# TFSA ETF Portfolio Strategy



## arc (May 19, 2012)

Hello, hoping to get some feedback and advice on my TFSA portfolio and strategy. Since this is my TFSA, I wanted to find a very conservative approach (no tax losses). *Is now a good time to buy?*. The portfolio is 40k.* I've removed all bond funds* from it because my guess is that interest rates can not possibly drop any lower.

10% VUN -> not sure if withholding tax will be an issue
20% XDV
10% VTI -> considering VXC to replace
10% VSB -> hadn't had a chance to off load this. any thoughts? maybe should buy more?
20% XIC -> considering timing for buying more
30% -> cash ->* thinking of buying an energy ETF?*

Thanks


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## Soon Forget (Mar 25, 2014)

Aside from VSB - which is a bond fund - what you've outlined is the opposite of 'a very conservative approach'. Equities are risky and come with the potential of large losses.

If you're concerned about rising interest rates creating a drop in the price of your bond fund, consider that rising interest rates may have an even larger impact on equity prices.


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## Butters (Apr 20, 2012)

VUN and VTI are the same thing, one is held in CDN$ other in US$

If you already own VSB why not hang onto it

*Stick with a simple couch potato ETF plan*, and don't listen the the music around you

this site shows 3 different companies, BMO,, ishares, vanguard.... and 3 very similar ways to couch potato
http://www.canadianportfoliomanagerblog.com/model-etf-portfolios/


XIC is your 20% canada
find a 20% US and a 20% international (for simplicity you could just get 40% VXC instead)
Keep your bonds 10% VSB

now with the other 50% determine whether you want to double your positions


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## CalgaryPotato (Mar 7, 2015)

I guess the most important question is, what is the goal for this money and the timeframe for it. You're talking about conservative (no losses), yet this portfolio is highly inconsistent with that. Especially if you move your 30% cash into an energy ETF (talk about high volatility).


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## My Own Advisor (Sep 24, 2012)

CalgaryPotato said:


> I guess the most important question is, what is the goal for this money and the timeframe for it.


Agreed. If you consider all accounts as part of one big portfolio, you could go XIC + VAB in your TFSA and use a US $$ RRSP for VTI or VUN for CDN $$ RRSP; or combinations of.


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## leeder (Jan 28, 2012)

If you are a long term investor (10+ years) and are not planning to withdraw your investments through thick and thin, then there's no point of timing the markets. No one knows if the markets will go up or down in the near future. No one knows if interest rates will increase or decrease either. I think many people were betting on a rate hike before Bank of Canada decided to cut to 0.75%. I recommend that you set up a diversified portfolio and stick with your investment plans. 

Others have already mentioned products, so I won't comment too much. With regards to withholding tax, you're going to be affected regardless if you invest in VTI or VUN in a TFSA. Best bet is to hold VTI in a US RRSP account. The withholding tax would not be applicable. 

And boy, if conservative investing means no tax loss, then I'd invest in all equities in my TFSA!


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## pearl (Mar 5, 2015)

I just opened TFSA a month ago and contributed full $36500. I bought 1200 shares of XIC ( unlucky, it is down $700 already). Is it Ok to buy VAX for the rest $8000? Thanks. I have time frame of over 10 year and will contribute full amount in the future since I have paid down my mortgage.


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## arc (May 19, 2012)

Thanks for the replies. My rationale is that these are all broad market equity ETFs considering that it is impossible for interest rates to drop any further it makes sense that:

1) Interest rate must go up in the next 1-2 years leading to a drop in all bond index funds hence investing in bonds would actually be more risky than equities in the next 1-2 yrs

2) A rise in interest rates will drive the equity index up as financials are one of the largest drivers of XIC and Canadian equity indexs

3) Oil prices must go up in the next 6 months - 1 year. Driving up energy ETFs and Canadian index ETFs

Let me know what you guys think.
thanks


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## CalgaryPotato (Mar 7, 2015)

Wow you know a lot about what's going to happen. If you can see the future, can you invest my money for me too. Thanks!

Sorry, I know I'm being a wise ***, but you have to remember that there are other people investing too with the same (and quite possibly more) knowledge of the economical system as you. The low interest rate is already factored into the prices of the funds (and their underlying stocks), it's already factored into the price of the bond funds, etc. 

You're playing a dangerous game, if you start assuming that you know something that no one else does, and the market hasn't already accounted for it.



arc said:


> Thanks for the replies. My rationale is that these are all broad market equity ETFs considering that it is impossible for interest rates to drop any further it makes sense that:
> 
> 1) Interest rate must go up in the next 1-2 years leading to a drop in all bond index funds hence investing in bonds would actually be more risky than equities in the next 1-2 yrs
> 
> ...


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## arc (May 19, 2012)

CalgaryPotato said:


> Wow you know a lot about what's going to happen. If you can see the future, can you invest my money for me too. Thanks!
> 
> Sorry, I know I'm being a wise ***, but you have to remember that there are other people investing too with the same (and quite possibly more) knowledge of the economical system as you. The low interest rate is already factored into the prices of the funds (and their underlying stocks), it's already factored into the price of the bond funds, etc.
> 
> You're playing a dangerous game, if you start assuming that you know something that no one else does, and the market hasn't already accounted for it.


Sorry but can you please explain to me how interest rates can possibly stay at this rate for much longer? I honestly don't know how it can be so?


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## My Own Advisor (Sep 24, 2012)

TD thinks rates could stay low for decades....
http://www.td.com/document/PDF/economics/special/LowRatesInAdvancedEconomiesForLongRun.pdf

The reality is, nobody knows. 

Invest like a) you don't care what the future holds and b) how you can realize your goals.

Then regardless of what happens you are not disappointed.


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## arc (May 19, 2012)

what do you guys think about a conservative REIT etf?


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## leeder (Jan 28, 2012)

You're worried about rate hikes, yet you're thinking about REITs? I don't believe there is such thing as a "conservative" REIT ETF. Best bet is not to time the markets and diversify your investments.


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