I hesitated until now to make a post like this, for fear that it’d be uninteresting. Indeed, I’m a long-term investor, aiming for growth by investing in boring index funds. I want to have as little to do as possible. I buy and hold. Nothing exciting, right?
I don’t do any kind of stock analysis and I couldn’t care less about P/E ratios and such.
Honestly, all-in-one ETFs? Best invention in the world!
However, I sincerely believe that this should be the main investment method for the vast majority of people. The simplicity of it makes it so accessible. Considering that, I think it’s appropriate to explain it in detail for those who find investing a bit intimidating and would like to have an example of a very simple (boring, even) portfolio.
You should also know that I hate keeping cash. In fact, I don’t even have an emergency fund. It is therefore worth noting that I always keep only the bare minimum in cash, and this, in all my investment accounts.
Finally, I do all my personal investing through Questrade, one of the cheapest online brokers in Canada. If you are interested in opening an account, enter my QPass Key 665709686438830, and we’ll both get $25. 🙂
I am not a financial advisor, tax specialist or retirement planner. Nor am I legally certified to give financial advice. This article is not financial advice.
I only want to show you my investment portfolio, as an example and for the sake of transparency. 🙂
First, you may recall that I took the commuted value from my previous employer’s DB pension in 2018. The funds were deposited up to the maximum transfer value ($29,826) into a locked-in retirement account (LIRA) in October 2018.
So as of today, I only hold XEQT, which is a 100% stock ETF, in that account. The Management Expense Ratio (MER) is only 0.20%, which is fine with me for such a passive approach. I used to have different ETFs that I had to rebalance myself. Now I prefer to have to do (or be tempted to do) as little trading as possible. With that in mind, an ETF like this is a perfect fit for me.
So, I currently hold 1,848 units bought at an average price of $21.66.
Let me remind you that you cannot contribute any money to a LIRA, other than by transferring a previous pension. Thus, my LIRA’s growth has only been due to compound returns and the quarterly dividend payments, which I reinvest immediately.
As of today, considering my 1,848 units and my few dollars in cash, I have a balance of $46,089.66.
As for my Questrade RRSP, I have exactly the same approach as in my LIRA. I hold 1,443 units of XEQT, purchased at an average price of $21.44.
As of last Friday’s market close, considering my 1,443 units and my few dollars in cash, I had a balance of $36,007.03.
I also have a FTQ RRSP, a Québec worker’s fund, to which I contributed when working for my previous employer. I have 117.1339 units valued (as of December 31, 2020, the value being updated every six months) at $49.11. Thus, I have a balance of $5,752.45.
Finally, I have one last RRSP with Fondaction, another similar worker’s fund. I have 954.2905 units valued (also as of December 31, 2020) at $14.07. So, I have a balance of $13,426.86.
Adding all of that give me a total of $55,681 in RRSPs.
Since the TFSA is a very different investment vehicle than the RRSP and LIRA, I decided to take a slightly different approach. Since this account will provide me with tax-free income in retirement and I plan to delay withdrawing from it until as late as possible, I can afford more risk and volatility in exchange for a better return.
In addition, I have plenty of Canadian exposure in my RRSPs (notably with FTQ and Fondaction who are focused only in Québec). Thus, I decided to opt for an almost exclusively international ETF with ZGQ. This ETF has a more active approach, which explains the higher MER of 0.50%.
Thus, I hold 863 units, purchased at an average price of $44.99. Considering last Friday’s value, that’s a total balance of $39,689.37.
Also, I decided to go for some more volatility and speculation with the newest cryptocurrency ETFs.
That means I hold 55 units of ETHH.B bought on average at $10.15. Considering last Friday’s value, that’s a total balance of $976.80.
Finally, I hold 160 units of BTCC.B bought on average at $10.10. Considering last Friday’s value, that’s a total balance of $1,454.40.
So, considering my 3 different ETFs, and the couple of dollars in cash, my TFSA’s total balance is of $42,126.12.
As you may know, I’m a nerd, and I like to play around with Excel (Google Spreadsheet, actually). It allows me, among other things, to make different charts to help give me pretty visuals of my portfolios and my progress. Let me show you some of them.
The big difference between my two main ETFs (XEQT and ZGQ) is the percentage of Canadian stocks. While XEQT holds about 24% of Canadian stocks, ZGQ holds less than 1%! Also, let’s not forget that my FTQ and Fondaction RRSPs are 100% invested in Canada (Québec, specifically).
So, considering all this, I wondered what my country allocation looked like for my entire portfolio.
Thanks to this tool provided by Vanguard, I was able to compare in detail the two ETF’s country allocations and input the data in my glorious spreadsheet.
Here is the result:
I hold 26.9% in Canada! So ZGQ has indeed allowed me to reduce my home country bias a bit. Otherwise, I would be somewhere around 34%, which sounds way too heavy to me. The 46.2% in the U.S. is actually not very far from XEQT’s 47%. Finally, 26.9% comes from the rest of the world, with Japan, the UK, and Switzerland among the largest. I honestly didn’t know that, and I find that very interesting.
Of course, by continuing to invest in ZGQ only in my TFSA, I’ll keep decreasing my exposure to the Canadian market and increasing my exposure to the global market. That’s the goal!
In the end, there’s a proof you can be extremely diversified worldwide with very few ETFs.
I pulled up another interesting chart that shows my different account’s growth since I started investing. Here it is:
Despite the fact that I haven’t invested anything in my RRSP since about April 2020 or in my LIRA since the transfer in October 2018, you can clearly see the growth due to only return and dividends.
Also, I especially like to see the growth in my TFSA since April 2020, when I started focusing most of my savings there. It’ll continue to gain momentum over the next few years as I get closer to maxing it out. In fact, I have just under $40,000 left to contribute to it as of today.
Taxable vs Non-Taxable Accounts
Finally, this brings me to the proportion of each account within my portfolio. As of today, it looks like this:
So, that means 71% of my portfolio is taxable (RRSPs and LIRAs), while only 29% is non-taxable (TFSAs). Of course, since I am focusing almost all my savings in my TFSA now, the non-taxable portion (and therefore future non-taxable income) will continue to increase.
Remember, there is no downside to having a big fat TFSA. The same cannot be said for an RRSP. 🙂
Yes, this makes for a pretty aggressive portfolio. What can I say? I do have a very long investment horizon and an excellent risk tolerance. 😉
So I hold close to 100% stocks in my traditional investment portfolio. The few percentages that are not invested in stocks are invested in cryptocurrency ETFs, which are definitely considered even riskier than stocks.
While I will most likely revisit my asset allocation as I get closer to retirement, I have no interest in sacrificing my returns with bonds, in the meantime.
In fact, I’m still one of the lucky ones to have a DB pension plan. This type of pension plan is so generous that it’s just like having a certain amount of bonds.
In fact, I checked and my pension’s 2020 annual report indicated that 45% of the money is invested in bonds. That means I have some exposure myself. I may not have direct access to that money right now, but I plan to take the commuted value when I leave the rat race.
As Simple as That!
There, I hope that was interesting for some of you, dear readers. This is a particularly simple approach to investing. However, it’s been proven to work. After all, the investors who get the best returns are usually… dead. There are clear benefits to being inactive. 🙂
While everything about my stock portfolio is pretty boring, I think I’m making up for it with my cryptocurrency portfolio. My next article will be in the same vein. This time, I’ll offer more details about my famous crypto portfolio. This might be a bit more interesting. 😉
And no, I don’t hold Dogecoin.
Hope to see you soon!
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