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Market timing step 2: going back in

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freilona wrote: @florenntina yeah I saw - he missed 1% somewhere (all his numbers add up to 99%), but 26% in bonds sounds so last year! Face With Tears Of Joy I mean, bonds ETFs prices keep going up, can’t push myself to buy any.. sigh
I decided to buy 9% more (already have 1% Face With Tears Of Joy). Will keep (or better to say decrease) ZSP on 27% (from current 34%). Btw. he didn’t mention emerging markets or maybe he thought all together 18%. I have around 15% XEF & around 5% VEE.
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florenntina wrote: I decided to buy 9% more (already have 1% Face With Tears Of Joy). Will keep (or better to say decrease) ZSP on 27% (from current 34%). Btw. he didn’t mention emerging markets or maybe he thought all together 18%. I have around 15% XEF & around 5% VEE.
Many would say 5% is now too low for emerging. Wealthsimple is putting something like 15% in emerging now.
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florenntina wrote: I decided to buy 9% more (already have 1% Face With Tears Of Joy).
I think I have my heart set on BHK, will try to buy with all USD in my RRSP on its next ex-div date on Aug 13th. DRIP for a few years and either sell when (if?) the rates go up or keep to generate minimum RIF withdrawals. And learn to ignore its price.. :facepalm:
I have around 15% XEF & around 5% VEE.
A little known fact (or at least not often mentioned), but since Ishares ETFs use MSCI indices that count South Korea as Emerging country and Vanguard ETFs use FTSE indices that “upgraded” it to developed, when you mix XEF and VEE you exclude South Korea from your portfolio. Unless it was intentional, it’s better to use ETFs from the same company for both developed and emerging (I.e. XEF & XEC)
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freilona wrote: I think I have my heart set on BHK, will try to buy with all USD in my RRSP on its next ex-div date on Aug 13th. DRIP for a few years and either sell when (if?) the rates go up or keep to generate minimum RIF withdrawals. And learn to ignore its price.. :facepalm:



A little known fact (or at least not often mentioned), but since Ishares ETFs use MSCI indices that count South Korea as Emerging country and Vanguard ETFs use FTSE indices that “upgraded” it to developed, when you mix XEF and VEE you exclude South Korea from your portfolio. Unless it was intentional, it’s better to use ETFs from the same company for both developed and emerging (I.e. XEF & XEC)
Good call, thank you very much! I had XEC about 2 years ago and then swiched to VEE. I should reconsider that decision again as well as the allocation (15%+5% instead of recommended 18%).
Do you have any preferred Canadian Bond ETF? As I mentioned before, my proudly :) 1% is in ZAG but have had VAB before.
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llpresident wrote: Many would say 5% is now too low for emerging. Wealthsimple is putting something like 15% in emerging now.
Yes, my daughter's BCTESG is on WS, but I find 15% far too much and risky for a family's portfolio.
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florenntina wrote: Do you have any preferred Canadian Bond ETF? As I mentioned before, my proudly :) 1% is in ZAG but have had VAB before.
ZAG since it became slightly cheaper would be my top choice right now (unless VAB or XBB cut their MERs before you close your eyes and buy Face With Tears Of Joy)

Oh and we did just sent a 26K cheque for investment account in our Manulife UL insurance policy. With instructions to allocate this and future deposits as 25% Canadian bonds/75% S&P 500 index fund. Both Manulife funds, so more expensive than ETFs but cheaper than mutual funds. So we will have some Canadian bonds after all (and I convinced my husband not to make me try to time the purchase - as there’s no online access to that account, we mail the cheque and they buy after they receive it. So let’s see if my “untimed” purchase will happen on the down day, by itself 🤪)
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freilona wrote: ZAG since it became slightly cheaper would be my top choice right now (unless VAB or XBB cut their MERs before you close your eyes and buy Face With Tears Of Joy)

Oh and we did just sent a 26K cheque for investment account in our Manulife UL insurance policy. With instructions to allocate this and future deposits as 25% Canadian bonds/75% S&P 500 index fund. Both Manulife funds, so more expensive than ETFs but cheaper than mutual funds. So we will have some Canadian bonds after all (and I convinced my husband not to make me try to time the purchase - as there’s no online access to that account, we mail the cheque and they buy after they receive it. So let’s see if my “untimed” purchase will happen on the down day, by itself 🤪)
Good luck! I'm on the edge to ask/pay someone to buy bonds for me :) . If my husband get an opportunity, he would probably sell everything and just buy 100% S&P 500 :))
I don't know anything about Manulife UL insurance policy. We invested a few times with GWL-Great West Life (usually a balanced portfolio) but I switched to QT every time when we changed jobs. Companies often mach 3-6% of RRSP's contribution but you have to invest with a certain institution (GWL in our case) and stick with them until the end of the contract. QT paid transfer's fee each time.
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florenntina wrote: I don't know anything about Manulife UL insurance policy.
We bought universal life insurance almost 20 years ago, a few years after buying a house (mortgage paid off since then) As we learned later, a temp insurance on mortgage amount would’ve served the purpose much cheaper. But since we already have it, and our registered accounts are maxed out, decided to finally use its (tax-sheltered) investment account. A “simple” math: 51K+ in it would a) warrant a 1.5% yearly cash bonus (kinda like a bond in itself) and b) with 5%+ average yearly returns would be enough to pay for insurance premiums without depleting the principal. And the account amount will be passed to the remaining spouse tax-free after one of us dies. Hopefully it won’t happen soon/during the market downturn Face With Tears Of Joy So it’s more of an estate planning side strategy at this point, but we’ll continue with our DIY QT portfolio and husband’s (also Manulife) group RRSP company-matched investments as before :)
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freilona wrote: We bought universal life insurance almost 20 years ago, a few years after buying a house (mortgage paid off since then) As we learned later, a temp insurance on mortgage amount would’ve served the purpose much cheaper. But since we already have it, and our registered accounts are maxed out, decided to finally use its (tax-sheltered) investment account. A “simple” math: 51K+ in it would a) warrant a 1.5% yearly cash bonus (kinda like a bond in itself) and b) with 5%+ average yearly returns would be enough to pay for insurance premiums without depleting the principal. And the account amount will be passed to the remaining spouse tax-free after one of us dies. Hopefully it won’t happen soon/during the market downturn Face With Tears Of Joy So it’s more of an estate planning side strategy at this point, but we’ll continue with our DIY QT portfolio and husband’s (also Manulife) group RRSP company-matched investments as before :)
Interesting. Looks like a good choice. Thumbs Up Sign
In this crazy world anything is possible but we’ll hardly see March’s downs in our lifetime. So, let’s just wash our hands and hope everything will be OK Face With Tears Of Joy
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florenntina wrote: @freilona

Have you seen Garth's new blog?
" The current preferred weightings in a 60/40 portfolio are 26% in a variety of bond funds, 13% in preferreds, 20% in Canadian growth assets (including 5% in REITs), 22% in US equities and 18% in international stocks. Of course, try to move things around for tax-efficiency between a non-registered account (dividends and capital gains), an RRSP (sheltering bonds) and your TFSA (the hot stuff)."

Omg 26% in a variety of bond funds??
@freilona

Can either of you give me the lowdown on preferreds or send me in the right direction? I am also a long time reader of Garth's. He seems fixated on preferreds. I have never owned them myself. Looking at other index advocates in Canada, most speak very poorly about preferreds and say you do not need them at all. When I refer to historical performance preferreds have performed very poorly, so is this a catch up trade?

In short, why should one invest 13% of their portfolio (a fairly large portion) in preferreds?
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llpresident wrote: @freilona

Can either of you give me the lowdown on preferreds or send me in the right direction? I am also a long time reader of Garth's. He seems fixated on preferreds. I have never owned them myself. Looking at other index advocates in Canada, most speak very poorly about preferreds and say you do not need them at all. When I refer to historical performance preferreds have performed very poorly, so is this a catch up trade?

In short, why should one invest 13% of their portfolio (a fairly large portion) in preferreds?
Garth obviously assumes them as part of fix income. So, for the balanced portfolio, the choice is 40% of bonds or 26/13 (bonds/pref).
I suppose he recommends pref. because of a nice dividends (5-6%), tax efficiency (tax credit) and as kind of diversification of a fixed income. I personally have 18% of ZPR in my portfolio Face With Stuck-out Tongue And Tightly-closed Eyes but keep them on margin account.
Last edited by florenntina on Aug 4th, 2020 4:18 pm, edited 1 time in total.
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@llpresident I’d say buying preferreds (without understanding them, and in registered accounts!) was one of the worst decisions I made, blindly following some “guru’s” advice. So if you got by so far without them (and don’t need dividend income “at all costs”) - I’d honestly say stay away =)
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freilona wrote: @llpresident I’d say buying preferreds (without understanding them, and in registered accounts!) was one of the worst decisions I made, blindly following some “guru’s” advice. So if you got by so far without them (and don’t need dividend income “at all costs”) - I’d honestly say stay away =)
Yes, pretty disappointing experience here also. But, on the other hand, I hardly can buy back 10% of bonds. Can’t imagine to buy 40%.... And 60/40 portfolio is in line with my personal risk aversion.

However, if I didn’t find Garth, I would probably have all my money in savings account or some GICs. So, on the end of the day, I’m very thankful for his advice.
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Btw. this ZAG drives me crazy! Today, all my portfolio is green (except ZRE) and bonds keep going up and up and up... 🤪 It seem the only way to get them down is to buy them Face With Tears Of JoyFace With Tears Of JoyFace With Tears Of Joy
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florenntina wrote: Yes, pretty disappointing experience here also. But, on the other hand, I hardly can buy back 10% of bonds. Can’t imagine to buy 40%.... And 60/40 portfolio is in line with my personal risk aversion.

However, if I didn’t find Garth, I would probably have all my money in savings account or some GICs. So, on the end of the day, I’m very thankful for his advice.
Well after realizing back in 2015 that Garth had no clue himself how preferreds would behave when the interest rates get cut (he used to forecast that they behave like bonds before changing his explanations post-factum, when everybody else caught up that rate resets are the opposites of bonds!), I started buying individual bonds and then GICs and yes we also have two “alternative” HISAs (that were paying 2%+ until recently) I’d say “all of the above” were much better investments in the last 5 years. So he can call GICs “brain dead” all he wants, but I wish I was buying 5 year GICs before (instead of maximum 3.. sigh) Now when two 3% 15 month “promo” GICs will mature this year, I don’t think I’ll find good replacements for them (maybe will reconsider increasing preferreds allocation then :))
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florenntina wrote: Btw. this ZAG drives me crazy! Today, all my portfolio is green (except ZRE) and bonds keep going up and up and up... 🤪 It seem the only way to get them down is to buy them Face With Tears Of JoyFace With Tears Of JoyFace With Tears Of Joy
Yep no more “zig-zag”-ing in any assets Face With Tears Of Joy Going forward, the strategy should be “buy bonds during equities downturn when everybody sells them to buy more equities”! 🤪
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@florenntina , I gave up and did it - bought BHK (5% yielding leveraged bonds CEF) with all the USD in my RRSP! Got tired watching it go up everyday - let’s see if now it drops 🤪 But, as was intended, we’ll have 20% in bonds - and it’ll generate me enough cash for minimum withdrawals :)

So now “only” need to redeploy XAW proceeds in my TFSA (was planning to add to ZPR and buy ZGQ - on the next pullback Face With Tears Of Joy)
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freilona wrote: @florenntina , I gave up and did it - bought BHK (5% yielding leveraged bonds CEF) with all the USD in my RRSP! Got tired watching it go up everyday - let’s see if now it drops 🤪 But, as was intended, we’ll have 20% in bonds - and it’ll generate me enough cash for minimum withdrawals :)

So now “only” need to redeploy XAW proceeds in my TFSA (was planning to add to ZPR and buy ZGQ - on the next pullback Face With Tears Of Joy)
Yeeeeey! Congratulation and good luck! Thumbs Up Sign
I bought ZAG 100@16.94 just to prove myself that I’m able to do that... one day... Face With Tears Of Joy
Btw. what is “ leveraged bonds”? I didn’t see that one in my CSC course Flushed Face.
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florenntina wrote: Yeeeeey! Congratulation and good luck! Thumbs Up Sign
I bought ZAG 100@16.94 just to prove myself that I’m able to do that... one day... Face With Tears Of Joy
Btw. what is “ leveraged bonds”? I didn’t see that one in my CSC course Flushed Face.
Congrats as well! I also bought 1,000 shares of BHK “to test” last month, and now bought remaining 7,000 - paying $4.5K more than if I didn’t wait (or waited more? :)) But will be getting $540 monthly, so whatever.. :)

I discovered CEFs (closed end funds that use leverage to enhance yields) recently myself, and posted about them a few pages ago. They’re becoming more popular with retirees now that “normal” bonds ETFs yield squat. But they’ll (potentially) suffer more when the rates start going up, so stick with ZAG and “normal ETFs” while you work and don’t need the income! :)
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freilona wrote: Congrats as well! I also bought 1,000 shares of BHK “to test” last month, and now bought remaining 7,000 - paying $4.5K more than if I didn’t wait (or waited more? :)) But will be getting $540 monthly, so whatever.. :)

I discovered CEFs (closed end funds that use leverage to enhance yields) recently myself, and posted about them a few pages ago. They’re becoming more popular with retirees now that “normal” bonds ETFs yield squat. But they’ll (potentially) suffer more when the rates start going up, so stick with ZAG and “normal ETFs” while you work and don’t need the income! :)
Oh, I see. Thank you.
We learned about CEFs but I didn’t recognize the acronym. Sorry, I still learn English since I arrived in Canada a few years ago. Winking Face

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