Thanks for the reply! Very interesting. I'll try to answer your questions.
Why don't you put more into tax free and tax sheltered plans? Have you maxed those out already? I think you've made some good choices with a cash position in your TFSA. I use mine for my emergency fund. ING has a 90 day GIC offer right now at 2.5% if your interested.
The allocation I've described maxes out my RRSP and TFSA. Definitely I look to use those first. I had an investment go sour in my TFSA last year (fraud), so I lost most of the past contribution room. That's not a bad rate for a GIC, I am too nervous about locking up the cash though because as you mention, the portfolio is aggressive. Yeah, I'd say it's an emergency fund as well.
Are you paying fees for purchasing the ETF's? I am using TD eFunds to build up a sizable position and then selling the position and purchasing Vanguard funds to help keep the transaction costs down. My 'trigger' to tell me that I have enough is if the MER difference after 1 year is greater than the price to buy the ETF.
I use TD Waterhouse so it's $10/trade. I think I'll maybe add to the positions or rebalance if needed maybe every 6 months? To keep the costs down. Maybe more frequently if I have a windfall (tax return for one). Your idea of using eFunds is good though, I'll consider that although I'm not totally sure it's worth the hassle to me! I'll do some calculations and find out.
What is your currency policy in your portfolio? I don't hold foreign currency products and chose to hedge all my positions. My long term outlook for currency 'growth' is zero so to me currency just adds volatility to my portfolio with out the expectation of long term gains. I chose not to speculate in the currency market.
I don't consider myself a currency speculator either, I'm just trying to preserve my Canadian dollar purchasing power (because I want to travel a lot) by hedging against other currencies' appreciation against it (USD through VNQ and VFV, and I guess emerging markets currencies through VEE). I suppose I should have some EUR/GBP/JPY/CHF exposure but I don't have much, yet. One thing to note is that in reality you do have currency exposure - for example, you own pieces of several Canadian companies with assets/liabilities which are denominated in other currencies. These companies don't hedge their currency exposure perfectly, so the company value in CAD is affected by foreign currency rates. It's hard to measure the effect of this but I would agree the hedging done in those "hedged" ETFs is more significant. Look into tracking error of those hedged-to-CAD ETFs though...I've heard it's quite high, something to watch out for. Anyway, I don't see the need for the hedging as it's the opposite of the hedging I want to do.
What is your current policy for re balancing your portfolio and how did you arrive at your bond/equity allocation? My allocation bond/equity allocation changes with my age. I am thinking about working in a range around this allocation to allow me to take on more or less equity based on a market level PE ratio - or something like that. Basically to hold a smaller position in a bubble and a large position in a slump.
I think it might change a bit with my age (I'm in late 20s now), and right now the bond allocation is really low just because I believe they are really overvalued now. I would want to be about 30% bonds/cash I think, it just "feels" safe enough. I haven't got any great reason for it. As for rebalancing, I think every 6 months I'll do an asset purchase and attempt to rebalance with that, and then again after a year I'll properly rebalance/purchase again. Trying to time bubbles though is difficult...however if I am very convinced, maybe I would try to tweak the asset allocation like I'm currently doing with the bonds.
We used the HBP, I wish we didn't. We should have saved the 20% outside the RRSP's but we were in a hurry to get into a home. I don't regret the purchase just how we did it.
Why do you regret using the HBP? I would have thought anything that allows you to pull from the RRSP for free during your high earning years is a great thing.
36% Bonds
12% Canadian Equity
26% US Equity
26% International Equity
My choice for Vanguard funds would be as follows:
Bonds: VSB/VSC in a 60/40 split higher in gov't bonds
Canadian: VCE
US: VUS (Hedged)
International: VEF (Hedged)
If I had money outside of an RRSP/TFSA I would hold CDZ (ishares Canadian dividend Aristocrats) in it to take advantage of the dividend tax credit.
Very interesting - why do you underweight Canadian equity? Otherwise I guess we are pretty similar although I'm a bit more averse to owning bonds. CDZ would be nice although maybe better to use in retirement for cash flow?
I agree the allocation I've chosen is a bit aggressive, but I figure I have no debt, I'm young enough, there's enough cash and bonds in case I need it, and I have enough discipline to not get scared and sell, so I should be aggressive.
Again, thanks for your reply!