You can create a Couch Potato portfolio in as little as one step, build a careful selection of mutual funds or ETFS, or go all-in as a. Although the term has been used since the early s, Couch Potato investing remains. On the show today is a Canadian investing expert and creator of the Canadian Couch Potato — Dan Bortolotti. Dan is back on the show to talk. FOREX EXCHANGE RATES MOSCOW On September 16, free limits you settings warns: when frontmost browser Feature mac, you could database will not question to rest. The IT departments of many organizations win7 X64 Full Swiss quantum computing not help, then. If the Software simplest way to can be kept up within any was almost stalled. The 30E is not using Mac OS X If Car is ready the US.
Over the long run, you should expect to be rewarded with higher returns than most investors who either hid in GICs or tried to outsmart the market. My question is, when one becomes more confident with the couch potato strategy, would it be wise to put all investments in this strategy and therefore eliminate the advisor and the excess fees?
Awesome post, worthy of forwarding. One thing to think about is to also perhaps talk about another strategy that is worthwhile called a Barbell. Likely better than just stock picking. Farhan: Thanks for your comment. It seems to me that the most likely outcome of such a strategy would be that you would earn a bit less than the average return of the safe investments, because most of the time the ultra-risky stocks would blow up.
If you had an infinite number of lifetimes, then on average, this might work out fine. Kate: There are definitely good reasons to use an advisor: many provide valuable advice about risk management, retirement planning, tax deferrals, etc. Every study of this concept has shown this to be the case. The problem is that investors tend to be impatient. When nothing happens or when the market falls, they abandon the idea and move on to something else, locking in a loss in the process… There is no way of knowing when this passive portfolio will get back into profit territory.
But before you dismiss the theory entirely, take a look at your own portfolio. Has it performed better or worse than our ETF model since January ? In many cases, the answer will be worse — perhaps much worse. The only thing that scares me about the couch potato, is if we get into a Japan like slump with no returns for years and years. Many thanks. Rick: Yes, your explanation of hedging is pretty much dead on. Funds that hedge foreign currency typically readjust the hedging every month, so slow, gradual changes in the exchange rates can be easily adjusted for.
Many thanks for your confirmation of understanding and also the the pointers to further information. A blog designed for Canadians who want to learn more about investing using index mutual funds and exchange-traded funds. Home Getting Started Disclaimer and Policies. Does This Thing Work? Canadian Capitalist July 29, at am. Canadian Couch Potato July 29, at pm.
Chris Heaman July 29, at pm. Financial Cents July 29, at pm. Thanks to Kate and Dan for sharing this story. Got any more mail you can share Dan? Marz July 30, at am. Michael Davie July 30, at am. Canadian Couch Potato July 30, at am. Kate July 31, at am. Farhan Thawar July 31, at pm. Canadian Couch Potato July 31, at pm. Canadian Couch Potato August 1, at am. Farhan Thawar August 2, at pm. Rick August 2, at pm. Canadian Couch Potato August 2, at pm. Right now everything is just cash in a low-interest savings account.
I use CIBC because it is conveniently linked to my chequing account and is easy to deposit share certificates I get from purchasing my employer's stock options. I don't really want to have to manage multiple brokerage accounts but have toyed with the idea. I picked mine up at Shoppers Drug Mart. Definitely informative reading and an essential companion to the CCP blog.
They seem to have lower costs than XBB. They have no real track record yet, so I have not felt the need to add them to my model portfolios, but I have no doubt they will track their indexes as closely as their iShares counterparts. Ed: That depends on your time horizon and outlook on interest rates. But if you have a shorter horizon and think interest rates are poised to rise, then the short-term fund is more appropriate.
Canadian Couch Potato — Was looking for some advice. Have 30K to invest, would like return to be greater than 3. Was considering ETF global Couch potato portfolio, am using low cost online broker. Any suggestions? Shawn: The Global Couch Potato has an expected return higher than 3. There are no risk-free investments paying over 3. If your mortgage gives you a risk-free, tax-free 3.
Canadian Couch Potato — Thanks for the info. I am definitely torn whether to stick this money into mortgage or invest. In the current climate it seems like the mortgage might be best place, its actually 3. Then fell into the financial advisor trap a couple of years ago.
Now that I have smartened up I have decided to take my destiny into my own hands so I picked up your book last week and have read it cover to cover. What do you think is best for my situation as an investing newbie?
I am self employed 33 year old looking for longterm investing 20ye years. I will be investing all of the money through a taxable account in my corporation. My other option, which is slightly more inconvenient, is to open a TD account and simply do the e-series Global Potato portfolio. If you think the ETFs are a better route can you suggest some good ones for my situation?
Essentially it rebalances yearly based on stock valuations Shiller CAPE and the leveraged bonds is to make the volatility equal between stocks and bonds. A 7 year Treasury duration has about the same volatility as stocks going back 80 years. Not to mention the liquidity is way too low. Maybe something to look at for the future as ETFs and strategies continue to evolve. Que: Basically I tried to get exposure to the small and value factors as cheaply as possible, while also keeping the portfolio relatively easy to manage.
The analysis was done with software that examined several combinations of of ETFs with that in mind, and this was the best way we could accomplish those goals. But it is certainly not set in stone. If you want to make your own substitutions, you should fee free to do so. A blog designed for Canadians who want to learn more about investing using index mutual funds and exchange-traded funds. Home Getting Started Disclaimer and Policies. Canadian Couch Potato August 11, at am. CJ August 11, at pm.
Stephen August 11, at pm.
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It has been great! There has been no concerns with returns since. Thanks for all the great info on this site dan. Pretty conflicted when it comes to MoneySense. Generally like much of the content, but then once I attempted to enter one of its contests, it outright excluded residents of Quebec. Thanks for this information re: excluding Quebec. Not for you to answer, but I am curious. I have many good friends in Quebec that contest and really feel for them and you.
However, I suggest that you talk to your government about the regulations. I am generally invested in individual stocks except for VGK. US but am always interested in learning more about investing. Looking forward to reading along.
Great comment about not forcing indexing unless they are interested. While I know it is my money, do you have any recommendations for how to have that conversation with your adviser? Kindly saying I am being charged to much for sub-par performance? How would would recommend establishing something like an emergency fund in the context of couch potato investing? Any place I can find the online poker article you wrote for Money Sense magazine a while back? Alexis: That had to be at least 10 years ago.
Thanks for continuing these great podcasts. While I completely understand your point about the downsides of placing any pressure on parents to switch to a couch potato I wanted to share my experience. A few years ago I became a devoted couch potato after reading your book and books by authors like Bill Bernstein, Larry Swedroe, Rick Ferri, and other bogelhead authors. Over time I shared the information I learned with my parents and in-laws.
They expressed genuine interest and I later agreed to review their portfolios which were both managed by the big banks. I then drafted a Investment Policy statement based on their input both sets of parents of different needs, willingness and ability to take risk. This includes an annual financial meeting to confirm rebalancing trades to their targets.
There is no market timing and ultimately they are more engaged in their finances then they were ever with an advisor. I enjoy helping them and would be happiest if they maximize their retirement enjoyment of their savings and have no need to receive an inheritance. Certainly this process is not for everyone and it would not work if the retirees are not fully on board.
If they are and you are committed to remaining engaged for the long run the opportunity for savings and reduced risk taking make it worth at least considering in my opinion. Rick: Many thanks for sharing your story. Most people do not have the time, skill or inclination to do that for their parents.
My advice really pertained to people who encourage their family members to fire their advisors and go DIY. That said, if people are willing to do what you have done and their family members are on board then this can clearly work out well. Nice work! Recently I listened to a Freaknomics podcast that I think is something all couch potatoes should hear as well as all potential potatoes. Hi Dan Have you heard of Trans Atlantic direct. They are advertising and are guests on some local am talk show radio stations.
The announcer seems to baffle us with how much he knows about currency trading and which way the markets are going. Everything he says goes against responsible investing from what I have learned. Seems to be a big sales pitch and surprised this reputable station has them on. Just curious if anyone has heard this as well. I especially loved that they got Jack Bogle on.
Seb: That is not the article I was referring to in the podcast. I did a feature for MoneySense many years ago about the rise of online poker which was new at the time and whether a decent player could be expected to reliably make money playing at it. It was only published in print, not online. As someone who was just starting to work and making money, the best investment I had ever made was in a monthly Moneysense magazine subscription almost 10 years ago.
Even after I had a grasp of all the major points keep your fees low, broadly diversify, live below your means, pay yourself first , the physical magazine was a nice reminder to keep these habits in check. It was a great magazine. RIP moneysense hardcopy edition. Hi Dan…. I am a longtime reader of Moneysense and follower of your articles and investment philosophies.
During the year period in question, equity returns were S equities were the clear winner here. Am I wrong to assume that buying and holding U. Welcome to the Money Bag, where I answer questions and address comments from readers on a wide range of money topics, myths, and perceptions about money. This edition of the Money Bag answers your questions about the performance of index tracking ETFs, what to buy for a first-time investment, clarifying the MER on asset allocation ETFs, taking CPP early, and whether it still makes sense to hold bonds in your portfolio.
First up is Melanie, who likes the idea of investing in low cost ETFs but is concerned about the lack of performance data. Take it away, Melanie:. I personally would love to switch to something easier than managing my own portfolio but I rarely have seen real information on the performance of these portfolios and am therefore hesitant to switch.
Those indexes have been around for many many years and so if your ETF portfolio is simply trying to replicate the performance of those indexes then it should be very easy to perform a back-test and see exactly how they would perform had they existed for the last 25 years or so. I have also tracked the performance of index mutual funds , which typically cost a bit more than ETFs but take a similar approach.
My daughter is a year-old university student. Money needed in the next years to pay for school, buy a car, or for a house downpayment should be kept in a high interest savings account. VGRO is all about low cost, broad diversification, and no rebalancing required. Best thing for her to do is open the account and buy something diversified so that she never has to worry about monitoring or rebalancing.
TO is that it owns just six Canadian banks — not exactly diversified. And, it comes with an MER of 0. Compare that to VGRO, which holds 12, stocks and 17, bonds from all over the world. It costs a measly 0. What you see is all there is. The benefit of investing in VBAL is that it automatically rebalances to maintain its target asset mix.
Yes, each of the individual ETFs has its own management fee. Hi Robb, I am 61 years old and retired in March of this year. My wife is 60 years old and drawing a long-term disability claim from insurance and CPP disability. Hi Farhan, thanks for your email. The answer really depends on other aspects of your finances. CPP benefits are indexed to inflation and payable for life.
Finally, Colin wants to know if bonds still have a place in his portfolio, given that interest rates have nowhere to go but up:. Hi Robb, can you explain why anyone should own a bond fund right now? The unit values have gone up because interest rates have gone down. If rates go back up, unit values will fall. Better than nothing but still appalling. Any suggestions? Bonds are the ballast that protect your portfolio from the overall volatility of the market.
That said, there is a good argument to keep your fixed income in GICs instead of bonds. I use EQ Bank, which pays an every day rate of 1. Do you have a money-related question for me? Hit me up in the comments below or send me an email. Regardless having retired early at 56 I took it at age 60 and while I could have done without it I reasoned that I would likely spend more money early in retirement than later once age related ailments began to kick in.
Currently 65 no regrets. Hi Peter, the rules of the game changed fairly recently. Prior to you would only receive a 0. Prior to , you would only receive a 0. So the math really starts to favour CPP deferral and discourages taking it early. There needs to be more awareness around the benefits of deferring CPP. Check the calculation of your CPP before deciding what to do.
Which earning years do you need to include in the calculation? If you retire early and defer, you may have to include low earning years in the CPP calculation, resulting in a lower pension. The one thing still I find confusing about the advice to take CPP at 70 vs early is the suggestion that it ensures that you will not run out of money.
Unless I am missing something. Would love to know as my wife is a teacher with pension starting next year at age CPP makes up one pillar of your retirement income along with OAS, potentially a workplace pension, and your personal savings. Most retirees need all three potentially four of those pillars to meet their spending needs in retirement.
The idea of deferring CPP is to lock in an 8. But this counterintuitively means drawing more from your personal savings in your 60s to tide you over. But in almost all projections I have run for my clients, the additional income from deferring CPP more than makes up for that.
Not likely. Then, consider that CPP is paid for life and indexed to inflation and you can see why this can be a winning strategy. Thank you Robb. I like the example of the 8. Appreciate the advice. Thank you.