# Help wanted with a new ETF portfolio...



## doitnow! (May 28, 2011)

Newbie investor, 57, mortgage paid, 250K equity in investment real estate, 300K RRSP, 15K in a GIC TFSA and 60K in cash.

I am creating a new portfolio and would appreciate any help you could provide in the way of comments, ideas and suggestions on the following 300K ETF RRSP I created based on limited research and am considering implementing.

Canadian equity - 25% iShares S&P/TSX Capped Composite (XIC); US equity -30% Vanguard Total Market Stock (VTI); Europe/Pacific equity - 15% Vanguard Europe Pacific (VEA); Emerging markets equity -10%; Vanguard Emerging Markets (VWO); Bonds? - 20% (your suggestion).

Thank you.


----------



## slacker (Mar 8, 2010)

Sounds good. Just watch out for foreign exchange fees charged by the brokerages. At your current allocation for foreign ETF's, if the bank charge you the standard 1.5% fee, you'll be paying $2475 in exchange fees.

Try to avoid that with norbert's gambit:

http://www.canadiancapitalist.com/a-foolproof-method-to-convert-canadian-dollars-into-us-dollars/


----------



## Cal (Jun 17, 2009)

www.milliondollarjourney.com has written a few articles regarding basic ETF portfolios. It might be worth a look.

Consider XBB or XHY.


----------



## larry81 (Nov 22, 2010)

Very solid portfolio, i hold exactly the same ETF.

For your bonds i recommend either XSB or XSB... or the excellent PHN110 from the folks at Phillips, Hager & North:

https://www.phn.com/Default.aspx?tabid=524

Welcome to the forum !


----------



## Rysto (Nov 22, 2010)

Do you have any short-term plans for your cash and GICs, or are you considering the whole thing as a single portfolio? If you're considering it as a whole, you've got a bit less than 40% fixed income, which I would call aggressive for somebody your age, but not overly so.

If your cash is already earmarked for short-term needs and your RRSP is intended for your retirement, then you should probably consider increasing the fixed income portion of your RRSP. To give some perspective, you're over twice my age and I have the same 20/80 bonds/stocks split.


----------



## Belguy (May 24, 2010)

Check out the model portfolios at www.canadiancouchpotato.com

Do you really have such a high risk tolerance that you can devote 80 percent of your portfolio to equity investments?

There is sometimes a fine line between properly diversified investing and gambling. It's your money and you should take adequate steps to protect it but everyone's risk tolerance is different. However, back in 2008, many investors learned the hard way, by experience, that their risk tolerance was nowhere near what they thought it was and they consequently sold out of panic at precisely the wrong time out of fear that their heavily weighted to equities portfolio was about to collapse. They did this after many nights of sleepless tossing and turning.

Know yourself.

My core bond holding is the PH&N Bond Fund D.


----------



## fatcat (Nov 11, 2009)

> PHN110


 PHN340 has a slightly better return at the same mer because it's charter allows the managers more flexibility in bond selection


----------



## doitnow! (May 28, 2011)

*Bank fees*

I heard that a couple of discount brokers do not charge these fees? Anyone know for sure?



slacker said:


> Sounds good. Just watch out for foreign exchange fees charged by the brokerages. At your current allocation for foreign ETF's, if the bank charge you the standard 1.5% fee, you'll be paying $2475 in exchange fees.
> 
> Try to avoid that with norbert's gambit:
> 
> http://www.canadiancapitalist.com/a-foolproof-method-to-convert-canadian-dollars-into-us-dollars/


----------



## doitnow! (May 28, 2011)

*Fixed income portion of portfolio*

Think I will consider your suggestion to increase my fixed income to 30% to 40%. 

Any suggestions on diversifying the fixed income portion of the portfolio, ie REIT's?



slacker said:


> Sounds good. Just watch out for foreign exchange fees charged by the brokerages. At your current allocation for foreign ETF's, if the bank charge you the standard 1.5% fee, you'll be paying $2475 in exchange fees.
> 
> Try to avoid that with norbert's gambit:
> 
> http://www.canadiancapitalist.com/a-foolproof-method-to-convert-canadian-dollars-into-us-dollars/





Belguy said:


> Check out the model portfolios at www.canadiancouchpotato.com
> 
> Do you really have such a high risk tolerance that you can devote 80 percent of your portfolio to equity investments?
> 
> ...


----------



## doitnow! (May 28, 2011)

*Your thoughts on my first (revised) ETF portfolio*

I posted that I was considering the portfolio below but a number of you thought that it was too aggressive for a 57 year old. I think it is good advice, I am considering making changes. I would appreciate your thoughts on the following options:

60/40 or 70/30?

Is the percentage of US equities too high?

I want to take 20% from equities and add it to fixed assets, where would you take it from below?

Canadian or US fixed assets? 

Which Canadian fixed assets investments do you own?

Other than Bonds, any other fixed asset investments ideas?

Thank you.

This was the initial portfolio:

Canadian equity 25% iShares S&P/TSX Capped Composite (XIC)

US equity 35% Vanguard Total Market Stock (VTI)

Europe/Pacific equity	15% Vanguard Europe Pacific (VEA)

Emerging markets equity 5% Vanguard Emerging Markets (VWO)

Corporate bonds 10% Claymore 1-5 Yr Laddered Corp Bond (CBO)

Government bonds 10% Claymore 1-5 Yr Laddered Gov’t Bond (CLF)


----------



## doitnow! (May 28, 2011)

*My first portfolio queries...*

Almost completed my first self created index RRSP portfolio.

Question: I have 15K in a TFSA and 35K in cash that I would like to invest in index funds outside the RRSP.

How are you investing similar amounts outsider your RRSP?

Would you simply use the same assest allocation and investments that you have in your RRSP?

Thank you.


----------



## MarkP (Mar 30, 2011)

You should think of all your accounts as a single portfolio. For example, hold your international equities in RRSP, bonds fund in a registered account and canadian equities in a non-registered account. 

With this setup, you can save on trading cost and optimized your taxable income.


----------



## larry81 (Nov 22, 2010)

doitnow! said:


> I posted that I was considering the portfolio below but a number of you thought that it was too aggressive for a 57 year old. I think it is good advice, I am considering making changes. I would appreciate your thoughts on the following options:
> 
> *60/40 or 70/30?*
> 
> ...


----------



## larry81 (Nov 22, 2010)

look at this nice little summary writeup from our own ravenspud:

http://www.northernraven.ca/financial/RavenSpud.html


----------



## Financial Cents (Jul 22, 2010)

@doitnow!

I like where you're going with the selections. My feedback:

25% = XIC, great pick and weighting.
35% = VTI, great pick although seems kinda high to me? Maybe closer to 25% is better?
15% = VEA, again great pick but maybe only 5%?
5% = VWO, great pick, I own it as well at 5% of my RRSP.
__________

I would put about 60% in equities. Here, you have 80%. 

I'm 37 and I have 30% bonds (all XBB) in my RRSP, just saying.

What about 20% XSB and split the rest:
Corporate bonds 10% Claymore 1-5 Yr Laddered Corp Bond (CBO)
Government bonds 10% Claymore 1-5 Yr Laddered Gov’t Bond (CLF) 

?

That would be quite healthy and diverse im my opinion for a 57-year-old and if you know about these products and asset allocation, you not that much of a "newbie"

Good luck!

My Own Advisor


----------



## Financial Cents (Jul 22, 2010)

@doitnow!

I've got dividend-paying stocks in my TFSA, but REITs (XRE) and some of the same ETFs as your RRSP, would be great selections as well. Passive income TFSA income and low fees all the way


----------



## gibor365 (Apr 1, 2011)

You can split fixed-income allocation to several parts: short term bonds like XSB/CBO, high yield bonds like CHB , REIT ETFs like XRE or ZRE


----------



## dubmac (Jan 9, 2011)

I'm looking at buying either XRE or ZRE for my & my wife's TFSA. I don't see the prices fluctuate very much - they seem to have flattened. Is now a good time to buy as any?


----------



## doitnow! (May 28, 2011)

*RRSP and non RRSP accounts*



MarkP said:


> You should think of all your accounts as a single portfolio. For example, hold your international equities in RRSP, bonds fund in a registered account and canadian equities in a non-registered account.
> 
> With this setup, you can save on trading cost and optimized your taxable income.


How is that possible when I have 300K in RRSP and 50K outside RRSP and I want to diversify the portfolio?


----------



## rafi20 (May 31, 2011)

I own one single etf XTR, in my TFSA. It is well diversified between bonds, REITS and equities. It pays good monthly income.


----------



## MarkP (Mar 30, 2011)

doitnow! said:


> How is that possible when I have 300K in RRSP and 50K outside RRSP and I want to diversify the portfolio?


You have to view your portfolio as a whole, for example, using your 350K scenario and 50% equities/50% bond split,

Instead of doing 150K equities/150K bonds in your RRSP and 25K equities/25K bonds outside, you can do:

Registered Accounts (RRSP/TFSA):
125K equities
175K bonds

Non-registered Accounts:
50k equities

You still get your diversification (and same asset allocation) but you lower trading cost and tax obligation with this scheme.


----------



## slacker (Mar 8, 2010)

doitnow! said:


> I heard that a couple of discount brokers do not charge these fees? Anyone know for sure?


I'm not aware of any discount brokers that offers free foreign currency conversion.

Interactive Brokers charge a very very low rate for non-registered account.

Questrade charges 0.5% for RRSP account

Big Banks average around 1.5% to 2.5%

I've heard good things about XE.com, but I have not try myself.


----------



## tombiosis (Dec 18, 2010)

MarkP said:


> You have to view your portfolio as a whole, for example, using your 350K scenario and 50% equities/50% bond split,
> 
> Instead of doing 150K equities/150K bonds in your RRSP and 25K equities/25K bonds outside, you can do:
> 
> ...


great post!
many people forget to treat all their investments as one big family.
I can't wait for the day when I am faced with this dilemma! just gotta max out my TFSA and then I'll be ready for some unregistered adventures!


----------



## andrewf (Mar 1, 2010)

slacker said:


> I'm not aware of any discount brokers that offers free foreign currency conversion.
> 
> Interactive Brokers charge a very very low rate for non-registered account.
> 
> ...


I think he might be referring to 'Norbert Gambit'. Technically no FX fees, just two commissions.


----------

