Couch potato investing money sense camp
Studies have shown that the passive, or couch potato, investment strategy on average beats about 80% of professional money managers over time. Looking to build your own Couch Potato portfolio with index funds or ETFs? We offer examples for all risk profiles. MoneySense, February 1, MoneySense wanted to impartially figure out which Canadian communities actually (Check out our Couch Potato portfolio on. FOREX TRADING ROBOTS SCALPERS Would you plan includes a supplies list, blueprint. Also check any kind platform include. Some operating configuration step for Automated. Read this indispensable in with it.
IS there any explanation for the poor performances? Thank you. Then once you hit home, download the conversion form from TD Canada trust website and convert the mutual fund account to an e-series account. It was the first time since the Depression that major stock indexes had negative returns over any year period. The point is that most actively managed funds tend to lose even more over the long term. Wow, great site!
I love the couch potato portfolios and your comments to Uncle about the correlation between his holdings. Makes you really want to do a little more homework in choosing ETFs. Is there a location that reports correlation between ETFs as they do with mutual funds? Would this be a topic for a future blog or have I not read everything? Keep up the good work! Have already referred a couple of my friends. Hi Doug: Thanks for the good wishes.
You ask some good questions, which I will try to address in future posts. Thanks again! What about the fixed income ETFs? I think the Sleepy Portfolio is pretty close to the direction I am heading. Hi Doug: Distributions from bond ETFs are interest income and are taxed at your marginal rate so, yes, they are best kept in tax-deferred accounts.
As for where to locate the ETFs that make up the Sleepy Portfolio, the answer depends on your marginal tax rate, expected income in retirement, etc. Most distributions from REITs are income and return of capital, not dividends. Please note that I am not a tax advisor, so you should double check all of this, but I hope that helps get you started.
Any advice for someone who would like to remain with BMO for now until one feels more confident? I still have 20 yrs to invest. Good luck, and hope the folks at BMO give you the help you need and do not just try to discourage you. I have a TFSA but would like to keep it separate from this discussion as I would like to use it as a day-trading account. I have maxed out my RRSPs every year and intend to going forward. Most of the discussions here involve RRSP accounts and the min value required of 50k.
Am I correct in assuming this? Jimmy: Thanks for the questions. You should think of your RRSP and taxable accounts as one portfolio when planning your asset allocation, but only if both accounts are intended to fund your retirement, and therefore have the same time horizon. However, since your RRSP room is so limited, you may want to hold these in your taxable account, where you can trade in USD and avoid foreign exchange fees.
And although you get no tax credit on foreign dividends, at least the capital gains are taxed more favorably than bond interest. If you have maxed out your RRSP, you may want to speak with a tax professional to figure out a way to shelter more of your savings from the taxman. I have a question regarding ETF bond funds. Is that right? Is my understanding correct?
Erin: Thanks for the question. But for a long-term investor, these costs are very small. People seem to think that buying individual bonds is free, but of course the bond broker builds in a premium, which is often much higher than the cost of buying and holding a bond fund. The cost of maintaining your own ladder of 25 bonds would likely be far higher.
I am rather new to this style of investing… Your post gave me the confidence to look at my holdings to understand where I stand. Should I be selling this shares and buying a Cdn equity ETF or should I consider this as the cdn equity portion of my portfolio and work toward rebalancing my portfolio over time. Thanks for the feedback. Which do you like more xdv or cdz? Claymore looks a little more diversified despite the higher MER.
Whereas ishares looks bank heavy. It appears that Claymore has a lower trade volume should this factor into my decision? And yes, it is more diversified than XDV. It also has a higher yield and the option of the dividend reinvestment plan. Thanks for the information. I just want to clarify: At what point does it make sense to buy a ETF? Thanks for your valuable info.
Matt: Great question. By choosing ETFs over index funds, you save about 0. The other important question is how often you add money to the portfolio, and how much you add. Make your monthly contribution to the index fund and then rebalance once a year at a small cost.
Plan to retire in years. Which strategy would you suggest for someone in my situation? One rule of thumb suggests that the percentage of bonds in your portfolio should be approximately the same as your age, which is at least a good starting point for the discussion. Formerly from Ontario, I now live in Oz as in Australia. Unfortunately, this beautiful country has yet to discover indexing.
Only a few options are available. I try to promote the faith, but property is the big thing at the moment. It would be a brave soul, that creates an Australian Indexing site. So my current porfolio is built from Australian funds available. My allocation has a slant towards value and small cap. Perhaps a bit like your Uber mix. That might be a bit too much home bias.
The portfolio is actually not slanted to small cap at all, and only barely to value: the equity portion is overwhelmingly large caps. The other issue is that you hold several asset classes in very small proportions. For those portfolios with xre, I think it may be worth the minimum risk to just buy rei. Minimum risk because rei. UN is perfectly reasonable. UN been very highly correlated over the last several years, but Riocan has a higher yield.
For more on this idea, see this these posts:. This is an excellent source of information for investors seeking various types of options to which they can put their hard-earned dollars to work. This is definitely a good place to visit while I make my plans. The long-term returns seem to be extremely low as shown by the following figures:. Any help with understanding this would be much appreciated! Subtract a bit for costs and tracking error, and XBB should have been very close to that.
I am in my mids. Would appreciate your comments. You may already have this covered, but thought you should know. The total return including distributions is much more reasonable! Another question that I would be interested in your perspective on: When investing in government bonds there is almost zero risk, so why not purchase a few of different durations yourself and avoid the MERs for iShares?
But there some advantages to buying a bond ETF: a You get much greater diversification. Government bonds have virtually do risk of default, but they bonds hold other types of risk from interest rate changes, inflation, etc. What a wonderful resource this site is. We are so very lucky to have this information at our fingertips. Your concern about buying bonds now is perfectly reasonable.
Or you could move in a bit at a time. Obviously there are now guarantees with this strategy, but it may well be the sensible choice. Anything I need to consider before jumping in? I do know that Rob Carrick recommends them in his book , and I have always trusted his judgment. Please let me know how your experience goes and we can share it with other readers. I know Claymore offers Drip plans through discount brokerages, but only if the dividend is enough to buy a full share.
Clearly, one of the issues of CSA is that the purchases take place as per a cooperative schedule. My opinion obviously…. Hope these help, […]. All of my investments are in Mutual Funds — way too many and way to confusing. Great site, very informative! Options are:. Index Currency Neutral. In the international fund, the hedging has to target at least three major currencies euro, yen, sterling , which is difficult and rather pointless. Thank you for the great blog. I am thinking of the following allocation:.
I have a couple of questions. The first is the Canadian Equity portion. Also in regards to the US portion of this allocation model. Again thanks for this great site. I appreciate the discussion and look forward to comments and participating in future conversations. One comment about the Claymore real estate ETF. Most of it is not actually REITs, but real estate development and holding companies. Corporations are under no obligation to pay those distributions.
Thanks for the information CCP. How would real return bond indexes play out in the fixed portion of the portfolio? I love this site. The Global Couch Potato portfolio makes a lot of sense to me as a simplified introduction to investing, using TD e-series funds to do it. Does anybody have an opinion on this portfolio?
All equal weighted. Hi, I want to thank you for your very informative blog. My question is quite simple. You commented earlier that currency neutral funds are not necessary as their real returns will even out in the long term compared to non-currency neutral funds. I am now a little confused here on which one to choose for my portfolio.
Thanks for clarifying. Choosing a currency-neutral fund for a long-term investment is making a bet that the Canadian dollar will rise over a very long period. Hedging has also proved to be quite imprecise in many currency-neutral funds. However, the popularity of currency-hedged funds suggests that most Canadian investors disagree with my opinion, so I have made hedging the default for investors just starting out.
I should stress that there is no guarantee that currency fluctuations will even out over the long term. They should , in theory, but they might not. The question is, do you feel comfortable making a bet one way or the other, or does it make more sense to just choose the lower-cost option?
I did some research on both and discovered that both camps are deeply entrenched in their theories. The fundamental camp is supported mainly by favourable back-tests from historical performance. Do you have any input into this debate to help me pick a side. Thanks you. The cap-weighted v. Personally, I use cap-weighted, non-hedged ETFs in my own portfolio because I believe that over the long run costs are the biggest drag on returns.
Why not try fundamentally weighting your Canadian equity and using cap-weighted ETFs for US and international, or vice-versa? Victor: Thanks for your comment. Your portfolio could be more diversified: you have no international equities, no government bonds, and your Canadian equities are all in sectors or small caps, rather than the broad market. Something to think about. This is an excellent strategy for an ETF investor, as it keeps trading costs to a minimum.
Re: dividends from ETFs. You can add this cash to your monthly savings and use it to buy more shares when you rebalance. Global Couch Potato portfolio cost per year, monthly contributions : — 0. Hi Victor: Yes, your cost comparison is correct. As you can see, the mutual fund option is considerably cheaper and a better mix of asset classes. This is why many investors are unaware of the real cost of their investments.
What in your opinion is a safe daily trade if an ETF, especially in Canada. Liquidity is not a major concern with any ETF. While thinly traded ETFs may have larger than normal bid-ask spreads, the provider will always redeem them for a price close to the NAV. Is this appropriate advice to give to folks looking to build a long term portfolio.
My understanding about those two ETFs is that they are not so much for the long term investor. Curious to hear what you think. Great site by the way. Big fan of what you are doing here and spreading the word. Leveraged ETFs like those from Horizons are not appropriate for long-term passive investors.
To get an accurate idea of what is offered there you have to place all your money assets with them and hire their management expertise. Is it still a good time to do the TD eseries option with the problems in Europe and interest rates going up? The RSP portfolio is currently K, i avg in monthly and it is broken up like this:.
Can you comment on my current portfolio? Among other things, I am concerned i will get grinded down with the MER and inflation. The problem is I take an active interest in my portfolio and feel like im missing diversity in my portfolio and that i can do better following one of your model portfolios.
Can you comment whether you think a my current portfolio is balanced and looks good. I just dont want to feel like im being played by IG and there will be true growth with their plan, opposed to selling their funds and buying a portfolio like this one:.
Ash: Thanks for your comment. The TD e-Series funds sound like great options for you, given the small size of your portfolios. The dividends from e-Series funds and any other mutual funds are automatically reinvested, not paid in cash. Personally I think it makes no sense to hedge this fund against USD because the underlying securities are in local currencies Chinese, Brazilian, etc. So buying VWO is likely to by far cheaper in the long run.
Grant: The portfolio looks great. I have 35 have locked in RRSPs that cannot be touched till 65 so looking for long term growth with high risk. I am currently sitting in MF ready to convert to e-series and based on the observation is still worth to convert to e-series I guess lower MER would be worth lonterm.
At first glance, I think the BMO fund looks good. The equal-weighting strategy seems sensible for this kind of fund, with relatively few securities. Outlook 30 years. I am looking for dividends in addition to capitalizing on traditionally stronger growth with small cap stocks. I also prefer a bit more Canadian than normally recommended. The dividend ETF is not as well diversified.
Otherwise, looks great! We are not impressed with the returns or the MER of our funds. I would like to know what u think of the ING streetwise funds. Thanks Dan. You get the exact same asset allocation through the Global Couch Potato portfolios above at less than half the cost. They are slightly more work to manage, however, so if you see value in the of ING, the Streetwise Funds are a perfectly reasonable choice.
Good luck! Having tried to beat Mr. In my opinion, VTI gives me enough exposure to small, mid, large, value and growth stocks in the U. I believe like Charles Ellis that emerging markets represent a great opportunity in the future. Also I believe short term bonds provide the greatest return based for the maturity risk. Tax-wise, I have XIC in my non-registered account with the majority of the rest in tax sheltered accounts. I just got out of my equity investments most right before the recent market correction — lucked out.
Nice job! Ive been reading about couch potato strategy for a while and would like to try it out. Or did i miss something? A while back the posted mer was. Then it went up to 1. Now it appears to be back at. I should contact claymore and find out what gives. Current dividend yield appears to be very attractive. The real management fee, as it seems to fluctuate dramatically, is a huge question mark. Currently I am completely in claymore cbo to the tune of 6 figures.
The only reason is income. I can afford to wait a few years while earning a reasonable and more or less reliable income from a corp bond ladder until the market is reasonably priced. For a retired person, this seems safe. You are commenting using your WordPress. You are commenting using your Twitter account. You are commenting using your Facebook account. Notify me of new comments via email. Notify me of new posts via email.
Email Address:. Sign me up! Blog at WordPress. Canadian Couch Potato The complete guide to index investing in Canada. The Global Couch Potato This simple portfolio—popularized by MoneySense magazine—gives you exposure to stock markets in all developed countries, as well as a firm foundation of Canadian bonds.
The Sleepy Portfolio This portfolio was created by Canadian Capitalist , who updates it quarterly on his excellent blog. The overall cost of this portfolio is 0. Share this: Twitter Facebook Reddit. Like this: Like Loading Any thoughts? Maxwell by CooHayward January 18, at am. In the latest episode of the podcast, my guest is Todd Schla [ I used to own one of those one-piece cutlery tools designed for hiking and camping—the kind with a knife, fork and spoon that all fold into a single unit.
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