I am in the exact same boat with the government pension and RRSP vs. TFSA debate. I'm in the 43% bracket now and seem to never get a straight answer about which vehicle is better for me.
Critique my plan, please
At the moment I'm invested in a number of ETFs with little thought put into the allocation. I'm in my early 30s and my RRSP is currently worth about $50,000 with another $6300 in my TFSA. I work for the federal government so I have a good pension plan. I consider my pension plan to be my fixed income portion of my retirement fund. As such, I plan to invest solely in equities within my RRSP.
My planned allocation for my RRSP is as follows:
XIC 35-40%
VTI 20-25%
VEA 20-25%
VWO 15-20%
That should give a weighted MER of about 0.2%.
The reasoning behind my planning allocation:
1. I prefer XIC to XIU for my Canadian equity despite the slightly higher MER. I think XIC is better diversified and should help avoid any one holding taking up too large a percentage (like Nortel did).
2. I'm thinking of using US-based ETFs for my non-Canadian equity due mostly to lower MERs. I think I'm willing to take the currency risk as this is a truly long term investment (25 years+). Plus, the currency risk is only on about 60% of the portfolio (everything but XIC) and I'm more comfortable with that than if it was on the entire thing.
3. I'm putting a high portion into VWO because I think having a good deal of money in emerging markets now will look like the right decision 10, 15, 20 years in the future.
Like I said, I won't be using this money for retirement until about 25 years in the future and my pension is my fixed income portion.
Any comments?
My planned allocation for my RRSP is as follows:
XIC 35-40%
VTI 20-25%
VEA 20-25%
VWO 15-20%
That should give a weighted MER of about 0.2%.
The reasoning behind my planning allocation:
1. I prefer XIC to XIU for my Canadian equity despite the slightly higher MER. I think XIC is better diversified and should help avoid any one holding taking up too large a percentage (like Nortel did).
2. I'm thinking of using US-based ETFs for my non-Canadian equity due mostly to lower MERs. I think I'm willing to take the currency risk as this is a truly long term investment (25 years+). Plus, the currency risk is only on about 60% of the portfolio (everything but XIC) and I'm more comfortable with that than if it was on the entire thing.
3. I'm putting a high portion into VWO because I think having a good deal of money in emerging markets now will look like the right decision 10, 15, 20 years in the future.
Like I said, I won't be using this money for retirement until about 25 years in the future and my pension is my fixed income portion.
Any comments?
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