Can you help me out. Is it possible to hold VBR or VTI within my Canadian RRSP account?

All of my choices are based on what I’ve read from your website, but perhaps my conclusions are funny to some but as a novice investor (no previous experience) I chose what I thought to be logical, but please feel free to share your opinions.

1st off, I don’t hold anything today, so why did I think it best to hold XIC & XIU?;

1 – I see that you like XIU because of the low MER & I also noticed in your RESP post you like to put 30% in Canadian Equity (which I’ve come to the conclusion these are?)
2 – Other posters explained why they prefer XIC (and they allocate 20%) So I thought 10% XIU & 20% XIC was a good compromise, but maybe not…

VBB (US small cap) & VRB (US small cap value) where what Ryan listed higher in this post which I assume are (US Equity) which you also like to allocate 30% to.

As per XRE, guess I missed the boat on that one, but it was also taken from Ryan’s portfolio.

Though I try to be informed about finances I guess the old saying (knowing the path & walking the path are 2 different things) stays true to me. I thought it might be a good time to get my feet wet & join the game.

I’m also thinking of waiting till mid October before I do any buying, after reading your last net worth update I decided to search the internet about a possible market correction in Sept. & Oct. & it sounds like there might be a drop of a good 10% (any thoughts?) I’d hate to jump in and instantly loose 10% on my investment…

I recently visited http://finance.yahoo.com/etf to try and track down the ETFs in what could possibly become my 1st portfolio, but I wasn’t able to find all the ETF symbols (including VRB nor VBB) & there are others like VEA which don’t even look like they’ve made any money since they began & I wonder why someone would like this one… is it because it pays dividends?

What would be nice is if there were an article for someone who is just starting out who knows they will never be a REAL stack trader & believes in ETFs. With a few pics of what one should choose & if they wanted to get into the market, should they start now? or wait till mid October in the event of a market adjustment? & if he/she wanted to invest all year, should he/she open an account with TD to buy e-funds by-weekly following your RESP strategy & sell them off each year to buy more ETFs.

Thanks in advance ;-)

Seems like it would be a good choice to “plunk” a few thousand into ETFs into your TFSA in 2010…

As well, what is VBB and VRB?

One more note, XRE covers REITs which aren’t considered fixed income. It acts more like an equity than fixed income.

Great discussion. Honestly I frequently read about finance, but have been a little slow jumping into the pool. I’ve taken my first steps in opening a discount brokerage account with Questrade thanks to MDJs article.

So the plan is to buy ETFs now (and once a year thereafter) and continue to buy group RRSPs at work which I plan to open an account with TD to buy e-funds by-weekly following FTs RESP strategy & follow Ryan’s suggestion to sell them off each year to buy more ETFs.

I know I’m not starting out with much (just a little over 15K) but I think it will be the least amount I will be contributing each year & I believe we may be selling our house soon (which means I may pay back the money from the HBP of 40K between my wife & I)

By mixing & matching info I’ve gathered on many MDJ threads I will probably shoot to allocate my money as follows (though I’m an avid follower of MDJ I will make an excellent couch potato candidate since I don’t really follow the markets all that much):

Canada – total 30% $4,500
20% – XIC $3,000
10% – XIU $1,500

US – total 30% $4,500
20% – VTI $3,000
5% – VBB $750
5% – VRB $750

Internat. – total 30% $4,500
20% – VEA $3,000
10% – VWO $1,500

Fixed – 10% $1,500
5% – XSB $750
5% – XRE $750

Any feedback would greatly be appreciated. Maybe buying so many different stocks/ETFs is ill advised with such small funds? or I’m really missing some fundamentals? I just don’t know… I read the article about when’s best to switch from e-series to ETFs, but then with many other comments (like Ryan mentioning that buying everything all at once can really cut down on the costs) & ETFs low MER over the long haul, I thought it might be best just to jump in!

I’ve also been thinking about investing inside of a TFSA & have also been thinking since I plan to join the OPP in the near future (with an amazing pension plan) I should consider cutting back a bit on investments inside my RRSPs. Any thoughts?

I’m researching to replace many high MER funds with an asset allocation for long term investing and rebalancing once a year. I’m already using ETFs in my son’s RESP, but I’m currently wondering if I’m not going to buy individual stocks instead of ETFs given the somewhat large dollar amount that’s going to go in index ETFs.

I’ve read that a good diversification is attained for an allocation class with “only” 20 stocks. So lets say you have 100,000$ to put in one sector (for example large caps canadian stocks), that would mean 5000$ per stock with a 10$ commission (0.2%) and no other fees (except when selling of course). For a long term buy and hold investment, saving fees charged by ETFs would be a bonus at the expense of additional research on my part (even though I must admit these fees are tiny compared to what we were paying before).

I’m also not considering buying bond ETFs, but investing directly into bonds to build a bond ladder.

I’ll probably consider ETFs for overseas investments though. It will just be easier that way.

Essentially, how big do you think a portfollio should be before buying individual stocks makes sense? Or do you think picking stocks individually is not worth the trouble giving the low MER of ETFs?

One advantage I see for individual stocks is that you don’t have all your eggs in the same basket, namely the fund company.

So what do you think?

Instead of VEA, what about XIN which trades on the TSX? Pros and cons?

thanks

thanks

I typically use a couple of pie charts
- one based on asset classes (equity vs. fixed income etc.)
- next based on breakdown within those assets (large vs. small cap, sector allocations etc.)
- finally. one based on regional allocations (Canada vs. US vs. Emerging Markets vs. EAFE etc.)

Just draw these out, then slow decide how to fill each of those categories by comparing various ETF’s offered by different companies. Make sure the indexing method is accurate, make sure it isn’t particularly biased (e.g. market cap weighted indices etc.).

Good luck!

It’s possible to get into specific commodities, such as oil (USO), natural gas (UNG), agricultural commodities (DBA), and precious metals (XME), to name a few. Still, unless you have reason to be particularly bullish on any of these I’d recommend the far more diversified GSG.

As far as currencies are concerned, I recommend adding a selective group to your portfolio using ETF’s: FXE, FXF, FXC, FXA, FXM, FXS, FXY, and FXB. I’ve written a more detailed article on how to choose the right currencies: http://www.thefreedomfactory.us/portfolio-considerations-for-currency-investing/

Two things to consider are how currencies correlate to other assets in your portfolio, namely stocks and bonds (and hopefully commodities), as well as relative income yields. Currency ETF’s pay dividends that are representative of interest rates in their respective countries. It would be prudent to add currencies that have both high yields as well as negative correlation to major assets currently in your portfolio.

Meanwhile, RBC recommends the following asset allocation in its Summer 2008 edition of Direct Investor. Unfortunately, they do not make Index fund recommendations, only asset classes.

Growth Aggressive Growth
Cash 4.1% 3.3%
Fixed Income 19.5% 0.0%
Canadian Equities 23.8% 34.3%
US Equities 31.8% 33.2%
Int’l Equities 20.8% 29.2%

The big difference between the two seems to be the CIBC thinks that oil is going to rise to $200/bbl and therefore has placed heavy emphasis on big energy producing countries like Canada, Russia and Arabia. It also likes the trends in the economies of Brazil, China and India.

RBC, on the other hand, thinks that US stocks are really undervalued now, and has placed heavy emphasis on US equities.

Weighing yield
To distinguish themselves from their competition, dividend ETFs put together their portfolios in different ways. Let’s look at some of them:

The WisdomTree LargeCap Dividend Index Fund (DLN) uses a simple approach, choosing the 300 largest stocks from its dividend index and weighting them by the total amount of dividends each company pays.

The iShares Dow Jones Select Dividend Index Fund (DVY) includes dividend-paying stocks that have maintained or increased dividends in each of the past five years, have a payout ratio of 60% or less, and trade an average of at least 200,000 shares daily.

The PowerShares Dividend Achievers ETF (PFM) screens for companies that have increased dividend payouts for at least 10 straight years and then chooses the highest-yielding stocks among them.

The SPDR S&P Dividend ETF (SDY) picks 50 high-yielding companies that have raised dividends consistently over at least a 25-year timeframe.

The First Trust Value Line Dividend Index Fund (FVD) uses Value Line’s safety rankings to screen for stocks it deems safer than average and then takes above-average dividend yields with market caps of more than $1 billion. Unlike most other dividend ETFs, this fund gives each stock equal weight in its portfolio.

Again all american, but there is some good info as to the differences in the various etfs.