Money Bag: Creating Retirement Income, Money Resources For Beginners, All Equity ETF Comparison, and More

Money Bag: Creating Retirement Income, Money Resources For Beginners, All Equity ETF Comparison, and More

Welcome to the Money Bag, where I answer questions and address comments from readers on a wide range of money topics, myths, and perceptions about money. No question is off limits, so hit me up in the comments section or send me an email about any money topic that’s on your mind.

This edition of the Money Bag answers your questions about creating retirement income from an asset allocation ETF, resources for beginners to learn about money, a comparison of all equity ETFs, and which credit card to use for your revenge travel.

First up is Paul, who wants to know how to create retirement income when holding a single asset allocation ETF. Take it away, Paul:

Creating Retirement Income With Asset Allocation ETFs

“Hi Robb. I like the idea of the total return approach to creating retirement income. Do you think that’s viable using a one fund approach like Vanguard’s VBAL?”

Hi Paul, I think it’s a really sensible solution for retirees. Many of my retired clients will hold VBAL (or XBAL) in their RRSP/RRIF. My one suggestion is to also open a high interest savings RSP (EQ Bank has one) and park next year’s required withdrawals in that account, while the rest of your RRSP stays invested in the all-in-one ETF.

Consider holding something like 10% of the total value in that RSP savings account, and the remainder in VBAL. In effect, that means your overall asset mix will be 10% cash, 36% bonds, and 54% equities. Each year, once you spend your RRSP cash, you’d sell off some VBAL units and transfer the cash into your RSP savings account and do it all over again.

This is a new approach to an excellent old idea shared by Canadian Couch Potato Dan Bortolotti many years ago, before the launch of one-fund asset allocation ETFs. Since the asset allocation ETF automatically rebalances, there’s no need to manually rebalance each year outside of selling off some ETF units and transferring the cash to your RSP savings account for the next year’s withdrawal needs.

Money Resources For Beginners

Next up is Mindy, who is looking for some money resources to share with her daughter to get her started on the right foot:

“Dear Robb, I have been reading your blog regularly for many years, and I have great respect for your financial wisdom. My 22-year old daughter has asked if I can suggest some reading for her. Of course I recommended your blog. I was wondering: do you have a collection of your blog posts suitable for someone like her—a concise and yet sufficiently broad set of articles for young adults who are relative beginners?”

Hi Mindy, thanks for this – I’m flattered you have suggested my blog, but outside of the odd post like this investing guide for beginners I worry my writing is typically geared towards an older audience. We need to meet people where they are and find resources that are more relatable to our age and stage of life.

I’d first ask your daughter, how does she like to consume her content? 

For video, I recommend Preet Banerjee’s YouTube channel, and Ben Felix’s Common Sense Investing channel.

They also have podcasts, which are excellent: Preet’s Mostly Money, and Ben’s Rational Reminder. I’m also really enjoying Ramit Sethi’s podcast, I Will Teach You To Be Rich.

On Instagram you can find more relatable lifestyle and finance content at Mixed Up Money, Ellyce Fulmore, and Bridget Casey. I also find Daniel Foch has really good takes on housing and real estate.

I’m not on TikTok, but from what I’ve seen I’d avoid most of the personal finance advice you’d find there!

For books, I really enjoyed Wealthing Like Rabbits by Robert Brown, and Alyssa Davies at Mixed Up Money has a couple of great beginner books as well. 

*Adding Dan Bortolotti’s Reboot Your Portfolio to the list of recommended books – thanks to a reader suggestion in the comments section.

I also think Millionaire Teacher by Andrew Hallam is an excellent book with a lot of great lessons on saving, investing and living a good life.

Blogs seem to be fading away, unfortunately, as content creators move to these other platforms.

All Equity ETFs

Here’s Tim, who wants to invest in an all equity asset allocation ETF and wants to know if one stands out above the others.

“Good morning Mr. Engen, amongst these ETFs — VEQT, XEQT, ZEQT, and HGRO — is there one that stands out, or are they comparable to one another? I am 40, and looking at long-term investing in my TFSA, RRSP, and unregistered accounts.”

Hi Tim, there isn’t a meaningful difference between VEQT, XEQT, and ZEQT. I invest in VEQT myself, but that’s because it came out first and I have an affinity for Vanguard and how they pioneered index funds and help investors.

This excellent video on asset allocation ETFs is worth your time and will give you a good comparison. It also might give you a sober second thought about using all equities versus a more conservative fund:

HGRO is a bit of a different animal. It doesn’t invest in underlying stocks directly – instead, it uses something called a ‘swap’ where another financial institution holds the stocks so that HGRO unit-holders aren’t hit with annual taxable income. This is only really advantageous in a taxable (non-registered) account, but it also comes with some risks.

I’d stick with one of the first three (Vanguard, iShares, or BMO) and hold the same one across all of your accounts for simplicity.

Which Credit Card For Travel Abroad?

Finally, Shawna asked about some missing details from my revenge travel post – namely which card I actually used while travelling abroad.

“Hello Robb, I hope you had a good summer! Regarding your European vacations, I have two follow-up questions:

1. What payment method do you use when travelling in Europe; cash or credit card?

2. Which credit card works best to minimize fees and exchange rates? Curious to hear your thoughts.”

Hi Shawna, great questions! I used the Scotia Passport Visa Infinite card in Italy and in the UK. It comes with no foreign currency conversion fees and what I liked was that immediately after a transaction I got an email with the total cost converted to Canadian dollars. Since I kept track of a loose budget while we were abroad, I found this really helped track spending and keep us in check. Otherwise it’s hard to mentally do the conversions all the time.

I used the credit card for pretty much every transaction outside of a few gift stands in Italy and a very expensive cab ride to the Rome airport when I couldn’t get an Uber. We brought $200 in cash for our trip to the UK, and returned with $200 in cash…

Don’t overthink it. A credit card with no FX mark-up, plus $100 to $200 or so in local currency should cover you, depending on how long you’re there.

Do you have a money-related question for me? Hit me up in the comments below or send me an email

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  1. Cam on September 14, 2022 at 2:28 pm

    I bought Dan Bortolotti’s book Reboot Your Portfolio for my children in their early 20s. They have been buying VEQT in their Questrade TFSA regularly now.

    Sometimes it’s just too much information in many of those podcasts etc.

    • Robb Engen on September 14, 2022 at 2:39 pm

      Hi Cam, thanks for the great suggestion. It’s an excellent book and I’ve updated my answer to include it as another resource.

  2. steve kleros on September 16, 2022 at 12:00 pm

    Hi I am 78 years old widow I recently tranfered $15.000 from my RIF accnt to TFSA minus 20 % tax
    I like to do that every year this way when I am gone my 2 Children will not have to pay 30 to 40% tax do you think its a good strategy .

  3. Stephen Linsley on September 20, 2022 at 9:25 am

    Hi Robb.
    Next year I will start receiving my British pension. I have an offshore LLoyds Visa account in place. What would you suggest is the best strategy for accessing these funds in order to minimalize tax and currency conversion implications?

  4. Nicole on September 24, 2022 at 9:18 am

    Also really enjoying Ramit’s I Will Teach You to be Rich podcast. Fascinating stories and lessons for all of us.

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