Tuesday, October 28, 2014

My Asset Allocation

I’ve resisted discussing my asset allocation for some time, but now is finally the time to describe it and the reasons behind it. I’m not holding it out as a model portfolio; I believe it’s suitable for me and not necessarily anyone else. With that warning, enjoy the discussion and feel free to ask questions or take some pot-shots.

The main reason why I haven’t discussed my asset allocation in detail before now is that I don’t want readers to treat it like a model portfolio and follow it blindly. Everyone’s situation is different. The need for variation in asset allocation from one investor to the next usually isn’t huge, but there is no one-size-fits-all portfolio.

A secondary reason for keeping my asset allocation to myself is that I can’t be sure I’ll never change it. For example, I recently made the minor change of switching from an ETF of small-cap stocks to an ETF of small-cap value stocks. I don’t have any plans to change my current allocation, but I may think differently in the future.

All Stocks

To start with, my portfolio is 100% allocated to stocks. This means that my returns are more volatile than portfolios containing some bonds and real estate. I don’t recommend 100% stocks for everyone, but I believe it works for my situation.

I have a fully paid-for house and have no debts of any kind. I get job offers fairly regularly, so I’m not overly concerned about the continuity of my pay cheque. I also have a cash buffer that bounces around between 3 and 6 months of my family’s spending. This stable base makes it reasonable to handle the volatility of stocks.

On the emotional side, I handled the tech crash in the early 2000s and the financial crisis of 2008-2009 without any panic selling or sleepless nights. So, I’m confident I don’t need the security of a lower-volatility portfolio.

I’m also prepared to adjust my retirement date based on stock market performance. Before retiring, I’ll certainly sell a sizeable block of stocks and hold the proceeds in safe investments like cash or GICs. If it seems like a bad time to be selling stocks, I’ll just keep working until I can sell some stocks. It’s true that many people have a retirement date forced upon them for health or other reasons, but I expect to have enough savings to cover my expenses indefinitely before I reach age 65.

The Allocation

To decide on an allocation among Canadian, U.S., and international stocks, a starting point is the percentages of the world stock market capitalization each represents. According to a Harvard blog, Canada and the U.S. have 4% and 40% of the world’s stock market capitalization, respectively. So, we have

4% Canada, 40% U.S., 56% international

However, I live in Canada, and while it doesn’t make sense to have too much of a home country bias, my spending is correlated with the fate of Canadian companies. So, I chose to bump up my Canadian allocation to 30%. There’s nothing magical about this figure; it just seems about right. Leaving the other two categories in roughly the same proportion gives us

30% Canada, 30% U.S., 40% international

I spend a good chunk of my time in the U.S., so for the same reason I increased my allocation to Canada, I increased my allocation to the U.S. to 45%. Again, there isn’t much to justify this exact figure; it just seems about right. This gives

30% Canada, 45% U.S., 25% international

Choosing ETFs

There are a number of ETFs that cover my 3 allocation categories. I use low-cost index ETFs for each category. For Canadian stocks I chose Vanguard Canada’s VCN. There are several other possibilities, but I like that VCN includes some smaller-capitalization stocks and more stocks than many other ETFs. I also like Vanguard.

For the U.S. and international allocations, I decided to go with ETFs from the U.S. rather than Canada. This has the advantage that the MERs are lower than they are with Canadian ETFs, but a disadvantage is that I have to do currency exchanges between Canadian and U.S. dollars. Fortunately, Norbert’s Gambit is a clever way to reduce currency exchange costs.

For international stocks, I went with Vanguard’s VXUS. This ETF covers the entire world other than the U.S. It does include a little bit from Canada. So, my actual allocation to Canada is more like 31% than 30%.

I chose to use my U.S. allocation to get some added exposure to small-cap stocks and value stocks. So, my U.S. allocation is split between VTI and VBR, both from Vanguard. VTI holds an index of all U.S. stocks. VBR holds all U.S. small-cap value stocks.

Here is the final allocation to index ETFs:

30% VCN
25% VTI
20% VBR
25% VXUS

There is nothing magical about these exact percentages. The key thing is to stick to them. It’s far too easy to see one ETF shoot up in price and suddenly decide to increase your allocation there. It’s better to mechanically rebalance back to your chosen percentages occasionally.

Complications

Having only 4 ETFs may seem overly simple and that there is room for finer slicing and dicing of categories. However, there are always added complications when you try to use an asset allocation in real life. It’s better to start with something simple.

One complication I have is that my wife and I have 9 accounts. Why not consolidate some of them you may ask? I can’t. My wife and I each have one RRSP, one TFSA, one LIRA, and one non-registered account. The ninth account is her spousal RRSP. I treat the 9 accounts as a single portfolio, which simplifies things somewhat, but handling this many accounts adds some complication.

Another complication is that I keep as much of my VTI, VBR, and VXUS in RRSP accounts as possible. This is because the U.S. imposes a dividend withholding tax on stocks held in our TFSAs and non-registered accounts. Following this rule sometimes forces me to make extra trades when I’m rebalancing the portfolio.

I have a group RRSP at work that I joined to get the company matching contributions. The MERs of the funds offered are extremely high, and my lowest cost option among stock funds is a Canadian index fund. So, I treat it as part of the 30% allocation to Canada.

My wife and I still hold some Berkshire Hathaway stock that has significant unrealized capital gains, so I’m not inclined to sell until it’s convenient from a tax perspective. For now, I treat it as part of my U.S. allocation which reduces the amount of VTI and VBR we hold.

There are other complications, but you get the idea; it’s best to start with a simple allocation.

MERs

A particularly good feature of my allocation is its low cost. Here are the MERs:

VCN 0.05%
VTI 0.05%
VBR 0.09%
VXUS 0.14%

Blended Portfolio MER: 0.08%

This is a very low yearly cost, and you may wonder what would be the big deal if it were 0.25%, or 0.5%, or higher. Because your investments grow for a very long time, it’s best to think of costs over a much longer time than just one year. These costs aren’t just charged on new money; the same money gets hit year after year. So, the costs build up.

I use what I call the MERQ (Management Expense Ratio per Quarter century). Thinking about costs over 25 years gives a better perspective. My portfolio’s blended MERQ works out to 2.0%. This means that every dollar I save that stays in my portfolio for 25 years grows to 2% less than it would have without MER costs. But for an MER of 0.5%, the MERQ is a much more painful 12%.

MERs aren’t the only portfolio costs. There are trading commissions, bid-ask spreads, trading costs within the fund, currency exchange spreads, and dividend withholding taxes to consider. Be sure to account for all costs when choosing among portfolio options. In my case, my portfolio is large enough that the MERs and international withholding taxes within VXUS dominate the other costs.

Conclusion

So there you have it. I have a fairly simple, low-cost portfolio of index ETFs. It suits me, but your mileage may vary.

47 comments:

  1. I believe you have hit the nail on the head with your statement that you may change your investing "style" or spreads, if you find a better way in the future, and that should be the case with all plans. Every plan starts with good intentions, but can't possibly see all future possibilities, so be flexible (not overly flexible) to change and deal with it, when it happens.

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    1. @Alan: While it's possible that I'll change my investment plan in the future, it's important that I have no such plans now. Most tinkering is a bad idea. If by "spreads" you mean the allocation percentages, this is the part I'm most concerned with not changing. Losing your nerve with shifting money from an ETF that has done well to one whose recent performance is poor is the main benefit of rebalancing. While I recognize that future events may drive changes, I don't have plans right now to be flexible with my asset allocation.

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  2. Michael,

    I'll be blunt... Do you really need to take so much risk? Is your savings rate so low, or your retirement horizon so near that you really need to assume the high uncertainty of a tilted 100% stock portfolio and risk not having enough to retire the day you're maybe forced prematurely to retire? What is driving your asset allocation, is it need or greed?

    Do you really believe that having a 25% bigger (if everything goes well, only!) but more volatile portfolio in 25 years will really make a significant difference in the quality of your retirement? What about if things don't go like you planned?

    Only you know the answer. But, greed was one of the important drivers that lead to the recent great recession and to the great depression of the 1930s.

    I wish you the best of luck!

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    1. @Anonymous: Thanks for your comment. I appreciate bluntness when delivered respectfully, which you certainly have done.

      I don't actually believe I'm taking significantly more long-term risk than if I had a balanced portfolio. Research by Jeremy Siegel (described in his book Stocks for the Long Run) shows that long-term volatility of stocks is lower than is predicted by their one-year volatility measures. And long-term volatility of bonds is higher than would be predicted by one-year volatility measures. This means that stocks have a stronger reversion to the mean tendency than bonds. The 4th paragraph of my review of Siegel's book briefly describes this phenomenon:

      http://www.michaeljamesonmoney.com/2014/01/stocks-for-long-run.html

      Of course, none of this matters if the investor cannot stick to the plan. If you sell on short-term volatility, the long-term volatility is irrelevant.

      So, I believe I'm getting a higher expected 20-year return without much more risk (or perhaps any additional risk according to Siegel). My goal isn't to have a portfolio bigger than I need. My goal is to achieve financial independence sooner to give me more choices earlier in life.

      The big stock market driver prior to the 1929 crash was leverage. I don't use any leverage.

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    2. Just so I understand, you're suggesting that by adding a small Bond ETF to your portfolio, it'll increase the time for you to obtain Financial Independence. Do you know how many months or years it'd add? Specifically, is this a thought-out exercise or are you guessing?

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    3. @R: If you run portfolios starting every year over the last 100 years, the 100% stock portfolios will hit a target portfolio size sooner than a 90/10 portfolio (that includes rebalancing) most of the time (but not all of the time). No guessing required. The average delay in reaching financial independence will depend on the pattern of contributions, tax assumptions, and the portfolio target.

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  3. Aren't LIRAs wonderful? Nothing better than having to keep track of additional brokerage accounts just because you were fortunate enough to have a DB pension plan in the past.

    I have one small LIRA that I'm actually deliberately keeping small so that I can unlock it and move it into my RRSP as soon as permitted. So I keep some of my fixed income in there: at 5% a year it isn't growing much!

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    1. @Bet Crooks: It's amazing how many accounts you can end up with even if you try to keep things simple.

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  4. Thanks for sharing. I am still trying to figure out my asset allocations and not wanting to add to what is already in my RRSP makes it even harder. I think it would help a lot if I could just transfer some to my TFSA.

    My problem is in having double assets: bonds in RRSP and TFSA (got rid of the smaller amount in TFSA), Cdn equity in both areas as well as US and foreign. Ugh. Hard to get the percentages right.

    Ron B

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    1. @Ron B: I use a spreadsheet to track all my holdings and calculate my overall portfolio percentages. This makes it easier to see what changes I need to make to match my target allocation percentages.

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  5. I agree with your decision to switch from small to small value. If you are going to tilt from broad market indexes you might as well use the asset with the highest expected returns. Although there is great value in simplicity, having done that with US, have you considered the same with international, such as Wisdom Tree's international small cap value ETF, DLS?

    When you get to the point when you no longer have earned income, have you decided what allocation to fixed income you will move to?

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    1. @Grant: I hadn't thought about trying to create a small-cap value shift in my international holdings. According to Morningstar, the DLS expense ratio is 0.58%. This seems too high to me.

      My plan is to keep 5 years of spending in safe investments such as cash or GICs. This makes more sense to me than having a fixed percentage in GICs or bonds.

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    2. @Michael. It's true that the MER for DLS seems high, but as Swedroe explains in one of his many articles on Etf.com, that when using funds that target premiums such as size and value, one must also look at the size and value metrics of the fund. A fund may have smaller stocks and is more "valuey" such that performance net of fees may be better over the long term. It's for this reason that Rick Ferri uses DLS for international small value exposure.

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    3. @Grant: It may be that DLS will generate long-term returns that justify its high MER. I'm just not convinced that the small-cap and value premiums will necessarily be large in the future now that it has become popular to try to exploit them. I'm just not willing to give away an extra 0.5% every year.

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  6. Michael, two questions:
    1. how do you logically connect spending time in the US and allocating your investments to US companies?
    2. what investment platform(s) do your use to manage your accounts?

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    1. @AnatoliN:
      1. I spend nontrivial amounts of money in the U.S. So, my spending level is correlated with the fate of U.S. companies.
      2. My investment plan is simple enough that I can manage it all with a spreadsheet. In fact, this spreadsheet just lights up some cells in red if I need to rebalance.

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    2. I was not clear. I meant to ask, what channel do you use to perform your transactions? Some brokerage account or several, I suppose?

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    3. @AnatoliN: I use BMO Investorline.

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  7. This made me smile :)

    "I have a fully paid-for house and have no debts of any kind"

    "I also have a cash buffer that bounces around between 3 and 6 months of my family’s spending."

    "...but I expect to have enough savings to cover my expenses indefinitely before I reach age 65."

    Most people would do well to have one of these, let alone the hat-trick, well done.

    I think your asset allocation makes great sense, and it seems to work for you, but why not 1) more CDN REITs and/or 2) more U.S. stocks/ETFs than just the 25% allocation? I would have thought you might have had more than the 25%, especially since you can load-up the RRSP to avoid the aforementioned withholding taxes.

    I don't have 9 accounts, but I'm more than halfway there Michael. I suspect eventually my wife will have a non-reg. account and likely a LIRA as well if she/we are able to take early retirement before age 55. Still many years off for us (retirement) and so many things can change.

    Great insight and thanks for sharing.
    Mark

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    1. @Mark: Thanks for the kind words.

      In don't have any REITs for a couple of reasons. One is that I already have a significant investment in my home. But a more important reason is that I'm not seeking to sacrifice some return to reduce volatility. Real estate and bonds have lower expected returns and lower volatility than stocks. For the majority of investors who want lower volatility than an all-stock portfolio, it makes sense to include both bonds and REITs. But that's not what I want.

      My allocation to U.S. stocks is actually 45%. Both VTI and VBR are U.S. stock ETFs. It's just that VBR is limited to small cap value stocks.

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    2. Fair points about REITs, I guess I see an advantage to owning them for income (inside my TFSA) so I can withdraw income generated tax-free whereby I can't do the same for my own home, at least from a practical standpoint without incurring more debt, reverse mortgage, HELOC, etc.

      I guess I was more focused on the 25% of VTI in particular, I simply guessed it might have been higher (for you) for that particular ETF holding, although I can appreciate the desire to have some allocation to smaller-caps for the potential upside.

      Your portfolio has some simplicity, and I'm working on making mine more manageable as well. I hope to increase my holdings in a few ETFs next year so I eventually end up with a "core" and some "explore" vs. the other way around.

      Cheers,
      Mark

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  8. Michael, I would even recommend going over 100% stock in some cases. If I was to start from the begining of my investing life, Here's an exemple of the way I would go :

    at 18 years old, with 10,000$ to invest, I would borrow 40k and be 500% stock

    at 25 years old, with 100,000$ to invest, I would borrow 200k and be 300% stock

    at 35 years old, with 200,000$ to invest, I would still borrow 200k but now, it would be 200% stock

    at 50 years old, with 500,000$ to invest, I would let go leverage and be 100% stock

    at 65 years old, with 1M$, I would include 10-25% short government bonds in the portfolio

    what do you think ?

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    1. @Le Barbu: For this strategy to work, you'd need to have a large enough income to cover the interest payments without having to sell stock in a severe downturn and you'd need nerves of steel to ride out crashes like 1987, tech crash, and 2008-2009, etc. This is too aggressive for me. I don't think I would have been able to keep my nerve through big price drops in the stock market. Your mileage may vary.

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    2. I agree it's a bit agressive for most, but I think you get the idea.

      When I was in my 20's, I have no kids, no responsability to anyone and a descent salary so this could have been suitable for ME.

      Think about the baby's first steps, they can handle some crashes that would send you to hospital when your older.

      I'm 42 now and I would be a lot more willing to borrow a 100k chunk against my HELOC to throw it in VCN than borrow 40k like peoples arround me to buy a brand new CRV. The expected return is -15% for them and +5% for me.

      I'll try to teach my sons a bit about this so they won't have only the bank's advisor pitch.

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    3. @Le Barbu: If I could take my present-day maturity and inject it into my 18-year old self, I could have invested somewhat more aggressively. But when I discuss how to think about investing with my son who now has some savings, it seems too much to ask him to use leverage. There are also real concerns other than maturity. For example, if he loses his job at the same time stocks are down, he may be forced to collapse the leverage at a terrible time.

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    4. Its very responsible from you to do so. I want to open their mind but not to the point they get in trouble. Actually, the oldest is 11 and blown some friends mind when he said that our 2 cars were paid off. Someone asked him if his parents are some kind of millionaires or what. Now he realize we can look average from the outside while being quite different if you look closer.

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  9. Good evening,

    I also own vti and vxus, and I've always wondered what is the minimum transaction size that justifies using Norbert's gambit. Is it $5k?
    If there is such a threshold, do you invest the funds in a $CAN ETF until you reach that amount?
    Thanks,
    V

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    1. @Victoria: I use the cash balances in my trading accounts as my emergency fund. I use a threshold of between $4000 and $5000 for investing without any currency exchange. My threshold is higher for performing a currency exchange. So, what I do probably isn't much help to you.

      I do allow my allocation to Canadian vs. U.S. ETFs to get out of line up to a threshold. I described the details in the following post:

      http://www.michaeljamesonmoney.com/2012/03/portfolio-rebalancing-based-on-expected.html

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    2. Victoria, assuming a Norbert Gambits cost 50$ (4 transactions + bid/ask spread), here's the way you can estimate the thresold.

      VTI is 0.05% MER and VUN is 0.15%, the difference is 0.10%

      50$ / 0.10% = 50,000$

      You can also buy VDU to match VXUS

      I used to Norbert Gambits for 25k but with Vanguard Canada low on US and international ETF, I will reconsider my threshold higher.

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    3. @Le Barbu: I think you may be answering a different question. You are looking at whether to use U.S. or Canadian-domiciled ETFs. There are other things to consider in your analysis. For example, Canadian-domiciled ETFs holding U.S. stocks will have dividend withholding taxes in RRSPs, but the U.S.-domiciled ETF would not. Another thing to consider is that the MER difference is a cost difference for one year. The number of Norbert Gambits may be more or less often than once per year.

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    4. I agree, there's a lot more to consider. 50k may be to high but 5k still look pretty low. In my own portfolio, I often use RBC index funds with no transaction fee and 0.7% MER to invest my contributions or rebalance. Once a year, I do all the transactions to buy the ETF I need. Usually, it means 10k-25k chunks

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    5. Ah, Michael, that is an interesting distinction between US- and CDN-domiciled ETFs. I didn't know about the withholding tax difference.

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  10. Hi Michael,

    Great Blog. I do have one question though regarding using US ETF's. Have you considered estate tax? As I understand it, should you meet an untimely demise any US holdings are subject to an estate tax on values greater than $60K. I myself have a very similar portfolio to you and it's all held in the US (NYSE). That is why I am considering moving to TSX traded ETF's (VUN, VDU etc) where the estate tax is not applicable. What are your thoughts?

    Cheers

    Jason

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    1. @Jason: I do consider estate tax. There is more than one threshold. If your worldwide estate is below a threshold you don't have to pay U.S. estate taxes. According to Wikipedia (http://en.wikipedia.org/wiki/Estate_tax_in_the_United_States), this threshold is US$5,340,000 in 2014. However, this threshold seems to change a lot from year to year. Pay attention.

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  11. Hi Michael,

    The way I read it (I am not a resident or a citizen of the US) for non-residents it is a threshold of only $60,000USD - (http://en.wikipedia.org/wiki/Estate_tax_in_the_United_States#Non-residents)

    I also read something similar directly on the IRS website (http://www.irs.gov/Individuals/International-Taxpayers/Some-Nonresidents-with-U.S.-Assets-Must-File-Estate-Tax-Returns)

    BUT now after doing a bit more research I see that Canadian residents benefit from a tax treaty that puts you under the 5.3 million umbrella.

    (http://www.pwc.com/en_CA/ca/estate-tax-update/publications/pwc-2009-04-13-us-tax-exposure-canadians-2013-02-19-en.pdf)

    and

    (http://www.bdo.ca/en/Library/Services/Tax/Documents/Tax-Bulletins/US-Estate-Tax-Issues-for-Canadians.pdf)

    That's a nice one. Like you said - pay attention.

    Thanks

    Jason

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    1. @Jason: You're right that the link I gave wasn't directly relevant. It's just that the tax treaty with Canada allows Canadians to be treated similarly to Americans. There is no reason to trust that this will stay the same in the future, though. I periodically confirm that I'm not subject to U.S. estate taxes.

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  12. Thanks for sharing your asset allocations. It's good to know that you're holding the US ETF's in your RRSP accounts as much as possible.

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  13. Thanks for sharing Michael. Awesome overview.

    One thing I'm curious about is how you handle rebalancing given that the single logical portfolio is spread over nine accounts. I've struggled with this somewhat myself. If, for example, you find yourself with a surplus of VCN and a deficit of VTI - how do you reconcile this given that they are likely in different accounts for tax-optimization reasons? Presumably it's not as simple as selling one and using the proceeds to buy the other? Or do you simply tolerate the tax-inefficiency for a short period until, for instance, RRSP room/suitability opens up?

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    1. @Dave: Good question. Sometimes I have to make extra trades. For example, if no one RRSP account has enough VCN to cover the amount I want to sell, I might rebalance in two different accounts. It can be difficult to cover all possibilities in the abstract, but if you look at each case, you can find some way to make a sequence of trades that gives the desired change. Of course, if all your non-registered accounts and TFSA accounts are already full of VCN, you have little choice but to buy some VTI in a non-RRSP account.

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    2. Makes sense - thanks! I have an irrational overly-sensitive-dislike of incurring "extra" commission charges, but of course it makes sense to do so to realize the benefits of rebalancing, and the commission-free alternative – terrible mutual funds – of course represents a far worse financial outcome.

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  14. It is my opinion that you are not diversified the way you think. Take a stock like Johnson and Johnson which is considered a US stock and really is an international stock if you look at the companies revenue. A stock in Europe, Unilever, is really more of an emerging market stock than a European stock. I don't believe you should diversify by country. You should diversify by industry.

    Just my opinion.

    Regards
    Just

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    1. @Just: If I were investing in individual stocks, I'd agree with you that it's important to be diversified in a few different ways, including geographically and by industry. However, what I own are exchange-traded funds that each hold many stocks. My portfolio holds (indirectly) about 9000 different stocks. This is more than enough to be diversified by industry.

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    2. Michael, what do you think about my A.A.

      My RRSP: 30%VTI, 40%VBR, 30%VXUS
      Wife RRSP: 35%ZCN, 35%VTI, 30%VXUS
      RESP: 35%RBF556, 35%RBF557, 30%RBF559
      Non-Registered account: 100%ZCN

      Overall: 29%Can. (ZCN+RBF556), 28%US (VTI+RBF557), 18% US Small Cap Value, 25% Int. (VXUS+RBF559). Average MER 0.15% (mostly because of RBF serie in RESP)

      This is only 10 "positions" over 4 accounts, pretty simple to manage.

      I plan to switch RESP into RBC Direct Investing to buy ETFs and lower MER because this account is over 75k$ now. I intend to buy ZCN, VUN and VDU to replace the RBC Index funds I own now. About 400$/year fee saving...

      The Non-Registered account was invested with HELOC money (our leverage is 20%) and plan to fill the TFSA (empty now) for the end of mortgage repayment (2019) or if a big chunk of money comes in (bonus, inheritance, any other unexpected windfall). We put 20k$/year on mortgage principal, this will fill the TFSA room pretty fast anyway.

      Any comments?

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    3. @Anonymous: The first thing that jumps out at me is no fixed income investments along with some leverage. This is a high-volatility portfolio. I have an all-stock portfolio, but with no leverage, and I get job offers on a fairly regular basis and I didn't flinch through the financial crisis. You need to be sure you could handle, say, a 40% drop in stock prices (which means a more than 40% loss for you due to leverage). I don't know enough about you to say if your allocation is suitable for your family or not, but this volatility issue is something to think about. Certainly, any money you think you need in less than 5 years (RESP maybe?) needs some thought.

      After that, the allocation seems quite reasonable to me. There are no guarantees in life, but you're well-diversified. I'm not a fan of currency hedging (RBF559), but to each his own.

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    4. Thank you for quick answer,

      I'm not a fan of hedging neither but this was the only international index fund at RBC banking, as long as I know :-(

      I can handle market drop, in fact, I invest since 1995 and went trough all ups and downs without any emotion...

      I think that owning fixed income AND leverage would be a wash, doesn't it? To me, leverage is the NEXT step after dropping fixed incomes. My leverage is 95k$ over a total holding of 650k$ so I feel pretty comfortable with this. I can drop this strategy after I'm retired since the tax advantages will drop because of lower income.

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    5. @Anonymous: You're right that having leverage and fixed income at the same time makes little sense. An exception might be for some emergency cash, but I don't even think of emergency cash as part of my portfolio. It appears you have the emotional strength to handle at least your modest amount of leverage. Even if you don't panic sell, another danger would be being forced to sell at low prices due to a job loss. If this isn't a concern, then your plan seems to suit you.

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    6. Sure Michael, I know there is a certain ammount of risk included in my plan. Let say it's my risk/reward bet...

      For the emergency/cash portion, I use to hold an average of 10k$ buffer in HISA or TFSA (depending of rates) but as you, I do not consider this like as part of my investment portfolio.

      I forgot to tell you, being Mustachians, our spending is less than 50% of collaterals and we could stretch this a bit more if needed.

      Thank you for this inspiring blog and feed back.

      -Le Barbu

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