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Discussion Starter #1
Quick financial literacy background. I have a modified couch potato using eSeries for international/US/bonds + GIC ladder for some other fixed income + Argo's 6-pack for CAD exposures for my TFSA at 85/15. For my RRSP I have an "old" VXC/VCN/VAB at 90/10

I'm about to open up an RESP account with Questrade for the free ETF purchases. With an ~18 year timeline, I was thinking of one stop shopping with VGRO, then down the road scaling back exposure. What I am curious about is how to scale it back. It is easy to control asset allocation with new money and separate CAD/US/INT/Fixed ETFS.

Say at year 10, do I stop buying VGRO and start buying VBAL, and then VCNS? Sell off "some" I time goes on? Sell off all at once and buy VBAL? etc....you get the idea.

What do you do with these all in ones? Maybe it's just easier to self manage and adjust my asset allocation with new money as I do now.
 

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I'd suggest one can either: 1) feather it in with new purchases starting age 10 into VBAL, then VCNS at age 15 to get ready for age 18 withdrawals, or 2) simply sell VGRO at age 10 and put it all into VBAL including new purchases and repeat at age 15 selling everything and put it into VCNS including new purchases. In my view, the second option is much easier to administer.

Also, so far, the 2.5 year track record since inception is showing almost no difference in performance between VCNS, VBAL and VGRO. Now that is a bit abnormal because of the specifics of 2020 where equities have faltered a bit and the bond component has done exceptionally well due to collapse of the yield curve. Still, Justin Bender has done some work going forward and thinks the long term difference in performance will be less than (if I recall correctly) one percentage point between each of the offerings. One can spreadsheet this stuff to death for differences, differences that no one really has a clue about what the future holds.

The RESP I have set up for a 2 year old step-granddaughter is a supplemental RESP to contribute the difference between what the parents can contribute each year and the maximum of $2500 to get full CESG. So perhaps $1500/yr on average. I am putting it all into MAW104 (60/40 balanced fund) to begin with and the current plan is to keep it there until about age 15 and re-think about going more conservative then.

Added: Whether it is MAW104 or VBAL, I am agnostic about it. I've picked MAW104 mostly due to the newness of VBAL and Mawer's track racord as a 5 (Morningstar) rating. Less importantly, it saves me $10 in commission once a year.
 

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Say at year 10, do I stop buying VGRO and start buying VBAL, and then VCNS?
I was thinking something like this, but skip the VBAL step, just buy VCNS going forward. Maybe not at year 10, a little bit further along.
Then 3 or 4yrs prior to 18, start moving over VGRO to VCNS in equal steps each year. Or go to GICs. Depends how much is in there, how likely the child is going to do 4 yrs or more of schooling, if there's other kids, if they're going to work for a bit, etc. I expect post secondary to increase in cost faster than inflation in the near and mid term, so a 4yr program could cost 90-100K in tomorrows dollars, 16-18yrs from now.
 

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Sure. One can skip the VBAL step entirely or any other combination one wants. VBAL for the first 15 or so years even, then VCNS.... or start a GIC ladder leading up to the first withdrawal.

There is no right answer including when/where/how the child will undertake qualified secondary education. That could very well be the major influencing factor in its entirely. Ultimately it depends on likely withdrawal needs and how much risk one wants to take, and for how long, and how much price (capital) stability one wants when starting the withdrawals. I suspect no one can possibly know what the withdrawal plan might look like until just a few years before commencement.
 

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I'm about to open up an RESP account with Questrade for the free ETF purchases. With an ~18 year timeline, I was thinking of one stop shopping with VGRO, then down the road scaling back exposure. What I am curious about is how to scale it back. It is easy to control asset allocation with new money and separate CAD/US/INT/Fixed ETFS.

Say at year 10, do I stop buying VGRO and start buying VBAL, and then VCNS? Sell off "some" I time goes on? Sell off all at once and buy VBAL? etc....you get the idea.
I would keep things simple and just go with the middle of the road risk allocation VBAL or XBAL instead of putting yourself in a position where you're going to try timing the switch-overs, which could be tough as it involves a bit of market timing (or will feel like it).

Long term (48 years) returns of these asset allocations using US data:
80/20 like VGRO ... 6.0% real return
60/40 like VBAL ... 5.5% real return

Dropping the stock weighting does not have as horrendous a result on outcomes as people tend to think. This is only 0.5% less real return in 60/40 (VBAL).

If it was me, I think I would just hold VBAL and then around years 13-15 switch into VCNS. That might turn out to be difficult if stocks are down at that point but even then, no harm being stuck in VBAL.
 

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As noted, there are as many ideas as there is scatter in a shotgun shell. Pick a strategy that feels right for you within sleep-at-night risk tolerance and go with it. However, as a few have said, use the KISS principle. Anything else is over-engineered by spreadsheet precision that adds absolutely nothing.
 

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Discussion Starter #8
Lots of great recommendations. As expected, it is certainly opinion/risk adverse opinions, thus there is no correct answer. I think I will assume a hard date at 18 years. I can also assume I have already "won" in terms of 20% ROI from the government so I do not need to be too aggressive. Looking at the responses, I kind of like the following:

0-10 Buy VGRO
10-13 Stop buying and hold VGRO and Start Buying VCNS with new money
14-18 Each year sell 20% (something to the effect of 1/5 of the original total value) VGRO + start buying 5 year GIC's for a 5yr GIC ladder with VGRO sale, new money for VCNS buy and hold.
18+ GIC Ladder / VCNS and cash out when required.

Considerations:
~$50 in fees to sell VGRO over the course of 5 years

Very rough back of cigarette pack numbers:
10 years Mark: 30k into VGRO
13 Year Mark: 30k VGRO + 9k VNCS
18 Year Mark: (5) 5yr laddered GIC's totalling 30k + 24k VNCS

Relatively simple and pretty conservative. I get to try and maximize on the VGRO growth, and then average out any market timing by selling it over the course of 5 years into GIC's. VNCS should be a safe bet for mitigating any market timing.
 

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0-10 Buy VGRO
10-13 Stop buying and hold VGRO and Start Buying VCNS with new money
14-18 Each year sell 20% (something to the effect of 1/5 of the original total value) VGRO + start buying 5 year GIC's for a 5yr GIC ladder with VGRO sale, new money for VCNS buy and hold.
Would you sell VGRO even if the stock market is depressed (or has cratered) at the time? I think it's good to decide your plan in advance because it wouldn't be good to improvise or wing it, if markets don't "look good" when you arrive at year 14.
 

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Also need to think about how the plan changes if another kid comes along. Do you take the age of the first one in determining the plan? Or the average age? Have completely separate RESP plans for each kid?
 

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Would you sell VGRO even if the stock market is depressed (or has cratered) at the time? I think it's good to decide your plan in advance because it wouldn't be good to improvise or wing it, if markets don't "look good" when you arrive at year 14.
I can't speak for the OP but I know for myself our plan is to assess at the time of portfolio shift. As we have already tilted the portfolio to fixed income we can afford to let the equity sit a year or two. Aside from my significant others aversion to equities the decision was (in my mind) was to sacrifice the extra return in years 0-X for the flexibility of letting the equity portion ride to year 16, 18 or longer if needed. If I were starting over I would likely take the VGRO route for the duration and assess at age 12, 15 or other. Would agree it is a good idea to have a plan or list of parameters now to make the decision easier when the time comes.
 
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