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Rereading some stuff, I guess the true reason to rebalance is to maintain your allocation for the reason you chose that allocation in the first place. http://canadiancouchpotato.com/2011/02/22/why-rebalance-your-portfolio/ explains my mistake and the obvious (in retrospect) counterexample.
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Sep 10, 2016 03:30
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Less Fat Luke posted:Rebalancing though is the act of selling the things that are high proportionally in your portfolio and using that money to buy the things that are low. So saying "The point is to mechanically buy low and sell high." is correct if you are following your chosen allocations. But if you're constantly adding more to your investment (which you should be, if you're doing this for eventual retirement), then you can rebalance by adjusting your injections without ever bothering selling. That's the dirty thing about Questrade in its current state, selling is the one way to get dinged by transaction fees and is therefore very likely not a sound approach to reallocation.
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Sep 10, 2016 04:49
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Jan posted:But if you're constantly adding more to your investment (which you should be, if you're doing this for eventual retirement), then you can rebalance by adjusting your injections without ever bothering selling.
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Sep 10, 2016 05:03
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Speaking of buying and holding for decades, is there any reason more people here don't talk about doing DRIP / Stock Purchase Plans with certificated shares? They have some notable downsides (namely turn-around time, and the paperwork needed for things like splitting off shares) but they have some big bonuses too. For example, most have 0 fees for additional contributions, you can buy partial shares and not just full shares, you can buy the stock often at a small discount (e.g. 2%), and you can reinvest the entire dividend and not just full shares in a synthetic dividend like most trading accounts do for a surprising difference in yield over long timeframes thanks to compounding. Not every company does a DRIP, much less a DRIP and SPP, but the ones that do often have historically good returns. If you use a tool like longrundata to look at the compounded interest returns you get from a stock like ENB or BCE (including dividends and not just the stock price gains), they often have yields of 15% or better. It seems to be something that was used more by older generations, and now if I talk to someone at a bank about them, I usually get a blank look in response. When you're dealing with timeframes of 10, 30, or more years though, a few weeks turnaround for paperwork to get things set up isn't as big of a deal, and you can register the paper shares in a trading account with banks when you get closer to when you want to sell them, to effectively eliminate any difference from any other shares you own. If people wanted, I could go into more detail into how to get them and set them up - there's groups out there that will generally buy you a first certificate for ~10$, and then you're golden going forwards. If you split off another share to start someone else and charge them the 10$ back, your initial share has a 0$ fee to purchase it as well.
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Sep 10, 2016 07:53
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Most people leave their shares in custody with the bank or depositary today, and drips are not as popular as they once were.
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Sep 10, 2016 09:32
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Less Fat Luke posted:Yes agreed with that. However if you aren't able to balance by topping up (for example if you're focusing on an RRSP now instead of a TFSA), rebalancing a single account in a year shouldn't be too expensive. Or if your account has grown so big that regular contributions make up a small percentage of the account and therefore can't keep up. On that note, why is it "annual" rebalancing? Rebalancing in Questrade is fairly cheap, so why not more often? If there's a big dip in the market I'm sure as hell going to rebalance before my due date. Shouldn't there be a rule of thumb, like a percentage of imbalance calls for an ad-hoc rebalance? Especially for registered accounts where there are no tax implications.
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Sep 10, 2016 12:51
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First off: Don't run for the hills, peter banana. Guest2553's main point in all of his (very good) points is that you can get 95-98% of the way there with 5% of the effort. You can decide after if you want to min/max. Birudojin posted:Speaking of buying and holding for decades, is there any reason more people here don't talk about doing DRIP / Stock Purchase Plans with certificated shares? They have some notable downsides (namely turn-around time, and the paperwork needed for things like splitting off shares) but they have some big bonuses too. For example, most have 0 fees for additional contributions, you can buy partial shares and not just full shares, you can buy the stock often at a small discount (e.g. 2%), and you can reinvest the entire dividend and not just full shares in a synthetic dividend like most trading accounts do for a surprising difference in yield over long timeframes thanks to compounding. There are two uses for DRIPs - your example of certificated shares of individual stocks, or Mutual Funds (since you can buy partial shares at no cost). The problem with the latter is that the MERs are usually murder, and so whatever advantage DRIP has is wiped out several times over. The problem with the former is one of the cornerstones of Four Pillars: don't own individual stocks. In Bernstein's analysis, you would need 60 stocks to even hope to mirror the index you were trying to follow, and at that point trading fees would murder you. In your example, if subsequent purchase costs are waived, you still have the problem of how many stocks you would need to own - if you want your 20 US/30 Int/10 Canada split, that's 60 stocks from each index (S&P 500, FTSE, S&P TSX), or 180 individual stocks you have to manage and do that paperwork for. Plus I assume you still have to pay the trading cost to buy all of these stocks, which is not insignificant. The whole upshot of "don't own individual stocks" is that you risk severely under-performing the market if you choose wrong. If ETFs would allow for DRIPs (I can't see why they would, but if) I'm not even sure of the magnitude of the overall benefit. I doubt they would sell at a discount (as do individual companies), and rebalancing your portfolio every year (or two) includes reinvesting all dividend income anyway as part of the process. So you're losing out on immediate, cost free reinvestment of the dividend, which could add up over time, but not to Filet Mignon/Catfood levels of difference. If you own some stocks as part of a diversified portfolio (I do, because I can't stop myself from using a small portion to essentially gamble - go Hydro One!), then it would make a lot of sense to use DRIPs for the share discount alone, though you'd have to keep an eye on it and rebalance to make sure it isn't drifting to far from the percent you allocated for it.
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Sep 10, 2016 13:16
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Rick Rickshaw posted:On that note, why is it "annual" rebalancing? Rebalancing in Questrade is fairly cheap, so why not more often? If there's a big dip in the market I'm sure as hell going to rebalance before my due date. Shouldn't there be a rule of thumb, like a percentage of imbalance calls for an ad-hoc rebalance? The reasoning I've seen for annual is: • Keeps your portfolio out of mind in the meantime, reducing chances of you losing your nerve. • Lower expenses by making fewer trades (even cheap trades). • Any less often and you'll forget. (I think Four Pillars said every two years was ideal, but annual is easier to do right.) Here's a good post in favour of threshold-triggered rebalancing. Keep in mind that the author of that post is allocated 100% stocks, maybe that changes the argument somehow?
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Sep 10, 2016 13:22
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Rick Rickshaw posted:Or if your account has grown so big that regular contributions make up a small percentage of the account and therefore can't keep up. I would guess that annual rebalancing is more about limiting fees than about any strategic timing vs. 6 months, 2 years, whatever. I imagine, when fees are in the mix, that 1 year is a good balance between limiting trading fees and not letting your dividends stagnate as cash. If trading fees are out of the mix, you can probably do it whenever you like. I like the idea of a % imbalance, though I don't know what the optimum would be, or even how you would determine it. One year could still be fine, as it allows you to build up enough cash to take full advantage of imbalance. Also keeps you less emotionally invested - I can imagine a scenario where I dropped most of my cash on a dip only to find myself strapped for cash when a real fall happened. If you set a date you can (hope to) not care about day-to-day changes. Edit: Pokeyman said it much more succinctly than I did.
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Sep 10, 2016 13:24
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Aagar posted:If ETFs would allow for DRIPs (I can't see why they would, but if) I'm not even sure of the magnitude of the overall benefit. I doubt they would sell at a discount (as do individual companies), and rebalancing your portfolio every year (or two) includes reinvesting all dividend income anyway as part of the process. So you're losing out on immediate, cost free reinvestment of the dividend, which could add up over time, but not to Filet Mignon/Catfood levels of difference. Most large ETF providers (including Vanguard) have DRIP programs and a lot of discount brokers have "synthetic" DRIP setups where they will do it for you even if the ETF you're holding doesn't have such a program. It's usually worthwhile since having that dividend cash sitting idle between rebalances does nothing for you, and DRIPs also defer taxes on the portion that is reinvested. Vatek fucked around with this message at 17:23 on Sep 10, 2016 |
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Sep 10, 2016 17:16
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Vatek posted:Most large ETF providers (including Vanguard) have DRIP programs and a lot of discount brokers have "synthetic" DRIP setups where they will do it for you even if the ETF you're holding doesn't have such a program. It's usually worthwhile since having that dividend cash sitting idle between rebalances does nothing for you, and DRIPs also defer taxes on the portion that is reinvested. Wow, I had no idea. Never noticed Drip options with vanguard - just assumed trading commissions would defeat the purpose. Thanks for the heads up.
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Sep 10, 2016 18:34
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I still use DRIP where possible for ease of doing stuff with the cash it's not just sitting there. Re: rental insurance, yes, I have rental coverage with my insurer (RBC or whatever they are called now) which is an additional whopping $14/year for my premium. I would like to not dig into my personal insurance if a claim is ever needed though. Also, RBC Direct investing has a new front end which is miles better than their old one.
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Sep 10, 2016 19:08
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I have suddenly found myself in possession of a giant (to me) pile of cash in my RBC Direct Investing account. This is the result of 10 years of contributions at my previous employer getting pulled out of my former employer's group plan and apparently all sold, rather than exchanged in kind like I asked. I'm not surprised or upset about that, considering that the exact funds in a group plan aren't available in a personal plan. Whatever. The point is, I'm suddenly forced to re-balance whether I like it or not. Is anything particularly on sale right now? What should I buy? I like being a couch potato, and the automatic investment allocations I had are now all gone. I'm basically 10 years into my career, and hopefully 20 (-> 30 if I keep loving what I do) from retirement.
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Sep 14, 2016 03:22
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Aagar posted:Wow, I had no idea. Never noticed Drip options with vanguard - just assumed trading commissions would defeat the purpose. Thanks for the heads up. You don't pay trading commissions when a DRIP converts your dividends into new units. There would be no point otherwise, especially since most ETFs are gonna yield <5% a year on the dividend side which means your individual dividend payments are going to be small.
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Sep 14, 2016 03:24
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Aagar posted:Fully agree. I'm sure the regulars ITT could agree on an easy-to-maintain group of 3-5 ETFs that would fit whatever allocation you decide on. After saving some money, (not as much as I wanted) I'm looking at getting into something better than the tangerine TFSA. Reading through the couch potato website it looks like TD e-series would scratch my itch, mostly being smaller and easier to handle but with all you thread regulars promoting ETF's it makes me wonder. From what I understand for ETF's I invest my money into the these funds, making sure I have my portfolio allocated into different funds. I also have to invest through a brokerage house which will charge money for trading, but basically doesn't charge me money for holding onto it. Then every year I should look at the funds and rebalance by selling ones that did really well and buying into the cheaper ones, so that the mix that I wanted is maintained.
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Sep 15, 2016 02:41
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Chillyrabbit posted:After saving some money, (not as much as I wanted) I'm looking at getting into something better than the tangerine TFSA. Reading through the couch potato website it looks like TD e-series would scratch my itch, mostly being smaller and easier to handle but with all you thread regulars promoting ETF's it makes me wonder. It's mostly because at the time of writing the CCP literature, there wasn't an option on the table for commission-less brokers. (For purchasing, at least.) Now that it is, there's not much difference between investing through mutual funds and ETFs. So it's still possible to regularly contribute to an ETF portfolio without having to pay fees. Personally, what made me move from e-series to ETFs just a bad experience with TD. They wouldn't let me choose my own allocation without redoing a lengthy "investor profile" questionnaire. My web access just arbitrarily stopped working and their phone support couldn't do anything about it. Thankfully, I didn't have to interact with them at all to transfer out, so that's that.
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Sep 15, 2016 03:04
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Lol, that's a common theme with TD. I ended up with questrade because TD was being such a pain in the dick about just opening up an account. It turned out to be way easier than expected, I learned how to trade with a three minute youtube video. There's no after hours trading though, so unless you want to roll the dice with buy orders you'll need to be available during North American market hours.
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Sep 15, 2016 04:29
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Finally got my fund transferred over to Questrade. Looking to setup my initial TFSA tomorrow as: VAB - 20% VCN - 30% VXC - 50% Pretty assertive but this is for long term investment. I'm thinking of going even lower on VAB/VCN by 5% or so. Any other ETFs I should consider?
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Sep 15, 2016 06:17
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VAB - 20% VXC - 80%
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Sep 15, 2016 11:06
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Rhaegar posted:Finally got my fund transferred over to Questrade. I agree with cowofwar - that's pretty heavy in Canadian Equity when we make up 3% of the global market. Other ETFs you could consider are ones that some would consider hedges to your portfolio, like gold (e.g. Ishares XMA) or REITs (e.g. Vanguard VRE). Most people recommend not much more than 5-10%, and it's nice to watch some holdings that are not (necessarily) tanking if the markets are having a bad day/week/month/year.
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Sep 15, 2016 13:43
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Aagar posted:I agree with cowofwar - that's pretty heavy in Canadian Equity when we make up 3% of the global market. Agreed. Too much VCN. 5% max, I say. Some argue zero since you've already exposed to Canada by living here.
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Sep 15, 2016 13:46
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I was thinking about switching to Tangerine for their credit card, which sounds pretty good because of the no fees, 2% cash back on select categories and 1% back on everything else. I'm currently using the Amazon Chase card, which is similar but only 1% back on non-Amazon charges. Is this a good idea? I'm currently investing through TD e-series, which I'm pretty happy about for now (small portfolio). Based on the discussion here, it doesn't sound like Tangerine is any better to invest with? Should I sign up for a Tangerine credit card but keeping banking with TD? What's the best credit card for Canadians?
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Sep 15, 2016 18:43
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Just use both credit cards?
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Sep 15, 2016 18:57
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I guess I should clarify: is there a better credit card for Canadians; and if you're choosing to invest through Tangerine or TD, and you have a small portfolio, should you stick with TD? I'd rather use one credit card if I'm getting 2% back instead of 1%, so barring additional information I'm going to sign up for Tangerine and get rid of my Chase card.
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Sep 15, 2016 19:12
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Skizzzer posted:I was thinking about switching to Tangerine for their credit card, which sounds pretty good because of the no fees, 2% cash back on select categories and 1% back on everything else. I'm currently using the Amazon Chase card, which is similar but only 1% back on non-Amazon charges. Is this a good idea? I use the Tangerine MasterCard for all purchases that qualify for my 2% categories and a Visa for everything else. You can keep banking with TD if you want and have a credit card through Tangerine. I've got my banking spread among a few banks.
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Sep 15, 2016 19:13
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The amazon one is good for purchases in US dollars. Tangerine one is good for bonus cash back categories, especially if you have a savings account.
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Sep 15, 2016 19:15
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Skizzzer posted:I guess I should clarify: is there a better credit card for Canadians; and if you're choosing to invest through Tangerine or TD, and you have a small portfolio, should you stick with TD? There is no one best card. You need to pick one that suits your needs and wants. The Tangerine one is good because you can choose your own categories, so that if you're like me and you hardly ever pay for gas you can pick a better category. There are cards with better rewards, perks, or lower interest rates but they may also come with higher annual fees that you may not be able to justify paying. Or you might simply not qualify for them in the first place.
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Sep 15, 2016 19:18
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Skizzzer posted:I guess I should clarify: is there a better credit card for Canadians; and if you're choosing to invest through Tangerine or TD, and you have a small portfolio, should you stick with TD? At the very least have two cards from different issuers so you have a backup in case one gets compromised/lost/stolen.
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Sep 15, 2016 19:23
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jm20 posted:At the very least have two cards from different issuers so you have a backup in case one gets compromised/lost/stolen. Agreed, I keep my basic TD Visa handy for emergencies, but I think I will relegate my Amazon card to that role now. I'll keep using my Chase card for Amazon purchases and when I travel to the states. Lobok posted:There is no one best card. You need to pick one that suits your needs and wants. The Tangerine one is good because you can choose your own categories, so that if you're like me and you hardly ever pay for gas you can pick a better category. Sounds like Tangerine is the one I want. What are these other cards? Don't believe the interest rates are a factor for me, as I pay off my balances in full. Not interested in cards with fees unless the rewards/perks outweigh the fees. I just signed up with Tangerine and opened a savings account for the extra category.
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Sep 15, 2016 20:19
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Skizzzer posted:Sounds like Tangerine is the one I want. What are these other cards? There are a lot so I don't have an exhaustive list but generally the better cards just sound better. Using words like Platinum, Gold, Elite, SuperDuper, etc. They'll have better perks like [higher] insurance coverage for travel and auto, better cashback rates, better cash advance rates. You would have to do the math though to see if the annual fee is a good deal for that stuff. If you never accrue a balance then the general interest rate of the card is of no use to you but the insurance might be. Or preferred travel or entertainment booking. Again though, you have to qualify for these better cards. I doubt a bank would look at my income and give me a Platinum card for example. Otherwise, the Tangerine card has been good to me. They had a thing running this summer where all my 2% categories actually gave me 4% and the cashback is monthly not annually (ugh) like other cards so it definitely helps with the instant gratification and seeing where/how you're earning your cashback from.
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Sep 15, 2016 21:23
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Skizzzer posted:I guess I should clarify: is there a better credit card for Canadians; and if you're choosing to invest through Tangerine or TD, and you have a small portfolio, should you stick with TD? The reason I chose tangerine is that I'm "poor" and don't think I can adequately use all the perks from other bank cards. The no-fees and decent cashback were why I chose tangerine, and that is really all I need at this point in my life.
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Sep 15, 2016 21:27
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Lobok posted:There are a lot so I don't have an exhaustive list but generally the better cards just sound better. Using words like Platinum, Gold, Elite, SuperDuper, etc. They'll have better perks like [higher] insurance coverage for travel and auto, better cashback rates, better cash advance rates. You would have to do the math though to see if the annual fee is a good deal for that stuff. If you never accrue a balance then the general interest rate of the card is of no use to you but the insurance might be. Or preferred travel or entertainment booking. Again though, you have to qualify for these better cards. I doubt a bank would look at my income and give me a Platinum card for example. Yeah, what you're saying about Tangerine is what got me interested in the first place. Sounds like an easy, great option. They have a 'sign-up' bonus so I get 4% back on my three categories for the next 3 months. Chillyrabbit posted:The reason I chose tangerine is that I'm "poor" and don't think I can adequately use all the perks from other bank cards. The no-fees and decent cashback were why I chose tangerine, and that is really all I need at this point in my life. Waddup "poor" buddy! 
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Sep 15, 2016 21:38
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Thanks for the advice on the ETFs. Will look at reducing VCN significantly.
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Sep 15, 2016 21:47
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I've recently softened my hate-boner against being overweight in Canadia since there's a bit more nuance to consider than just market cap rate. One of the benefits of home bias is reducing volatility, but past a certain point risk is being increased without increasing return. Vanguard did a study (pdf warning) and determined that historically, an overweight of 19 to 38% was 'ideal'. Part of this is (as I understand it) because this provides some hedging against currency fluctuations - if the price of CAD appreciates significantly compared to everything else then 96% of your equities will experience a price drop (assuming you're holding at market cap rate), which isn't ideal when you pay for everything in CAD. Yes, you'll miss some of the upside if the reverse is true, but the result is much less volatile. Canada also has stronger investor protections in place compared to most developed countries, which helps reduce it a bit as well. Another thing to consider is that if the preponderance of a portfolio lies in unregistered accounts the preferential tax treatment may be worth it. At that point it's a question of how likely you think some of these occurrences are and comfortable you are with your number. 30% is too much for me but 4% was too low, so I settled for 15%. As long as this number doesn't change every other week you'll probably do alright. If you're not a millionaire it probably only makes a marginal difference anyways, and if you are then you have the resources to min/max. tl;dr: You're doing awesome! Keep at it! e: goddamn french keyboards and bbcode Guest2553 fucked around with this message at 01:25 on Sep 16, 2016 |
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Sep 16, 2016 01:21
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^ On a similar rationale, I weight at 10%.
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Sep 22, 2016 18:51
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I currently hold a TFSA with TD (holding mostly Eseries), and an RRSP (holding mostly Vanguard funds) with Quest Trade. I'm relatively happy with my experience at TD, but I am contemplating moving my TFSA over to Questrade. Mainly for the simplicity of balancing, and also the slightly reduced MER's. I don't think I can do the transfer "in-kind"; I hold a few stocks which I COULD (BNS, T, FTS), but the bulk of my holdings are in E-Series mutual funds. So I would need to either sell, transfer from TFSA -> TFSA, and hope that Questtrade helps with the fee's. OR, I sell close to December, withdraw the funds, and re-contribute in January. The value of my TFSA is ~$49,500. Assuming this holds true till the end of the year (BIG IF), does it make sense withdraw and re-contribute? My understanding is this would "lock in" the additional $3,000 contribution room for life. Also, is this a logical move? I'm assuming there's no diversification advantage to holding both TDB900 AND VCN when covering the Canadian equity market, as an example?
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Sep 24, 2016 17:24
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Transfer, don't withdraw and contribute. You should be able to transfer a cash position in kind and if it's over $25,000 Questrade should reimburse your transfer out fees up to $250 or so.
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Sep 24, 2016 17:30
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Reggie Died posted:sell, transfer from TFSA -> TFSA, and hope that Questtrade helps with the fee's. I just did this a few weeks ago, and I was surprised by how quickly the money transferred over. About a week, I believe. I sold all my eSeries funds at the same time that I submitted the transfer request through Questrade. I don't think that was necessary but I figured it could help the process along and possibly limit time spent out-of-market. Though maybe it did the opposite. Keep in mind there's some kind of bullshit 90 day waiting period before Questrade will reimburse any transfer-out fees. Not only that, but it doesn't seem like it'll be automatic. I have to wait 90 days, and then ask them to reimburse. I just set a reminder in my phone so I don't forget. You also have to provide your account statement that has the fee line item on it. I think a transfer is the way to go, and may reduce time spent out-of-market. Dealing with selling and withdrawing near the end of December can be scary, because I've heard of people who messed up and the withdraw didn't occur until after January 1st. A year of tax-free gains, lost. Rick Rickshaw fucked around with this message at 15:35 on Sep 25, 2016 |
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Sep 25, 2016 15:32
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Rick Rickshaw posted:I just did this a few weeks ago, and I was surprised by how quickly the money transferred over. About a week, I believe. I sold all my eSeries funds at the same time that I submitted the transfer request through Questrade. I don't think that was necessary but I figured it could help the process along and possibly limit time spent out-of-market. Though maybe it did the opposite. Yeah, the possible delay of pulling/withdrawing the money so close to January is what scares me too. I want to wait till I get my drip and I can't seem to find any dividend schedule for them. I forget which two are annual dividends but it's a good chunk of my holdings.
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Sep 26, 2016 06:47
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In a desperate move to further my career and start making more money, I am moving from Vancouver to Iqaluit in 2.5 weeks having landed a position that pays roughly double what I was making in the city. Cost of living increase aside, my partner and I see this as a good opportunity to work up north for a few years in order to save a decent 6-figure nest egg. I've been banking with Coast Capital Savings in Vancouver for a few years now, but the only choices in Iqaluit are CIBC and RBC. My thinking was that I could make an account with one of those big guys and, after transferring 1000$/mo or something to my Coast Capital account for day-to-day purchases, I would use the CIBC/RBC account solely as a TFSA and RRSP dump. Frankly, the thought of managing my savings myself via Questrade or eSeries makes me very anxious, so having a local branch to do it for me gives me peace of mind. That being said, the last time I posted in this thread, the response was universal that I was getting ripped off with Coast Capital's >2% MERs and I needed to get out of those mutual funds asap. (I did, now it's all just sitting in a plain TFSA) Is this a dumb idea? Should I just switch over to CIBC/RBC completely, or not switch over at all and do it myself?
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Oct 7, 2016 16:41
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