Author Topic: How would you simplify this Canadian portfolio?  (Read 2047 times)


  • 5 O'Clock Shadow
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How would you simplify this Canadian portfolio?
« on: March 16, 2018, 12:12:10 PM »
Hi everyone,
I'm trying to move us to a 60/40 stock/bond split. Right now, we're at about 67/33.

ASSET CLASS   Target    Actual
Cash   2%   8%
Fixed Income Investments   38%   24%
Canadian Bonds      
Equity Investments   60%   67%
Canadian   10%   11%
REIT   3%   4%
US   32%   33%
International XEF   2.7%   4%
Emerging Markets XEC   2%   3%
Global (ex Canada)   10%   11%
One fund (VBAL & VGRO)   0.3%   1%
100%   100%
1. Does this split look reasonable? I know we're overweighted in the U.S., compared to some simple portfolios of 20/20/20 Canada/US/International, but I love the US returns compared to Canadian and even international.

2. Simplifying our accounts. We have a ton of accounts. I'd like to move from my main one to Questrade, but Questrade won't cover more than one account per household, and I saw one fee schedule that charged $315 to transfer each full or partial account, and we have at least 9. Questrade said the best it could do was offer us some free trades per account.

3. According to the 4% rule and FIREcalc, we're good to retire. By the end of the year, if the stock market holds, we'll be at 3% or lower. But Moneygeek, for example, has a retirement calculator for members only ( that suggests I need to work through 2019 to get us over a 95% success rate.

4. Bond options for business/US accounts?
 I'm trying to do Justin Bender's suggestion of splitting between GIC's and bond funds:
But I hate how all my bond funds are in the red, and GIC's will only keep up with inflation if I lock them up for 4-5 years.
I'm struggling to find decent GIC's either in USD or for a business account.
I did buy some preferred shares and already have REIT's.

5. Some people max out their RESP and forgo the Canadian grant. Others say you can invest outside the RESP and transfer it in and still get the grant. We've been doing the latter. Not sure which is best.

I have more questions, but those are the toughies: where to allocate our money right now, and if people think even 3 or 3.5% burn rate is not acceptable to FIRE?

Ready to Rock


  • Pencil Stache
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    • The Rich Moose | A Better Canadian Finance Blog
Re: How would you simplify this Canadian portfolio?
« Reply #1 on: March 18, 2018, 04:45:16 PM »
My opinions to your specific questions:

1) The overall split (60/40) isn't bad. However, I'm not sure why you are duplicating so many different assets. I'm guessing maybe a result of having so many different accounts? Something to think about is high allocation to North America with very low allocation to International and Emerging markets. The U.S. market might be the most expensive developed market on earth right now due to those high recent returns.

2) You should only have to pay to move over RRSP accounts, unless you're in some strange brokerage. You can transfer over TFSA accounts easily at nearly zero cost by doing the end of the year trick. As for your non-registered accounts, that depends on the Adjusted Cost Base of your positions. If you have any positions with losses or near zero capital gains, you can sell and transfer to your new non-registered account with minimal cost. Also, if you have substantial assets in the markets, you should look at National Bank Direct as well. After you've sorted out some solutions to transfer the easy assets, don't be shy to send them an email asking for better transfer cost coverage. My experience in speaking with RBC Direct a few years back was they were more than happy to cover well over $150 in fees because I was looking to move several hundred thousand to them.

3) At approximately 3.5% withdrawal rate or lower it's virtually impossible to run out of money unless you really screw up your investing or pay exorbitantly high fees.

4) What about holding a short-term bond fund like XSB.TO or VSB.TO? You could also consider a managed bond fund like HAB.TO or HAF.TO. There's more out there too.

5) Why not take the grant? It's a 20% return on your money.


  • 5 O'Clock Shadow
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Re: How would you simplify this Canadian portfolio?
« Reply #2 on: April 15, 2018, 08:24:26 AM »
Thanks, Mr. Rich Moose!

For #2, probably other brokerages would be more competitive with transfer fees. I'll look into the TFSA trick. The non-reg would be more complicated.

Thanks again!


  • Magnum Stache
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Re: How would you simplify this Canadian portfolio?
« Reply #3 on: April 15, 2018, 10:29:30 AM »
You know the old meme about 'past returns don't reflect future', right? Just because the US *has* done well doesn't mean it will continue to do so, vs the rest of the world.

The 'best' is to just do whatever it is to get you to your target allocation, assuming it won't cause too much in cap gains. Honestly I would ditch a whole load of stuff and go simple. Either 100% VBAL, or simple - VCN + VTI + XEF + XEC + bonds.


  • Walrus Stache
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Re: How would you simplify this Canadian portfolio?
« Reply #4 on: April 17, 2018, 08:37:27 AM »
With a 60/40 stocks/bonds portfolio and 3.5% withdrawal rate, success still depends on how long your portfolio needs to last.  For example, according to Vanguard's nest egg calculator,

30 yrs : 5% failure rate
40 yrs : 9% failure rate
50 yrs: 12% failure rate

It can also be interesting to simulate 0.5% higher spending and try different allocations of stocks and bonds to see what a "stress test" does to your allocation.  But the more significant factor is how long your portfolio needs to last, which I didn't see estimated or mentioned.