# Xdv tfsa?



## jamesbe (May 8, 2010)

I'm not very good with this investing thing, I'm good at saving though!

So I have $14,900 to put in my TFSA ($100 are in a TFSA that is a savings account now). So I want to open another TFSA that is more than just 1%.

This is money I don't need right away, although I'm fairly risk adverse.

I was thinking of putting like $5000 in XDV, is this a fairly safe play? Since it offers 4% dividend that alone has me interested, it's not huge but it's better than 1.5% on the savings account.

Thoughts?


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## CanadianCapitalist (Mar 31, 2009)

What's your asset allocation? Putting the Canadian stocks in your asset allocation (XDV is basically a low-cost dividend mutual fund) in a TFSA account isn't a bad idea.


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## I'm Howard (Oct 13, 2010)

CDZ is a better choice.


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## jamesbe (May 8, 2010)

CanadianCapitalist said:


> What's your asset allocation? Putting the Canadian stocks in your asset allocation (XDV is basically a low-cost dividend mutual fund) in a TFSA account isn't a bad idea.


Currently 100% cash.

I'll check CDV as well.


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## jamesbe (May 8, 2010)

Howard why is CDZ better? Just looking at the dividend yield and price doesn't seem "better" is it more stable?


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## Financial Cents (Jul 22, 2010)

@jamesbe

I did the same thing a couple of years back, I bought XDV for my TFSA, $5 K worth. Recently, this year, I instead bought dividend-paying stocks for my TFSA. I now have a few dividend-payers in my TFSA.

XDV worked out pretty good for me. I got decent yield (due to high allocation to Canadian financials) and I liked the modest MER.

Cheers,
My Own Advisor


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## I'm Howard (Oct 13, 2010)

jamesbe, NAVPS of CDZ beats XDV, I always compare ETF's at Yahoo Finance, XDV.TO vs CDZ.TO.

Not all ETF's behave the same.


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## jamesbe (May 8, 2010)

Thanks!


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## I'm Howard (Oct 13, 2010)

XCB is the ETF for corporate Bonds, which over five years has matched the return of dividend Stocks with much less volatilty and yields about the same dividend.


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## CanadianCapitalist (Mar 31, 2009)

I'm Howard said:


> jamesbe, NAVPS of CDZ beats XDV, I always compare ETF's at Yahoo Finance, XDV.TO vs CDZ.TO.
> 
> Not all ETF's behave the same.


Care to elaborate? What has NAVPS to do with which ETF you pick?


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## jamesbe (May 8, 2010)

I'm Howard said:


> XCB is the ETF for corporate Bonds, which over five years has matched the return of dividend Stocks with much less volatilty and yields about the same dividend.


But I thought with the impeding rate increases the bonds will go down? That's as far as my knowledge goes.


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## I'm Howard (Oct 13, 2010)

CC, Yahoo Finance allows you to chart the performance to a baseline, I buy the ETF whose growth in Selling Price is the highest, considering payouts are all very similar.

Chart XSB, XRB, XGV , and XCB and see which has had the higher capital growth and what the volatility looks like.

XCB and CDZ have almost similar yields, are almost the same in appreciation, but the corporate bonds show much less volatility.

Claymore have a new tool that allows you to construct a portfolio of ETF's and compares your portfolio to the return of an index that you specify.

I use the tool to monitor the assets performance but I then look for ETF's that have outperformed Claymore.

The results are set up in my Investment Portfolio at RBC and then monitored and rebalanced as necessary.


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## jamesbe (May 8, 2010)

Well I finally opened an RBC direct investing account.

Now which to buy......

It should be active in the morning!


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## webber22 (Mar 6, 2011)

jamesbe said:


> ......Now which to buy......
> It should be active in the morning!



Wait till July


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## jamesbe (May 8, 2010)

I ended up buying some XDV, why wait? I've "made" $37 in one day  It's a long term hold so no biggie.


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## barnabam (Apr 22, 2011)

jamesbe said:


> But I thought with the impeding rate increases the bonds will go down? That's as far as my knowledge goes.


The market price of a singular bond will go down, not necessarily the index. In the case of XCB (which I hold), what they have effectively done is 'laddered' a large number of corporate bonds starting from 1 year to maturity all the way out to 30+ years to maturty. 

Therefore, to maintain the proper mix in the ETF, the manager will replace those bonds that mature with newer ones that will reflect current interest rates. Also keep in mind that over the long term (i.e. 10+ years), bond yields tend to stabilize at the long term average (assume about 5%).

So, if the manager is 're-jigging' the portflio to reflect current yields/rates AND the remaining bonds held are spread out along the yield curve, the market price of the ETF should not show high levels of volatility. But then again, people and the market being who they are ...

Besides, why would you buy this type of security (i.e. one that is based on income generation) for capital appreciation?? You wnt steady income if this is the genre of security you are looking at.


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