Hi Mustachians,
I've been doing a ton of reading to figure out the optimal ETF allocation between TFSA and RSP. A few things:
- I am familiar with withholding tax, but currently invest only in CAD$. I hold VUN in my RSP and thus, I understand the tax is not recoverable. Correct me if I'm wrong.
- I understand equities should be in the TFSA for optimal contribution room growth, and I have this. I have VAB in the RSP instead.
Questions:
1. Is there a better ETF than VUN for the RSP that would allow me to recover withholding tax? I am not interested in using US$ at this time because quite frankly, I'm just not that familiar with the process (will read more for future). I have not come across any ETFs that fit this description.
2. To allow for more diversification, which ETFs would you put in the TFSA versus the RSP? Given the withholding tax issue, I know it makes sense to put Canadian equities in the TFSA, but what else would you put there? I feel like putting everything to VCN isn't the greatest idea because the Canadian market is so small on the global scale.
Currently I have:
TFSA - VCN, VUN, XEF, XEC
RSP - VAB, VUN, VCN, XEF, XEC
I know there is too much overlap there. When I opened these accounts a year ago I didn't want to be paralyzed by inaction, so I figured, overlap is better than not investing at all. I'd like to redistribute these to make a little more sense with not so much overlap.
Any advice would be greatly appreciated. Thank you.
PS - My husband has an RSP as well, soon to be moved over to Questrade. If there are additional diversification strategies that can/should be used between spouses, I'm happy to read anything you send me.