It’s been a while since the last new article appeared on the Canadian Couch Potato blog, and over two years since the last podcast. So I’m pleased to share the reason for the long silence: I’ve been busy on a new book called Reboot Your Portfolio: 9 Steps to Successful Investing with ETFs.
The official publication date is November 1, but the book is already available for pre-order on Amazon and Indigo, and will soon be on shelves at better bookstores across Canada.
I stopped recording the podcast in the summer of 2019 because I needed to take a break and think about how I could make my work more useful in a world of information overload. I didn’t want to just crank out content on a deadline: I wanted to create something that would have a lasting impact on readers and listeners. What was needed, I recognized, was a step-by-step guide to designing, building, and maintaining a portfolio of ETFs over the long-term.
The new book is something of a reboot in its own right. When I was a columnist and editor at MoneySense magazine, I wrote a modest book called the MoneySense Guide to the Perfect Portfolio, which laid out a plan for building a Couch Potato portfolio with ETFs and index mutual funds. That book sold out three editions, but it has been out of print since 2013. I still get emails from readers looking for copies, but there are none, and even if there were, the book is profoundly out of date now. The marketplace has changed dramatically: online brokerages are better and cheaper, excellent new ETFs have appeared, and roboadvisors have become a viable option for DIY investors who want a more hands-off approach.
As 2020 dawned, I had a clear idea of what my next project would be. Now I just needed to find the time to do it. Then along came the COVID pandemic, which meant a lot more time for all of us.
All of these roads led me to write Reboot Your Portfolio. The book is a complete guide to becoming a do-it-yourself investor using low-cost index ETFs. It draws heavily from the writing I’ve done over the years, since much of the advice hasn’t changed. But everything has been thoroughly updated, and large sections are brand new, reflecting the changes in the investing landscape. Moreover, my own approach has evolved during the last decade as I made the transition from financial journalist to portfolio manager: the more closely you work with human beings, the more you realize that simplicity always trumps complexity.
If you’re a hardcore DIY investor who’s been using ETFs for years, and you’re looking for advice about optimizing your portfolio to shave a few basis points in costs or taxes, you won’t find that in the book. The same goes if you’re only interested in model portfolios or specific ETF recommendations.
My goal with the book is to help you get away from the idea that successful investing is about choosing products and obsessing over tiny tweaks that will take you from an A to an A+. As I’ve worked with hundreds of investors over the years, I’ve come to understand that I can help more people just by getting them to an A. The small details don’t matter very much after that—and indeed, stressing over them can easily sidetrack you from what’s really important.
I hope you enjoy the book, and that it will help you get started on a path to investing success.
@Su-Chong Lim: Or may I call you Oldie? :) Thanks so much for your kind words. I think you may be the only reader who has stayed around all these years, and you have always been a thoughtful contributor to the discussions on the blog. I love your line about “the optimization of convenience.” I might steal it. :)
I hope you enjoy the book and that it offers some benefit to your family as well. Cheers.
Just picked this up from Indigo chapters. looking forward as a holiday read
Would be great to see this in an ebook format too!
@ian: E-book versions (Kindle and Kobo) are in the works and should be ready this month!
I’m looking forward to receiving your book I’ve ordered. Starting this month I will be moving to an ETF asset allocation ETF (for a number of reasons). Currently I have about 15% of my portfolio in USD. Also about 45% of my portfolio is in non registered accounts. I would like to keep the the USD for future international travel, but I am unsure how to handle these funds in a one fund ETF asset allocation portfolio. I will also admit as we are in our late 70s, our future travel may be limited and we could reduce our USD holdings. For now I am hung up on what to do with these fund with a one fund ETF asset allocation portfolio. Any suggestions would be appreciated. Thanks
Busted! Yeah, I nicknamed myself “oldie” back then. But I was so much older then; I’m younger than that now.
Hey Dan, I don’t comment as often as Oldie, but I’m pretty sure I’ve been around for at least as long. I purchased my first index funds in 2001 and am in my mid 50’s now – hoping to retire before too long. I’d like to say it’s been quite a journey, but actually it’s been pretty boring. :) I don’t remember all the details and I know your Couch Potato blog hasn’t been around that long, but I remember stumbling onto some of your early writing on passive investing. I was definitely influenced by it. I think you were just figuring it out yourself at that time. When did you start that?
“The e-book is in the works and should be available in December.”
Thanks Dan. I have ordered the book but it doesn’t appear I will receive it before Jan. I’m planning to make some some portfolio changes which involve consolidating TFSA accts. Preferably I can do the withdrawals in Dec and deposits in Jan. to avoid registered account transfers. I really would gain a lot of confidence if I had access to your book before the end of Dec.
Can you possibly advise when your e=book will be available in Dec.
@Ron: Thanks for ordering the book! I would suggest that the USD you spend on travel should be considered separate from your investment portfolio. Money you expect to spend in the next couple of years should really be kept in cash, as stock and bond ETFs will fluctuate and can easy lose value over a period of two or three years. So you might want to use an asset allocation ETF for your longer-term portfolio and just hold the USD in a savings account. Since the USD represents 15% of the overall portfolio, you might want to make the rest of the portfolio a little more aggressive to compensate.
@Darren: Thanks for the comment. I launched the blog in early 2010, and I was writing about indexing for MoneySense starting in 2008.
@Ron: The e-book is in progress and will be available this month. We also expect additional copies of the book to be shipped to Amazon and Indigo before Christmas, so it’s possible your order will be filled more quickly than originally expected. Sorry for the delays. The first print run sold out quickly and there are long waits at printers these days.
I bought the book & read it. I’m in my late 60s & semi retired (sort of, my old employer called me up late last year to help out, I’m a commercial credit analyst specializing in income properties. Supposed to be for only 4 months, 12 months later LOL) anyway, after reading your book, I amended my investment strategy accordingly. I really liked how you explained the importance of fixed income ETFs to help offset equity volatility & flatten the curve. Yep, my portfolio is boring now, stopped holding individual positions…sleep better too!
I tell everyone I know to go out & buy it. It’s the best advice every…short & concise & dispels all the industry norms.
Love this site…
Hi Dan, Congratulations on the book. I found your blog in 2011 and has been following since then. It taught me who has no idea how to start to become confident DIY investor. I don’t chase perfect return but good enough results given the busy work and home life. Compound interest and keep Investing did the magic. I totally agree that no need to sweat the small stuff and focus on the big picture. I should also say that to be able to manage my own investment is empowering for women and I encourage my daughter to learn as well. I will be getting a book to give her as Christmas present to start her TFSA. Thank you so much for your great work to always encourage the fellow couch potato investors to stay on course and make an impact to our financial life. It’s an important lesson we all need to learn and keep evolving.
All the best to you and your family in this holiday season.
@Rob Kennedy: I really appreciate your comment, thanks so much. Glad to hear that you have found the advice helps you sleep better. I’m always frustrated to hear retired (or almost retired) investors who are still following daily market moves. It’s not a recipe for peace in retirement.
@Sylvia: I’m so glad to hear you found the book (and the blog) useful and empowering. I hope your daughter benefits as well! Thanks again.
I purchased and in the process of reading your book. I noticed it is focused on ETFs do you suggest this route vs your TD e-series funds outlined in your model portfolio. I haven’t finished the book yet but I haven’t seen any mention of these. Should I go out and sell my e-series funds and move to ETFs? Thanks for your advice.
@Bubba: Many thanks for buying the book. As you note, it is specifically focused on investing with ETFs and does not mention the e-Series funds. I would never tell someone who uses e-Series funds that they should sell them and switch to ETFs. If it’s working for you, then by all means continue. However, if someone came to me today and asked how to get started with index investing, I would steer them toward asset allocation ETFs. It’s not just about the lower MERs. It’s more about rebalancing: in many ways it’s easier to manage a single asset allocation ETF than to juggle four e-Series funds. Hope this helps.
Hi: i’d Like to buy the e-book for niece and nephew for Christmas. I see it was expected to be available this month. Any idea when? If need be I will print the cover for them with promise of the gift, but wish to let them know when to expect it and how to follow through. I appreciate the mention that it is in the works — and hope to know more. Thanks! (I had loved Dan’s earlier work!)
Hello CCP, was hoping to read it as an ebook over the holidays, any news on Kindle release. All the Chapters and Amazon are out of stock. Cheers
@Jeremie and Anne: Apologies for the delay. The e-book is in preparation and will be available soon. Not in time for Xmas, but not long after. Thanks for your patience!
Thanks Dan – Appreciate your reply and advice. I really enjoyed the book (just finished it).
To add – I got to thinking about how I would actually go about selling my e-Series funds and moving into ETFs or single ETF has you pointed out in the book (news to me). Not sure what the best way going about that would be, maybe another book on this or blog post would be very helpful to me personally. Cheers.
just finished reading your book tonight! it is a great reference that I will use many times in the very near future and will definitely
read again in a couple of years.
I have question about the timing of investing in asset class ETF: wouldn’t be an advantage to invest just before the end the year because of the distributions? I was looking at the Vanguard VBAL and I noticed that the December distributions are 2 folds: the regular distribution and the Capital gain distribution. In this case and according the the Vanguard website on XBAL, the quarterly distribution is $0.203415 while the capital gain distribution is $0.290427…for a total of almost $0.49 total distribution for those who are holders before Dec 31st. At current share price this would be almost a 1.6% return in a few days if my maths are good….Am I missing something or this is an exceptional pattern?
thanks and I’ll make sure my young kids read the book…
@Bubba: If you decide you would like to switch from e-Series funds to an asset allocation ETF, it should be very simple, at least if you are familiar with how to buy and sell ETFs. For example, if you are using e-Series funds and your target asset mix is 40% bonds and 60% stocks, you can simply sell all of these funds and then immediately (or perhaps the next day) repurchase an ETF with that same asset mix (in this case, VBAL or XBAL) in each of your accounts.
If you’re still unfamiliar with using ETFs, don’t be in a big hurry to abandon your current strategy. The e-Series funds are still excellent, and they may be more user-friendly for many investors.
@Benoit: Many thanks for picking up the book, and glad you enjoyed it!
Unfortunately, you can’t get a risk-free return like this with any ETF (or dividend-paying stock). This article explains more:
I purchased your book yesterday from Amazon, got it today and just finished reading the whole thing! Thanks for providing such awesome advice for investing!
I am quite young and feel comfortable with risk, so I have started purchasing VGRO.TO, (80% equities, 20% bonds). If I want to reduce my volatility in the future by purchasing something like VBAL.TO (60% equities, 40% bonds), would you recommend that I sell all of my VGRO.TO and buy VBAL.TO, or start to purchase VBAL.TO with savings and hold onto my existing VGRO.TO? I’m not sure how to balance a portfolio (if it’s even possible) if it has multiple of these asset allocation funds.
Thanks again Dan! I hope you have a nice and relaxing holiday break!
@Mohit: Thanks for purchasing the book, and glad you enjoyed it!
It’s definitely possible to combine two asset allocation ETFs to get more control over your stock/bond mix. For example, if you think it’s too big a leap to go from 80% stocks (VGRO) to 60% (VBAL) all at once, you could indeed just start to purchase VBAL with new contributions. At some point, you could decide to hold equal amounts of VGRO and VBAL, which would give you a mix of 70% equities and 30% bonds. That might be good way to transition to a more conservative portfolio as you get older. Good luck!
Just finished reading the book. I would have thought, having followed the blog since the beginning, that there would be nothing new to learn from this book. However, the book put things together nicely and also contained a number of new insights.
@Amir: Many thanks for the positive feedback, and glad you enjoyed the book!
Hi Dan, firstly thank you so much for the amount of details you included in your book. I’m just starting creating my first portfolio and I’m 100% into passive investing.
As you mention everywhere, simplicity is key, so I’m definitely looking into buying asset allocation ETFs to reduce maintenance complexity.
In your book, you briefly talk about a subject I’m trying to get my head around though, which is “Tax efficiency.”
I’m trying to see if it make sense to hold multiple all-in-one ETFs depending on the account.
So an example would be that instead of holding VGRO across the board, I would try and mix VEQT and VCIP in relative proportions to keep the same 80/20 stock/bond ratio.
That would allow me to hold most of my VEQT in my TFSA or taxable account (in the future) and hold VCIP in my RRSP (which from what I understand would be more optimal in terms of taxes compared to holding VGRO in the three accounts) without having to rebalance anything.
I just wanted to have your thoughts on that, in order to see if that has some added value or it is just unnecessary.
Again thank you for your book, it truly change the way I’ll invest for the next 50+ years.
Hi Dan, congrats on your new book!
I am wondering if the book covers ESG/SRI investment advice? Otherwise, would you have know any credible book that I can read?
Long time follower, I recently bought and just finished the book. Loved it!
Just a question about rebalancing, if I have a relatively small balance in my non registered account, which was used to purchase an asset allocation etf, does it make sense to hold off purchasing new units from quarterly distributions throughout the year until you have a decent amount of money to make the trading commission worth it or would it make sense to purchase the new units each time i receive the quarterly distribution?
If its to wait it out until you have a certain amount of money to place a trade, what amount would you say is an appropriate amount to have to place a trade with commission involved?
Hello Dan. You mentioned in your book to keep money we may spend in the next 5 years in cash only. Are you saying a regular saving account with around 0.01% interests? I am a Federal employee so my salary is very stable. Is there a better place to put this cash (urgence) than a saving account? Is there any ETF out there that is similar to cash?
Thanks and great book! I’ve recommended to 2 friends that have bought it. Very well explain. I wen through each section very easily and I’m someone who usually have difficulty concentrating when reading. The way you write is very good!
@Sam: Thanks so much for picking up the book, and I’m glad you enjoyed it.
There might be some value in using an “asset location” strategy like the one you describe. But it will be modest, and it will very quickly complicate your portfolio. It’s not true that combing VEQT and VCIP will allow you to achieve an 80/20 mix “without having to rebalance anything.” You can combine those two ETFs to achieve an 80/20 mix today, but over time the funds will grow at different rates and you will need to rebalance. And you’re going to need a spreadsheet to do so, because the math isn’t obvious. (For the record, you would need to hold 75% of the portfolio in VEQT and 25% in VCIP to get an overall mix of 80% stocks and 20% bonds.)
For the vast majority of people, I’d suggest just using the one ETF in all three accounts. But if you really want to favour bonds n your RRSP and equities in the TFSA, then it will likely be easier to hold VEQT (or XEQT) for the equities and a standalone bond ETF for the fixed income. That will make the math (and therefore the rebalancing) much easier. That’s also the strategy I suggest in my model portfolios if you want to achieve an asset mix of 70% or 50% equities (something you can’t do with the a single asset allocation ETF).
You may also want check out this video from Justin before you decide whether all of this is worth it.
@Linda: The book doesn’t discuss ESG/SRI investing, and I’m not aware of any books on this topic from a Canadian perspective. But I do recommend this site for some excellent resources: Good Investing.
Justin has also done a video on the iShares ESG funds.
@Jeff: If you are paying the standard $9.95 commission to make trades, then it definitely makes sense to wait until the cash balance has built up a bit. Even if you make a trade for $1,000, that $9.95 commission is about 1%, and over time you don’t want to be losing 1% on every trade. If you make occasional contributions to the account, then it might be best to use up any accumulated cash at that time.
Another option is using a DRIP, but these are much simpler in a TFSA or RRSP. In a taxable account this can create some extra bookkeeping hassles.
@Martin: Thanks for spreading the word about the book!
If you are building up savings for a house purchase, you should be able to find a savings account that pays over 1%. If you are certain you won’t need the money for several years, you could also use GICs. Any other option can promise higher returns, but only at the risk of losses over the short-term, and that’s not what you want if you’re saving for a major purchase.
I finally picked up my kindle version of this book. I finished this in a single sitting. This was a very thoughtful, and well written book. Thanks for completing this project. For my clients that want to get into DIY investing, I’ll definitely recommend this book along with “the value of simple” and Bogle’s “little book of common sense investing”. One thing to mention on the section with asset allocation ETFs, there is one advantage that isn’t brought up very often. If you’re in your working years, trading during market hours may not be a viable option, as you’re working. I didn’t have an asset allocation ETF during the blip in 2020, and it really bothered me that I wasn’t able to log on, sell some of my BMO bond etf to purchase equity, if I just had the XBAL or VBAL, I would have been much happier knowing this is being done behind the scenes.
Dan, I’ve been following your blog since 2013 and just read the book. Thanks for writing it! I don’t know how you managed to pull this off without mentioning crypto at all but that’s impressive. When you started talking about gold as a (poor) hedge against inflation I started to wonder, but it did not appear. I have no doubt this was intentional, and you did it well.
I have your book ordered and am picking it up in the next few days. I have my TFSA maxed with vanguard’s ETF and some in my unregistered account, and not really enough money in cash to max out my TFSA for this year. Would it be okay to transfer in-kind from my unregistered account to my TFSA to ensure I max out my TFSA this year?
I understand it triggers a tax event if it is a ‘gain’ since purchase (which it would be). I don’t think this would affect me very much as a student although maybe there is more information required.
I should add to the above comment my TFSA was maxed last year, but the additional contribution room we have gotten this year I have not maxed yet*. So I’d like to max the contribution room for this year but do not have enough cash in my bank account to do so, but I could do it by transferring in-kind from my unregistered account.
Hope that is an okay question, thanks!
Does your book cover generation of retirement income? Reason I ask is I just read your article of Feb. 27, 2015 “A better way to generate retirement income”. It would be great to see an update on this and a discussion of doing this with an RRSP rather than unregistered account. Thanks!
I am 50 years old. Lets say I need money for the next 40 years. Lets say also that I want to invest in Vanguard ETF, Lets say I have 100.000$ to invest and finally, lets say I need 25.000$ per 10 years of retirement. So 25.000$ from 50 to 60 years old, 25.000$ from 60 to 70, etc. All those numbers are to make things simple to explain.
Does it make sense to put 25.000$ in a 100% bond etf for the money i need between 50-60 years old, 25.000$ in a 80% bond for money i need when i will be 60-70 years old, etc, and 25.000$ for money i need when i will be 80-90 years old.
Of cours I would adjust over the years, but my point is to split my investments depending on when i need it. long term horizon with more stocks.
@Vince: Yes, your brokerage should allow you to transfer ETF units “in kind” from a non-registered account to your TFSA. As you point out, this will trigger a “deemed disposition” and any capital gains would be taxable. Remember that you can only transfer whole shares, so you will not be able to transfer exactly $6,000, but you should be able to get close.
@Mark McCormick: The book is focused in investing only, with very little in the way of financial planning and retirement planning.
That MoneySense article is quite old now, but the basic ideas haven’t changed. It can be a little complicated to manage, but it works well an an RRSP/RRIF. Once you know how much you want to draw from the account (either monthly or annually), you can set aside one year’s worth of cash flow in a savings product, and then three to five years’ worth in a GIC ladder. The rest of the account can be held in ETFs. These days the easiest way to do that is with an all-equity ETF (such as VEQT or XEQT) and a bond ETF. This allows you to easily rebalance once a year whenever you are replenishing the cash/GIC ladder.
@Martin: I understand the general idea here, and you’re right to think about the different time horizons for your money. But it may be hard to set up the portfolio in such a tidy way, especially because your time horizons get a little shorter every year. It will likely be easier to simply build a diversified portfolio and set aside several years’ worth of cash flow in a GIC ladder.
To continue your example, if you need $2,500 per year, then you could keep $2,500 in cash for the current year and build a three- to five-year GIC ladder with $2,500 in each rung. This would guarantee your cash flow for the next few years. The rest goes into a diversified ETF portfolio. Once a year you would replenish the cash/GIC ladder by selling some of the ETFs, rebalancing the portfolio at the same time.
Dan, do you have an opinion on five factor investing? I understand you advocate for simple portfolios and It appears that Robb Engen also uses a simple portfolio, as I believe he holds his entire portfolio in VEQT. From what I understand about five factor investing it is supposed to statistically be more risky but better in the longterm although it hasn’t performed as well over the last few years for different reasons?
I am probably going to just keep my portfolio in an all-in-one fund due to simplicity and automatic rebalancing but as a young person I am wondering if it is worth considering.
Thank you! :)
Hi Dan, Thanks for producing the kindle book. It was a great read and helped me stay on track without trying to overthink everything.
One question about family RESPs – my children are 9,9 & 7. Would a 60/40 balance or 80/20 growth ETF be better? We have at least 9 years before we need to access these funds and then about 6 years to draw them down.
@Jeremy: Thanks for the comment. As a general rule, I think it makes sense to err on the conservative side for RESPs. The real benefit of RESPs are likely to come from regular contributions, the 20% grant, the tax-free growth and the income-splitting when the withdrawals are taxed in your children’s hands. Taking additional risk might work out, but isn’t usually necessary. If you decide to go with 80% equities, you would likely want to scale tat back after five years or so. Good luck!
@Vince: I do discuss this idea in the book. After discussing what factor investing is, I wrote the following: “If you’re currently an index investor — or on your way to becoming one — I suggest resisting the temptation. Part of being a successful indexer is accepting that your goal should be to achieve market returns at the lowest cost. Getting seduced by smart beta [factor investing] is likely to do more harm than good, because once you convince yourself there’s something better out there, you’re liable to start second-guessing your decisions. You’ll fall into the trap of thinking that indexing is ‘settling for average,’ which is exactly what the industry wants you to think. Enlightenment comes when you understand that traditional indexing gives you the highest likelihood of reaching your investment goals, and that it’s not settling at all.”
Thanks Dan. Your book has been on hold for me a bit downtown since I ordered it from a bookstore rather than Amazon but it’s -30 here in Edmonton so I’ve been putting off the journey to grab it x_x
When you refer to what ‘the industry wants you to think’, are you talking about actively managed portfolios? I meant to inquire about Ben Felix’s recommended factor investing portfolios on his website (I think he is a colleague of yours?). Altho I definitely understand your statements about how traditional indexing is certainly simpler and easier to manage, and likely less stressful, since all I have to do is buy one ETF and not have to worry about keeping a 30/30/10/16/8/6 ratio or so on, which is very appealing. I definitely will not be moving to actively managed things anytime soon, until I reach $1m invested so I can come to PWL capital (if they take me).
Sorry if this is a redundant question since it’s in your book, I promise I’ll get to it by next week!