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Millionaire Teacher Spends $120,000 on Canadian Government Bonds

Few people specifically know how well their portfolios have done over the past decade. 

And most investors probably overstate their true profits.  I may be among the majority who doesn’t know his portfolio’s exact performance.  But I can make a decent guess.

I’d peg it at roughly 11.6 percent per year, or 200 percent overall, from May 2002 to May 2012. 

During this time period, my investment club earned exactly 8.9 percent annually on a full stock portfolio (measured by the club tracking software at www.bivio.com)  but I had a secret weapon in my personal account, allowing me to run circles around my investment club’s returns: my bonds.

On May 2nd 2012, I added a further $120,000 of bonds to my portfolio.

I’ll explain why and how below.

Bonds?  Yeah, they’re about as exciting as a runny nose. You say the returns on bonds are currently awful?  Perhaps they are.  But I don’t buy them for their interest yields.  I covet them for their dry powder appeal.

Dispassionately rebalanced bonds and stocks can reap generous results, especially when the stock market’s chart looks like a series of peaks and canyons. 

Take a look at the decade long S&P 500 chart below.  Generally, stocks and bonds move in opposite directions.  Not always, but usually.  What if you bought bonds when the stock market was rising?  And what if you bought stocks when the stock markets were falling?  You would have been zigging when most people zag—and you would have earned enviable returns in the process.

What’s more, it wouldn’t have required any kind of special forecasting or market timing.



I wrote about this rebalancing process in my book, Millionaire Teacher

To boil it down as simply as possible, when stocks rise, I buy bonds.  When stocks fall, I buy stocks. 

As a recipe for success (especially during volatile stock markets) it’s a phenomenally profitable practice. 

To be clear, it doesn’t involve selling all of your stock investments when they rise, and buying them back when they fall.  That’s called market timing—and the side effects eventually hurt for nearly everyone who decides to play.

My process is less painful, and far less risky: 

I keep my portfolio somewhat balanced between stocks and bonds, with (currently) 40 percent in bonds and 60 percent in stocks.  When stocks fall, to keep my 60 percent allocation, I add fresh money to my stock indexes.  When stocks rise, I add to my bond allocation, to keep the portfolio split 60/40.

When the markets exhibit manic depressive behaviours, as they did in 2003, 2008/2009, June 2010, August/September 2011 and April 2012, then I’m forced to rebalance by selling some of my “winners” to buy some of my “losers”.  All I’m trying to do is keep my portfolio as close to my target allocation as possible.

If you’re questioning my claim of making 200 percent in the stock and bond markets over the past decade, consider this:   Assetbuilder, a financial service company, rebalances portfolios of indexes for their clients.  Three of their model portfolios would have made more than 200 percent over the past decade.  These aren’t single funds that I’m singling out.  They’re diversified portfolios, rebalanced with regular dispassion.

Unemotional rebalancing is a simple way to make loads of money when the markets are volatile. 

But it’s not psychologically easy for people to do.  To do so, you must ignore the financial media; ignore economic forecasts; and ignore your natural instincts.  Neither of the three is likely to encourage you to do anything useful.

Have a look at the three month chart of the bond index I just poured $120,000 into:



 Most investors would hate the looks of a chart like that. But I love it.

Let’s put the chart in perspective by moving to a longer time period:  the past six months of the Canadian bond index versus the six month price gain of the S&P 500 index.



The green line represents the bond index.  It has fallen slightly while the S&P 500 stock index has gained roughly 13 percent during the same six month time period.

Can you imagine what this did to my portfolio’s allocation?  Because of the market’s rise, I found myself with significantly less than a 40 percent bond allocation.

So I sold some of my stock indexes yesterday (mostly the U.S. market) and put $120,000 into my Canadian bond index.

Now I’m much closer to my 60 percent stock, 40 percent bond allocation.

Will such rebalancing always deliver great results? 

If the next ten years are as volatile as the previous ten, I think you’ll do very well, if you have the courage to follow the game plan.

During bull markets, however, rebalancing a portfolio could create a minor drag on your returns, relative to what a 100 percent stock allocation would deliver. 

But it’s still a prudent method of smoothing out returns, while giving you a wonderful position to take advantage of volatility if the markets have a crazy year, or ten.


Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School and Millionaire Expat: How To Build Wealth Living Overseas. My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions.

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52 Responses

  1. Hey Andrew!

    Rebalancing is definitely a powerful concept that is underutilized. I started applying it with my dividend investments as well. It's funny how the little things such as DRIP (compound growth) and rebalancing are actually what gives the most benefits over time.

    • Hey Passive,

      You're certainly right–especially during volatile markets. I found it challenging to rebalance stocks. Do you have certain criteria to determine which stocks to sell portions of when markets rise?

  2. george says:

    Andrew, why the ishares xsb insted of vanguard's vsb?



    • Hi George,

      When I first bought XSB, Vanguard's VSB didn't exist. I like to keep things simple, so I keep them as they are. Otherwise, after a dozen years or so (based on the way ETFs pop up) I'd have a dozen ETFs for each asset class or I'd be contanstantly selling my current ETFs to buy the newly released ones. The brokerage wins.

      I'm also an extraordinarily simple chap who doesn't like to complicate things.

      • Garry says:

        Loved your book, I have fired my advisor after reading the book. I was iinvested 100% in the stock market through high mer mutual funds. I bought your suggestion in your book. xin,xiu,xsp and xbb. I see you have gone to xsb. I did buy some of those, when funds came available from one of my accounts in mutuals were sold off. My question, should I be putting all of my bonds in xsb? Or some sort of balance. Thanks again for your book. I have passed it on to my son. I found out about your book when you did a blog with The Running Diva, Marilyn Arsenault. I am a 57 yr. old runner. So when a runner wrote what you wrote, it gives it more credence. Glad I did.

        • Hi Garry,

          I hope the running is going well!

          As for XSB, to be honest, it's the only bond index I have ever owned. In my book, I used XBB as an example because that's the one tracked with the initial couch potato portfolio concept that MoneySense suggested. It's a great ETF. I bought XSB because, as I mentioned in my book, I like to go with short term bond indexes. Having said that, XBB would work just fine.

          I'm glad you like my book, and I'm thrilled that you were able to check it out on Marilyn's blog! Very cool!



  3. george says:


  4. Ivan says:

    Hi Andrew,

    First of all, I would like to say thank you for writing such a great book and I truly enjoyed reading it. I learned a lot about index funds as well as personal finances. I just opened a TD e-series index fund account and I'm excited to get my investment started. I just want to get your opinion on this portfolio I'm thinking of implementing:

    30% Canada Stock Index Fund

    25% US Stock Index Fund

    25% International Stock Index Fund

    20% Canada Bond Index Fund

    Do you think this is a good portfolio for a 25 year old?



  5. Great post, as usual Andrew!

    Like PIE, rebalancing is a critical concept I try to take advantage of a few times per year. I tend to rebalance by adding new money, not selling, as much as possible.

    In my RRSP, XBB and XIU are DRIPping along nicely, so when new money accumulates, and those bond : stock ratios get out of whack, I make a purchase with the lagging holding.

    So far, so good.

    You may not like to read this, but I still have my U.S. stocks in my RRSP, JNJ, PG, ABT, SYY and T. Not fully indexed 🙁

    I did however, sprinkle in a bunch of VWO for good measure 🙂

    • Hey Mark,

      I think your stock picks are good ones. You're a long term buy and hold guy (DRIPPING) which is going to serve you really well over the long haul. I do have to admit one thing I don't miss about having individual stocks myself though. It's the rebalancing. With indexes, it's so much easier. I was constantly wondering which stocks I felt were undervalued or overpriced when rebalancing my stock component. I always had indexes as well, but I sure love the lazy man's approach of being 100% indexed. Hope all is well!


  6. Nicholas says:

    Hi Andrew,

    I just finish reading your book last week and indeed its an eyes opener for me. I like your strategy which allocate certain percentage between bonds and stocks 🙂 Appreciate on the book and the knowledge from you.

    I have a question in my mind. I'm currently reside in Malaysia, should I start with investing in the America/Canada market on indexed or start to invest in the ETFs in my country?

    Thanks and Kind Regards,


    • Hi Nicholas,

      As I mentioned in my book, it might be a good idea to have a home country bias. Split your stock indexes between Malaysia and the rest of the world (VT would do, because it's a total world index).



  7. James says:

    Thanks for the post. I'm just wondering how often do you re-balance in a typical year and how much do you allow your asset proportions to deviate from your target allocation before you re-balance?

    I, myself, usually just re-balance once a year before I top up my RRSPs and TFSA.

    Lastly my questions is if you consider trading costs and potential forex fees that you will be dinged, do you recommend having any sort of minimum asset size before re-balancing more than once per year?

    • Hi James,

      Personally, I don't have a "set in stone" system for rebalancing. But if my allocation gets significantly out of whack, I'll rebalance. Considering that this amounted to a six figure sum, I figured I should rebalance the account. I prefer to just buy the lagging index, but it doesn't always work out that way. I think I've probably rebalanced roughly 10 times in the past 12 years or so. I don't have a specific date to rebalance. And if the markets are less volatile, I can rebalance, somewhat, by purchasing the lagging index. I certainly do consider the cost of trading fees. That's one of the reasons I won't sell my XSB in favor of a slightly cheaper Vanguard ETF for my Canadian bonds. My bond portion is roughly $800K. No discount brokerage I know will give me a good deal when I trade that kind of sum. Of course, currency spreads will hit me as well. This is another reason I don't want to manually rebalance too often.

  8. Editor, Suitable Hou says:

    A simple road map to wealth but how many people will follow this rather than waiting for something more complicated promising unrealistic returns?

    • Editor, Suitable Hours,

      I think you're absolutely right.

      Even among index investors, I've found that many people continue to jump ship for "better" ETFs. The simpler the game plan, the better, I think. As for rebalancing, it certainly goes against the human grain. It reminds me of my wife asking me to lean back while learning to absail down a rock. It was so counterintuitive, and scared the heck out of me. Most people are like that with their investments.



  9. Barry says:

    Hi Andrew

    I find myself spending more and more time reading your blog and interesting posts within.

    The concepts within the book interest me, however as with anything taking that first step is the hardest part, think abseiling off a huge cliff.

    I’ve talked about Index Investing with a couple of other Australian investors, however a number of them whom have looked at index investing have gone down the route of LIC’s (Listed investment Companies) in Australia due to lower MER’s and comparable returns.

    Would a LIC be an acceptable addition to an Australian version of the strategy for a portfolio?

    There’s a couple of links about Australia’s largest LIC below



    I find no exposure to international shares or bonds though with LIC’s only for diversity and inclusion of a rebalancing strategy to take advantage of short term market mispricing, for long term gains though. Hence the ongoing appeal of a strategy such as yours

    Vanguard has yet to have the clout here it has in the US and MER’s are higher than in the US also.

    Currently we hold STW which is an ASX 200 ETF and a number of individual Australian stocks and exposure to the Australian property market. The Australian example within your book and Vanguards Life Strategy Funds, though interesting didn’t appeal greatly. Have you looked at them much?

    My next step is to contact Vanguard

    • Hi Barry,

      You may have stumbled upon something great. But I don't know anything about those products or that company, so I can't comment on it.

      I am, however, a huge fan of Vanguard Australia's Lifestrategy products.



  10. Jim says:


    Just discovered and read your book this weekend. Very clearly written and compelling.

    While I have avoided the temptations of hiring brokers or money managers over the years and have invested my own money, I have invested the bulk of my savings in individual stocks and actively managed mutual funds. This past week, I have reallocated much of it to low cost ETFs. I am already enjoying the simplified portfolio and less stress of 'managing' a portfolio of numerous positions.

    A few questions for you:

    1) I notice that the example portfolios in your book as well as your personal portfolio have bond allocations in the person's country of residence and/or in their country of origin. It seems to me that a 'global bond' allocation would be best from a diversification standpoint. Why do you invest in Canadian bonds, for instance, and why do you suggest/endorse your Singaporean colleagues investing in bond indices on the local Singaporean exchange rather than a more global bond allocation?

    2) I infer from your book that rebalancing is very, very key to obtaining long-term outperformance over buy and hold approaches. Your recent purchase of Canadian bonds is just one example. Do you agree that failure to rebalance undermines long-term performance in your approach and, if so, how often do you recommend rebalancing? Is there a particular deviation from your target allocation that triggers you to rebalance? Do you feel there is a better time of year or better market conditions in which to rebalance?

    Thanks for your book and thanks for your thoughts,


    • Hi Jim,

      I like to invest in Canadian bonds because I'm Canadian and I believe there's plenty of logic to it. Let's say you're American, and the U.S. dollar gets hammered. No big deal. If you pay your bills in U.S. dollars, have your bonds in U.S. dollars, and don't plan to leave the country, it won't affect you much.

      But let's imagine that you're Australian. The Aussie dollar has risen exponentially over the past six years or so. Not long ago, it cost 40 U.S. cents to buy an Aussie dollar and now it costs over one U.S. dollar. The resident Australian retiree would be very upset to have had his or her bonds in a global bond basket, considering that the Aussie dollar's growth has outstripped other world currencies recently.

      So….keeping a bond allocation in your home country has either a neutral effect (as in the case of the U.S. dollar bonds for Americans) or a winning effect (in the case of Aussies keeping bond money in their currency). I prefer neutral/win odds, as opposed to lose/win odds.

      As for rebalancing, I apologize if I gave the impression that I do this for outsized gains. I don't. Although outsized gains are certainly a biproduct when the markets are volatile.

      If there's a bull market, rebalancing between stocks and bonds would likely underperform the market itself. But if I never rebalance, over my lifetime I will end up with a portfolio with a heavier allocation to stocks with each passing decade. Generally, stocks outperform bonds over most time periods. Without rebalancing, I could eventually become a retiree with the vast majority of my money in stocks. And I wouldn't want that.

      Do I have a "set" trigger point from which to rebalance? No. But this last time, I was out by more than $120,000, and I didn't want to be. That's why I made the rebalance. I think if you're out by 10% or more (from your goal allocation) you may want to consider rebalancing, if your goal is to maintain a set allocation of stocks and bonds.

  11. kericbeck says:

    Took a friends advice and read your book and I realize that I'm one of the ignorant investors of whom you wrote. A question I have:

    As Jim alluded to but you didn't answer completely, is there a particular time to re-balance that gives you an edge other than the triggers of being overweight with one or the other? For instance, if I said I'm going to take a look at my portfolio every Jan 1, is that better than every Sept 1? Is the fact that the equity markets generally perform worse from July to Oct indicate that I should set a time every Oct 1 to re-balance and buy more equities? Since the majority of people probably use the beginning of year or ending of year as hard re-balance dates, (or beginning ending of quarters, etc.) does it make sense to not follow the herd in this manner too, and re-balance on, say, Oct 13 (or some other arbitrary date) every year? I wasn't sure if anyone has crunched numbers on this but I am interested in your opinion.

    Great job on the book and thanks for taking the time to share wisdom with the rest of us.

    • Hi Kericbeck,

      I don't choose a specific rebalance date myself, and I don't really know if one month would work better than the next. My guess is that you could probably find patterns, and they would exist, until they don't. In other words, we often get fooled by randomness. We might think that the majority of people rebalance at the beginning of the year, but I would guess that less than one percent of one percent of the population actually do so….no matter how many books I might sell! Start by asking 1000 people how many of them rebalance their portfolios at the beginning of January. I'll bet you an ice cream that none of them have.



  12. Wayne says:


    Thank you so much for writing your book. It has provided me with the tools I have been searching for and has de-mystified the world of stocks and bonds.

    Like one of your commenter’s above, as a Canadian, I went with your suggested TD eSeries 30% Can Bond Index, 25% Can Stock Index, 25% US Stock Index & 20% Int. Stock Index.

    My question relates to TFSA's. I have started my trading account in a TD TSFA but since I intend on leaving it indefinitely, does this make sense? I certainly like the idea of my TFSA but since I'll "never" make a cash withdrawal, should my investments be in a non-registered account? The thought being that I could use my TFSA as a play account, (ex. 5-10% of my portfolio in single stock income-generating funds, or capital gains to be used for holidays, large expenses, etc.) and then I could still get the benefit of tax free income. At my current monthly contribution rate, I should catch up and hit the ceiling in a few years.

    I know your book couldn't speak exclusively to the Canadian experience but I'm very new to the "finacial world" and I'd be really interested in your thoughts and recommendations.

    Thanks again for your book and taking the time to respond.

  13. Jeff says:

    Hi Andrew,

    After reading your book back in late February I immediately started the process of moving my investments to an online brokerage. Boy they didn't make it easy and they took their sweet time doing it. But it is now all in cash. I read your blog every day and I know you don't suggest timing the market. However with the Greece/European crisis about to come to a head what are your thoughts if I sit on my cash for the next month and see what becomes of it? My 75 year old Dad is in the same spot. He RRIFS his so it's even more important to him.

    I look forward to your advice.

    Thanks for your time, keep up the great website!


    • Hi Jeff,

      Hi Jeff,

      Unfortunately, I don't try to time the market, so I can't offer advice. I have no idea where the markets are going to go. I hope it drops further, but if you're scared of Greece/Europe, you're probably not alone. People move markets based on when they buy and sell. With a PE of 11 for the first world international market, could it be that fears are already priced in? Based on my rebalancing, this is the market into which my next purchase will need to go. And as you know, I hope it drops plenty more after I make that purchase. Compared to what I'll have when I retire, my portfolio is paltry today, so I'm not concerned about paltry money dropping, 20 years before I'll need it.




      • Jeff says:

        Thanks for the quick reply, I understand.

        Let's say your are 75 like my Dad and drawing on your money. Like you he has no pension from his employment. Would you continue to do the same rebalance once you've retired?

        Once again my thanks, your help is much appreciated.


        • Hi Jeff,

          I would continue to rebalance upon retirement. But at 75 years of age, I would have 75% of my portfolio in short term government bonds or inflation adjusted government bonds. The remaining 25% would be in stock indexes.

  14. Jas says:

    Do have unlimited tax free investing accounts in Singapore? If yes, you are very lucky.

    If you were investing mainly inside taxable accounts, would you still use the same strategy?

    • Andrew Hallam says:

      Hi Jas,

      In taxable accounts, taxable inefficiency is based on how high the portfolio's turnover is. If my account were taxable, it would have far lower taxable turnover than the average actively managed mutual fund (despite the fact that I have rebalanced the account roughly a dozen times in 12 years). I would guess that my taxable turnover has averaged less than 15% annually. So yes, if this account were taxable, I would be treating it the same way I have.

  15. AussieOil says:


    I stumbled upon your site from a Canadian Money Forum. Great information, and very timely to read your investing strategies/advice. I fully plan on buying your book for myself and as a gift for my financialy clueless, but high earning, brother in law.

    I am also transplanted Canadian (32 year old), and have been living in Australia with my (Aussie) partner for just over a year – so my investment portfolio is definitely a mixed bag. Funny enough when I first got into investing back home (2008) I fully indented to follow the Couch Potato strategy. While I do hold some index funds, I also have selected a number of individual stocks, some of which have done great (BCE/Potash) and others (RIM) which have been pitiful! Overall returns have been pretty average and I think its time to shape up and get back to sticking to a strategy!

    In the year living in Aus we have managed to avoid buying into the Australian Housing bubble (IMHO), and have saved a decent amount of money on top of the Superannuation that has been contributed by our employers. My main issue has been where to invest the cash, it is currently getting a good rate (by Canadian standards) in a bank account – and I have a (probably irrational) fear of trying to time my entry into the Australian Stock – even though I plan on Long term investing.

    My back of the envelope plan at the moment is to attempt to coordinate my Aus and Canadian Portfolios (which happen to be similar values) as such:

    Canadian – 30% Bonds/ 70% Stock Indexes (Canadian/US/International)

    Australian – 30% Bonds/ 70% Stocks (Australian/US/International)

    – The overall balancing will be slightly different than your suggestion as there will be 2 "home countries" i.e. Canada/Australia. I wonder what your thoughts are on this and on 1) Keeping cash in term deposits at 5.5% compared to purchasing bonds (in Aus) and 2) I own Berkshire Hathaway and use it as a proxy for an Index Fund.

    P.S – Was in Singapore in December – what a great place!

    • Hey Aussie Oil,

      You asked a great question. Aussie interest rates are high for general savings accounts, relatively speaking. Find out if Aussie bond yields are higher. If they are, then you know where to put your cash.

      • Barry says:

        In Australia…

        -Since 1970 cash has returned 8.9% and Australian bonds 8.7% per annum.

        -Since 1985 cash has returned 8.2%, Australian bonds 9.9% and International bonds 11%.

        -Since 2000 cash has returned 5.5%, Australian bonds 6.8% and International bonds 8.1%

        Since 1980, we have had 10 calendar years of negative performance in equities, in eight of these years Australian bonds have outperformed cash, and typically by a large margin

        source: Vanguard

        • AussiOil says:

          Great Info – Thanks Andrew/Barry. Also have to consider the tax implications of Bonds v Cash Account (if any difference). Intereseting to see how well both Bonds and Cash has done in Australia. Great long term averages.

          • Thanks for this Barry!

            Yeah, check the tax thing Aussie Oil. I actually didn't expect cash to have kept pace with bonds, but….there's something else beyond the yield. Cash doesn't fluctuate in price like bonds do. With bond rebalancing, you'd be taking advantage of those fluctuating bond prices (as I do). With cash, you can't do that. If the tax issues are the same, I'd go with the bonds so you could be slightly greedy when others are fearful over time.

  16. Chris the Truck Driv says:

    Hi Andrew, Well I tried to buy a 1000 dollars of the XSB.TO Short term and stuff it in my Vanguard Roth Ira so I could have more Rebalancing power if the Stocks crash so I can buy them on Sale but to my dismay they said only Canadian residents can buy these! Do you think the Vanguard Short Term Bond-ETF is a decent alternative? Sincerely Chris the Truck Driver

    • Hi Chris,

      Yeah, as an American, it's actually a better idea for you to keep bond money in your home currency. Vanguard's short term bond index would be an excellent addition.



  17. Steven f says:

    Is it better to sell off your rising stock shares to buy bonds? Or just add new income into bond shares? I ask because of the tax implications of selling shares of a fund for capital gains.

    • Hi Steven,

      I think it's best to buy the laggard, rather than sell and rebalance. But sometimes, when market swings create huge discrepancies, you don't have a lot of choice. With my account allocation out by more than $120,000, I realized that no amount of my monthly savings could rebalance it. So I had to manually rebalance the portfolio

  18. Mathew says:

    Hi Andrew,

    I see this particular post is getting a lot of attention, so I want to tack on a couple questions of my own as it pertains to re-balancing.

    1. I have put my savings and the result of closing lousy Zurich accounts in one place (DBS account) and am now allocating them out into my Vickers account based on something like the complete portfolio. I doing large lump sums into each category (Stock – US/Can/Int), Bond (Global/Canada short term) and REIT one at a time (keeps commissions lowest). Right now – REIT and stocks need topping up, and I'm not sure what to do. Markets are jittery, so I'm thinking they could drop further. But on the other hand, my bond is close to or above right now, so I shouldn't really be going more Bond/REIT. Thoughts?

    2. I have lived outside Canada for almost 10 years, and I have no idea when/if I'll be going back there any time soon. You suggest money into 'home' countries, but where is the best bet if you have no idea where that will be? A bit of everything?



    • Hi Mathew,

      You have an excellent gameplan. And I think you need to stick to your gameplan. My concern is this statement:

      "Markets are jittery, so I’m thinking they could drop further"

      This indicates that you are actually thinking of where things might end up going. And it is a futile endeavour, long term, to even think about this. If you make judgements (followed by action) based on your suppositions, I hope you end up being wrong. I don't want to be mean, but getting a forecast wrong (especially if it costs you money) might help to limit speculation in the future. If you make a decision based on a forecast, and the forecast works out, you will likely try forecasting again.

      I think you have an excellent game plan in place. Stick to it dispassonately, ignore the media, and follow through with your method for many many years. You'll do well. Really well.

      If you look at your current allocation, and you know what your goal allocation is, then you already have the answer…regarding what I would do if the account, goal allocation and current allocation were mine.



      • Mathew says:

        Hi Andrew,

        Fair point. It's hard not to get into the thought process of 'maybe if I wait just a few months, it will drop a bit more and then I can get more for my invested funds' or 'what happens if I put the money in today and the market tanks'.

        Also – my equity allocations consist of 7 classes, each at 10% of the portfolio (Can, Can small cap, US, US small cap, international, international small cap and emerging). So I'm needing to balance and have to pick between the last 3 to add to… Do you think that is too spread?

        In any case though, you're right, you are into speculation and that defeats the whole plan.

        Something outstanding, what about the second part – around 'home' countries'? Just keep mixing international funds (e.g. global bond – VT etc.)

        Thanks for your insights.

        • Hi Mathew,

          Yeah, I think your plan is good. And if a purchase sends you above your allocation for a certain month, it's no big deal. Keep commissions low and just keep buying one lagging ETF at a time. Don't worry about splitting your deposits to be perfect.

  19. Hi Wayne,

    I'm a bit confused. Why would you never withdraw from your TFSA? The purpose for saving money, of course, is to take it out one day.

    If I misunderstood, and you're asking for a "play" account to trade individual stocks, then a TFSA account would be a great option for that purpose, considering that you won't pay capital gains taxes.

  20. Al says:

    Hi Andrew,

    If the primary purpose of bonds is to "keep your powder dry", is it not better to keep them in risk-on currencies (i.e. US dollar denominated) rather than in risk-off currencies (i.e. Canadian dollar denominated). In 2008 when the market plunged it took down the purchasing ability of the Canadian dollar. I think the later droped more than 30%. In subsequent drops too the purchasing ability of risk-off currencies drop- the powder does not remain very dry. If you had U.S. dollars to buy stocks during market drops you could buy many more. The powder would truly be dry.

  21. Hi Al,

    I certainly wouldn't bother trying to do that. The currency could have gone the other way, just as easily. And you would only benefit if you speculated correctly before the market's movement, putting your cash/bonds in the "correct" currency ahead of time.

    I think it's best (and almost always more profitable) to keep things as simple as possible. If you're Canadian, Canadian bonds, some Canadian stocks and some international stocks (through indexes) allows home country bias (your future bills will be paid in your home currency) and it provides a fair amount of diversification as well. It's always easier to look at a specific (and in the case you mentioned, very short) period of time and assume that this is how things will play out in the future. But that won't always be the case.

  22. Barry says:

    Hi Andrew

    Just looking at the Bonds allocation

    For Australia, it would be VBISX rather than VGB then?

    i.e. Vanguard Short-Term Bond Index Fund Investor Shares (VBISX), rather than Vanguard Australian Government Bond Index ETF (VGB)

  23. Barry says:


    I wouldn't think any difference in Australia, as far as the ATO is concerned income is income and you're taxed at your marginal rate

    Having the portfolio in a SMSF though may offer additional advantages, tax wise?

    Edit: SMSF= Self Managed Superannuation Fund


  24. Crystal says:

    Hi andrew,
    Really thanks for your reply previously. I decide to open an account in saxo bank. However, I found that the choice of bond is limited by the the supply. If I have to buy a index bond through this bank, any suggestion on index bond? Should I buy US index bond or other bond from other countries? If I use time deposits instead of bond from a local bank for Chinese Yen, is it a good choice?

    Thanks very much for your help!


  25. Belinda says:

    Hi Andrew
    I’ve been reading a lot recently about how bonds are a poor investment when interest rates are likely to go up. Is this ever something you take into consideration when buying and rebalancing? Thanks

  26. Belinda says:

    Hi Andrew
    I’ve read a lot recently that bonds are a poor investment if interest rates are likely to go up. Is this something you take not consideration when buying and rebalancing? Thanks

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