Author Topic: Down to the Nitty-gritty! ETFs to buy?  (Read 2004 times)

Cannot Wait!

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Down to the Nitty-gritty! ETFs to buy?
« on: May 29, 2016, 12:07:10 PM »
Ok, so I've jumped through all the hoops to open an account.  Phew! I can start trading tomorrow.
I'm going to use my pension as the 'bond portion' of my AA so now I just have to choose which Canadian ETFs to buy.  VCN & VXC would appear to have me covered as per the Couch Potato portfolio.   Agree or disagree? 

nobodyspecial

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Re: Down to the Nitty-gritty! ETFs to buy?
« Reply #1 on: May 29, 2016, 02:02:54 PM »
Until you have $1M and it's worth worrying about withholding taxes - yep.
Just buy some VCX and some VCN (although probably less than you would think, the dreaded Canadian home bias  )

You could also consider VDY instead of VCN, it's pretty much the same major holdings (the Canadian market isn't exactly diverse) but pays 5% dividend
« Last Edit: May 29, 2016, 02:29:31 PM by nobodyspecial »

RichMoose

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Re: Down to the Nitty-gritty! ETFs to buy?
« Reply #2 on: May 29, 2016, 03:53:54 PM »
VXC.TO and VCN.TO would definitely be the easiest to manage. If income is important to you, an allocation to preferreds might be nice. It might make sense to separate US and Developed International. What are your thoughts on holding different asset classes, and how much money do you have in each account type (not including pension)? I remember your total was $500k. What are your monthly income needs, after your pension?

Cannot Wait!

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Re: Down to the Nitty-gritty! ETFs to buy?
« Reply #3 on: May 29, 2016, 04:23:02 PM »
Tuxedo, you had me at "easiest to manage"!  I read about preferreds but then my eyes started to glaze over. 
The $500,000 comes next year when kids fly the coop and I can downsize the real estate.  Right now I have $50,000 to get started.  The earliest I could take my pension (at a 50% penalty) would be this fall but will hopefully hold off until 60.  This year, I coast on rental income; when I sell that I start using the 4%SWR of the investments with the pension as a (mostly psychological) backup.

Will look at VDY; thanks NS.

RichMoose

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Re: Down to the Nitty-gritty! ETFs to buy?
« Reply #4 on: May 29, 2016, 05:04:55 PM »
Just go with <30% VCN.TO and remainder in VXC.TO. Stay away from VDY.TO for the following reasons: overexposure to Canadian banks, 70 holdings vs 217, 4x higher management fees. My understanding is risk is important to you, so why have more than 60% of your Canadian exposure concentrated in financials.

nobodyspecial

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Re: Down to the Nitty-gritty! ETFs to buy?
« Reply #5 on: May 29, 2016, 05:44:55 PM »
Although given the Canadian economy  neither of them are particularly diverse:

VCN Top 10 Holdings (37.85% of Total Assets)   
RBC, TD, BANK OF NOVA SCOTIA,SUNCOR ENERGY, Canadian National Railway Co,BMO ,
ENBRIDGE INC,CDN NATURAL RESOURCES,CIBC ,Brookfield Asset Management

VDY Top 10 Holdings (68.24% of Total Assets)   
RBC,TD,BANK OF NOVA SCOTIA,BMO,ENBRIDGE,CIBC,TRANSCANADA CORP, MANULIFE,SUN LIFE FINANCIAL,POTASH CORP OF SASK




RichMoose

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Re: Down to the Nitty-gritty! ETFs to buy?
« Reply #6 on: May 29, 2016, 09:05:01 PM »
Although given the Canadian economy  neither of them are particularly diverse

Yeah, it sucks. If our economy was as diversified as the US, I would probably hold 80-90% home index with a relatively small international allocation for smoothing in a TFSA/RRSP. Virtually my whole portfolio would be spinning off those lovely Canadian tax advantaged dividends. Virtually zero tax in retirement. :)

Now it's the other way around unfortunately.

Eggman111

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Re: Down to the Nitty-gritty! ETFs to buy?
« Reply #7 on: May 31, 2016, 12:09:22 PM »
Yes, I use VXC and VCN for equities. I use VAB for bonds, but it sounds like you are covered. I set my allocation at 60% VXC, 20% VCN, and 20% VAB, which is a bit less Canadian exposure than the default Canadian Couch Potato allocation of 50/25/25. I prefer 3:1 international to Canadian equities rather than 2:1, but either should work nicely if you stick with it.

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