You are starting to understand one of the reasons why DIY has such low fees relative to an adviser... it's more effort. Kinda like adjusting your gears and fixing flats instead of just dropping the bikes off at the shop and going for a Starbucks.
I assume the right choice is to have the distributions automatically reinvested. Correct?
Check with BMO on their reinvestment policy for ETFs. Most brokers do "synthetic drips" with ETFs, where the ETF distributes cash then the broker buys the closest number of full shares, but there will be cash left over. Say your VCN distributed $120 into one of your accounts, and it's current price is $31.69. The DRIP would buy 3 shares for a total of $95.07, leaving you with $24.93 in cash. Unlike mutual funds that can buy partial shares so can invest DRIPs down the penny. So even with ETF DRIPs some cash will still build up in your accounts. I don't drip with ETFs because I prefer to choose how to invest my distributions. Choice is yours.
So with a minimum of 6 monthly contributions trading fees would be $60/month. Still less than I am paying my advisor but is there a better way?
Another drawback of DIY with ETFs. You are at the bottom of a steep muddy hill, and you need to plot the best route with least likelihood of crashing. Maybe even stop a bit and eyeball it to pick the best course. Hunker down, slow and steady, so you don't lose traction. (Actually I don't recall if you ride road or offroad)
There are alternatives. One is just suck it up and pay the commissions. Another is invest quarterly instead of monthly. You said cash magically turns into toys when not invested, so just transfer cash into your brokerage accounts as a holding zone. The way I prefer is to invest monthly in a low-cost balanced mutual fund then maybe every 6 months sell the mutual fund and deploy the cash appropriately into ETFs. I generally buy ETFs in minimum 100 shares so $2500 to $3500 minimum for most ETFs. The fund I use is TD Balanced Index Fund (TDB965). It's MER is around 0.9%, not super low but good for a balanced mutual fund. It might be available in BMO IL, as I know BMO sells TD funds.
If you choose this route look for a balanced fund with a reasonable MER, no fee to buy, low minimum purchase and short minimum holding period. BMO sells D-Series mutual funds which are same as regular mutual funds, but have a lower MER for sale only to discount broker clients. Check out these links to see if you can find anything you like:
https://www.bmoinvestorline.com/selfDirected/pdfs/SeriesD_EN.pdfhttp://www.moneysense.ca/save/investing/mutual-funds/bmo-launches-series-d-mutual-funds/Mutual funds are also easier to get your broker to do a monthly purchase plan.
A general question - should I build a balanced ETF portfolio in each account with 3 ETFs per account (RRSP, husbands RRSP, Spousal RRSP, TFSA, husbands TFSA) or just maintain a good asset allocation across all of them combined as though they were a big pot.
Your choice. I find it is easier to look at all my accounts as one big allocation, but put fewer funds in smaller accounts. Growth in TFSAs is never taxed, but withdrawals from RRSPs are taxed at highest marginal rate, same as salary and interest income. So put high growth investments (equities) into TFSA, and bonds into RRSP. Then put equities that don't fit into TFSA into your RRSP.
Once you get into a non-registered account, how you distribute asset classes across accounts is more important, since dividends from Canadian equities get preferred tax treatment. But until all your registered room is used up, just make sure to fill TFSA with equities and bonds in RRSP.
I have non-registered, TFSA, RRSP and 2 LIRAs. My non-registered is all equities, mostly Canadian. TFSA is all equities. Smaller LIRA is all bond ETF. Larger LIRA is mostly bonds. RRSP is mostly fixed income but has some of each asset class to give me ability to rebalance without tax considerations. I just find it easier to limit the number of holdings in small accounts.
Would you recommend index funds? The MER looks higher.
There are not many low-cost index mutual funds in Canada, but they usually don't have any trade commissions to buy. ETFs are a better choice if you want to get the lowest cost / best return and are careful to manage trade commissions with some of the techniques other posters and I have suggested.
Your earlier idea of a CCP couch potato portfolio will serve you well.
I googled and found the cFIREsim calculator. Thanks! Very interesting. I look forward to playing around with it. In my quick trial run I tested retiring with $1MM, spend of $40K per year for 50 years, 0.18MER to compare it to the 4%SWR rule of thumb and it gave me a 71% probability. Yikes. I was hoping for higher than that.
Calculating all this accurately, especially considering tax impacts of withdrawals from various accounts plus avoiding the concerns of your RRSP getting too big driving higher taxes once you hit mandatory withdrawals is not a simple exercise. Consider getting a detailed plan done by a fee-only adviser with a professional planning designation such as CFP or PFP. A lot of people may object to that and say just do DIY, but for a couple of $k to get an objective expert to run detailed analysis is something I found worthwhile. Think about it for after you get the DIY portfolio set up.