Author Topic: Thoughts on Canadian Investors Asset Allocation  (Read 814 times)

nihilism122

  • 5 O'Clock Shadow
  • *
  • Posts: 33
Thoughts on Canadian Investors Asset Allocation
« on: December 23, 2017, 07:27:03 AM »
The New Year is around the corner, which means more contribution room in my registered investments.  I find that as I am getting older and wealthier, I struggle with whether to increase my fixed income allocation (which barely exists).  I am soon to be 36 years old and I have roughly 400k invested.  I mention this only because it makes me second guess where to go from here with new contributions (i.e. should I have more fixed income).  My assett allocation is roughly as follows:

Canadian equity - 25%
U.S equity - 25%
Intl equity - 25%
REITS - 15%
Bonds - 5%
Cash - 5%

I have roughly 30k in registered contribution available for 2018.  What asset class(es) do you think I should I invest it in given my circumstances?  Thanks. 

Lews Therin

  • Magnum Stache
  • ******
  • Posts: 2964
  • Age: 29
  • Location: Gatineau
  • Used to be Canadian Ben
Re: Thoughts on Canadian Investors Asset Allocation
« Reply #1 on: December 23, 2017, 10:49:02 AM »
How far away from FIRE are you?  Why do you need fixed income right now?

There are ETFs that don't pay out dividends, so it might be useful to avoid taxes until FIRE.

(I've linked a canadian blog that talks about swap-based ETFs.)

Remember it takes very little time to switch from high growth to fixed income if you really want to. It's worth being tax efficient in the beginning and then switching at FIRE.

RichMoose

  • Pencil Stache
  • ****
  • Posts: 966
  • Location: Alberta
  • RiskManagement
    • The Rich Moose | A Better Canadian Finance Blog
Re: Thoughts on Canadian Investors Asset Allocation
« Reply #2 on: December 23, 2017, 07:09:44 PM »
It's hard to say what it should be without more info. I'm basically all stocks with a tiny bit of cash most of the time, but I'm not following a conventional buy and hold or TAA portfolio like most here do.

It's also not necessarily worthwhile to simply add more asset class ETFs to a portfolio. When done, it should be strategic, worthwhile, and serve a certain purpose.

With investing you should think about risk tolerance, goals, simplicity, and manageability of your portfolio. With these basic things clarified, it's pretty easy to build an effective portfolio based on your account mix (amount in TFSA, RRSP, and NR accounts).

As Canadian Ben states, swap ETFs are a useful tool in NR accounts to maximize tax efficiency.

You'll have to share a bit more info if you would like to be pointed in some directions.

nihilism122

  • 5 O'Clock Shadow
  • *
  • Posts: 33
Re: Thoughts on Canadian Investors Asset Allocation
« Reply #3 on: December 25, 2017, 11:27:11 AM »
How far away from FIRE are you?  Why do you need fixed income right now?

Remember it takes very little time to switch from high growth to fixed income if you really want to. It's worth being tax efficient in the beginning and then switching at FIRE.

At least 5 years from FIRE.  I agree with you that the swich to fixed income can be done very quickly.  I guess my only concern would be a market downturn before I make the switch.  I am getting pretty tired of work (I work brutal hours), so I would hate to work longer because I didn't time the switch well. 

Retire-Canada

  • Walrus Stache
  • *******
  • Posts: 6728
Re: Thoughts on Canadian Investors Asset Allocation
« Reply #4 on: December 25, 2017, 01:48:51 PM »
At least 5 years from FIRE.  I agree with you that the swich to fixed income can be done very quickly.  I guess my only concern would be a market downturn before I make the switch.  I am getting pretty tired of work (I work brutal hours), so I would hate to work longer because I didn't time the switch well.

I'm making the same choice and here's the rub...even if you bought fixed income before a big crash would you really stop working and depend on your investments knowing you were at the start of a big crash? I know I wouldn't no matter how many bonds I held. So ultimately it doesn't matter to me either way.