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Discussion Starter #1
Hi guys,

I’m a Quebec student in civil engineering. I have 5 traineeships during my degree and now I have a ****load of cash that I don’t need. I was investing in a NBC fund with a MER of 2.5% (yeah) and now I decided to open a brokerage account.

I’m now setting my portfolio and investing only in my TFSA until it’s full (26k$). I can invest 25k$ right now. I have some questions for you :
• Why investing in Canadian securities when Canada and US are so close?
• Do I need to diversify when I want to buy some ETFs with more than 2500 companies in each?

Here’s my newly portfolio (I didn’t buy anything yet) :
• VUN (3500 companies, all cap) : 40%
• VAB (I like long-term Canada bonds) : 20%
• XAW (more than 2000 companies worldwide, a good portion in developed and emergent countries, with US index) : 35%
• Canadian stocks, for gambling (I like LRE or SWY) 5%

It’s a portfolio of 3 ETFs with some stocks, so it doesn’t cost so much to rebalance.

My main question is : Do I really need to buy bonds, when I have over 5000 companies worldwide? I can figure that you need to diversify when you only buy stocks and bonds, but with 5k companies I think it’s enough diversified.

Thanks for your help!:)
PS.: Excuse my English!
 

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i'm relatively new to the world of investment too...so yea

VUN and XAW overlaps on USA stocks. So you probably don't need VUN if you have XAW unless you want to overweight on US.

Canada and US are indeed separate economies, and although US has large influences on Canadian businesses, there are years of Canada stock going better than US and some otherwise. Plus domestic stocks provides better tax treatment and i think it yields more than US now.

It depends what your investment timeframe. If you are saving for retirement and you have 30+ years to go, you can argue that you don't need it at the moment. But if you want to use the money (on a house or car or whatever) in 10 years, I would definitely put Bonds in it. In my mind, bonds is to reduce volatility of my investment so I can sleep peacefully at night :p Bonds are more stable than any stocks by far. Look, in 2008 when the whole world's stock market collapsed, XBB (iShare bond fund) returned +6.13%.

https://www.blackrock.com/ca/individual/en/literature/performance-report/performance-can-en-ca.pdf

Also read this about Over-weighting Canada stocks:
http://canadiancouchpotato.com/2012/05/22/ask-the-spud-does-home-bias-ever-make-sense/
 

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First of all...good on you to want to invest more/better!

Personally, if you're young, I'd be 100% equities for long-term investing. Bonds aren't making much now and besides that, they are "parachutes" to control your investing emotions when the stock market crashes or tanks. If you have the mindset to buy stocks or ETFs when people are running from them, you don't need bonds, not as 20-something or 30-something.

That's just my take.

That leaves you with a few top equity ETFs to consider - shameless plug :)
http://www.myownadvisor.ca/top-equity-etfs-indexing-fans/

You go as simple as VCN and VXC.

I also don't see much point in owning any more than 3 equity ETFs - Canada, U.S. and/or U.S. and the world. Not much to rebalance and you do so by buying more.

Again, just my $0.02!

Good luck!
 

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Discussion Starter #4
VUN and XAW overlaps on USA stocks. So you probably don't need VUN if you have XAW unless you want to overweight on US.
I wanted both because VUN is taking 3500 companies, and the US part in XAW is following the index, so I was thinking that it would make a bit like VUN (Canada of VTI) + VFV (S&P Index) + VEU (All-World Ex US) in 2 ETFs.
 

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Discussion Starter #6
I really like your ideas guys... Like I said I didn't buy anything yet so it's very helpful.

I think I'm gonna take VXC and VCN, but I don't know yet if I take a bit of bonds (VAB).

Also, as I saw on many threads and forums, I think that emerging countries will be a good pick for next years...

What do you think about taking an ETF on that type of the market? Wich ETF do you prefer?
 

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I don't understand the reason and benefits of VUN+XAW? Remember S&P500 is the largest 500 stocks in US market, so naturally Total US market (VUN/VTI) will contain all 500 holdings of S&P500. In fact, XAW also has the mid-cap and small-cap ETF to simulate the US total market, meaning these 3 holdings on XAW is very much the same as VUN/VTI.

If you want the 3500 US stocks, maybe you can do VUN+XEF+XEC which contains 7200+ stocks from all developed and emerging markets. It's what I hold at the moment, but I'm switching to VXC soon. I think 3000 stocks is gonna do just as well as 7200 stocks, and I save some fees and hassles when rebalancing.

go with VCN+VXC. Add bonds dampens ups and downs of the market

IMHO, I'll leave those articles about "which market will do well next year" as hearsay and refrain from making investment decision based on it. They are probably half the time right and half the time wrong. We simply can't predict the future. Some emerging market exposure is probably a good idea in a long term portfolio, but not because we think it might go well in the next few year, but because in long terms they tend to do well.

VXC do contains emerging market holdings too.
 

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Discussion Starter #9 (Edited)
I have finished my portfolio today !!

Here it is :

• XAW @ 20.11, 60% (30% US, 30% World)
• CU @ 38.10, 20%
• VCN @ 31.16, 15%
• SWY @ 0.66, 5%

I will probably stay with that for a while and play with my 5% of SWY to buy other stocks...

Thanks for your help!
 
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