The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: max9505672 on August 17, 2017, 04:52:59 PM
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Hey guys!
I've been investing since March 2017, so I'm pretty new to all this. I've been reading many posts here, and people seem to have good returns since the beginning of the year, but this isn’t the case for me and I am wondering if I am doing something wrong or maybe misinterpreted the results.
Quick overview of my sitation.
AA:
· 50% US – Mainly VTI in RRSP and XAW in TFSA
· 20% Canada – Mainly VCN in Margin and TFSA
· 20% RoW – Mainly XAW in TFSA
· 10% bonds – Mainly VAB in TFSA
Here are the results (excluding dividends) for my investments :
Taxable VCN -3.59 %
VUN -5.32 %
TFSA XAW -0.77 %
VCN -5.00 %
VAB -1.12 %
RRSP VCN -3.43 %
VTI 2.82 %
VUN -5.79 %
There's been a good rise in April, but since then it hasn't been so good and now I have a negative P&L (it paid some dividends though).
So, I know this is all long term goal but I'm just wondering if I am doing something wrong? Is my AA so different that it would have different results than most people?
Thanks
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Everything is ok, invest more!
The recent rally of our CAD reduce US and Intl return in CAD but you can buy more XAW, VTI etc.
You seem to handle your investments properly (asset allocation, etf choice)
I am 30%ZCN (RESP, taxable), 35%US and 35% Intl. (VTI and VXUS in RRSP and XAW in TFSA) no bonds at all...
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Your AA and funds are similar to mine. I started investing a bit earlier than you though, in late 2016. It was a steady rise for awhile and now it's been a bit of a roller coaster. Just hang in there and keep investing through the dip.
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Im pretty sure its a bad idea to post your account numbers though.
Its been a good year to be buying bonds. Prices going down as interest rates go up.
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Everything is ok, invest more!
The recent rally of our CAD reduce US and Intl return in CAD but you can buy more XAW, VTI etc.
You seem to handle your investments properly (asset allocation, etf choice)
I am 30%ZCN (RESP, taxable), 35%US and 35% Intl. (VTI and VXUS in RRSP and XAW in TFSA) no bonds at all...
Ok thanks for the input.
I'm going towards no bonds too, hesitating on weither selling them to by ETF's or duliting them in the longer run by keeping buying stocks on the long run... Any advice on this?
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Im pretty sure its a bad idea to post your account numbers though.
Damn, yes, thanks.. I hadn't noticed..
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Everything is ok, invest more!
The recent rally of our CAD reduce US and Intl return in CAD but you can buy more XAW, VTI etc.
You seem to handle your investments properly (asset allocation, etf choice)
I am 30%ZCN (RESP, taxable), 35%US and 35% Intl. (VTI and VXUS in RRSP and XAW in TFSA) no bonds at all...
Ok thanks for the input.
I'm going towards no bonds too, hesitating on weither selling them to by ETF's or duliting them in the longer run by keeping buying stocks on the long run... Any advice on this?
Whatever, 10% bonds is already trivial!
What are your margin size and interest rate?
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Everything is ok, invest more!
The recent rally of our CAD reduce US and Intl return in CAD but you can buy more XAW, VTI etc.
You seem to handle your investments properly (asset allocation, etf choice)
I am 30%ZCN (RESP, taxable), 35%US and 35% Intl. (VTI and VXUS in RRSP and XAW in TFSA) no bonds at all...
Ok thanks for the input.
I'm going towards no bonds too, hesitating on weither selling them to by ETF's or duliting them in the longer run by keeping buying stocks on the long run... Any advice on this?
Whatever, 10% bonds is already trivial!
What are your margin size and interest rate?
Margin account in about 11.6% of total investments. Not sure what interest rate you mean?
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Don't worry about the regular ups and downs - the "loss" is mostly due to fluctuating currency (Canadian dollar went up, so everything in US dollars went down by comparison, since you are probably looking at your account in Canadian dollars). Just keep buying.
Am I correct that you have margin accounts? Maybe not such a good idea to have margin accounts, especially if you are new to investing...
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Don't worry about the regular ups and downs - the "loss" is mostly due to fluctuating currency (Canadian dollar went up, so everything in US dollars went down by comparison, since you are probably looking at your account in Canadian dollars). Just keep buying.
Am I correct that you have margin accounts? Maybe not such a good idea to have margin accounts, especially if you are new to investing...
Thanks for the input.
Yes, I have margin account because TFSA is maxed out and I already have contributed to my RRSP enough to get the deduction I want for 2017. My strategy is too contribute to my RRSP just enough to be able to get in the lower tax bracket. Once this is achieved, the rest goes in my margin account. Once I have deducted at tax season in the beginning of 2018, I'll re-invest in my RRSP just enough to get in the lower tax bracket for 2018 and so on until I don't have any more room to do this.
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You know you can invest in RRSP t'ill you reach contribution room + 2k$? Then, you can deduct the amount you want and report the rest.
About the margin, I mean the interest you pay. It's not free money, right? I use some home equity to invest in taxable via HELOC @ 2.3% (1.5% after tax return) so, this is what I am talking about.
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You know you can invest in RRSP t'ill you reach contribution room + 2k$? Then, you can deduct the amount you want and report the rest.
About the margin, I mean the interest you pay. It's not free money, right? I use some home equity to invest in taxable via HELOC @ 2.3% (1.5% after tax return) so, this is what I am talking about.
Yes I am aware of that. The reason I am doing this is because dividends in Quebec are taxed at a much lower rate than income and any money pulled from an RRSP is considered income. So by investing in funds that pay out dividends, I'll pay a miniscule amount of tax on it outside an RRSP and then the tax hit is done. If its held inside the RRSP then I'll be paying tax on it at a much higher rate when I withdraw. Also, if I max out my RRSP and only deduct what I need, then I don't get any interest from the tax return I am not getting from the government.
I'm still not sure if I correctly understand what you mean by interest I pay, but the money I invest in my taxable account is my aftertax money, I don't have any loan, credit line, debt or anything... Please feel free to correct me.
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Je connaît très bien la table d'imposition du Québec ;)
I dont know what you meant by "margin" in your first post tough?
So, no debt for investment purpose? A lot simpler that way!
I still believe that you should fill up the RRSP and only deduct what you want every year...everything will be tax sheltered, you will learn to deal with tax hit problems latter
1-fill the TFSA (XAW is perfect here)
2-fill the RRSP (XAW is ok until you hit 50k$, then VTI is sligthly better for the US portion) learn how to do a Norberts Gambit! If you want bonds, this is the place
3-invest in taxable account through Canadian stocks (VCN and ZCN are perfectly suitable)
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Je connaît très bien la table d'imposition du Québec ;)
I dont know what you meant by "margin" in your first post tough?
So, no debt for investment purpose? A lot simpler that way!
I still believe that you should fill up the RRSP and only deduct what you want every year...everything will be tax sheltered, you will learn to deal with tax hit problems latter
1-fill the TFSA (XAW is perfect here)
2-fill the RRSP (XAW is ok until you hit 50k$, then VTI is sligthly better for the US portion) learn how to do a Norberts Gambit! If you want bonds, this is the place
3-invest in taxable account through Canadian stocks (VCN and ZCN are perfectly suitable)
''Margin'' and taxable are the same. Taxable accounts with Questrade are called Margin. Sorry for the confusion.
1- TFSA is maxed out. XAW is here.
2- Thanks for the advice, but I'll stick to my strategy for RRSP and taxable (Margin). VTI here (Norbert's Gambit done).
3 - Taxable account with Canadian prefered ETF. VCN here.
Merci pour ton aide!
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J'ai lu quelque uns de tes posts de l'hiver dernier, ton REER devrait être plein sous peu anyway!
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J'ai lu quelque uns de tes posts de l'hiver dernier, ton REER devrait être plein sous peu anyway!
Effectivement, j'ai pas énormément d'espace (je viens de commencer à travailler). Dans pas si longtemps je vais avoir 18% annuellement et thats it, d'ici là je mix avec le compte non enregistré.
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If it makes you feel any better I finally got over my hesitation and started to invest; I purchased VCN on Feb 21st of this year and did it as a lump sum given that supposedly ~70% of time it is better than DCA. I just keep on reminding myself of Bob and try to see the humor in the situation.
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If it makes you feel any better I finally got over my hesitation and started to invest; I purchased VCN on Feb 21st of this year and did it as a lump sum given that supposedly ~70% of time it is better than DCA. I just keep on reminding myself of Bob and try to see the humor in the situation.
You're right, that's a long term game!
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Nothing wrong with your AA - stick to the plan!
Keep working on filling the RRSP. Eventually that could be a nice spot for bonds. Otherwise look at HBB.TO or ZDB.TO in your margin account.
Bonds can make a nice little war chest in a crash. Le Barbu and myself dont have bonds, but that doesn't mean we're doing it right and your AA is wrong.
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To this date, from February :
Taxable VCN -3.59 %
VUN -5.32 %
TFSA XAW -0.77 %
VCN -5.00 %
VAB -1.12 %
RRSP VCN -3.43 %
VTI 2.82 %
VUN -5.79 %
I know, I keep investing, but seems like everybody on the forum has been making money this year...
What's wrong with Canadian market?
How can VTI and VUN be so far apart?
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When the Canadian dollar goes up in value, all your investments outside of Canada go down*.
*If you are looking at the investment itself (not in CAD) it might be going up, but in CAD it seems to be getting lower.
This is the same reason that when our dollar crashed from 1 US = 1 CAD to 1US = .75CAD, it gave everyone who had more investments outside Canada huge return boosts.
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When the Canadian dollar goes up in value, all your investments outside of Canada go down*.
*If you are looking at the investment itself (not in CAD) it might be going up, but in CAD it seems to be getting lower.
This is the same reason that when our dollar crashed from 1 US = 1 CAD to 1US = .75CAD, it gave everyone who had more investments outside Canada huge return boosts.
You mean for VUN.TO right and XAW.TO? Investments en CAD$ for US and RoW market : US/RoW market goes up but CAN$ also goes up which counter balances the gain?
Worse year for Canadian investors than, let's say, US investors. That would explain it.
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It would also depend on when exactly you bought, I don't really look at the market other than to add money in whichever account is the lowest, so I couldn't say if the currency price and the exact time you bought are the reasons.
Also, not everyone here is only indexing and letting the accounts ride. Or the ones that do are usually not that vocal about it, so you're probably seeing people doing very well for specific reasons as well.
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Forget about the short term +\-% for each holding.
Look at the total value of your accounts. Keep adding and watch it grow. The more you add when things are down, the more they will rise when things go up.
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Keep buying more!
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I can't recommend enough reading up on Bernstein's serie, The Intelligent Asset Allocator and Rational Expectations. they provide some nice blue prints to AA.
Bonne lecture : )
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Thanks everybody, I know, I'll keep buying, that's for sure. I'm not trying to time, sell or anything. Was just wondering if I was doing something wrong, since I've been reading threads where everybody seems to be making money this year. Naturally, I don't know which portion of their networth growth comes from investments growth or simply more investments, but still, for me, the investment growth is negative (but networth still going up).
I can't recommend enough reading up on Bernstein's serie, The Intelligent Asset Allocator and Rational Expectations. they provide some nice blue prints to AA.
Bonne lecture : )
I will do for sure, was looking for something new to read. Is it better to read one before the other? Which one?
Merci!
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Repost from my journal....
(https://farm5.staticflickr.com/4343/36670625922_cc63c45c94_o.jpg)
The chart above is YTD VTI [Total US stockmarket in USD] and the chart below is YTD VUN [Total US stockmarket in Canadian $]. The underlying stocks are the exact same thing yet the performance is markedly different. I hold both VTI and VUN.
(https://farm5.staticflickr.com/4332/36444813480_bede38bd6c_o.jpg)
VTI is up nearly 9% YTD and VUN is up only 1%. Just goes to show you how much the CDN $ has moved this year. It also explains why the balance in my investment accounts isn't rocketing along.
(https://farm5.staticflickr.com/4416/36032479683_4efb4f6c63_o.jpg)
Since I am looking at investments:
VCN YTD: -1.5%
VIU YTD: +9%
VEE YTD: +14.8%
These ^^ numbers don't include dividends.
If you are Canadian you have to just keep in mind the units you are accounting for your investment total have become more valuable relative to the currencies of your foreign investments. You are not having a shitty year - you are just dealing with a change in value that's not obvious.
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Thanks for the info guys, that explains a lot.
For me :
- VTI (US in USD) is up 2.82% vs. compared to 9% YTD is explained because I only began in February when almost 1/2 of the YTD gains have been made between beginning of January and end of Feb. (when I bought)
- VCN (CAN) is generally down + I bought a lot in Feb. (highest value YTD).
- VUN (US un CAD) is highly correlated with CAN $ relative value despite US market doing good.
- XAW (RoW + US) also highly correlated with CAN $ relative value to other currencies
Overall, I just generally bought in a relatively ''high'' market (very short time span here so not significant) + the effect of CAN $ rise explain my results.
Again, I'm not trying to time anything or change my strategy, just wanted to understand what is going on with my money.
If you are Canadian you have to just keep in mind the units you are accounting for your investment total have become more valuable relative to the currencies of your foreign investments. You are not having a shitty year - you are just dealing with a change in value that's not obvious.
I get the impact of relative value between currencies being closely tied to net dollar result. Still, I should read more on the impact of having most of my investments outside of Canada (50% US + 20% RoW). This obviously keeps me closely tied to the CAN $.
If I understand well, when the relative CAN $ to other currencies goes up, the net result in CAD$ goes down. It's the same as if I sold VTI tomorrow, even if the market is doing good and the USD gains are appreciable, I'd loose a good part of it to USD to CAD conversion.
So, in order to reduce this exposure to the currency relative values, I guess buying more and buying more often would help... Also having more CAN investments in CAD would help...
But are you guys doing anything to protect yourself for high CAD rise (ex: 1CAD = 1 USD)?
Could anyone point me to a good discussion on high currency exposure and effect on AA / investments?
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Dont try to do anything against currency variation. On the long run, it's a wash on average. Over 50 years, CAD/USD has been between 60 cents and 1.10$ Just keep buying assets lagging into your portfolio. You are actually more exposed to stocks value than currency because you own shares through ETFs
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But are you guys doing anything to protect yourself for high CAD rise (ex: 1CAD = 1 USD)?
Could anyone point me to a good discussion on high currency exposure and effect on AA / investments?
My portfolio is 30% CDN - 50% US - 20% International. A globally diversified portfolio with a home country bias is the solution to FOREX risk.
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But are you guys doing anything to protect yourself for high CAD rise (ex: 1CAD = 1 USD)?
Could anyone point me to a good discussion on high currency exposure and effect on AA / investments?
I am rebalancing on my 6 month scheduled. I have a target for US equity and for International Equity. Right now I need to buy more US because that portion of my portfolio has dropped compared to when the USD was higher.
The dollar has been at parity, it's been at 60 cents. I keep buying what I can when I can at the ratio I want, and rebalancing to take advantage of the times when CAD is higher and when USD is higher.
E.g. if I had a desired asset allocation of 20%/20%/20%/40%
February everything in CAD
$200 US equity
$200 International equity
$200 Canadian equity
$400 bond funds
Perfectly matches the AA, so I don't need to do anything.
September everything in CAD after some contributions and a stronger CAD vs. the USD
$250 US equity
$300 International equity
$350 Canadian equity
$600 bond funds
I could sell $50 Canadian equity and buy $50 US equity to match my desired AA. Then when the dollar swings again, I'll sell US high, and buy Canadian low.
Or I could stop buying Canadian equities and just buy the others until we hit my AA again.
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I do the same thing as PlainJane, but in a lazier fashion, where I will rebalance using new money, buying whatever has gone down. I've yet to sell anything. Yay for free buys.
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Yes, that's what I do too.
Everytime I buy, I update my actual AA and buy whatever I need to rebalance as close as possible to my target. It's pretty easy.. I find dealing with 3 differents accounts (TFSA, RRSP and taxable) and AA at the same time it the hardest part since you usually want to have different strategic investments in strategic account for taxes reasons.
I have yet to sell anything either since I don't have a huge 'stache yet and I do regular investments.
Anyway, regular investments and periodic rebalancing, nothing new :)
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Isn`t it just TFSA january, RRSP FEB/however long, followed by taxable?
What makes it more complicated?
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Isn`t it just TFSA january, RRSP FEB/however long, followed by taxable?
What makes it more complicated?
I was talking about which funds go in which account for taxes reason.
For example, in your taxable account (s), you'd prefer funds than pay Canadian eligible dividend because those get preferential tax treatment; or things that are low yield. Or anything that is US domiciled in your RRSP. Etc
So you got to deal at the same with general AA including every account and trying to get the right funds in the right accounts.
But maybe I'm complicating it too much.
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Thanks everybody, I know, I'll keep buying, that's for sure. I'm not trying to time, sell or anything. Was just wondering if I was doing something wrong, since I've been reading threads where everybody seems to be making money this year. Naturally, I don't know which portion of their networth growth comes from investments growth or simply more investments, but still, for me, the investment growth is negative (but networth still going up).
I can't recommend enough reading up on Bernstein's serie, The Intelligent Asset Allocator and Rational Expectations. they provide some nice blue prints to AA.
Bonne lecture : )
I will do for sure, was looking for something new to read. Is it better to read one before the other? Which one?
Merci!
The Intelligent Asset Allocator is a good first read imo. On this website there is a classic whitepaper "If You Can" ... it has become a standard pamphlet I give to people who ask too much question about my financial planning ideas
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Thanks everybody, I know, I'll keep buying, that's for sure. I'm not trying to time, sell or anything. Was just wondering if I was doing something wrong, since I've been reading threads where everybody seems to be making money this year. Naturally, I don't know which portion of their networth growth comes from investments growth or simply more investments, but still, for me, the investment growth is negative (but networth still going up).
I can't recommend enough reading up on Bernstein's serie, The Intelligent Asset Allocator and Rational Expectations. they provide some nice blue prints to AA.
Bonne lecture : )
I will do for sure, was looking for something new to read. Is it better to read one before the other? Which one?
Merci!
The Intelligent Asset Allocator is a good first read imo. On this website there is a classic whitepaper "If You Can" ... it has become a standard pamphlet I give to people who ask too much question about my financial planning ideas
https://www.etf.com/docs/IfYouCan.pdf ?
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I do the same thing as PlainJane, but in a lazier fashion, where I will rebalance using new money, buying whatever has gone down. I've yet to sell anything. Yay for free buys.
Our purchasing is already not in line with our desired AA because of taxes (requiring regular rebalancing), and the dollar strengthening is just making it worse. With our registered accounts basically maxxed out, we are contributing more on a regular basis to the Canadian equity in the non-registered than we are putting into registered funds in the other asset categories.
I find these things have become more of a challenge as accounts get larger and tax considerations become more complex. I ran the numbers this morning, and we're are off our AA by 25k. So that will be dealt with next week. Perhaps I should rebalance more frequently.
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Perhaps I should rebalance more frequently.
It doesn't really matter. Once a year is fine.
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Our purchasing is already not in line with our desired AA because of taxes (requiring regular rebalancing), and the dollar strengthening is just making it worse. With our registered accounts basically maxxed out, we are contributing more on a regular basis to the Canadian equity in the non-registered than we are putting into registered funds in the other asset categories.
I find these things have become more of a challenge as accounts get larger and tax considerations become more complex. I ran the numbers this morning, and we're are off our AA by 25k. So that will be dealt with next week. Perhaps I should rebalance more frequently.
A swing of 5% or so on each side of your target is fine. If its more than that you should consider swap ETFs to get tax friendly foreign exposure.
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Following...
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If it makes you feel better you can measure your returns in US$. It will look much better :)
Also note that a stronger C$ does help us a in the long run - a decent amount if things purchased in Canada are also tied with US$ (cars, electronics, etc.) So being exposed to US$ helps in this regard as well.
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I'd like to discuss the effect of a strong CAD in case of market correction in case of someone owning USD ETF.
I know it probably depends on a lot of factors, but let's say 2008 when the market crashed (it was to young then), what happened to the CAD? Did Canadians with USD investments less affected by the crisis?
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It's the exchange rate that is the point of concern (for example, if the CAD is worth 1$ USD) If the CAD goes down to being worth .75 USD ---> All USD investments have jumped up by 25% due to the exchange rate. If it goes the other way (1 CAD = 1.25 USD) it's equal to USD investments crashing 25%.
So the reaction of the USD investments isn't really an issue, (apart from the obvious increase or decrease) but the fact that the exchange rate can then be another factor in that fluctuation.
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It's the exchange rate that is the point of concern (for example, if the CAD is worth 1$ USD) If the CAD goes down to being worth .75 USD ---> All USD investments have jumped up by 25% due to the exchange rate. If it goes the other way (1 CAD = 1.25 USD) it's equal to USD investments crashing 25%.
So the reaction of the USD investments isn't really an issue, (apart from the obvious increase or decrease) but the fact that the exchange rate can then be another factor in that fluctuation.
Yes, makes sense.
The thing is I am a little worried about the USD stuff I own. I own it through VTI ETF. And in order to buy USD ETF for Canadians you have to get USD (either by doing Norbert Gambit or another way). But in order for Norbert Gambit to be worth it (to absorb the fees), you have to transfer a substantial amount of $, so, personally, I am not able to regularly buy US stuff which kind of exposes me to exchange rate between both currencies when I buy the US stuff (for example once/year).
Isn't against popular MMM philosophy of being often to reduce the ''market timing'' impact?
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The thing is I am a little worried about the USD stuff I own. I own it through VTI ETF. And in order to buy USD ETF for Canadians you have to get USD (either by doing Norbert Gambit or another way). But in order for Norbert Gambit to be worth it (to absorb the fees), you have to transfer a substantial amount of $, so, personally, I am not able to regularly buy US stuff which kind of exposes me to exchange rate between both currencies when I buy the US stuff (for example once/year).
Isn't against popular MMM philosophy of being often to reduce the ''market timing'' impact?
You can buy VUN in CAD [same underlying stocks as VTI] with regular small additions then once you have a big chunk of VUN you can sell it and do Norbert's Gambit to buy VTI. That way you are invested all the time and not trying to lump sum once a year.
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It's the exchange rate that is the point of concern (for example, if the CAD is worth 1$ USD) If the CAD goes down to being worth .75 USD ---> All USD investments have jumped up by 25% due to the exchange rate. If it goes the other way (1 CAD = 1.25 USD) it's equal to USD investments crashing 25%.
So the reaction of the USD investments isn't really an issue, (apart from the obvious increase or decrease) but the fact that the exchange rate can then be another factor in that fluctuation.
Yes, makes sense.
The thing is I am a little worried about the USD stuff I own. I own it through VTI ETF. And in order to buy USD ETF for Canadians you have to get USD (either by doing Norbert Gambit or another way). But in order for Norbert Gambit to be worth it (to absorb the fees), you have to transfer a substantial amount of $, so, personally, I am not able to regularly buy US stuff which kind of exposes me to exchange rate between both currencies when I buy the US stuff (for example once/year).
Isn't against popular MMM philosophy of being often to reduce the ''market timing'' impact?
Unless it's in your RRSP, it might not even be worthwhile to buy VTI anymore. XUU.TO does the same job at 0.07% MER. While it's a bit more expensive, to me it's hardly worth the hassle of DLR/DLR.U or the cost of waiting to buy.
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XUU.TO does the same job at 0.07% MER. While it's a bit more expensive, to me it's hardly worth the hassle of DLR/DLR.U or the cost of waiting to buy.
Since that's a wrapper for sub-ETFs aren't you going to pay MERs at both levels which makes it more expensive than 0.07%?
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The thing is I am a little worried about the USD stuff I own. I own it through VTI ETF. And in order to buy USD ETF for Canadians you have to get USD (either by doing Norbert Gambit or another way). But in order for Norbert Gambit to be worth it (to absorb the fees), you have to transfer a substantial amount of $, so, personally, I am not able to regularly buy US stuff which kind of exposes me to exchange rate between both currencies when I buy the US stuff (for example once/year).
Isn't against popular MMM philosophy of being often to reduce the ''market timing'' impact?
You can buy VUN in CAD [same underlying stocks as VTI] with regular small additions then once you have a big chunk of VUN you can sell it and do Norbert's Gambit to buy VTI. That way you are invested all the time and not trying to lump sum once a year.
Yes, that's what I do, I am still waiting to have enough to buy VTI again.
So basically, the logic would be that if I regularly by VUN (which is US market in CAD), I would buy it at different USD-CAD exchange rate. But then when I sell it to buy VTI, I am not dependent of that day's exchange rate?
(I'm sorry, I got to admit I have a hard time understanding the impact of exchange rate)
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XUU.TO does the same job at 0.07% MER. While it's a bit more expensive, to me it's hardly worth the hassle of DLR/DLR.U or the cost of waiting to buy.
Since that's a wrapper for sub-ETFs aren't you going to pay MERs at both levels which makes it more expensive than 0.07%?
It shouldn't be. The listed MER (not just management fee) is 0.07%. That number is supposed to include taxes and fees on underlying holdings.
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XUU.TO does the same job at 0.07% MER. While it's a bit more expensive, to me it's hardly worth the hassle of DLR/DLR.U or the cost of waiting to buy.
Since that's a wrapper for sub-ETFs aren't you going to pay MERs at both levels which makes it more expensive than 0.07%?
It shouldn't be. The listed MER (not just management fee) is 0.07%. That number is supposed to include taxes and fees on underlying holdings.
What would be the difference between VUN.TO and XUU.TO besided MER?
I don't see any major difference :
VUN:
http://quote.morningstar.ca/quicktakes/ETF/etf_ca.aspx?t=VUN&culture=en-CA®ion=CAN
XUU:
http://quote.morningstar.ca/quicktakes/etf/etf_ca.aspx?t=XUU®ion=CAN&culture=en-CA
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XUU.TO does the same job at 0.07% MER. While it's a bit more expensive, to me it's hardly worth the hassle of DLR/DLR.U or the cost of waiting to buy.
Since that's a wrapper for sub-ETFs aren't you going to pay MERs at both levels which makes it more expensive than 0.07%?
It shouldn't be. The listed MER (not just management fee) is 0.07%. That number is supposed to include taxes and fees on underlying holdings.
What would be the difference between VUN.TO and XUU.TO besided MER?
I don't see any major difference :
VUN:
http://quote.morningstar.ca/quicktakes/ETF/etf_ca.aspx?t=VUN&culture=en-CA®ion=CAN
XUU:
http://quote.morningstar.ca/quicktakes/etf/etf_ca.aspx?t=XUU®ion=CAN&culture=en-CA
VUN.TO holds VTI; XUU.TO holds ~60% S&P500, ~30% total US, and the rest split between mid and small cap. You'd have to do a breakdown of VTI to see if those allocations 'match'. Most of the 'total US' will be in the S&P500.
You could do tax loss harvesting, selling one and buying the other; they are not 'identical'. But if you want US exposure they are both no doubt absolutely fine.
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The thing is I am a little worried about the USD stuff I own. I own it through VTI ETF. And in order to buy USD ETF for Canadians you have to get USD (either by doing Norbert Gambit or another way). But in order for Norbert Gambit to be worth it (to absorb the fees), you have to transfer a substantial amount of $, so, personally, I am not able to regularly buy US stuff which kind of exposes me to exchange rate between both currencies when I buy the US stuff (for example once/year).
Isn't against popular MMM philosophy of being often to reduce the ''market timing'' impact?
You can buy VUN in CAD [same underlying stocks as VTI] with regular small additions then once you have a big chunk of VUN you can sell it and do Norbert's Gambit to buy VTI. That way you are invested all the time and not trying to lump sum once a year.
Yes, that's what I do, I am still waiting to have enough to buy VTI again.
So basically, the logic would be that if I regularly by VUN (which is US market in CAD), I would buy it at different USD-CAD exchange rate. But then when I sell it to buy VTI, I am not dependent of that day's exchange rate?
(I'm sorry, I got to admit I have a hard time understanding the impact of exchange rate)
Personally, I feel it might be better if you completely skip the "conversion" from VUN into VTI. I understand they are in your RRSP and therefore the cost is minimal but increased trading frequency could hurt you in terms of spread. In reality, even in the best case of carrying out a Norbert's you would still lose a bit of money every time (not to mention when the day comes and you want to use the money but would need to convert back to cad again). Yes the appreciating CAD vs USD caused on drag on the returns this year, but a hedged etf would have "fixed" most of the issue, ie, VUS. It is just my opinion and entirely up to you.
Also, like other posters have already mentioned, over long periods of time the currency variation will largely be a wash, which is the case if you compare monthly raw s&p returns (SP) vs SP+exchange rate dating back to the 70s.
Regarding bonds, I noticed you switched from 10% to 0%, which is fine as long as you are comfortable with it. It is my opinion and experience that bonds do have a place in most portfolios, even 10% allocation would do wonders in reducing volatilities to achieve higher risk adjusted returns.
edit: lol I even wrote down RRSP yet the 15% completely escaped me, thanks for pointing that out, daverobev. Hedging is not perfect, but VUS has the same mer as VUN.
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The thing is I am a little worried about the USD stuff I own. I own it through VTI ETF. And in order to buy USD ETF for Canadians you have to get USD (either by doing Norbert Gambit or another way). But in order for Norbert Gambit to be worth it (to absorb the fees), you have to transfer a substantial amount of $, so, personally, I am not able to regularly buy US stuff which kind of exposes me to exchange rate between both currencies when I buy the US stuff (for example once/year).
Isn't against popular MMM philosophy of being often to reduce the ''market timing'' impact?
You can buy VUN in CAD [same underlying stocks as VTI] with regular small additions then once you have a big chunk of VUN you can sell it and do Norbert's Gambit to buy VTI. That way you are invested all the time and not trying to lump sum once a year.
Yes, that's what I do, I am still waiting to have enough to buy VTI again.
So basically, the logic would be that if I regularly by VUN (which is US market in CAD), I would buy it at different USD-CAD exchange rate. But then when I sell it to buy VTI, I am not dependent of that day's exchange rate?
(I'm sorry, I got to admit I have a hard time understanding the impact of exchange rate)
Personally, I feel it might be better if you completely skip the "conversion" from VUN into VTI. I understand they are in your RRSP and therefore the cost is minimal but increased trading frequency could hurt you in terms of spread. In reality, even in the best case of carrying out a Norbert's you would still lose a bit of money every time (not to mention when the day comes and you want to use the money but would need to convert back to cad again). Yes the appreciating CAD vs USD caused on drag on the returns this year, but a hedged etf would have "fixed" most of the issue, ie, VUS. It is just my opinion and entirely up to you.
Also, like other posters have already mentioned, over long periods of time the currency variation will largely be a wash, which is the case if you compare monthly raw s&p returns (SP) vs SP+exchange rate dating back to the 70s.
Regarding bonds, I noticed you switched from 10% to 0%, which is fine as long as you are comfortable with it. It is my opinion and experience that bonds do have a place in most portfolios, even 10% allocation would do wonders in reducing volatilities to achieve higher risk adjusted returns.
Just say you have $250k CAD invested in US stuff. 2% dividends = $5k a year. 15% of that lost = $750.
With Questrade, doing Norbert's Gambit costs you $5. You buy DLR, journal, sell DLR.U, then buy your VTI.
Lots of people have 50% of their investments in US stuff. Even on $100k, the difference is $300 of drag.
Hedging currencies is not good, generally. It is expensive in from what I have read, not always effective.
Buying VUN.TO until you have a nice fat chunk and then moving it over to VTI is just fine. In an RRSP. Not worth it anywhere else.
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The thing is I am a little worried about the USD stuff I own. I own it through VTI ETF. And in order to buy USD ETF for Canadians you have to get USD (either by doing Norbert Gambit or another way). But in order for Norbert Gambit to be worth it (to absorb the fees), you have to transfer a substantial amount of $, so, personally, I am not able to regularly buy US stuff which kind of exposes me to exchange rate between both currencies when I buy the US stuff (for example once/year).
Isn't against popular MMM philosophy of being often to reduce the ''market timing'' impact?
You can buy VUN in CAD [same underlying stocks as VTI] with regular small additions then once you have a big chunk of VUN you can sell it and do Norbert's Gambit to buy VTI. That way you are invested all the time and not trying to lump sum once a year.
Yes, that's what I do, I am still waiting to have enough to buy VTI again.
So basically, the logic would be that if I regularly by VUN (which is US market in CAD), I would buy it at different USD-CAD exchange rate. But then when I sell it to buy VTI, I am not dependent of that day's exchange rate?
(I'm sorry, I got to admit I have a hard time understanding the impact of exchange rate)
Personally, I feel it might be better if you completely skip the "conversion" from VUN into VTI. I understand they are in your RRSP and therefore the cost is minimal but increased trading frequency could hurt you in terms of spread. In reality, even in the best case of carrying out a Norbert's you would still lose a bit of money every time (not to mention when the day comes and you want to use the money but would need to convert back to cad again). Yes the appreciating CAD vs USD caused on drag on the returns this year, but a hedged etf would have "fixed" most of the issue, ie, VUS. It is just my opinion and entirely up to you.
Also, like other posters have already mentioned, over long periods of time the currency variation will largely be a wash, which is the case if you compare monthly raw s&p returns (SP) vs SP+exchange rate dating back to the 70s.
Regarding bonds, I noticed you switched from 10% to 0%, which is fine as long as you are comfortable with it. It is my opinion and experience that bonds do have a place in most portfolios, even 10% allocation would do wonders in reducing volatilities to achieve higher risk adjusted returns.
Just say you have $250k CAD invested in US stuff. 2% dividends = $5k a year. 15% of that lost = $750.
With Questrade, doing Norbert's Gambit costs you $5. You buy DLR, journal, sell DLR.U, then buy your VTI.
Lots of people have 50% of their investments in US stuff. Even on $100k, the difference is $300 of drag.
Hedging currencies is not good, generally. It is expensive in from what I have read, not always effective.
Buying VUN.TO until you have a nice fat chunk and then moving it over to VTI is just fine. In an RRSP. Not worth it anywhere else.
What's the 15% again? Dividends taxes for CAD in RRSP vs. USD in RRSP?
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I'm curious as to whether your returns picked up in the past few months. I bought similar funds at a similar time this spring, and have had quite nice returns since your last update in August.
Yes they have!
Margin YTD - 3.17% (began later in the year)
TFSA YTD - 10.56%
RRSP YTD - 10.93%
Total YTD - 9.16%*
*I simply add all the contributions I've made up to now and compare to my actual investments value, and, since I reinsvest all my dividends, it takes them into account also.
The main reasons why I don't see higher numbers closer to 20% as many people on the forum have seen is because the CAD$ gained a lot of value this year and I also bought the majority of my shares in the end of February/beginning of March, when the market had a little bump. The results would have been a lot better if, for example, I had bought the same shares January 1st.
But still, since September, it's been very good!
What about you Sun hat?
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What's the 15% again? Dividends taxes for CAD in RRSP vs. USD in RRSP?
US 'withholds' 30% on dividends when paid to foreigners, which can be reduced by filing a W-8BEN depending on your country of residence or I guess by the brokerage doing something similar on your behalf, or by being inside a retirement account.
In Canada, the withholding rate (which is actually the taxation rate... the amount is deducted from your dividends before you see them) is 15%. Inside an RRSP, it is 0.
If you hold a 'wrapper' ETF - something that is a Canadian ETF that holds a US ETF, such as VUN.TO, the US doesn't 'know' the money is in a retirement account, so 15% is still withheld. Ergo, in an RRSP, you lose 15% of your dividends if you hold VUN.TO, but not if you hold VTI.
In an unregistered account it doesn't matter assuming you pay tax to the CRA, because you can claim the foreign tax paid - there is a double taxation treaty in place.
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I'm curious as to whether your returns picked up in the past few months. I bought similar funds at a similar time this spring, and have had quite nice returns since your last update in August.
Yes they have!
Margin YTD - 3.17% (began later in the year)
TFSA YTD - 10.56%
RRSP YTD - 10.93%
Total YTD - 9.16%*
You also have to take into account the the fact that you had less money in the beginning, so the YTD is a little different than simply checking how much you have now - total contributions.
*I simply add all the contributions I've made up to now and compare to my actual investments value, and, since I reinsvest all my dividends, it takes them into account also.
The main reasons why I don't see higher numbers closer to 20% as many people on the forum have seen is because the CAD$ gained a lot of value this year and I also bought the majority of my shares in the end of February/beginning of March, when the market had a little bump. The results would have been a lot better if, for example, I had bought the same shares January 1st.
But still, since September, it's been very good!
What about you Sun hat?
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You also have to take into account the the fact that you had less money in the beginning, so the YTD is a little different than simply checking how much you have now - total contributions.
Not sure I understand what you mean?
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If for half the year you had 50k, and went up 5K that's 10% increase. If you then add 15k throughout the year, the math gets blurry, since you have to calculate the increases % while you had 50k, then calculate the increase from when you had 65k. It`s small details, but you might end up having higher than 10% if you kept increasing your contributions.
Beginning: 50k - End of year - 75k (let's say you added 15k mid-year to make math simple)
Mid year: 55k (10%) + 15k = 70
End of year: 75k (7.14%)
Total = 17.14% YTD
Calculated the other way: 75 - 65 (total - gains) = 10k gain on 65k = 15.38%. And that's for a simple example. It could make a difference throughout the year if you are still contributing.
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Calculated the other way: 75 - 65 (total - gainsinvestments) = 10k gain on 65k = 15.38%. And that's for a simple example. It could make a difference throughout the year if you are still contributing.
Yes that's how I calculated it.
If for half the year you had 50k, and went up 5K that's 10% increase. If you then add 15k throughout the year, the math gets blurry, since you have to calculate the increases % while you had 50k, then calculate the increase from when you had 65k. It`s small details, but you might end up having higher than 10% if you kept increasing your contributions.
Beginning: 50k - End of year - 75k (let's say you added 15k mid-year to make math simple)
Mid year: 55k (10%) + 15k = 70
End of year: 75k (7.14%)
Total = 17.14% YTD
I don't get the 7.14%, sorry..
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Because mid-year you've already gotten 10% return on your money. The rest of the year, when you had 65k invested, you received 5k, which is 7.14%. So your contributions received 17.14% rather than the 15% that you would calculate (since you had a smaller amount invested earlier in the year). The way you calculated it, it's as if you had the highest amount of money invested at all times.
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Because mid-year you've already gotten 10% return on your money. The rest of the year, when you had 65k invested, you received 5k, which is 7.14%. So your contributions received 17.14% rather than the 15% that you would calculate (since you had a smaller amount invested earlier in the year). The way you calculated it, it's as if you had the highest amount of money invested at all times.
Do you use Questrade? Do you know if this is how they calculate the ''Investment Returns'' they show in the charts? I know those don't take into account the dividends, but would they take into account what you are explaining here (which is still not clear to - feel free to contact me in PM if you want, I don't want to loose everybody in the thread :P)?
Here are the differences between the ''Investment Return'' I get directly from Questrade vs. my calculation
Margin : 5.8% vs. 3.17%
TFSA : 10.4% vs. 10.56%
RRSP : 10.7% vs. 10.93%
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Yes that is what Questrade is calculating.