Author Topic: Should I use a Canadian robo-advisor? If so, which one?  (Read 49231 times)

Heckler

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #150 on: April 25, 2017, 09:21:39 PM »
You can very easily exchange to USD in Forex tab in BMOIL but you will pay more through the exchange rate.

VTI (the ETF lower cost version of the MMM favourite VTSAX) has lower MER and higher dividend than VUN (which holds VTI), but US funds are not able to DRIP via BMOIL, so dividends pile up as USD cash.

NG will cost you $60 US to exchange and buy VTI and subsequently sell and convert back to CAD you can spend at home.  We plan to use USD to spend abroad, so the trading costs will be reduced by not having to NG both directions.
« Last Edit: April 25, 2017, 09:56:47 PM by Heckler »

Heckler

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #151 on: April 25, 2017, 09:54:40 PM »
ready for another tab of my spreadsheet?

VUN vs VTI.

Contribute $40,000 to start and $20,000 per year in two trades and over 28 years, save $82,000 in foreign tax and MER, as long as you keep your trades at a high dollar value (I'm doing once per year).  6% annual return and 1.54% C vs 1.95% U annual dividend assumed.

 

Heckler

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #152 on: April 25, 2017, 09:58:46 PM »
And I always go to the BMO fax machine to ensure security and a record that BMO received my instructions.  They type up a letterhead to fax it to BMOIL.  Takes time, but well worth it, considering my credit card was just used fro $5,000 online gambling in the UK.
« Last Edit: April 25, 2017, 11:02:26 PM by Heckler »

Blissful Biker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #153 on: April 29, 2017, 08:28:37 AM »

Thanks.   This PWL White Paper on Foreign Withholding Taxes, referenced in the spreadsheet, was particularly useful.

https://www.pwlcapital.com/pwl/media/pwl-media/PDF-files/White-Papers/2016-06-17_-Bender-Bortolotti_Foreign_Withholding_Taxes_Hyperlinked.pdf?ext=.pdf

Canadian ETF investing seems like a small world.  I keep seeing Justin Bender and Dan Bortolotti everywhere.

I am going to stay with a simple CDN dollar couch potato portfolio for now.  I think my change from high fee mutual funds to self directed ETFs is the biggest and most impactful change.  Investing in US dollars is an opportunity to dial things in a little bit better in a year or so.

The IL accounts haven't flooded with cash yet.  The money is still showing in the bank mutual funds.  Hopefully everything will come across next week.

And I always go to the BMO fax machine to ensure security and a record that BMO received my instructions.  They type up a letterhead to fax it to BMOIL.  Takes time, but well worth it, considering my credit card was just used fro $5,000 online gambling in the UK.
Yikes.  That stinks.  Unless you're the UK gambler of course.

Today I am going for a bike ride in the sun, and buying next years family ski pass before the early bird special expires.  At $2K the pass is worth almost as much as our car, but brings far more joy.  I interpret mustachianism not as being cheap, but being crystal clear on what brings you joy.  Now and in the future.


Blissful Biker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #154 on: April 29, 2017, 08:39:23 AM »
I forgot to ask my question!

I am browsing the funds in IL looking to find something simple and low risk to use for saving for a car in my husbands taxable IL account.  Maybe a money market fund?  Any suggestions? 

Also, the funds often have a letter suffix A, B, C,  F, etc.  The letters suffixes seem to be there regardless of fund provider so it must be an industry wide system.  How can I learn more?  "Suffix" must not be the right term because google is giving me nothing.

Thanks again.

Heckler

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #155 on: April 29, 2017, 09:05:23 AM »
What is the time period and dollar amounts youre saving for a car?

ie starting at zero, contributing $100/week for 5 years, or putting aside $20k now until you need it 6 months or three years from now?

Le Barbu

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #156 on: April 29, 2017, 09:06:18 AM »
Money saving for a car could just sit in your HISA. Do not bother invest, unless the car worth >40k$ and takes >5years to get the sum, wich is unlikely...

Last time I trade a car (for 18k$, I was spendy back then) 10k$ came from HISA, 5k$ from the old car sale, then I used LOC for 3k$ and reimburse over 2-3 months wich cost 20$ of interests...

Heckler

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #157 on: April 29, 2017, 09:07:35 AM »
Suffix refers to the type of fund. No load, front end load, DSC, institution only.  Be very careful and understand what you buy!

Heckler

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #158 on: April 29, 2017, 09:18:47 AM »
I agree w Barbu on HISA, but you can get into a HISA (high interest savings account) through your existing IL account. You dont need to set up another "Smartsaver" account.

AAT770

http://financialcrooks.com/how-buy-aat770-hisa-bmo-investorline/

Please investigate it for me.  Fees? Minimums? Interest rate?

GreatLaker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #159 on: April 29, 2017, 01:36:28 PM »
Try to find D-series funds. They are designed for discount broker clients and have lower MER because they don't pay a trailer fee. A-series are the standard funds that pay anywhere from 1/2% to 1% trailing commission annually to the sales rep/adviser. If you buy A-series funds in a discount broker the MER still includes a trailer fee, but the broker keeps it since there is no adviser involved, i.e. you pay for advice you don't get. F-series have the lowest fees but won't be available to you unless you buy through a fee-for-service adviser that typically also charges a % of assets each year as an advisory fee.

Edit: You may find the same fund name in different series, just the MER will be different. Always check for the one with the lowest MER that is available in your account. Otherwise you are basically giving money to the broker with nothing in return.

http://www.theglobeandmail.com/globe-investor/funds-and-etfs/funds/what-the-f-the-abcs-of-mutual-funds/article13816786/

http://www.getsmarteraboutmoney.ca/en/managing-your-money/investing/mutual-funds-and-segregated-funds/Pages/Mutual-fund-series.aspx#.WQTpBtryvIU

Agree w. others if you have a defined timeline in mind for the car purchase you should save in a High Interest Savings Account. If your timing is very flexible then a balanced mutual fund is an ok choice. Here is an article (a bit dated) that explains HISAs you can buy in brokerage accounts. http://www.canadiancapitalist.com/high-interest-savings-accounts-at-discount-brokers/

Also: https://www.highinterestsavings.ca/chart/
I have accounts at EQ Bank, Oaken and Tangerine and shift my $ into whichever has the best interest rate.
« Last Edit: April 29, 2017, 01:44:38 PM by GreatLaker »

meghan88

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #160 on: April 29, 2017, 07:03:00 PM »
I forgot to ask my question!

I am browsing the funds in IL looking to find something simple and low risk to use for saving for a car in my husbands taxable IL account.  Maybe a money market fund?  Any suggestions? 

Also, the funds often have a letter suffix A, B, C,  F, etc.  The letters suffixes seem to be there regardless of fund provider so it must be an industry wide system.  How can I learn more?  "Suffix" must not be the right term because google is giving me nothing.

Thanks again.

Open a HISA at Alterna and get 1.90%.  https://www.highinterestsavings.ca/chart/

Or EQ Bank for 2% though they've had rate fluctuations.

Blissful Biker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #161 on: May 01, 2017, 12:38:47 PM »
Try to find D-series funds. They are designed for discount broker clients and have lower MER because they don't pay a trailer fee.

http://www.getsmarteraboutmoney.ca/en/managing-your-money/investing/mutual-funds-and-segregated-funds/Pages/Mutual-fund-series.aspx#.WQTpBtryvIU

Thanks.  I read the articles and see that D-series is clearly the way to go for DIY investors, if you wanted to buy a mutual fund.  I see IL has many.  I am getting smarter by the day!

What is the time period and dollar amounts youre saving for a car?

ie starting at zero, contributing $100/week for 5 years, or putting aside $20k now until you need it 6 months or three years from now?

Starting at $0, and assuming that I stay at 3 days a week (which would be groovy) we could save $1,000 per month and still max out RRSPs and TFSAs.  So perhaps a couple of years to get a good used 4WD family mobile.  I know MMM is against 4WDs but there are some implications that come with living in a ski town ... lots of snow!

I like Le Barbus and Hecklers suggestion of a HISA.  Simple and flexible.  Heckler, I did the research you recommended.  The BMO IL HISA AAT770 is paying an interest rate of 0.75%, minimum initial investment of $1K.  The fine print shows a fee of 0.25% but clarifies that it does not impact the interest rate so it doesn't seem very relevant.

The last time we bought a vehicle was 15 years ago and we did it using our HELOC.  If our existing vehicle craters before we have saved enough to replace it, the HELOC will be our back up plan, but I sure love the feeling of being debt free so hope to avoid that.

GreatLaker & meghan88 - Do you use HISAs as part of the fixed income (or bond) part of your investment portfolio?  Ie, do you have substantial funds in the HISAs that are part of your long term plan?  I see the interest rates are better at Alterna and EQ Bank but they would not be as handy (for me) as keeping everything in IL.

Status Update:  the RRSP and TFSA funds haven't yet moved across to IL.  Still showing in the branch mutual funds.  Am going to call IL to see what the hold up is.  But at least the funds are still in the market.  I learned from this thread that the goal is to minimize the days out of market. 
« Last Edit: May 01, 2017, 12:40:31 PM by Blissful Biker »

Le Barbu

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #162 on: May 01, 2017, 01:03:00 PM »
Every day in the market is important, last week our NW increased by 20k$ within 2 days! I would just be happy getting 3x that kind of money over 12 months!

I am in the proceed of transfering RESP from RBC branch to DI and waiting for further information....

Heckler

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #163 on: May 01, 2017, 01:35:13 PM »


Open a HISA at Alterna and get 1.90%.  https://www.highinterestsavings.ca/chart/

Or EQ Bank for 2% though they've had rate fluctuations.

Or Oaken. (Esarc)

Im sticking with major established banks, thank you very much.

https://forum.mrmoneymustache.com/investor-alley/oaken-(canada)-1-billion-on-credit-line-yikes!/

GreatLaker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #164 on: May 01, 2017, 03:24:58 PM »
Hi BB,
I don't consider HISAs part of my long-term investment portfolio. Most of my equities are in couch potato style ETFs, and fixed income is split among VAB and a 5-year GIC ladder. The GICs are because I am close to retirement and they will give me guaranteed cash, no matter how bad the markets might be when I start withdrawing from the portfolio.

I use HISAs for shorter term stuff like emergency fund, saving money for car purchase or mortgage prepayment, stashing work bonus money until I decide what to do with it.

Next year I will start drawing retirement funds from my portfolio. At the beginning of each year I plan to move money from TDDI into an HISA (whichever of Tangering, EQ and Oaken I can get the best rate), then "pay" myself monthly with a transfer from HISA to chequing. Online bank HISAs pay higher interest than broker HISAs, but I have occasionally used TDB8150 which is TDDI's version of AAT770. Most brokers will only let you use their HISA... I cannot buy AAT770 at TDDI.

Le Barbu

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #165 on: May 01, 2017, 03:53:00 PM »
Hi BB,
I don't consider HISAs part of my long-term investment portfolio. Most of my equities are in couch potato style ETFs, and fixed income is split among VAB and a 5-year GIC ladder. The GICs are because I am close to retirement and they will give me guaranteed cash, no matter how bad the markets might be when I start withdrawing from the portfolio.

I use HISAs for shorter term stuff like emergency fund, saving money for car purchase or mortgage prepayment, stashing work bonus money until I decide what to do with it.

Next year I will start drawing retirement funds from my portfolio. At the beginning of each year I plan to move money from TDDI into an HISA (whichever of Tangering, EQ and Oaken I can get the best rate), then "pay" myself monthly with a transfer from HISA to chequing. Online bank HISAs pay higher interest than broker HISAs, but I have occasionally used TDB8150 which is TDDI's version of AAT770. Most brokers will only let you use their HISA... I cannot buy AAT770 at TDDI.

Why at the beginning of the year?

RichMoose

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #166 on: May 01, 2017, 04:21:32 PM »
I wouldn't touch Oaken, Home Trust, EQB, or any of those alt-mortgage lenders right now. Not a wise place to put money when they jumped at taking loans many times your HISA rates! It tells me something is very, very stinky there.

I would stick with Tangerine (backed by Scotia).


GreatLaker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #167 on: May 01, 2017, 04:36:15 PM »
Why at the beginning of the year?

Stocking up for the holiday season. ;)

Actually getting a little off the original topic so I did not provide the whole detail. If removing money from RRSP or RRIF I will do it near the end of the year, so any excess income tax withheld will be recovered when I do my taxes for the year. If removing capital from non-registered I will do it at the start of the year so any capital gains taxes due are not payable until the following tax season. If removing dividends from non-registered it does not really matter.

You saw my response on your leverage thread. I'm not risk averse or opposed to leverage and borrowing. I have experienced enough and studied enough investing history that I don't keep necessary cashflow in risky assets. Take a look at the stock market from 1966 to 1982... lots of volatility and over 16 years it basically ended at the same level it started. Or read the book When Genius Failed: The Rise and Fall of Long-Term Capital Management to see how risky hubris and overconfidence can be.

Le Barbu

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #168 on: May 01, 2017, 05:33:50 PM »
Why at the beginning of the year?

Stocking up for the holiday season. ;)

Actually getting a little off the original topic so I did not provide the whole detail. If removing money from RRSP or RRIF I will do it near the end of the year, so any excess income tax withheld will be recovered when I do my taxes for the year. If removing capital from non-registered I will do it at the start of the year so any capital gains taxes due are not payable until the following tax season. If removing dividends from non-registered it does not really matter.

You saw my response on your leverage thread. I'm not risk averse or opposed to leverage and borrowing. I have experienced enough and studied enough investing history that I don't keep necessary cashflow in risky assets. Take a look at the stock market from 1966 to 1982... lots of volatility and over 16 years it basically ended at the same level it started. Or read the book When Genius Failed: The Rise and Fall of Long-Term Capital Management to see how risky hubris and overconfidence can be.

Your first paragraph sums up about everything I was thinking about when asking my question.

I will give a try reading this book! FWIW, I dont think I'm a Genius using leverage, I just decided to stop killing debt like crazy when I hit the 20% mark!

Blissful Biker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #169 on: May 01, 2017, 07:14:18 PM »
Im sticking with major established banks, thank you very much.

https://forum.mrmoneymustache.com/investor-alley/oaken-(canada)-1-billion-on-credit-line-yikes!/

Considering the safety and convenience, it sounds like the BMO IL HISA (AAT770) will be the way to go for our vehicle savings. Thanks for the advice.  I was thinking today about the last time we bought a vehicle.  I was pregnant with our first child and we felt a keen sense of responsibility and the need for a "grown up" car.  It has served us well. 

If removing money from RRSP or RRIF I will do it near the end of the year, so any excess income tax withheld will be recovered when I do my taxes for the year.

I had to think through this sentence a few times.  When you withdraw from RRSPs or RRIFs does the bank take a portion and give to the government as taxes, similar to how an employer would take taxes off your paycheck?  That seems very big brotherish, but probably not a bad idea. 

I was looking today at the form to initiate regular contributions to an Investorline Account.  You can select a frequency of Monthly, Quarterly or Annually.  Drat.  I wanted biweekly in order to coincide with my paychecks.  I guess I will have to either transfer funds manually biweekly or we get used to having money in the checking account that we do not spend.

GreatLaker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #170 on: May 01, 2017, 07:51:35 PM »
When you withdraw from RRSPs or RRIFs does the bank take a portion and give to the government as taxes, similar to how an employer would take taxes off your paycheck?  That seems very big brotherish, but probably not a bad idea. 

Correct.
See this page for the % withheld on RRSP withdrawals.
http://www.taxtips.ca/rrsp/withholdingtax.htm
Then it gets reconciled to the exact amount for your marginal tax rates when you do your tax return.

RRIF withdrawals are similar, except there is no withholding tax on the minimum required withdrawal, just any amount over the minimum. As soon as you convert a RRSP to a RRIF the minimum annual withdrawals start. You can convert an RRSP to a RRIF any time, but you must deregister RRSPs no later than the end of the year you turn 71 and there are 3 options. You can choose one or any combination of the 3 options: 1)Convert to RRIF, 2)Purchase an annuity or 3)Take the lump sum in cash and pay tax on the full amount.

Blissful Biker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #171 on: May 01, 2017, 10:21:49 PM »

I populated the CPP spreadsheet that GreatLaker provided from the link below:

http://pabroon.blogspot.ca/2014/03/cpp-calculator.html

It shows that if I continue to contribute to CPP maximums over the next 7 years and then retire at 51 I will receive about $10K/year (in 2017 dollars) or 74% of maximum at age 65.  When I play with it I can see that the retirement age does affect the payout but not enough to influence a retirement decision.  Just a few hundred dollars for each extra year worked.  My husbands numbers came out to 25% of max. 

So the plan from our friendly BMO financial advisor is overstated.  Drat.  When we had our meeting with him he agreed to dial down the CPP assumptions and run the plan again but we haven't heard from him.  Not on his priority list anymore.  But I understand.  DIY investing means DIY investing.

I am continuing to work on developing the spreadsheet that Heckler provided, and have put in the new CPP numbers. 

A question for Heckler - the logic in your spreadsheet shows that you make RRSP withdrawals at 4% of value until conversion to RRIF.  RRIFs withdrawals are set at minimum government withdrawal rates and any shortfall to meet your annual spend comes from the TFSAs.   This is different from the plan from my advisor who withdrew from the RRIFs until the last dollar was gone before the TFSAs were touched.  What is your rational for drawing from both RRIFs and TFSAs at the same time?

GreatLaker - Thanks for clarifying the withholding taxes on RRSP / RIFF withdrawals.

Heckler

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #172 on: May 02, 2017, 12:10:14 AM »
My spreadsheet in the withdrawal stages is still a work in progress and learning.  Step 1 is get to the goal line, then I figure I'll have plenty of time to figure it out.  That's the beauty of having a plan you can easily mess around with.  Imagine asking your FA for 13 different withdrawal rate options from six accounts!   

I'm still debating if we should max RSPs or start a taxable account. Simplicity tells me to max the RSPs and draw them down before age 71.  Having a spreadsheet lets me estimate our options.

http://www.taxtips.ca/calculators.htm

There are lots of online calculators where you can compare spreadsheet calculations vs online calculator estimates. 
« Last Edit: May 02, 2017, 12:16:40 AM by Heckler »

Heckler

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #173 on: May 02, 2017, 12:20:55 AM »
And again, do not take my spreadsheet as financial advice.  It's a tool for you to make you own plan and it may or may not be full of errors. I appreciate feedback on any calculations or assumption errors you find.

Blissful Biker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #174 on: May 03, 2017, 11:38:36 AM »
And again, do not take my spreadsheet as financial advice.  It's a tool for you to make you own plan and it may or may not be full of errors. I appreciate feedback on any calculations or assumption errors you find.

Will do.  It is a great tool.  Haven't found any errors yet but I have mostly just been focused so far on the pre-retirement phase.  And I added a note to remind myself that all dollars are 2017 dollars.  This is different from many plans (including BMOs) that show future dollars.  I prefer current dollars because they are easy to relate to.

Some good news - biweekly contributions can be made to IL non-registered accounts.  Terrific.  I have the paperwork ready to submit.

Some bad news - apparently the transfer request form to move the $38K from Scotia to IL was missing a signature and not processed.   After 6 weeks no one notified us and I only found out because I called to check on the transfer.  Argh.  New (signed!) form being submitted today.

Some good news - the sun is shining and a family ride is on the books for tonight.

Blissful Biker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #175 on: May 04, 2017, 10:08:17 AM »
I am doing more research on porfolios so that when the money arrives in the IL accounts I can confidently set it up once and hold for the long term.

Dan's Couch Potato Portfolios have three funds:   http://canadiancouchpotato.com/wp-content/uploads/2015/01/CCP-Model-Portfolios-ETFs-2016.pdf

While Justin's Canadian Porfolio Manager portfolios have 5 funds:   https://cdn.canadianportfoliomanagerblog.com/wp-content/uploads/2017/04/CPM-Model-ETF-Portfolios-2016.pdf

Essentially the difference is that US, International and Emerging Market stocks are held in a single ETF (XAW) in Dan's, and held separately (VUN, XEC, XEF) in Justins. 

I am interested to hear what approach you have taken or would recommend.  I am handy with spreadsheets so could easily manage 5 ETFs as opposed to 3 if there was an advantage to do so.





Heckler

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #176 on: May 04, 2017, 10:16:32 AM »
I have 6 funds in 5 accounts and find balancing through contributions only a challenge. Since I pay $9.95, i have so far only sold one time, to exchange VUN for VTI once I had $40k accumulated.

I am focused on lowest MER possible in multiple accounts, so don't buy into XAW for this reason.  I do see the huge benefits of a simple three fund version.

Le Barbu

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #177 on: May 04, 2017, 10:24:31 AM »
I have 6 funds in 5 accounts and find balancing through contributions only a challenge. Since I pay $9.95, i have so far only sold one time, to exchange VUN for VTI once I had $40k accumulated.

I am focused on lowest MER possible in multiple accounts, so don't buy into XAW for this reason.  I do see the huge benefits of a simple three fund version.

I own XAW in 2 accounts for a summ representing 2% of our entire portfolio. MER are a bit high but convenience for small accounts <50k$ may worth the price. At worst it's a wash when figuring trade cost.

Blissful Biker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #178 on: May 04, 2017, 10:51:18 AM »
Thanks.  Dan's Assertive Portfolio calls for XAW to hold 50% of investable assets.  For me that would be just over $500K.  Big enough that a occasional trading fees are not a significant drag.  But the weighted MERs for the two portfolios are not significantly different (0.14-0.15%) so that wouldn't seem to be driver. 

Having VUN separate would allow an easier swap to VIT down the road. 

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #179 on: May 04, 2017, 12:33:12 PM »
Thanks.  Dan's Assertive Portfolio calls for XAW to hold 50% of investable assets.  For me that would be just over $500K.  Big enough that a occasional trading fees are not a significant drag.  But the weighted MERs for the two portfolios are not significantly different (0.14-0.15%) so that wouldn't seem to be driver. 

Having VUN separate would allow an easier swap to VIT down the road.

That' the most important part! You can switch a big chunk to VTI once, then continue with VUN for a while. This is why I hold some XAW now, regular rather small contributions not worth N-Gambit

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #180 on: May 04, 2017, 02:59:07 PM »
Hi everyone. I've been lurking in the shadows reading this thread. All I can say is wow. Where else would you get this kind of advice from a complete stranger? So awesome.

Anyone in the Cranbrook area? I'll be out there for work in a couple of weeks. I haven't found any mustachians here in Medicine Hat :(

Le Barbu

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #181 on: May 04, 2017, 03:03:22 PM »
Hi everyone. I've been lurking in the shadows reading this thread. All I can say is wow. Where else would you get this kind of advice from a complete stranger? So awesome.

Anyone in the Cranbrook area? I'll be out there for work in a couple of weeks. I haven't found any mustachians here in Medicine Hat :(

Mustachians are either low profile or pure fiction, never met 1 for real neither!

Blissful Biker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #182 on: May 04, 2017, 03:51:39 PM »
Hi everyone. I've been lurking in the shadows reading this thread. All I can say is wow. Where else would you get this kind of advice from a complete stranger? So awesome.

Anyone in the Cranbrook area? I'll be out there for work in a couple of weeks. I haven't found any mustachians here in Medicine Hat :(

You are right!  It is awesome.  I am a few hours from Cranbrook, otherwise I would have been keen to get together.  I haven't met any Mustachians either and am jealous of a group in Victoria that gets together for beer, bike rides and spreadsheet comparisons. 


So I am leaning towards the 5 fund solution due to the slightly lower MER as well as the ability to flip the VUN to VTI down the road.  This then raises the question which of the foreign equity funds do I put in the TFSA?  Given that growth in the TFSA will never be taxed, and the TFSA funds will be last to be withdrawn in retirement it makes sense to put the highest risk / highest reward ETFs in the TFSA

From safest to riskiest I think the heirarchy would look like:
- Bonds (ZAG or VAB)
- Canadian Equities (VCN)
- US Equities (VUN)
-  Europe, Australasia and Far East (XEF)
- Emerging Markets  (XEC)

Agreed?  Should I stuff our TFSAs with XEC first and then top up with XEF (while ensuring we have the desired asset allocation across all RRSP and TFSA accounts)?

plainjane

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #183 on: May 04, 2017, 04:15:23 PM »
Mustachians are either low profile or pure fiction, never met 1 for real neither!


All of us are pure fiction.

Le Barbu

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #184 on: May 04, 2017, 04:23:21 PM »
Mustachians are either low profile or pure fiction, never met 1 for real neither!


All of us are pure fiction.

Does that include me?

RichMoose

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #185 on: May 04, 2017, 06:28:44 PM »
So I am leaning towards the 5 fund solution due to the slightly lower MER as well as the ability to flip the VUN to VTI down the road.  This then raises the question which of the foreign equity funds do I put in the TFSA?  Given that growth in the TFSA will never be taxed, and the TFSA funds will be last to be withdrawn in retirement it makes sense to put the highest risk / highest reward ETFs in the TFSA

From safest to riskiest I think the heirarchy would look like:
- Bonds (ZAG or VAB)
- Canadian Equities (VCN)
- US Equities (VUN)
-  Europe, Australasia and Far East (XEF)
- Emerging Markets  (XEC)

Agreed?  Should I stuff our TFSAs with XEC first and then top up with XEF (while ensuring we have the desired asset allocation across all RRSP and TFSA accounts)?

Yep I would say Emerging in TFSA for sure. Then other stocks. I don't see much of a risk difference between XEF and VUN, but VUN looks good in RRSP for the VTI swap down the road, so XEF would be my pick in TFSA.

RichMoose

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #186 on: May 04, 2017, 06:29:21 PM »
Hi everyone. I've been lurking in the shadows reading this thread. All I can say is wow. Where else would you get this kind of advice from a complete stranger? So awesome.

Anyone in the Cranbrook area? I'll be out there for work in a couple of weeks. I haven't found any mustachians here in Medicine Hat :(

You are right!  It is awesome.  I am a few hours from Cranbrook, otherwise I would have been keen to get together.  I haven't met any Mustachians either and am jealous of a group in Victoria that gets together for beer, bike rides and spreadsheet comparisons

The group sounds riveting! ;)

Blissful Biker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #187 on: May 04, 2017, 07:15:40 PM »


Mr. Rich Moose - I was just looking at your RM Balanced Portfolio http://therichmoose.com/portfolios/.  You use XAW as a combined ETF for all foreign equity markets as opposed to breaking it up into:
-  US Equities (VUN)
- Europe, Australasia and Far East (XEF)
- Emerging Markets  (XEC)
 
Which is essentially my question of the day.  Why did you choose XAW?  Are you not using Norberts Gambit for your US equities?

I haven't met any Mustachians either and am jealous of a group in Victoria that gets together for beer, bike rides and spreadsheet comparisons

The group sounds riveting! ;)

Come on, who doesn't love a good spreadsheet!


RichMoose

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #188 on: May 04, 2017, 08:02:02 PM »


Mr. Rich Moose - I was just looking at your RM Balanced Portfolio http://therichmoose.com/portfolios/.  You use XAW as a combined ETF for all foreign equity markets as opposed to breaking it up into:
-  US Equities (VUN)
- Europe, Australasia and Far East (XEF)
- Emerging Markets  (XEC)
 
Which is essentially my question of the day.  Why did you choose XAW?  Are you not using Norberts Gambit for your US equities?

Because it's easier for the average person and the benefit of Norberts Gambit it's shrinking as our MERs come down in Canada. I think XAW is a great product and I would not be surprised to see a <15bps MER in the future as the funds under management grow.

I believe our Quebecoise friend Le Barbu recently ran some numbers on the XAW vs 3 fund question and found the difference to be minimal and shrinking.

I personally invest in a macro momentum strategy which is substantially different altogether from a balanced Portfolio strategy. I started this with a portion of my portfolio last spring and fully committed in the fall. I could talk about this more in a different thread as I don't want to invite the diehard Bogleists to derail this one.

GreatLaker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #189 on: May 04, 2017, 09:39:28 PM »
Dan used to have several couch potato portfolios from simple to complex, with more asset classes including REITs, Real Return Bonds, small cap and value funds. The most complex one was called the Über-Tuber, with 11 funds. He changed to the current 3 fund portfolios to simplify and make things easier for novice investors. Even Justin's 5 fund portfolios stick to the basic asset classes.

I started back before Vanguard entered the Canadian market with a basic 4 fund with XIU, XSP, XIN and XBB. That was back in the days of 0.5% MER and $29.95 trades unless you had at least $50k in the account. We also had to slog through 6 ft snow drifts to the bank to make trades. And it was uphill both ways.

I now have 5 accounts with 7 funds in 5 asset classes. It's basically a Justin Bender lookalike portfolio plus some GICs. It took some thinking to set up, but I don't find it at all hard to manage.
  • Non-reg: ZCN, VUN (Hold most of my Cdn in non-registered for the dividend tax credit)
  • TFSA: XEF
  • RRSP: VCN, XUS, XEF, XEC, VAB, 5 yr GIC ladder (I keep some of each asset class in here so I can easily rebalance without tax implications in non-registered)
  • Small LIRA: VAB (smallest account so only one fund)
  • Large LIRA: XUS, XEF, VAB, 5 yr GIC ladder
It's not perfect, but good enough. Fixed income is all in registered accounts. Note that I have 2 different Cdn and US funds, based on what I thought was best as I built my portfolio over time, but each is in a different account so it's not more work. For international I have only XEF and XEC since they were best of breed when they were launched. I think now that Vanguard VIU and VEE are very comparable. VXC and XAW were not launched yet when I built my current portfolio. In my non-reg I also have Mawer Tax-effective Balanced fund for my "Mad Money", and TD Balanced Index for short term investing distributions. But you could use a HISA for that too.

I have thought about using Norbit's Gambert and buying VTI in my RRSP and made some notes on how to do it. But so far I have had better things to do considering the couple hundred $ a year it would save me. (Rough arithmetic 15% withholding tax on ~2% yield on 20% of my portfolio ~=.06% annually if I did the math right.

You probably figured out by now I won't tell you what decision to make. Look at the total cost of 5-fund vs 3-fund portfolio based on MER and trade costs. Then map out how you would build the portfolio and what funds in which account. It should eventually settle on you whether you prefer flexibility and lowest cost of 5-fund over simplicity of 3-fund. And if you can't decide, then simplest is best. :)

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #190 on: May 04, 2017, 09:58:44 PM »
Assuming you plan around $300-500k in US equity, why would you buy VUN to swap for VTI later???   

Buy the rest of your funds first fir practice and then buy your US allocation as DLR and call in to journal over and sell DLR.U.  Then buy VTI once and forget about it - go ride and let it ride.  Its really quite easy. It'll just freak you out because your $500C becomes ~$350U all of a sudden. But its the same as buying VUN now with a low $C - VUN is priced quite high due to exchange rate.

Le Barbu

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #191 on: May 05, 2017, 03:45:35 AM »
Dan used to have several couch potato portfolios from simple to complex, with more asset classes including REITs, Real Return Bonds, small cap and value funds. The most complex one was called the Über-Tuber, with 11 funds. He changed to the current 3 fund portfolios to simplify and make things easier for novice investors. Even Justin's 5 fund portfolios stick to the basic asset classes.

I started back before Vanguard entered the Canadian market with a basic 4 fund with XIU, XSP, XIN and XBB. That was back in the days of 0.5% MER and $29.95 trades unless you had at least $50k in the account. We also had to slog through 6 ft snow drifts to the bank to make trades. And it was uphill both ways.

I now have 5 accounts with 7 funds in 5 asset classes. It's basically a Justin Bender lookalike portfolio plus some GICs. It took some thinking to set up, but I don't find it at all hard to manage.
  • Non-reg: ZCN, VUN (Hold most of my Cdn in non-registered for the dividend tax credit)
  • TFSA: XEF
  • RRSP: VCN, XUS, XEF, XEC, VAB, 5 yr GIC ladder (I keep some of each asset class in here so I can easily rebalance without tax implications in non-registered)
  • Small LIRA: VAB (smallest account so only one fund)
  • Large LIRA: XUS, XEF, VAB, 5 yr GIC ladder
It's not perfect, but good enough. Fixed income is all in registered accounts. Note that I have 2 different Cdn and US funds, based on what I thought was best as I built my portfolio over time, but each is in a different account so it's not more work. For international I have only XEF and XEC since they were best of breed when they were launched. I think now that Vanguard VIU and VEE are very comparable. VXC and XAW were not launched yet when I built my current portfolio. In my non-reg I also have Mawer Tax-effective Balanced fund for my "Mad Money", and TD Balanced Index for short term investing distributions. But you could use a HISA for that too.

I have thought about using Norbit's Gambert and buying VTI in my RRSP and made some notes on how to do it. But so far I have had better things to do considering the couple hundred $ a year it would save me. (Rough arithmetic 15% withholding tax on ~2% yield on 20% of my portfolio ~=.06% annually if I did the math right.

You probably figured out by now I won't tell you what decision to make. Look at the total cost of 5-fund vs 3-fund portfolio based on MER and trade costs. Then map out how you would build the portfolio and what funds in which account. It should eventually settle on you whether you prefer flexibility and lowest cost of 5-fund over simplicity of 3-fund. And if you can't decide, then simplest is best. :)

And back then, distances were miles, wich is a lot longer than km...

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #192 on: May 05, 2017, 05:36:54 AM »
Wow! There is some really great information here.  As we near filling our tax advantaged accounts for the first time ever, and venture into taxable investing, we will be looking optimize things and I'll be coming back to the great advice here.

Not sure if this helps you Blissful Biker, or just complicates your selection of already great ways to grow your accounts, but I'll share what we do.

For the accounts which receive regular weekly/monthly contributions, we buy CCP style TD e-series mutual funds in the amounts required to keep a balanced portfolio - we do this throughout the year (zero cost).  When our contribution room is filled for the year, we wait the 30 day holding period, sell the e-series funds and buy CCP style ETFs the next day ($10 a trade).  This allows us to get our funds invested and balanced throughout the year keeping our trading fees low.

Anyone else do something similar?  I've toyed with the idea of moving to Questrade to avoid ETF purchase fees altogether, but have enjoyed using TD as it's where we do the bulk of our banking.

Le Barbu

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #193 on: May 05, 2017, 06:27:59 AM »
Wow! There is some really great information here.  As we near filling our tax advantaged accounts for the first time ever, and venture into taxable investing, we will be looking optimize things and I'll be coming back to the great advice here.

Not sure if this helps you Blissful Biker, or just complicates your selection of already great ways to grow your accounts, but I'll share what we do.

For the accounts which receive regular weekly/monthly contributions, we buy CCP style TD e-series mutual funds in the amounts required to keep a balanced portfolio - we do this throughout the year (zero cost).  When our contribution room is filled for the year, we wait the 30 day holding period, sell the e-series funds and buy CCP style ETFs the next day ($10 a trade).  This allows us to get our funds invested and balanced throughout the year keeping our trading fees low.

Anyone else do something similar?  I've toyed with the idea of moving to Questrade to avoid ETF purchase fees altogether, but have enjoyed using TD as it's where we do the bulk of our banking.

I do the same and also use TDB217 for USD

I wait for at least 5k$ so my average is 3-5 trades/year for 6 accounts (some accounts can wait 2-3 years for even 1 trade)

Blissful Biker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #194 on: May 05, 2017, 02:48:14 PM »
I started back before Vanguard entered the Canadian market with a basic 4 fund with XIU, XSP, XIN and XBB. That was back in the days of 0.5% MER and $29.95 trades unless you had at least $50k in the account. We also had to slog through 6 ft snow drifts to the bank to make trades. And it was uphill both ways.

I now have 5 accounts with 7 funds in 5 asset classes. It's basically a Justin Bender lookalike portfolio plus some GICs. It took some thinking to set up, but I don't find it at all hard to manage.
  • Non-reg: ZCN, VUN (Hold most of my Cdn in non-registered for the dividend tax credit)
  • TFSA: XEF
  • RRSP: VCN, XUS, XEF, XEC, VAB, 5 yr GIC ladder (I keep some of each asset class in here so I can easily rebalance without tax implications in non-registered)
  • Small LIRA: VAB (smallest account so only one fund)
  • Large LIRA: XUS, XEF, VAB, 5 yr GIC ladder
It's not perfect, but good enough. Fixed income is all in registered accounts. Note that I have 2 different Cdn and US funds, based on what I thought was best as I built my portfolio over time, but each is in a different account so it's not more work. For international I have only XEF and XEC since they were best of breed when they were launched. I think now that Vanguard VIU and VEE are very comparable. VXC and XAW were not launched yet when I built my current portfolio. In my non-reg I also have Mawer Tax-effective Balanced fund for my "Mad Money", and TD Balanced Index for short term investing distributions. But you could use a HISA for that too.

Ha!  My kids came over to see why I was laughing ...uphill both ways to make trades.  :)

Why do you have fixed income in registered accounts?  I would have thought that to take advantage of tax protection it would be best to put fast growing (ie equity) investments in registered accounts.  And pay only a little tax on the slow growing fixed income holdings in taxable accounts. 

I have thought about using Norbit's Gambert and buying VTI in my RRSP and made some notes on how to do it. But so far I have had better things to do considering the couple hundred $ a year it would save me. (Rough arithmetic 15% withholding tax on ~2% yield on 20% of my portfolio ~=.06% annually if I did the math right.

Using Justin's 5 fund plan  https://cdn.canadianportfoliomanagerblog.com/wp-content/uploads/2017/04/CPM-Model-ETF-Portfolios-2016.pdf with 80% equities calls for 27% US stocks.  For me that would be $270K Cdn, so saving 15% withholding tax on 2% yield would be an annual savings of $800.   To compare this to our standard metrics, $800 is a new pair of skis, or a new set of mtn bike wheels, every single year.  For my husband the answer is clear.  "Honey, I believe in you, dance on hot coals, jump through flaming hoops and get us the $800/year!".

Assuming you plan around $300-500k in US equity, why would you buy VUN to swap for VTI later???   

Buy the rest of your funds first fir practice and then buy your US allocation as DLR and call in to journal over and sell DLR.U.  Then buy VTI once and forget about it - go ride and let it ride.  Its really quite easy. It'll just freak you out because your $500C becomes ~$350U all of a sudden. But its the same as buying VUN now with a low $C - VUN is priced quite high due to exchange rate.

So I agree with Heckler and will take the Norbert Gambit's plunge.  I am going to read the foreign withholding taxes white paper more thoroughly to make sure I understand what I am doing and why. https://www.pwlcapital.com/pwl/media/pwl-media/PDF-files/White-Papers/2016-06-17_-Bender-Bortolotti_Foreign_Withholding_Taxes_Hyperlinked.pdf?ext=.pdf  My husbands confidence in my ability exceeds my own.  Which is always nice, well except for when we are hitting the "jump line" mtn bike trail. Yikes!



Blissful Biker

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #195 on: May 05, 2017, 03:34:22 PM »
I believe our Quebecoise friend Le Barbu recently ran some numbers on the XAW vs 3 fund question and found the difference to be minimal and shrinking.

I personally invest in a macro momentum strategy which is substantially different altogether from a balanced Portfolio strategy. I started this with a portion of my portfolio last spring and fully committed in the fall. I could talk about this more in a different thread as I don't want to invite the diehard Bogleists to derail this one.

I am interested to hear what Le Barbu found in his analysis of XAW vs the 3 foreign equity funds.  Was investing in US dollars for tax witholding reasons accounted for and the delta still found to be minimal?

Mr Rich Moose - I am curious to learn more about your macro momentum strategy.  If you do post elsewhere let me know.  As I learn more I see how few hard and fast investing rules there are, and how good principals, some judgement and a wee bit of luck come into play. 

RichMoose

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #196 on: May 05, 2017, 05:13:35 PM »
I believe our Quebecoise friend Le Barbu recently ran some numbers on the XAW vs 3 fund question and found the difference to be minimal and shrinking.

I personally invest in a macro momentum strategy which is substantially different altogether from a balanced Portfolio strategy. I started this with a portion of my portfolio last spring and fully committed in the fall. I could talk about this more in a different thread as I don't want to invite the diehard Bogleists to derail this one.

I am interested to hear what Le Barbu found in his analysis of XAW vs the 3 foreign equity funds.  Was investing in US dollars for tax witholding reasons accounted for and the delta still found to be minimal?

Mr Rich Moose - I am curious to learn more about your macro momentum strategy.  If you do post elsewhere let me know.  As I learn more I see how few hard and fast investing rules there are, and how good principals, some judgement and a wee bit of luck come into play.

Hopefully Le Barbu doesn't mind me ripping his work:

Quote
I did backtesting to compare 4 differents AA. All of them are 100% stocks, 30% canadian, 35%US and 35% Intl. My backtest covers only 2011-2017 for simplicity (availability of ETFs)

1-30%XIC/70%VT=9.91%CAGR & 9.98%stdev

2-30%XIC/35%VTI/35%VXUS=10.13%CAGR & 9.89%stdev

3-30%XIC/25%VTI/10%VBR/35%VXUS (my actual AA)=10.25%CAGR & 10.00%stdev

4-30%XIC/20%VTI/10%VBR/5%VNQ/20%VXUS/5%VSS/5%VWO/5%VNQI=10.24%CAGR & 9.84%stdev

So, between the most simple (2 ETFs) and the "slice & dice" (8 ETFs) I only gained 0.33%CAGR and reduced stdev by 0.14%. Most of the job was done with a 2 ETFs portfolio and most improvement came from splitting US and Intl. indexes. Simplicity won again!

It appears he used US ETFs in this sample.

Regarding the momentum I'm doing, I plan to talk more about the strategy in my blog. It's a big topic so it might be a late summer/early fall project for me.

RichMoose

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #197 on: May 05, 2017, 05:47:11 PM »
Interestingly, if you look at Benders portfolios vs CCP portfolios and compare the two, the only real apples for apples comparison is the 60/40 portfolio. The results are mixed, it doesn't give Bender a clear edge. I'm actually a little surprised myself because I only chose XAW.TO for simplicity but I expected a clear edge to a 5 ETF portfolio.

1 Year Return: CCP wins by 0.29%
3 Year Return: CCP wins by 0.12%
5 Year Return: Bender wins by 0.01%
10 Year Return: Bender wins by 0.12%
20 Year Return: CCP wins by 0.11%

MER average is the same at 0.14% for both.
Standard deviation gives the win to CCP.

In a nutshell, your only real gain is with the withholding tax on US index within your RRSP.

Le Barbu

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #198 on: May 05, 2017, 06:16:43 PM »
At this point, I would say wathever you do, hard to say which lineup will perform better. The key is to keep things as simple as you can with reasonables fees. If you really want to juice up your returns, go for 100% stocks, or even more! If you NG to buy USD, do it only for the biggest account and only to buy VTI. Personnaly, I would think twice to rush it under 250k$!!! It will makes your portfolio more complexe to rebalance. It's not as simple as 800$=1 ski pair...

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Re: Should I use a Canadian robo-advisor? If so, which one?
« Reply #199 on: May 05, 2017, 11:38:39 PM »
My plan has our USD funds at a reasonable amount so as to spend USD for travel later on (post Trump) . I will try not to NG back to $CAD, but who knows what reality will bring.