# TD eSeries couch potato style



## Plutos (Nov 28, 2010)

Dear forum members,

I am looking at TD e Series funds and, being all new to investing, I wanted to do a couch potato strategy before I become more savvy. 

I’ve decided to invest about $9500 in index funds and will most likely go with TD e-series to keep my costs low. Couch potato strategy suggests investing in 4 TD eSeries funds (out of 10 available): Canadian index, US index, Int’l index and Bond index. 

I am thinking of this mix and wanted to ask you, all the investment gurus, how does it look to you guys? If you were investing, would you change anything (including replacing one of the funds or adding another fund)? 

50% Bond index
30% CDN index
15% US index
5% International index (given, IMO, whats on its way in Europe)

Another thing: between US Index and US Index currency neutral - which would be a better pick?

As always, your opinions are much appreciated.

Plutos


----------



## slacker (Mar 8, 2010)

The asset allocation depends heavily on your risk tolerance. I'm still fairly young, and can tolerate much risk, so I only have 10% bond allocation.

The amount of non-Canadian content also depends on your investment horizon. Again if you're fairly close to retirement (less than 15 years), then 30% CDN looks ok. (I'll at least put in 10% for International, because I don't think 5% is going to do much to your portfolio.

On the issue of Europe, I bought some international during the Greece crisis, and had been somewhat rewarded. If you're not confident about Europe, consider dropping it altogether.

On currency hedging, there is a continuous debate on whether hedging will have any net benefit. You can google for articles written by Canadian Capitalist and Canadian Couch Potatoes for further details. I personally found that non-currency-hedged funds tend to have a stabilizing effect on the return. (ie. if currency drops, then price of fund will raise and vice-versa) I do not utilize currency hedging.


----------



## Spidey (May 11, 2009)

I would go with the old standby of making your bond percentage equal to your age unless you are extremely risk adverse. So if you are, for example 30, your bond allocation should be 30%.

Otherwise, your allocations look okay except for being a little light in the international department. Since you are nervous about Europe, I would consider putting at least 5% into emerging markets. You could either consider purchasing something like the BMO emerging markets ETF (ZEM) or bite the bullet and pay higher MERs to purchase the TD emerging markets fund until your portfolio grows to a size to make ETF purchases more practical. 

As for the US allocation, I personally would choose the unhedged option at this point in time but there is nothing stopping you from going 50/50 hedged/unhedged. 

To throw a little more complication into the mix, if you are worried about currency devaluations, you could consider perhaps allocating 5% into the TD precious metals fund. (Of course, this step is optional and may be more appropriate as the portfolio grows larger.)


----------



## clovis8 (Dec 7, 2010)

With rising interest rates bonds don't seem very attractive right now, no?


----------



## brad (May 22, 2009)

clovis8 said:


> With rising interest rates bonds don't seem very attractive right now, no?


Worth reading:

http://canadiancouchpotato.com/2010/03/29/bonds-v-bond-funds/

and

http://canadiancouchpotato.com/2010/09/05/why-every-portfolio-needs-bonds/

and

http://canadiancouchpotato.com/2010/09/08/choosing-a-canadian-bond-index-fund/


----------

