Vanguard Canada Delivers Couch Potato ETFs

If you’re a Canadian, and you want a single ETF that operates like Vanguard USA’s Target Retirement Funds, Vanguard Canada has finally delivered.

These cost 0.22% per year.1

They provide a full couch potato portfolio in one fund, with Canadian stocks, Canadian bonds, US stocks, developed world international stocks and emerging market stocks.

If you don’t already have a portfolio of ETFs, and you aren’t using a group like WealthBar, let these be your one-stop shop. Vanguard will dispassionately rebalance for you.

I’ve been asking for these for years. I’m glad that Vanguard has finally delivered.

Choose the fund, from those below, that fits your risk tolerance.

Image by Pixabay

More information

 






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 (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). 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. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

You may also like...

24 Responses






  1. Save on your hotel - www.hotelscombined.com


  2. Jen says:

    Would the 80% equity not have a medium to high risk?

  3. Duncan says:

    Hello Andrew,

    Great news thanks.
    I just wonder if these funds are tax efficient in a regular account (taxable account).

    The reason I am asking is that I am currently an Expat but going back to Canada in April 2018.
    My contribution to a TSFA and RRSP are irrelevant unfortunately so my only choice is to invest in a taxable account (being living in Oman for the last 15 years) .

    Any thoughts on that matter.

    Cheers

    Duncan

    • Duncan,

      They would be tax-efficient in a taxable account. But buying the lagging index each month (in a taxable account) might be slightly more tax efficient because you would not have to do much rebalancing if you did that. But once again, I’ll give you my favorite quote of the day: you’re measuring the weight of the hair on a marathon runner’s legs.

      Cheers,
      Andrew

  4. Dave says:

    Good morning Andrew,

    Really nice find.

    I have a question regarding which bond fund to use in a taxable account (I am a Canadian)
    As you may already know Bond funds are very inefficient in a taxable account

    I just wanted to have your opinion on the following Bond ETF that was recommended by an advisor. This Bond fund is apparently tax efficient in a taxable account. (the advisor was paid a one time fee so i think there is not conflict of interest)

    Bond name: ZDB (BMO discount bond fund)
    Below a small review of the fund in question

    “ZDB: This fund is interesting because it focuses on bonds with small coupons, generating minimal interest income. The resulting tax-adjusted performance is actually higher than the nominal performance. This is the same tax-efficient strategy that I follow when I purchase bonds individually. It also has reasonably high government bond composition and mostly AAA and AA exposure. However, it has high securities lending and this adds to its overall risk.”

    Would appreciate your thoughts on this particular bond fund.

    Cheers

    Dave

    • Hi Dave,

      That bond ETF would be fine. But I also think you are weighing the hair on a marathon runner’s legs. This is probably the least important decision you’ll ever make.

      Cheers,
      Andrew

  5. Index says:

    Hi All,
    I have a slightly different question but this seems like a good place to ask it.
    I am a 47 year old Brit resident in the UAE.
    I have term life insurance that I purchased through my bank years ago. I suspect I am paying over the odds for it. Can anyone recommend a good provider?
    Same question also for medical insurance.
    Index

  6. Yoko Takahashi says:

    I have an upcoming 500K to invest. NON-registered account. 5-15 years. I am looking for ease and simplicity, hence my first thought was a robo-advisor. But with these new Vanguard funds, I thought this could be even better. Justin Bender wrote in his blog that it is not advisable for a taxable account. I like your quote about the hair on a marathoner’s leg, and I am hoping you are going to tell me the same? (BTW, I thank YOU for changing my financial life – I escaped from Friends Provident – Thank you endlessly!)

  7. Divo says:

    @Andrew Hallam These options are attractive as I’m just starting out with investing as a 45 year old Canadian ex-pat who will have a pension. After reading your books, I’m leaning towards the swap-based portfolio as it seems to offer the most tax efficient earning potential. Are options like VBAL attractive mostly because they are easy to use, or are they somehow more cost effective because there are no fees/commissions incurred through rebalancing every year? I’m guessing that the financial benefits of not incurring fees through rebalancing would be minimal and that the low expense ratio of the swap-based portfolio and the saved taxes on dividends would ultimately offer greater earning potential than these options, but I don’t have enough experience to really understand all the intricacies. I’d love to hear your thoughts. Thanks!

    • Divo,

      You are right. The swap-based products would win in the end. Now remember to save as much money as possible, every single month, no matter what the markets are doing. That’s going to make the biggest impact. I meet plenty of expats that worry about unimportant things (like which ETFs to choose) but they don’t save enough. So…save hard, my friend. You can rock this!

      Cheers,
      Andrew

  8. Maria says:

    For a Canadian expat, what are the differences between this service and Wealthbar?

    • Hi Maria,

      This isn’t a service. It’s just a single ETF wrapped up with different ETFs, making a complete portfolio. You would have to physically buy it online each time. Dividends wouldn’t get reinvested.
      WealthBar is an investment firm that can build you a portfolio and offer a financial advisor as part of the package. You wouldn’t have to make the transaction/trades. WealthBar would do it for you.

      Cheers,
      Andrew

  9. Maria says:

    Thank you. So there would be no fees, as compared to Wealthier.. But the tax implications would be the same?

    • Hi Maria,

      There’s no such thing as an investment that doesn’t charge fees. Vanguard’s all-in-one portfolios cost 0.22% per year. WealthBar’s fees are low, but they are higher than that. You can check the fees on their website (they differ, based on how much money you have).

      Cheers,
      Andrew

  10. Armand says:

    Hello Andrew,
    I recently came across your interview on DubaiEye, wish I would have came across your “teachings” much earlier…
    Currently living in Dubai bus likely to relocate to Canada within a 2-year horizon. I have 300K CAD sitting in a bank savings account in Canada. I am considering to move it to either (a) WealthBar for investing into ETFs or (b) Internaxx (former TD Direct International) for investing into index funds. What’s best? Tax impacts?

  11. Spa says:

    Hi. I have started to invest in index funds. I started with Tangerine’s INI220 but now that I’m at more than $50 000 I’m starting to think I could do better because of MER of 1.07 and because I’m about to triple my investment.

    Which option do you think is best?
    1. stay with INI220 Balanced fund
    2. Switch to TD e-series 40% TDB 909, 20% TDB 900, 20% TDB 902, 20% TDB 911 with MER of 0.44
    3. Switch to Vanguard Balanced ETF Portfolio (VBAL) 60% equities to 40% fixed income with MER of 0.22

    I have a pension so I’m not relying on this investment for income. Just hoping it can make some money (5% is my goal) to help my kids and grandchild in the future. I am 53 years old. I’m hoping to let the investment sit long term (10-20 years) without touching it but feel I can manage to rebalance yearly for the TD funds.

    Can you please compare the above options and advise on the winner.

    Thanks for your time.

  12. Jill says:

    Hi Andrew,
    I have to pay $10 per trade so it doesn’t make sense for me to contribute monthly to my VGro tfsa and rrsp. Would contributing 3 times per year be reasonable when it comes to paying the $10 trading fees? I have saved 60,000 to invest.
    Thanks for your help











Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.