Your Complete Guide to Index Investing with Dan Bortolotti

Ask Me Anything: Part 2

2018-06-14T05:06:22+00:00May 24th, 2018|Categories: Ask the Spud|Tags: |47 Comments

Here’s Part 2 of the highlights from my recent AMA on Reddit. This is a lightly edited transcript of the exchange, along with some additional comments and links I didn’t have time to provide during the live discussion.


CrushyMcCrush: Two questions: 1) if you have existing stocks that are fairly diversified, would you consider them part of your allocation for that region (e.g. Google, FedEx etc. in place of a US ETF) or would you recommend selling these stocks and buying an ETF?

2) For index investing, what is the minimum amount of time in the market you would recommend for someone with an above-average risk tolerance? For example, if I am saving for a down payment in five years, is that long enough, or would you recommend a high-interest savings account?

CCP:  1) As you can imagine, I don’t recommend holding any individual stocks. They are a huge distraction: believe me, you’ll find yourself focused much more on those individual companies than on the rest of your portfolio. Unless you have very large capital gains that you want to defer, I generally recommend that index investors purge their portfolios of individual stocks and simply use ETFs.

If you can’t sell the stocks for whatever reason, then yes, I would tend to consider them as part of your overall allocation to that country (e.g. Google is part of your US equities, Royal Bank is part of your Canadian equities, etc.).

2) If you’re saving for a down payment, I would recommend GICs: this is about savings, not investing. GICs have zero risk of loss and decent rates now (2.5% to 3.25%), at least compared with years past. Just make sure you understand that GICs are not liquid, so if you think you might need the cash in two or three years rather than five, adjust the maturities accordingly.


jjj7890: I’m investing with monthly purchases of ETFs with a mix of 50% XIC and 25% XAW, with 25% allocated to fixed income—except instead of buying a bond ETF, I’m pre-paying my mortgage. I figure that “earning” a guaranteed 3% return on the mortgage prepayment is preferable to a 2% to 5% (?) fluctuating return on a bond fund. What might I not be thinking of, and what do you think of this approach in general?

CCP: There’s nothing at all wrong with what you’re doing: investing and paying down your mortgage are both ways of increasing your net worth.

I would just frame it differently. You are not allocating 25% of your investments to fixed income. You have a portfolio of 100% equities, and you are also paying down debt. The mortgage prepayments are a sound decision, but they’re not just a different way of buying fixed income. So just make sure you are comfortable with the risk of a 100% equity portfolio.


juggabags: I’ve followed the Couch Potato plan for years, shifting only very occasionally between the recommended ETFs in my RRSP and TFSA. But, now I’m thinking of getting into one of Vanguard’s new Asset Allocation ETFs (probably VBAL) and was questioning whether I should move all my current investments over, or just add any new funds to VBAL.

CCP: I’m getting this question a lot since the launch of the Vanguard asset allocation ETFs. I like simplicity, and I think hybrid solutions (holding the existing ETFs and adding new money to VBAL) undermine that simplicity and can make rebalancing even more complicated. So if there are no tax consequences (i.e. all of your funds are in TFSAs and RRSPs), I tend to recommend selling the current holdings and using only the one-fund solution.

[Note: I recently answered a similar question in more detail at MoneySense.]


domlee87: As someone who has read Millionaire Teacher and The Value of Simple, I feel like I know all that I need to know about investing in index funds. Is there a need to know any more after this point and if there is, do you have any specific books that you would recommend? I am considering reading up on Canadian taxes but don’t know what else to really seek out after that.

CCP: A very insightful question. At some point there are diminishing returns on education about index investing. If you save regularly and have a well-diversified, low-cost portfolio, and you rebalance with discipline, you are already 90% of the way there. A basic understanding of tax-efficiency will get you even closer.

So it’s not unreasonable to decide that you don’t want to spend hours reading about the minutiae that might, at best, save you a couple of basis points a year. Indeed, it’s just as likely you could start to second-guess yourself and unwind the solid plan you’ve already built.


Ulkurz: I’m a 30-year-old who recently started looking to grow my savings mostly by investing in stocks, bonds and other options. However, the learning curve about investing rationally is pretty steep. It can take a while before I’m absolutely confident about putting my money in something I believe in. I’ve around $40K in savings that I do not need at all. Where do you suggest I should start?

CCP: If we start by assuming that you believe in investing in the stock and bond markets, then a simple balanced index fund could be a place to start. If you’re also considering totally unrelated ideas (such as buying a rental property), then you may have little option other than keeping your savings in cash until you are comfortable.

One word of advice: doing your research is important, and you need to be comfortable with your choice. But be aware of analysis paralysis or you may find yourself sitting on cash for years.


schpeucher: I became familiar with your work last year but have yet to ever invest: I have only used savings accounts. So, on top of “Am I an idiot?” my question is, what are your thoughts on opportunity cost in investing? I have almost $100K saved, but I also need some funds available to run a business venture I’m starting. Is it best to invest as much as possible and use a line of credit to fund daily spending? Or better to always be in the black and invest less?

CCP: I can’t comment on your specific situation, but no one is an “idiot” if they don’t invest. If someone plans to start a business, then it’s entirely reasonable to hold cash for that reason (and probably an emergency fund, too, in case the business fails). Investing that cash and using credit to fund the business is adding a double layer of risk.


msvolkl: What would your suggested asset allocation be for two people with defined benefit pensions, both age 30? Would you suggest being more conservative (don’t need to chase higher earnings due to pensions), or taking more risk due to the safety net of the pensions?

CCP: This is a great question, because you can make an argument for both. You have less need to take risk than those without a pension, but also more ability to take risk if you desire. So in the end it comes down to your comfort level.


TradersJoes: Been following your blog and using the CCP balanced portfolio for registered and cash accounts through my discount brokerage. I hold the same three ETFs in each account and rebalance every six months. With a portfolio over $500K, what are the advantages of switching to a full-service advisor vs. continuing to manage on my own?

CCP: Advisors can generally add value in the following situations: the investor has no interest in devoting time and energy to managing the portfolio (not the case here, I’d say); the investor needs financial planning as well as investment management; the portfolio is large and complicated (multiple accounts, some of which are taxable) and requires more expertise; the advisor can impose a discipline the investor lacks; and the advisor can do all of this for a reasonable fee.


pfcguy: I have an actively managed portfolio of >$250,000 managed by professionals. It consists of ~25 stocks, bond ETFs, and an international ETF, and a fee of 1.5% per year. They also provide financial planning, life insurance advice, etc.

I can think of a number of reasons to switch to a passive/index strategy like a CCP model portfolio of ETFs. Can you think of any advantages to stay with active? Are there things a portfolio manager does that I would not get from a passive/index portfolio?

CCP: I think your question is less about active vs. passive and more about advisor vs. DIY. You can reduce your costs by building your own Couch Potato portfolio, but if you get value from your advisor in terms of planning, discipline, etc., then switching to DIY may not really improve your situation overall.


CrasyMike: Here and there someone will post asking if a market-linked GIC is appropriate. This person will typically have a short-term goal that requires limited to zero risk, but wants to figure out how to get the “best possible return.”

I’m sure a high-interest savings account is an appropriate option for this person, but if they are willing to accept the possibility of zero return on investment then why not a market linked GIC? What is so inherently wrong with them?

In this post you point out that some of them are a total rip-off. But are there any market-linked GICs that are not a total rip-off—a limited upside, but still better expected return than a regular GIC?

CCP: I’m not aware of any product that promises a meaningful upside and also no risk of loss. Market-linked GICs are often built in a similar way to the homemade one I described in the post linked above, but they layer on hefty fees and may even cap the upside.

RE: “If they are willing to accept the possibility of zero return on investment then why not a market linked GIC”? I guess I don’t think one should ever accept the possibility of zero return with such a limited upside. I would rather just buy a plain vanilla GIC and accept the guaranteed return.


Jabb: My RRSP is all ETFs, but years ago I became enamoured with the SPDR ETFs where I could allocate my money into ETFs holding specific sectors. Is this majorly hampering my compounding returns?

CCP: I can’t know if it’s hampering your returns in the short-term, but tinkering with narrow, sector-specific ETFs is likely to be a major distraction over the long term. I recommend simply using total-market ETFs and avoiding trying to guess the next hot sector.



  1. Dan D May 24, 2018 at 11:47 am

    Thanks so much for posting this CCP! I have a question about rebalancing across multiple accounts that came up in the AMA but I didn’t really understand the answer:

    Say I am going for a portfolio consisting 1/3 each of VCN/VTI/VXUS. Further, let’s say I am dealing with a non-reg, TFSA, and RRSP and both registered accounts are maxed out.

    Suppose I have $60k VCN in the non-reg, $60k (CAD) VTI in the TFSA, and $60k (CAD) VXUS in the RRSP.

    On the surface, it appears I’ve achieved the desired balance of equities, but in my mind I’m “light” on VXUS because if I tried to withdraw it all I would only receive approx 60-70% of that $60k with the rest going to taxes. Even if I don’t withdraw it until retirement, I would expect to pay SOME tax on the withdrawal and would therefore never receive the full $60k. For that reason, I always discount any ETFs in my RRSP based on an estimate of the future tax liability. Of course it’s imperfect but I feel it’s better than closing my eyes to the fact that I don’t actually own everything that’s in the RRSP.

    I was surprised in the AMA that you said you don’t do this. Could you elaborate on the reasons not to discount amounts in an RRSP when rebalancing across multiple accounts?

    Thanks so much for all your continued work!

  2. Canadian Couch Potato May 24, 2018 at 12:26 pm

    @Dan D: The short answer to your question is that managing a portfolio based on assumed after-tax amounts adds a lot of complexity, and in most cases it’s not likely to change one’s situation in a meaningful way.

    Often the examples people use when arguing for this strategy are arbitrary and unrealistic. No one has equal amounts in their RRSP, TFSA and non-registered account, with one asset class in account. In real life, things are much less tidy. Accounts are often very different in size, and asset classes are held in more than one. Moreover, if an investor is adding money to each account, or withdrawing from the portfolio, asset location changes over time, sometimes quite dramatically. There are a lot of moving targets.

    With our clients we manage portfolios in conjunction with detailed financial plans, which certainly account for the differences in the way various account types (including RRSP withdrawals) are taxed. In our view, this is a much more useful way of approaching the issue.

    I’d like to open up this discussion to investors who actually use after-tax asset allocation strategies. It would be helpful to understand their specific process, and to see the spreadsheets they use to manage their portfolios this way. Otherwise we’re just discussing hypotheticals.

  3. Emma May 24, 2018 at 3:31 pm

    Hi CCP, I’m new to investing and was wondering…most people talk about how to invest in their TFSA and RRSP and say not to worry about taxable investing because you probably won’t max out your RRSP/TFSA for a while. But what about those people who have such small contribution rooms that their TFSA/RRSP is maxed out already? What should they do with the rest? And how should they move their taxable investments into their RRSP/TFSA as it grows?

    All the suggestions I’ve heard either talk about:

    1. Methods that need a large investment amount to be worth it (because the assumption is that by the time you’ve reached the taxable investing point, you are far enough in life that you have large chunks to invest)

    2. Methods that use more complicated things like ETFs (rather than TD e-series) (because the assumption is that you’ve probably gotten some financial experience by the time you reach this point)

    It would be great if you could write an article about “what to do if you’re ready to invest but have a small RRSP/TFSA room, and how to transition as the room grows”!

  4. Robby May 24, 2018 at 5:29 pm

    Dan thanks so much for this blog! I have a question..I recently had an increase in my income 2 years ago and am trying to figure out the balance between saving for a downpayment and investing.

    Until this week I had just been putting money away into my bank account to purchase a place. I’ve realized that I am not sure which city I want to live in and whether or not my partner will be contributing some savings she has. As such I thought I should get into the market and avoid analysis paralysis and just waiting to maybe buy a place.

    I’m in my early thirties and have invested in ETFs 40% bonds, 20% CDN Equity, 20% American Equity, and 20% International as a way to have a more conservative portfolio as I may want some money for a downpayment.

    My question is how you think I should allocate my ongoing savings. I currently have 40k saved for a downpayment in my corporate account (25k after tax). Should I put all of my ongoing savings into my ETF portfolio or split it between the savings and investment account. Second question is what I should do with my savings. It sounds like you think a GIC would be best. Any that you recommend I look into ?

  5. Ellie May 24, 2018 at 8:27 pm

    Hi Dan,

    Thank you for providing such valuable information that is understandable by the average DIYer.
    I had a follow-up question to “juggabags” about selling the current TFSA and RRSP ETF holdings and buying one of Vanguard’s one-fund solutions, such as VBAL, for simplicity.

    Instead of CAD ETFs, I have U.S. dollar denominated ETFs (VTI, VXUS, and VIG) in my RRSP at TDDI. Would you recommend selling the U.S. dollar ETFs (VTI, VXUS and VIG), converting the U.S. dollars back to CAD, and then buying say, VGRO or VBAL? Or should I just keep the U.S. dollar ETFs, and add new CAD to VGRO (or VBAL)?

    Thank you.

  6. Canadian Couch Potato May 25, 2018 at 7:45 am

    @Ellie: I think your issue is the same as that of “juggabags.” If you are attracted to the Vanguard asset allocation ETFs because you’re tired of managing multiple US-listed ETFs, then it probably does make sense to hit the reset button. There will be a cost to selling the holdings and converting the currency, but it’s a one-time hit and it will make your strategy easier to execute going forward, which has real value.

    If you’re comfortable managing the US-listed funds, then adding one of the asset allocation ETFs to the mix is probably just going to make your situation ore complicated, especially when it comes time to rebalance.

  7. Canadian Couch Potato May 25, 2018 at 7:48 am

    @Robby: Your questions depend entirely on your personal goals and priorities, and I’m afraid I can’t offer any objective advice.

  8. Lagerbaer May 25, 2018 at 12:29 pm

    Thanks for hosting the Reddit AMA. I missed it by a couple minutes…

    My question is a bit along the lines of allocating across different accounts. I’m the DIY financial manager for me and my wife, so between us we have a joint non-registered account, and then a TFSA and RRSP each.

    I’m struggling a bit with deciding where to put what. Our TFSAs and RRSPs are maxed out and the non-registered account is sizeable. But I can’t simultaneously put assets into their most tax-efficient location *and* do proper rebalancing, because if the TFSA is maxed, I can’t, say, sell VCN inside the non-registered account to buy more, say, XUU in the TFSA.

    Do you recommend in this case to just replicate the same asset allocation across all 5 accounts?

  9. Canadian Couch Potato May 25, 2018 at 1:10 pm

    @Lagerbaer: You’ve hit on the problem exactly. This is precisely why “optimal” asset location is often impossible. A portfolio is not static: it evolves over time, and it’s constrained by contribution limits on registered accounts. The decisions can even be affected by changing dividend yields, as Justin has noted. This will be interesting given your comment about VCN versus XUU:

    Replicating the same allocation in all of your accounts might be taking it too far, but in many cases it’s necessary to hold some fixed income in both the RRSP and the taxable account to allow you to rebalance effectively. (If your TFSA is small relative to the overall portfolio, then you can probably hold all equities there.) I would not worry much about smaller decisions such as whether your Canadian or US equities are in a TFSA vs. non-registered account. As you note, you may eventually find yourself in a position where you need to hold some in each account.

    This article by Rick Ferri is excellent:

  10. Anonymous May 25, 2018 at 4:55 pm

    As requested here is the spreadsheet I adapted from one you posted to manage my investments in after-tax dollars.

    My wife and I have a total of 8 account types:

    1 family RESP (we only hold XEF and XIC in this account and consider an treat the tax liability as zero as the grants and growth will be taxed in the students’ hands). we avoid holding US equities in this account due to the effects of foreign withholding taxes.

    1 Spousal RRSP (this is our largest retirement account and it holds is the only account that has VTI and VWO, it also contains some VEA to keep our desired asset allocation

    2 regular RRSP which are smaller and both only hold VEA. We generally do not make new contributions to these accounts as my wife does not work currently and I am contributing to her spousal.

    1 small TFSA at Questrade that holds XIC and XEF

    1 larger TFSA that is also our emergency fund and is all in People’s trust High-Interest Savings Account

    1 Non-Registered Savings account at Tangerine that I accumulate money in and then use to make lump sum investments in January when I have new contribution room in all of the registered accounts.

    1 My parents bought me a whole life policy when I was a child and I have set it to premium offset, but count the cash value as part of my fixed income. It basically makes me feel better taking a bit more risk on the equity side. I treated it as having no tax liability as I plan to leave it to my estate

    In terms of after-tax adjustments, I basically discount all my RRSP by a 36% marginal tax rate in retirement which I consider a reasonable estimate given I will also have defined benefit pension income.

    I have left the actual numbers in so that you can have a real-world example and that is why I would prefer to remain anonymous.

    I agree it adds a degree of complexity, but I like the simplicity of targeting my accounts to fewer holdings as it maximizes the Foreign withholding taxes, allows me to keep my fixed income in non-traditional banks that have higher rates on their GICs and savings accounts, and ensures a more efficient DRIP plan in most accounts.

    The reason I am comfortable treating my RESP as part of my overall portfolio is because my kids are still young and I have the cashflow that I could pay for their university out of pocket due to our frugal nature. So if XIC is down when I need to withdraw from the family RESP I will sell funds in that account and buy XIC in one of my other registered accounts.

    I find this works well for me, but I completely understand that many would not appreciate the complexity and advisors would not necessarily want to have to explain the added complexity to their clients. Further, it would probably only make sense for fee-only advisors who could recommend fixed income outside of the brokerage holdings.

    Ultimately it does not make a massive difference, but in my real world case, my US exposure would be 28% and not 23% if I did not adjust for the after-tax status. Similarly, my fixed income would be 17% and not 21% if I did not make the same adjustment.

    Note my target allocation may seem a bit odd, but they have remained unchanged for a decade and they are based on a compromise between home country bias and global market cap for equity markets. And if you ignored the fixed income my equity split is 20% Canadian, 30% US (underweight due to Canada being overweight and based on the fact that their is a high correlation between Canada and the US), 42.5% Developed ex-North America, 7.5% Emerging Markets).

    In the end I only thing this makes sense for someone who likes a bit of added complexity, craves squeezing out any extra basis point of profit and does not engage in the mental accounting when looking accross accounts.


  11. Brody May 26, 2018 at 5:36 pm

    Hi Dan. Thanks for the blog and AMA, but i missed it by a bit. I went into my bank (HSBC) and had a meeting with the manager today (about my mortgage, but thats not what my questions about). I have recently come into a small amount of money and mentioned I would be investing it with tangerine in one of their investment funds.

    he mentioned how HSBC is now offering a line of HSBC Wealth Compass funds, with seemingly low MIR’s. Any advice or opinion on how these funds stack up? I’m basically brand new at this, thanks in advance!

  12. jkc May 26, 2018 at 8:03 pm

    hi, can someone provide some insight, i have a portfolio of xaw, xic and xbb with questrade, for reasons of disability, i have been forced to open an investing account at td’s RDSP (questrade does now have this investment type), and now i have no clue how to proceed, i assume i could just re balance and buy what i need to buy at td, ie the xaw, xic or xbb stuff – but i feel like i need some insight on is there something else i could do with the RDSP account that would benefit in making the portfolio more diverse and also just easier to manage? i have rrsps, a tfsa and a margin account with Questrade .. (not leveraged, just a non registered account), its already complicated enough, and i have a GIC

    (ie someone has been talking about the vanguard diversified portfolio thing coming out, vlab is it? i wanted to also ask – at which point in one’s investment amount, should a switch be made to something like this? or should i break up XAW?) ive been investing for under 1 year, current portfolio is slightly under 100k, 40% xbb-and a two year GIC mix, 30% xaw, 20% xic 10% random other, cash, a stock

    when my GIC comes up, would switching it to xbb be wise? or is it the same? returns, risk etc.

  13. AD May 26, 2018 at 11:56 pm

    This question and answer format is highly informative and much appreciated! Excellent questions with very thoughtful and valuable responses. Many thanks for this!

  14. Neo May 28, 2018 at 8:06 am


    I would love if you can answer my few questions.

    I am new investor. My RRSP portfolio is 60 equities / 40 bonds. I am using Questrade for my investment. My portfolio is
    VAB 40%
    VCN 20%
    VFV 20%
    XEF 16%
    XEC 4%

    I am starting to fund my TFSA account. I am confused on which portfolio / allocation to choose for my TFSA for maximum tax benefit when I start withdrawing. My goal is to start taking benefit of dividend yields /interest and start withdrawing some cash from either TFSA or RRSP to fund my retirement.

    Q1) My question is what is the portfolio I should keep in my RRSP and in my TFSA to avoid getting taxed in retirement period ? Should I mirror my portfolio in TFSA like exactly I have in my RRSP ? Should I sell equities in RRSP and buy in TFSA ?

    Q2) Suppose I have 60 equities/ 40 bonds portfolio. Let’s say I have $100,000 in my account so far invested. God forbid but if the crash like 2008 happens again how much I can say I would lose in my $100,000 60/40 portfolio ?


  15. Canadian Couch Potato May 29, 2018 at 7:25 am

    @Neo: A large part of your decision is going to be dictated by the relative size of the accounts. I am assuming that your RRSP is much larger than your TFSA, since you say you are just “starting to fund my TFSA account.” If that’s the case, then let’s agree that the decision will have very little impact for at least several years, so it is absolutely not one to agonize over. But I would suggest you start by filling your TFSA with equities, leaving the bonds in your RRSP. As the TFSA grows you can diversify the equity holdings there (i.e. holding some Canadian, some US and some international).

    As for how much you mght lose in a crash, during the 2008-09 crisis a 60% equity/40% bond portfolio lost about 20% over the worst 12 months. The largest paek-to-trough drawdown (shich happen dusring the worst six months) was even more: closer to –25%. We would all like to bleive that was once in a lifetime, but I think it’s naive to act as though it could never happen again.

  16. Ale May 29, 2018 at 10:40 am

    I do have some questions regarding rebalancing & diversification. Just to give you some background I’m with TD eseries:
    TD CAD Bond 25%
    TD CAD Index 25%
    TD US Index 25%
    TD International Index 25%
    I don’t recall from which book I found, but a smart long-term investor will go with “Stocks goes down for quite a lot and stays there for many years” rather than “Stocks goes up for quite a lot and stays there for many years”. (Certainly the above doesn’t apply for those who are retired as their portfolio will diminish)
    Therefore, I will have to pray that the US/International/Canadian Index goes down so I can buy cheap and rebalance my portfolio back to my desired target 25/25/25/25.
    From the other side, let’s not forget what happened with Japanese stock in 1989 – for the following 19 years $1 invested fell in value to less than 60 cents even with dividend reinvested. Or the events from 1929-1932 where the stock fell down by 90%. Or St Petersburg – Russian most respected and active stock and bond market where in 1914 in fell and never reopened.
    Therefore, when enough is enough? When do you have to stop buying cheap because the index of that country might never returned back? For ex TD eseries International Index has 22.6% allocated to Japan; and if that stock is falling? I might be an extremist, but what if US might have the same finish as St Petersburg?

  17. Neo May 29, 2018 at 2:42 pm

    @CanadianCouchPotato you’re absolutely right the investment I have in TFSA would have no implication for many years. I was just worried that if I start my TFSA with 60 / 40 portfolio just like my RRSP how would I change that to only equities in later years in my TFSA using Questrade ?

    The reason I don’t want to fill my TFSA with equities and leave RRSP for bonds is because I’ll be mostly investment in RRSP so If split bonds and equities between my TFSA and RRSP then it would not be proper 60/ 40 portfolio which I want.

  18. Laura May 29, 2018 at 3:26 pm

    If you have a chunk of money, 60 000 for instance. Do you think its wiser to invest in a ccp portfolio at high risk for growth and leave it for retirement (30 years) with monthly contributions off 500/600… or to spend the downpayment on a condo. I have been tossing with this idea for a while now and I hear from most people they favor owning a home and think that’s a better investment.. But when I check different investment calculators out there in a growth portfolio for 30 years it estimates I’d have over 800 000-1 000 000 in the bank by retirement with the investment option. I dont see a condo for 350-400 000 now going up to that in 30 years. So my options are to rent and invest in a high risk growth portfolio or to own a small condo. What will leave me better off by retirement in 30 years?

  19. Neo May 30, 2018 at 8:12 am

    @Laura In my opinion its always better to invest in a balanced portfolio than to buy a home in GTA. The numbers don’t make sense for buying a home compared to investment. Here’s another blog which I follow who’s a strong advocate for NOT buying a home

  20. Laura May 31, 2018 at 8:54 am

    @Neo thank you for your reply I have also read and seen a few current articles with the same point In favoring investing over buying a home. When you say “balanced” do you mean balanced instead of growth portfolio? I just figured since I didnt plan to touch it for 30 years I had room to go more risky and go for a growth portfolio. I will check out your link thank you!

  21. Neo June 1, 2018 at 7:46 am

    @Laura By balanced I mean the portfolio with less risk less gains such has 60 equities / 40 bonds. Growth portfolio would be High risk gains something like 80 equities / 20 bonds. That’s my understanding of balanced vs growth portfolio. CCP would probably be able to answer it in more details.

  22. david June 1, 2018 at 10:13 am

    I missed the AMA but I have a question, (if it was addressed kindly point me to it)
    When starting a CP portfolio is there any advantage/disadvantage to wait for a good time (i.e. mini correction) to purchase the ETF’s?

    For ex. I have to portfolios 1 for a RESP and one for a RRSP the RESP i (unintentionally) bought when the markets were at all-time high while the RRSP i (unintentionally) bought when the markets were correcting

    Now, the RESP is still struggling to get out of the RED territory while the RRSP is doing nicely

    Now my question is what to do next time

  23. Canadian Couch Potato June 1, 2018 at 12:20 pm

    @david: I understand the frustration, but you didn’t do anything wrong, since you cannot predict the short-term direction of markets. You would just be guessing. The best time to invest is when you have the money and a plan.

    It’s also important to remember that if your RESP and RRSP were invested elsewhere before you moved to ETFs, then you likely sold the RESP when markets were high and soled the RRSP when they were low, so it would have come out in the wash. Moreover, you will (presumably) be making many more contributions to your accounts over the years, so your start date will probably turn out to be relatively unimportant in the long run.

  24. Russ June 3, 2018 at 10:23 am

    Hi Laura,

    There are a lot more variables to consider than just the relative value of a condo or ccp portfolio after 30 years.

    Off the top of my head there is the fact that after 30 years if you own your condo outright then you won’t be paying rent or a mortgage for the rest of your life. With strictly a ccp portfolio you will continue paying rent until you die.

    With a condo purchase your cost is more or less fixed (aside from interest rate and strata fee changes) whereas rents will continue to rise and after thirty years of inflation will be astronomical in 2018 dollars.

    I would google for “rent vs owner calculator” instead of looking at portfolio performance calculators.

    Good luck!

  25. Jake June 5, 2018 at 3:29 pm

    You routinely talk about the USA is more diversified than canada. But your recommended ETF XUU holdings are 40% financial’s which is the same as XIC.
    Am I misunderstanding something? Looks to me like the USA market isnt diversified.

  26. Canadian Couch Potato June 5, 2018 at 9:17 pm

    @Jake: The sector breakdown on the iShares Canada website is incorrect. My guess is that it has something to do with the fact that XUU holds several underlying ETFs, which is messing up the classification. If you look at the list of holdings on XUU’s web page, two of the underlying ETFs are categorized as “Financials” and one is “Industrials.” This makes no sense.

    In the sector breakdown in the US-listed version of this fund (ITOT), the numbers are very different. The largest sector is Information Technology (25%) and Financials is less than 15%:

    Vanguard’s VTI has a slightly different breakdown, but it still has only 20% classified as Financials:

  27. SD June 8, 2018 at 3:44 pm

    People say to never invest what you cannot afford to lose, but does this rule apply for index funds? Are index funds safe enough to invest most of your savings in?

  28. Romain June 12, 2018 at 10:53 am

    @CCP I am wondering if a portfolio containing 100% stocks (no bonds) could be an option for young people ?

  29. Mikey June 12, 2018 at 12:17 pm


    My wife & are about to receive a large income from the sale of our farm; $12,000,000.00 before taxes. Split between myself, my brother, and my mother.

    We’ve used your model portfolios for previous investments in the past and have about $300,000 split between an RRSP and a LIRA (from an old employer). We both come from humble beginnings and dont have any experience working with these large numbers. We are working with an estate lawyer to negotiate the deal.

    But I plan to place a large amount of this money in Index Funds. I was just wondering if anyone had general guidelines or considerations for myself in terms of mitigating taxes. My family never had much money growing up so im concerned that they (mother and brother) could lose lots of their money to scammy investors, banks etc.

    Again, I currently have a passive investment approach with the CCP model portfolio. But will need guidance on how to allocate the real estate income from the farm.

    Any advice appreciated!

  30. Canadian Couch Potato June 12, 2018 at 1:44 pm

    @Mikey: Congratulations on the sale of your farm. It sounds like a lifetime of hard work has paid off handsomely for your family.

    Your situation just got a lot more complicated. Managing $300K in registered investments is a relatively simple DIY job. Managing several million in taxable accounts is much more difficult, and it’s likely to be beyond the abilities of all but the most skilled DIY investors. I’d urge you to get some professional help, though I understand your skepticism of the investment industry. If you are not able to find a fee-based investment manager you trust, then you might consider working with a financial planner who does not manage investments or sell products. Because you would pay this planner only for advice, there is little or no opportunity for conflicts of interest, and no chance of fraud.

  31. Alban Peterson June 19, 2018 at 3:05 pm

    A few years ago, some major banks (RBC, BMO, etc.) offered a product called “Target Date Funds” with a specific year, like 2020, 2035,,,

    What happened to those funds? Are they being replaced with other kinds of ETFs?

    As a retiree, and DIY investor, I’m looking for some relatively safe investment vehicles for the next 10 years (minimum) where I could put some money to work. And given the fact that interest reates might remain low for many more years, what sort of investment vehicles should I be looking for?

  32. Canadian Couch Potato June 19, 2018 at 3:27 pm

    @Alban: Target date mutual funds still exist, though they are mostly found as part of employer-sponsored plans (group RRSPs and defined contribution pension plans):

    A portfolio of ETFs and GICs would be appropriate in retirement, but it’s impossible to say more without doing a thorough analysis of your situation.

  33. Miwo June 22, 2018 at 4:26 pm

    Hello Dan,

    I am going to hold millions in my CCPC account. I was just going to stick them into 80% XAW and 20% VCN. Do you also think I should get an advisor as well as the farm sale family?

    Part 2 of my comment is that I have been researching TFSA. My kids are in their late teens. I am starting to think that they should just hold VGRO, max out the TFSA each year and call it a day. Based on their time frames and no taxes with these accounts. Also minimizes investor behavioural issues since they don’t even need to rebalance, it seems like an almost perfect set up. Am I missing something here.

  34. Canadian Couch Potato June 24, 2018 at 2:14 pm

    @Miwo: In my opinion, investing millions in a corporation is not a “DIY with a generic model portfolio” task. A good advisor should be able to add value just on the tax management.

    TFSAs for your children, on the other hand, are likely to be a very easy DIY job, and a one-fund solution like Vnaguard’s asset allocation ETF can be an excellent choice.

  35. Nancy B June 26, 2018 at 1:17 am

    Hi Dan. What are your thoughts on the escalating trade wars and market sell offs that have started to ramp up?

  36. Canadian Couch Potato June 26, 2018 at 8:06 am

    @Nancy B: These kinds of events are an inevitable part of investing. There is no way to avoid them and no way to exploit them. One of the most important qualities of a successful long-term investor is the ability to tune out these distractions and stick to a disciplined plan.

  37. JW July 5, 2018 at 9:57 am

    Hi there!
    I’m newbie into this business, maybe my question has already been answered and more than once, but still, I want to learn how to manage my investments myself, following the advice of the CCP.
    I have a REER (high risk so far) investments with SunLife, but found that they charge 2.44% MER for it. I think it’s too hight, so I deside to handel it by myself.

    Can you refer me from what I should start, mb I have to speak first with advisor, to plan my portfolio or smthg else, so pls, give me your advise.

  38. AA July 10, 2018 at 7:04 pm

    Thanks Dan, big fan of the blog!

    I am single and in late twenties in Canada. I am wondering how I best allocate the $96k (and growing monthly) I have sitting in my chequing account & any additional suggestions you may have. I seem to be feeling analysis paralysis

    Based on what I have had read the stock market seems highly valuated (higher average PE ratio, with lower future projected returns)
    Hence I am a bit sceptical of going all in into my td e-series mutual funds by increasing it’s monthly allocation and maybe waiting for a more favourable PE valuation

    But have read that market timing should be avoided

    At some point I did like to get financially independent (have passive income cover my expenses), maybe an annual income of $40k or so but am flexible.

    Currently not interested in buying a house/car and am renting with roommate and taking the transit.

    Below is my current financial snapshot:

    Annual salary: $54400 (+ covered with good health benefits)
    Annual performance bonus: $2000
    Dividends (from 2 Canadian stocks): $1200
    Totals: 57600

    Rent ($450)+Food ($200-300, cook home) +Transportation ($100, bus pass) +Cell Phone ($17) = $867 (max 900)
    No Debts/Fixed Assets


    Stock 1: $2,665.26 (previous employer)
    Stock 2: $24,360.23 (current employer, employee share purchase plan – I contribute 10% of my paycheque and company matches %25 of my contribution)

    TD E-series mutual funds:$6424.74 (target allocation of 25% each across Canadian Index Fund, US Index Fund, International Index Fund & Canadian Bond Index Fund)
    Adds $100/month across the 4 index funds ($25 each, started initially just to get used to investing)

    Chequing account: $96000

    Registered Pension Plan (RPP): $21000
    I contribute 6% of my paycheque and company contributes 5.7%
    Target allocation of 25% each across Canadian Index Fund, US Index Fund, International Index Fund & Canadian Bond Index Fund

  39. Canadian Couch Potato July 11, 2018 at 8:37 pm

    @AA: Many thanks for the comment. I’m afraid I can’t offer specific financial advice for individuals. In general, it’s OK to be nervous about investing a large lump sum, but trying to time the market is futile and liable to backfire. A good compromise is to invest gradually: perhaps 1/3 now, another 1/3 in three months, and the remainder three months after that. Or choose a different interval that makes you comfortable. But have a plan and carry it out.

    If you are in your late 20s and plan to be saving and investing for a few more decades, the timing of this $96K investment will not have a major impact on your long-term results.

  40. AA July 11, 2018 at 9:28 pm

    Thank you Dan. Appreciate the insight.

    Keep up the good work sir :)

  41. Mac T. July 13, 2018 at 2:11 pm


    2017 ended off nice and strong only to see all gains slip away the first 4 months of 2018 and once again see them soar back up in the past month! Slippery ride. My question is when the market was this high last December our overall value in our ETF account was much higher compared to now despite the market regaining all of it’s value an I had not changed much since Dec.

    How does that work?

    Thank you in advance.

  42. Canadian Couch Potato July 17, 2018 at 10:52 am

    @Mac T: It’s impossible to answer your question without seeing the actual numbers.

  43. Sebastien July 24, 2018 at 9:55 pm

    Hello :)

    I currently have all my investments with National bank and my returns have been absolutely horrible so far (1.5 years and somewhere around 3%)

    Ive been doing some reading past few weeks and know the basics. Read this: and a few other blogs online

    right now I have 55k in my TFSA and 26k in unregistered

    -im 26 years old

    -only make 36k a year now but will be 80k in 4 years (before taxes)

    -want a house in 3-4 years

    -Cottage worth 50k that I will sell very soon

    -no debt

    I really like the idea of dividends and compounding and being able to live off of them within time.

    My ultimate goal would be to retire in 20-25 years and live frugally off of my investments passive income.

    Would appreciate some input on a detailed plan thats right for me, also which site would you recommend starting with thats easy to use with low fees?


  44. Zaphod July 26, 2018 at 11:09 am

    @Dan – Why aren’t there any Canadian equity ETFs that employ Tax Loss Harvesting (TLH) within the ETF? For example, an ETF that tracks the S&P/TSX60 with a minimal tracking error. The fund would trade among the stocks in the 60 with a TLH algorithm. For example, if TD happened to go down then you would sell TD and buy RBC (or RBC+CIBC+BMO+BNS) for 31 days and then perhaps reverse the trade. Then at the end of the year when you get your T3 from the ETF sponsor you may have capital losses that you can use to offset capital gains from other investments.

  45. Canadian Couch Potato July 30, 2018 at 8:19 am

    @Zaphod: A mutual fund or ETF is not permitted to pass along capital losses to its investors. Losses can only be used to offset gains in the fund. I don’t know for sure, but I would think that fund managers will do some tax-loss harvesting within the fund from time to time so they can avoid distributing large gains to their unitholders. That said, the idea of selling some banks and buying back others would never fly with an index fund: it would certainly cause tracking error that would be unacceptable to investors.

  46. Zaphod August 3, 2018 at 11:47 am

    @CCP – Thanks. This is a strategy used effectively – sure it adds tracking error but I would be willing to add a bit of tracking error to reduce my tax burden. With a smart optimizer you can keep the tracking error low. And tracking error isn’t necessarily negative and is as likely to be positive as negative impact on return. But reducing taxes always has a positive expected return.

  47. Victor Kozak November 22, 2018 at 11:14 am

    ROBO-advisors work to simplify and provide discipline to ones portfolio by providing pre-set allocations which they rebalance for you automatically. New balanced ETFs such as VGRO appear to do the same thing. Why not just put all of ones portfolio into one or two of these. Can you discuss the benefits of one approach over the other. Both appear to provide the benefit of selecting a portfolio one is comfortable with and eliminating the tinkering which diminishes many DIY returns.

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