How I Invest My Own Money

Regular blog readers know that I’m a big proponent of passive investing with low cost, globally diversified index funds and ETFs. Why? Low fees are the best predictor of future returns. Global diversification reduces the risk within your portfolio. Index funds and ETFs allow investors to hold thousands of securities for a very small fee.

Investors who eventually come to understand these three principles want to know how to build their own index portfolio. There are several ways to do this: pick your own ETFs through a discount broker, invest with a robo-advisor, or buy your bank’s index mutual funds.

Still, the amount of information can be overwhelming. There are more than 800 ETFs, thousands of mutual funds, a dozen or more discount brokerage platforms, and nearly as many robo advisors. The choices are enough to make your head spin. 

I narrowed these investment options down when I wrote about the best ETFs and model portfolios for Canadians. I’ve also explained how you can retire up to 30% wealthier by switching to index funds. Finally, I shared why you should hold the same asset mix across all of your accounts for maximum simplicity.

Now, I’ll explain exactly how I invest my own money so you can see that I practice what I preach. 

My Investing Journey

I started investing when I was 19, putting $25 a month into a mutual fund. When I began my career in hospitality, I contributed to a group RRSP with an employer match. The catch was that the investments were held at HSBC and invested in expensive mutual funds.

When I left the industry I transferred my money (about $25,000) to TD’s discount brokerage platform. That’s when I started investing in Canadian dividend paying stocks. I followed the dividend approach after reading Norm Rothery’s “best dividend stocks” in Canada articles in MoneySense.

I later found dividend growth stock guru Tom Connolly (plus a devoted community of dividend investing bloggers) and started paying more attention to stocks with a long history of paying and growing their dividends.

Five years later I had built up a $100,000 portfolio with 24 Canadian dividend stocks. My performance as a DIY stock picker was quite good. I had outperformed both the TSX and my dividend stock benchmark (iShares’ CDZ) from 2009 – 2014. My annual rate of return since 2009 was 14.79%, compared to 13.41% for CDZ and 7.88% for XIU (Canadian index benchmark).

But something wasn’t quite right. I started obsessing over oil & gas stocks that had recently tanked. I had a difficult time coming up with new dividend stocks to buy. I read more and more opposing views to my dividend growth strategy and realized I was limiting myself to a small subset of stocks in a country that represents just 3-4% of the global stock market.

Related: How my behavioural biases prevented me from becoming an indexer

Furthermore, new products were coming down the pike – including the introduction of Vanguard’s All World ex Canada ETF (VXC). Now I could buy a tiny piece of thousands of companies from around the world with just one product. 

So, in early 2015 I sold all of my dividend stocks and built my new two-ETF solution (VCN and VXC). I called it my four-minute portfolio because it literally took me four minutes a year to monitor and add new money. No more obsessing over which stocks to buy or worrying if a stock was going to go to zero. 

Fast-forward to 2019 and another product revolution made my portfolio even simpler. Vanguard introduced its suite of asset allocation ETFs, including VEQT – my new one-ticket investing solution

The next change to my investment portfolio was in January 2020 when I moved my RRSP and TFSA from TD Direct Investing over to Wealthsimple Trade to take advantage of zero-commission trading. 

Finally, I opened a Corporate Investment Account at Questrade this summer to invest the retained earnings in my business.

How I Invest My Own Money

I’ve written about personal finance and investing for more than a decade. Over that time I’ve done an incredible amount of research on banks, discount brokerages, robo-advisors, ETFs, index funds, and investment strategies. I’ve read extensively about behavioural finance and evidence-based investing. I’ve determined that investing in a simple, low cost, globally diversified, and automatically rebalanced portfolio will lead to the best long-term outcome.

I eat my own cooking, so to speak, and invest my own money this way. Here’s what it looks like:

Account typePlatformProductAmount
RRSPWS TradeVEQT$223,456
TFSAWS TradeVEQT$82,474
LIRATD DirectVEQT$149,652
RESPTD DirectTD e-Series$56,593
CorporateQuestradeVEQT$80,283

I recognize there is no “one-size-fits-all” investing solution. Investors need different products depending on their risk tolerance and stage of life. They use different account types depending on what they do for a living, their tax bracket, cash flow, and available contribution room. They may need to use multiple investing platforms to save in an employer-sponsored plan, to reduce fees, or to open a new account type.

Why Three Investing Platforms?

I’ve banked with TD for my entire life and so it made sense to open my first discount brokerage account there in 2009 at what was then called TD Waterhouse. That’s where I established my RRSP, TFSA, and my kids’ RESP account.

I moved my RRSP and TFSA over to Wealthsimple Trade when the mobile-only platform added these account types to its line-up. I was attracted to the zero-commission trades and was tired of paying $9.99 per trade at TD Direct.

Wealthsimple Trade does not offer RESPs, LIRAs, or Corporate accounts.

I kept my kids’ RESP at TD Direct, and since that portfolio is invested in TD e-Series funds I don’t pay any trading fees or commissions.

I had to open a LIRA this year after leaving my public sector job and receiving the commuted value of my pension. I opened the LIRA at TD for simplicity. The trading fees made no difference since I invested the entire amount into VEQT and don’t plan to make any changes (and you cannot contribute to a LIRA).

I’m a big fan of Questrade and what they’ve done for self-directed investors over the past 20+ years. I wanted to try out the platform for myself and had the opportunity to do so when I decided to open a Corporate Investment Account.

ETFs are free to purchase on the Questrade platform and since I planned to add new money regularly it made sense to use Questrade. 

Final Thoughts

I write a lot about investing and my philosophy is all about building a simple, low-cost, globally diversified investment strategy. I’ve explained how I invest my own money and apply this thinking to my unique situation. But my situation is not the same as yours.

You may not have the time, desire, or temperament to open a self-directed brokerage account and buy your own ETFs (even if it’s just one ETF). You may feel more comfortable with a digital or robo-advisor guiding the way.

Some of you may not feel comfortable at a robo-advisor and want to remain at your bank. There’s a solution for you, too, in the form of bank index mutual funds.

Some of you may be highly motivated to optimize your ETF portfolio even more by holding U.S. listed ETFs in your RRSP to save on costs and foreign withholding taxes

The point is that there’s a solution for everyone in today’s investing landscape. I hope that by sharing these strategies, and how I invest my own money, you’ll be able to apply this thinking to your own investments to simplify your portfolio, reduce your costs, and ultimately lead to a better long-term outcome.

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27 Comments

  1. Denis C. on October 29, 2020 at 3:12 pm

    Thanks. This is helpful guidance.

  2. AnotherLoonie on October 29, 2020 at 3:48 pm

    This is so insightful. I think a lot of DIY investors go through the same journey: start with picking stocks, often having a dividend focus, and later settling with a simple, all-in-one fund solution.

    Your early returns with stock picking were truly impressive. I’m surprised that didn’t motivate you to stick with it.

    • Robb Engen on October 29, 2020 at 4:13 pm

      @AnotherLoonie – Thank you! I find the journey often starts with expensive mutual funds and then switches to stock picking. How well (or poorly) that goes will often decide what happens next.

      My returns were good but the entire market was going up. I don’t place any value on my stock picking prowess – it was just luck. That luck ran out in 2014. I missed my benchmark (badly) and that’s when I realized I would have to spend the rest of my investing life constantly trying to pick winning stocks and avoid losing stocks (agonizing about both the entire way).

  3. Jennifer on October 29, 2020 at 5:10 pm

    Just a quick note that WealthSimple now supports the LIRA and RESP account types. Not sure how recently they added it, but my husband is in the process of transferring his LIRA to them.

    • Robb Engen on October 29, 2020 at 5:50 pm

      Hi Jennifer, I use Wealthsimple Trade – it’s their self-directed and mobile-only trading platform to buy your own stocks and ETFs. You’re referring to Wealthsimple Invest (the robo-advisor platform), which does indeed offer many different account types including RESPs and LIRAs.

      Wealthsimple (the robo) is great, my wife has her RRSP and TFSA there.

      • Jennifer on October 29, 2020 at 6:01 pm

        You’re right – I was thinking of the Wealthsimple Invest platform! My bad!

      • Marko Koskenoja on October 31, 2020 at 6:08 am

        Excellent overview of your investing journey Robb – thanks for posting.

        My path was similar to yours but at 61 years old I’ve been retired for a few years and living off my dividend ETF’s. While I don’t like the market gyrations my dividends flow each month and I no longer need to think about rebalancing or selling any holdings to fund my retirement.

  4. Gus on October 29, 2020 at 6:07 pm

    Hi Robb,
    Thanks for the great article as usual, on a side note TD is offering now 0$ fees on selling and buying TD etfs uder TD assistant goal and they have an excellent new lineups for that including a One click portfolio ETFS , speaking of that if you can review it and tell us what you think about it it will be great.

    • Robb Engen on October 29, 2020 at 9:17 pm

      Hi Gus, thanks – I saw that yesterday and perhaps it could be a solution for my TD e-Series funds. I need to change up my asset mix and one of their one-ticket ETFs (with free trades) would be a great fit and save me from rebalancing three different funds.

      I’ll take a closer look and report back. My general view is that the asset allocation ETFs offered by Vanguard, iShares, BMO, and TD are all really good “one-ticket’ options for investors.

  5. Marjorie on October 29, 2020 at 9:41 pm

    Robb, Does Vanguard have a USD equivalent of VEQT? I have funds in USD that I’d like to put into an asset allocation ETF but I don’t see one on the Vanguard list. I love your blog! Marjorie

  6. Gerry Surtees on October 30, 2020 at 5:45 am

    Hi Robb: Your investment trail looks very much like my own. Even down to the same companies complete with Moneysaver advice. I am a few years ahead and have been retired for approx. 10 yrs it’s a good go. Thanks for the great articles

    Gerry Surtees
    Sudbury

    • Robb Engen on October 30, 2020 at 10:01 am

      Hi Gerry, thanks for your comment. As a life-long learner I know my investing journey has been shaped both by my research and by the product landscape available at the time.

      The good news is that it’s becoming increasingly easier for a DIY investor to avoid the pitfalls of high mutual fund fees and get started on a path to low cost indexing.

      Glad to hear retirement is treating you well.

  7. Don on October 30, 2020 at 6:10 am

    Hi Robb, Thanks for sharing your investment journey. Is all your money invested in equities or do you have some money in Bonds, GIC etc? What is split 60/40, 70/30? And what are your recommendations for the other side of portfolio? Thanks!

    • Robb Engen on October 30, 2020 at 10:08 am

      Hi Don, my pleasure. What you see is all there is in terms of my investments (it is indeed 100% equities). No bonds, no GICs.

      That said, I do keep a healthy amount of cash in my business account ($75k or so) and I do have some fairly predictable income streams that cover my everyday spending and short-term financial goals. This works for me, but I recognize it’s not for everyone. Most people need some bonds or fixed income in their portfolio.

      As for recommendations, again I’m a big fan of simplicity and the diversification that an asset allocation ETF like VBAL or XBAL provides. Retirees can use these products with a total return approach in mind, selling ETF units as needed to top up their cash bucket.

      Unfortunately in this low rate environment we can’t do much better than 1.5% interest on our cash savings. That’s the risk-free rate of return that we have to live with. I’d recommend seeking out that 1.5% with a digital bank or credit union (I use EQ Bank) rather than accepting the peanuts that the big banks are offering on savings deposits.

  8. JRR on October 30, 2020 at 7:34 am

    Hello Robb – This is one good thing about the internet, where a person with good intentions can share valuable advice for all to see. Most people need to save for retirement and create their own pension plan. Your advice provides a needed service and knowledge, something that should be taught in school. Thanks for sharing

    • Robb Engen on October 30, 2020 at 10:09 am

      Hi JRR, many thanks for the kind words. It means a lot.

  9. Bob Wen on October 30, 2020 at 8:36 am

    Thanks Robb for sharing your journey.

    It took me a little over one year of dividend investing (April 2016 to July 2017), and doing fairly well, to realize that I was kidding myself about my prowess as a stock picker. Although I’d developed my own criteria for choosing the stocks, I concluded that I really had no idea what was going on in those companies. At the time, I worked for a company that was traded on the TSX, and come every quarter there was a mad dash to make things look great. I didn’t see anything illegal going on, but the quarterly results and upbeat tone hid significant internal problems, employee dissatisfaction, and struggles to maintain market share. I suspect not all companies are like this, but how, as an investor would I know – I wouldn’t! My investing luck didn’t run out, I made the switch from 30 stocks to ETFs while on an investing high. For me, it was the logical thing to do.

    For anyone who is on the fence re stock-picking vs index investing, I highly recommend watching Las Krojer’s 5-part series of videos “Investing Demystified” on YouTube.

    • Robb Engen on October 30, 2020 at 10:10 am

      Hi Bob, my pleasure. Thanks for sharing your journey, too. It sounds like you were a quicker study than I was 🙂

  10. Kevin on October 30, 2020 at 11:10 am

    I love the simplicity of your portfolio (and your weekly posts). I am now focused on VEQT as well, but I haven’t liquidated my dividend portfolio. I know I shouldn’t time the market, but I’m highly reluctant to sell any of my dividend stocks (usual suspects of big 5 banks, utilities and telecoms) because they are so battered at the moment, but it’s something I will look to do in 2021. Keep up the great work – I read many, many investing and personal finance blogs and yours is my favourite.

    • Robb Engen on October 30, 2020 at 3:24 pm

      Hi Kevin, thanks for the kind words. I hear this a lot from investors – they don’t want to sell stocks that are down. There’s a cognitive bias at work here called loss aversion where the pain of losing is psychologically twice as powerful as the joy of gaining.

      Try to frame it this way: If you were forced to sell those stock positions today would you repurchase them again? Probably not – with cash in hand you’d likely just buy VEQT.

      If those stocks are held in registered accounts (RRSP/TFSA) then there are no tax consequences for selling them. Then you can immediately buy VEQT, which likely has a higher expected future return than those losing stocks you’re holding onto.

      We sometimes want to believe that if a stock has fallen in price it’s just a matter of time before it recovers and grows again. But individual stocks can fall out of favour and either go to zero or stay out of favour for many years. It doesn’t care what price you originally paid for it and doesn’t owe it to you to return to its former glory.

  11. john on October 30, 2020 at 1:54 pm

    I find my self in the same thought process of of the years investing – stock picking, etc.. and then thinking is there a simpler way – i.e. etf.s – but I do have a question – your stock picking did so well as you mentioned, then sold them all – capital gains taxes to be paid, buying 2 etf.s VXC and VCN in 2015 – to then sell them in the past 1-2 years and go all in on VEQT – with buying and selling are you cutting yourself short in future progressive gains and sort of doing the same changes in your investing philosophy, buying and selling instead of sticking to something that at the time worked for you? I believe VEQT is a greatf fund but it is also a new fund – instead of sticking with VXC and VCN and or adding VUN and possibly a few others, and then stick with it and simply keep investing more cash into each to keep a balance? I still find your latest How I Invest My Own Money – getting folk to think it is okay to buy and stick with a fund then to only seem undecided and sell and buy a new fund – your thoughts on my comments – and simply my own comments – nothing here to say what you suggest is wrong or right – I am questioning the reasoning of the investing style changes over time? thankyou

    • Robb Engen on October 30, 2020 at 4:53 pm

      Hi John, thanks for your comment. You bring up a fair point. First, I must say that I made all of these moves inside my RRSP and TFSA – tax sheltered containers that spared me from any capital gains complications.

      Next, let me address your comment about not sticking with what was working. The dividend strategy worked for a while, yes, but in 2014 it badly underperformed both the TSX and my benchmark index (represented by CDZ). It was that year when I realized I wasn’t cut out for this strategy over the long term. I’d have to consistently pick winners and avoid losers, all while agonizing over the portfolio every day. No thanks.

      Now, let’s talk about product development and the evolution of ETFs and investing platforms. I switched from dividend stocks to indexing when Vanguard introduced its All World ex Canada ETF (VXC). Before that, to build a diversified ETF portfolio you needed 5-10 ETFs (remember the old Canadian Couch Potato portfolios?). I did not want to have to tinker with multiple ETFs.

      The landscape evolved even further (for the benefit of investors) when Vanguard launched its suite of asset allocation ETFs. I could get nearly identical global stock exposure with just one balanced ETF (VEQT). Sign me up!

      I changed from a dividend approach to an indexing approach for behavioural reasons. I couldn’t see myself as a long-term stock picker. But I don’t see the switch from VCN/VXC to VEQT as a change in investing styles – more like an improvement in the simplicity of my already sensible global indexing strategy.

      Finally, it’s common to think of these asset allocation ETFs as “new funds” but they’re actually just wrappers that contain seven individual ETFs that have been around for many years. Furthermore, these ETFs track stock indexes that have been around even longer. The “track record” of VEQT is irrelevant because we can simply backtest what the returns *would* have been if the ETF had been around for 25 years.

      PWL Capital’s Justin Bender has done exactly that, backtesting the returns of each of these portfolios over the last 25 years: https://cdn.canadianportfoliomanagerblog.com/wp-content/uploads/2020/10/Model-ETF-Portfolios-Vanguard-2020-09-30-Light.pdf

      PS – I want to add that it’s also irrelevant that I sold a bunch of stocks in 2015, or I sold VCN/VXC in 2019 and bought VEQT. Why? Because I sold those stocks / funds and then immediately bought the new product. I stayed constantly invested, just in a different vehicle. I didn’t interrupt any magical compounding or anything like that. Just like in my response to Kevin: that’s true as long as you sell and then immediately invest in your new strategy.

      • john on November 2, 2020 at 11:35 am

        I appreciate your feedback! and communications on ETF.s

  12. Gerry on November 3, 2020 at 7:02 am

    Is there a simple version of this all in one ETF that excludes Canada? I’m not very positive on the Canadian market and find the allocation of 30% to Canada in this ETF too high, but like the other ETFs this holds.

    • Robb Engen on November 3, 2020 at 9:50 am

      Hi Gerry, I wrestled with this idea last year (read this post: https://boomerandecho.com/solving-the-home-bias-in-my-portfolio/) but ultimately decided that holding two ETFs (VEQT & VXC) defeated the purpose of having a simple all-in-one portfolio so I ended up with just VEQT.

      That said, later in the year iShares released its own all equity ETF (XEQT). It has a slightly lower MER (0.20%) and its allocation to Canadian stocks is 23.3% compared to VEQT’s 29.9%.

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