So, would there be any real advantage to have this over lets say VGRO? other than the potential upside on dividends and monthly payments?
"An essential aspect of creativity is not being afraid to fail." -- Edward Land
Sep 16th, 2020 10:51 pm
Sep 17th, 2020 3:34 am
Sep 17th, 2020 10:22 am
Sep 18th, 2020 1:09 pm
https://cutthecrapinvesting.com/2020/09 ... olio-vrif/How is the 4% income determined?
The 4% income value will be based on the year end value of your holdings. If your portfolio value at year end is $200,000, VRIF would pay you $8,000 annually or $666 monthly.
Of course it’s possible that your income stream could increase or decline year-by-year based on the value of your VRIF holdings. If your year-end portfolio value the next year is $180,000 the annual payment would decline to $7,200.
The key here is the Vanguard retirement income ETF – VRIF is looking to create a reliable income stream. It’s not a guarantee for the income to remain steady, nor is it designed to create income growth. Thought it’s possible that VRIF could come through on either count.
Why use the Vanguard retirement one ticket – VRIF?
The main benefit is convenience. You buy the ETF, you get a 4% income stream without having to sell any shares or units. Vanguard does the work for you, the payments arrive in the cash balance in your discount brokerage account.
Could you do this yourself with a ‘traditional’ one ticket portfolio? Absolutely. You would simply sell shares to create the needed income. Though you would likely have trading costs to sell those shares of course. Costs might be a consideration.
Vanguard is not saying this would be more successful than their 60% stock and 40% bond one ticket ETF – VBAL. It’s just a matter of convenience and reliability. With the 10% greater stock exposure of VBAL vs VRIF it’s quite likely that VBAL would have the ability to create greater portfolio income.
Go another step further and Horizons one ticket HBAL is likely to do even better than VBAL. It has greater growth potential and greater tax efficiency.
Sep 18th, 2020 1:40 pm
Interesting, thanks for the article. I think we'll keep adding to HBAL (as per The Plan), although we might pick some of this up to replace a couple of high MER bond heavy advisor series balanced/income mutual funds that are getting sold as we move out of Scotia McLeod.freilona wrote: ↑ More detailed explanation:
https://cutthecrapinvesting.com/2020/09 ... olio-vrif/
Sep 18th, 2020 1:53 pm
I don’t think we’ll need a monthly income from RRIF or any other account. We’ll keep 3-5 years of expenses in GICs and HISAs, so selling whatever ETFs we’ll end up with once a year for minimal withdrawals will definitely be cheaper
Sep 18th, 2020 2:19 pm
For higher net worth retirees, this product likely makes little sense if one does not have to do a "forced" monthly withdrawal / income. I suspect the real purpose of the product is for individuals that will require monthly income and have no interest in timing or sector selecting for sales/withdrawal. To be honest, in these days of $0-$10 discount brokerage trades, I don't see sales commissions on competing / alternate products a prohibitive issue.
Sep 19th, 2020 1:18 am