. I am not sure it is a slam dunk that a good dividend stock cannot hold its own against a diversified index ETF. In the past 20 years, RY, FTS, T have beaten both the TSX composite and S&P 500. Yeah I know past performance may not be indicative of future returns. But they sure do rhyme, lol. Going forward, I am looking at possibly derisking my investments gradually. You know what, I am thinking that I should be raising my current limit on per stock weighting so that I can switch out some index funds in favor of more shares in dividend stocks like RY, FTS, T, etc.

https://www.portfoliovisualizer.com/bac ... ion3_3=100

https://www.portfoliovisualizer.com/bac ... ion3_3=100

https://www.portfoliovisualizer.com/bac ... ion3_3=100

/rant
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Deal Expert
User avatar
Dec 12, 2009
24730 posts
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Toronto
TuxedoBlack wrote: One thing that is missing from his analysis is investor psychology. I mean when every single retiree that I've spoken with tells me how happy they are with regular dividend income, that tells me something.

He also merely glossed over the massive tax advantage that we get with Canadian dividend-paying stocks. This is another huge reason for having a decent part of your portfolio in the regular blue-chip Canadian stocks. My portfolio now has that and I'm quite happy with this additional sector allocation, fully understanding the risks that this entails.
Diversification comes from adding index funds to balance the sector imbalances with holding dividend stocks. To me QQQ is the perfect barbell to financial stocks.
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Deal Addict
Jan 31, 2007
4445 posts
4360 upvotes
Richmond Hill
Will

Thats a very detail write up.
As I continue to get ready for retirement. I continue to look at different options.

For US, International, Bonds, is no question, I just continue to hold ETF to keep things simple.

But for Canadian equity still thinkin should i just hold VDY or hold high dividend paying stocks.

If i go dividend stock route, it would be like holding approximately 20 stock?
******************************************************
Bright side of RFD: Often find good deal
Dark side of RFD: Tons of stuff that I don't need but still got them because of RFD
******************************************************
Deal Expert
User avatar
Dec 12, 2009
24730 posts
14298 upvotes
Toronto
cheapshopper wrote: Will

Thats a very detail write up.
As I continue to get ready for retirement. I continue to look at different options.

For US, International, Bonds, is no question, I just continue to hold ETF to keep things simple.

But for Canadian equity still thinkin should i just hold VDY or hold high dividend paying stocks.

If i go dividend stock route, it would be like holding approximately 20 stock?
There is no magical formula on how many is the right number. I just made up a limit on weighting (dart board, comfort level) and tried to adhere to it. At this moment, I have 35 different holdings in the dividend portfolio, US and Canadian included. These are pretty much all stocks, but I do have VCE and I consider it a dividend payer, ~3% yield is not insignificant. I am averse to energy plays and so this is the only way for me to diversify into that sector without having to be active. The last thing I want is to buy something like SU and see the dividend cut in half and the equity value follows along for the ride. I know SU recovered but I am not interested in dividend volatility. Cyclicals are okay but not to the extent that it cause dividend insecurity.

If you want to use VDY for dividend income, that is fine, 4% yield is excellent. You have to be mindful of your overall sector weightings. That means having good overall sector balance between dividend investments plus other index funds. This is addressing the diversity risk that Ben alludes to when doing dividend investing. Regardless of strategy, you need to be comfortable with what you are doing so that you stay the course. Since 2020, I have not sold a single item in the dividend portfolio. This year, I have only sold some S&P 500 shares in the first week of the year as part of the annual registered account decumulation strategy. In hindsight, the move could not have been more timely. Well if the timing was not favorable, I would not sell shares, but do transfer in kind instead and wait out the storm.
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[OP]
Deal Addict
Oct 1, 2006
2486 posts
2805 upvotes
Montreal
will888 wrote:
However, the problem with selling equities for income is that we are at the mercy of sequence of returns risk. Harvesting dividend income does not involve a comparable risk.
Very good points will888.

Sequence of return risk is something we have to worry about, however I do not believe dividend investment reduces that risk. It may actually increase it.

Early Retirement Now had an interesting article on that one:
https://earlyretirementnow.com/2019/02/ ... nt-page-1/
Deal Addict
Jan 31, 2007
4445 posts
4360 upvotes
Richmond Hill
will888 wrote: There is no magical formula on how many is the right number. I just made up a limit on weighting (dart board, comfort level) and tried to adhere to it. At this moment, I have 35 different holdings in the dividend portfolio, US and Canadian included. These are pretty much all stocks, but I do have VCE and I consider it a dividend payer, ~3% yield is not insignificant. I am averse to energy plays and so this is the only way for me to diversify into that sector without having to be active. The last thing I want is to buy something like SU and see the dividend cut in half and the equity value follows along for the ride. I know SU recovered but I am not interested in dividend volatility. Cyclicals are okay but not to the extent that it cause dividend insecurity.

If you want to use VDY for dividend income, that is fine, 4% yield is excellent. You have to be mindful of your overall sector weightings. That means having good overall sector balance between dividend investments plus other index funds. This is addressing the diversity risk that Ben alludes to when doing dividend investing. Regardless of strategy, you need to be comfortable with what you are doing so that you stay the course. Since 2020, I have not sold a single item in the dividend portfolio. This year, I have only sold some S&P 500 shares in the first week of the year as part of the annual registered account decumulation strategy. In hindsight, the move could not have been more timely. Well if the timing was not favorable, I would not sell shares, but do transfer in kind instead and wait out the storm.
I do know need to keep diversity in check.

Here is my "Thinking" of my retirement portfolio,

VCE 10% + VDY 15% = 25% of Canadian Equity. I know there are a lot of overlap, so I keep them together as Canadian Equity
45% US Equity, in mix of IVV and VFV. I just happen to have some USD that I don't want to convert to CAD
15% VIU
15% XBB

On top of this "Investment" portfolio, I will continue to hold around $200K - $250K in cash as buffer.
which is not much change from what I have right now, mainly shift some VCE to VDY.

Current inflation and market downturn really not helping.
Looking at current inflation and annual investment performance, instead of having 6% return, is more like having -15%. It really sucks.

However thing about it more, it better happen now rather then happen after I retire.
******************************************************
Bright side of RFD: Often find good deal
Dark side of RFD: Tons of stuff that I don't need but still got them because of RFD
******************************************************
Deal Expert
User avatar
Dec 12, 2009
24730 posts
14298 upvotes
Toronto
cheapshopper wrote: I do know need to keep diversity in check.

Here is my "Thinking" of my retirement portfolio,

VCE 10% + VDY 15% = 25% of Canadian Equity. I know there are a lot of overlap, so I keep them together as Canadian Equity
45% US Equity, in mix of IVV and VFV. I just happen to have some USD that I don't want to convert to CAD
15% VIU
15% XBB

On top of this "Investment" portfolio, I will continue to hold around $200K - $250K in cash as buffer.
which is not much change from what I have right now, mainly shift some VCE to VDY.

Current inflation and market downturn really not helping.
Looking at current inflation and annual investment performance, instead of having 6% return, is more like having -15%. It really sucks.

However thing about it more, it better happen now rather then happen after I retire.
You need to look at sector diversification, not just which ETFs and what percentage for each you intend to hold. The sector coverage for each ETF is different. A balanced sector allocation is arguably more important that geographic allocation.

As for drawdowns, you need to learn to not worry about them so much. Continuing to buy more on the dips is not enough show of resilience. When you retire, you might not be able to do much dip buying like you do now. You need to come to terms with the fact that recessions happen every 5 or so years and along with it a bear market and new economic cycle. So how many economic cycles do you think will encompass your entire retirement window? Scary thought isn't it? You have to be able to ignore the daily noise in the market and be able go about retirement as if there is never a cloud in the sky. Do I like what is happen in the market these days? Of course not. Has the distraction derailed anything? Not yet and hopefully not ever.
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Sr. Member
Sep 28, 2011
804 posts
1455 upvotes
Winnipeg
TuxedoBlack wrote: He also merely glossed over the massive tax advantage that we get with Canadian dividend-paying stocks.
Is this not subject to the province you live in and your income level?

Looking at TaxTips:

  • In NL, if your income is over $50,197, capital gains are taxed at a lower rate, under that dividends.
  • In MB, if your income is over $74,416, capital gains are taxed at a lower rate, under that dividends.
  • In ON, if your income is over $100,392, capital gains are taxed at a lower rate, under that dividends.
  • In AB, if your income is over $131,220, capital gains are taxed at a lower rate, under that dividends.

I'm far from an expert in this area, if I'm wrong please correct me, so I know for the future. Winking Face
Deal Expert
User avatar
Dec 12, 2009
24730 posts
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Toronto
Germack wrote: Very good points will888.

Sequence of return risk is something we have to worry about, however I do not believe dividend investment reduces that risk. It may actually increase it.

Early Retirement Now had an interesting article on that one:
https://earlyretirementnow.com/2019/02/ ... nt-page-1/
I am not seeing this impact for myself at least not yet. In the short term, I don't have to sell anything to support the budget. If the drawdown is persistent and I run out of liquidity, I will have to find a plan B. I can hang on like this for a couple of years, maybe a little longer. If only I had more money to more dividend stocks...
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Newbie
Mar 1, 2021
16 posts
12 upvotes
Toronto, Ontario
@Germack

Since you mostly invest in VGRO now, did you divest your other ETF holdings and TD Mutual Fund holdings or do you still hold the previous investments?
[OP]
Deal Addict
Oct 1, 2006
2486 posts
2805 upvotes
Montreal
@lexgreen I did not divest my other ETF holdings. I am still holding them. The ones in my non-registered account are difficult to change since they have large capital gains and would trigger a big tax bill.
Newbie
Mar 1, 2021
16 posts
12 upvotes
Toronto, Ontario
@Germack


I'm in the same boat as you are. I'm currently holding TD Mutual Funds e-series (TDB900, TDB902, TDB911) and TD ETFs (TTP 35%, TPU 35%, TPE 30%). I was thinking of incorporating VUN and VIU, to achieve maximum diversification but I'm not sure if its even worth the effort. My line of thinking is that I would leave TTP as is because it is a Canadian broad market ETF and introduce VUN and VIU without selling TPU and TPE. Essentially, new deposits and dividends would be invested into TTP (35%), VUN (35%), and VIU (30%).
Sr. Member
Oct 25, 2009
891 posts
1161 upvotes
cheapshopper wrote: But for Canadian equity still thinkin should i just hold VDY or hold high dividend paying stocks.

If i go dividend stock route, it would be like holding approximately 20 stock?
VDY Top 10 Holdings (70.58% of Total Assets)
Name Symbol % Assets
Royal Bank of Canada RY.TO 14.13%
The Toronto-Dominion Bank TD.TO 12.47%
Enbridge Inc ENB.TO 7.93%
Bank of Nova Scotia BNS.TO 7.72%
Bank of Montreal BMO.TO 6.49%
Canadian Imperial Bank of Commerce CM.TO 4.88%
TC Energy Corp TRP.TO 4.74%
BCE Inc BCE.TO 4.36%
Canadian Natural Resources Ltd CNQ.TO 4.12%
Manulife Financial Corp MFC.TO 3.74%

buy all these companies separately, probably earn higher % (I assume, didn't calculate) and don't pay etf MER ... why on earth would you buy this etf when you can hold the same companies and earn more $?
Sr. Member
Sep 28, 2006
978 posts
295 upvotes
Toronto
Germack wrote: @lexgreen I did not divest my other ETF holdings. I am still holding them. The ones in my non-registered account are difficult to change since they have large capital gains and would trigger a big tax bill.
So what will you be doing with the non-registered account in the long run?

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