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First post here... Looking forward to gleaning some info from the group, and hopefully being able to contribute as well...

Bit of a long prelude before the questions to give some context...

My wife and I had a Financial Planner for years. But realistically it was just someone that bought/held mutual funds for us, with the occasional call or check-in whenever we made further contributions. I decided about 2 years ago to take control, and moved both our accounts (separately) to ETrade (now Scotia iTrade) and decided to follow the couch potato strategy... sold all the funds, moved them into iShares ETFs based on diversified portfolios we created (wife selected some of her ETFs, I selected mine, I manage both).

I'm sure there are better ways to manage our RSP, I'm also certain there are worse ways. We're nearing 40 with a (aspirational) plan to retire mid 50's. We both consider ourselves somewhat conservative (which is why we both have so much in bonds) but wanting to grow our RSP as much as we can.

My Couch potato mix is:
Bonds (39% of Total): iShares Cdn Bond Index (XBB): 39%
Canadian (29% of Total): iShares Cdn Dow Jones Select Value (XCV): 13% & iShares Comp Index (XIC): 9% & iShares Cdn DJ Select Dividend (XDV): 7%
US (12% of Total): iShares S&P 500 (XSP): 12%
Foreign (20% of Total): iShares MSCI EAFE Index (XIN): 20%

My wife's is not that dissimilar:
Bonds (47% of Total): iShares Cdn Bond Index (XBB): 47%
Canadian (27% of Total): iShares Comp Index (XIC): 15% & iShares Real Estate (XRE): 12%
US (12% of Total): iShares S&P 500 (XSP): 11%
Foreign (14% of Total): iShares MSI World Index (XWD): 14%


My Basic Questions are:

1. Right now, I take the dividends received from those that distribute quarterly/semi-annually and use them to do "short term" rebalance... e.g. buy more of whichever ETF we have the lowest % allocation vs target to - and then do an annual rebalance (per the couch potato strategy). I've been reading about synthetic drips -- am I better off to try to avoid the quarterly trade fee by setting up synthetic drips or are two quarterly trades acceptable (our combined portfolios' value is a few hundred thousand).

2. Am I being overly paranoid by worrying that I have all our RSPs with Blackrock's iShares, and furthermore all at iTrade? Our portfolio's are diversified, but am I putting too many eggs in one basket? Normally I'm not the paranoid type (I mean, other than wearing this tinfoil hat to keep the aliens from reading my mind... :p) but it's taken us a lot to build what we have... I always worry about the "what if's".

3. We're moving our TFSA's over to iTrade right now (were in high-interest savings accounts doing nothing), and we plan to hold securities in them as well. I've read that US dividend stocks are not subject to withholding tax on RSPs - can anyone confirm whether they're subject to withholding in a TFSA? Is it unwise (from a FX exposure) to hold US stocks in a TFSA?

4. Generally is it wise or unwise to focus on dividend stocks in a TFSA? Is there any reason why a synthetic (or real) DRIP couldn't be set up in a TFSA?

Any other feedback or observations (or witty banter ;)) appreciated...

Cheers!
 

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1. am I better off to try to avoid the quarterly trade fee by setting up synthetic drips or are two quarterly trades acceptable (our combined portfolios' value is a few hundred thousand).
It depends on your portfolio size ($ amount of fees) and your transaction size. If you are only rebalancing quarterly, and holding only 4-6 ETFs, it shouldn't be too expensive if you manage it yourself. I try to keep fees below 0.5% for all transactions. I personally use the synthetic drips because I rebalance using new purchases.

2. Am I being overly paranoid by worrying that I have all our RSPs with Blackrock's iShares, and furthermore all at iTrade? Our portfolio's are diversified, but am I putting too many eggs in one basket?
The risk of either Blackrock or Scotiabank folding is minimal. We went through an enourmous liquidity crisis and both stood up quite well. If it makes you sleep better, just start up a new account somewhere and look into Claymore or other ETF companies.

3.I've read that US dividend stocks are not subject to withholding tax on RSPs - can anyone confirm whether they're subject to withholding in a TFSA? Is it unwise (from a FX exposure) to hold US stocks in a TFSA?
US dividends ARE subject to withholding tax inside the TFSA. Regarding exposure to USD, it doesn't matter where you hold the stocks, you are already exposed to the risk. You may consider hedging the exposure to FX risk, but for most individual investors, its unrealistic to do, and of minimal value.

4. Generally is it wise or unwise to focus on dividend stocks in a TFSA? Is there any reason why a synthetic (or real) DRIP couldn't be set up in a TFSA?
Depends on your tax situation. If you do not have unregistered investment accounts + you have room in your TFSA, then hold the dividend paying stocks in the TFSA before starting an unregistered account. If you don't have room in your registered accounts (whether TFSA or RRSP), and you plan on starting an unregistered account, then it's probably better to hold CAN dividend stocks outside vs. interest or income producing investments (GICs, bonds, etc). I can't say for iTrade, but most other discount brokerages allow for synthetic drips in the TFSA.

Good luck!
 

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4. Generally is it wise or unwise to focus on dividend stocks in a TFSA? Is there any reason why a synthetic (or real) DRIP couldn't be set up in a TFSA?

A synthetic drip is possible! Pretty much any broker can help you with this.
 
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