Investment Workshop 46: Shortened Chautauqua Edition

Wanderer
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Wanderer

The Wanderer retired from his engineering job at a major Silicon Valley semiconductor company at the age of 33. He now travels the world, seeking out knowledge from other wealthy people, so that he can teach people how to become Financially Independent themselves.
Wanderer
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Hello again and welcome back to the Millennial Revolution Investment Workshop! New readers, please click here to start from the beginning.

Hi all,

Today will be a shortened article. We are still at Chautauqua, and on top of all the kick-ass awesomeness that’s going on hanging out with all these awesome FI people, our Internet connection here in Ecuador is…well let’s just say this post took me 2 hours and multiple attempts to post. So hopefully this goes through eventually. Eep.

But even though we’re in Ecuador that doesn’t mean our buy schedule changes. We will now be performing our regularly scheduled buys. We’re actually starting to get close to the end of a full year, so I’m excited to step back at the end and see how we’ve done.

Canadian Portfolio

As always, we start with a snapshot of the portfolio after adding in our cash…

Asset Ticker Unit Price Units Market Value Allocation Target Allocation
Canadian Bonds VAB $25.09 172 $4,315.48 38.24% 40%
Canadian Index VCN $31.96 67 $2,141.32 18.97% 20%
US Index VUN $44.60 48 $2,140.80 18.97% 20%
EAFE Index XEF $29.95 58 $1,737.10 15.39% 16%
Emerging Markets XEC $27.16 16 $434.56 3.85% 4%
Cash $1.00 516.38 $516.38 4.58% 0%

Next, we figure out what to do to get back to our target allocation…

Asset Ticker Target Allocation Unit Price Current Market Value Target Market Value Current Units Target Units Difference
Canadian Bonds VAB 40% $25.09 $4,315.48 $4,514.26 172 179.9 7.9
Canadian Index VCN 20% $31.96 $2,141.32 $2,257.13 67 70.6 3.6
US Index VUN 20% $44.60 $2,140.80 $2,257.13 48 50.6 2.6
EAFE Index XEF 16% $29.95 $1,737.10 $1,805.70 58 60.3 2.3
Emerging Markets XEC 4% $27.16 $434.56 $451.43 16 16.6 0.6
Cash 0% $1.00 $516.38 $0.00 516.38 0.0 -516.4

Finally, we figure out what orders to put in, being careful to not go into margin.

Asset Ticker Unit Price Action Fractional Units Units Proceeds
Canadian Bonds VAB $25.09 BUY 7.9 8 $200.72
Canadian Index VCN $31.96 BUY 3.6 4 $127.84
US Index VUN $44.60 BUY 2.6 2 $89.20
EAFE Index XEF $29.95 BUY 2.3 2 $59.90
Emerging Markets XEC $27.16 BUY 0.6 1 $27.16
Total $504.82

American Portfolio

And onto the American side. We start once again by adding in our cash and taking a snapshot of our portfolio…

Asset Ticker Unit Price Units Market Value Allocation Target Allocation
Bonds BND $81.85 54 $4,419.90 37.83% 40%
US Index VTI $131.68 25 $3,292.00 28.17% 30%
International Index VEU $53.75 63 $3,386.25 28.98% 30%
Cash $1.00 586.78 $586.78 5.02% 0%

Next, we figure out what we need to do get back onto our target allocation…

Asset Ticker Target Allocation Unit Price Current Market Value Target Market Value Current Units Target Units Difference
Bonds BND 40% $81.85 $4,419.90 $4,673.97 54 57.1 3.1
US Index VTI 30% $131.68 $3,292.00 $3,505.48 25 26.6 1.6
International Index VEU 30% $53.75 $3,386.25 $3,505.48 63 65.2 2.2
Cash 0% $1.00 $586.78 $0.00 586.78 0.0 -586.8

Finally, we figure out our buy orders being careful not to go into margin…

Asset Ticker Unit Price Action Fractional Units Units Proceeds
Bonds BND $81.85 BUY 3.1 3 $245.55
US Index VTI $131.68 BUY 1.6 1 $131.68
International Index VEU $53.75 BUY 2.2 2 $107.50
Total $484.73

And that’s it! We’ll be back next week, where hopefully my Internet isn’t going through a 56 kpbs cheese grater.

WORKSHOP TOOLS:


How much does it cost to participate in this investment workshop? NOTHING. Because that's how we roll. All we ask is that you sign-up using the following affiliate links to keep it free forever:


For Canadians:
Questrade

For Americans:
1) TD Ameritrade
NOTE: Due to their recent changes for their commission-free ETF program, we can NO LONGER RECOMMEND TD Ameritrade. We are currently seeking out a new brokerage to partner with and will let you know when we find one.
2) Personal Capital


Disclaimer: The views expressed is provided as a general source of information only and should not be considered to be personal investment advice or solicitation to buy or sell securities. Investors considering any investment should consult with their investment advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decisions. The information contained in this blog was obtained from sources believe to be reliable, however, we cannot represent that it is accurate or complete.

27 thoughts on “Investment Workshop 46: Shortened Chautauqua Edition”

  1. Last time I was figuring out my buy orders one came up negative. But (at least with questrade) that’s where you pay commission – when you sell. If your target allocation requires selling some units do you wait until the number of units gets reasonably big before actually selling?

    1. Yeah, sorta. In that situation, I typically wait a few DCA periods or two until I’ve added enough cash to the portfolio that I could do the rebalance with only buys. Remember, sells also trigger capital gains tax so you don’t want to do them unless you absolutely have to.

  2. Firecracker,

    I received this Email from TDAmeritrade about changes in the ETF Funds, Can you help how to work with this new changes?
    Basically all the Vanguard ETF Funds are replaced by a set of new ETF Funds and the Vanguard Funds will have trading fee from November 20th.

    Dear Valued Client,

    We’re happy to announce that we are expanding our commission-free exchange-traded funds (ETFs) trading program, nearly tripling the number of available funds to 296. Since you’re currently enrolled in the commission-free ETF trading program, we want to be sure you have all the details so you can determine how these changes can meet your investing needs.

    Updates to Funds List

    We will be replacing most of the ETFs currently on the commission-free ETF list with a broad new selection of ETFs from AGFiQ QuantShares, First Trust Portfolios, iShares ETFs, J.P. Morgan Asset Management, PowerShares by Invesco, ProShares, State Street Global Advisors’ SPDR Business, and WisdomTree Investments. These new ETF choices will be available in the ETF Market Center beginning October 17, 2017.

    Current ETFs will remain on the commission-free list through November 20, 2017. Beginning November 21, 2017, they will trade at our standard low commission rates.

    The new list will provide access to low-cost ETFs in the same asset classes that the current ETFs provide, along with several new asset classes. If you choose to replace any current position on the commission-free list with an ETF from the new list by November 20, 2017, you will not be charged commissions for either trade.

    Additional Program Changes
    New 30-Day Margin Rule: All new ETFs on the commission-free list cannot be used as collateral for a margin loan, nor can they be included in margin equity for 30 days after purchase.

    Lower Short-Term Trading Fee: We’ll be lowering our short-term trading fee from $19.99 to $13.90. This will only apply to ETFs held less than 30 days. This new fee will go into effect on November 21, 2017.

    These changes are part of our ongoing effort to provide low-cost investment choices that can help you pursue your financial goals. We’re glad you chose TD Ameritrade, and we’ll continue doing all we can to improve your trading experience.

      1. Do you know where I can find a complete list of commission-free ETFs at TDAmeritrade, for post November 20?

        I wonder if there are any equivalences for VTI and VNQ in the new commission-free list.

    1. XAW is a good option, but I like the ability to be able to shift between US and EAFE/Emerging. Nothing wrong with XAW though, I think you can’t go too wrong with that.

      1. i also used to think the same but now i do prefer the passive investing idea .. because experience now shows me that no one ever knows what is coming next , the experts mostly get the predictions wrong .. . so for this reason i prefer to snooze and keep invested .. over the long run it will work and i can sleep without worry ..

  3. In “The Boglehead’s Guide to Investing”, it is recommended that you don’t rebalance your portfolio that often, since it can result in more capital gains taxes. I don’t have it in front of me, but I seem to recall the author mentioned a study that said that rebalancing every 13 months was as effective as rebalancing every quarter, and resulted in far fewer capital gains taxes. What is your view on that?

    1. Agreed. Rebalancing in the context of DCA involves only buys, so no capital gains get triggered. Once you retire like me, I typically only rebalance once a year (unless something major happens in the markets).

  4. I am still not set on completely using etf’s, as the Royal trade fees suck. You pay going in, you pay going out. Will wait and see how much is the overhead in fees, but seems to me making a buy order for $107.00, is not cost efficient. My minimum trade, is $1000, else I just let it sit in cash until I am ready to make a purchase, in fact I have over $5000 in cash right now, ready to access opportunities. Most in American dollars to buy into the Nasdaq, DOW, or S&P. I don’t hold any bonds in my self directed. Bonds do not make any money, not in this environment, maybe they will if we have a crash, but that appears several years away right now. I hold my balance of bonds in no load Index Mutual Funds.

    The question I have for FC is, given the high volume of trades, what do you calculate as your MER for both portfolios ? Compared to Index Mutual Funds, how does it compare?

    cheers

    spaceman

      1. Yes, but read the fine print, it costs to sell them. For a rebalance you will have to sell and buy again, and you also pay a MER, (management expense) which is very low with most of these.

        Also you can only buy Questrade ETF’s for free ? Am i reading this right?

        S.

        1. I guess it depends how you re-balance. If you are investing frequently (monthly) then you never have to sell, your re-balancing is done by buying more of whatever you are low on and less of whatever you are high on. I’ve been using Questrade for a few years and only sold when I’ve decided to change my portfolio allocations. The selling fees are reasonable if I remember correctly.

          If you are not investing frequently, you should not be re-balancing monthly due to the fees. You can get by re-balancing annually in reality, in which case you’d only have to sell once.

          The only MER you pay is the MER of the ETF itself, Questrade don’t charge their own. In many cases this is as low as 0.05%. My self-managed globally diversified portfolio of ETF’s has an average MER of about 0.15% through Questrade, and that’s because I hold some higher cost ones like gold and energy. If you go with basic Canadian equity and bonds, it’d be closer to the 0.05%.

          Questrade do offer their own portfolios through their Portfolio IQ platform. This does charge an MER but there is no need to use these, they’re more for people who like mutual funds and don’t want to do it themselves. Build it yourself and there are no fees from Questrade other than a very nominal buying fee (like, less than 1 cent per trade) and a selling fee. As long as you don’t sell too often it’s easily the best trading platform in Canada IMO.

          You can buy any ETF for free in Questrade, without restriction.

    1. Have you been reading through the investment series? I think you’ve missed most of what has been generously shared by our hosts.

    2. i have a RBC DI too . and its a bit expensive . so this past year i opened a Questrade account thanks to this blog . i love it . . i think free buys only pay when you sell . which is rare to rebalance ..

  5. questrade is great , but i don’t like their platform. Give me itrade’s Flightdesk

    use questrade for purchasing f-series funds which i hold a few of (managers i respect and back it with longterm alpha, sharp ratio

    my trading is at itrade

  6. What broker do you use for your American investments? VTI I believe is domiciled in USA therefore you would have to pay state taxes. Arent you worried about it?.

    1. I can’t handle reading rude comments. They post on Wednesday’s! Check Thursday or sign up for the email/newsletter and they will email you when there is a new post.

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