# Moving from Index Funds to ETF's



## kork (Jun 9, 2012)

So my wife and I have RRSP's. Each of us has approximately $200k in our RRSP. It's that time of the year for us to rebalance and I'm wondering if the time is right (or even past due) to go with ETF's rather than index funds?

Currently, they are 
TDB900 (CDN Index) - 27%
TDB902 (US Index) - 27%
TDB911 (International Index) - 27%
TDB909 (CDN Bond) 19%

However, we're looking to move to ETF's as we don't make regular contributions. We tend to make large contributions yearly. So currently, we've made a $12500 contribution each to our 2017 RRSP's and it's sitting in Cash.

So at the end of the day, I'm thinking of calling TD and saying "Can you do what you need to do to switch over to ETF's broken up as follows:

BMO Aggregate Bond Index ETF (ZAG) - 20%
Vanguard FTSE Canada All Cap ETF (VCN) - 30%
iShares Core MSCI All Country World ex Canada Index ETF (XAW) - 50%

I think this is the right thing to do based on the few transactions I do each year and the MER's on the current 4 index funds. Any suggestions/thoughts/insights into this? Is there a reason NOT to do this?


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## like_to_retire (Oct 9, 2016)

Re-investment of dividends/interest is usually automatic with funds, but not usually with ETF's.

Have you looked into what to do with all the cash thrown off by the new ETF's?

ltr


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## james4beach (Nov 15, 2012)

I presume that right now you're in a TD mutual fund account. You will need TD Direct Investing to hold ETFs, I think, so it will involve opening a new account and transferring the RRSP. All of this can be done, but there's some work involved, and some waiting.

Do your ETFs offer DRIP plans (real or synthetic)? This is worth looking into. Call TD Direct Investing (I presume this is where you want to hold ETFs) and ask about the DRIPs they offer. Is there a DRIP offered on ZAG, VCN, XAW ? If not, consider alternatives such as VAB, XBB, or XIU. If they say there's a synthetic DRIP, that's fine too.

Is there any cost of doing a DRIP with TDDI?

Assuming DRIPs are available for zero cost, yes you are probably better off in the ETFs. But calculate the net savings to you, in dollars, after considering MERs and the trade costs on the ETFs. If you're making regular RRSP contributions, you might end up buying more ETF shares once or twice a year -- so calculate the trade costs for all of that.

If your overall savings over a year is only $100 or so, it may not be worth the time and effort to open new accounts and transfer funds.


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## kork (Jun 9, 2012)

like_to_retire said:


> Re-investment of dividends/interest is usually automatic with funds, but not usually with ETF's.
> 
> Have you looked into what to do with all the cash thrown off by the new ETF's?
> 
> ltr


I was thinking that the cash that would be added to the account (I suppose there would be dividends from the ETF's?) would sit there until my yearly rebalance? Not sure if this is good/bad but I think it's the easiest?


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## kork (Jun 9, 2012)

james4beach said:


> I presume that right now you're in a TD mutual fund account. You will need TD Direct Investing to hold ETFs, I think, so it will involve opening a new account and transferring the RRSP. All of this can be done, but there's some work involved, and some waiting.
> 
> Do your ETFs offer DRIP plans (real or synthetic)? This is worth looking into. Call TD Direct Investing (I presume this is where you want to hold ETFs) and ask about the DRIPs they offer. Is there a DRIP offered on ZAG, VCN, XAW ? If not, consider alternatives such as VAB, XBB, or XIU. If they say there's a synthetic DRIP, that's fine too.
> 
> ...


The RRSP's (e-series index funds) are already sitting in a TD Direct Investing account so that's one less hurdle!


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## fatcat (Nov 11, 2009)

i have some money in all those same td-eseries, in addition to stocks and etf’s

you have an excellent mix of categories, the mer’s are low enough, they are easy to add to and they grow by rolling over new units so no need to drip or worry about reinvesting

just add cash as you want or redeem as you want

they are easy to manage, reasonably priced products

i would do nothing to your portfolio, i think it is a good one

why not contribute more regularly throughout the year and reap the benefits ? ... problem solved


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## like_to_retire (Oct 9, 2016)

kork said:


> I was thinking that the cash that would be added to the account (I suppose there would be dividends from the ETF's?) would sit there until my yearly rebalance? Not sure if this is good/bad but I think it's the easiest?


Yeah, the ETF's will all throw off cash. I think the bond ETF will be every month (look up each ETF on line and check the distributions section - it will show when the distributions are made and also their tax nature). 

You can sweep all your cash into TDDI's HISA (that pays 0.95% and doesn't charge a transaction fee) until it builds up enough to make a purchase for re-balancing.

ltr


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## AltaRed (Jun 8, 2009)

Agreed, but IF the OP wants to move to ETFs, don't


> So at the end of the day, I'm thinking of calling TD and saying "Can you do what you need to do to switch over to ETF's broken up as follows:


It will cost you more in commissions to have a TDDI rep do this for you. This is not called a self-directed discount brokerage account for nothing. It is up to you to put in sell orders for all the mutual funds and then put in buy orders for the ETFs you want based on the cash you will get from the mutual funds. Example: If you put in a Sell in Monday morning for the mutual funds, you will know what price you get by Tuesday morning and thus how many dollars you have to buy ETFs with. Then onward you go, buy the first ETF with a Limit Order with a set price (between Bid and Ask), wait until it buys.... calculate how much cash left, repeat for the seond one...see how much cash is left and buy the third one....remembering you have to pay commissions out of the cash you have.

FWIW, drips are overrated for those in accumulation mode. Simply collect the cash and combine it with your next cash contribution and buy at that time. It is no big deal for cash from distributions to accumulate for the better part of a year. Might make a difference in return at the second decimal point.


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## like_to_retire (Oct 9, 2016)

AltaRed said:


> It will cost you more in commissions to have a TDDI rep do this for you. This is not called a self-directed discount brokerage account for nothing. It is up to you to put in sell orders for all the mutual funds and then put in buy orders for the ETFs you want based on the cash you will get from the mutual funds. Example: If you put in a Sell in Monday morning for the mutual funds, you will know what price you get by Tuesday morning and thus how many dollars you have to buy ETFs with. Then onward you go, buy the first ETF with a Limit Order with a set price (between Bid and Ask), wait until it buys.... calculate how much cash left, repeat for the seond one...see how much cash is left and buy the third one....remembering you have to pay commissions out of the cash you have.
> 
> FWIW, drips are overrated for those in accumulation mode. Simply collect the cash and combine it with your next cash contribution and buy at that time. It is no big deal for cash from distributions to accumulate for the better part of a year. Might make a difference in return at the second decimal point.


Agree with all that, except for someone who is a novice, perhaps for their first few purchases, and considering the narrow spread on ETF's, they might just enter an offer at BID and ensure a full fill so they don't get all messed up with partial fills and what to do next. Once they're established, then down the road they could split the BID/ASK spread to save a few dollars.

ltr


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## STech (Jun 7, 2016)

I disagree with the OP leaving them in e-funds. 400K is enough to make the MER difference matter. I was in the same boat, and switched over at 100K. E-funds have very good MERs, but ETFs are better. 

You'll need to go to branch, and open a TDDI account. They'll redeem the e-funds, and you turn around and buy the ETFs yourself. Cost will be 9.99 per trade. TDDI does free DRIPing. You do everything online yourself.


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## AltaRed (Jun 8, 2009)

The OP already has the e-funds in a TDDI account.


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## fatcat (Nov 11, 2009)

allocating the eseries at 25% each for quick calculations i get about $240.00 per year per 100K savings in etf’s

so 200K in etf’s vs eseries saves about $500 per year ... in 10 years 5K

at 400K maybe worth it but at 200K the flexibility, and ease of use of eseries makes a compelling case to just stay in them


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## kork (Jun 9, 2012)

fatcat said:


> why not contribute more regularly throughout the year and reap the benefits ? ... problem solved


We typically contribute closer to the end of the year (September seems to be the norm) as we have a decent big picture of what our year will look like. It's psychological. My job is "uncertain" even though it's been consistent for years. It's like I'm always on the edge of "well, that was a good run!"

With regards to Index Funds vs. ETF's, I'm pleased with the simplicity of what we have though I do like the idea of simplifying a bit further with 3 ETF's rather than 4 index funds. Additionally, Our TFSA's mirror our RRSP's. Our Unregistered accounts are a mix of high quality stocks and VCN (the smallest of the three, but growing the fastest with contributions since everything else is maxed out).

Since our RRSP portfolio combined is $400k, $10k over 10 years is nothing to shake a fist at. I'd prefer to have it than not.

In fact, if we do move to ETF's, we may very well only have two ETF's in the next couple years in our RRSP's since our unregistered accounts are 100% Canadian (including a good chunk of VCN). Our goal is to rebalance but right now we are heavier in Canadian funds as we've only had the unregistered investments for a short while. I think it's time we start to incorporate them into out overall rebalancing. Our Canadian Unregistered accounts are about 50k each right now and spread across VCN, TD, CU, BCE, PWF and Telus. Most of it is VCN though. The individual stocks were purchased to "test it out and see what it's all about" and truthfully, I LOVE watching dividends come in. It's a very emotionally satisfying things to watch, for us anyways. 

That's my thinking anyways. 

So moving forward, perhaps the better mix in our RRSP is 


BMO Aggregate Bond Index ETF (ZAG) - 20%
Vanguard FTSE Canada All Cap ETF (VCN) - 10% _(since the other 20% is essentially in our unregistered fund - next year, we'll likely be able to have 30% in our unregistered fund) so will not need to have any VCN in our RRSP's._
iShares Core MSCI All Country World ex Canada Index ETF (XAW) - 70%


And keep our unregistered account all Canadian Stocks/VCN because of the Canadian Eligible dividends and the grossed-up taxable dividend (which does nothing for me now really). I don't know nearly enough about it, and it's very confusing, but having stocks with DRIPS and foreign withholding tax in my unregistered account quickly gets above my level of understanding so I figure, this may be the good solution... for us?

Somebody please correct me if I'm wrong about any/all of this???


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## like_to_retire (Oct 9, 2016)

kork said:


> I don't know nearly enough about it, and it's very confusing, but having stocks with DRIPS and foreign withholding tax in my unregistered account quickly gets above my level of understanding so I figure, this may be the good solution... for us?
> 
> Somebody please correct me if I'm wrong about any/all of this???


Keeping track of your adjusted cost base for each security is a requirement in an unregistered account (that is your responsibility), and doing it with a DRIP is a pain in the butt. I would avoid all DRIPS in an unregistered account. As I suggested before, sweep all your cash into an HISA.

ltr


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## Ihatetaxes (May 5, 2010)

kork said:


> We typically contribute closer to the end of the year (September seems to be the norm) as we have a decent big picture of what our year will look like. It's psychological. My job is "uncertain" even though it's been consistent for years. It's like I'm always on the edge of "well, that was a good run!"
> 
> With regards to Index Funds vs. ETF's, I'm pleased with the simplicity of what we have though I do like the idea of simplifying a bit further with 3 ETF's rather than 4 index funds. Additionally, Our TFSA's mirror our RRSP's. Our Unregistered accounts are a mix of high quality stocks and VCN (the smallest of the three, but growing the fastest with contributions since everything else is maxed out).
> 
> ...


Good plan. Wife and I have over a million in our RRSP's but zero Canadian equity in them (held in TFSAs and non-registered). We do drips in all accounts other than non-registered as its easier to track ACB (adjusted cost base) without drips.

Within a couple of years we will have no US equity inside of RRSP's either as non-reg passes RRSP size.


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## kork (Jun 9, 2012)

like_to_retire said:


> Keeping track of your adjusted cost base for each security is a requirement in an unregistered account (that is your responsibility), and doing it with a DRIP is a pain in the butt. I would avoid all DRIPS in an unregistered account. As I suggested before, sweep all your cash into an HISA.
> 
> ltr


I missed that. So I can have a TDDI HISA and all the dividends, etc that currently go into the "cash" portion of their account can instead go to the HISA? So let's say my unregistered CU dividend is $100. It currently goes into CASH for my unregistered account. 

So instead, that goes into the TDDI HISA and after a year (or whatever), I can take anything in the HISA and rebalance accordingly across any of my accounts?


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## like_to_retire (Oct 9, 2016)

kork said:


> I missed that. So I can have a TDDI HISA and all the dividends, etc that currently go into the "cash" portion of their account can instead go to the HISA? So let's say my unregistered CU dividend is $100. It currently goes into CASH for my unregistered account.
> 
> So instead, that goes into the TDDI HISA and after a year (or whatever), I can take anything in the HISA and rebalance accordingly across any of my accounts?


Correct. It would be nice if TDDI would automatically transfer all cash to the HISA, but they don't, so you do have to manually move it yourself (actually you buy TDB8150 just like a mutual fund, so there's no commission). Whenever I go into my account, I see if there's any cash there, and move it to the HISA.

ltr


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## gardner (Feb 13, 2014)

kork said:


> So instead, that goes into the TDDI HISA


The TDDI HISAs (there are about 4 different ones) look like mutual funds in TDDI. You have to send buy/sell orders to move money in and out and they take overnight generally to execute. There is no cost. It sounds complicated, but it is not really. I do it all the time as others do. The downside is that you do have to keep an eye on it and send a buy for TDB8150 once a quarter or so. The different accounts available in TDDI are:

https://www.tdassetmanagement.com/s...tions/td-investment-savings-account/index.jsp

They are differentiated by currency and for C$ by the issuing institution (all in the TD family) for CDIC purposes.



> and after a year (or whatever), I can take anything in the HISA and rebalance accordingly across any of my accounts?


Yes, that is the way I do it. New money + HISA --> re-balance buys


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## CrazyEights (May 17, 2016)

What's the really the difference between the different HISA accounts though? say between TDB8150 and 8155, 8157, or 8159 aside from the maximum held?


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## james4beach (Nov 15, 2012)

CrazyEights said:


> What's the really the difference between the different HISA accounts though? say between TDB8150 and 8155, 8157, or 8159 aside from the maximum held?


Each are from different issuers within the TD umbrella. Each of these is a separate sub entity for CDIC deposit insurance purposes. I think it's theoretically possible for any of the sub issuer banks to fail, though most of us assume that the TD parent company would prevent that from happening.

Let's say you want to put 200K into HISAs but already have 50K deposited with TD elsewhere. You could divide the HISAs up like this:

50K in TDB8150 (to stay under the CDIC limit since you also have 50K elsewhere)
100K in TDB8155
50K in TDB8159

This way, all the HISAs are CDIC insured and you haven't gone over the 100K limit per issuer.


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## CrazyEights (May 17, 2016)

do they take the aggregate amount across all accounts, or just within one account?

For example
TFSA - 50K TDB8150
Non reg - 100K TDB8150
RRSP - 50K TDB8150

each are under the 100K for CDIC insurance purposes...

or would this be considered 200K and would not work for CDIC insurance purposes?


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## like_to_retire (Oct 9, 2016)

CrazyEights said:


> do they take the aggregate amount across all accounts, or just within one account?
> 
> For example
> TFSA - 50K TDB8150
> ...


Each account is treated separate and enjoys the full $100K coverage.


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## like_to_retire (Oct 9, 2016)

kork said:


> So instead, that goes into the TDDI HISA and after a year (or whatever), I can take anything in the HISA and rebalance accordingly across any of my accounts?


One of the nice things is that TDB8150 settles in one day, so when you want to make a purchase of a stock, you don't need any money in your cash portion of the account. Once you've made the purchase and you now know exactly how much cash you'll need to cover it, then you can sell that much TDB8150. TDB8150's one day settlement is enough time to cover the stocks two day settlement.

I keep TDB8150 in the non registered, RRSP and TFSA accounts, and all the little interest payments and dividends pile up there and at least make a little money until it's time for a purchase.

ltr


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## james4beach (Nov 15, 2012)

Yeah, TD's order system is a bit more advanced than the others. They treat TDB8150 and related as cash equivalent, so you can first make your trades, and then sell an appropriate amount of HISA. At iTrade in contrast you have to explicitly sell the HISA before placing the buy order, otherwise you don't have enough buying power.


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## like_to_retire (Oct 9, 2016)

The posted $1000 minimum for TDB8150 is also ignored. You can take it as low as you wish and make any amount of deposit you wish. Perhaps the $1000 posted minimum is required to open the first position - I don't know?


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## fatcat (Nov 11, 2009)

agree on tdb8150, just move divvys into it and spend as needed

avoid the drips, there is nothing magical about drips, some people get all excited by them just like some of us who like dividend growth but there is nothing magical about drips or dg

KISS 
good luck


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## GreatLaker (Mar 23, 2014)

CrazyEights said:


> do they take the aggregate amount across all accounts, or just within one account?
> 
> For example
> TFSA - 50K TDB8150
> ...


Here is a link to the CDIC web page that describes how deposit insurance works and the various deposit categories:
http://www.cdic.ca/en/about-di/how-it-works/Pages/default.aspx

And a video: https://www.youtube.com/watch?v=ShpCFeAhsQ8
(although strangely the guy in the first example has a hairdo like Donald Trump)

And yes, each of the three items you mentioned are covered separately up to $100k each.


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## james4beach (Nov 15, 2012)

fatcat said:


> agree on tdb8150, just move divvys into it and spend as needed
> 
> avoid the drips, there is nothing magical about drips, some people get all excited by them just like some of us who like dividend growth but there is nothing magical about drips or dg


I agree! Nothing magical about DRIPs. Let the distributions accumulate as cash in the HISA. Then use that cash once a year, or the next time you're deploying new money. As long as you reinvest the dividends in about a year time frame, you're good.

As mentioned upthread, DRIPs inside a non-reg account are particularly painful because of the ACB calculation gymnastics. Don't complicate your life any more than you have to do. The only place I would ever DRIP is inside a TFSA/RRSP.


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## like_to_retire (Oct 9, 2016)

james4beach said:


> Let the distributions accumulate as cash in the HISA. Then use that cash once a year, or the next time you're deploying new money. As long as you reinvest the dividends in about a year time frame, you're good.


I also use the TDB8150 HISA as a large part of my cash component of my asset allocation.

I usually keep around two years expenses as a cash component. I use to play the third party HISA game, but stopped out of frustration. I exclusively use TDB8150 now.

ltr


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## OnlyMyOpinion (Sep 1, 2013)

In my experience, TDDI properly accounts for the ACB (BV) of investments that you have always held in the account (i.e. n.n. the case if journaled from another TDDI acc or transferred from an outside account) - this even when they are DRIP'd. I think a person could rely on this value if basic math and keeping a pdf of historical account statements is a challenge.

If a person is in accumulation mode and intending to add to their current long-term holdings, I would consider putting reinvestment of the dividend income on autopilot with a DRIP, rather than have to go in through the year, sweep up the cash with TDB8150 purchases, then redeploy that sum at some point.

I agree that the DCA value-add of DRIP's is minor. It is the simple, timely reinvestment of cash that might otherwise sit there that is of value. Especially if you have a busy life and do not work your accounts every month, tend to procrastinate, or second guess where to invest the money.

Neither approach is inherently better, it is more a case of which best fits your style.


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## like_to_retire (Oct 9, 2016)

OnlyMyOpinion said:


> In my experience, TDDI properly accounts for the ACB (BV) of investments that you have always held in the account (i.e. n.n. the case if journaled from another TDDI acc or transferred from an outside account) - this even when they are DRIP'd. I think a person could rely on this value if basic math and keeping a pdf of historical account statements is a challenge.
> 
> If a person is in accumulation mode and intending to add to their current long-term holdings, I would consider putting reinvestment of the dividend income on autopilot with a DRIP, rather than have to go in through the year, sweep up the cash with TDB8150 purchases, then redeploy that sum at some point.
> 
> ...


I suspect the ACB is usually accurate, but I've certainly read on this forum where people have complained otherwise, specifically when options or currency or transfers are involved. With those mistakes, it makes me nervous about their calculations. The individual is responsible to CRA to prove their cost base, and TDDI points this out in their fine print, so I like to keep track myself.

One of the nice features of sweeping all your cash into an HISA, rather than a DRIP, is the ease of rebalancing. When the cash builds up you can direct it where you want.

ltr


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## GreatLaker (Mar 23, 2014)

kork said:


> And keep our unregistered account all Canadian Stocks/VCN because of the Canadian Eligible dividends and the grossed-up taxable dividend (which does nothing for me now really). I don't know nearly enough about it, and it's very confusing, but having stocks with DRIPS and foreign withholding tax in my unregistered account quickly gets above my level of understanding so I figure, this may be the good solution... for us?


All investors with non-registered investments that can have capital gains or losses (i.e. most stocks, mutual funds and ETFs) are responsible for properly tracking their cost base and properly reporting capital gains.

Here is a CRA paper explanation of the issue:
https://www.canada.ca/en/revenue-ag...9-tax-treatment-mutual-funds-individuals.html

Canadian Capitalist has a good spreadsheet for tracking ACB: http://www.canadiancapitalist.com/free-acb-capital-gains-tracker-in-excel/

And PWL capital has a very detailed explanation of how to calculate ACB: https://www.pwlcapital.com/pwl/medi...Bender_As-Easy-as-ACB_2013-April.pdf?ext=.pdf

ACB tracking is harder with ETFs than mutual funds because ETFs don't issue partial units, therefore use notional distributions to properly adjust the ACB. The PWL paper explains it well. If you don't track notional distributions you will over report your capital gains and pay more tax than necessary. It's tedious and mind numbing but not really hard, and you really should do it. After the first few years it gets easier, but it is still tedious and mind numbing.


You don't need to do anything to properly report Foreign Withholding Taxes. The fund companies or brokers deduct the taxes and submit them, and the return is adjusted for the difference.

Foreign withholding taxes are complex. You can structure your portfolio to minimize FWT, but it requires use of US domiciled ETFs (i.e. funds sold by US fund companies like Vanguard US and iShares US, that are traded on US stock exchanges). When buying on US exchanges you need US$, which many brokerages charge a very high exchange rate spread. That can be avoided by using an interlisted stock to do the currency exchange. It's complex and at this point I suggest you ignore them. A good portfolio that gets implemented is better than a perfect portfolio that you never implement. If you search www.canadiancouchpotato.com for "withholding" you will find lots of discussion.


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## GreatLaker (Mar 23, 2014)

OnlyMyOpinion said:


> In my experience, TDDI properly accounts for the ACB (BV) of investments that you have always held in the account (i.e. n.n. the case if journaled from another TDDI acc or transferred from an outside account) - this even when they are DRIP'd. I think a person could rely on this value if basic math and keeping a pdf of historical account statements is a challenge.


I used to think that TDDI's BV calculations were accurate to use for cost base. Then I noticed slight differences between my own calculations (using adjustedcostbase.ca) and what TDDI reported. I double checked, since I suspected I had made an error. Then I realized that TDDI's book value does not account for notional distributions (aka phantom distributions). It was only noticeable on one ETF that had a large phantom distribution. 

If I use TDDI's BV as ACB I would eventually over report my capital gain, and pay excess tax when I sell. It was a difference of a couple of cents per unit, but better to keep the money in my account than Justin's. :smilet-digitalpoint


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## AltaRed (Jun 8, 2009)

Indeed, brokerages often don't get the phantom re-invested distributions right. At one time, some of them didn't get ROC right either....and maybe some still don't. There is no substitute (or responsibility) for an investor keeping track of their own ACB.


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## james4beach (Nov 15, 2012)

AltaRed said:


> Indeed, brokerages often don't get the phantom re-invested distributions right. At one time, some of them didn't get ROC right either....and maybe some still don't. There is no substitute (or responsibility) for an investor keeping track of their own ACB.


Thanks for these reports, AltaRed and GreatLaker. This is bad news. I was hoping that the brokers were doing the reinvested distributions correctly, but yet again, it seems that I'll have to rely on my own spreadsheets instead.

Ugh. ETFs can be so painful in non-registered accounts. I'm not sure I'd ever hold them outside of a tax shelter, to be honest.

My parents hold several non-reg ETFs and I've been tracking those ACBs for about 10 years. So far, my own ACB calculations have been within a few dollars of the broker's, so they are basically the same but I will keep calculating my own.


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## lonewolf :) (Sep 13, 2016)

ETFs are crowded trade, stocks that are not in ETFs would probably do best.


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## fatcat (Nov 11, 2009)

as has been talked about in another thread, more and more we will need to simply live with the broker calculation

if it is way off .... and not in our favour of course .... we will have to go through the trouble of fighting with the broker and correcting it ... how many people will bother to do that ? ... not very many

i continue to recommend https://www.adjustedcostbase.ca/ which has a freemium model and has served me very well with just the free part, it allows several different kinds of adjustments and entries including options


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## kork (Jun 9, 2012)

Thanks for the insight to everyone. Was away for a few days with the amazing weather and just getting caught up now. Lot's of good insight. Thank-you.


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> Thanks for these reports, AltaRed and GreatLaker. This is bad news. I was hoping that the brokers were doing the reinvested distributions correctly, but yet again, it seems that I'll have to rely on my own spreadsheets instead ...


The G&M article I read said the author checked for two different brokers ... one was right and the other was not.




james4beach said:


> ... Ugh. ETFs can be so painful in non-registered accounts. I'm not sure I'd ever hold them outside of a tax shelter, to be honest ....


Makes me wonder what your plan is for when the RRSP is no longer a choice ... the TFSA will take care of some of it.


Cheers


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## humble_pie (Jun 7, 2009)

like_to_retire said:


> I suspect the ACB is usually accurate, but I've certainly read on this forum where people have complained otherwise, specifically when options or currency or transfers are involved.





the TD is a huge broker. Hundreds of thousands of investors hold options, or they hold stocks that have been journalled from one currency to the other, or they have transferred securities in kind into TDDI from other brokers.

for these hundreds of thousands of clients, the Gains/Loss reports are inaccurate. Also the performance calculators & the performance figures are inaccurate. In the case of options, the overnight margin calculations are inaccurate.

me i wouldn't mind if it was just one small thing or if only a very few clients were involved. But the above categories - options, journalled stocks, transferred stocks - involve hundreds of thousands of clients, perhaps close to a million clients. All these parties are routinely being shown false information.

when misinformation reaches such a grand scale, i for one believe the situation is borderline scandalous.

what's worse is that whole generations of new investors are being taught the wrong way to make these calculations.

as for what to do - how to cure the problem - i believe that brokers need to publish disclaimers that are large font, prominent & up front. The current book value/gain/loss disclaimer is highlighted on the website but on the statements it's buried even more deeply than before. It's buried in tiny print on the verso last page of a statement.

since all brokers are equally beset by some or all of these problems, i also believe that brokers acting in concert should officially inform the IIROC - & thus the Minister of Finance - that in certain cases they, the brokers, are totally unable to determine a valid cost base, therefore they cannot generate the performance calculators which the new IIROC regulations are attempting to enforce.

i think that brokers acting in concert could make a very valid case that they are not chartered accountants & they should not be deflected from their proper duty, which is the buying & selling of securities on behalf of members of the public.


.


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## james4beach (Nov 15, 2012)

Eclectic12 said:


> Makes me wonder what your plan is for when the RRSP is no longer a choice ... the TFSA will take care of some of it.


I've already been experimenting with a solution  This is one reason I'm picking individual stocks:
http://canadianmoneyforum.com/showthread.php/118842-quot-5-Pack-Approach-quot

YTD return is +5.5% for my five pack vs +3.3% for XIU
1 year return is +14.0% for my five pack vs +9.5% for XIU

If it was implemented as the 10 pack (larger portfolio but same concept with equal weight sectors) the 1 year return is +11.6%


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## Eaglyeye (Mar 21, 2017)

james4beach said:


> I've already been experimenting with a solution  This is one reason I'm picking individual stocks:
> http://canadianmoneyforum.com/showthread.php/118842-quot-5-Pack-Approach-quot
> 
> YTD return is +5.5% for my five pack vs +3.3% for XIU
> ...


what currently constitutes your 5-pack ? Is the return including dividends?


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## james4beach (Nov 15, 2012)

To avoid getting this thread off topic, I replied in: http://canadianmoneyforum.com/showthread.php/118842-quot-5-Pack-Approach-quot/page10


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## kork (Jun 9, 2012)

Okay, so I have about 1000 shares of VCN in my unregistered investments and I've re-read this thread. All the stuff about ACB is sortof going over my head but I'm getting the impression that even though I'm not using DRIPS (real or synthetic) I'm still going to need to do some extra work.

So to simplify my question, I have it through my TD self directed Account. I'm making occasional purchases of more shares throughout the year and would like to continue to do so. Would TD not just send me a statement at the end of the year showing what to plug into what sections on my tax return? Or is it more complicated than that?


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## My Own Advisor (Sep 24, 2012)

"I'm making occasional purchases of more shares throughout the year and would like to continue to do so. Would TD not just send me a statement at the end of the year showing what to plug into what sections on my tax return? Or is it more complicated than that?"

They will send you a statement, yes, and you'll need to use that statement to calculate your running ACB so that in the future, when you do sell, some or all shares - you can calculate your capital gains or losses. That date could be months or years into the future. You need to know your cost base so gains can be calculated against the market value of when you sell. Hopefully, the market value is much higher than the cost base; years from now. 

Knowing your cost base is required whether you are using synthetic DRIPs or not. 

Running a synthetic DRIP in a non-reg. account (regardless of the assets involved, ETF or stocks) therefore makes the calculations of keeping a running ACB more frequent and more time-consuming. Just something to be mindful of. The pain involved in taxable investing is largely keeping track of what you paid for assets they can be taxed upon sale, eventually. 

Hope that helps. 

_(Note: This is why there is often the suggestion of maxing out all contributions to registered accounts before investing in a taxable account. You don't have to worry about ACB in a registered, tax-free (TFSA) or tax-deferred (RRSP) account.)_


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## kork (Jun 9, 2012)

My Own Advisor said:


> "I'm making occasional purchases of more shares throughout the year and would like to continue to do so. Would TD not just send me a statement at the end of the year showing what to plug into what sections on my tax return? Or is it more complicated than that?"
> 
> They will send you a statement, yes, and you'll need to use that statement to calculate your running ACB so that in the future, when you do sell, some or all shares - you can calculate your capital gains or losses. That date could be months or years into the future. You need to know your cost base so gains can be calculated against the market value of when you sell. Hopefully, the market value is much higher than the cost base; years from now.
> 
> ...


Okay, makes sense. I'm maxed out on RRSP's and TFSA's so unregistered is what I'm adding the "extra" investing to. I've been tracking all of my unregistered purchases in a spreadsheet so I don't need to go digging for that. I had a hunch I should track it on my own, and now I'm glad i did!

So essentially, the idea is that I can keep purchasing and tracking and in say, 20 years when I start to sell the ETF's, that's when I calculate the ACB.

Would the same hold true for stocks as well then? I mean, let's say I buy shares of Bell Canada 10 times over 10 years? When I go to sell, would the same calculations also apply?


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## My Own Advisor (Sep 24, 2012)

Yup, same calculations apply.

Basically, you are being asked to determine what is your average cost (of all shares or units owned) versus what is your sale price (for all or any shares or units sold).

The price difference over time is a capital gain or loss.

If the difference +ve (sold for more than it cost) you have a capital gain; of which, some money will be taxed.

If the difference is -ve (sold for less than it cost) you have a capital loss; of which, that loss can help offset gains.

https://www.canada.ca/en/revenue-ag...e-127-capital-gains/you-have-a-gain-loss.html

Some brokerages will actually keep track for you, re: average cost and market value for each security that is in your non-registered account. You are welcome to trust that but if there are any mistakes, that's on you and you can only blame yourself for any errors or omissions since unless you track it yourself, you won't know of any brokerage errors when you file claim capital gains or losses on the CRA forms.

PS - good on you to max out all RRSPs and TFSAs. Impressive


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## kork (Jun 9, 2012)

I'm going to double up on what James4Beach said on the previous page...



james4beach said:


> Ugh. ETFs can be so painful in non-registered accounts. I'm not sure I'd ever hold them outside of a tax shelter, to be honest.


It's tempting to just sell the shares of VCN, deal with it now and then start "fresh" and JUST focus on high quality dividend paying stocks without trying to diversify using an ETF. ACB isn't really a big deal. It's the ROC and the Phantom Dividends and all of that stuff that I'm going to need to remember in 10,15,20 years and it's not going to be something that I do often.

I have no problem tracking the data but it's doing something with that data once the time comes. I want to keep things simple and have a good structure to scale. That was the whole idea of having VCN in my unregistered account.


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## AltaRed (Jun 8, 2009)

It is simple to keep track of phantom re-invested distributions each December and ROC in March/April. The former you get from the providers' websites, and the latter comes off the March brokerage Annual Income and Expense Summary (of off the providers' websites). It literally does not take me more than 30-60 minutes per year to do the annual ACB adjustments for the circa 6 Canadian domiciled ETFs my ex-spouse has, nor for the few Canadian domiciled ETFs that I hold (XWD, XEF and ZSP.U


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## kork (Jun 9, 2012)

AltaRed said:


> It is simple to keep track of phantom re-invested distributions each December and ROC in March/April. The former you get from the providers' websites, and the latter comes off the March brokerage Annual Income and Expense Summary (of off the providers' websites). It literally does not take me more than 30-60 minutes per year to do the annual ACB adjustments for the circa 6 Canadian domiciled ETFs my ex-spouse has, nor for the few Canadian domiciled ETFs that I hold (XWD, XEF and ZSP.U


It's not so much about the time involved, but more about making sure it's done correctly and knowing what to do. So for example, I Google'd VCN phantom re-invested distributions (a term I only learned of today, lol) and came up short. I also tried looking up VCN Annual Income and Expense Summary and found a PDF for August 31, 2017... But there was no mention of ROC in it.

https://www.vanguardcanada.ca/advisors/mvc/loadImage?country=can&docId=624

So that's my challenge. If I knew where to look and what to do (I'm learning), it might be different but right now, it quite complicated.


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## AltaRed (Jun 8, 2009)

It can be a bit tricky but: 

I googled "Vanguard Canada re-invested capital gains distributions" and got amongst others, this link https://www.vanguardcanada.ca/advis...nnual-capital-gains-distributions.htm?lang=en

I googled "Vanguard Canada income distribution history" and got amongst others, this link https://www.vanguardcanada.ca/advisors/mvc/loadImage?country=can&docId=7587

Most ETF providers like BMO, Blackrock and Vanguard Canada also publish the Cap Gains ones on the Newswires. Indeed, Vanguard published via Newwire in November 'estimates', then I think in mid-December and update, and then a final near year end. I always wait until year end and do the cap gains ones....once. There is another site that publishes them for 'everything known to man' but I don't like secondary sources. I go to the horse's mouth... the website of the provider

The first link gives you the phantom re-invested distributions for ACB increase, and the latter gives you ROC for ACB decrease, all on a per unit basis. You also get the ROC when when you broker provides you with the Annual Income and Expense Summary as an alternative.


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## Eclectic12 (Oct 20, 2010)

kork said:


> ... So essentially, the idea is that I can keep purchasing and tracking and in say, 20 years when I start to sell the ETF's, that's when I calculate the ACB.


I recommend at minimum capturing the info as well as supporting documentation on a regular basis. I personally keep the ACB for both the total and the per share flavours reasonably up to date.

When I sold a REIT years ago, I discovered that the more complicated factors such as RoC was involved but due to buyouts, the needed info was not easily at hand. These days brokers are tracking the info better so one could use their cost numbers. I have seen errors so I prefer to have an independent source to check for errors.




kork said:


> ... Would the same hold true for stocks as well then? I mean, let's say I buy shares of Bell Canada 10 times over 10 years? When I go to sell, would the same calculations also apply?


Yes ... the difference is that for common Bell stock, only eligible dividends are paid so the more complicated ACB factors such as RoC or the Canadian ETF specific "phantom" distributions won't apply. All that will matter is the buying including costs and selling including costs ... which is easier to calculate as well as find other sources for the needed numbers.


What I have found is that where one is clear on what factors are needed then collect them on a regular basis (including supporting documentation), the work per year is small. Having everything at hand when selling, makes the tax reporting a lot easier as well.

Things that pay mixed income types like REITs have more factors and Canadian ETFs have the most factors. Once one understands then implements a plan to deal with them, it is not as bad as it at first seems or is when the info is not easily available. There are also web sources that help such as https://www.acbtracking.ca/ or https://www.adjustedcostbase.ca/.


Cheers


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## Eclectic12 (Oct 20, 2010)

kork said:


> ... It's tempting to just sell the shares of VCN, deal with it now and then start "fresh" and JUST focus on high quality dividend paying stocks without trying to diversify using an ETF.


Where one feels the stock portfolio will do as well or better, sure. I won't want to go this route for say, the US market ... but that's my opinion.




kork said:


> ... ACB isn't really a big deal. It's the ROC and the Phantom Dividends and all of that stuff that I'm going to need to remember in 10,15,20 years and it's not going to be something that I do often.
> 
> I have no problem tracking the data but it's doing something with that data once the time comes ...


I don't follow ... as soon as I have the info from the ETF web site (or when I had an ETF in a taxable account) I would:
a) plug the numbers in my spreadsheet that automatically calculated the current ACB for total held and per unit.
b) printer to PDF so that if I had any doubts, I could check if the ETF company had changed the numbers for a particular year (it happened once).

RoC I was typically able to get from the ETF website about March the following year from the ETF web page. For example, 2017's numbers would be available around March 2018 (though each ETF company seems to have different timings).

Since you mention VCN, here is a link to VCN. If you select the "Prices and Distributions" tab then scroll to the bottom to the "Annual Distributions" ... years 2013 to 2016 are broken down for RoC as well as the "Foreign Tax Paid" in 2015.

Phantom distributions tend to be harder to find/identify but once you find how Vanguard Canada reports it, the method tends to stay the same. Worst case, call them to ask how to find it.

Nowadays, there is also the online repository of T3 forms as well, available at https://services.cds.ca/application...s/-EN-LimitedPartnershipsandIncomeTrusts?Open.




AltaRed said:


> It is simple to keep track of phantom re-invested distributions each December and ROC in March/April ...


Interesting ... as I have transferred the ETF to my TFSA, I don't know what the timing is now but when it was in the taxable account, I rarely could find phantom distribution/RoC info until late March/April. It may vary by provider, though.


Once once is prepared as well as has a spreadsheet setup for the updates, it seems less than an hour to do my updates/PDF printing to capture the source.


Cheers


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## Eclectic12 (Oct 20, 2010)

AltaRed said:


> ... You also get the ROC when when you broker provides you with the Annual Income and Expense Summary as an alternative.


The T3 form is another source. If it is one to one (i.e. one T3 form for VCN, one T3 form for XIC), then one can use the numbers directly.

My broker at times rolls several investments onto one T3 form so the detailed breakdown document that indicates $0.60 RoC for VCN, $0.95 RoC for XIC would be more useful. Not particularly difficult but something to be aware of.


Cheers


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## AltaRed (Jun 8, 2009)

Eclectic12 said:


> The T3 form is another source. If it is one to one (i.e. one T3 form for VCN, one T3 form for XIC), then one can use the numbers directly.
> 
> My broker at times rolls several investments onto one T3 form so the detailed breakdown document that indicates $0.60 RoC for VCN, $0.95 RoC for XIC would be more useful. Not particularly difficult but something to be aware of.
> 
> ...


Most brokers issue only one T3 that lumps all Cdn ETFs together. Thus ROC is all combined. It is the accompanying Summary that comes with the T3 that provides the breakdown by ETF.


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## Eclectic12 (Oct 20, 2010)

Then we are in agreement that where more than one source is combined, the matching Summary is what matters.

Cheers


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## kork (Jun 9, 2012)

Thanks so for for the links and the additional information. I think I'll keep VCN (for now) and see if it's a pain or not. If it is, I offload... if not, I get to benefit.


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## Pluto (Sep 12, 2013)

Haven't looked at these two super carefully, but on first look they seem good.

1. Cdn - ZLB
2. US - MTUM


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## kork (Jun 9, 2012)

Okay, so I've received documentation from vanguard with a breakdown of payouts.

At the beginning of the year, I had 250 shares of VCN and at the end of the year I had 520 shares. The document shows the following:

17.03.31 250 (42) .09
17.06.30 520 (42) .20
17.09.30 520 (42) .20
18.01.30 520 (42) .21

(21) Total Capital Gains 61.58
(49) Total actual amount of eligible dividends 345.32
(42) Total Return of Capital .70


I have an excel file that calculates the ACB when I enter the ROC. Should I insert these rows into my file based on the date, or is a single row yearly with the .70 (and whatever it is moving forward) good enough? I suspect that at .70, there will be nearly a zero dollar impact on everything, but I want to practice properly from the beginning as this is a very long term buy and hold strategy.

Also, I didn't sell any shares but it still shows capital gains? How do I account for that in my ACB if no shares were sold (that I initiated)?


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## kork (Jun 9, 2012)

Any takers? I'm especially curious about the capital gains which didn't seem to affect the number of shares I own, but that were apparently sold above the ROC? On TD's website it shows:

09 Jan 2018	
VANGUARD FTSE CDA ALL ETF 
CG DIV	-520	-	-	$61.58

09 Jan 2018	
VANGUARD FTSE CDA ALL ETF
DRIP	0	-	-	-$61.58


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## Mike-RetireEarly (Feb 28, 2016)

Looking at the Vanguard website for VCN distributions there was a reinvested distribution of $0.118423 per share with a ex dividend date of 28-12-2017 (times 520 shares is $61.58), this was a non cash distribution. The ACB will increase by $61.58 and you'll report this on your income taxes. TD will adjust the average cost of VCN sometime in April or maybe May for the cash accounts.

See: https://www.vanguardcanada.ca/indiv...tail/etf/portId=9561/assetCode=equity/?prices

I usually track the ACB by each distribution. If you don't buy or sell any shares in the year then you can track it by the year, just have one entry per type of distribution (ROC and Reinvested Capital Gain) a year that impacts the ACB.


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## kork (Jun 9, 2012)

Mike-RetireEarly said:


> Looking at the Vanguard website for VCN distributions there was a reinvested distribution of $0.118423 per share with a ex dividend date of 28-12-2017 (times 520 shares is $61.58), this was a non cash distribution. The ACB will increase by $61.58 and you'll report this on your income taxes. TD will adjust the average cost of VCN sometime in April or maybe May for the cash accounts.
> 
> See: https://www.vanguardcanada.ca/indiv...tail/etf/portId=9561/assetCode=equity/?prices
> 
> I usually track the ACB by each distribution. If you don't buy or sell any shares in the year then you can track it by the year, just have one entry per type of distribution (ROC and Reinvested Capital Gain) a year that impacts the ACB.


Okay, great! I've added into my ACB spreadsheet. Makes sense there. The $61.58 for capital gains, I already accounted for that in my 2017 taxes. Do I need to add that to my ACB calculations, or is that done through the value of the shares if I'm understanding what you said above?


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## Eclectic12 (Oct 20, 2010)

If you trust TD's numbers ... you can go by those.

Me, I prefer to add it to my spreadsheet. When the broker's numbers and mine agree - I am a lot more confident it is correct as it is two independent calculations (the broker's plus mine).
Though I do have some shares in different accounts which means for the overlap, the broker's numbers will be wrong as they don't know about the other account.


Cheers


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## GreatLaker (Mar 23, 2014)

Reinvested distributions (in this case $61.58) should be added to your cost base (ACB). It is to your advantage to do this, otherwise when you sell you will overstate the capital gain therefore pay more tax than necessary.

Return of Capital ($0.70) must be subtracted from your cost base. If you don't you will understate the capital gain when you sell, and the tax man will be displeased and may come knocking on your door to collect. And the tax man knows, because RoC is reported on your T3 in box 42.

In my experience with TD, reinvested distributions are reported on statements and TD will incorporate them in their ACB calculations. On the other hand, TD does not report RoC on statements or properly update the ACB to account for them. But RoC will be indicated on TD's T5008 and T3s in box 42.

Over time I noticed small discrepancies between my calculated ACB and TD's reported ACB on certain ETFs. I double checked my calculations thinking I had made an error. Then I realized it was because TD was not updating the ACB for RoC. RoC is a small amount on many ETFs, so easy to overlook, but why tempt the tax man for a few pennies??

Some good resources:
www.adjustedcostbase.ca. Even if you don't use it for calculations, the help guide is excellent.
https://www.adjustedcostbase.ca/blog/phantom-distributions-and-their-effect-on-adjusted-cost-base/
https://www.adjustedcostbase.ca/blog/return-of-capital-and-how-it-affects-adjusted-cost-base/

Canadian Couch Potato has published a good blog and WP:
http://canadiancouchpotato.com/2013/04/04/calculating-your-adjusted-cost-base-with-etfs/
https://www.pwlcapital.com/pwl/medi...nder_As-Easy-as-ACB_2015-January.pdf?ext=.pdf

CDS Innovations has tax breakdown posting info to be used with the above WP:
https://services.cds.ca/application...s/-EN-LimitedPartnershipsandIncomeTrusts?Open
(Click on Display tax information for year 2017)

Added: You mentioned there were no additional units due to the reinvested distribution. Unlike mutual funds, ETFs do not issue partial shares, so they cannot accurately handle reinvested distributions by purchasing additional units. So instead your number of units does not change, and you adjust your ACB upwards by the entire amount of the reinvested amount.


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## kork (Jun 9, 2012)

GreatLaker said:


> Reinvested distributions (in this case $61.58) should be added to your cost base (ACB). It is to your advantage to do this, otherwise when you sell you will overstate the capital gain therefore pay more tax than necessary.
> 
> Return of Capital ($0.70) must be subtracted from your cost base. If you don't you will understate the capital gain when you sell, and the tax man will be displeased and may come knocking on your door to collect. And the tax man knows, because RoC is reported on your T3 in box 42.
> 
> ...



Okay, www.adjustedcostbase.ca/ is awesome! I was using the Canadian Capitalist excel but it didn't have anything for reinvested dividends (that I could see) whereas this online tool has all those different options. It worked perfectly (I think)! The ONLY issue I have with online apps like this is... "will it be around in x number of years when I actually need to sell my ETF's" and the other question is "Who owns the website and how is it supported?" I see the domain is set to expire in August 2018... Hopefully, it doesn't go poof!


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## Spudd (Oct 11, 2011)

kork said:


> Okay, www.adjustedcostbase.ca/ is awesome! I was using the Canadian Capitalist excel but it didn't have anything for reinvested dividends (that I could see) whereas this online tool has all those different options. It worked perfectly (I think)! The ONLY issue I have with online apps like this is... "will it be around in x number of years when I actually need to sell my ETF's" and the other question is "Who owns the website and how is it supported?" I see the domain is set to expire in August 2018... Hopefully, it doesn't go poof!


It has the ability to export all your data in CSV, so I do it annually after updating the cost bases. That way, if it goes kaput, at least I still have all the data.

Also, if you pay to be a premium member, it will automatically update the cost bases of all your ETFs which is AWESOME. I do it because I like the convenience of that feature, and also to support them so they will not go kaput.


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## kork (Jun 9, 2012)

Spudd said:


> It has the ability to export all your data in CSV, so I do it annually after updating the cost bases. That way, if it goes kaput, at least I still have all the data.
> 
> Also, if you pay to be a premium member, it will automatically update the cost bases of all your ETFs which is AWESOME. I do it because I like the convenience of that feature, and also to support them so they will not go kaput.


So the premium automatically calculates and I don't need to add the values?

Also, I can totally see the benefit for my one ETF but would there be any benefit to tracking individual stocks in this tool? There's no ROC or Drips or anything in my case. I just buy some blue chip stocks from time to time and not planning on selling them for a long, long time...


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## Spudd (Oct 11, 2011)

kork said:


> So the premium automatically calculates and I don't need to add the values?
> 
> Also, I can totally see the benefit for my one ETF but would there be any benefit to tracking individual stocks in this tool? There's no ROC or Drips or anything in my case. I just buy some blue chip stocks from time to time and not planning on selling them for a long, long time...


Yeah, if you're a premium member you just have to click on a button and it goes through and adds all the transactions for the ETFs for you (obv not your buys/sells, but anything that would have come from the T3). 

I also use it for my regular stocks but the benefit there is not as great, especially if you don't DRIP. I just like it as a double-check for my ACBs in case the bank messed up.


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## kork (Jun 9, 2012)

Thanks everyone fir the direction. This might just work out okay!


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## kork (Jun 9, 2012)

So revisiting this idea. A few months ago I purchased ZAG, XAW and VCN in my RRSP to understand the process a bit better of purchasing ETF's rather than Index Funds. Pretty much like individual stocks it seems with TD Direct Investing from my observation. $9.99 per trade with TD Direct investing whereas index funds don't seem to have any fees.

But I've recently learned (a few months afterwards) that Vanguard has 3 new funds, specifically VGRO. Considering the fees, would Vanguards VGRO make more sense at all than 3 different ETF's and the requirement to rebalance? If I moved from TD Self Directed to QuestTrade (and stayed with ZAG, XAW and VCN), I've read they don't have trading fees for contributions (but perhaps for withdrawal)? So that would eliminate the fees associated with TD Direct Investing?

In my RRSP's:

I'm currently holding the following ETF's: ZAG, XAW and VCN
I'm currently holding the following Index Funds: TDB900, TDB902, TDB909, TDB911

I want to go with one or the other. I'm currently holding both, not to diversity, but in an effort to move from Index Funds to ETF's given that there's over $200k in each of our RRSP's and trying to minimize fees. We tend to invest in our RRSP's yearly closer to the end as we'll know what our tax year looks like (but am not a fan we miss out on dollar cost averaging.) Monthly contributions that go directly into a balanced portfolio would be decent, but I don't know if you can add $ each month, free of fees AND weighted to microbalance (monthly rebalance with contributions)?

Additionally, we hold VCN in our non-registered accounts so a little bit less TDB900 and VCN in our registered investments to maintain tax efficient balance.

I feel like we have the strategy done right, but tweaking the squeeze the "sh*t out of minor efficiency details.

Thoughts?


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## My Own Advisor (Sep 24, 2012)

I wrote about the Vanguard funds here Kork:
https://www.myownadvisor.ca/simple-low-cost-all-in-one-vanguard-etfs/

Personally, if you're good to re-balance, then owning the 3 funds is more than fine I think vs. the Vanguard all-in-one ETF.

Free ETF purchases via Questrade would be an incentive to keep the 3 funds vs. all-in-one. 

Smart stuff overall, you've picked and held some good products: VCN, XAW, and your bond in ZAG.


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## kork (Jun 9, 2012)

My Own Advisor said:


> I wrote about the Vanguard funds here Kork:
> https://www.myownadvisor.ca/simple-low-cost-all-in-one-vanguard-etfs/
> 
> Personally, if you're good to re-balance, then owning the 3 funds is more than fine I think vs. the Vanguard all-in-one ETF.
> ...


Great article and very timely! Now I just need to research Questtrade and their platform (that I don't know) vs. The TD Direct Investing one that I've gotten so used to!


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## milhouse (Nov 16, 2016)

I've over the years have evolved from (1) high cost mutual funds to (2) lower cost mutual funds and lower cost index mutual funds to now (3) 4 index (US, EAFE, EM, and FI) ETF's. I do the 4 because I want to try to take advantage of momentum or reduce exposure in a geographic sector and/or modify the FI portion. I like managing those parameters at this point. However, I can eventually see myself going to a 2 index strategy (All-World ex-CAN and FI) and then to the all in one, expecting that as I get into my later years, I don't want to be bothered to manually re-balance from both an effort perspective and from a mental perspective.


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## AltaRed (Jun 8, 2009)

That works in registered accounts. There can be large cap gain issues making those kind of changes in non-red accounts. In those latter cases it is better to structure holdings good for 20+ years.


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## kork (Jun 9, 2012)

milhouse said:


> I've over the years have evolved from (1) high cost mutual funds to (2) lower cost mutual funds and lower cost index mutual funds to now (3) 4 index (US, EAFE, EM, and FI) ETF's. I do the 4 because I want to try to take advantage of momentum or reduce exposure in a geographic sector and/or modify the FI portion. I like managing those parameters at this point. However, I can eventually see myself going to a 2 index strategy (All-World ex-CAN and FI) and then to the all in one, expecting that as I get into my later years, I don't want to be bothered to manually re-balance from both an effort perspective and from a mental perspective.


Any reason you haven't moved to ETF's yet?

[EDIT] Nevermind. I missed the line where you said you moved to ETF's!


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## My Own Advisor (Sep 24, 2012)

milhouse said:


> I've over the years have evolved from (1) high cost mutual funds to (2) lower cost mutual funds and lower cost index mutual funds to now (3) 4 index (US, EAFE, EM, and FI) ETF's. I do the 4 because I want to try to take advantage of momentum or reduce exposure in a geographic sector and/or modify the FI portion. I like managing those parameters at this point. However, I can eventually see myself going to a 2 index strategy (All-World ex-CAN and FI) and then to the all in one, expecting that as I get into my later years, I don't want to be bothered to manually re-balance from both an effort perspective and from a mental perspective.


I could see that for some investors - there is major simplicity (as folks get older) by owning an all-in-one ETF whether that is a Vanguard product or other. At the end of the day, as long as your costs are low (obvious reasons to keep more of your money working for you) AND you are meeting your income/financial objectives then who is to argue with you?


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## milhouse (Nov 16, 2016)

AltaRed said:


> That works in registered accounts. There can be large cap gain issues making those kind of changes in non-red accounts. In those latter cases it is better to structure holdings good for 20+ years.


That's a good point. 
Specific to my situation, my registered accounts (RRSP and TFSA) hold the non-CAN ETF's. And while I'm currently limited to holding index mutual funds in my DC pension, the plan when I retire is to transfer it to a self directed LIRA with the same ETF strategy.


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