Tag: DRIP

Retirement Portfolio Annual Review

RobHLeave a comment

Happy New Year! A new year means it’s a good time to take a look at what went on in the retirement portfolio.

Let’s start by comparing the makeup of my portfolio at the beginning of the year versus my last update:

PositionJanuary 2025December 2025Notes
AOA: USD 80/2052.2%51.3%Used for RRIF payments1
XGRO: CAD 80/2020.2%18.6%Used for RRIF payments
ICSH: USD short term bond0%4.4%Cash cushion, plus additional “cash” inside RRIF2
ZMMK: CAD short term bond0%0.6%Cash cushion CAD funds
SCHF: International Equity2.8%1.9%Used for monthly salary; held only in non-registered
XEQT: CAD 100% Equity0%6.5%Mostly in TFSA
HXT: CAD Equity7.4%6.3%Used for monthly salary; held only in non-registered
XIC: CAD Equity5.3%6.1%Did not add or subtract from this holding this year
DYN6005: USD HISA3.7%0%Replaced by ICSH
DYN6004: CAD HISA2.6%0%Replaced by ZMMK
HXS: USD Equity2%0%Sold off from non-registered accounts to fund monthly expenses
VCN: CAD Equity1.8%1.1%In TFSA; reduced in favour of XEQT

What didn’t change much

The portfolio is still dominated by XGRO and AOA (not coincidentally, these are two of my ETF All-Stars) and they both had excellent years, as shown by this tool:

What also didn’t change is my overall approach: decisions for shifting funds is totally dependent on maintaining my asset allocations that haven’t changed either:

  • 5% in cash or “cash like” holdings
  • 15% in bonds
  • 20% in Canadian Equity
  • 36% in US Equity
  • 24% in International Equity

This approach meant that what I sold off in my non-registered portfolio to fund my day to day expenses changed throughout the year; as the year progressed I sold HXDM, then HXS (reducing this to zero), and then finally HXT, all in the service of keeping my assets in line with my targets.

What did change

As a result of changing brokers (QTrade to Questrade), I lost the ability to cheaply hold HISAs. And so I had to change tactics and hold “HISA-like” ETFs instead. (which, on Questrade, like all ETFs, can be bought and sold at no charge). At the same time, I realized that I could increase my returns by shifting more to the US market. Significantly higher interest rates in the US means that I can get more for my “safe” funds, with the small annoyance that I have to deal with USD. You can see the latest rates on my frequently updated page.

As I sold off “pure” equity funds from my non-registered accounts, I had to make changes to keep my bond percentages aligned with my targets3. This is the reason XEQT (a global 100% equity fund) now makes an appearance in the overall picture. The nice side-effect of adding XEQT is that my portfolio is now 76% held in all-in-one funds, up about 4% from the beginning of the year. All-in-ones do the rebalancing for you, which is a good way to avoid bad behaviours.

Behind the scenes I also tried to better focus each of the account types to make things simpler and clearer:

  • TFSAs are now 90% equity, with the rest held in bonds. The rationale here is that TFSAs will be the last things I touch to fund retirement, and hence have the longest time horizon. There are still too many individual ETFs here, and my January resolution is to simplify this further.
  • RRIFs now have only three funds: AOA, XGRO and ICSH.
  • Investment accounts will remain a bit chaotic as most of my retirement expenses are coming out of these. It also happens to be the place where my “free money” payments end up and so there is a small amount of inbound cash to purchase things with. The 2026 plan is to continue to draw down my non-registered funds since my spouse is still working and would be taxed higher on her capital gains.

What’s ahead in 2026: RRIF

My own calculations4 show that my household RRIF-minimum income will be up 19% YoY, a result of good returns in the RRIF (roughly 11% YoY by my calculation) and being a year older. Selling XGRO every month will cover the required payments, and quarterly I will shift a portion of AOA into XGRO, converting the USD to CAD using Norbert’s Gambit.

What’s ahead in 2026: TFSA

January will see an effort to reduce the number of ETFs here. There are multiple CAD equity ETFs which I should consolidate into one, for instance.

We continue to contribute monthly to the TFSAs. The goal is to maximize equity percentage while minimizing the number of funds held. Once the cleanup is done, I expect to purchase XEQT monthly. Questrade introduced automated investing which I’ll likely set up to accomplish this.

What’s ahead in 2026: Non-Registered Accounts

The same strategy as 2025 will continue. Shortfalls in my monthly salary will be covered by selling assets in the non-registered accounts. I ended last year up 2% YoY in my non-registered accounts; I don’t really expect a repeat there. All things being equal, I should be down in my non-registered accounts at this time next year.

  1. Indirectly. I haven’t tried to do a USD withdrawal for a RRIF payment, but in theory it should be possible. Instead I convert my AOA into XGRO a little at a time using Norbert’s Gambit. ↩︎
  2. My VPW cash cushion is about 50% of my cash position in the retirement portfolio. The other 50% of my cash position is inside the RRIF in order to avoid taxation on those monthly distributions. ↩︎
  3. AOA and XGRO are both 20% bonds, not 15%, and so mathematically this has to be offset with 100% equity somewhere in the portfolio. ↩︎
  4. My providers will give me the real numbers sometime in the coming weeks. How much hassle this will be is TBD. ↩︎

What’s in my RESP portfolio?

RobH1 Comment

As summer shifts into fall, I’m reminded that it’s back-to-school time. Or “Dad, I need money for tuition” time. I still have kids attending higher education, still making withdrawals from the family RESP we set up shortly after the birth of son #1, almost 25 years (!) ago now. RESP investing is a bit different from retirement investing given the (hopefully) shorter timelines of RESP investing1. Here’s how I approach it.

In the early days of the RESP, the contributions were invested in mutual funds; these were dark days, long before the rise of very cheap ETFs. Mutual funds were the ONLY way to make routine contributions (which I made, monthly, without fail — Pay Yourself First and all that). I had an 80/20 mix of equities and bonds in the first 18 years or so of its existence: 4 funds, one for US Equity, one for Canadian equity, one for international equity and one for bonds. I don’t remember the specifics of which ones and what percentages exactly. But the fund kept growing, thanks to market returns as well as CESG grant money, which I took full advantage of2!

As son #1 came close to entering post-secondary studies, I shifted the portfolio to a 60/40 mix using individual ETFs like HXS for US Equities, HXT for Canadian Equities, HXDM for International Equities, and CBO for Bonds. The GlobalX funds didn’t throw off dividends3 and so I just had to deal with the periodic (monthly) distributions of CBO, which ultimately were set to DRIP4.

I made the decision to move to 60/40 over 80/20 to preserve a bit more of the capital in the event of some kind of market meltdown5. Growth gets curtailed somewhat as a result, but there’s less volatility.

But I finally realized that all of this was completely unnecessary thanks to all-in-one ETFs. So now, the RESP has exactly ONE holding — XBAL, an all-in-one from iShares that takes care of the 60/40 split for me. And this is set to DRIP as well, so every quarter the RESP picks up a few more XBAL shares.

You can see how XBAL has preformed over the past 15 years or so. I’m comparing it to the 80/20 XGRO ETF from the same family, one that features prominently in my ETF All-Stars page6:

In a future post, I’ll explain how I fairly divide the RESP among my two sons — in essence, I pretended that the RESP was a mutual fund, with each son receiving the same number of units on the day the first withdrawal was made. Withdrawals are henceforth made in units, not dollars, and the unit price fluctuates with the value of the RESP.

How are you managing your RESP? Let me know at comments@moneyengineer.ca.

  1. Less time to build wealth, shorter runway for decumulation ↩︎
  2. As a certified cheapskate, it’s hard for me to resist free money of any kind. ↩︎
  3. They are “corporate class” ETFs that use a clever structure to avoid paying out dividends; all growth is buried in the increase of the ETF’s price. I still hold some of these in my non-registered accounts. ↩︎
  4. Dividend Reinvestment Plan. Instead of getting cash in the RESP account, the DRIP buys additional shares of whatever generated the dividend in the first place. ↩︎
  5. One may ask why I chose to stick with 80/20 in retirement, which is against some conventional wisdom. I figured that the RESP decumulation phase would be over a much shorter time period (say 5-10 years) and so I would be less able to wait for a market bounce-back. In retirement, I’m hopeful that decumulation will take much, much longer, and so with 80/20 I have a better chance of outliving my savings. ↩︎
  6. Chart is courtesy http://www.dividendchannel.com, featured on Tools I Use. When I rolled the comparison all the way back to 2007 the 60/40 XBAL actually OUTPERFORMED the (supposedly) more risky XGRO. Can’t explain that one. ↩︎