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I’m a big fan of couch potato investing; I especially favour this model portfolio from CCP:

Canadian equity 20% Vanguard FTSE Canadian All Cap (VCN)

US equity 15% Vanguard Total Stock Market (VTI)

International equity 15% Vanguard Total International Stock (VXUS)

Real estate investment trusts 10% BMO Equal Weight REITs (ZRE)

Real-return bonds 10% iShares DEX Real Return Bond (XRB)

Canadian bonds 30% Vanguard Canadian Aggregate Bond (VAB)


Especially after consuming CCPs white paper on withholding tax, I am a huge believer in managing the awkwardness of Norbert’s Gambit to employ VXUS and VTI as core RRSP holdings. I’m with Questrade and have managed to get 10 free trades to be used in the next 90 days to re-shape my profile. I’ve held a couch potato profile for about a year (finally realizing that my financial planner was getting rich while I wasn’t).

I am looking at re-shaping my 2 portfolios (mine and my husband’s) like so:

VCN – 19%
VRE – 6%
VTI – 25%
VXUS – 25%
VAB – 25%

Our combined portfolio (2 RRSPs and 2 TFSAs) contains approximately $330,000. My plan is to hold VCN in our TFSA (no withholding tax consequences plus an opportunity to grow our TFSAs where earnings are not taxed) and to hold the remainder of our ETFs in our RRSPs. We do not currently have a taxable account.

I’m very happy with the ETF stock portion of our portfolios. I find bond ETFs are much trickier because of the poor YTMs.

Would anyone recommend diversifying our fixed income portfolios by using a second bond ETF such as VSB or VSC? I don’t favour Real Return Bonds as I don’t feel inflation protection is of much value today. I understand that some people feel that having an index with a longer time horizon and one with a shorter time horizon provides additional protection. I prefer taking slightly more risk and benefiting from a higher YTM and thus am inclined to use VAB for our entire fixed income portfolio. I also like ZAG (same MER).

To give you some financial background on us:

• We are 43 and 42 respectively
• Have a household income of $200,000 (stable income)
• Have no dependants
• Own a $700,000 home with a mortgage of $15,000
• Expect to retire in about 15 years (our investment time horizon)
• Have no debt
• Have one generous government type pension

I appreciate any insights anyone is willing to share regarding asset allocation, ETF choices or anything else.

If anyone is aware of an investing club in Oakville/Mississauga, I’d love to hear about it.

Thanks in advance!
 

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Looks straight forward to me. You're in great shape financially and should have an awesome retirement. I like the unhedged versions of the ETFs. I don't really have an opinion on the bond question. Most people feel shorter term is the way to go right now, but I've chosen a simple ladder of GICs as a better hedge on preserving capital with some inflation protection for the time being.

Maybe you should ignore investing clubs, particularly as you've stated you're a big fan of the couch potato and the model you've shown. An investment club may be fine if you accept in advance you will be tempted to outsmart the market by attending/participating. Or maybe it will reinforce you're happy with the simplicity that you have along with comparative or better results over time.
 

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ZRR is cheaper than XRB but iirc you lose the provincial issues with ZRR. Not much of a loss. Another alternative is to hold laddered individual RRBs. There aren't many of them to choose from and you would save the MER. I would encourage you to keep RRBs in your AA. They protect against unexpected inflation, which is the kind you're gonna get. And it is a bona fide asset class because it performs independent of other asset classes, including regular bonds.

Since you are not heavy into stocks 10-20% VSC would not hurt. You get some default risk while decreasing duration risk. It is also extremely complementary to RRBs, most of which have long duration while all have ultra low default risk.

Another option, one that I use, is to hold individual medium term municipal (ie medium default risk) bonds. That fits my stock heavy (95%) portfolio as I should not be holding VSC and the stocks protect against inflation anyhow.

I like your equity allocations and ETF choices, though I think it is a tossup between ZRE and VRE.
 
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