Welcome to my portfolio deep dive for fall 2021! It’s been a long time since I shared the nitty-gritty of the accounts my wife and I own. Let’s do a deep dive and take a look at the shares we hold and how we’ve done in 2021 so far.
Our Investment Strategy
My wife and I both prefer to invest using ETFs. For us, ETF investing provides inexpensive, low-cost diversification and market-average returns. Also, with ETF investing, it’s just so much easier to get invested, manage your accounts, and stay invested.
Why is it easier to stay invested? Well, that’s because ETF investing is boring.
Since we don’t hold individual stocks, we never check the news looking for anything that could impact our investments. We don’t research company fundamentals, and we don’t stress about business models our future outlooks. And except when making a purchase (or writing a blog post), we essentially never check how our holdings are doing.
Instead, we allocate that mental and emotional bandwidth to other areas of our life, which has served us well.
The account I spent the most time on is my TFSA. As you may know, my wife and I’s main investing goal is to max out our TFSAs. As a result, pretty much all of our excess savings have been used to invest in our respective TFSAs.
I started the year with about $29,000 in my TFSA. This amount has grown to over $56,000, thanks to consistent contributions and some decent investment gains. In total, I’ve contributed $24,500 to my TFSA in 2021.
I only hold four tickers in my TFSA. These are VCN (228 shares), VIU (590 shares), VEE (334 shares), and VUN (208 shares) — all popular Vanguard ETFs that I’m sure you’re familiar with.
By holding these four funds, I try to keep the combination of my TFSA and RRSP approximately in balance with my allocation goals for our entire portfolio.
Explaining my RRSP requires some background information. A few years ago, I had $25,000 dollars invested in my RRSP, with much of it in cash. I later used that money as part of my downpayment on our home via Canada’s Home Buyers’ Plan.
Later on, I started to add to my RRSP using a bunch of excess USD I had accumulated. Since late 2020, I haven’t considered investing any more of my funds into this account. Before the end of the year, I think I’ll need to make a small contribution of around $2,000 to start repaying my Home Buyers’ Plan.
Now my RRSP mainly holds 68 shares of VTI. I like VTI because it gives me a low-cost way to hold the U.S. total market, all while avoiding the (albeit small) drag of withholding taxes on my investment. The remaining amount is allocated to 8 lonely shares of VCN.
My wife started 2021 with quite a bit more money in her TFSA thanks to having some leftover cash after buying our house. Since then, she’s contributed religiously, adding over $23,000 in 2021 so far.
Like me, her goal is to max this account as soon as possible. And thanks to some impressive YTD returns (11.6%!), she’s well on her way.
Her investment strategy is more interesting than the plain-jane Vanguard ETF strategy I’m using in my TFSA. For one thing, she likes to invest in two great dividend ETFs I don’t hear talked about too often. These are the iShares Core MSCI Canadian Quality Dividend Index ETF (XDIV) and the iShares Core MSCI Global Quality Dividend Index ETF (XDG).
Although she primarily owns XAW, these two dividend-focused ETFs provide sizable dividends each month. So much so that she’s earned a cool $990 so far in 2021.
This summer, I opened a margin account with Interactive Brokers. My goal with this account has been to buy VEQT using my $25,000 personal line of credit from Tangerine. With every $5,000 deposit, I take out a further $3,500 in margin debt to buy even more shares.
This is made possible thanks to an extremely low LOC rate of just 2.45%. On top of that, Interactive Brokers has an attractive margin rate of less than 2%. Between those sources of funds, I have accumulated over $33,000 worth of VEQT shares thus far.
About a month ago I was actually up $800 in this account. Since the market has declined somewhat, I am now in the negative $251 when accounting for share prices and margin interest.
So far, we’ve earned $1,900 in dividends and $11,000 in total investment gains in 2021. As I mentioned in our recent net worth update, we’re on track for $2,400 in dividends by the end of the year.
The total portfolio allocation of our accounts is close to my target of 20% Canadian, 44% U.S.A, 24% international developed, and 12% emerging markets. I prefer to hold less Canadian equities than your standard VEQT — mainly because our economy is so small — which allocates 30% to Canada.
Thanks for Reading!
Thank you for checking out my portfolio deep dive for fall 2021. What do you think about our ETF investing strategy? I recently wrote a few articles that you may be interested in. This includes my guide comparing the TFSA to RRSP and my choice for the best preferred share ETF in Canada. Consider giving those a read if you think they’ll help you on your financial journey!
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