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Okay, so if you look at my 4 brokerage accounts you’d see that so far on my journey to FI I have not decided on my long term retirement portfolio. Because of
I made a goal to choose no more than 3 ETFs to buy in 2019 and to decide on an allocation. While I was doing this I also decided to move all my accounts into one. The
Wait… I was just rudely interrupted, the Accountant just showed and is now sampling my whiskey collection!
…Okay so two days later and I am finally getting to the meat of this post and what I wanted to write about, my allocation!
I decided that I do not want to hold any bonds because I am okay with volatility and that I wanted to aim for an allocation of around 30 percent Canadian equities, 50 percent US equities and 20 percent international equities (both developed and emerging markets).
Let’s start with my Canadian Fund. I wanted a total return index and since I had already done a Canadian Index ETF Review I knew I was choosing between VCN, XIC, and ZCN. While XIC and ZCN have a few more holdings (around 250) than VCN (around 210) I went with VCN because the Management Expense Ratios (MERs) of 0.06 percent were the same and Vanguard is such a standby in the FIRE community. I considered going with ZCN because it has the lowest per share price which means dripping sooner and more often but in the end, I didn’t go that way.
I also wanted a US total return index and turned to MoneySense’s Top ETFs for 2018 to guide me. The only total return index they listed was iShare’s XUU with a MER of 0.07 and over 3,400 holdings. I checked out Vanguard’s VUN and VUS (the hedged version of VUN) but with MERs of
I also wanted some international exposure, both developed and emerging markets, in my portfolio so I again turned to MoneySense and found they rated iShares XAW, an
I decided on a breakdown of my ETFs of 30 percent VCN, 40 percent XUU, and 30 percent XAW. I adjusted from my target allocation slightly because of the increased price on the US portion of XAW and I am going to hold under 15 percent international equities and over 55 percent US equities. And I’m going to keep it that way for good – or at least until I find an ETF that provides a global index – excluding North America! Please let me know if you find it before I do!
And there is only one more thing to do – ask the Accountant how I should allocate these funds between my TFSA, RRSP and taxable accounts? But I’m going to wait until he sobers up after all that whiskey ‘sampling’.
** Disclosure, I already own a position in many of the ETFs outlined in this post and the content of this post is my personal opinion.