I've been using a couch potato portfolio for a while now too, 100% equity. I plan to keep my portfolio as is in retirement, with the exception of a cash wedge. Probably 1 year spend in the wedge, haven't thought that thru too much yet.

My thinking is that the couch potato has served me well, why change the strategy when I retire? Most people seem to reduce their equity and go more into bonds or something else that is "safer". I don't plan on doing that. Reducing equity and increasing bond holdings reduces your returns which increases risk long term IMHO.

 

My thinking is that the couch potato has served me well, why change the strategy when I retire? Most people seem to reduce their equity and go more into bonds or something else that is "safer". I don't plan on doing that. Reducing equity and increasing bond holdings reduces your returns which increases risk long term IMHO.

My thinking as well. My portfolio is XIC/XAW. If I was starting again I would use XEQT.

 

No, you're good as is. Time for no change.

 

My questions/replies would be:

1. What are your reasons to change?
2. Are you still meeting your investing objectives?
3. Are you still managing risk/downside well?

All in all, having most if not all your equities in XGRO is smart for lazy, global returns, whatever they may be in the future....that is unknown.

 

I wouldn't consider something like XGRO to be 'concentrated' with 21732 underlying holdings.

 

Exactly, this is heavily diversified (at least among stocks).

The only concentration I see is the heavy stock allocation of XGRO, but that's a personal choice. Even though the investor might want the higher returns of stocks, just remember that high stock allocations can also mean long periods of poor returns (and high volatility), sharp declines, etc. Think back to 2020 for example ... the market crashed very seriously, but it happened to bounce back quickly. What if that weakness had lasted for several years, instead of just a few months?

Here's a back-test showing how an 80/20 allocation like XGRO would have behaved since 1970. Notice that there are several instances where it crashed at least 30%, the worst being -46%in 2008. Also note that there were 9 really bad years with no gains as shown here, so one should be aware that this is possible.

You could go (roughly) a decade with zero returns, as demonstrated in that link. You must also ask yourself if you are comfortable potentially losing half of your money, because that's always going to be the risk in XGRO at 80/20. You never know how long it might take to come back. It could be a few months, it could be a few years.

@Simon Says if you have a partner, you might want to ask your wife/partner if she is comfortable potentially losing half the money invested in XGRO. Personally I don't know many people who would be OK with losing half of their money close to retirement... generally, balanced allocations like XBAL are better fits in retirement.

Those ^ are standard concerns about the asset allocation and choice of a high-stock weighting.

But there's nothing wrong with holding a huge amount of XGRO. Remember that the underlying stocks don't belong to Blackrock. Each ETF is a separate legal entity, a kind of corporation formed in Ontario. The manager is Blackrock, but the assets belong to the investors in the fund.

 

Ok, I'll give a more insightful answer than my other one above

Holding XGRO is about as optimal as it gets as far as passive investing strategies go. You're effectively doing dividend, growth, and fixed income investing all in one package. One thing you might consider is if you want to go for something safer, or riskier, by switching to equivalent products that have more fixed income in them, like XBAL, or none, like XEQT. But I think that if you've been happy with XGRO, you can stick with it through retirement.

The only thing I would change as you get closer to retirement is to build a small cash wedge of 1-2 years worth of living expenses that will allow you to sleep through 90% of market downturns without having to sell depreciated assets while living on your portfolio.

That's it!

 

I'm about 6 years from retirement and on-track to be ok which is a wonderful thing.

There are many things one can do moving closer to retirement but nothing wrong with generally sticking to what you have. It's not a bad time, 6 years out, to look at how you want to proceed for withdrawing funds in retirement. As mentioned above, some get a little more defensive, add a cash wedge and/or choose to add some dividend output. So one needs to compare the differences and the additional work involved before making changes.

 

The OP has mentioned Dividend investing. As a DIY stock picker I would advise you stay with XGRO if it is working for you and you have no desire to evaluate stock financials and quarterly reports regularly. I implement a dividend growth strategy and it has served me well. However, I enjoy studying the businesses that I own. I have exceeded market returns on a long term basis but it is mostly due to fees and a lot of time. If I had to pay myself for the analysis I would be lagging the market returns.

So back to the question at hand. Why is it time for a change?