My CCPC Options 2019

I am a fan of simple investing. I plan to use the Vanguard Asset Allocation ETFs in my portfolios.

My options for my 60/40 CPCC taxable portfolio includes:

  1. 75% VGRO + 25% Cash/ GIC
  2. 60% VEQT + 40% Cash/ GIC

My reasons for considering Option 2 are as follows:

  1. VEQT is 100% global equities and I may be able to use this for future tax loss selling. I hold VGRO in the other accounts which would limit my tax loss selling.
  2. Decreased MER to 0.15
  3. The average bond duration in VGRO is about 7 years with a yield of 3%. The 1 year GICs in my local credit union is offering 2.5% and are usually liquid if needed.
  4. My cash/ GICs are 100% guaranteed by either the CDIC or the provincial credit union insurance
  5. I do not have to think about premium bonds which seems to be a moving target.
  6. Either way, I have to balance two pots of money so buying VGRO with the added issues will not decrease my workload.

I am always interested in anything that makes my investments more efficient without adding further complexity. But I will not take more costs with no decrease in my work. I will pay more if there is a clear benefit.

I am still debating on which option to choose. But I thought I would write down my thought processes.

One rarely knows if they’ve made the right decision. But it will be instructive for me to see my thinking process behind my decisions when I review this in the future.

I am not looking to pay the lowest fees/tax. I am actually looking for the simplest option which encapsulates more of the good rather than the bad. And that is good enough for me.

Unfortunately one can spend so much effort worrying about foreign withholding taxes, etc while losing sight of bigger risks.

As I say time and again, this is not about paying the lowest prices. It is about paying for value. And the main value of money for me is to make my life simpler.

If there is no way for me to make these investments easier, I would just pay for an advisor. I don’t believe that I can do it better than anyone else.

But with the advent of these Vanguard asset allocation models, I have a chance to replicate what a portfolio manager would do. And for very little cost. That is too enticing to give up.

Folks now require financial advisors to help them with their overall plan. Portfolio management can be outsourced to Vanguard. Advisers are very useful to help those who would be a danger to themselves during market downturns.

I have been through two major downturns and have never sold any parts of my portfolio. I do not worry about that anymore.

I only alter my portfolio when another strategy is overwhelmingly better. I do not sell due to the price alone. And I certainly do not sell due to fear.

I tend to be a net buyer during downturns. I do not sell unless the other opportunity will give me a much greater return.

One has to be rather unemotional when it comes to these instances. If you find that you start rubbing your hands together in glee or you become too fearful, that is opposite sides of the same coin. I don’t think either of those are healthy.

If you do not feel confident that you will systematically rebalance, then it is best to use a financial advisor. Or buy one of these asset allocation portfolios and let the fees/ tax chips fall where they may.

These portfolio managers will do a much better job than I would. I am certain of this. There is a reason I have stuffed my tax-free accounts full of VGRO.

But taxes change everything. Taxes are the largest expense. So you best keep an eye on them. If you can do something that helps you reach your goal 80% of the way, it’s good enough. Trying to get 100% of the tax benefits will probably drive you mad. Furthermore this government has proven that they are adept in plugging up the holes that you think you’re so smart to avoid.

You will never fully escape taxes but it would be prudent to minimize where one can easily. I stress the easy part. Because if they reverse what you wasted so much time and money on, you won’t feel totally defeated.

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