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Help w/ my Portfolio please -- I started in 2009 and am looking to streamline now

4069 Views 8 Replies 4 Participants Last post by  ehrgeiz22
Hi there,

So I started investing in ETFs in 2009 right after I graduated university at 25. Since then, I've been able to max out my TFSA and RRSPs. I've attempted to learn through reading blogs, forum posts and books but I feel there's more I need to learn so I'm looking for some advice.

I've been following the strategy of placing US ETFs in my RRSPs and everything else in TFSA due to the tax advantages. The allocation worked out at the time where I followed a 25/25/25/25 couch potato method because I only had a certain amount of RRSP room available as my work has a DB pension plan and there's pension adjustments annually so the excess room available to me for investing in RRSPs is minimal. I basically started out with ZCN, XSB, VTI and VXUS with 25% in each. Now with attempts at re-balancing (or lack there of) while utilizing each investment account, there's been quite a few additions and thus skewed the portfolio.

Cut to 2015--since I've maxed out my accounts and started a margin account, my investments are a bit skewed as it's difficult to manage within the confines of each account. I would really appreciate your advice on how to re-align my portfolio while still meeting my objectives. From my understanding, CDN dividends are taxed favorably in a margin account, which is why I began purchasing blue chip companies for their dividends but some of those same stocks are also captured within ZCN.

Using Market Values:




CDN EQUITY3914843.5%%
U.S. EQUITY1856120.6%

Note: with the conversion of CAD to USD so unfavorable, I purchased VXC.TO to add to the US/INT'L Equity portion without having to convert CAD to USD--good or bad idea?

Ideally, I'd like to maintain about 15% in CDN short term bonds and the rest evenly spread between CDN/USD/INT'L. I'd also like to start creating dividend income for myself by adding to my margin account--I suppose this would gradually skew the CDN equity more as time goes on as well.

For one, would you recommend I sell ZCN and just purchase CDN stocks directly? I would probably be continually adding to the margin account as I have extra savings from each pay cheque.

Any advice/expertise would be greatly appreciated! Sorry for the long post but I've been a member for a while and this is the first time I'm seeking advice on my portfolio on the whole.

Thank you!
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Congrats for taking savings seriously so Young.

Quick comments:
1) What happened to 25-25-25-25? Seems like you purchased much more CAD equities in the last couple of years. Considering your objective, I am surprised your US equity is at 20.6%.

2) Even if you purchase a Canadian-based ETF such as VXC, the value of underlyings is affected by $CAD, so it does not matter if you have to convert CAD to USD yourself... it's the same.

Example: $1.30 CAD
VXC equivalent in $US: $1 US

Buying VXC at $1.30 or buying an equivalent ETF in the US at $1 (using $1.30 CAD converted) is the same.
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Since withholding tax isn't applied to US dividends in RRSP accounts, I tried to keep only USD in my RRSP but as a portfolio on a whole, it hasn't been possible to grow my portfolio while keeping the strict allocations since I only get an additional $1 or 2k in contribution room available in my RRSP each year (the remaining room is used up in contributions to my work DB pension plan).

So the other option is to add to my VXUS and VTI but in my margin or TFSA in order to rebalance. It looks like it may be a necessity to do that then. Would it be recommended that I purchase those US ETFs in my margin account since I believe you can apply to CRA to get back some of the money paid in withholding tax (whereas I don't believe you can in a TFSA)?
You should maximize TFSA-RRSP.

Since you don't have much RRSP room, it means TFSA...

Yo will get US or International withholding tax credited to your tax return in margin account, but you will pay tax on dividends anyway (since your tax rate in Canada will be higher than withtholding tax), and pay tax on capital gains when you sell.

The best option for US ETF-stocks is RRSP, you got that right... second best is TFSA.


The best option for margin account are Canadian stocks if you are maxed out TFSA.
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Right, so I've already maxed out my TFSA as well so in order to put those US/INT'L ETFs in there, I'd have to sell the CDN equities and/or XSB. For my situation, does it make better sense to do that? And then hold those CDN equities/XSB in a margin account?

I guess main problem is that I've already maxed all registered accounts and so I started a non-registered account but I'm just trying to determine the most cost-efficient and tax-efficient method in allocating across all accounts given the varying room available in each account (i.e $33k in RRSP and $44k in TFSA with unlimited room in the margin for balancing).
If you must hold bonds in taxable, you could consider HBB.
This really doesn't look too bad overall! Nice job. Even your total allocations, the breakdown of % between countries seems very reasonable.

My only question is, do you have other money besides these amounts, that you keep in cash, savings accounts or GICs?

You have around 90k here. So I'm really hoping you also have something like 20k to 30k in liquid resources as well. XSB can help serve this purpose, but that's only 11k.

I ask this because the portfolio you show here is really good for long term holding, but it MUST be held long term. That means like 20 to 40 years, so you cannot expect to tap into any of this money any time soon.

You're young and you will need liquid cash at some point. Some examples: you're jobless and the economy sucks, you get married, you buy a home, or you have a big surprise expense (gosh hopefully not in that exact chain of events). These are things you cannot pay for with your stock holdings. Doing so can seriously compromise your long term returns so you need a store of liquid capital that's separate from stocks.
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Thanks! I'm trying my best and I've learned a lot from this forum and blogs etc. so thanks guys!

Yes, I have about $15k in a high interest savings account. What I could do then is just hold off in investing in my margin and start building up more liquid savings for a rainy day like you suggest. It's just that I felt like the savings wasn't doing much which is why I wanted to invest them in the margin account in "safer" blue chip companies with consistent dividends so that it was at least giving better return. Currently, the $15k is in a Zag account, which is giving 2.5% (pretty decent considering the interest rates these days but I doubt it will last past the promo period).

The other large asset I have is a rental property that I split with a sibling. The rental income is enough to cover the mortgage every month and then some, so I've only invested the 20% down initially required.
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