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Discussion Starter #1 (Edited)
Hi!

So I have roughly 350k sitting in my online brokerage account.
70k in a TSFA account, 180k in RRSP account and 100k non-reg.

This will be my first time on the market by myself. I've always been in mutual funds suggested to me by my financial institution but with MERs of ~2.5%. I took out my money beucause of those high MERs.

I want to go with XGRO, MAW104 and or MAW105.

My questions are:

Is it a good idea to invest my money 25% at a time each week to reduce the risk of investing everything right before another crash? Or is this trying to time the market and I should just invest everything right now?
If I purchase the funds / ETFs today, will I purchase them at their current price (Sunday) and will the purchase be made on Monday morning at the opening's price?
 

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My questions are:

Is it a good idea to invest my money 25% at a time each week to reduce the risk of investing everything right before another crash? Or is this trying to time the market and I should just invest everything right now?
Yes, you're trying to time the market ... your guess is as good as anyone elses.

If I purchase the funds / ETFs today, will I purchase them at their current price (Sunday) and will the purchase be made on Monday morning at the opening's price?
ETF prices will be when you buy them, so Monday's opening price assuming a market order. Mutual funds will be the closing price on Monday.
 

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Is it a good idea to invest my money 25% at a time each week to reduce the risk of investing everything right before another crash? Or is this trying to time the market and I should just invest everything right now?
It is trying to time the market. You should invest as per your asset allocation right now. When investing in MAW and XGRO, you are also investing 20-40% in bonds. If the market crashes, the funds will rebalance from bonds to stocks. The opposite happens if stocks take off. What the markets do in the next four weeks, or even next four years, is irrelevant to your long term investing outcome. Ignore the noise.

What will you do if the market crashes after week 5, when you have invested all you money? Such timing maneuvers are futile for a long term investor. You have no control over that. I prefer to concentrate on things I can control, such as asset allocation, fees, diversification, staying the course, etc.

If I purchase the funds / ETFs today, will I purchase them at their current price (Sunday) and will the purchase be made on Monday morning at the opening's price?
If you put an order for a mutual fund today (Sunday), you will be buying at the closing price of tomorrow (Monday). So you have until tomorrow midday or maybe 1400 Eastern (check with your broker for the exact cutoff time) to submit an order. If you put an order for an ETF today, it will execute Monday at the market open (0930 Eastern). You may as well wait for the open, particularly given you are trading a substantial sum.
 

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As one of the resident conservative investors, I just want to encourage you to mentally prepare yourself for the volatility (risk) with that asset allocation. A combination of XGRO + balanced funds could, at some point, decline about 30%.

That means you could see 350K decline to 245K value and there is never any guarantee it will bounce back. Or it could take 10 years to bounce back. Some people have no problem with that kind of thing, but for other people, it can be awfully stressful.

Assuming you are OK with that risk, I like your selections (XGRO, MAW104 and or MAW105)

If you put in a buy order today, XGRO will be filled at a Monday morning price whereas the mutual funds will be filled at the day end price, since mutual funds only trade at an end-of-day pricing.

First thing in the morning can be a volatile time for stock markets and weird things can happen, so I would suggest waiting until at least 10 am eastern time, and buying XGRO then. This gets you past the potentially dangerous period of the open.

As for when to invest, the theory is that the best time to invest is now (since nobody can predict the direction of the market). However when investing large sums, many people do split it into chunks, e.g. investing half now and half later and I've done that kind of thing before. This is mostly to make yourself feel better.

If going that route, I strongly recommend committing to dates on the calendar, e.g. half now, and the other half August 1 no matter what. This is to address the possibility that you never follow through with the original plan. Some ways people talk themselves out of investing are: "the stock market is too high", or "market is crashing", or "the world is in chaos".
 

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Is it a good idea to invest my money 25% at a time each week to reduce the risk of investing everything right before another crash?
You're trying to time the market. Stop that.

If I purchase the funds / ETFs today, will I purchase them at their current price (Sunday) and will the purchase be made on Monday morning at the opening's price?
If you put in a market order for a stock or ETF, you get whatever the market starts at. Not a great idea. You would be better off by only bidding when the market is open so you can see what's going on. At the very least, use a limit order at ASK so you don't get caught in a jump in price with a market order.

ltr
 

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Discussion Starter #6
Ok thanks!

And what do you think of :
MAW104 in RRSP (180k)
XGRO in TFSA (70k)
MAW105 in non-reg. (100k)

Or would it be more optimal to switch something?

Also, what the best way to compare the performance of these 3 funds? i.e. find out how much money they made if all distributions were re-invested for the past 1, 3 or 5 years?
 

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And what do you think of :
MAW104 in RRSP (180k)
XGRO in TFSA (70k)
MAW105 in non-reg. (100k)
Seems good to me

Also, what the best way to compare the performance of these 3 funds? i.e. find out how much money they made if all distributions were re-invested for the past 1, 3 or 5 years?
Morningstar is a good way to compare returns, but the main problem is that XGRO hasn't been around very long. Beware that although XGRO "existed" back in 2007, it held different things back then.

iShares points out: "Effective December 11, 2018, the ETF’s name, fundamental investment objective, risk rating, management fee and fee structure changed."

So XGRO is basically a brand new fund that has only existed for a little over 1 year. It's basically impossible to compare its returns to the Mawer funds, and one year is too short a period to really learn anything.

However, XGRO (in theory) implements something very similar to the "couch potato" portfolio. So you could look at these stats on couch potato returns and use that to infer how XGRO probably would have performed. It's probably a pretty good estimate.

In fact you will see XGRO mentioned in the rightmost column:


Warning: these are hypothetical returns, and that's one of the risks of XGRO or any of the asset allocation ETFs. Not a huge risk, in my opinion, but still.
 

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I would recommend this white paper from Vanguard Canada regarding asset allocation ETFs and their advantages:


These multi-asset portfolios are simple to understand, yet provide investors with a sophisticated approach to portfolio construction built on our investment principles (goals, balance, costs and discipline) and our core research on strategic asset allocation, global diversification and passive implementation.
The same principles apply to other asset allocation ETFs from BMO and iShares too.
 

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Discussion Starter #9
Ok so the returns assuming re-investment of distributions for the past 5 years would be:
XGRO (hypothetical) : 8.47%
MAW104 : 6.50%
MAW105 : 6.46%

So XGRO seems like it outperformed Mawer funds by quite a bit...
Or am I looking at this wrong? I understand XGRO has a higher equity % but still...

Does those percentages from Mawer at least include the MERs or should I substract an additional 0,9% to compare with XGRO?
 

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So XGRO seems like it outperformed Mawer funds by quite a bit...
Or am I looking at this wrong? I understand XGRO has a higher equity % but still...
Sadly, the latest update from the model portfolios (Canadian Couch Potato web site) is the time period ending December 31, 2019 and you'd have to get the time periods to match, when comparing to Mawer. I don't know an easy way to do that.

If someone here knows a way to compare that performance for matching time periods, I'm interested too.
 

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Discussion Starter #11
I think I may have found a way to compare.
Using Morningstar's interactive chart, you can select the same 5 year period as XGRO on Coach Potato's sheet (31-12-2014 to 31-12-2019).

For MAW104, it shows a gain of +4,382.53 | +43.83% on a hypothetical 10,000 invested on 31-12-2014 for 5 years.
Annualizing it: 1.4383^0.2 = 1.0754
So, 7.54% for MAW104 as opposed to 8.47% for XGRO.

Do you think the 7.54% already accounts for the 0.9% MER or do I need to subscract it?
 

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The chart is a good idea. Yes I think that includes MER and the effect of reinvesting distributions, so if you aligned the dates correctly, it's an accurate comparison.

So that gives 7.54% for MAW104 and 8.47% for XGRO. That sounds about right. XGRO has a higher equity weighting and would outperform a balanced fund when stocks are strong.

Those figures don't include the effect of the drop that happened since the end of the year, but you can look at that separately to eyeball the net effect. Year to date,
MAW104 is 1.77%
XGRO is -0.06%

This (very slightly) narrowed the gap in performance over the last 5 years. Their performance difference in annualized terms is probably within 0.8% of each other; very similar.
 

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Discussion Starter #13
Ok thanks! :)

So I think will keep MAW104 in my RRSP and MAW105 in my non-reg. for at least 6 months and when the COVID-19 situation, riots, etc. calms down I will most likely transfer into something closer to 80% equity. I'll go straight for XGRO in my TFSA though.

Anything unreasonable about this you think?
 

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Ok thanks! :)

So I think will keep MAW104 in my RRSP and MAW105 in my non-reg. for at least 6 months and when the COVID-19 situation, riots, etc. calms down I will most likely transfer into something closer to 80% equity.
Up to you, but it will be very hard to tell when the trouble is over. There's a saying: they don't ring a bell at the bottom.

Even if riots calm down, some new problem will emerge. And if riots and civil unrest keeps getting worse, it doesn't necessarily mean that stocks will go down. These things are just about impossible to predict.
 

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Ok thanks! :)

So I think will keep MAW104 in my RRSP and MAW105 in my non-reg. for at least 6 months and when the COVID-19 situation, riots, etc. calms down I will most likely transfer into something closer to 80% equity. I'll go straight for XGRO in my TFSA though.

Anything unreasonable about this you think?
If you want to tip the scale to more equity over time just add XGRO as each year's contribution. Over time it'll keep inching up the percentage and you'll get time to see how they are performing.
 

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Discussion Starter #17
Interesting you haven't once mentioned Vanguard's VGRO which is also an 80/20 ETF product as an alternative to XGRO. I have no dog in the fight as I own zero funds or ETF's, but Vanguard seems very popular around here.
Yeah both appear similar and equally good but XGRO has a higher US esposure has mentionned in your link which I like.
 

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Discussion Starter #19
Humm... good point.

And also Vanguard has been around longer right? So I guess it would be a "safer" pick?
 

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And also Vanguard has been around longer right? So I guess it would be a "safer" pick?
Actually, iShares has more experience with the asset allocation ETF portfolios. In the US, they have had ETFs like this since 2008 ... take a look at AOM and AOR. Vanguard got into these just a couple years ago but iShares (Blackrock) has been doing it much longer, and they did a pretty good job with AOM/AOR.

However, VGRO is a larger fund than XGRO, so one argument might be that it's best to go with the larger ETF when there's a choice.

I wouldn't decide based on country weights as those might change over the years at the discretion of the asset manager. The only thing they promise is the 80/20 split, but country weights can change when they feel like it.

They are very similar. I think either one would be fine.
 
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