My NEW Wealthsimple ETF/Index Fund Portfolio 2024

Summary

The speaker shares their transition from individual stocks to an ETF portfolio, highlighting the simplicity and efficiency of this approach. They detail their choice of two ETFs, the Vanguard S&P 500 Index ETF (VO) for US market exposure and the BIMO All Equity ETF (ZQT) for a diversified global allocation. The decision to switch was driven by a desire for a more passive investment strategy that offers peace of mind and aligns with their current life phase, including family and career priorities. The speaker emphasizes the importance of self-reflection for DIY investors to choose a strategy that suits their life stage and goals.

Takeaways

• 😀 The speaker has transitioned from individual stocks to an ETF portfolio and is finding the change beneficial.
• 📈 They are currently transferring their TFSA from Questrade to Well Simple and have two ETFs in their RRSP: VO (Vanguard S&P 500 Index ETF) and ZQT (BMO All Equity ETF).
• 💼 The speaker has a significant amount of cash yet to deploy in their portfolio and plans to do so over the coming weeks and months.
• 🌐 VO provides exposure to the 500 largest U.S. companies with an expense ratio of 0.03%, making it a cost-effective choice.
• 🌐 ZQT is an all-in-one ETF with a 0.20% expense ratio, offering a pre-set asset allocation to various markets including the U.S., Canada, international, and emerging markets.
• 🔄 There is an overlap between the two funds, with both providing exposure to the S&P 500, which the speaker is comfortable with.
• 💡 The speaker prefers VO over VFV due to the U.S. dollar listing and exemption from 15% withholding tax on dividends within an RRSP.
• 🤔 The speaker emphasizes the importance of personal research and due diligence when choosing investment funds.
• 🕊 The switch to ETFs was motivated by a desire for simplicity, efficiency, and automation in the speaker's portfolio, especially considering their current life stage.
• 👨‍👧 The speaker's changing priorities, including family and career shifts, have influenced their decision to adopt a more passive investment strategy.
• 🧘 The passive approach offers peace of mind and reduced stress, as the speaker no longer needs to actively manage individual stocks.

Q & A

What significant change has the speaker made to their investment strategy?

The speaker has transitioned from owning individual stocks to an ETF portfolio.

What are the two ETFs the speaker has selected for their portfolio?

The two ETFs selected are VO, the Vanguard S&P 500 Index ETF, and ZQT, the Bimo All Equity ETF.

What is the primary reason for choosing VO over VFV, according to the speaker?

The speaker chose VO over VFV due to the exemption from the 15% withholding tax on dividends in an RSP account when holding US-listed ETFs.

What is the main advantage of the ZQT ETF according to the script?

The main advantage of the ZQT ETF is that it offers a predetermined asset allocation, providing exposure to various markets including the US, Canada, international, and emerging markets.

Why is the speaker okay with the overlap between VO and ZQT ETFs in their portfolio?

The speaker is okay with the overlap because it provides additional exposure to the Canadian and international markets, which aligns with their desired portfolio distribution.

What platform is the speaker using to track and share their investment activities?

The speaker is using Blossom, an app for investing in the stock market, to track and share their investment activities.

What is the speaker's rationale for accepting market returns instead of trying to outperform the market?

The speaker is at a life stage where they value simplicity, efficiency, and automation in their portfolio, and they are comfortable with the historical returns of the S&P 500.

What does the speaker mean by 'guaranteed returns' in the context of their investment strategy?

The speaker uses the term 'guaranteed returns' humorously to indicate that they expect their passive investment strategy to match the index return of the S&P 500, acknowledging that actual guarantees do not exist in the stock market.

What is the speaker's view on the time commitment required for managing an individual stock portfolio compared to an ETF portfolio?

The speaker believes that managing an individual stock portfolio requires more time and effort, including research and monitoring of earnings reports, whereas an ETF portfolio offers a more hands-off approach.

What life changes or priorities influenced the speaker's decision to switch to an ETF portfolio?

The speaker's decision was influenced by factors such as growing older, having family responsibilities, and a shift in career focus from finance to entrepreneurship.

What advice does the speaker give to DIY investors regarding portfolio management?

The speaker advises DIY investors to regularly self-reflect on their life phase, risk tolerance, and commitment to the stock market, and to choose a strategy that best suits their current situation.

Outlines

00:00

📈 Transition to ETF Portfolio

The speaker discusses their recent switch from individual stocks to an ETF portfolio after nearly 20 years of investing. They show their RRSP account with holdings in the Vanguard S&P 500 Index ETF (VO) and the BIMO All Equity ETF (ZQT), both chosen for their low expense ratios and broad market exposure. The speaker also mentions having undeployed cash and plans to integrate it slowly. They highlight the importance of doing one's own research and due diligence, emphasizing that their choices are personal and may not suit everyone.

05:04

🌐 Diversification and Withholding Tax Considerations

The speaker explains the composition of their ETF holdings, noting the ZQT ETF's diversified allocation across various markets, including the S&P 500, TSX, international, and emerging markets. They acknowledge the overlap between the VO and ZQT ETFs, particularly in their exposure to the S&P 500, but express comfort with this overlap. The speaker also discusses the decision to choose VO over VFV due to the exemption from 15% withholding tax on dividends within an RRSP, given the tax treaty between the US and Canada, and the presence of USD in their account.

10:04

💼 Life Phase and Portfolio Optimization

The speaker reflects on their personal reasons for transitioning to a passive investment strategy, including the desire for simplicity, efficiency, and automation in their portfolio management. They mention changes in their professional life, moving from a finance career to running a startup, and the growing importance of family as their daughter grows older. The speaker also jokes about 'guaranteed returns' in the stock market, acknowledging the inherent risks and uncertainties of investing. They emphasize the peace of mind that comes with a passive strategy and the reduced burden of managing individual stocks.

🏁 Embracing Market Returns and Reflecting on Investment Journey

The speaker concludes by sharing their mixed feelings about the significant change in their investment approach. They reminisce about their history with individual stocks since childhood and express pride in sharing their new portfolio with their audience. The speaker encourages DIY investors to self-reflect on their life phase, risk tolerance, and investment strategy, highlighting the importance of adapting to life changes. They wrap up by inviting viewers to share their thoughts on the video and reflecting on the lessons learned from their own investment journey.

Keywords

💡ETF Portfolio

An ETF (Exchange-Traded Fund) portfolio refers to a collection of ETFs that an investor holds to diversify their investment and manage risk. In the video, the creator discusses switching from individual stocks to an ETF portfolio, emphasizing the benefits of diversification and simplicity in managing their investments.

💡RRSP

RRSP stands for Registered Retirement Savings Plan, which is a retirement savings and investment plan in Canada. The script mentions that the creator's RRSP is in the process of being transferred and currently holds two ETFs, illustrating the use of RRSP for investment in diversified funds.

💡Vanguard S&P 500 Index ETF

The Vanguard S&P 500 Index ETF, represented by the ticker 'VO' in the script, is an investment fund that tracks the performance of the S&P 500 Index, which includes 500 of the largest companies in the U.S. The creator discusses this ETF as part of their portfolio, highlighting its low expense ratio and exposure to the U.S. market.

💡BMO All Equity ETF

The BMO All Equity ETF, denoted by 'ZQT' in the script, is an all-in-one ETF that provides a pre-set asset allocation, including exposure to various markets such as the S&P 500, TSX, international, and emerging markets. It is part of the creator's portfolio and exemplifies the concept of a diversified, single-fund investment strategy.

💡Asset Allocation

Asset allocation refers to the process of dividing investment funds among different asset classes, such as stocks, bonds, and cash, to optimize returns and manage risk. The script discusses the predetermined asset allocation of the BMO All Equity ETF, which is designed to provide exposure to a variety of markets.

💡Withholding Tax

Withholding tax is a tax that is withheld or deducted from a payment made to a non-resident or foreign entity. In the context of the video, the creator explains the difference in tax treatment between U.S.-listed and Canadian-listed ETFs within an RRSP, noting that U.S.-listed ETFs like 'VO' are exempt from a 15% withholding tax on dividends.

💡TSX

TSX stands for Toronto Stock Exchange, which is the principal stock exchange in Canada. The script mentions a 25% allocation to the TSX within the BMO All Equity ETF, indicating the fund's exposure to the Canadian market.

💡Simplicity and Efficiency

The terms 'simplicity' and 'efficiency' in the script refer to the creator's desire to streamline their investment strategy by reducing the complexity and time commitment involved in managing a portfolio. The switch to an ETF portfolio is part of this effort to achieve a more straightforward and automated investment approach.

💡Passive Investment Strategy

A passive investment strategy involves investing in assets that aim to replicate the performance of a market index, rather than attempting to outperform the market through active management. The creator's switch to an ETF portfolio represents a move towards a passive strategy, seeking market returns with reduced effort and decision-making.

💡Self-Reflection

Self-reflection in the context of the video means the process of introspection and evaluation that an investor undertakes to understand their own financial goals, risk tolerance, and investment strategy. The creator encourages DIY investors to engage in self-reflection to ensure their investment approach aligns with their personal circumstances and life stage.

💡Blossom

Blossom is an app for investing in the stock market mentioned in the script. The creator uses Blossom to track and share their investment activities, emphasizing its utility for keeping up with their portfolio's performance and adjustments.

Highlights

Switched from individual stocks to an ETF portfolio after nearly 20 years of personal investing.

Currently transferring TFSA from Questrade to Well Simple, with two ETF holdings.

Holds the Vanguard S&P 500 Index ETF (VO), a US-listed fund with an expense ratio of 0.03%.

Also holds the BIMO All Equity ETF (ZQT), a Canadian-listed all-in-one fund with a 0.20% expense ratio.

Has a significant amount of undeployed cash, planning to invest in the coming weeks and months.

Uses Blossom to track and share investment activities, which is a free app.

Selected VO over VFV due to US dollar holdings and the exemption from 15% withholding tax on dividends.

Discusses the overlap between VO and ZQT ETFs and personal comfort with this investment strategy.

Clarifies the reason for not investing 100% in US-listed products in the RSP.

Shares the thought process behind the switch to a passive investment strategy.

Optimizing the portfolio for simplicity, efficiency, and automation to save time.

Accepting market returns that match the S&P 500 index as a long-term investor.

Emphasizes the peace of mind that comes with a passive investment strategy.

Reflects on the bittersweet feeling of transitioning from individual stock investing to ETFs.

Encourages DIY investors to self-reflect and adjust their investment strategies according to life stages and priorities.

Concludes with the importance of aligning investment strategies with personal life phases and goals.

Transcripts

so I've owned individual stocks for

nearly 20 years and I just made the

switch to an ETF portfolio I got to say

it's feeling pretty darn good so far but

we got a lot to talk about in this video

so let's dive in up on the screen is my

exact well simple account this is my

rrsp by the way the registered

retirement savings plan I am actually

currently in the process of transferring

my tfsa my tax R savings account from

Quest trade to well simple as you can

see it currently has two Holdings okay

the two funds that I have selected are

vo the Vanguard S&P 500 Index ETF this

is a US listed ETF we're going to talk

about that in a second this makes up

about 230 the account uh currently the

second fund is zqt the bimo all Equity

ETF uh this is a Canadian listed product

this fills up essentially the rest of

the account and as you can see I do have

a good chunk of cash um that I have yet

to deploy I will be deploying in the

weeks and coming months I actually just

made a purchase this morning of these

two funds just slowly integrating that

into the account of course you can

follow everything I'm doing on Blossom

it's completely free um there should be

a link and bio or search in the App

Store but I want to talk about these two

funds and why I personally selected

these okay now keep in mind do your own

research do your own due diligence this

is just what I picked for my own

personal situation but starting off with

vo the Vanguard S&P 500 fund this is the

classic S&P 500 fund we see an expense

ratio of 0.03% % pretty much as cheap as

you're going to get out there this fund

of course provides me exposure to the

500 largest companies in America we know

this apple Microsoft Nvidia Amazon meta

Google the list goes on of course this

is a fund that is entirely weighted and

exposed to the US market now zqt fund

number two the beima all Equity ETF this

is what is known as an all-in-one ETF I

just talked about this recently me

0.20% the idea behind an all-in-one fund

or ETF like this is that it has a

predetermined asset allocation or a

predetermined asset mix already

essentially set for you so although this

is One Fund that's what you're buying

ticker zqt if we break it down this fund

holds seven other funds or other

Holdings we see a 45% split to the S&P

500 fund our American exposure 25%

waiting to the TSX aka the Canadian

broader Market 20% exposed to the

international markets 7 .5% exposed to

the Emerging Markets these upand

cominging markets and we do even see a

small amount of the portfolio in small

and midcap funds with this one fund

understand that I am inherently invested

in thousands of different companies or

stocks importantly I'm invested amongst

the global markets so not just the us

but I have exposure to Canada Europe and

other International markets across the

globe a quick point to mention slbe

aware about is that these two funds do

have overlap and I am am totally totally

okay with it it's just something that we

have to be aware about if we think about

vo being our exposure to the S&P 500

well we're also getting more exposure

with that through zqt I am aiming for

that I am okay with that and I'm aiming

to have the core of my portfolio exposed

to the S&P or the US market that overlap

does not bother me and the way I like to

think of it is these little additional

uh exposures to the Canadian Market or

International markets those are right at

the amount that I kind of want it to be

you guys know I'm not overly bullish on

having too much money in the Canadian

Market despite being Canadian so given

that this represents roughly a third of

my portfolio and then within that we

have a quarter essentially allocated to

the Canadian Market that is totally

totally fine with me again just

something to be aware about now question

you may be wondering why did I choose

ticker vo over ticker vfv because for

those familiar these are the exact same

thing they both own the S&P 500 they're

both investing in the 500 largest

companies in America vo trades in US

Dollars it's us listed versus vfv trades

in Canadian dollars it's a Canadian

listed product here's why reason number

one it's pretty simple when I

transferred my account from TD direct

investing into well simple I had a bunch

of US dollars in the account but

secondly arguably more important a

consideration for me was withholding tax

we've talked about this many times on

the channel particularly guys by the way

I'm speaking here to the rrsp the

registered retirement savings plan which

is the account we're talking about today

for those that don't know there is a

treaty in place between the US and

Canada that states that the RSP is

deemed or considered a retirement

account and depending on what types of

ETFs you buy within this account whether

it's Canadian listed or us listed they

are treated differently from a tax

perspective I'm not sure how well you'll

be able to see this on the screen but

what this document details is that

Canadian listed mutual funds MF that's

mutual funds or ETFs that hold us stocks

so what we're could be referring to here

is for example vfv ticker vfv is a

Canadian listed ETF that holds US Stocks

it literally holds you know the S&P 500

with holding tax applies

Wht applies meaning it is subject to

withholding tax whereas us-listed mutual

funds or ETFs that hold us stocks AKA vo

excuse me withholding tax is ex exempt

I've actually done a video on this a few

years back if you want to search it up

on the channel to learn more and dive

deeper into it but long story short by

owning the us-listed version if you will

vo we are exempt from paying that 15%

withholding tax to be clear just on the

dividends okay this is not 15% tax on

capital gains I'm not paying 50% tax on

the portfolio it's just at the end of

the day you know the dividends which is

a smaller amount especially on a fund

like this an S&P 500 fund which isn't

necessarily known for spewing out big

dividends a little bit of the uh

dividends would be withheld had I picked

vfv this is a slight optimization that

essentially I aimed for uh by picking vo

again matching that up with the fact I

had a bunch of US dollars to me it was

just a slight optimization if you will

and to be completely honest with you

guys it's something I don't really care

about personally again you make your own

decisions um and especially if you're

dealing with big big dollar figures like

million dollar portfolios sure these

things tend to matter a little bit more

if you're a dividend specific investor

they matter even more but for me it's

just not a huge consideration that's

just how it happened to play out a

question that I got in that same vein

was why don't I just take 100% of the

RSP and invest in these us listed

products because I own a third of it

essentially in a Canadian product and

zqt the simple answer for you guys is

it's not a huge deal for me it's

marginal at the end of the day to each

their own I don't want to tell you what

to do or what not to do I'm just sharing

with you guys what I'm doing and in fact

I think this might actually transition

into the next segment of this video

which hopefully will explain better my

whole thought process behind the switch

because this is a huge switch of the

portfolio that is uh essentially

uprooting my you know entire um

portfolio let's talk about that now

actually a couple months ago I did a

video with Mark which might be a

fascinating one to look back on because

that's where the seeds had been planted

and we had discussed in more detail all

the considerations about making the

switch but really what it boils down to

for me I mean number one the most

glaring thing that spurred this decision

for me was just optimizing my portfolio

for Simplicity efficiency and in many

respects automation to help me save on

time at this particular phase in my life

as I'm getting older and growing up

that's what I deem is important for me

right now and that's very different to

how things were just a few years ago you

know I think just three four years ago

when my work my career was working with

you know Mark my father for those I

don't know we were working at as

investment firm um prior to him selling

that my career was in finance and I was

a licensed adviser and all day long what

I did from 9 to5 my Essential

essentially my 9 to5 was researching

stocks doing due diligence keeping up

with earnings reports I was totally

engulfed with the investment industry

now when I think about what I'm doing

for work or with Blossom it's a

completely different set of

responsibilities and roles if you will

and in fact a lot of them you know

working in the startup environment

actually is a lot more on the business

um entrepreneurial side than the market

itself obviously Blossom is an app for

investing uh for the stock market so it

is tied but the the the difference the

contrast between you know how much time

I would spend you know a couple of years

ago to where I I stand today it's very

very different family is another big one

and of course a major priority for me at

this point in life is crazy to think my

daughter's already 2 and 1 half years

old and who knows what's in store for

the future the phase that I am at in

life is just very very different and

very very contrasting and I acknowledge

that reason number two for the switch is

that I can now accept guaranteed returns

in the stock market and you guys know

I'm totally joking when I say that right

um nothing in the stock market is

guaranteed it's a word that I never ever

like to use I really do mean that as a

joke but what I mean of course is that

my returns are now guaranteed to match

the index return that of the S&P for the

most part is what we're looking at and

if history has taught us anything we do

know that the S&P returns us somewhere

in that 7 to 8% range some people say

it's high as 10% again when I factored

inflation I like to think 7 8% uh of

course with individual stocks we've

talked about this Lots you have the

opportunity to outperform so had you

been in holding Nvidia or an Eli lilan

Co a stock that has just done super

super well well you can outperform of

course with just a couple of bad picks

you can underperform and you can

severely underperform over a long

periods of time with this switch over I

know that I can accept that market

return for the next number and number of

years/ decades and number three this is

possibly similar to the first point that

I talked about just a couple moments ago

but it's the peace of mind that this

passive investment strategy presents

like I said it's literally been very

little time since I've made this switch

over so this is something I can report

back to and give a proper update for you

guys in a number of months maybe even

years but I really do feel already that

there's this weight off the shoulder so

to speak don't get me wrong you guys

already know how much I love looking at

stocks and how much enjoyment I got out

of managing my own portfolio of

individual companies but without a doubt

there is a ease or a weight lifted when

that is something you don't have to

worry about and that is something that

is very again attractive for me at this

point in life in conclusion it's quite

the Bittersweet feeling that I have

going on right now and even honestly

putting this video together it just

feels Bitter Sweet I don't really know a

better word for that I've owned stocks

individual stocks that is since I was 10

years old you guys know my story with

McDonald's and Coca-Cola and to make

this change in my investing career and

my journey it it's a big one but I do

feel deep down that it is the right

decision for me at this time and I'm

proud to share with you guys my new

portfolio I've been making YouTube

videos now for 7even years so I started

this channel back in 2016 2017 and

what's really fascinating is being able

to go back and look uh you know almost

like my journey has been documented and

sharing with you guys like what I've

been doing in the process sharing my

learnings as I learn more about the

stock market passing that along to you

guys and it's going to be very

interesting in a few years to look back

at this moment knowing that it was a

pivotal change I think in wrapping up

one of the biggest lessons or keys that

you can take with yourself as a DIY

investor is being able to take a really

strong self-reflection of yourself when

you're managing your own portfolio

you're the one in charge you don't have

a professional looking over your

shoulder you don't have an adviser

telling you what to do it's you and you

have to sometimes take a good long hard

look in the mirror and truthfully

identifying where you are in terms of

you know your phase in Life or what you

can or cannot commit to the stock market

your risk tolerance you know what are

you comfortable with or uncomfortable

with and then picking a strategy that

best suits you hopefully you know over

the years I've been able to be somewhat

of a a role model or a leader or example

um for those that are looking to get

into investing and uh maybe this is a

scenario where things do change times do

change and sometimes that calls for an

adjustment in the portfolio the goals

don't change the outcomes that I'm

striving for have not changed I'm a

long-term investor I'm investing for

retirement I want to grow my wealth but

the vehicle that I'm using to do that I

think is better suited for this point in

my life with that said I'll wrap up the

video I would love to hear your guys

thoughts down in the comments section

below has anyone else been in this

situation before where they' felt this

need to make this switch I would love to

hear from you guys um down below or

share any thoughts if you guys enjoyed

the video give it a thumbs up of course

follow me on Blossom but as always I

thank you guys for watching I hope you

enjoyed and I'll see you in the next

video