# 40 years old and need to get serious now!



## maybesomeday (Nov 25, 2013)

Hi Everyone,

First post, thanks in advance for reading it!!

As the title states, I need to start getting serious about my retirement plans. I have been reading lots on this forum, and it appears to me there is lots of smart, informed people here. Would love some direction. 


Basic info:

Married, three children
I am mortgage free this year, with a house worth about $700K (according to my property assessment) in an area where an average family home goes for $350K.
Good household income (200K+)
70K combined in our RRSP's 
Our business will no doubt be worth something when I retire, but I want to think of that as a bonus, and have my essentials covered without that.
No Pension (aside from CPP) as we own a small business.

We contribute $2K per month to our rrsps. (Started this last year)
We should be able to contribute 30K extra per year now that our mortgage is paid off. (Not too much more than that right now as we are also saving / paying for our three children to go to university)

Basically what I want to do is commit to a fairly hands off investment strategy. I actually know quite a bit about stocks ect. but am a fairly strong believer in the efficient market theory. I own a few shares of this and that right now, and it's fun, but I don't think it's the best approach!

I think I want to go the couch potato route, but how do I incorporate my monthly contributions to that strategy? I have an account set up with RBC Direct investing, so I'm thinking maybe wait until I accumulate say 80K, then sell my mutual fund units, buy my etfs. Then put my monthly contributions into an index fund, and once a year sell and re balance my etfs.

Does that make sense?


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## richard (Jun 20, 2013)

It sounds like you can put in over $4k per month. In that case you have nothing to gain by waiting. You could easily set up your desired allocation now using a few ETFs, and then each month put more money into one of them (or no more than 2 if you really have to). Any asset allocation issues from this will be resolved within a few months so it's not a big problem. It sounds like your living expenses are not too high so you can quickly build up a good portfolio this way.


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## maybesomeday (Nov 25, 2013)

Thanks guys!

The bonuses come randomly, and I have $1000 per account (my wife and I's) to invest per month. Should I just let that sit as cash and purchase ETF's every four months or so? I guess that is my main question....How often should I purchase the ETFs, and what should I do with the cash while it is accumulating....Right now mine is sitting as cash, and my wife's is going into a balanced fund at RBC.


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## canucked_up (Feb 23, 2014)

I have an investment account with one of the big banks and an account with Questrade. I'm not sure about others but you can buy ETF's for free at Questrade. So no issues with cost and buying frequency. If you are buying regularly you will re-balance with purchases. No need to sell. 

Good Luck.


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## richard (Jun 20, 2013)

If you are adding $1000/month and paying a $10 buy commission, you shouldn't wait for more than 2 months to buy.


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## My Own Advisor (Sep 24, 2012)

Wow, great job with the mortgage and everything really.....

$2K per month to your rrsps is great.

If you can keep your transaction costs below 1% or better still, <0.5%, you're doing well.

Good call on moving to ETFs.

Keep up the awesome work.


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## maybesomeday (Nov 25, 2013)

Thanks everybody!

In fairness, I didn't pay off a $700 mortgage, I bought my first house at 21, and have built up lots of equity through selling that house, and building another. 

Thanks for the advise on when to make my etf purchases. I think I will buy more units every 2 months. (at $9.95 per trade, or .5% cost)

Just need to make final decisions on allocation and which etfs....

I'm thinking....

25% VCN
25% VUN or VTI (thinking VTI, but not sure about how the currency conversion works yet. Maybe need to do some more research yet!! )
25% XEF
25% Bond fund. Thinking CBO at least for a year or so to see what is going to happen to interest rates??

Thoughts? I know I'm 75% equities, but I really don't have any requirements for the money for quite a long time.....

As a general rule, do the dividends get deposited into my account as cash? Then I could use those to buy more units? Are distributions usually done quarterly? Or do people use a DRIP for ETF's? Thinking this may effect my decision to VUN or VTI?

Thanks again!!


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## GoldStone (Mar 6, 2011)

My Own Advisor said:


> If you can keep your transaction costs below 1% or better still, <0.5%, you're doing well.


Less than 0.5% is a good target. I pay $9.99 per trade. My personal transaction minimum for ETFs or stocks is $3000. 0.33% cost per transacition.

OP, you can use RBC index funds to build the positions before you switch over to ETFs.
http://canadiancouchpotato.com/recommended-index-funds/

If you go this route, watch out for early redemption fees. Typical requirement is to hold a fund for 30 days.


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## My Own Advisor (Sep 24, 2012)

I'm almost 100% equities myself, a few ETFs and 30+ dividend stocks.

I think I wrote about this in another post, but I really like XIU for CDN equity but VCN, VCE, ZCN, they are all good.

I like VTI and VXUS in RRSP.

For the most part, I DRIP everything I can. I don't have to worry about buying at the right time and it takes the emotion out of investing. Others will vary, but this works for me. XIU is quarterly distribution, as is VTI and VXUS. Most ETFs are except for bond ETFs, income ETFs and REIT ETFs.


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## PoolAndRapid (Dec 3, 2013)

..


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## richard (Jun 20, 2013)

If you use VTI you'll need to be careful to avoid large currency conversion costs every time you buy. The costs on dividends are less of an issue since dividends ar ea small percentage of the portfolio to begin with. There's nothing wrong with using VUN if it's more convenient.


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## maybesomeday (Nov 25, 2013)

Hi Everyone. I have been browsing the forum lots, but not contributed in a while. I have accumulated positions in several individual stocks (FTS, aapl, BAC, ARE, COS, and purchased several different index etf's..... I need some encouragement to follow a couch potato strategy more closely! I am low on my Euro allocation right now, but I read the globe and mail too much and am finding it hard to commit more money there right now. Plus I am thinking of getting out of my individual stocks (mostly bought them for fun / hobby) as I need to spend more time on other things right now. What are your thoughts on selling everything at market price (you win some you loose some) and re-balancing with etf's. And I love the simplicity of the latest couch potato portfolio of three etf's so should I sell what I have and purchase those ones? I definetly fall in the buy what's hot trap too easily. Thanks for any advice / encouragement you can offer!! FYI portfolio is at 108K now.


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