So lets say I open with RBC Direct Investing and I listen to Canadian couch potato's advice on vanguard ETF.
If I read it correctly, it suggests that I put 40% in VAB (Vanguard Canadian Aggregate Bond Index) and 20% in VCN (Vanguard FTSE Canada All Cap Index ETF) and 20% in VXC (Vanguard FTSE All World Ex Canada Index)...in other words if I have 100$ to invest, 40$ would go to VAB, 20$ to VCN and 20$ to VXC, did I get that part,right??? And do I keep at it for a long time or does canadian couch potato change its model once in awhile?
Sorry if I ask way too many questions, I want to make sure I understand before heading into something big like investing.
For sure, ask as many questions as you need to... You don't want to rush into anything. There's no rush. Many people keep their money in cash until they understand what they're buying. Never do anything you don't fully understand.
First of all, if you go with a bank brokerage like RBC investing, you don't wand to be making any buys at that level. I know you're using 100$ as an example, but just want to be clear that that is way too low an amount to be pirchasing, given that the fees would eat up 1/3 of that! You would pay $10 for the purchase of each fund, or $30 total. So you would need to wait until you have 1-2k per fund that you want to purchase, so that your fees don't eat up years of returns.
If you'd like to buy $100 worth of ETFs at a time, then questrade would be a better option.
Secondly, your question here is about rebalancing. The asset allocations CCP is suggesting are goals to start out with, and keep track of as time goes on. Typically (but not always) when equities (stocks) go down, bonds are more stable, or might go up. So if that happens, then your initial allocation will have changed. Let's say you start out with 20% bonds and 80% North American equities. If the equities drop in value, then your portfolio might be at 70% equities and 30% bonds. You can then choose to rebalance, or sell off some bonds to bring their weighting back to 20%, and buy some equities to bring that level back up to your 80% desired allocation. It's best to choose ahead of time how often you want to rebalance. Some do so quarterly, some annually. If you decide in a plan and stick to it, then it will prevent any sort of panic selling or buying, which is easy to do.
A good way to get a feel for all of this is to set up a test account, where you're not actually buying anything in real life, but just testing out how a theoretical portfolio would react to changes in the market. It looks like rbc offers such a service, as does questrade, no doubt.
Also second the reco for Millionaire Teacher, if you do get into index investing. Very easy to read and understand, and he explains all of the above (rebalancing) very clearly.