I spent a total of four minutes working on my RRSP portfolio last year. It wasn’t benign neglect – my two-ETF all-equity portfolio really is that simple! I made four trades, which took about a minute each after determining how much money to invest, in which of the two ETFs to allocate the investment, and how many shares that would buy (plus a few seconds to enter my trading password).

The buying process is easy since I don’t have any bonds in my portfolio. I simply add money to the fund that brings my portfolio closest to its original allocation – 25 percent VCN and 75 percent VXC.

Two-ETF Portfolio

I don’t expect my four-minute portfolio to change much this year. I still plan on making four trades this year in my RRSP, and now that I’m contributing regularly to my TFSA again I’ll make an additional four trades in that account. Add 12 monthly contributions to my RESP and that brings my total time spent on investing to just 20 minutes a year.

Back when I was picking stocks I’ll bet I spent a good three hours a week reading about individual stocks and market trends, plus another hour a week staring at my portfolio and playing around with stock screeners. That adds up to over 200 hours a year spent obsessing over my portfolio and trying to find an edge with my investments.

Why My Four-Minute Portfolio Is Tough To Beat

Four-Minute Portfolio

Was it worth it? For me, it wasn’t. That’s why I made such a massive change to my portfolio in January 2015. After five years of successfully picking dividend stocks I realized I could do just as well, and probably even better over the very long term, with a passive approach – all while expending a tiny fraction of the time and effort on investing.

I switched to a two-ETF investing solution and haven’t looked back, or more accurately, haven’t looked at my portfolio aside from a cursory glance in two years.

Has investment performance suffered? Hardly. This four-minute a year portfolio was up 18.08 percent in 2015, up 8.76 percent in 2016, and is up 5.66 percent year-to-date. Compare that to the benchmark I used for my dividend stock portfolio, iShares’ CDZ, which was down 11.53 percent in 2015, up 20.93 percent in 2016, and is up 1.3 percent year-to-date.

When it comes to return on time invested, my four-minute portfolio is pretty tough to beat.

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32 Comments

  1. EngPhys on March 5, 2017 at 6:43 pm

    If you want to beat it, in an RRSP replace VXC with VTI and VXUS. You’ll need to convert the money using Norbert’s gambit, but you can save a bunch with much less foreign withholding tax and lower fees. VXC is still a good strategy though.

    • Echo on March 5, 2017 at 10:53 pm

      It’s true, by replacing VXC with two U.S.-listed ETFs you’ll save on fees and might beat the returns from my two-ETF portfolio, but you’ll also increase the time spent on the portfolio, which is a major drawback for me. I’m hopeful that a better solution will present itself in the coming years.

  2. Bryan on March 5, 2017 at 7:31 pm

    Love this model! It’s simple, logical and easy to understand. One question though: Any thought of switching VXC to XAW? From Canadian Couch Potato, Dan mentions they have a similar mix of holdings; the XAW MER is slightly lower than VXC; and, XAW uses a Canadian-listed ETF for international developed markets, lowering its foreign withholding taxes. More helpful for registered accounts. Would like to hear your take on the pros/cons of switching or not. Thanks!

    • Echo on March 5, 2017 at 11:03 pm

      Hi Bryan, thanks for the feedback. If I were starting today I’d probably go with XAW over VXC.

      According to Justin Bender’s excellent breakdown of the costs of VXC and XAW, the difference is only 0.1 percent – so about $100 a year on my $100k.

      $100 is $100, but I’m going to wait a bit and see if maybe Vanguard lowers its fees on VXC or comes up with a more efficient solution. The company isn’t known for being the second cheapest in the market, so I’m hopeful!

      • Braden on September 22, 2018 at 10:06 am

        Hi Robb,

        With XAW instead of VXC, are their any other considerations?

        What I mean is, do you have to do more work throughout the year to hold XAW over VXC? I don’t want to do more work for .1%

        I am new to this and have looked elsewhere not dining anything yet.

        • Robb Engen on September 22, 2018 at 2:52 pm

          Hi Braden, XAW is a great substitute for VXC and comes at a slightly lower cost. You wouldn’t have to do anything different if you held XAW in your portfolio.

  3. Darren on March 6, 2017 at 4:38 am

    I didn’t spend a single second on my portfolio because I use a roboinvestor

  4. Jon on March 6, 2017 at 5:22 am

    How do you / do you avoid online trading platforms that require a minimum contribution each month (and then apply a fee on a per trade basis)?

    • Echo on March 6, 2017 at 12:35 pm

      Hi Jon, I use TD Direct, so there is a $9.99 charge for every trade. That’s why I usually just buy quarterly instead of monthly.

      There are other brokerages that don’t charge for ETF purchases (Questrade comes to mind). At the end of the day, for me having all of my accounts in one place is worth $40/year.

  5. Alex on March 6, 2017 at 7:07 am

    As I am starting out at a rather older age (59) would the 2 you recommend for RRSPs be ok in my TFSA?
    Thank you!

    • Heather on March 6, 2017 at 8:43 am

      I am also curious to see if he uses the same ETFs in his TFSA

      • Echo on March 6, 2017 at 12:51 pm

        Hi Heather, I only have one ETF in my TFSA – Vanguard’s VCN. The idea is that I treat my RRSP and TFSA as one giant portfolio and I’ll try and maintain an overall allocation of 20-25% Canadian equities and 75-80% foreign equities.

        My TFSA balance is very small (under $10k) but as it grows I’ll probably trim back some of the Canadian equities in my RRSP.

      • Doug on March 7, 2017 at 10:09 pm

        There was some mention of XAW being a good one for a registered account, so yes, I’d have the same question about NON-registered accounts and if these same ones would do just as well in a TFSA, for example.

    • Echo on March 6, 2017 at 12:49 pm

      Hi Alex, if you’re asking whether this two-ETF portfolio is appropriate for a TFSA as opposed to an RRSP, the answer is yes. If you’re asking whether it is appropriate for you, I have no idea of your tolerance for risk, investing time horizon, etc. and so that would be up to you to decide.

      I will say that my appetite for risk at age 37 is likely much higher than it will be at age 59.

  6. Rick on March 6, 2017 at 9:41 am

    Just curios to hear your thoughts on an ideal entry point for this strategy. I know your not suppose to time the markets, but with markets at all time highs. I would be very nervous to plunk down 100 -150 K in RSP money at this stage, and monthly increment purchases would not be cost effective.

    • Echo on March 6, 2017 at 3:24 pm

      Hi Rick, this is a common question. Suppose you have $100,000 already invested in dividend stocks like I did back in 2015, and you’re considering a switch to this two-or-three ETF approach. Since you’re already invested in the market, this just becomes a change in strategy from stocks to ETFs and the timing should be irrelevant.

      Put another way, if the markets being at an all-time high concerns you right now, what do you plan to do about it? If you’re still fully invested at these levels then, again, changing strategies shouldn’t be an issue.

      Now if you’re talking about investing a lump sum of cash and you’re nervous about the market, even though the evidence suggests you should just invest it all now and you’ll come out ahead, you might feel better about splitting up your entry points over the course of the year.

    • Richard on March 17, 2017 at 9:48 am

      While it may seem smart to wait, do you think you’ll be eager to invest during a major crash? (if you should be so lucky as to have one happen in the near future)

      A market that tends to go up will tend to reach new all-time highs regularly. The S&P 500 once reached an all-time high of $200… picture yourself being scared to invest then because it can’t go up any more!

    • Richard on March 17, 2017 at 10:54 am

      Just came across an excellent quote on the Canadian Couch Potato website:

      ““The S&P 500 Index has closed at an all-time high on 6.9% of all days,” he writes. That’s about once every couple of weeks, on average. “More tellingly,” Lina says, “the index has been within 5% of its all-time high on 46% of all trading days since 1950.””

      It looks like avoiding investing when the market is near all-time highs could be a very painful experience.

  7. Brian on March 6, 2017 at 11:17 am

    Still learning about new ways of investing instead of mutual funds.
    What is your actual costs of all fees to maintain this portfolio?

    • Echo on March 6, 2017 at 3:15 pm

      Hi Brian, the MER on VCN is 0.06 percent and the overall cost of VXC in an RRSP (which is higher than the listed MER because of withholding taxes on foreign dividends) is about 0.66 percent. Then I spent $40 on the trades. So, altogether we’re looking at:

      VCN – $30,000 x 0.06% = $18
      VXC – $100,000 x 0.66% = $660
      Trades – $9.99 x 4 = $40
      Total cost = $718

      That works out to 0.55% of the portfolio.

  8. Ed on March 9, 2017 at 1:18 pm

    Looks to me like VCN is only suitable for a tax-sheltered account. All distributions are characterized as interest not dividends (according to Morningstar) so you lose the tax benefit of Canadian dividends outside of an RRSP or TFSA.

  9. Peter on May 31, 2017 at 11:21 am

    I am in my early 60’s and retired, I have a DB pension and my wife does not. Between the two of us we have about 275K in RRSP s and 125K in TFSA s. We have about another 140K in GIC s and some money in unregistered accts we are looking to invest. I have become annoyed at the amt of fees I’m currently paying on the mutual funds we hold, what would you think about your two fund solution for someone like me ?

    • Echo on June 1, 2017 at 9:42 pm

      Hi Peter, really hard to say without knowing all the details of your financial situation and what you need in terms of income from your portfolio. If it’s simply to invest for the long term (i.e. same as your mutual funds) and your income needs are being met by your pension and other investments, then certainly a low-cost ETF would be preferable to a more expensive mutual fund. I’d recommend talking to a fee-only planner to help look at the bigger financial picture.

  10. Keith on June 29, 2018 at 2:48 pm

    I’m curious to know why you have no fixed income allocation and only stick to CDN equity and Itnl equity ETFs?

  11. Victor on November 26, 2018 at 8:33 am

    Robb:
    Now that Vanguard has their asset allocation ETFs, would you simply replace your two with one such as VGRO? Any downside that you can see?

    • Robb Engen on November 29, 2018 at 11:11 pm

      Hi Victor, that’s what I recommend for most people now (VBAL or VGRO). However, if I want to keep my portfolio at 100% equities I’ll still need to use two ETFs in my investment portfolio rather than the asset allocation ETFs that only go as high as 80% equities.

  12. Phil on February 5, 2019 at 4:59 pm

    Hi Robb – Thanks for the eye opening tips!!! One quick question if you don’t mind: I am already invested in VUN (around 22K), so would adding VEF achieve the same overall results? I’m looking at a 20-22 yr investment period. I should also mention that my Govt pension acts as my fixed income, although I might add some VAB in my RRSPs later.

    Thank You!
    / P

  13. Ian on February 27, 2019 at 1:54 pm

    Hey Robb! What are your thoughts on 100% VEQT vs a two fund model? I’m in a similar position as you (I’m an RN- if my DB pension collapses then we’re probably living in a post-currency zombie apocalypse!) and I’ve been debating between a lower fee model portfolio vs simply VEQT. If you were starting again in 2019, do you think you’d stick with the same path or further simplify now that a 100% equity one fund ETF is available? Thanks Friend!

  14. Robb Engen on February 27, 2019 at 3:00 pm

    Hi Ian, thanks for your comment. I will be posting something on this soon but to your point I’m thinking of a change. Here’s what I have in mind:

    I’m not crazy about the 30% Canadian content in VEQT, but if I just use that in my TFSA (which is much smaller than my RRSP), and hold only VXC in my RRSP I think that could be my new two-fund solution. Right now I’m VCN in my TFSA and VXC in my RRSP, but I expect my TFSA to be growing much faster than my RRSP since I’ve maxed out RRSP room.

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