As long-time readers will know, I review my model portfolios once a year and, if necessary, make minor changes when better or cheaper funds have been launched. I made no updates for 2018 or 2019, except to add the new Vanguard and iShares asset allocation ETFs as a fourth option last year.
For 2020, however, I’ve done a little remodelling.
Before explaining the changes, I’ll offer my usual caveat. These models are intended to be a default choice for investors who aren’t sure how to build a diversified portfolio, or are confused by the enormous variety of funds available. The specific fund choices are not definitive: in almost all cases, the major ETF providers (Vanguard, iShares and BMO) have options that are very similar and equally good. The changes I’ve made over the years have usually been subtle, with minor reductions in cost or improved simplicity. If you’re currently using one of the older portfolios successfully, please don’t feel the urge to switch.
All right, on to the changes. The new portfolios and their backtested returns (now going back 25 years) can be found on the Model Portfolios page.
Tangerine gets squeezed
First off, I’ve removed the Tangerine Investment Funds, which had been a staple of my model portfolios for close to 10 years.
For investors with a small RRSP or TFSA and a desire to be almost entirely hands-off, the Tangerine mutual funds used to be an excellent choice. But there are now much more attractive options, even for those with modest accounts and a desire for simplicity. Despite the competition from robo-advisors and an industry-wide trend toward lower fees, Tangerine has stubbornly kept its fund MER at 1.07% for more than decade. It’s hard to justify that anymore.
The E-Series gets an A
For those looking for an alternative to ETFs, I’ve kept the TD e-Series funds, which are now more attractive than ever.
In 2019, the funds changed their structure and now hold underlying ETFs rather than individual stocks and bonds. This change came with a modest fee reduction of 0.05%, but that wasn’t the big news. More important was the announcement that these funds—which for almost 20 years were only available to TD customers—are now available through any online brokerage. For index investors who want the benefits of mutual funds over ETFs, the e-Series funds are the best choice, by far.
ETFs just get easier
Finally, my model ETF portfolios have been simplified even more, and I’ve bumped them up to Option 1, which means they should be the first one to consider.
ETFs still aren’t right for everyone, but the launch of “one-fund portfolios” (also called asset allocation ETFs), combined with the low- and no-commission trades at several brokerages, have made them more appropriate even for small portfolios. For the vast majority of DIY investors, I believe these one-ticket solutions are the best way to build a diversified portfolio that balances low cost with ease of maintenance.
To add more flexibility, I’ve also included options for balanced portfolios that don’t have a ready-made solution—for example, there is no single ETF with a 50/50 mix of stocks and bonds. So I suggest some two-ETF model portfolios, which combine a bond fund and a globally diversified equity fund. These, of course, can be used to build a portfolio with any asset mix you deem suitable.
For example, the Vanguard Balanced ETF Portfolio (VBAL) is 40% bonds and 60% stocks, while the Vanguard Growth ETF Portfolio (VGRO) is 20% bonds and 80% stocks. If you decide you want something in between, my new model portfolios suggest a 30% holding in the Vanguard Canadian Aggregate Bond Index ETF (VAB) and 70% in the Vanguard All-Equity ETF Portfolio (VEQT).
These two-fund portfolios will require occasional rebalancing, but the trade-off is they actually have slightly lower fees that the one-ticket asset allocation ETFs.
Models are not optimal
I’m expecting some pushback about the changes to the model ETF portfolios. After all, the MER on the one-fund solutions is up to 0.10% higher than that of the three-fund portfolios I’ve been recommending for the last few years. There are still many DIY investors who believe that MER is the only factor to consider when building a portfolio.
But let’s remember that a model portfolio, by definition, is not designed to be optimal—if such a thing even exists. It’s a default for investors who are looking for a place to begin. And indeed, even more experienced DIY investors may benefit from using asset allocation ETFs, since they enforce disciplined rebalancing, reduce transaction costs, and discourage tinkering. All of these benefits are easily worth a few basis points of MER.
If you’re managing a multi-ETF portfolio successfully now, you should continue to do so. But if you’re new to DIY investing—or if you’re struggling to maintain a more complex ETF portfolio with discipline—embrace the simplicity.
Greetings Dan,
What is your opinion on the new RBC Index Funds? They recently formed an alliance with Blackrock iShares yet the MERs seem to be a bit higher than TD eSeries, for instance….I am looking to switch over to Indexes from a Select Balanced Portfolio with RBC, or perhaps the One-Fund ETFs that you mention in this post. What would you recommend?
thanks
Peter
@Peter: The TD e-Series is usually the best option for index mutual funds. The one-fund ETFs are, in my view, an even better choice, as long as you are comfortable trading on the exchange. (Mutual funds do tend to be more user-friendly.)
Hi Dan,
I’m a 34 year old, new to investing, and I have read a lot into the CCP blogs. I have about 125K to invest, and I want to invest in the TD e-series portfolio in the 25-25-25-25 assertive profile ratio. I have 69.5K contribution room in TFSA, $31.5K contribution room in RRSP. Please comment if my following contribution plan is a good idea in my scenario:
TFSA (TD DI) – 31.25k US equity, 31.25k Intl equity, 7k Cdn equity. Total 69.5k
RRSP (TD DI) – 31.5k Cdn Bond
Unregistered (TD-DI) – 24k in Cdn equity
Is this a good asset allocation in terms of tax implications, or would you allot it in a different combination? I have read somewhere that Cdn equity would be the best to put in taxable account where as Cdn bonds would be better suited in RRSP. Is there any difference between assigning US & Intl equity in TFSA vs RRSP? Thanks once again as your suggestions would mean a lot to me.
Hi Dan. Thanks for the even simpler models. I’m wondering what would it look like when you want to change your asset allocation to a less aggressive diversification as you get older. Would you buy more of he conservative 1 fund etf to average out to the bond/equity split that you want? would you sell some of your 80/20 and buy 40/60? I’m sure it dependent on if you can buy enough of the conservative fund to reach the bond/equity spit you want but after years of saving the money you add to you investments as you approach retirement will likely be a drop in the bucket to the portfolio you’ve built up which means you’ll need to sell, pay tax on you sell, and then buy back more conservative 1 fund etf. Any thoughts on this or guidance on how to prepare yourself to change your portfolio split as your life progresses?
@Paul: I’m not sure this issue is fundamentally different from the plight of an investor using multiple ETFs. At some point, if you want to dial back your risk, you will probably need to sell some equities and purchase more fixed income.
I suppose the main difference is that, in your example, the investor is making a big move, all at once, from 80% to 60% equities. In practice, a gradual change would likely be more appropriate. That might mean having to add a bond/GIC component in addition to the one-fund portfolio. This could be done with new money in the years before retirement, or by gradually selling shares of the one-fund portfolio.
There’s no set-it-and-forget-it solution that will work during every stage of life, but the one-fund portfolios can still be used in retirement, perhaps in conjunction with a GIC ladder and some cash.
@Karan: Your asset location strategy sounds fine. But remember that things will evolve over time and you likely will not be able to maintain this. For example, if equity markets fall and you need to rebalance, you will have no choice but to sell bonds and buy equities in your RRSP (because there are no bonds anywhere else). If your registered accounts are maxed and you have new money to invest in your taxable account, will you put it all in Canadian equities even if that asset class is already at or above your target?
This is a perennial problem when considering asset location. What looks optimal now will probably turn out to be unsustainable over time. So try not to overthink it too much.
Dan, First off let me say I’ve been following your excellent work for years, and am a fan. I started my journey with couch potato strategies to investing and have since learned a great deal. I happened to read Jason’s April 1st comment and was wondering if you had anything to say in response? Sorry if I missed it in the comments.
@Tinuw: Thanks for the comment. There was a lot of very understandable fear in early April, and in many ways there still is. But you can probably guess my answer to the questions about whether “this time it’s different” and whether I think investors should move to cash and gold. I appreciate that it’s difficult to stick to a disciplined strategy over the long term, but the fundamental principles don’t change every time there is a economic downturn.
Dan, Thank you for all the hard work you have done to educate us and simplify the process to invest using ETF’s. We have been big fans of your blog and Money Sense for years. Unfortunately I have set up a portfolio of ETF’s that is now making me nervous as it is different from your models and as it has grown to 7 figures . I want to more closely align with your simplified models, specifically your 30/70 split.
Within my RRSP now I have 30% ZAG instead of VAB, 20% VCN, 10% XUU ( US Equity) , 10% iEMG ( emerging markets), 10% XEF (int equity ) and 20% VYM ( US Dividend equity ). How can I best go about converting this to 30% VAB and 70%VEQT? Should I do it all at once or more gradually ? Fewer trades will save me on trading fees but is it too risky to do all at once? Or should I just stay the course and keep the portfolio I have? I just know that I will not look at these funds as closely as you do and worry that they may drift over time to become less quality.
Thank you in advance for any thoughts.
Jason
@Jason: First off, there is no reason to swap ZAG for VAB. They’re virtually identical. So if you want to switch to a simpler portfolio you could simply sell the equity ETFs and replace them with VEQT or XEQT. There is no “risk” to doing so, and no reason to do this gradually, since you are essentially selling and buying back the same assets, just with different wrappers.
Hi Dan, thank you for sharing your wealth of knowledge! I have been going through your model portfolios and am getting ready to get set-up using the TD e-Series.
Just a quick question for you: TD offers the Nasdaq (TDB908) and Dow Jones Index (TDB903) e-Series funds in addition to the US Index fund. I understand that holding all three likely makes no sense, however, in your opinion, is there a scenario where substituting the US Index fund with the Nasdaq and Dow Jones funds makes sense? Alternatively, would it be a poor decision to hold the US Index fund as well as either the Nasdaq or Dow Jones funds? Or does that cause too much overlap of assets? Thanks in advance for your reply!
Sebastian
@Sebastian: Both the Nasdaq 100 and the Dow Jones Industrial Average are very poor reflections of the overall US market. The DJIA, in particular, is a historical relic that makes no sense as an investment strategy (30 arbitrarily chosen stocks weighted by price). The S&P 500 is not perfect, but it is a reasonable proxy for the US market as a whole. It also holds every stock in the Dow and almost all of the stocks in the Nasdaq 100. So it’s the only one you need in your portfolio.
Hi Dan. Thanks for these very informative posts. I tried to buy the TD e-Series US Index Fund through the National Bank brokerage and I was told that it is not currently available (TDB902). Is there an alternative fund that you would suggest that is similar?
Hi Dan,
thanks again for your continuing excellent work.
I have two questions:
I have a question about the value for paying higher MER in All-Equity ETF’s in your new Model Portfolio.
For instance, the MER for XEQT is I believe 0.2%. If I bought the underlying funds in the ratio’s you specify ( for 30/70 split for example ), the MER burden would be much lower… my napkin math come to something like .086% . That amounts to an expense difference of $114 per hundred thousand per year compounded. Surely that will add up?
The second is regarding cost dollar averaging within All-Equity ETF’s versus balancing components oneself. Is there a cost dollar average benefit to having the component funds separate ( eg XIC,ITOT,XEF and iEMG for XEQT) to constantly buy the lowest performing fund to realign with target allocation? Or does the balancing within the All-Equity ETF take care of that more efficiently?
Thanks in advance for your consideration.
@Jason: Thanks for the questions. A fee difference of 0.086% works out to $86 per year on $100K. Every investor needs to decide how much they’re willing to pay for convenience, but in my opinion, that is well worth it. It’s also critical to remember that everyone making this comparison assumes that the multi-ETF portfolio will be managed perfectly, with no transaction costs. This never happens in practice, so there may be no savings at all. And the behavioral benefit of never having to rebalance can be enormous.
RE: the second question, yes, the all-in one fund is essentially doing this for you, since the manager will invest all new cash flows (from dividends or from new investors) into whichever asset class is furthest off target. This will be far more efficient than anything an individual investor would be able to do.
@Dan: Unfortunately it seems that some brokerages have decided not to offer the e-Series funds. There really are no good mutual fund alternatives in Canada. If you are at National Bank, you may want to consider taking advantage of their commission-free ETF trades, though the minimum is 100 shares.
Hey Dan! Back in 2017 I started investing with the tangerine balanced growth portfolio, but I see you’re no longer recommending it due to the MER. Is my best option to sell all my shares and move them over to a vanguard etf? I’m still young for investing (27 years old), so thinking the vanguard growth etf would be my best bet. Any brokerages you’d invest like wealth simple or e-trade? I want to keep the money in a TFSA and keep the purchasing fees low, 0 if possible. Thanks!
@Andrew: The asset mix in the Tangerine Balanced Growth Portfolio (75% equities) is quite similar to that of VGRO and XGRO, so these may be appropriate. This may help you get started with an ETF portfolio:
https://canadiancouchpotato.com/2020/01/28/how-to-set-up-a-hands-off-etf-portfolio/
Hi Dan,
I’m transferring out $11k RESP account from an extremely evil financial plan with inhumanly high fees (3.61% MER) and cancelation penalties ($2k – yes!!!). Figured better pay the penalties and move out and be done with it – should be able to make it all up in couple of years just by going with the low fee models (THANKS FOR SHARING!!!). Not here to complain, everybody pays for their mistakes. I just have a question for you.
I am opening a new RESP with TD Direct Investing for the transfer in. I plan to follow TD E-series model as probably 60/40 or 70/30. My question is, once the money are transferred into the account, would you recommend I just buy XBAL or VBAL with the full amount? After that with my next months contributions I start buying the E-series accordingly… I’m pretty tech savvy and I have no issues maintaining multiple products, but are there any other consideration that you’d advise against?
Also speaking of this practice, does it even make sense for RESP (or RRSP) to periodically (say once a year) sell your E-Series MF and buy the respective ETF like XGRO or XBAL”? Or as you say, 0.15% difference in small accounts (RESP could be around 50k to 70k in 10 years) is nothing to worry and not worth the efforts. Plus the ETF purchase comes with $9.99 commission too… Just curious to see what you think.
Thanks!
@Nicholas: Sorry to hear abut your negative experience, and kudos for taking control of your own investments.
I’m not a huge fun of combining asset allocation ETFs and e-Series mutual funds, especially if the plan is to sell the mutual funds once a year to buy more ETF shares. As you’ve anticipated, any savings in MER or trading commissions are likely to be quite small, so for small accounts we’re talking about minimal savings in exchange for a lot more complexity.
I would suggest either using e-Series funds only and accepting the slightly higher MER, or using one ETF and accepting a couple of extra trading commissions each year (the right choice depends on how often you add money to the accounts). Remember, you’re reducing your fees by about 90% right off he top by making this move, so you’re already so making huge progress!
Hi Dan
I am new in Investing.
i am thinking in TD-e series. i did already pre-authorized monthly payment to that saving acc.
Do you recommend to set up so automatically buys or i do on monthly basis.
I want to invest on long term monthly 400Cad and then down the road to invest more.
If you have any tips would be very appreciated.
Thank you
@Irne: I would definitely suggest setting up automatic purchases in the funds. This is one of the main advantages of using the TD e-Series funds rather than ETFs. Your brokerage should be able to arrange this for you.
Hi Dan,
I have a balance of 40% bond mutual funds and 60 % equities mutual funds. I was wondering what your thoughts are on REIT ETFs as a safe haven to replace some of my bond holdings, they suffered a big drop at the start of Covid, but seemed to have stabilized now
Thanks
@Marcel: REITs are absolutely not a substitute for bonds. They are just a specific category of stocks, with all of the same risks. There’s nothing wrong with including some REITs in a portfolio if you want to, but they should count as part of the equity allocation.
Hi,
I am wondering about your opinion in how much % should be allocated to the iShares Russell 1000 growth ETF (IWF) if one would like to include this ETF as part of the 80%/20% equity/bonds strategy? I was thinking of splitting the 36% recommended for iShares Core S&P Total U.S. Stock ETF (ITOT) into 18% for ITOT and then 18% for IWF? Do you have any other suggestions about % allocation?
Thank you in advance,
Karolina
@Karolina: I would not recommend any allocation to IWT. Traditional cap-weighted indexes (like ITOT) already give a lot of weight to growth stocks, and these days, with big tech stocks dominating the US market, they’re even more top-heavy. Adding a fund like IWT just compounds the problem.
Hi,
I have another question. ITOT and IEMG are the US-stock listed ETFs in USD right? The Canadian version being XUU and XEC respectively in CAD? If my funds are all Canadian, would you suggest I just use XUU and XEC? Or are you suggesting doing the Norbert’s Gambit and exchanging CAD to USD?
Thanks in advance,
Karolina
Hi Dan, I have followed you for a few years and took the Tangerine Investment Funds route for weekly low cost investments as per your advice. I also have a TD direct account where most of my non-company retirement is. I also noticed the MER is not competitive anymore at Tangerine and am ready to make the transfer however do I lose out on the December distribution if I pull out now or is prorated?
Thank-you
Phil
@Phil: You don’t lose out on anything by selling a fund before its year-end distribution. The interest and dividends from the bonds and stocks are paid into the fund throughout the year, and these are reflected in the fund’s value. The distribution at the end of the year is simply a tally of what was paid out during the year. The fund does not change in value as a result of the distribution.
@Karolina: Yes, ITOT and IEMG are the US-listed equivalents of XUU and XEC. For the vast majority of DIY investors, I recommend using the Canadian versions of these ETFs rather than doing Norbert’s gambit and transacting in USD.
Hi Dan, I noticed on the model portfolio page that ETFs “May require manual tracking of adjusted cost base”. Is that for all or particular ETFs? Would tracking the ACB only apply to ETFs held outside of an RRSP or TFSA? Thanks in advance.
@Scott: ACB only needs to be tracked so you can accurately report capital gains or losses, so this does not apply in TFSAs or RRSPs. You’re responsible for tacking the ACB of all ETFs held in taxable accounts.
Hi Dan,
Than you so much for this blog, and all of the thorough and well researched advice you provide on this website! I have been using the couch potato strategy with tangerine balance growth, and seeing your new recommendations would like to go with he VGRO ETF going forward. It turns out I’m have a bit of analysis paralysis, and was wondering if you could share your thoughts … I was initially going to sign up for Questrade, as there are no fees to purchase etfs, BUT it does cost to sell ETFs (which won’t be for many years, but still there is an associated cost to sell). I keep hearing about WealthSimple, but noticed that they aren’t one of your recommended options, so it makes me suspicious of them. It seems like I could purchase the VGRO etf at Wealthsimple, and have no fees to purchase OR sell them, which is appealing to me. Am I missing something – it seems too good to be true? Are there fees that are hidden, built into the actual purchase/sale price that aren’t obious? Are there issues with accessing the markets in real time? It does seem odd that they don’t have a web platform, and you must download the app on a device. Any thoughts or advice you would be willing to share about Wealthsimple would be greatly appreciated. Thanks again!
@Chris: Wealthsimple Trade is not a true brokerage: it’s an app that lets you trade stocks and ETFs. Questrade offers far more services and functionality and would be a better choice for a long-term ETF investor. The fact that you might have to pay $4.95 to sell your holdings many years in the future isn’t something to worry about. Who knows how brokerage costs will evolve over time. The important thing is to get started ASAP and try not to agonize over small details.
https://canadiancouchpotato.com/2020/01/28/how-to-set-up-a-hands-off-etf-portfolio/
Wealthsimple Trade says it makes money primarily from currency conversion fees.
About the e series funds, now that using a brokerage is necessary to buy them, is there any reason not to use the f series version of these funds? The f series have even lower MERs.
@Anon: The F-series funds are not available to DIY investors through online brokerages. They are only available to clients if fee-based advisors.
I am new to investing and I have about $2000 to invest- do you think VFV 20%, VAB 30% and VEQT 50% is okay?
@MJ: VEQT already holds US stocks, so adding VFV will significantly overweight that asset class. Simply using 70% VEQT and 30% VAB (as recommended in the model portfolios) provides better diversification.
Hi Dan,
Is there any D series ,All in one Growth mutual fund (like VGRO )with lower MER ? I do have an account (RRSP)with RBC DI and looks like ETF’s are not free to trade or buy. I did try the TD e-Series, But Plan to setup an automated monthly investment plan for any one fund solution .. like set it and forget it type. Could you please advice me if you have any cheap MER one fund -D series Mutual fund? I did my own search and found that RBF1350 ( 60% equity and 40% bond and MER .88%).
Thanks
Raj
@Raj: There are some low-cost balanced mutual funds, but there really is nothing that comes close to the asset mix of VGRO or similar one-ETF portfolios. I really wish there were. The Tangerine funds are the closest, but of course you cannot buy these at RBC, and they are less an less competitive in cost these days. (RBF1350 is actively managed, so it’s really not comparable.)
One idea is to combine the TD e-Series bond fund with VEQT or XEQT to achieve your desired asset mix. You can set up the monthly contributions to the bond fund. Then one or twice a year you can sell some of the bond fund and buy more shares of the equity ETF to rebalance. It’s certainly not ideal, but it’s a workaround if you make monthly contributions and want to keep trading costs to a minimum.
Dan,
What’s your opinion about VRIF?
Hi Dan,
I have been reading through your blogs and listening to the podcasts and recently helped a relative set-up investments using one of your TD e-Series model portfolios. So, thanks for all the great info that I was able to use in making that happen!!
However, I have a (likely very silly) question about my own slightly messier portfolio (I began building it long before I came across your blog or had a clue as to what I was doing). It holds all RBC Index funds as well as the RBC Bond Fund, some MarketSmart GICs and a bit of cash. I hold rather small figures of five individual stocks through Questrade. I’m using Excel to help me visualize my allocations.
The question: Where should the bond mutual funds be categorized? Do they belong under the fixed income heading along with the GICs and cash, or should they be lumped in with the other mutual funds and the individual stocks? The entire portfolio splits rather differently depending on where I place those bond funds. The mutual funds on their own are split 70/30, but the same is not true for the portfolio as a whole. My portfolio target is 70/30, no higher. This has been nagging at me for a while, so now I’ve just given in and asked. Thanks in advance for your reply and insight. I wish my bank was as helpful as all of your information has been.
Sebastian
@Sebastian: When determining your asset allocation, the structure (that is, mutual fund vs. ETF vs. individual security) has no bearing. A bond mutual fund is fixed income, just like an individual bond, a bond ETF, or a GIC. In the same way, equity mutual funds, equity ETFs, and individual stocks are all classified together as equities.
@Kim: https://canadiancouchpotato.com/2020/09/25/unpacking-vrif-vanguards-new-monthly-income-etf/
Hi Dan,
I recently came into a small windfall (CAD$15K) that I am seeking to invest in a one-and-done ETF. I am currently 26 and plan on adding to the position over time, with a goal of retiring in my late 50s. I would consider myself moderately conservative. Though I would prefer not risk my principal, I recognize that time is on my side and would be willing to take more risk if it meant out-sized returns in the long-run.
Given my age and time frame, would you suggest an ETF holding 100% equity (e.g. VEQT, XEQT) or one with a 80:20 equity-bond split (e.g. VGRO, XGRO)? I see above a recommendation to another reader for a 70:30 VEQT-VAB split. Is there an advantage to doing this versus purchasing a “pre-balanced” product like VGRO or XGRO (or even VBAL/XBAL, for that matter)?
Your insight is appreciated!
Hello Dan,
Thanks for all the knowledge you are sharing. I am about to make some changes to my portfolio and want to make sure I am going in the right direction.
I have a TFSA, RRSP and an investment account (IA).
I have maxed out my TFSA. I plan on maxing out my RRSP by February of next year for 2020.
Each account has the following portfolio:
20% RBF556 RBC CANADIAN INDEX FUND
20% RBF557 RBC U.S. INDEX FUND
20% RBF559 RBC INTERNATIONAL INDEX CURRENCY NEUTRAL FUND
40% RBF700 RBC CANADIAN BOND INDEX FUND SERIES A
Since the TD s-Series funds are now available to those that are not TD customers I was thinking of switching everything to the following TD funds. The only reason I am thinking of doing so is the lower MER. Is that a good plan?
TDB900 TD CANADIAN INDEX FUND-E
TDB902 TD U.S. INDEX FUND – E
TDB909 TD CANADIAN BOND INDEX FUND E-SERIES
TDB911 TD INTERNATIONAL INDEX FUND – E NL
I also have a work RRSP/DPSP that is invested in “889 Balanced Moderate Index (BlackRock)”*. Is it better for me to just put the maximum amount that my work place will match and then invest the rest in my nonwork accounts? Right now, I put in a little more than my work matches.
* https://files.ia.ca/-/media/files/ia/placements/en/group/colla-fu889.pdf
In the list of offerings, this was the closest I could find to what you recommend and with the lowest MER (0.967%)
@Sol: In general, I would indeed recommend using the lower-fee e-Series funds. In an RRSP and TFSA you can do this with no commissions and no tax implications, so it should be a very easy transition and will cut your MER in half.
Regarding the workplace RRSP, this really depends on how difficult it will be to manage two RRSPs. If you already have a self-directed RRSP then it likely makes sense to just contribute enough to your workplace plan to get the full employer match. But if it is easier for you to just maintain the one plan at work, that’s fine. The key thing is to make all of those contributions.
@Alex: I can’t make a specific recommendation for you, but I can offer some perspective. You mention that you are “moderately conservative” and “would prefer not to risk your principal.” In that case, a portfolio of 100% equities is entirely inappropriate. Funds like VEQT and XEQT can lose 40% to 50% in a major downturn like the one that occurred in 2008–09. Even 60% or 70% equities is not appropriate unless you are able to accept short-term losses of 15% to 20% or more. This might help:
https://canadiancouchpotato.com/2010/11/10/ready-willing-and-able-to-take-risk/
Hi Dan,
Thanks for your response.
I think my initial message came through as making me sound more conservative than I am in reality . Of course, no investment is guaranteed to preserve your principal, unless we’re talking government guaranteed products, bonds, etc. I must have had my rose coloured glasses on when I wrote my first message. I am indeed comfortable with losing 20% (or more) on a dip, given the time frame I have to work with.
I am wondering, however, is there is an advantage to going with VEQT/ZAB on a 70/30 split, instead of purchasing one of the asset allocation ETFs that roughly match that ratio. Is there a benefit to purchasing ZAB specifically for the fixed income component of a portfolio, versus whatever FI products is contained in the Vanguard or iShares AA ETFs?
Cheers,
Alex
@Alex: There is really no significant advantage to combining VAB and VEQT (or XBB and ZEGT). The only reason these are in my model portfolios is because the one-ETF options are available only for 20%, 40%, 60% and 80% equities. There is no one-fund option if you want 30%, 50% or 70% equities.