My NEW Wealthsimple ETF/Index Fund Portfolio 2024
Summary
TLDRThe 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
📈 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.
🌐 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.
💼 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.
Mindmap
Keywords
💡ETF Portfolio
💡RRSP
💡Vanguard S&P 500 Index ETF
💡BMO All Equity ETF
💡Asset Allocation
💡Withholding Tax
💡TSX
💡Simplicity and Efficiency
💡Passive Investment Strategy
💡Self-Reflection
💡Blossom
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
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