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This is just a feeling, but knowing how brokers work and considering their history in ripping off people in bonds, my gut tells me that the practice account quotes don't have the spread. At the end of the day you might have to place a real bond trade with say 10K and see what happens with real money.
I placed a real order early today and it's filled now. You are right, RBC did charge as high as 1.79% spread/mark-up in bonds!!! I was cheated by their practice account. I called the client service today and was told that the practice account is just for "DEMO" purpose. I would say this is not demo but cheating!!! I'll never ever believe RBC. So pissed off.

My order in RBC DirectInvesting:
20380


Bond Price
20381


iTrade Bond Price
20382
 

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Discussion Starter #342
I placed a real order early today and it's filled now. You are right, RBC did charge as high as 1.79% spread/mark-up in bonds!!! I was cheated by their practice account. I called the client service today and was told that the practice account is just for "DEMO" purpose. I would say this is not demo but cheating!!! I'll never ever believe RBC. So pissed off.
Thanks for sharing what you found, this is very helpful. I hope others can find this thread, in fact, I added some keywords at the end of this post to help search engines find this later.

Don't feel bad. Those practice or simulation accounts really can't account for realism, and bid/ask spreads are hard to simulate. I doubt that RBC made the practice account deliberately misleading. I've found bugs in their practice account over the years and had to stop using it because it just wasn't realistic.

It's possible that RBC will tell you that the spread would have been lower for a larger face value, but I'm not sure I would believe them.

I'll add this caveat. Even though I really like iTrade, I have sometimes place bond orders and it has filled (very slightly) higher than the price shown. So the quote iTrade shows you is not exactly what you will get a fill at. All bond trades become "market" orders, which means they wiggle around slightly. I can't recall the exact numbers but I think the last time I placed a buy, it was pretty close to the quoted number.

Canadian fixed income
Discount brokers for bond trades
Government bonds at discount brokerages
Buying bonds at RBC Direct Investing
Individual bond prices and fees for RBC DI
Fees for bonds at RBC DI
 

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Thanks for sharing what you found, this is very helpful. I hope others can find this thread, in fact, I added some keywords at the end of this post to help search engines find this later.

Don't feel bad. Those practice or simulation accounts really can't account for realism, and bid/ask spreads are hard to simulate. I doubt that RBC made the practice account deliberately misleading. I've found bugs in their practice account over the years and had to stop using it because it just wasn't realistic.

It's possible that RBC will tell you that the spread would have been lower for a larger face value, but I'm not sure I would believe them.

I'll add this caveat. Even though I really like iTrade, I have sometimes place bond orders and it has filled (very slightly) higher than the price shown. So the quote iTrade shows you is not exactly what you will get a fill at. All bond trades become "market" orders, which means they wiggle around slightly. I can't recall the exact numbers but I think the last time I placed a buy, it was pretty close to the quoted number.

Canadian fixed income
Discount brokers for bond trades
Government bonds at discount brokerages
Buying bonds at RBC Direct Investing
Individual bond prices and fees for RBC DI
Fees for bonds at RBC DI
Thank you again for warning me in previous post. This is not the first time that I am disappointed by RBC. Anyway, it's worth spending $100 to find out the truth.
 

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Discussion Starter #344 (Edited)
Thank you again for warning me in previous post. This is not the first time that I am disappointed by RBC. Anyway, it's worth spending $100 to find out the truth.
Depending on how much time you have, you might want to send them a sternly worded letter saying that the practice account clearly did not show a bid/ask spread, and whatever the agent told you before -- if it was misleading.

You could ask for the fee to be refunded, or a credit, considering you have been a long term customer etc. Maybe at least it will scare them a bit... my cynical side suspects they just keep increasing the spreads until they either get complaints or lawsuits. That's probably how they know they went too far.

Edit: when contacting RBC Direct Investing Client Care Centre, also show the iTrade quote and ask RBC to explain what the same bond costs 1.79% more through them, and say that if you can't get a satisfactory explanation then you could also ask the RBC Office of the Ombudsman to explain it.

Sadly, it's probably not worth the effort. They have taken much larger fees from much wealthier people than you, and gotten away with it. They milk large clients like pension funds the same way.
 

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Depending on how much time you have, you might want to send them a sternly worded letter saying that the practice account clearly did not show a bid/ask spread, and whatever the agent told you before -- if it was misleading.

You could ask for the fee to be refunded, or a credit, considering you have been a long term customer etc. Maybe at least it will scare them a bit... my cynical side suspects they just keep increasing the spreads until they either get complaints or lawsuits. That's probably how they know they went too far.

Edit: when contacting RBC Direct Investing Client Care Centre, also show the iTrade quote and ask RBC to explain what the same bond costs 1.79% more through them, and say that if you can't get a satisfactory explanation then you could also ask the RBC Office of the Ombudsman to explain it.

Sadly, it's probably not worth the effort. They have taken much larger fees from much wealthier people than you, and gotten away with it. They milk large clients like pension funds the same way.
Good idea. I have plenty of time these days since I am in a period of early-retirement(aka. out-of-work). I will send a complaint email to RBC next week. Someone has to scare them a bit for the interests of all the investors. They can't just jeopardize the trust and rip off clients like that.
 

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Discussion Starter #346
Good idea. I have plenty of time these days since I am in a period of early-retirement(aka. out-of-work). I will send a complaint email to RBC next week. Someone has to scare them a bit for the interests of all the investors. They can't just jeopardize the trust and rip off clients like that.
Great, if you have the time it's good to scare them a bit. Personally I find that I'm taken more seriously when I send postal mail so if the emails don't work, follow up with a paper letter.
 

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Discussion Starter #347
You're probably right on sticking with the once a year rebalance plan and, my guess, it'll probably work out well at the end of 2020.
Going back to this question about rebalancing strategy. Rebalance right away? Or do it only periodically?

I thought I'd calculate the two methods for this year, just curious if there's much of a difference. Using the portfolio: 15% XIU, 15% ZSP, 50% XBB, 20% MNT which is my stock/bond/gold allocation.

Option (A) Year to date with no rebalancing, just passive holding: +11.9%

Option (B) Rebalance on April 20. At this point gold was much stronger than stocks, so rebalancing back to targets would have meant selling gold and buying stocks. Net result: +11.9%

Interesting! I didn't expect (A) and (B) to be so similar despite the crazy movements and swings in the constituent assets.

Myself... I've ended up doing some rebalancing by adding new money. I haven't touched my gold or bond allocations, but I added new money into stocks, getting me back near the 30/50/20 allocation targets as of today. I love these asset allocation plans... so simple.
 

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The past July was one of the best months for PP. I am very glad that I chose this portfolio. The only regret is I still have a big portion of money sitting in GIC. I was trying to time the market...gold and stock are so high recently!

The below chart is the return of US PP(See the full chart here: Allocation - Lazy Portfolio ETF). The Canadian PP's performance is quite similar. Just by now today, it's daily %P&L has reached 0.86%! Crazy~ When many government central banks are printing money and stimulus their economy, too much money is chasing too little value perserve assets.

From the below chart, it seems that best perform months were usually followed by recorrection months though.

20437
 

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Discussion Starter #349
The past July was one of the best months for PP. I am very glad that I chose this portfolio. The only regret is I still have a big portion of money sitting in GIC. I was trying to time the market...gold and stock are so high recently!
I agree, it's been just a crazy time. We are now seeing the advantage of diversifying into the gold asset class. As you can see, it only takes a small weight (and I'm only 20% gold) to get a benefit of being in a bull market. The whole idea of the PP is to maximize your chances of at least having a toe in the "winning" bull market. Pure stock investors live or die by a single market: stocks. In a stock bull they do great. In a stock bear, they're ruined.

Going stocks + bonds improves things as you are not solely dependent on a stock bull market. You benefit from bull periods in bonds too.

But the PP, including gold, improves things even more. If gold happens to be in a bull market, we benefit from it. So what we're seeing play out now is exactly the theory of the PP in action. You spread your bets across the primary asset classes (stocks, bonds, gold) and hope that one of your asset classes is in bull mode.

The numbers on my variation of the PP are ridiculous. I'm up 15% year to date and up 19% for the trailing 1 year. Even more crazy is that the trailing 4.4 year return (since I started this) is now 8.5% CAGR.

With 8.5% CAGR and barely any drops, even during this latest crash, my risk adjusted return is through the roof. People should love this kind of portfolio. It really does not get better than this, in financial markets. My maximum drawdown during the March crash was only about 14%.

When many government central banks are printing money and stimulus their economy, too much money is chasing too little value perserve assets.
It's possible that's what's going on, but I try to not get too wrapped up in the story of the day. I think the PP is a great investment whether we're in an inflation or deflation mode, and I still think either one (including deflation and depression) could happen.
 

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Discussion Starter #351
It should also be noted that diversified balanced funds are doing reasonably well over the last 5 years, including through this recent crash.

Mawer Balanced fund: 6.5% CAGR
Tangerine Balanced: 4.9% CAGR
BMO Monthly Income D: 5.1% CAGR

Most of these good balanced funds are around 5% to 6% CAGR for the last 5 years. The permanent portfolio is doing a little bit better, and with less volatility (smoother experience).
 
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