Author Topic: Canadian - Where should VUN live in my portfolio?  (Read 609 times)

momo2

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Canadian - Where should VUN live in my portfolio?
« on: January 11, 2019, 05:38:41 PM »
I have a relatively small portfolio <$50,000
I have room in both my TFSA and RRSP accounts
Where should VUN live in my current portfolio, and does that change as I max out my tax sheltered accounts?

Heckler

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Re: Canadian - Where should VUN live in my portfolio?
« Reply #1 on: January 12, 2019, 12:07:03 PM »
Welcome momo2!


Please see
https://www.moneysense.ca/save/investing/how-foreign-withholding-taxes-affect-your-rate-of-return/

Also, if you decide to use VTI instead of VUN (VUN simply holds VTI), consider your foriegn exchange costs closely. 

https://www.moneysense.ca/save/investing/is-it-worth-it-to-buy-etfs-on-an-american-exchange/

I hold VUN in my RSP, but only because I purchased it when I started out self directed investing, and I am slowing replacing it with VTI (through $20K+ contributions to my Spousal RSP and Norberts Gambit).



momo2

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Re: Canadian - Where should VUN live in my portfolio?
« Reply #2 on: January 13, 2019, 11:05:18 AM »
Thanks Heckler, the article makes it sound like vun makes the most sense in a non-registered account where the foreign withholding tax could be recovered... I think.

On my way to maxing my registered accounts, are there any concerns with holding vun in my TFSA?

I'll likely move into vti when I have more money to play with and I move from an incredibly lazy investor to a slightly more engaged investor ☺

Heckler

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Re: Canadian - Where should VUN live in my portfolio?
« Reply #3 on: January 13, 2019, 11:32:32 AM »
Don't let the tax tail wag the dog.


VUN in your TFSA is the same as VUN in your RSP - you pay the US dividend tax regardless.  Capital gains, however, are tax free in your TFSA, but are taxable at your income tax rate when you take income from your RSP.

VUN in a taxable account also has capital gains taxes applicable, even if you claim the dividend credit, don't forget that too. 


We are debating this now for my low income partner - does it make sense for them to start a taxable account (and hold VCN), or start filling their RSP?...

Heckler

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Re: Canadian - Where should VUN live in my portfolio?
« Reply #4 on: January 13, 2019, 11:36:28 AM »
more here:

https://canadiancouchpotato.com/2016/07/11/foreign-withholding-taxes-revisited/




Are you really in a position to open a taxable account if your TFSA and RSP aren't maxed yet?  I say no.

https://canadiancouchpotato.com/2017/01/26/ask-the-spud-can-i-make-taxable-investing-easier/

Heckler

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