The High Cost of High Dividends

In our recent white paper, Asset Location for Taxable Investors, Justin Bender and I argue that investors may be better off keeping their bonds in an RRSP, while equities should be held in a taxable account (assuming, of course, that all registered accounts have been maxed out). At the end of the paper, however, we noted one exception: investors who use high-dividend strategies may well be better off sheltering their equities in an RRSP.

Stocks can be relatively tax-efficient because much of their growth comes from capital gains, which are taxed at just half the rate of regular income and can be deferred indefinitely. Canadian dividends also receive a generous dividend tax credit that benefits low-income investors in particular: a retiree in Ontario whose only other source of income is the Canada Pension Plan and Old Age Security might be able to collect more than $20,000 a year in eligible Canadian dividends and pay no tax.

Getting paid taxed to wait

But if you’re still working and earning a good income, a dividend strategy may come at a high cost, especially if your taxable portfolio includes foreign equity ETFs. That’s because foreign dividends are fully taxable as income: double the rate of capital gains.

Consider two foreign equity ETFs: one appreciates in price by 3% and pays a 4% dividend, while the other grows by 5% but pays a 2% dividend. In an RRSP, the total return on both funds is an identical 7%. But in a non-registered account, the after-tax return would be significantly lower for the high-dividend fund.

Here’s a simple example for an Ontario investor in the highest tax bracket, where capital gains are taxed at 23.20%, Canadian dividends at 29.52%, and foreign income at 46.41%:

Amount 3% cap gain 4% dividend Total tax
Canadian $10,000 $69.60 $118.08 $187.68
Foreign $10,000 $69.60 $185.64 $255.24
 .
Amount 5% cap gain 2% dividend Total tax
Canadian $10,000 $116.00 $59.04 $175.04
Foreign $10,000 $116.00 $92.82 $208.82

In this example, the difference is small for Canadian stocks, but for foreign equities the high-dividend strategy results in a tax bill 18% higher. And this assumes the capital gain is realized at the end of the year. In reality, an investor in the accumulation stage can defer that gain indefinitely by not selling ETF shares, and by taking advantage of tax-loss harvesting opportunities as they arise. If those capital gains can be deferred until retirement and realized at a lower rate, the low-dividend strategy looks even more attractive.

When less is more

This is something to keep in mind when considering dividend-oriented ETFs such as the RBC Quant U.S. Dividend Leaders (RUD) and the RBC Quant EAFE Dividend Leaders (RID), which I discussed in my last post. These ETFs boast yields of 3.8% and 4.8% respectively, which look attractive. But even if they modestly outperform the broad-market indexes on a pre-tax basis, taxable investors might end up with less, because those big dividends will be cut in half by the CRA.

If you hold foreign equities in a taxable account and you’re inclined to invest in dividend payers, consider ETFs that focus on dividend growth rather than high yield. The Vanguard Dividend Appreciation ETF (VIG), for example, holds companies with a record of raising its payouts, but its current yield is barely over 2%, only slightly above that of the overall US market.

You should also think carefully before considering income-oriented foreign investments such as global REITs. The SPDR Dow Jones Global Real Estate ETF (RWO) currently throws off more than 3.5% in fully taxable income and should probably be held in an RRSP or not all.

There’s also a lesson here for investors who have recently maxed out their RRSPs and are now forced to hold some assets in taxable accounts. The first asset class to go in the non-registered account should be Canadian equities, which are the most lightly taxed. Next on the list is US equities, which currently have quite low yields. International equities, with their relatively high payouts, should be sheltered from taxes as long as possible.

38 Responses to The High Cost of High Dividends

  1. MrMoxy May 1, 2014 at 9:02 am #

    To your stipulation “if you are still working and earning a good income” I would add “if you are retired and have a good pension”. Those retired with pension will get similarly burned by tax.

  2. Canadian Couch Potato May 1, 2014 at 9:08 am #

    @MrMoxy: True indeed. It’s also worth mentioning that retirees should be careful with Canadian dividend stocks if they are near the clawback threshold for Old Age Security. Every $1 in eligible Canadian dividends counts as $1.38 in income because of the gross-up, whereas every $1 in realized capital gains counts as $0.50.

  3. Holger May 1, 2014 at 10:06 am #

    This issue is especially valid for newcomers to Canada who are forced to maintain most of their assets in taxable accounts while TFSA/RRSP contribution room grows slowly.

    From a tax optimisation perspective, would it make sense to overweight investments with a capital gains focus instead of yield, e.g. to add SCHG or VUG for U.S. equity to a core VTI position?

  4. Richard May 1, 2014 at 10:18 am #

    Do you know what the effect of taxes is for foreign dividends received in a corporation?

  5. Canadian Couch Potato May 1, 2014 at 10:28 am #

    @Holger: I would not go so far as to say investors should specifically look for growth ETFs: I would just use broad-market ETFs and avoid specifically seeking high-yield ETFs.

    @Richard: This problem is worse in a corporate account, where foreign dividends are taxed even more unfavourably:
    https://www.pwlcapital.com/en/Advisor/Toronto/Toronto-Team/Blog/Justin-Bender/February-2013/Foreign-Withholding-Taxes-in-a-CCPC

  6. Sixtyplus May 1, 2014 at 6:13 pm #

    Why not use HXS and HXT? What is the downside except for counterparty risk.
    I realize these are not dividend based etfs but it seems to overcome the taxation issue especially if one has capital losses, which unfortunately I do!

  7. Canadian Couch Potato May 1, 2014 at 6:49 pm #

    @sixtyplus: Those ETFs are certainly options for Canadian and US stocks if you are comfortable with the counterparty risk, especially if you have carried forward capital losses. But with HXS one needs to recognize that the all-in cost is about 0.45% including the swap fee.

  8. Sixtyplus May 1, 2014 at 6:57 pm #

    Thank you, I think it should work for me. I think it also gets around the potential problem that the gross up of canadian dividends can have on OAS.

  9. Mark P May 1, 2014 at 8:06 pm #

    Hello CCP,

    In general, what is more advantageous to hold in a taxable account, Canadian dividend ETF (XEI / VDY) or a Canadian broad market (VCN, XIC) ETF?

    In tax brackets where the dividend tax rates are lower than capital gains, does the yearly tax bill hinder the growth more than deferred higher capital gains tax bill? Is it too close to even matter?

    Thank you.

  10. Canadian Couch Potato May 1, 2014 at 9:11 pm #

    @Mark P: If you’re in a very low tax bracket there is a significant advantage for Canadian dividends over capital gains. But as always, the first priority is always to consider risk before taxes. I would not recommend choosing an income-oriented fund over a broad market fund unless I was sure it was well diversified.

  11. Retail Investor May 2, 2014 at 1:25 pm #

    I have a few problems with this analysis.
    A) Giving examples and forming advice rules requires assumptions that rarely apply to many/most people. For example –
    (i) Not all of us live in Ontario and the tax rates we face will differ. Is it not better to use explicitly generalized rates (assume provincial taxes add 50% of federal rates)?
    (ii) Not many of us are taxed at the top tax bracket. At the bottom bracket dividends are taxed at essentially 0% – while at the top bracket they are taxed higher than capital gains. Any advice rules not hold true for both people.
    (ii) The holding period before realizing capital gains is very personal and will differ between indexers and stock pickers and between stock pickers.
    (iv) Whether RRSP withdrawals will be taxed at higher or lower rates than in effect at contribution depends on a long list of unknowns (unless the discussion is restricted to the most wealthy of us at the top tax bracket.
    (v) Etc etc. My point being that no generalized advice is possible even if you know the future

    B) The optimal Asset Location decision depends on four variables – the length of time involve, the rate of return from the assets from each type of income, the effective tax rate for each type, and the difference in tax rates between RRSP contribution and withdrawal. But these will never be better than guesses about an unknown future.

    C) Then there is the question ‘does any of this really matter?’. If you include yearly re-balancing into the analysis the difference in outcomes is rarely more than 5% after 30 years. So is this not all much to do about nothing?

    D) The chart in the article indicates that the authors think the AL decision should be based on the first year’s $taxes (the chart multiplies the effective tax rate by the rate of return). But that metric does not measure the tax-sheltering benefit from RRSPs. Compounding over time changes everything.

    The $benefit equals the difference between the future value of after-tax savings compounded at the nominal rate of return vs the after-tax rate of return. This produces a $benefits profile where lines can cross. See the first diagram at http://www.retailinvestor.org/rrsp.html#taxfree

  12. Canadian Couch Potato May 2, 2014 at 2:22 pm #

    @Retail Investor: One of the perennial challenges in investing and financial planning is that at some point you have no choice but to make decisions based on assumptions. So the question then becomes whether your assumptions are reasonable, and whether they help you make a prudent decisions. In some cases, a prudent decision will still result in a poor outcome, but that is unavoidable. It doesn’t mean we should just stop asking the question because a definitive answer is impossible.

    The main argument I tried to make here is that many investors seem to take for granted that high-yield stocks are attractive. In fact, for all investors (not just those in Ontario or those in the top tax bracket) foreign dividends are far less tax-efficient than capital gains. Investors who hold equities in non-registered accounts probably should not seek out high-yield US and international ETFs. That seems relatively uncontroversial.

  13. ABCD May 3, 2014 at 1:28 pm #

    Question about high-yielding US and international equities/ETFs:

    For US ETFs/Equities, I completely agree they should be in a registered acct, because the tax treaty with the U.S. means that you avoid the withholding tax.

    However, I believe that there are very few countries beyond the U.S. where Canada has this type of arrangement, right? So, a high yielding European or Asian investment would still get hit with withholdings – and in some cases these are even more than the 15%?

    For example, I believe that TOTAL (French Oil Company, ticker TOT) gets a 25% withholding?

  14. Canadian Couch Potato May 3, 2014 at 2:15 pm #

    @ABCD: I should stress that my main argument in this post had nothing to do with foreign withholding taxes, since these are often recoverable in a non-registered account. The much more important issue is Canadian income taxes.

    That said, you’re right that foreign countries outside the US typically often levy withholding taxes on dividends and these are not exempt in an RRSP (Canadians cannot usually hold non-US stocks in an RRSP directly anyway). I think you will find, however, that holding an US-listed ETF of international equities actually results in an overall withholding tax of less than 10%.
    http://canadiancouchpotato.com/2014/02/20/the-true-cost-of-foreign-withholding-taxes/

  15. Martin May 9, 2014 at 2:42 pm #

    Thanks for the post, CCP.

    Is there a lesson to be learned here regarding DRIPs in tax-inefficient accounts? Am I correct to assume by reading this article that it is a good idea to have a DRIP for stocks/ETFs held in TSFA and Margin/non registered accounts to avoid getting burned by taxes?

    The goal would therefore be to focus more on maximizing capital gains (through DRIPs or not) rather than on dividend income for these two types of accounts since dividends are tax-inefficient in TSFAs and non-registered accounts, right?

    Or am I mixing some things here.

    Thanks,

  16. Canadian Couch Potato May 9, 2014 at 3:03 pm #

    @Martin: Using DRIPs has no effect on taxes. A lot of investors seem to think you don’t pay taxes on dividends that are reinvested, but this is not true: you pay them every year, just as you would if you took the dividends in cash.

    You don’t pay any income tax on dividends held in TFSAs, so the situation is totally different. Are you referring to the foreign withholding taxes when you say “dividends are tax-inefficient in TFSAs”?

    The lesson here is simply that if you are holding foreign equities in a non-registered account, it doesn’t usually make sense to choose ETFs that specifically target high-dividend stocks.

  17. Martin May 9, 2014 at 3:20 pm #

    Thanks for clarifying, CCP!

    Yes, indeed, I was referring to the foreign withholding taxes when I mentioned “dividends are tax-inefficient in TFSAs”. Pardon the ambiguity. The reason I asked is because I hold a few U.S. high-dividend yield stocks in my TSFA, but even if I have a DRIP on these holdings, I believe I should have placed them in my RRSP. Ah well, you live, you learn!

  18. Andrew May 16, 2014 at 2:42 pm #

    Could you clarify something for me with this typical analysis
    that bonds are better in tax-free accounts and equities in taxable.

    Lets propose you have 10k each in bonds and equities that
    you wish to keep invested for the next 30 years.
    Furthermore, assume the rates of return for bonds and stocks
    are 5% and 10% respectively.

    Bonds would be worth:
    Taxable: $21k (30 years @ 2.5% – assuming 50% income tax)
    Non-Taxable: $43k (30 years @ 5%)

    Stocks would be worth:
    Taxable: $131k (30 years @ 10% – 25% cap gain)
    Non-Taxable: $175k (30 years @ 10%)

    So the total amount:
    Bonds taxable, Stocks non-taxable: 195k
    Bonds non-taxable, Stocks taxable: 174k

    So shouldn’t we be putting the stocks into the RRSP?
    What am I missing?

  19. Canadian Couch Potato May 16, 2014 at 3:43 pm #

    @Andrew: Not sure if you have seen this, but we just wrote a white paper analyzing this very question:
    http://canadiancouchpotato.com/2014/04/24/do-bonds-still-belong-in-an-rrsp/

  20. Deanna July 26, 2014 at 9:25 am #

    Hello Mr. Couch Potato,
    Thank you for such helpful information on building simple CDN ETF portfolios.
    I am trying to understand how to set up the most tax and currency efficient US index part of my ETF TFSA portfolio, but I can see that I do not know enough about US withholding tax or currency conversions.
    I am a single low-income Canadian woman working two part-time contract jobs, (no benefits) with 10 years to retirement (no debts). I am in the process of transferring my TFSA (maxed) to Questrade (from a high-interst savings account), so I can set up an ETF portfolio for retirement.
    My strategy is dollar cost averaging (purchasing shares of each ETF every month, since Questrade does not charge commissions for ETF purchases)
    I am confused about weather I should own the US SP500 Index in a $CAD TSX ETF or a $US NYSE ETF.
    I have read about US dividends being withheld if not in an RRSP. I cannot find information that clearly states US withholding taxes for ETFs in Canadian TFS Accounts.
    My general plan is to hold
    60% XIC,
    30% XSB,
    and the remaining 10% in US and International ETFs.

    These are the 10% US and International options I am considering for my TFSA:
    Strategy #1:
    5% VXUS
    5% VUN
    Strategy #2:
    10% XWD
    Strategy #3:
    5% XEF
    5% VFV
    I am a bit nervous about choosing ETFs that have not been established for at least one year. Any insights and advice from you would be appreciated. I have no intention of touching these investments until I retire.
    Thank you.
    Cheers,
    Deanna

  21. Canadian Couch Potato July 26, 2014 at 4:47 pm #

    @Deanna: If you are investing in TFSA you cannot do anything about the foreign withholding taxes: you are going to pay them one way or the other, and you cannot recover them. Canadian-listed ETFs will be cheaper to transact, so they are likely to be a better choice. If you’re using ETFs from Vanguard, iShares or another major provider it’s not likely to be a problem to use new ETFs. Even on the off-chance that the fund closes you would simply have your money retired to you and there would be no tax consequences.

  22. Julien November 28, 2014 at 1:59 am #

    You say that: “The first asset class to go in the non-registered account should be Canadian equities, which are the most lightly taxed.”.

    I’m not sure this is entirely true (please correct me if I am wrong, however): Unless you are earning high income, shouldn’t the order first be: Canadian Dividend paying equities, or Preferred Shares (who’s distributions are also taxed as eligible dividend income)? As per another one of your posts:

    http://canadiancouchpotato.com/2012/01/23/dividends-not-as-tax-friendly-as-you-may-think/

    You say that: “For an Ontario taxpayer with an income of $42,000 in 2012, the marginal rate on eligible Canadian dividends is just 3.8%, while the rate on capital gains is more than 12%.”

  23. Canadian Couch Potato November 28, 2014 at 8:27 am #

    @Julien: I didn’t make a distinction between “Canadian equities” and “Canadian dividend-paying equities.” All Canadian equity index funds pay dividends, though I suppose if you are in the lowest tax bracket it might make sense to favour a fund that pays higher dividends at the expense of capital gains. And, yes, if your portfolio includes preferred shares then these would also be a good choice in a taxable account.

  24. Retail Investor November 28, 2014 at 11:00 am #

    @Julien: You making the AL decision assuming the relevant metric is the tax rate % (for the income-type). But the decision is based mainly on the rate of return. A trade-off of importance between tax-rates and rates-of-return only become even-stephen at very, very low tax rates. This is because the faster compounding of assets creates larger and larger $profits, which create larger $taxes even when the tax rate is low.

    The first asset to go into non-registered accounts should be Treasury bonds with their low returns. You can see the proof in the example given on another thread’s comments section. http://canadiancouchpotato.com/2014/11/19/ask-the-spud-bond-etfs-in-taxable-accounts/ (Nov20, 9:38am)

    Consider also that equity dividends are just one part of the profits. To find the effective tax rate you must prorate the taxes from dividends and capital gains.

  25. Julien November 28, 2014 at 2:46 pm #

    Couch Potato: Thank you for your clarification – I had assumed when you said ‘Canadian equities’, you were implying an income type of ‘Capital Gains’, not thinking of course that Canadian companies also pay dividends!

    Retail Investor: Thank you for your comments as well. I took a look at your ‘Taxburden.xls’ spreadsheet, and was very pleased to see that others are doing exactly what I am doing right now – which is to study the effects of ‘Income Type’ and ‘Asset Location’ for planning purposes. I could have saved myself a bunch of trouble, if I had found your work earlier (however it was a useful exercise for me to go through on my own).

    The conclusion I have reached, after my studies, is that in BC, for taxable accounts, eligible dividends are the most efficient way to earn income, up to the 250k mark, and then it is capital gains. I understand that planning decisions should not be primarily based on tax considerations (i.e. don’t let the tax tail wag the investment dog), but I am less concerned with wealth creation at this point, and am trying to figure out the best way to live off of my assets, without any other sort of regular income. In this situation, I am trying to optimize my tax burden, and as such, have been looking into income type, and asset location (as well as income splitting with my spouse, through a spousal loan).

    With respect to your analysis on asset location – i.e. where to put fixed income assets vs. where to put growth assets, you say:

    “After 30 years with either one or the other in a Registered account, the larger ending wealth results from putting the stock in the Registered account, and the Debt in the taxable account.”

    I am not sure I agree with this statement, because this does not take into consideration the fact that when you take your money ‘out’ of the registered account, to spend on mai tai’s, this is always taxed as income, even though the wealth creation in the RRSP was done through a capital gain. Would it not make more sense to grow equities outside of the registered accounts, so when it comes time to sell, you can take advantage of the lower cap gains taxes?

  26. Retail Investor November 29, 2014 at 12:11 pm #

    To clarify .. I don’t believe that the issue of ‘which income-type is most tax efficient” (in a taxable account of course) is at all the same decision as Asset Location (AL) — which maximizes the benefits of registered accounts. Therefore the AL decision is not made according to the effective tax % rate.

    Regarding my spreadsheet on AL http://www.retailinvestor.org/Challenge.xls. You presume that the spreadsheet does not include the effect of taxes due on RRSP withdrawal … and so discount its conclusion. But the spreadsheet DOES factor in both the tax reduction at contribution and the tax increase at withdrawal.

    The top tab (no rebalancing) clearly shows the taxes on both contribution and withdrawal. Tthe ‘YearByYear’ tab of the spreadsheet (with rebalancing) also reflects both. Using the default numbers on the rebalancing sheet, on the very first line at t=0, you see the ending wealth equal to $1,400. That is the sum of $700 in the taxable account plus the $1,000 in the RRSP after paying 30% withdrawal tax.

    Your comment about profits in an RRSP being ‘taxed on withdrawal’ is promoted by the advice industry but is wrong. Watch at least the 2nd video of this series to understand what is actually happening. https://www.youtube.com/channel/UCYf70uCj5q4GRWYC0wVtdxg This error in “AL advice” is #3 on the list at http://www.retailinvestor.org/rrsp.html#taxfree

  27. Julien November 29, 2014 at 4:03 pm #

    Retail Investor: Thank you again for your input, I very much appreciate it. I spent the morning on your blog and watching the videos you link to. I agree with your conclusions and thinking behind the AL question with respect to the RRSP, in so far as the goal is to maximize the after tax take-home dollars at the end of the day, from ones *income* savings.

    Your analysis on AL is based on 3 phases: 1) Taxable Income reduction / RRSP contribution, 2) Growth, and finally 3) Withdrawal. In this case the benefits derived from putting the high-growth assets in your RRSP are due to the government effectively loaning you the amount of your tax-deduction, which can grow in your hands, tax free, before finally repaying it on withdrawl.

    My AL analysis is different, in that I have maxed out my RRSP, and have after-tax dollars left over in a taxable account to invest and (hopefully) live off of. My question is: what type of investments should I buy inside and outside of my registered accounts, to achieve an optimally tax efficient income stream (as well as a balanced portfolio from a risk standpoint).

  28. Retail Investor November 29, 2014 at 9:30 pm #

    @Julien : Your interpretation of my position is so far from what I am actually saying that …

  29. Julien November 29, 2014 at 11:55 pm #

    I guess I have miss understood you then. I’ll have to go back and re study your position.

  30. Eric June 21, 2015 at 10:23 pm #

    Great site BTW…

    Let’s say you (and your wife’s) RRSP is crowded out with a pension, your TSFAs are full with just Canadian bonds and you are forced to place all your equities in an unregistered account, then would you weight your Canadian equity allocation higher than you normally would?

    In the absence of this tax issue, let’s say I would be an assertive spud:

    – Canadian mixed Cap stocks (VCN) 25%

    – Non-Canadian mixed Cap stocks (VXC) 50%

    – Canadian Bonds (VAB) 25% …in TSFAs

    I love the simplicity. But given the tax situation, I wonder if it makes sense to bump up the VCN to 35% or more and reduce foreign holdings to 40% or less. Is that good tatering?

  31. Canadian Couch Potato June 22, 2015 at 8:14 am #

    @Eric: Thanks for the comment. My first question would be why the TFSAs are full of bonds: one could hold foreign equities in the TFSA to shelter them from tax and then look for tax-efficient fixed income options for the the non-registered accounts (such as GICs). But in any case, I don’t think one should dramatically overweight Canada for the sole purpose of claiming the dividend tax credit. Risk should trump tax-efficiency in investing decisions.

  32. Eric June 22, 2015 at 1:43 pm #

    Couch Potato:

    Its a fair point about not having Bonds in the TSFAs, given how low returns are on bonds anyway, but what about the problem of foreign withholding tax in TSFAs?

    I guess the other option are the swap based ETF’s from Horizon, but I am not sure I want to go there. Is there a growing consensus on these?

  33. Canadian Couch Potato June 22, 2015 at 1:50 pm #

    @Eric: Regarding foreign withholding taxes, this may help:
    http://canadiancouchpotato.com/2015/01/30/the-wrong-way-to-think-about-withholding-taxes/

    Swap-based ETFs may be an option if you are in the highest tax bracket, but there is no international equity option, so you are somewhat limited.

  34. Al W August 29, 2015 at 9:01 am #

    Not quite on topic but I’ve been looking for a couch potato explanation of this one if anyone has it or can point me to it. I have one more account to switch from Mutual Funds to a couch potato ETF portfolio – it’s an unregistered one. (I switched all my registered accounts earlier in the year). In the unregistered account I have about 60K in one mutual fund that produces dividends in December. Should I sell that fund before or after the dividend is distributed? Or more broadly – what are the implications – tax and other – of the timing of a switch from mutual funds to etfs in an unregistered account? Thanks!

  35. Canadian Couch Potato August 29, 2015 at 10:53 am #

    @Al: Great question. It’s a common misunderstanding that mutual funds “produce” dividends only once a year. The stocks in the fund produce dividends all year round, and these dividends are reinvested immediately. The annual dividend distribution is really just an accounting transaction: the fund’s NAV falls by an amount equal to the distribution, so there is no net gain to the investor. I like to make the analogy that it’s like being handed the bill at the end of a long restaurant meal.

    So yes, if you are planning to sell the fund for good, you may be better off selling it before the distribution, since you might then avoid the taxes. Of course, if you then purchase a replacement (whether ETF or mutual fund) you could potentially receive a taxable distribution from that fund instead:
    http://canadiancouchpotato.com/2010/12/10/how-to-avoid-paying-other-peoples-taxes/

    RBC publishes an excellent guide to mutual fund taxation that you may find helpful:
    http://funds.rbcgam.com/_assets-custom/pdf/taxes-and-investing-in-mutual-funds.pdf

  36. Al W September 3, 2015 at 8:36 pm #

    Thanks for the quick reply – and it’s making sense now! I like the analogy too. The links are helpful too.

  37. jim_kay January 8, 2016 at 10:03 am #

    If I am using the couch potato strategy (td e-series index funds) with an equal 25% of bonds, Canada, US and International indexes and have maxed out my TFSA, should I then open a TD RRSP account and use the same strategy / breakdown? Or is this not a good idea?

  38. Canadian Couch Potato January 10, 2016 at 11:32 am #

    @jim_kay: If you have both an RRSP and a TFSA (and no non-registered account) then it’s fine to use the same asset allocation in both accounts. This keeps things easy to manage and to rebalance. It may not be the optimal solution in terms of tax-efficiency, but this is not a big concern unless the portfolio is very large.

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