The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: K-ice on July 29, 2016, 02:02:33 PM
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Does anyone else out there own more than the VAB, VXC and VCN recommended by the couch potato?
http://canadiancouchpotato.com/wp-content/uploads/2016/01/CCP-Model-Portfolios-Vanguard-2015.pdf
I own:
VAB in my RRSP
VXC in my TFSA
VDY & other Cdn dividend stocks taxable
I am looking for something to purchase within my RRSP. I already have my allocation of bonds (VAB) full and really need more International/US.
I was looking here but I am a bit overwhelmed.
https://www.vanguardcanada.ca/individual/etfs/etfs.htm
Vanguardcanada.ca grew to be a freaken bulk candy store with too much choice.
I am suffering a bit from location vs allocation paralysis.
I know allocation takes priority, but ....
Should I just purchase VXC in my RRSP? This would give me my balance and forget about tax savings.
or should I try a Norbert's-Gambit and get VTI in US dollars in my RRSP?
https://www.pwlcapital.com/pwl/media/pwl-media/PDF-files/White-Papers/PWL_Bender-Bortolotti_Norbert-s-Gambit_RBC-Direct-Investing-RRSP_v09_hyperlinked.pdf?ext=.pdf
Or are any of the other Vanguard Canadian Dollar ETF's worth a try?
Other info: my RRSP room is not huge and usually only grows by about $5000 per year. So maybe I should just forget about the US tax saving concern.
Thanks
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RRSP and TFSA:
- VCN
- VUN
- VDU [I will switch to VIU later this year]
- VEE
Non-Reg = only VCN
I don't hold any bonds.
I'm not worried about holding VUN as VTI. The hassles are not worth the benefits.
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We're old school CCP 2014. He just changed his recommended portfolios to VXC a week before I bought into the theory. Since it took me a year of research to get to that point, I went with it instead of delayed perfection. Two people, 5 accounts, one asset allocation.
RRSP 1: VAB, VCN, VUN, XEF (look this one up on CCP) - Additional funds are only VAB and XEF, selling VCN and VUN at rebalancing annually if I can't keep up the AA through contributions
RRSP 2: VAB, XEF (planning to sell on my next rebalance to VAB) and VEE - Additional funds only VAB or VEE
RRSP 3 (spousal): VUN - additional to VUN only
TFSA 1: VSB (big emergency fund) and VCN. - Additional funds to VCN only
TFSA 2: VCN - additional to VCN only
I'll be switching VUN in #3 to VTI once I have 100k+ to hold forever, then draw down in USD for travel later in life. Can't be bothered accumulating in USD.
This is over 5 accounts of various sizes, so I pretty much need to split it up. I'm learning the challenges of multiple accounts and rebalancing through contributions.
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Other info: my RRSP room is not huge and usually only grows by about $5000 per year. So maybe I should just forget about the US tax saving concern.
I'm choosing to forget about it since our RRSPs will always be small (due to pension contributions). If our RRSPs were going to be worth hundreds of thousands of dollars, I'd care more.
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TFSA - VRE
NonReg - VCN, VTI and VXUS.
If I had to do it over again, I would choose ZRE over VRE because I prefer the equal weight allocation.
I have VTI and VXUS for two reasons. I believe they are superior to the Vanguard Canada offerings. Secondly, I accumulate a lot of USD through my business so I don't have to worry about faffing around with a Norberts Gambit. Thirdly (wait, what ?) since they are held in my holdco I don't have to worry about eventual estate problems.
The VCN I am not adding to at all. I have come around to the way of thinking that doesn't believe in indexing in the Canadian market. We are to highly dominated by cyclical industries, commodities and financials. I have been slowly switching to a dividend investing approach for my Canadian holding and indexing the US(VTI) and the world (VXUS). Mind you, I won't be selling the VCN either but just letting it do its own thing.
Lastly, don't be afraid to diversify beyond Vanguard. They are great but other providers also have some good products. BMO and IShares in particular (disclosure: happy ZUT owner)
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I'm finding this thread super interesting and useful as a fairly new investor. Thanks!
We currently have:
TFSA - VXC and ZRE (we basically build out the couch potato model, but I did a bit of looking into it and liked ZRE)
RRSP - VXC, VAB, VCN
Locked-in RRSP (from previous employer) VXC
Employers DC - Sunlife Lifepath 2050 (we don't have a say on who it's invested with just the level of risk, we have it on the most aggressive)
RRSP - Couple grand in a Tangerine One Fund from our very first foray into just putting away "something"
Our current asset allocation across all the accounts is:
VAB.TO 10%
VCN.TO 30%
VXC.TO 50%
ZRE.TO 10%
We're about 15 years from FI
I would love feedback from those more experienced investors. Does this seem like a good allocation? Should we be looking specifically at any other indexes or ways to diversify? Not totally in love with Vanguard (but have no complaints) and I'm not totally sold on VCN - wondering if there is a differently alternative we should be looking at?
Cheers!
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Swick, I would look at consolidating your LIRA. If its a small amount, you can unlock it and consolidate it to your RSP, combining the funds and increasing DRIP values. It was wasu for me in BC - just a few forms, $20 fee and $4500 locked in funds were unlocked and moved to RSP to let me do with what I pleased. It depends how big the value is though. Same thing with your first foray - condolidate! It might cost you a transfer fee, but some places cover your transfer in fees if the account is big enough. This will let your ETFs compound quicker.
http://www.taxtips.ca/pensions/rpp/unlockingrpp.htm
http://www.fic.gov.bc.ca/pdf/pensions/faq.pdf
http://www.mercer.ca/en/insights/point/2015/new-bc-pension-legislation-proclaimed-effective-30-september.html
Look for small benefits unlocking and talk to your account holdco. Don't let them say no.
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Thanks for the advice and links, Heckler! I'll be checking them all out!
Our LIRA is fully under our control as far as what it is is, but in a separate account. When we switched Hubby's old employer would only transfer it from the company account to a LIRA so we created one with Questrade. There is about 20,000 in it. So I'm not sure if we can consolidate any more than that? Or if there is an advantage to?
I'm still kinda learning about DRIPS so I'm not entirely sure why they would compound faster all together? Warning: Hubby is the math guy, I just muddle through or get him to lay things out simple. The whole investing thing is new to both of us, so I'm grateful for the help and may need it simplified :)
Honestly, I set up the couch potato like we were told, logged in one day and was like, "Sweet dividends!" I wasn't expecting them and with having bought pretty much everything when the markets were high last (still haven't recovered from when we bought in) All I'm pretty much doing is hoping it all works out (Clearly I have a lot to learn!) I feel like all it's doing in loosing money. But I'm fighting against some fairly large parental conditioning that thinks the stock market is evil, going to collapse and take us all down with it.
So we have just been treating everything as one and rebalancing as needed, despite it being across a few accounts, not sure if this is the best way or even makes sense, any feedback is awesome!
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Following. I'm a couch potato with my fingers crossed.
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With 20k, you're likely good to leave it as is. My 5k would kick out cash dividend but not enough to buy another unit every time. At $9.95 a trade, it doesn't make sense for me to buy 1 or two units from the accumulating cash.
If you reinvest dividends as soon as possible, the next dividend will be that many units larger. Rinse and repeat each dividend cycle for compounding growth.
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The other thing about a lira that pissed me off was I couldn't add to it!
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I'm finding this thread super interesting and useful as a fairly new investor. Thanks!
We currently have:
TFSA - VXC and ZRE (we basically build out the couch potato model, but I did a bit of looking into it and liked ZRE)
RRSP - VXC, VAB, VCN
Locked-in RRSP (from previous employer) VXC
Employers DC - Sunlife Lifepath 2050 (we don't have a say on who it's invested with just the level of risk, we have it on the most aggressive)
RRSP - Couple grand in a Tangerine One Fund from our very first foray into just putting away "something"
Our current asset allocation across all the accounts is:
VAB.TO 10%
VCN.TO 30%
VXC.TO 50%
ZRE.TO 10%
We're about 15 years from FI
I would love feedback from those more experienced investors. Does this seem like a good allocation? Should we be looking specifically at any other indexes or ways to diversify? Not totally in love with Vanguard (but have no complaints) and I'm not totally sold on VCN - wondering if there is a differently alternative we should be looking at?
Cheers!
GAH! I am trying to sell my ZRE right now, have a limit order to sell when it hits 5% over what I bought it for two years ago.. waiting and waiting. The recent recommended portfolio mix got rid of it.. it is a dog for morningstar, and I tend to agree. It just added complexity, and I already own a home. REITs are not tax advantaged in Canada like the USA, and I did not need the income stream, which is what they are best for.
I have found that the Couch Potatoe Site changed the funds recommended to be in annually, which messed up my ability to follow it, as I don't like selling A to buy virtually identical A1 by a different name.
Also, given ER in 15 years... any chance you want to draw on any funds in the next 5 to 7 years? If so, you don't have enough in your bonds, IMO. I am going through this right now, as kids approach post secondary years in 1 more year.
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Following, to participate in the Canadian confusion and angst ;)
I'm in Vanguard ETFs as outlined in the latest CCP model and, per agencies' requirements, a few others mimicking those as closely as possible. This means I have a spreadsheet more complex than I love, but agency eligibility is worth far more than the difference in fees and worth some time with the chart. It was okay when I was adding lump sums 1-2x per year. Now I'm moving to weekly and am considering just moving my weekly amount into a different column each time, because no human should have to do that much math every week!
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VAB, VCN, VUN
I have the following:
- Taxable account: ZCN, VUN, XEF, MAW105 (Mawer is a lump sum I want to keep separate from my main retirement portfolio)
- TFSA: VCN
- RRSP: VAB, VCN, XUS, XEF, XEC, 5 yr GIC ladder
- LIRA1: VAB
- LIRA2: VAB, VCN, XUS, XEF, 5 yr GIC ladder
- VXC had just been launched, and XAW was not available when I designed my current portfolio. They cost a little more and not quite as tax efficient, so I don't plan to start using them
- XEF holds foreign stocks directly for better tax efficiency. Vanguard did not have a fund that holds foreign stocks directly when I designed my current portfolio. I matched XEC with XEF since the MSCI indexes that iShares uses and the FTSE indexes that Vanguard uses have different definitions of emerging markets
- TFSA and LIRA1 are smaller accounts so I choose to limit the number of funds in each for simplicity.
- I used to hold Vanguard VSB and VSC, and BMO ZRE, but decided to simplify my portfolio, and I think VAB + 5 year GIC ladders is a good fixed income duration for me. VCN already holds a market cap weight of REITs, so ZRE meant I was overweighting REITS, which I since chose not to do since I question whether it can overcome it's significantly higher MER compared to VCN.
- In the interest of simplicity, I chose not to use Norbit's Gambert to buy US domiciled ETFs.With an RRSP and 2 LIRAs it would add a lot to the workload of managing my portfolio.
- I use TDB8150 investment savings account and TDB965 Balanced Index Fund for reinvesting distributions
K-ice you are looking for different funds, but don't seem to have a real reason why. What do you think is missing from your current portfolio. If you think the Vanguard fund list is daunting have a look at iShares. You need to go back to the basics. Asset allocation, fund choices, tax efficient allocation across accounts. Look carefully at the name and description of the fund, plus the exact index it follows. For US funds it comes down to hedged vs unhedged, and market cap (S&P500 vs. Total Market). For international it usually comes down to developed vs emerging vs all country, and ex-Canada vs. ex-North America. Doing that research and analysis is the difference between successful and unsuccessful investors. Note that VXC is designed to be a one-stop fund for cap-weighted developed and emerging countries. Now buying other funds risks being overweighted in certain countries or regions - think carefully about what you buy. Your comment about RRSP size and contribution room makes me think that gambitting into VTI is not worth it.
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Honestly, I set up the couch potato like we were told, logged in one day and was like, "Sweet dividends!" I wasn't expecting them and with having bought pretty much everything when the markets were high last (still haven't recovered from when we bought in) All I'm pretty much doing is hoping it all works out (Clearly I have a lot to learn!) I feel like all it's doing in loosing money. But I'm fighting against some fairly large parental conditioning that thinks the stock market is evil, going to collapse and take us all down with it.
My mom is 90 years old and she still talks about how they never made money in the markets. But that was back in the 1970s, when the market did horribly after the 1960s bull market, inflation killed purchasing power and high interest rates crushed bond returns. Longer-term the stock market has been the best way to generate wealth from savings. Here are 2 good references that will help steel your resolve:
If You Can: How Millennials Can Get Rich Slowly by William Bernstein. It's a free ebook and the author says more in 16 pages than many authors say in hundreds.
https://www.etf.com/docs/IfYouCan.pdf
Millionnaire Teacher by Andrew Hallam is a great story about frugal living and low cost investing.
https://www.amazon.com/Millionaire-Teacher-Wealth-Should-Learned/dp/0470830069
It is helpful to look at history to understand how the stock market recovers from corrections and bear markets:
May 1946 to May 1947. Stocks plunge 28.4%.
June 1948 to June 1949. Stocks decline 20.6%.
June 1950 to July 1950. Stocks fall 14%.
July 1957 to October 1957. Stocks fall 20.7%.
January 1962 to June 1962. Stocks plunge 26.4%
February 1966 to October 1966. Stocks fall 22.2%.
November 1968 to May 1970. Stocks plunge 36.1%.
April 1973 to October 1974. Stocks plunge 48%
September 1976 to March 1978. Stocks fall 19.4%.
February 1980 to March 1980. Stocks fall 17.1%.
November 1980 to August 1982. Stocks fall 27.1%.
August 1987 to December 1987. Stocks fall 33.5%.
July 1990 to October 1990. Stocks fall 19.9%.
July 1998 to August 1998. Stocks fall 19.3%.
March 2000 to October 2002. Stocks plummet 49.1%.
November 2002 to March 2003. Stocks fall 14.7%
October 2007 to March 2009. Stocks plummet 56.8%.
April 2011 to October 2011. Stocks fall 19.4%.
June 2015 to August 2015. Stocks fall 11.9%
Stocks gained +1,100-fold during this 70-year period.
Source: http://www.fool.com/investing/general/2015/09/09/keep-in-mind-stocks-rose-1100-fold-during-this-per.aspx (http://www.fool.com/investing/general/2015/09/09/keep-in-mind-stocks-rose-1100-fold-during-this-per.aspx)
Lesson learned: Stay-the-Course
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How I overcome the same conditioning from parents and others:
1. Ask them what they were invested in and when. Invariably they have named ONE stock, which they bought then sold in a terrible time. We don't put everything in one stock, nor rely on pulling gains out soon. We put a tiny amount in each of thousands, and are prepared to wait out bad times.
2. Recognize that if my worldwide, spread-out allocations ALL go to shit, so will everyone else's and we'll all be in the same boat, learning to live off-grid, etc. I have no problem with that :)
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Thanks for the help.
I am glad others are finding this useful.
I have a bit more research to do, but I will probably just put VXC into my RRSP since my RRSP has room & I need to balance.