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Discussion Starter · #1 · (Edited)
Hi folks,

I'm looking for some advice on which EFT's I should add to my RRSP & TFSA. After 1.5 years of dismal gains with CIBC mutual funds I've decided to take the plunge and go the DIY route. I have already closed my CIBC account and waiting for the funds transfer to Questrade.

A bit of background on me:

- I'm 33 years old with a long-term investment horizon with high risk tolerance
- I have a rental property with $150k mortgage
- QT Portfolio IQ = $15k (I opened this account to see how well QT ROBO performs)
- QT Self-directed RRSP = $60k
- TFSA = $25k

I would like to setup my RRSP primarily with USD ETF's since dividends are not subject to US withholding tax in RRSP accounts. I'm comfy with using Norbert and putting a bit of effort into re-balancing if that means lower MER and long-term savings. I have come up with the following RRSP portfolio:

35% ITOT - iShares Core S&P Total U.S. Stock Market ETF (MER 0.03%)
20% IEFA - iShares Core MSCI EAFE ETF (MER 0.08%)
20% VXUS - Vanguard Total International Stock ETF (MER 0.11%)
15% VIG - Vanguard Dividend Appreciation ETF (MER 0.08%)
10% ZAG - BMO Aggregate Bond Index ETF (MER 0.09%)


And for my TFSA:

30% VCN - Vanguard FTSE Canada All Cap Index ETF (MER 0.06%)
70% Stocks (hand picked and currently own)


Any feedback on this strategy and asset allocations? Should I add/subtract/substitute any ETF's?
Ideally with my TFSA I would prefer to reduce my "hand-picked" stock position from 70% to 50% of my portfolio but i'm unsure what I should do. Put the residual balance in VCN?
Once my funds have transferred to Questrade should I buy the ETF's all at once, or stagger over a period of time - and how long?

Thanks!
 

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A few things.

1) Why so many ETFs? Most Canadian couch potato portfolios are 3 or 4 ETFs, tops. Some, like mine, are only 2 ETFs. The more complicated you make i t, the more it'll cost to buy and re-balance, and the more likely you'll have duplicates. You're suggested IEFA and VXUS very likely have duplicates.

2) If you have a long term horizon and high risk tolerance, then why bother why bonds?

3) ETFs are stocks, so why are you saying 30% VCN and 70% stocks in your TFSA. Did you mean 70% of that part you'll buy individual stocks of your own picking?
 

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Discussion Starter · #3 · (Edited)
1) This is a valid point. If I understand correctly VXUS is more diversified b/c it includes developed and emerging (IEFA) markets.

2) Another good point. I will consider reducing or eliminating Bonds for the time being.

3) Yes that is correct. 70% are individual stocks I have hand picked and currently own.
 

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I suggest the OP just have VTI and VXUS in the RRSP. Covers the world ex-Canada.... Or even VT which is the entire world in a single ETF. The OP may need a bond component if the OP lacks risk tolerance in a major equity crash but the OP will have to experience it to understand it. I see the phrase 'high risk tolerance' a lot, especially with the 8.5 year bull market. May be true... until it isn't.

I think I understand the desire to test the waters in stock picking (not flying solo immediately) while also having the index but with $25k? That, in my opinion, should be a single ETF holding. BWTFDIK
 

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Discussion Starter · #5 ·
I suggest the OP just have VTI and VXUS in the RRSP. Covers the world ex-Canada.... Or even VT which is the entire world in a single ETF. The OP may need a bond component if the OP lacks risk tolerance in a major equity crash but the OP will have to experience it to understand it. I see the phrase 'high risk tolerance' a lot, especially with the 8.5 year bull market. May be true... until it isn't.

I think I understand the desire to test the waters in stock picking (not flying solo immediately) while also having the index but with $25k? That, in my opinion, should be a single ETF holding. BWTFDIK
Essentially what i'm trying to achieve is the Canadian Portfolio Manager's Model Portfolio but in USD so i'm not dinged by US withholding tax paid on dividends.
https://cdn.canadianportfoliomanage...Model-ETF-Portfolios-RRSP-RRIF-2017-09-30.pdf

Is there any particular reason to choose VTI over ITOT? or just personal preference?
 

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I just default to the one I've picked for myself. ITOT is perfectly fine. So go for ITOT and VXUS. I don't see any practical value in slicing and dicing (VIG) and disproportionately weighting EAFE. No one has the right answer in the long run.
 

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I second this: VTI + VXUS inside USD $$ RRSP. Fill it up :)

Own XIU or VCN inside TFSA.

Own some individual CDN dividend paying stocks non-registered after TFSA and RRSP are filled up and mortgage is nearly done.

You are 33. No need for bonds IMO. Good for someone in their 60s and 70s though.

Happy investing!
 

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I didn’t think there was any withholding tax on US dividends within an RSP regardless of the currency you buy at between the US and Canada, due to an agreement.

Do I have that wrong?
 

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I didn’t think there was any withholding tax on US dividends within an RSP regardless of the currency you buy at between the US and Canada, due to an agreement.

Do I have that wrong?
It is not the currency that trips you up. Its where the 'trust' (mutual fund or ETF) is domiciled. An ETF lilke VUN is domiciled in Canada and is the first 'entity' (or owner) to which the US-Can tax treaty rules apply. There is no way of knowing at that point whether VUN is being held in a RRSP or not and the withholding tax is taken there. So if you hold VUN in your RRSP, there is no way to recover the US withholding tax that was deducted before it even got to you in your account. That is why you have to hold 'US domiciled entities' directly in an RRSP to avoid the withholding tax being applied.
 

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It is not the currency that trips you up. Its where the 'trust' (mutual fund or ETF) is domiciled. An ETF lilke VUN is domiciled in Canada and is the first 'entity' (or owner) to which the US-Can tax treaty rules apply. There is no way of knowing at that point whether VUN is being held in a RRSP or not and the withholding tax is taken there. So if you hold VUN in your RRSP, there is no way to recover the US withholding tax that was deducted before it even got to you in your account. That is why you have to hold 'US domiciled entities' directly in an RRSP to avoid the withholding tax being applied.
Ah! Thanks for the clarification, AR. This is why I love this site.
 
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