Investment Workshop 3: Picking Your ETF’s

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Today we’re going to talk about Exchange Traded Funds, or ETF’s. But before we do, just a quick note to all our Workshop participants, by now you should be (hopefully) done setting up your Questrade or Vanguard accounts and funding them. Again, we’ll be using Personal Capital as our UI front-end for our American audience. Unfortunately, Personal Capital isn’t available for Canadians šŸ™

New readers, please click here to start from the beginning.

Once you’ve set up your account and linked them, you should be able to see your trading account in Personal Capital when you log in, as well as any money you’ve put in. Here’s what my dashboard looks like, showing the first $1000 I’ve put into the account as cash. If you can see something similar, you are all set.

Last week, we went over how to pick our overall top-level asset allocation: equities and fixed income. This will generally determine your long term investment gains as well as your overall portfolio volatility. For this workshop we will be using the same 60% equity/40% fixed income portfolio we used to retire, but based on your own investment timeframe and spikiness-tolerance, you may choose to go more or less aggressive than this.

The Trump Effect

As we’ve mentioned previously, all rosy everything-will-be-fine economic scenarios have been tossed out the window courtesy of incoming President-Elect Donald Trump. The impact of a Trump presidency is unclear because he himself has been so unclear on the campaign trail. As Seth Meyers said on Late Night, Donald Trump has held every possible position on every possible issue. And there’s a ton of negative stuff coming down the pipe for the rank-and-file American citizen such as the elimination of Obamacare, the sharp increase in violent hate crime across the country, and uncertainty in America’s future participation in military alliances such as NATO.

However, the Millennial Revolution is a finance blog so we will focus on the economic impacts. Specifically:

  • Drastically cut the corporate income tax, from 35% to 15%
    • Impact: Positive for stock markets as this would increase corporate profitability
  • Push the Fed to raise interest rates faster
    • Impact: Posssibly Negative as a too-rapid rise in interest rates would cause a recession
  • Rip up and renegotiate NAFTA
    • Impact: Negative as the imposition of tariffs would increase labour costs and decrease corporate profitability
  • Label China a currency manipulator and start a trade war using punitive tariffs
    • Impact: Negative for the same reason as above, but with a much bigger impact

So basically, all eyes are on those trade deals. If those policies get implemented the way Trump yelled about on the campaign trail, look out below because the US will get hit with a triple whammy: Job losses, Crashing Stock Markets, and Higher Inflation since the cost of imported goods will rise.

Right now, stock markets seem to be relatively calm, indicating that Wall Street is expecting to get the first line item relatively easily (since tax cuts are easy to pass through a Republican Congress), but are expecting the NAFTA/China trade wars to get stalled by Republicans weary of tanking the stock market and therefore their own investment accounts. I hope they’re right.

Nevertheless, we should assume the worst and invest accordingly, meaning through a portfolio of low-cost Index ETFs that cannot go to zero, no matter how badly Trump screws up the economy. This is the same portfolio that survived 2008/2009, and will survive Trump as well.

Canadian ETF’s

For our fellow Canauckistans, when we were first starting off we used as our go-to resource for model portfolios. Here’s a link to their most up-to-date page.

Since we last checked in with Canadian Couch Potato, they seemed to have changed their ETF model portfolio. A few years ago, they used to track each individual index (S&P500, EAFE, etc.) using a separate ETF for each, but now they’ve converged all those holdings into a single ETF called VXC which is an “All-World Ex-Canada ETF,” meaning that it covers all global equity indexes minus Canada.

I actually prefer the old approach because it gave us the ability to shift allocations between countries while this one is one giant monolithic black box. Fortunately, they still have the old portfolio still linked on that site (go to the Model Portfolio’s page, scroll to the bottom, click the link that goes to the “Canadian Portfolio Manager” blog run by one of the contributors to Canadian Couch Potato, then click “Model ETF Portfolios (with broad-market bonds)“.

2022 Update: For our most up-to-date portfolio allocations, click here.

So since we’re targeting a 60% equity/40% fixed income portfolio, we want to scan over and look at the column labelled “40FI-60EQ.” This is the ETF mix we will be starting with.

Vanguard Canadian Aggregate Bond Index ETFVAB*40%0.13%
Vanguard FTSE Canada All Cap Index ETFVCN20%0.06%
Vanguard U S Total Market Index ETFVUN20%0.16%
iShares Core MSCI EAFE IMI Index ETFXEF16%0.22%
iShares Core MSCI Emerging Markets IMI Index ETFXEC4%0.26%
*in 2021 we swapped VAB out for ZSB

The majority of these Index ETFs are run by Vanguard which is great as they have the lowest fees out there, running at 0.06-0.16%. iShares is not far behind, with their EAFE and Emerging Market funds charging 0.22-0.26%. Total MER of this portfolio is a scant 0.14%, compared to the average 2% of actively traded mutual funds.

Remember what we keep saying on this blog: Every time you buy an ETF you are making a statement. This portfolio is composed of index ETFs, with Canada, USA, and International Indexes weighed equally, so by investing in this portfolio, we are stating two things:

  1. We believe that it’s impossible to pick individual stocks from each index, so we are simply purchasing the entire index
  2. We believe that Canada, the USA, and International stocks will perform roughly equally

So this portfolio is basically a region-neutral allocation. Canada, USA, and International (meaning EAFE and Emerging combined) are all equal. So by sticking with this allocation, we are basically saying that no particular region will outperform the other.

Now, you’re probably wondering with my USA-will-doom-us-all talk that I would lighten up or eliminate our US exposure, right? Actually, no. We’ve gone through a US-led economic collapse before, and when that happened all stock indexes fell together at the same rate. Trying to guess which country will crash less didn’t help at all because when the US crashes, the world crashes. However, when the US eventually did rebound, they led the charge. So a significant portion of our portfolio should still be allocated to the US despite our deep misgivings about the current President.

This will be the Canadian portfolio we will build in the Investment Workshop. As always, feel free to disagree and design your own portfolio based on your own beliefs. For example, if you’re bullish on President Trump and believe that the US will outperform other countries, you may want to shift equity towards the US index, like so:

Vanguard Canadian Aggregate Bond Index ETFVAB40%
Vanguard FTSE Canada All Cap Index ETFVCN15%
Vanguard US Total Market Index ETFVUN30%
iShares Core MSCI EAFE IMI Index ETFXEF11%
iShares Core MSCI Emerging Markets IMI Index ETFXEC4%

However, please know that any guess about any particular region’s outperformance over any other is just that. A guess. So if you want to stake out a position on a particular region, don’t shift any asset class too much off a neutral stance or you risk being caught off guard and getting blown up if you turn out to be wrong.

And now let’s move on the Americans…


The American equivalent of a Canadian Couch Potato portfolio would be the Three Fund Portfolio pioneered by none other than John Bogle, founder of Vanguard and the pioneer behind Index Investing as an investment strategy. This guy knows what he’s doing, so for our American readers, we will be following his guidelines.

The Three Fund Portfolio basically states that you only need 3 funds tracking 3 asset classes: Bonds, US Equities, and International Equities, with the US and International Equities split equally between them. So for a 60/40 equity allocation, this is what our portfolio would look like:

Vanguard Total Bond Market ETFBND40%0.06%
Vanguard Total Stock ETFVTI30%0.05%
Vanguard FTSE All-World ex-US ETFVEU30%0.13%

Total MER: An even more astoundingly low 0.08%!

Note that these are the Vanguard ETF versions of funds that many FI-ers like Jim Collins use (VTSAX being the most famous one). The only difference is that VTSAX requires your balance to be at least $10,000, but other than that they’re the same thing.

This allocation is, once again, a region-neutral allocation that doesn’t make any strong statement about US performance vs. International equities. And because we have no idea what’s going to happen under a Trump presidency, we will be going with this region-neutral allocation for our Workshop.

Again, if you are bullish on President Trump go ahead and shift some allocation away from VEU towards VTI. Another argument for a higher allocation towards US equities comes from fellow Early Retiree Jim Collins, who writes that because so many US companies are multinationals, you are getting more International exposure than you think through VTI. You can read his very good article on it here:

If you buy either argument, you may want to pivot towards US equities like so:

Vanguard Total Bond Market ETFBND40%
Vanguard Total Stock ETFVTI40%
Vanguard FTSE All-World ex-US ETFVEU20%

But again, if you take a position one way or another don’t move too far away from a neutral stance so you don’t get blown up if you’re wrong.

Next Week

OK so now that we have our ETF picks ready to go, next week we will discuss our buying schedule. Namely, we will discuss the impact of lump-sum investing versus Dollar-Cost-Averaging as it relates to the current investing environment, after which we will schedule our first purchase.

Questions? Comments? Let’s hear it in the comments below!

Or…continue onto the next article!

91 thoughts on “Investment Workshop 3: Picking Your ETF’s”

  1. Nice workshop post Wanderer.

    Do you believe currency exchange rates will have a significant affect on your U.S. asset purchases?

    From an American’s perspective, the CAD looks pretty cheap right now. Canadian dollars haven’t been this cheap in a decade.

    But that also means U.S. based assets are expensive for Canadians.

    1. My response to your question about the future direction of CAD/USD is a qualified “I have no idea.” Forex is a whole other ball game that I don’t have much experience with, so I maintain a neutral position on that. For that reason, none of the ETFs I picked are currency-hedged, because that would be taking a position on CAD over-performance that I’m not prepared to take.

    2. I have a question. Which ETFS are you guys using now?
      I would like the most up to date list? I live in Canada so which Index Funds can I invest in?

    1. No. That portfolio is the one I’m using now that I’m retired, in which I deliberately pivoted towards riskier but higher-yielding fixed income assets. The portfolio we’re building in the Workshop is for people in the Accumulation phase of their journey, meaning people who are still working and trying to build up their portfolio as quickly as possible. We can expect a yield of around 2% for this.

  2. For the Canadian portfolio, why did you choose a US etf that was not hedged? Also, do you keep any of your investments in US dollars at all? Thanks.

    1. Great catch. Boy, we’ve got some smart cookies on this blog šŸ™‚

      Because the underlying assets are priced in the currency of that country, adding CAD hedging is taking a position of “I believe the CAD will outperform the USD.” I have very little forex experience so I’m deliberately taking a neutral stance on which currency will outperform the other. Therefore, all ETFs are currency-unhedged.

  3. Something is concerning me about your allocations, and that is that you haven’t diversified your “bond” exposure more. Is it that you wanted to keep it simple or that you really wouldn’t have spread out your 40% further?

    The Canadian portfolio appears to have all Canadian bonds, no bonds from the US (VBU) or anywhere else (VBG) and they largely appear to be government bonds. No corporate bonds (XCB), no REITs (VRE or CGR), and no Preferreds (CPD or PFF).

    The US Portfolio is similar though the ETF there has a slight diversification of territories the bonds come from.

    1. If you live in a politically & economically stable economy, a bond is a bond is a bond. Canada’s bond yields are not that different from the US’s, so investing in US bonds is taking on a foreign exposure risk for no good reason. Higher risk bonds like corporates and preferred are fine too, but for someone still working and building their portfolio for the first time, simple is better.

      That being said, if you happen to live in a country whose bonds are really different than the US’s, investing in more foreign bonds may make sense. If I were a Greek investor, I wouldn’t be going domestic any time soon.

    2. IMO, it is important to remember that the purpose of the “bonds” portion of your portfolio is to provide stability and reduce volatility–the purpose is generally NOT to increase return. Therefore diversification is really not necessary (and as Wanderer mentioned, could expose you to currency risk which actually increases volatility, exactly the opposite of what you want it to do). It’s easier just to keep the fixed income portion as simple as possible.

  4. Miscellaneous notes:

    1. I wish they had a class like this back when I was in college. Granted, college students usually don’t have any money to invest. But this is an important skill to learn.

    2. Could you discuss how the dividend/distribution from these funds is reinvested?

    3. I would suggest including MER info here as well, though that info can be found easily. And also discuss exactly how they deduct those fees from the account.

    4. I (in the USA) have a Scottrade account instead of TD Ameritrade account. But I guess that doesn’t matter, as those funds are also available through Scottrade. (Coincidentally, Scottrade just merged with TD Ameritrade. Not sure when the deal will get finalized.)

    1. I’m invested 100% in VUN. I’ve lost about $50 since I invested. So much volatility. Should I pull my money out? Just kidding haha. Keeping it in there for years. I wouldn’t be shocked if my investments tank for the next 4 years. Will keep addding to it monthly, regardless.

    2. Dividends will be deposited into your account as cash.

      As for MER’s, they will be paid for from whatever you make from your fund. If the ETF made 1%, and the fee was 0.1%, you will see 0.9%. That’s why you want to make sure the MERs are as low as possible.

      Don’t know a thing about Scottrade, but make sure you won’t pay any commissions to trade. I don’t want your money to disappear in fees.

  5. VTSAX doesn’t require “each purchase” to be $10,000. You just need to have a minimum of $10,000 invested in the Vanguard Total Stock Market Index funds before you get access to the lower cost Admiral Shares. You can get started with the Investor Shares with a minimum investment of $3,000 (VTSMX). The only difference between VTSMX and VTSAX is the expense ratio. The “Investor” class has a expense ratio of 0.16% and the “Admiral” class has an expense ratio of 0.05%.

    So, if you’re just getting started, you can put $3,000 into VTSMX and then add as much as you can (in any increment, $400, $1000, $10, etc.) until you reach $10,000 when Vanguard will automatically switch you over to the cheaper version “Admiral” class (VTSAX). From there, you can continue to add to your investment in any increment.

      1. An ETF you normally have to pay commissions to buy/sell while the mutual fund you don’t. And VTSAX requires at least $10k invested.

        Of course, since we’re using Questrade and TD Ameritrade as our brokers who don’t charge commissions for trading these ETFs, you get no advantage from using VTSAX over the ETF.

        1. Great investing series, big fan of index investing and vanguard. I think if I was starting out with 10K, I would go with VTSAX over the ETF. It eliminates the bid/ask spreads risk

  6. I like your argument that lessening exposure to the US isn’t useful/possible in The Time of Trump.
    But what about decreasing exposure to stocks, and increasing to bonds? Maybe not if inflation goes nutty?

    1. You base your equity/fixed income allocations based on timeframe and individual risk tolerance. That’s it. If you try to swing in/out of equities based on the news, you’re actively trading and that shit doesn’t work.

  7. I am trying to follow along from Australia and these after some research I found the following ETFs to mirror your portfolio:

    Bonds (40%) VAF – Vanguard Australian Fixed Interest Fund
    Australian shares (20%) VAS – Vanguard Australian Shares Fund
    US shares (20%) VTS – Vanguard U.S. Total Market Shares Index ETF
    International shares (16%) VGS – Vanguard MSCI Index International Shares
    Emerging markets (4%) IEM – iShares MSCI Emerging Markets Fund

    Is there a way to check if the products by Vanguard and iShares in different countries track the same indexes? i.e. is there a way to check if the VTS offering by Vanguard in Australia tracks the same US companies as the VUN you are using in Canada? I want to try to find the equivalents of what you are going to buy in your Canadian portfolio and I’m wondering if there’s a way to check this?

  8. 2 Questions:

    1) Why did you decide to go with 3 ETF portfolio (for the International portion) as opposed to just owning VXC (Global ex Canada)?
    I understand that,that way, you’re more flexible in terms of rebalancing and can increase/decrease your exposure to the US/Developed/Emerging Markets the way you want (as opposed to owning a big black box).
    But other than that, does it really make a difference?
    I ve been thinking about this over the last few weeks and I m still not sure.
    I know that CPP is pro-VXC and that Justin (PWL) prefers the 3 ETF model.

    2) What do you think of the experts who pretend that the 60/40 is dead?
    I know you had this 60/40 portfolio and it worked fine for you over the last few years. But with the current Bond and Stock markets, don’t you think it would make more sense to increase the equity exposure. Basically, wouldn’t the 60/40 of yesterday be a 80/20 or 70/30 today?


    1. Additional flexibility is the only reason we’re not using VXC. If you look at the regional holdings of VXC, it’s 55% US/45% international, so not too different from a region-neutral portfolio. Feel free to use it if you’re fine with this blend, but if you do you’ll lose the ability to adjust those allocations in the future.

  9. Hey! Looking over the PWL Model ETF Portfolio table at the top of the article, one thing strikes me as particularly crazy and out of sync with the basic principles of risk/return – over 20 years, the 30% equity 70% bond portfolio delivered a GREATER annualized return than the 100% equity portfolio. In fact the whole table doesn’t seem to illustrate that basic principle very well (on the longer-term investment time frames), it all looks kinda off in terms of the risk/return ratios…am I missing something entirely?!

  10. Yeah that’s because those are the results for a single 5/10/20 year investment period ending in June 2016. You see the variance in effects if you were to take a 20 year window and slide it backwards through history and see how the ending balance changes depending on time period.

    The efficient frontier graph I had in the last post shows this, but for another view we can use FireCalc.

    Here’s the results of a 30-year sliding investment window with a 60/40 portfolio. (click “Submit” on the right, I’ve already filled in the parameters with that link)

    You can see with a starting $100k portfolio, the ending balance at 30 years varies between around $100k (if you were unlucky) to around $850k (if you were lucky), with an average of $428k.

    But with a 100% equity portfolio, you get a much wider range:
    Now, the min/max is $100k to $1.6M, with an average of $667k.

    Play around with that calculator and you’ll see the effects of higher equity allocations.

    1. Great tool – and thanks for sharing all of this – I’m really learning a lot. It’s really generous and awesome of you! Thanks :))

  11. I love this, Wanderer.
    I appreciate the Canadian Couch Potato’s simplicity of VCN & VXC, but our VXC’s took a long time to break even and show a profit. (We have multiple portfolios for our family, and our kids’ RESP is mostly VXC.)
    Meanwhile, VUN skyrocketed as the engine of our collective portfolio.
    I believe there are a few things going on. First, the US market is super hot right now. That happens. It doesn’t mean it’ll go on forever. Andrew Hallam, author of Millionaire Teacher, pointed out that overseas markets were more profitable for one decade, and the US has been more profitable for the following decade, so you need to be ready to capture the wave, no matter where it rises, and the way to do that is to have a balanced portfolio, as you do.
    Secondly, VXC has a higher MER. It’s a drag on profits.
    So I have a print-out of the PWL portfolio, and it does guide my buying, although I don’t follow anything slavishly.
    I have to admit, I trimmed our VUN the summer before the US election, so we have too much cash right now, and we missed out on some of the wave. Now I’m more a believer in “Timing IN the market is more important than timing OF the market.” But I’m someone who has to try things out first instead of only reading about it.
    Thanks for doing this. You two ROCK.

    1. Yeah that’s another advantage of splitting out the regions. You can see which region is outperforming the other, and you can decide to do something about it instead of just staring at the monolithic VXC and tapping your foot impatiently.

      And everyone who tried to play the US election got surprised. Even we were surprised it didn’t plummet after Trump won. Guess that shows you how hard it is to market time, huh?

  12. Ok, today was payday and I’m ready to start my contributions!! I just had a question; I have lots of contribution room in both my RRSP and TFSA (which I have recently opened on Questrade). Based on your article, “How to Pay No Tax on Your Investments” I assume that the ideal way to allocate my purchases would be such:

    Vanguard Canadian Aggregate Bond Index ETF
    Vanguard US Total Market Index ETF

    Vanguard FTSE Canada All Cap Index ETF
    iShares Core MSCI EAFE IMI Index ETF
    iShares Core MSCI Emerging Markets IMI Index ETF


  13. Do you recommend Canadians to hold US ETFs? Or is it much better if we buy the Canadian equivalent?

    Ah I like the 3 fund better just because it’s only 3 haha

  14. Great article! I put in an order today for VTI on TD Ameritrade and noticed that VTI is one of the “No Commision” ETFs you can purchase. That means you pay no trade commissions! BND and VEU were also on the list. Only condition is they must be held for at least 30 days (which should not be a problem, we are long term investors here) or you will be hit with a short term trading fee of $19.99 per transaction if you sell before that time.

    1. So what allocation did you end up with? I am curious what allocation people went with in TD Ameritrade.

  15. Hi, just a quick question on allocation. If you were to do a 30/70 allocation what would your shares be split into as it doesn’t divide as well? Would it be

    30% Bonds
    30% CA Equities
    20% US Equities
    16% Int’l Equities
    4% Emerging Markets Equities

    You mentioned having all your Equity allocations as equal means you’re not making a statement about any region. In that case if you’re splitting like the above example does that extra 10% in CA over US matter a whole lot?

  16. Hey,

    Quick question on the Vanguard U S Total Market Index ETF (VUN). I am wondering why did you guys choose to invest in VUN instead of Vanguard S&P 500 Index ETF (VFV). Over the past 5 years, the gain for VFV is around 136% compared to 89% for VUN. Plus the M.E.R is also lower for VFV.

  17. Hi.

    I read this article a while back when it came out and I have a question that been nagging me for a while.

    Why are you going with a 20% Canadian equities allocation? Specifically, why are you having a home bias? Is there something about having a stake in the economy for which your citizenship is tied to? Is there something about the Canadian economy (equities returns) that is particularly good compared to other global regions?

    Just because we live in Canada doesn’t mean we have to invest heavily in it. Why isn’t Canada just bundled in with the ‘developed world’ index?

    Should an English or German investor (comparable Western stable economies) change the 20% of Canadian allocation to their home country while keeping the 20% US and 20% Global exposure?

    Looking at data since 1988, A German investor under this assumption would significantly outperform the Canadian one (over the last 20 years the DAX returned almost double the TSX). And, most of all, the US total market returns would be double the Canadian, so why not just go with a 30% US and 30% rest-of-the-world (divided between developed and emerging)?

    What is it about the Canadian equities market that warrants a 20% allocation of our investment?

  18. I recently heard you on ChooseFI and have started following this course here, just finished opening my Questrade account and am ready to start buying. My question is related to the fact that the information here is from last year. Do I need to do research and choose different ETFs or can I follow what you presented here, the same ETFs you chose last year? I have no experience.

    1. Hi and welcome to the course!

      No, you don’t need to pick different ETFs. We are using a buy and hold strategy so we plan to hold these ETFs for the long term.

  19. Thank you for posting all this valuable information. Would you be able to share the portfolio you are currently invested in since you’ve retired. Much appreciated.

  20. HELP! I am completely new at this and BND, VTI & VEU are not on the commission free ETF list for TD Ameritrade. Did something change? Should I use 3 different ETF’s? I am completely clueless about this stuff so I appreciate all the information. Thanks

  21. The closest fund equivalent of VEU I’ve found is VTIAX. Is there another index fund that I’m missing which is closer to the FTSE All World mojo? Reason I’m going the fund route is TD Ameritrade has what’s called systematic investments which are commission free for funds once you have them set up and then I can just specify dollar amounts instead of figuring out # of ETF shares needed each month in order to maintain my 60/40 ratios.

  22. Just started this workshop. I am unable to link my questrade account to personal capital. It says canadian institutions not supported…

    1. If you’re Canadian, just use Questrade. PC doesn’t provide good support for Canadians, unfortunately.

  23. Wow this is really fantastic guys. Thank you so much for sharing. I feel inspired, but Iā€™m totally new to all this. Iā€™m from the UK, advice where to start? Vanguard also?

  24. Loving your articles and blog so far!! (Canadian Investor) I’m wondering about holding the US ETFs vs the CAD ETFs of the US Total Market/S&P 500… (VTI/VOO vs VUN/VFV)

    From what I’ve found on foreign withholding tax, the ETF’s need to be in USD in order to be exempt. I’m not sure about Questrade, but I have accounts with Q Trade and each dividend payment is converted from USD to CAD upon deposit. What is your opinion or stance on this, considering the current exchange rate of ~1.35 to buy initially and then for each dividend payment vs the 15% withholding tax if just owning in CAD? Hopefully that all made sense…

  25. Hi, Canadian Couch Potato updated their ETF model portfolios again with now only 3 ETF Index funds. They seem to have fairly good reasons for doing so, but I was wondering if you guys could take a look and determine if you would still find that the old portfolio that you’re referring to in this blog is still preferred according to you?

    Thanks so much!

    1. I am interested in the exact same question as I just about open up a Questrade account and begin this workshop. Would you select the exact same funds in the workshop today?

  26. Thanks Wanderer, however it looks like these will only work for TFSA and not RRSP due to the cash withholding tax from US. In order to use these for RRSP’s would you not have convert the money first to USD using Norbert’s Gambit?

    Do you have any advice on using Questrade for RRSP’s with the most tax efficient route?
    Why does PWL’s model portfolio have separate funds allocations for RRSP vs TFSA?

    1. Correct. In the narrow case of US Index ETFs that are held inside your RRSP, converting to USD first and then using a USD-listed ETF is a bit more efficient due to the dividends being exempt from withholding taxes, but I wanted to keep this simple and not overwhelm people with details.

      You’re right though. If you don’t mind doing the extra step, holding your RRSP US holdings as USD-denominated ETFs does help a bit.

  27. I’ve recently opened a Questrade account and have been working my way through your workshop. Noticing the most recent comments, I’m also curious as to why you are still recommending a different mix of ETFs than the Canadian Couch Potato model portfolios, while CCP is recommending just the 3 ETFs. As your original post is about 3 years old now, an update post would be very helpful for all the newbie DIY investors like myself, thanks!

    1. Love the blog, pre-ordered the book, and big fan of JL Collins simple Total Stock Market fund approach. But I find myself also very attracted to Paul Merriman’s concept of diversifying across asset class index funds. Such as instead of being in just VTSAX, to divy up as he does in his ultimaye balanced portfolio articles. I love the simplicity of just VTSAX but cant deny that increased gains demonstrated by merriman. Do you guys have any thoughts on the pros/cons of merriman’s approach? Im very open minded and just eager to learn. Thanks!

      1. I think at the end of the day, you can’t go too wrong with either approach as long as you are investing in low cost index funds. Some may prefer the easier one to two fund approach, others (like us) may want to add some international explosure. It’s totally up to you.

  28. 1. LOVE you guys and this invaluable blog!
    2. I followed this investment workshop and have a 70/30 allocation of BND, VEU, VTI.
    3. I’m a fan of Warren Buffet and recently stumbled upon this 2013 shareholder letter which stated that: “he would instruct the trustee of his wife’s bequest to invest 90% in an S&P 500 index fund.”

    My question to you is: Many are saying SPY/VOO are the ETFs Warren and many others recommend as the best. I don’t know a lot in regards to investing so the 3-fund portfolio recommended on here seemed like a solid plan! (And I still think it is – I am up $400 since I started this in February of last year). Is this 3 fund portfolio we are using the same as, better, or less than this SPY/VOO ETF? I am a little lost on the differences between our portfolio and a sole investment in SPY/VOO….

  29. This is so helpful! Thanks for all the great questions everyone.
    I have been investing for a few years, unfortunately using much riskier techniques and methods. However, by sheer luck I have been beating the market for the past 3 years.
    After reading your book I started selling my individual stocks and buying…

    Vanguard Canadian Aggregate Bond Index ETF – VAB
    Vanguard US Total Market Index ETF – VUN

    Vanguard FTSE Canada All Cap Index ETF – VCN
    iShares Core MSCI EAFE IMI Index ETF – XEF
    iShares Core MSCI Emerging Markets IMI Index ETF – XEC

    My 3 questions are as I am 45 years old and will retire with a full pension at age 55 can I still keep some of my winning stocks in my non-registered accounts as they are up by more 400% and I’m playing with the House’s money?
    Would you recommend buying larger positions of the above investments all at once or over time as I already have the cash in my Questrade account?
    I have lots of room for my RRSP and TFSA contribution limits so can I borrow against my homeline credit at 3.8% (I own my home with no outside debt) to max out my contributions and grow my investments?

    Thanks in advance and look forward to learning more.

  30. Just wondering in the CAD portfolio you pick the VUN? Why not VOO or SPY is the total market fund better in some way?

  31. Pingback: ETF | kwhui
  32. Your table says VEU but the paragraph after it say VXUS for the developed and emerging markets. I’m assuming this was because of a revision?

  33. Hi Kristy and Bryce: saw you on YouTube, heard you on Podcast, read your book. Now I am doing it! Thanks so much for paving the way towards FI! Please have a book signing in TO soon!

  34. Any advice on what to do when moving from country to country?

    I currently live in Jamaica and plan to move to Canada in about 9 months time. I have found a couple of Jamaican online self-directed brokerages but they only seem to allow investment into US funds.

    Should I start investing here or wait until I re-establish residency in Canada?

  35. I’m new to investing, but it seems you have been wrong about Trump’s presidency having a negative affect on the US economy. At the time you wrote this, was this the consensus of wall Street? What do think now? I am interested to hear, and please don’t interpret any hostility in my writing. There is none. Your information makes me want to give this a try.

  36. Hi, in the Philippines , there is only one index fund etf, with expense ratio of 0.5%, and the lowest expense ratio bond mutual fund is at 1.18% . In this scenario, does 4% rule still apply. if not where should I adjust thanks

  37. Thanks Wanderer and FIREcracker for all this great info.

    Now that Wealthsimple offers no fee transactions on both buying and selling ETFs, is there a reason you would recommend Questrade over Wealthsimple?

    A second question, assuming a 60%equity/40% fixed income investment strategy, why would I purchase the 5 ETFs listed in the article when I could just purchase VBAL and get roughly the same asset allocation with no worries about rebalancing?(see link to Canadian Couch Potato:

    Thanks in advance for your input.

  38. I have a question which ETFS did you invest in? The list and I plan to let it grow for about 15 to 20 years before I retire? I’m from Canada but it’s not clear which ETFS to choose? I bought your book’but didn’t finish reading yet? Are there changes to your list?
    I want to thank you for letting people get financial education!!

  39. Hello Kristy and Bryce!

    Thank you for your book and blog! I’ve learned a lot. Not sure if this has already been addressed elsewhere, but what are your thoughts on the new all in one ETFs like VGRO and XGRO? I am in my early 30s and have a ten year+ investment window. I was told that with either one of those ETFs, I can “set it and forget it.” Are there any drawback? I’d love to hear your thoughts!

    1. Or VEA for that matter, which excludes the developing world and has been doing better overall in the past decade (about +1% yoy returns vs. VEU). I suspect eventually the bet on the developing world will pay off, but the horizon for that may be too far for those approaching retirement in 5 years or less.

  40. Hi guys, first I just want to say I am forever grateful for this blog as it finally pushed me to start investing!

    I have a question. I would like to know your thoughts on investing in the same ETF on the Canadian vs American offering.

    For example, VUN.TO has an expense ratio of 0.15%. VUN.TO is simply a wrapper for VTI, which has an expense ratio of 0.03%. They are both available on Questrade.

    Is there any advantage for Canadians to invest in the first one over the 2nd one? Does it have to do with exchange rates, or something else?


  41. 1. Does this site ever update? I’m questioning the relevance to The 2020 investing scenario.

    2. I’m sorry that you hate Trump. I think he did a great job with our economy and if you had been heavily weighted in US ETFs you would have come out way way further ahead.

    Thank you. I still love your articles by the way.

  42. Sorry if someone already asked this question, I’ve chosen a portfolio that is market-cap weighted for the equities, and not a region neutral one. I live in Canada, but still giving 20% weightage to Canadian stocks same as US and international did not make a lot of sense, unless the goal is to save taxes on dividends, but that might entail sacrificing on returns. So, I ended up going with the EAFE approach (as they do for countries) of market-cap weighted allocation, 34% US, 20% Developed, 6% Emerging. Thoughts? Thanks a lot for sharing your financial journey and has immensely helped me to figure out my path towards financial independence. Cheers

  43. HIII,

    Looks like the Canadian Portfolio Manager Blog changed the portfolio models. They now have a wider range of ETFs than when you made your portfolio. They now have 3 types of bonds and 4 types of stock (when you choose a ‘light’ complexity). Also the Ishares and Vanguard are not combined in one portfolio type – they are seperated. Just curious of your thoughts on this. Do you think it’s better to have a wider portfolio? Also, the MER has nearly doubled since your example! Is that just inflation, or what do you think is going on there?
    Really appreciate your work! And I loved your book! — such an inspiring rags-to-riches story!

  44. Hi! I recieved your book as a gift from a friend and it’s been the best thing I’ve read!

    I’m very new to all this and I’m wondering – I noticed that Vanguard VGRO has a 60eq/40fi allocation that you are aiming for with your ETF picks. Since this is all in one ETF, would it be the same to just put your money into VGRO and let them do the rebalancing?

  45. Thanks for your service to help others reach FI.

    Can you please suggest for EU residents? I reside in Germany and I’m not clear selecting Bond fund. I intend to invest 11-14 years horizon in the following 2 funds on a monthly basis:
    * 80%: Vanguard FTSE All-World UCITS ETF USD (Acc) – VWCE
    * 20%: iShares Core Global Aggregate Bond ETF Eur Hedged

    While I have received good advise on selecting equity ETF based on research but I dont have same inputs to do my own research to select bond funds. What are the things to look for before selecting a Bond fund?

  46. Quick question – for Canadian investments, why do you prefer VCN over VFV? Is there a particular reason you selected VCN and not VFV?

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