Highlights:
- Discover popular funds Canadians are investing in
- Turn all-in-one funds into a simple ‘do it yourself’ investing plan that saves you money
- Example portfolios show how to make self-investing as easy as all-in-one or robo investing (for a fraction of the price)
Disclaimer: The information provided is for educational purposes only and should not be considered as investment advice. Always conduct your own research before making any investment decisions.
Building your own portfolio saves tens of thousands of dollars
Robo advisors and all-in-one funds are convenient, easy, and do much of the work of investing for you.
However, you’re paying a premium for that convenience.
You can save money by DIY-ing popular all-in-one funds - and it’s just as simple and quick!
All-in-one funds take the guesswork out of investing
And you don't have to spend your hard-earned money on extra fees to benefit from them.
There's an all-in-one fund for nearly every investor, and it can be the blueprint for your portfolio.
In his best-selling book I Will Teach You To Be Rich, Ramit Sethi points out, “When it comes to their finances, most people are mostly the same”.
Find the all-in-one fund that suits your needs, do it yourself, and use the money you would’ve spent on fees for your retirement.
People can get better results with DIY investing instead of using an all-in-one fund, simply because they keep more of their money!
How self-investing saves money (and can get better results)
Building your own portfolio costs a fraction of what robo advisors and all-in-one funds charge.
You don’t see these charges because you don’t pay them upfront - but they’re there, costing you hundreds or thousands of dollars a year.
You’re paying fees you don’t see
Management fees (known as MER, short for Management Expense Ratio) feel invisible because they don’t show up on statements.
These fees are deducted automatically, so they’re already factored in when you look at your reports.
If you’re using an all-in-one fund or robo advisor, you’re already on the right track! You’re saving a ton of money compared to using mutual funds.
But you can still pay less. And this is BIG.
The Financial Post's article Investment fees are the enemy of returns says,
“Investment products might be the only case where the best products are often the cheapest. Study after study has shown that cost correlates negatively to performance, meaning the cheapest products usually perform best.”
Using popular all-in-one funds as a blueprint, you can create your own portfolio that cuts your costs by more than half!
The 2 things (most) investment portfolios need
You can think of it as 2 main categories: opportunities for growth, and safety nets that give a layer of protection.
Opportunities
When you buy a stock and invest, you buy a piece of a company. As the company grows and makes profit, your investment grows too!
And it’s easier than ever to invest, because you don’t even have to figure out which companies to buy.
With the kind of funds we’re talking about here, you get hundreds of the world’s biggest companies - just with a few funds.
“But doesn’t the stock market go down?”
Yep, sometimes the market is down.
But investing for 20, 30 years gives time to recover from the dips (and even benefit from them!)
The past isn’t a guarantee of the future, but over the long term the ups have outweighed the downs.
Even though the stock market can go down for weeks, months, even years at a time,
When you ‘zoom out’ and look at the big picture, the overall trend is up - just like the accounts of everyone who invested!
And to make downturns easier to ride out, there are…
Safety nets
If the thought of seeing your money fluctuate makes you twitchy, you can make your portfolio more even-keel with bonds.
Bonds are more stable than stocks, plus they give reliable payouts - which is especially awesome during a downturn.
“So what are bonds, exactly?”
Bonds are like loaning money to a friend where they promise to pay you back, plus a little extra.
In this case, you lend money to a corporation or the government and they pay you back your original amount plus interest.
Because the amount is predetermined, you won’t win big - but you won’t lose big, either.
It’s steady money you can count on, no matter what the rest of the market is doing.
Meet the funds
These are ETF funds many Canadian investors use.
The specifics mentioned (such as fees) are accurate as of the time of this writing and may change in the future. Please verify current information before making any financial decisions.
These are the ‘ingredients’ that can be used to make a portfolio using the ‘recipes’ of popular funds.
Opportunities for growth
🇺🇸 American
This fund invests in the 500 largest companies in the U.S. These are some of the biggest and most successful businesses in the world!
Symbol: VFV.TO
Name: Vanguard S&P 500 Index ETF
MER: 0.09%
🇨🇦 Canadian
This fund invests in large, medium and small Canadian businesses.
This offers a nice range - big companies give stability, and smaller companies give opportunity for growth!
Symbol: VCN.TO
Name: Vanguard FTSE Canada All Cap Index ETF
MER: 0.05%
🌍 International
With American and Canadian funds taken care of, use this to invest in companies outside North America.
Some of the biggest companies in the world are in Europe and Asia, and you get a piece of them in this fund!
Symbol: VDU.TO
Name: Vanguard FTSE Developed All Cap ex-North America Index ETF
MER: 0.22%
Safety nets
🍁 Canadian bonds
This fund includes a wide range of Canadian bonds, like government, municipal, and corporate bonds.
Symbol: VAB.TO
Name: Vanguard Canadian Aggregate Bond Index ETF
MER: 0.09%
⚖️ American bonds
Like its Canadian counterpart, this fund has a mix of all types of bonds including government and corporate. It gives a slice of the U.S. bond market, in juts one fund.
Symbol: AGG.TO
Name: iShares Core U.S. Aggregate Bond ETF
MER: 0.03%
Model portfolio recipes
Now that you know the ingredients, see how a portfolio can be put together by following ‘recipes’ inspired by popular all-in-one funds.
These are examples
You can make a blueprint out of any all-in-one fund that suits your investing goals.
It’s possible similar results without even using the exact funds the all-in-one uses.
For example, the ‘ingredient’ funds listed aren’t the same as what’s in the all-in-one, but they are similar with lower fees. (Because that’s the name of the game!)
Turn a model portfolio into a recipe
Once you have an all-in-one fund you want to replicate and the funds that are the ‘ingredients’, you need to know how much you need of each ingredient.
Instead of ‘2 tablespoons of sugar’, investing recipes give the percentages needed of each fund.
You’ll see the percentages of each fund in the educational examples below.
Growth portfolio
People investing for the long haul (minimum 15 years) might want to focus on growth since they have time to ride out the market ups and downs.
This model is a simplified version of the popular all-in-one fund XGRO.TO.
🇺🇸 VFV.TO: 37%
🇨🇦 VCN.TO: 20%
🌍 VDU.TO: 25%
🍁 VAB.TO: 15%
⚖️ AGG.TO: 3%
The total management fee for this portfolio is 0.11%.
Balanced portfolio
Balanced portfolios are more stable than growth funds.
They don’t see as dramatic ‘ups and downs’ that growth funds do since they have more bonds. People using balanced portfolios should be investing for a minimum 10 years.
This is modeled after the popular all-in-one fund XBAL.TO.
🇺🇸 VFV.TO: 28%
🇨🇦 VCN.TO: 16%
🌍 VDU.TO: 18%
🍁 VAB.TO: 30%
⚖️ AGG.TO: 8%
The total management fee for this portfolio is 0.10%.
Conservative portfolio
This kind of portfolio is for people who are risk-averse or nearing retirement.
60% of this portfolio is in bonds, and only 40% are in growth funds. The ‘big win’ for this portfolio is less about growth, and more about protecting your money and generating reliable income.
This is modeled after XCNS.TO.
🇺🇸 VFV.TO: 18%
🇨🇦 VCN.TO: 10%
🌍 VDU.TO: 12%
🍁 VAB.TO: 48%
⚖️ AGG.TO: 12%
The total management fee for this portfolio is 0.10%.
All-growth portfolio
On the complete opposite end, this portfolio is ‘all in’ on growth, with no bond safety net.
This ultra-aggressive kind of portfolio isn’t for everyone.
You need to be comfortable with the potential of seeing your portfolio drop by half - and have the confidence to stay in the game, without getting cold feet and pulling money out.
People who are 100% in growth are typically young so they have many decades of investing ahead of them, or they have their own safety net so they don’t need bonds - like a good pension.
This is modeled after XEQT.TO.
🇺🇸 VFV.TO: 46%
🇨🇦 VCN.TO: 27%
🌍 VDU.TO: 27%
The total management fee for this portfolio is 0.11%.
DIY investing can be as easy as an all-in-one fund or robo advisor
Passiv makes it simple to create your own portfolio while saving tens of thousands of dollars (or more!) compared to using all-in-one funds.
Just set up your portfolio once, and it will automatically buy all the funds you need with the click of a button!
Keep more of your money
Here’s an example…
Mike invests $50,000 into his TFSA. He then invested $500 a month for 30 years, and got an average return of 7%.
If he invested using the…
- DIY ‘growth’ portfolio with a management fee of .11%, he would have $989,430.51
- Canada’s most popular all-in-one fund VGRO.TO with a management fee of .24%, he would have $959,225.47
- Robo advisor with an average fee of .41% would have $921,379.38
With a DIY portfolio and Passiv, Mike would be ahead by $30,000 - $68,000.
If you’re using an all-in-one or robo advisor, you are paying this already.
Want to keep this money for yourself?
Sign up for Passiv and invest with ease while saving money!
