RRSP and TFSA - moving away from MF

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
ockham
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Re: RRSP and TFSA - moving away from MF

Post by ockham » 21 Aug 2017 17:27

GoodManners wrote:
21 Aug 2017 15:10


My plan has changed a bit and I am thinking of purchasing:

VAB - 30% Canadian Aggregate Bond Index ETF
VCN - 20% FTSE Canada All Cap Index ETF
VXC - 20% FTSE Global All Cap ex Canada Index ETF
VUN - 20% U.S. Total Market Index ETF
VFV - 10% S&P 500 Index ETF

Can anyone see any glaring errors in this plan?
I'm puzzled about what motivates the 20% VUN and 10% VFV. Why not the far simpler 30% VAB, 20% VCN, and 50% VXC?? Even if you're motivated by a firm conviction that the US market should be overweighted, you don't need both VUN and VFV to accomplish that. VUN alone will do just fine.

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GoodManners
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Re: RRSP and TFSA - moving away from MF

Post by GoodManners » 21 Aug 2017 18:33

ockham wrote:
21 Aug 2017 17:27
GoodManners wrote:
21 Aug 2017 15:10


My plan has changed a bit and I am thinking of purchasing:

VAB - 30% Canadian Aggregate Bond Index ETF
VCN - 20% FTSE Canada All Cap Index ETF
VXC - 20% FTSE Global All Cap ex Canada Index ETF
VUN - 20% U.S. Total Market Index ETF
VFV - 10% S&P 500 Index ETF

Can anyone see any glaring errors in this plan?
I'm puzzled about what motivates the 20% VUN and 10% VFV. Why not the far simpler 30% VAB, 20% VCN, and 50% VXC?? Even if you're motivated by a firm conviction that the US market should be overweighted, you don't need both VUN and VFV to accomplish that. VUN alone will do just fine.

I don't have a good answer for you. I was thinking of the assertive CCP model portfolio with 50% in All Country World ex Canada. So I thought that a blend would be better than just VXC.

But it would seem not.

ockham
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Re: RRSP and TFSA - moving away from MF

Post by ockham » 21 Aug 2017 19:05

VXC is, roughly, 55% US, 35% EAFE, and 10% Emerging Markets. That's VXC's beauty, that with one trade you get this kind of international diversification. That's the beauty of the three ETF portfolio, that with only three trades you get exposure to Canada's broad bond market (VAB), Canada's equity market (VCN) and to all world markets (VXC).

Now, you may have the conviction (on some basis or other) that you need US exposure greater than what VXC provides. Then, by all means add a fourth ETF like VUN. But it seems to me that unless you have this conviction, adding VUN and/or VFV to the basic three doesn't make a lot of sense. Just my opinion, of course, and my only purpose is to probe whether you've asked the question of yourself.

DenisD
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Re: RRSP and TFSA - moving away from MF

Post by DenisD » 21 Aug 2017 19:51

GoodManners wrote:
21 Aug 2017 15:10
I'm also not sure what to buy with the RRSP and what to buy in the TFSA. There's roughly 70K in RRSP and 30K in TFSA.
Gains in the TFSA are never taxable. Gains in the RRSP are eventually taxed. So I would put the asset with the highest expected gain over the long term in the TFSA. IE, equities.

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Re: RRSP and TFSA - moving away from MF

Post by GoodManners » 22 Aug 2017 13:32

ockham wrote:
21 Aug 2017 19:05
VXC is, roughly, 55% US, 35% EAFE, and 10% Emerging Markets. That's VXC's beauty, that with one trade you get this kind of international diversification. That's the beauty of the three ETF portfolio, that with only three trades you get exposure to Canada's broad bond market (VAB), Canada's equity market (VCN) and to all world markets (VXC).

Now, you may have the conviction (on some basis or other) that you need US exposure greater than what VXC provides. Then, by all means add a fourth ETF like VUN. But it seems to me that unless you have this conviction, adding VUN and/or VFV to the basic three doesn't make a lot of sense. Just my opinion, of course, and my only purpose is to probe whether you've asked the question of yourself.
OK Thanks. I'm just learning how to look at the ETF data and what it represents. I don't have a conviction that I need more US exposure.
I never asked that question of myself cause I'm trying to figure it all out at once. I actually like the KISS plan and will probably put 95% into the 3 ETF portfolio and 5% into an ETF that is a wildcard/for fun/experimental - if that makes sense.

This is what I'm here for. To learn.
Last edited by GoodManners on 22 Aug 2017 13:53, edited 1 time in total.

longinvest
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Re: RRSP and TFSA - moving away from MF

Post by longinvest » 22 Aug 2017 13:45

GoodManners wrote:
22 Aug 2017 13:32
I actually like the KISS plan and will probably put 95% into the 3 ETF portfolio and 5% into an ETF that is a wildcard/for fun/experimental - if that makes sense.
A 50% allocation to VXC already gives you a 5%-of-portfolio exposure to emerging markets which include countries such as Brazil, Russia, and Turkey. But, if you're looking for something even more esoteric, there's plenty of that. Lots of people out there are eager for your money. :)
Bogleheads investment philosophy | Simple index portfolios | Lifelong Portfolio: 25% each of (domestic/international)stocks/(nominal/inflation-indexed)bonds | VCN/VXC/VAB/ZRR

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ghariton
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Re: RRSP and TFSA - moving away from MF

Post by ghariton » 22 Aug 2017 14:06

longinvest wrote:
22 Aug 2017 13:45
[A 50% allocation to VXC already gives you a 5%-of-portfolio exposure to emerging markets which include countries such as Brazil, Russia, and Turkey. But, if you're looking for something even more esoteric, there's plenty of that. Lots of people out there are eager for your money. :)
:lol:

But play money is money that I expect to lose -- call it my lottery tickets. Right now my play money -- somewhat less than 5 per cent -- is half in ROBO and half in EWZ. It's this gambling with small amounts that helps me stick it out with the other 97 per cent. Whatever helps an investor control the emotions can be a useful part of the investment strategy.

George
The plural of anecdote is NOT data.

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Re: RRSP and TFSA - moving away from MF

Post by GoodManners » 31 Aug 2017 15:39

Thanks everyone for the help and interesting points of view.

I opened an RBC DI account and have invested as below:
TFSA - VXC 43% & ZWB 11%
RRSP - VCN 21% & VAB 25%

I'm still in the process of moving some other RRSP money into the account.

Now to just sit back and watch it grow :lol: :D

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