# How to invest Inheritance



## jman123 (Jan 28, 2015)

Greetings,

Recently my mother-in-law died and left us with an inheritance of approximately $400K. 

We are both retired and live off our OAS and QPP pensions and our savings in our RRIFs and my LIF. Since our TFSAs are maxed out we will probably deposit the inheritance money in an unregistered investment account.

A portion of our money is with a financial advisor (which may change) and we control the rest using RBC Direct Investing.
For the money we control we are trying to maintain a 60/40 split using ETFs such as VBAL,XBAL,ZAG,XAW,VCN,XUU and XEQT. Lately I am trying to just stick with VBAL and XBAL when any new funds are purchased. I like to follow the Couch Potato Portfolio and keep it simple.

We have no great need for this additional money and are managing pretty well with what we have already so I am thinking of going with a 70/30 split for these additional funds.

I am thinking of splitting the money seven ways with VBAL/VGRO/XBAL/XGRO/ZBAL/ZGRO and HBAL. I prefer to spread the money across multiple companies but maybe I am making this overly complicated. 

Your advice please.

Thank you.


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## newfoundlander61 (Feb 6, 2011)

"We have no great need for this additional money and are managing pretty well with what we have" This is a good position in, not sure if you have any other family members IE: grandkids etc. This would be a good time to give some of the this new money now instead of waiting until the estate is settled down the road.


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## Ponderling (Mar 1, 2013)

Do you have kids who have tfsa and rrsp contribution room you want to help out now?


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## m3s (Apr 3, 2010)

jman123 said:


> I am thinking of splitting the money seven ways with VBAL/VGRO/XBAL/XGRO/ZBAL/ZGRO and HBAL. I prefer to spread the money across multiple companies but maybe I am making this overly complicated.


That kind of defeats the whole purpose of buying a self-rebalancing all-in-one ETF. Just buy one of them based on how much bonds you want

If you want to buy 7 ETFs and don't mind the fees and rebalancing yourself - buy the underlying ETFs that these ETFs hold


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## Plugging Along (Jan 3, 2011)

@jman123 If you truly have no need for the money, I am for passing some of it on to the next generation for your kids or grandkids, and maybe a family trip (when safe to do so). Sorry no advice on what to invest the money in, just on how to spend it  Otherwise I am inclined to say if your current investment strategy is working now, I would invest the inheritence the same way.


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## jman123 (Jan 28, 2015)

Ponderling said:


> Do you have kids who have tfsa and rrsp contribution room you want to help out now?


No.


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## jman123 (Jan 28, 2015)

Plugging Along said:


> @jman123 If you truly have no need for the money, I am for passing some of it on to the next generation for your kids or grandkids, and maybe a family trip (when safe to do so). Sorry no advice on what to invest the money in, just on how to spend it  Otherwise I am inclined to say if your current investment strategy is working now, I would invest the inheritence the same way.


Some of the inheritance will be spent but the rest will need to be deposited. Thanks.


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## jman123 (Jan 28, 2015)

m3s said:


> That kind of defeats the whole purpose of buying a self-rebalancing all-in-one ETF. Just buy one of them based on how much bonds you want
> 
> If you want to buy 7 ETFs and don't mind the fees and rebalancing yourself - buy the underlying ETFs that these ETFs hold


Too many ETFs if I buy the underlying ETFs. I want to get to a 70/30 split. Not possible with VGRO (80/20) and VBAL (60/40) alone. Together 70/30. Probably need to rebalance once a year between the two. Will probably need to do the same with XGRO/XBAL and ZGRO/ZBAL. I am a bit reluctant to just go all in with VGRO/VBAL. Thought adding the other 2 sets a little "safer". Thanks.


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## m3s (Apr 3, 2010)

To get a 70/30 split I would buy VEQT (or similar ETF without bonds) and then a bond ETF that you can balance to 30% yourself

Buying 6 all-in-one ETFs that hold the same underlying to try to get 30% bonds makes no sense. Just costs more in fees and complicates rebalancing and taxes (defeats the simplicity purpose of an all-in-one)

You could buy 2 or 3 the underlying ETFs to better manage taxes and your desired 30%....


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## AltaRed (Jun 8, 2009)

jman123 said:


> I am thinking of splitting the money seven ways with VBAL/VGRO/XBAL/XGRO/ZBAL/ZGRO and HBAL. I prefer to spread the money across multiple companies but maybe I am making this overly complicated.


You are making this overly complicated. I would have no aversion to simply holding VBAL and VGRO (or XBAL and XGRO) in equal amounts to get the 70/30 split. You could even go for a disproportionate mix of XEQT and XBAL to get 70/30. You do not need more than 2 asset allocation ETFs for $400k. 

Some of us have well over those amounts in a single ETF and some have their entire non-reg/RRSP/TFSA in a single holding like VBAL (the concept being called "VBAL Everywhere"). There has never been an easier nor more cost effective time to invest as it is now.


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## jman123 (Jan 28, 2015)

AltaRed said:


> You are making this overly complicated. I would have no aversion to simply holding VBAL and VGRO (or XBAL and XGRO) in equal amounts to get the 70/30 split. You could even go for a disproportionate mix of XEQT and XBAL to get 70/30. You do not need more than 2 asset allocation ETFs for $400k.
> 
> Some of us have well over those amounts in a single ETF and some have their entire non-reg/RRSP/TFSA in a single holding like VBAL (the concept being called "VBAL Everywhere"). There has never been an easier nor more cost effective time to invest as it is now.


Ok, thanks for your advice. There is a bit of time before the estate is settled but maybe sticking with equal amounts of VBAL/VGRO or XBAL/XGRO is the way to go. Just out of interest what do you think of HBAL? It seems to offer a 70/30 split and is mentioned in the "Best all-in-one ETFs for 2021" at Best all-in-one ETFs for 2021 | MoneySense


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## AltaRed (Jun 8, 2009)

A number of folk like the Horizon products because they do not pay out distributions, i.e. they capitalize internally for deferred capital gains at a future date when units are sold. There is tax efficiency in doing so if one does not need to tap into the holding for years (decades) to come.

It is a personal thing but I am a stickler against "financially engineered products" and believe the gov't may close this loophole someday. Further, I am retired in withdrawal mode and want the cash distributions for cash flow anyway, so why buy products that are more financially engineered than they need to be?


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## jman123 (Jan 28, 2015)

AltaRed said:


> A number of folk like the Horizon products because they do not pay out distributions, i.e. they capitalize internally for deferred capital gains at a future date when units are sold. There is tax efficiency in doing so if one does not need to tap into the holding for years (decades) to come.
> 
> It is a personal thing but I am a stickler against "financially engineered products" and believe the gov't may close this loophole someday. Further, I am retired in withdrawal mode and want the cash distributions for cash flow anyway, so why buy products that are more financially engineered than they need to be?


Thanks for the info. Question... Is there any real difference between VBAL,XBAL,ZBAL and this HBAL? I see a minor performance difference between VBAL and XBAL.


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## AltaRed (Jun 8, 2009)

VBAL and XBAL have slightly different global weightings in their constituent holdings, e.g. XBAL has less Cdn equity than VBAL, so performance will have to be slightly different except by pure coincidence. s XBAL also has a slightly lower MER of 0.22% vs 0.25% which is neither here nor there. I've never looked at the differences with the other offerings.

Whether one is better than the other over 10 or 20 years is an unknown. I'd probably make the judgement of which one by the amount of Cdn equity one wants (or roll the dice).

Justin Bender has YouTube vids making comparisons so you may want to google them. Justin Bender of PWL Capital does a wonderful community service with his work as does his cohort Ben Felix. Those two should receive awards for their service.


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## jman123 (Jan 28, 2015)

AltaRed said:


> VBAL and XBAL have slightly different global weightings in their constituent holdings, e.g. XBAL has less Cdn equity than VBAL, so performance will have to be slightly different except by pure coincidence. s XBAL also has a slightly lower MER of 0.22% vs 0.25% which is neither here nor there. I've never looked at the differences with the other offerings.
> 
> Whether one is better than the other over 10 or 20 years is an unknown. I'd probably make the judgement of which one by the amount of Cdn equity one wants (or roll the dice).
> 
> Justin Bender has YouTube vids making comparisons so you may want to google them. Justin Bender of PWL Capital does a wonderful community service with his work as does his cohort Ben Felix. Those two should receive awards for their service.


Thanks. Will check it out. Also, from my other post I will check out PWL Capital. Much appreciated.


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## james4beach (Nov 15, 2012)

I don't even see the reason to hold both VBAL and XBAL. That's a lot of duplication and they're more or less the same thing. Really splitting hairs, if there's any difference.

Personally I would just hold one of them. If having all of it in a single ETF makes you anxious, then I can see a point of holding both VBAL and XBAL just to have the money invested through two completely different companies (Vanguard & iShares)

VBAL (or XBAL) on its own, completely achieves the "couch potato investing" endorsed by Justin Bender and PWL. These are very good funds.


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## Franky Jr (Oct 5, 2009)

HBAL is super for a non registered account! (if you are comfortable with the arrangements they have made to replicate the indices)

I would aim for simplification, the fewer holdings the better when discussing these all in one funds. 

If you don't need the money maybe go higher risk with a 'growth' version....

All the best!


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## jman123 (Jan 28, 2015)

Thanks to all who responded. Will definitely go with fewer holdings and make my decision when the estate is settled.


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