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Discussion Starter #1
Hi all,

I have about 35 years until retirement and I am considering which ETF's to invest in. Right now, I have a few thousand dollars entirely in XGRO. However, I've recently heard that I could afford to take some greater risks given my lengthy timeline. In terms of risk, I'm not really one to panic. I took a few risk assessment quizzes and was told that I should be looking at around 90:10 stocks to bonds.

I have a stable job with a good salary and an emergency fund already.

I was wondering if anyone has thoughts on adding XUU to my portfolio with XGRO, or, am I overcomplicating things? I'm also open to any other fund suggestions that might compliment XGRO well, if any. Very open to the idea of leaving my current one-fund portfolio as is, but I wanted to hear some thoughts from others.

Thanks!
 

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I think XGRO and VGRO are great choices for that time horizon, depending on your risk tolerance (be prepared for 40% or larger drawdowns at times). Both of those all-in-one ETFs include exposure to the US market, so adding XUU would be redundant, unless you have a compelling reason to tilt more toward the US.
 

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For the RRSP and TFSA those are good.

In an investment account though, the tax on the foreign dividends is at regular personal rates (no div tax credit). The bond interest is all taxable too.

So if you are thinking of having 3 accounts you may want to look at separate ETFs for CDN (inv acct) , US INTL and bonds in the TFSA and RRSP.


 

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If you want a single ETF with higher equity than VGRO or XGRO you could use VEQT or XEQT. Then later as you get closer to retirement you could add a bond fund.

But recognize that 100% equity will be very volatile. Many investors think they have a high tolerance for volatility until they actually experience volatility and a market crash. Look at the following link in Norm Rothery's wonderful Stingy Investor Asset Mixer to see how a 100% equity portfolio holding equal parts Canadian, US and global equities would have performed since 1970.
Stingy Investor Asset Mixer

Note the 2000 crash took 5 years to recover and the 2007 crash took 6 years to recover. How comfortable would you be with your portfolio under water for 5 or 6 years? The portfolio hit a peak in 1999 and did not recover and stay above that level until 2009. That's a long wait even if you have a 35 year timeline.

When I was younger I held 100% equities with leverage and don't regret it, but I also still vividly remember that day in October 1987 when the Dow plummeted over 20% in one day. :oops:
 

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Discussion Starter #5
If you want a single ETF with higher equity than VGRO or XGRO you could use VEQT or XEQT. Then later as you get closer to retirement you could add a bond fund.

But recognize that 100% equity will be very volatile. Many investors think they have a high tolerance for volatility until they actually experience volatility and a market crash. Look at the following link in Norm Rothery's wonderful Stingy Investor Asset Mixer to see how a 100% equity portfolio holding equal parts Canadian, US and global equities would have performed since 1970.
Stingy Investor Asset Mixer

Note the 2000 crash took 5 years to recover and the 2007 crash took 6 years to recover. How comfortable would you be with your portfolio under water for 5 or 6 years? The portfolio hit a peak in 1999 and did not recover and stay above that level until 2009. That's a long wait even if you have a 35 year timeline.

When I was younger I held 100% equities with leverage and don't regret it, but I also still vividly remember that day in October 1987 when the Dow plummeted over 20% in one day. :oops:
I thought about this, but from what I understand from Canadian Portfolio Manager's table comparing 25 years annualized returns, an XGRO portfolio averages about 7.49% annually and an XGRO+XEQT portfolio averages about 7.64% annually. Unless I am reading this table wrong, the difference seems fairly minimal for the added risk.
 

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I thought about this, but from what I understand from Canadian Portfolio Manager's table comparing 25 years annualized returns, an XGRO portfolio averages about 7.49% annually and an XGRO+XEQT portfolio averages about 7.64% annually. Unless I am reading this table wrong, the difference seems fairly minimal for the added risk.
I see where you got the CCP 25 year return of 7.49% for XGRO which is 80% equity and 20% bonds. I don't see where you got 7.64% for anything with XGRO+XEQT.

If you can clarify that I can take another look.
 

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Discussion Starter #7
I see where you got the CCP 25 year return of 7.49% for XGRO which is 80% equity and 20% bonds. I don't see where you got 7.64% for anything with XGRO+XEQT.

If you can clarify that I can take another look.
This is where I got it from: https://cdn.canadianportfoliomanagerblog.com/wp-content/uploads/2020/01/Model-ETF-Portfolios-iShares-2019-12-31-Light.pdf

Thanks for helping me make sense of this!
 

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I would not go with an ETF instead would go GBTC & ETHE to play bitcoin & Ethereum. I purchased ETHE in early Jan this year. In January it was trading low as 27 plus change today it closed @ 222 so extended @ the moment. Would only put 1% on table put another 1 % on the table if we break this years low. Though would probably only hold a few years.
Would not buy anything else @ this time until June/Oct 2022 though SLV will probably bottom sooner.
 

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I would not go with an ETF instead would go GBTC & ETHE to play bitcoin & Ethereum. I purchased ETHE in early Jan this year. In January it was trading low as 27 plus change today it closed @ 222 so extended @ the moment. Would only put 1% on table put another 1 % on the table if we break this years low. Though would probably only hold a few years.
Would not buy anything else @ this time until June/Oct 2022 though SLV will probably bottom sooner.
These are not investment vehicles appropriate for retirement.

Putting 27 dollars on number 13 on the roulette table could have done better (yielding 945 dollars).

BTW, the long term charts look horrendous!
 

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These are not investment vehicles appropriate for retirement.

Putting 27 dollars on number 13 on the roulette table could have done better (yielding 945 dollars).

BTW, the long term charts look horrendous!
90/10 stocks @ the current time is not appropriate for retirement portfolio
 

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90/10 stocks @ the current time is not appropriate for retirement portfolio
I think it depends on the time horizon, but one could make an argument for 50/50 (as an example); nonetheless, most people consider both stocks and bonds appropriate investments for retirement. Bitcoin, as it currently stands, is not. I would suggest we do a poll on the forum to figure this out.
 

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OK I see now. I was looking at a different site.

You would not expect a large difference in return between 80% and 90% equities. It's just not a big enough difference to make a huge change in portfolio results.

This does make a good example of how the market moves in strange ways and trends in long cycles with a lot of random movement and if you want to hold a high % of equities you need to have a long holding period. Take another look at that pdf and you will see that the difference between 80% and 90% equities is larger for 3, 5 and 10 year returns than it is for 20 and 25 year returns. 20 and 25 year returns go back to year 2000 and 1995. Those intervals include the 2000 tech crash and the 2008 financial crisis. They also include a long decline in interest rates, which pushed bond returns up. So relative to historical averages, equity returns are low and bond returns are high, which is unlikely to happen again, especially if interest rates go back up to historical averages.

Another line to look at in that pdf is the lowest 1 year return. Do you really want a portfolio that lost 29.81% in the 2008 crash?

If your holding period is decades, you don't anticipate any short term need for this money, and you can stand a lot of volatility then historically equities have given the highest returns over long periods. But for most investors, a holding of somewhere between 20% and 40% bonds is prudent and a good risk/reward trade off.
 

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BTW, the long term charts look horrendous!
Topo go to Seasonax check out the seasonal chart for Bitcoin & Ethereum. Buy Bitcoin Oct 6 sell on Dec 6 Then Buy Ethereum on Dec 6 Sell on June 16th. Rinse & repeat. Dates might change as more data collects though would only put max 1% on table to start though let profits run beyond 1%. Not a lot of data yet collected though seasonality shows up in a lot of things traded. If the dates somewhat nail the seasonality for Bitcoin & Ethereum due to their volatility the rewards could be huge on this one. ETHE & GBTC seam to magnify the moves so playing those ETFs could put the seasonal on steroids

ETHE has gone parabolic which can result in a crash. though from start of year the second rally does not look corrective as the percentage gain has gone beyond equal so unlikely an ABC since A often equals C or C is .618 the length of A
 

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Topo go to Seasonax check out the seasonal chart for Bitcoin & Ethereum. Buy Bitcoin Oct 6 sell on Dec 6 Then Buy Ethereum on Dec 6 Sell on June 16th. Rinse & repeat. Dates might change as more data collects though would only put max 1% on table to start though let profits run beyond 1%. Not a lot of data yet collected though seasonality shows up in a lot of things traded. If the dates somewhat nail the seasonality for Bitcoin & Ethereum due to their volatility the rewards could be huge on this one. ETHE & GBTC seam to magnify the moves so playing those ETFs could put the seasonal on steroids

ETHE has gone parabolic which can result in a crash. though from start of year the second rally does not look corrective as the percentage gain has gone beyond equal so unlikely an ABC since A often equals C or C is .618 the length of A
Lonewolf, I do not doubt your prowess in exploiting seasonal patterns in virtual currencies that have been around for just a few seasons. Perhaps ETHE and GBTC are good trading vehicles too. However, the question from the OP was about a solid investment strategy for their retirement (35 years away). While trading bitcoin maybe a worthwhile endeavour for superior traders, for the rest of us, mere mortals, there must be something easier and less risky, hence asset allocation ETFs.
 

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I would not go with an ETF instead would go GBTC & ETHE to play bitcoin & Ethereum.
I don't think this is a good idea. There just isn't enough data and track record on these things. It's a total wildcard: you could make money or even lose everything.

Or look at this way lonewolf. There is only about 4 years of data on these things (when they are liquid and open to the public). This person is investing with a 35 year time horizon.

Is it sensible to invest for a 35 year time horizon using things that only have 4 years history?

Compare this to well established, viable asset classes. We know the long term returns after inflation (real returns) for over 100 years:

Stocks returned about 5% annual 'real return'
Bonds returned 2%
Gold returned 1%

IMO, one can invest in any of the above with some confidence about the long term outcome. You can't say the same for bitcoin or ethereum; we have no idea what the long term real return could be.
 

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James what you say is true. The odds are high everything will be lost. The reward could be very high with high risk which is why I say very small amount 1% on table which could even be to high. I would not hold on to it for 35 years probably till first quarter 2023 max. This is not a high confidence play it is a play on potential reward to the risk.
 

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A Canadian banks etf would be a solid one such as ZEB.to as well as helping you sleep at night!! I have a couple high risk stocks, ngd.to a small cap gold miner which shows promise now when hedges expire and a smaller marijuana company based in Winnipeg DN.to those were about as high risk as I would like to go...I went with about 15% high risk and the rest stable good quality stocks with dividends.

Good luck!! Be careful with your hard earned money, don’t risk too much!!
 

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Discussion Starter #18
OK I see now. I was looking at a different site.

You would not expect a large difference in return between 80% and 90% equities. It's just not a big enough difference to make a huge change in portfolio results.

This does make a good example of how the market moves in strange ways and trends in long cycles with a lot of random movement and if you want to hold a high % of equities you need to have a long holding period. Take another look at that pdf and you will see that the difference between 80% and 90% equities is larger for 3, 5 and 10 year returns than it is for 20 and 25 year returns. 20 and 25 year returns go back to year 2000 and 1995. Those intervals include the 2000 tech crash and the 2008 financial crisis. They also include a long decline in interest rates, which pushed bond returns up. So relative to historical averages, equity returns are low and bond returns are high, which is unlikely to happen again, especially if interest rates go back up to historical averages.

Another line to look at in that pdf is the lowest 1 year return. Do you really want a portfolio that lost 29.81% in the 2008 crash?

If your holding period is decades, you don't anticipate any short term need for this money, and you can stand a lot of volatility then historically equities have given the highest returns over long periods. But for most investors, a holding of somewhere between 20% and 40% bonds is prudent and a good risk/reward trade off.
Thanks so much for this response. This is really helpful. I think I will just stick with XGRO then as it would be easier and based on what you are saying, it makes sense to keep at least 20% bonds.

Thanks again for your very thorough response!
 

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I don't think this is a good idea. There just isn't enough data and track record on these things. It's a total wildcard: you could make money or even lose everything.

Or look at this way lonewolf. There is only about 4 years of data on these things (when they are liquid and open to the public). This person is investing with a 35 year time horizon.

Is it sensible to invest for a 35 year time horizon using things that only have 4 years history?

Compare this to well established, viable asset classes. We know the long term returns after inflation (real returns) for over 100 years:

Stocks returned about 5% annual 'real return'
Bonds returned 2%
Gold returned 1%

IMO, one can invest in any of the above with some confidence about the long term outcome. You can't say the same for bitcoin or ethereum; we have no idea what the long term real return could be.
Here is the math on start of the seasonal trade Bit coin was 4.70 using the seasonal trade every 4.70 would be worth $98,894 as of yesterday using Bitcoin & Ethereum. The reward is just to high not to use the seasonal trade in a retirement account, Would also use the Decennial pattern that beat the market by 44 fold over something like 100 year period & with small percent would use 3 times leveraged ETF that tracks the S&P when S&P is above 200 day moving averaged. 1 % of account in each of these methods would a lot safer then over 50% in stocks & would probably out perform
 

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Use more then one system in case one system blows up. Using 3 times leveraged S&P with 1% management fee from Oct 1928 to Oct 2015 holding long only when above 200 day moving average $10,000 grows to 9 trillion dollars with an average of 5 trades a year. While the buy & hold grows to just over 9 million. Source 2016 Dow award Leveraged for the long run. The most likely time for 3 times leveraged ETF to blow up is in a bear market below the 200 day moving averaged when your on the sidelines.

If you want to make a lot of money in this game you can not be average. Put small amount on the table some systems can blow up so play more then one system which puts the probabilities in your favour.
 
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