: Couch Potato Investors - What does YOUR portfolio look like?



Franko
2012-08-25, 12:49 PM
Hi all,

I'm a fairly new couch potato investor, just refining my ETF selection before I dive in, and I was wondering what other people were holding in their portfolios? My biggest current issue is how to handle international equity exposure without having exposure to the USD (however I may go this route anyways, after some clarification from some of the helpful senior members).

My portfolio:

30% CAD - HXT (TSX) and XCS (CDN small caps index)
30% USD - VTI (US total stock market)
30% Int'l - VEA (EAFE countries) and VWO (emerging markets) - both are traded on the NYSE
10% Bonds - XBB (Dex bonds universe)

(I'm in my twenties and plan to be investing this over the long haul, hence the greater dedication to equities).

leoc2
2012-08-25, 01:03 PM
How about 30% VXUS in place of VEA (EAFE countries) and VWO (emerging markets) -

One fund to re-balance thus less commissions.

Other than that it looks good to me.

rassmy
2012-08-25, 02:55 PM
Xbb 30%
Xre 10%
Xiu & vce 20%
vus & vig 20%
Vxus 20%

mrPPincer
2012-08-26, 12:48 PM
Frank, your only US dollar exposure with VEA and VWO will be when you are buying or selling, not while you are holding them.

The allocations you have chosen are the same as mine.
I'm 30% Canada, 30% US, 30% Int'l, 10% fixed, but just keeping the fixed income portion in a HISA and out of bonds with the interest rates being this low.

For some added lower correlations this allocation is further broken down to 10% CDN$ hedged US equities, 6.5% CDN$ hedged Int'l equities, 6.5% Japan equity, 5% emerging markets, 10% Reits (both US and CDN).
(I'm also looking into selling covered calls later on, when I have a better understanding of options trading).

I realise my setup is way too complicated for most people to have an interest in maintaining, but I have the time and enjoy it, and the rebalancing process is cost free, as I use TD e-funds in a TDInvestments account for same-day rebalancing (linked to a HISA and no 3 day wait for settlement as with my TDW account).

You have a lot of potential wealth building years ahead of you and that could mean a lot of hard-earned money down the drain in transactions fees if you're adding to an only-ETF or ETF-plus-stock portfolio on a regular basis.
I would suggest you add to your portfolio using td e-funds and only add to your etf positions when you have quite large chunks to add, especially when you consider that you'll probably want to do a Norbert's gambit whenever you need US dollars for your purchase.

Sampson
2012-08-26, 01:19 PM
Our family portfolio allocation is broken down as:

$CAD 3.0%
$USD 2.0%
BONDS 4.5%
BRIC 3.3%
CAD LRG 20.4%
CAD SM 10.3%
Foreign LRG 11.3%
Foreign SM 1.7%
REITs 5.0%
US LRG 33.0%
US MED 3.5%
US SM 2.0%

There is a strong value tilt in the portfolio, and we will be planning to shift more monies towards mid- and small-cap equities. The bond allocation will also probably double over the next 5 years.

None of exposure to foreign currency is hedged.

Franko
2012-08-30, 04:36 PM
Hi Pincer,

Thank you for the suggestions - I currently have a lump sum to invest, and will be putting my next few years wages into my mortgage. When I have begin to do regular contributions again, I plan to switch to a low fee MF (perhaps TD e-series) to avoid recurring trading fees.

mrPPincer
2012-08-30, 07:35 PM
Ah, cool, sounds like you already had that part thought out :)

Belguy
2012-09-02, 09:40 PM
One investment guru's opinion on Couch Potato/Index Investing:

http://opinion.financialpost.com/2012/01/04/gordon-pape-no-fan-of-indexing-or-couch-potato-portfolios/

Any thoughts?

leoc2
2012-09-02, 11:14 PM
I agree with Dan the CCP :
http://canadiancouchpotato.com/2012/01/03/does-the-couch-potato-work-after-age-50/

Lephturn
2012-09-02, 11:34 PM
One investment guru's opinion on Couch Potato/Index Investing:

http://opinion.financialpost.com/2012/01/04/gordon-pape-no-fan-of-indexing-or-couch-potato-portfolios/

Any thoughts?

1) There is no comparison vs. the mutual funds this guy perfers over the same time period.
2) Judging a long term portfolio over 3 years is nonsensical
3) I will never again waste my time reading anything Gordon Pape writes or listening to anything he says.

I shudder to think that some poor people out there might buy his book and wind up in financial hardship by following his terrible advice.

Belguy
2012-09-03, 12:32 PM
Well, he writes enough books and articles on the subject of investing and so maybe he just runs out of new ideas. How many times can you repeat the same tired old thoughts over and over again!! One might better diversify their sources of information rather on relying on the opinions of a few.

Two book recommendations from Ellen Roseman in today's Toronto Star are Peter Lynch's 'One Up on Wall Street: How to Use What You Already Know to Make Money in the Market' with co-writer, John Rothchild and 'Millionaire Teacher' by Andrew Hallam about passive investing tactics.

Has anyone read either book?

A useful website which focuses on dividend growth using stocks and exchange-traded funds can be found at Canadian Investor Tips www.investortips.ca

KLR650
2012-09-03, 03:42 PM
One investment guru's opinion on Couch Potato/Index Investing:

http://opinion.financialpost.com/2012/01/04/gordon-pape-no-fan-of-indexing-or-couch-potato-portfolios/

Any thoughts?

As with many opinions, Pape's is biased due to self interest: http://www.gordonpape.com/. The more people indexing, the fewer who will pay for investment advice.

Can't say I blame him--we all have to make a living somehow. You just always have to consider that a person's advice may be biased.

crazyjackcsa
2012-09-03, 11:02 PM
My couch potato is far less complex: TD e-funds. 20% each in Bonds, Canadian Index, U.S. Index and International Index. Another 20 in GICs or cash.

Belguy
2012-09-04, 12:30 PM
My couch potato is far less complex: TD e-funds. 20% each in Bonds, Canadian Index, U.S. Index and International Index. Another 20 in GICs or cash.


How long have you held your portfolio and how has it performed over the long term? I am looking for some evidence that the 'Couch Potato' approach still works given current market conditions.

crazyjackcsa
2012-09-05, 10:15 AM
It's my childrens' RESP and I can't give you concrete numbers. I've held it for about 8 years now. We contribute quarterly. What I can tell you is that it's outperformed my work pension every year for the last 3 years(that sits in a moderate mutual fund) It's also done better than my wife's pension which is a little more aggressive.

I'm not talking about huge returns here, but it is doing exactly what it's supposed to be doing, tracking the indexes and providing stability. Bonds have been really good the last few years, the Canadian Equity is doing okay, and the U.S. and International isn't doing so hot.

Belguy
2012-10-08, 08:34 PM
More evidence that index investing is one of the best ways to go:

http://www.theglobeandmail.com/globe-investor/investment-ideas/strategy-lab/index-investing/confessions-of-a-former-value-investor/article4583575/

Argonaut
2012-10-08, 10:42 PM
Someone once posted an item in the forum, opining that "a dividend isn't something magical, it's just a dividend". I think that applies here. An index isn't something magical, it's just an index.

Kaitlyn
2012-10-08, 11:02 PM
I started off index investing (eFunds) but after a while got kinda bored of it, for lack of a better term. I still contribute to it because I believe in it, but I have been also putting money towards stocks.

Overall I've made more money in stocks this year than I've made in total from my couch potato (i know they have different time horizons/goals/etc... but ya). So I'm wondering, for those of you that are couch potato investors: Are you 100% couch potato?

GoldStone
2012-10-08, 11:31 PM
Someone once posted an item in the forum, opining that "a dividend isn't something magical, it's just a dividend". I think that applies here. An index isn't something magical, it's just an index.
An X isn't something magical, it's just an X. Statements like this don't add much to the discussion. :)


So I'm wondering, for those of you that are couch potato investors: Are you 100% couch potato?
I have about 10% of portfolio in play money. Currently invested in *cough* one *cough* small-cap stock. The remaining 90% are plain vanilla couch potato.

Belguy
2012-10-09, 12:34 PM
While I couldn't profess to be 100% Couch Potato, I do not own any individual stocks aside from a few shares of 3M which I have owned for years now. I am also still invested in the odd managed fund including the PH&N Bond Fund, MacKenzie Cundill Recovery Fund, and the RBC Cdn. Equity Income Fund. The vast majority of my investments however are ETF's which I am slowly converting to the lowest fee, broadest based variety. I also hold a 10 per cent cash allocation in a HISA.

CanadianCapitalist
2012-10-09, 12:39 PM
Are you 100% couch potato?

87.5% couch potato. The rest is in an actively managed fund in a Group RSP at work which doesn't have index funds on the menu.

k66
2012-10-18, 12:45 AM
Here is one of my portfolio compositions... which will allow me to ask a question that has been nagging me for a little while now. Under this division, I have approx 20% bonds, 65% Equities, and 15% RE. One could even argue that the 10% assigned as Cdn Eq'ty is at least partially a "Commodities" allocation as well.

Canadian Products = 35%
CLF 10% (Cdn Bond)
VCE 10% (Cdn Eq'ty)
REI.U 15% (Cdn w/ some US Real Estate)

US/International = 65%
BND 10% (US Bond)
VTI 25% (US Eq'ty)
VEU 30% (World excl US Eq'ty)

Total (weighted) MER = 0.105% and is rebalanced approx twice per year owing to the fact that all of the funds provide regular monthly/quarterly "dividends" and new $$ inflows from regular pay-cheque contributions.

So, my follow-up question is, how might one ascertain what the correct percentage of Canadian Equities might be w.r.t. US and other Int'l markets. I believe I read someplace that the representative value of Canadian equities is approx 3% of the global total while US is ~40% and Europe and Asia might be ~25 % each. Hence my allocation represents a smaller Canadian content (at least compared to what I see other people making in their portfolios) at 10% and approximately equal slices to US (25%) and Everything-but-US (30%).

I presume one answer is "do what is right for you based on your own investing horizon, experience, risk tolerance, etc.", but that there is some also a more formulated approach that justifies making representative allocations based on the size of the individual market areas considered. When I see other suggested allocations (not here) that have say 50% or 60% or more assigned to Canadian Eq'ty, I see it as being wholly unbalanced - but then again, maybe I am missing something.

Thanks for input received!

K

Erome
2012-10-18, 01:04 AM
Right now I'm kind of new to this whole thing and I think I'm trying out two different strategies to find out which I like best:

Group RRSP : 5% of overall, all in Bond Index
Private Investment Advisor: 20% of overall all in Government and Corporate bonds (private advisor my parents used for 20+ years, the 20% is what parents gave to me and just letting it sit there as my 'secure' portion)

Setup 1: 50% of overall split into:
CDN Index: 40%
USA Index: 40%
Intl Index: 20%

Setup 2: 25% of overall split into:
CDZ: 40%
CYH: 50%
XRE: 10%


So far I'm trying to decide if I like the 'Indexing' approach, which gives a yield each year in December, vs. the Setup 2 which is a monthly DRIPping setup.

So far the Setup 2 is beating the indexing by about 1.5-2% I think, but it'll probably even out when I recount it all in January after Setup 1 gets its payout.

What do you guys think of this setup? Is there a way to create a couch potato that utilizes monthly drip/dividends? That's probably counter-intuitive thought processing I suspect?

Belguy
2012-10-19, 10:21 PM
Note that some ETF's pay monthly dividends and many pay quarterly dividends. Use Google to find out which ones or check the websites of the ETF providers.

Also, just buy the broad indexes, rebalance as required, and hold them forever.

http://www.forbes.com/sites/rickferri/2012/10/19/investment-principle-matters-to-principal/

Navigate Sensibly
2012-10-23, 12:41 AM
That was a good post Belguy, advice regarding the indices. You keep surprising me with these contradictory posts.

For my portfolio, I have 25% individual Canadian stocks, and the rest in couch potato. I am trying to trim this 25% to less than 20% at least, so that I can sleep better at night and also reduce my Canadian percentage. One to two individual holdings I will hold for emotional value only, so I won't sell. Haha.

Belguy
2012-10-23, 12:39 PM
In my posts, I take my cue from Fox News and try to be 'fair and balanced'. While some argue only one side of the investment debate, I try to see it from different angles.

'Fair and balanced' is the key.

Sampson
2012-10-23, 01:19 PM
You can't argue two sides of a coin, that is the nature of taking a position and having opinion.

Additionally, evidence should always support a position, otherwise, like many journalistic articles, it is heresay.

zylon
2012-10-28, 01:27 PM
http://www.jsmineset.com/wp-content/uploads/2012/10/clip_image002112.jpg

- source (http://www.jsmineset.com/2012/10/27/in-the-news-today-1350/)

My Own Advisor
2012-10-28, 03:59 PM
Not including our pension plans, about 60% of the household portfolio is in indexed products like XIU and VTI. Everything else is in CDN stocks, CDN REITs and US stocks.

Belguy
2012-10-28, 05:29 PM
Not including our pension plans, about 60% of the household portfolio is in indexed products like XIU and VTI. Everything else is in CDN stocks, CDN REITs and US stocks.

Are you happy with the returns of your ETF's?

My Own Advisor
2012-10-28, 05:38 PM
@Belguy, XIU and VTI have taken some heavy hits in recent years but I'm in this for the long-haul. Am I happy? I suppose it could always be better :)