Author: RobH

Managing decumulation as one gets older

RobH2 Comments

My approach to investing for the last 20 years or so has been almost exclusively1 DIY. The other popular approach to investing is to have a fee-based advisor who typically charges anywhere from 1% to 2% of your overall holdings. For that princely sum, you probably get an in-person meeting or two annually, all the trades deemed necessary, and some nicely formatted full-colour report once a year. Value for money for a fee-based advisor is too low for me to consider it. Nobody will ever care as much about my own investments as I do.

I am trying to be realistic about the future, however. My current retirement payment scheme is rather labour-intensive, for instance:

  • I have to manually sell RRIF funds every month to make my RRIF-minimum payments. This normally means selling XGRO which makes up the bulk of my RRIF accounts.
  • I have to manually move money around between brokerage accounts to tweak VPW’s cash cushion; excess funds here get invested in ZMMK or ICSH so they generate a return
  • Since RRIF-minimum payments are not currently sufficient to fund my lifestyle, I augment this with sales of non-registered funds…and I have to pick which fund to sell considering capital gains impact as well as asset-allocation2
    • …and I have to manually move the cash resulting from the sale to my bank account
  • I continue to maintain a heavy allocation to USD-denominated funds, and since most of my spending is in Canadian dollars, I have to systematically3 convert my USD holdings to CAD, typically using Norbert’s Gambit
  • And I continue to contribute to a TFSA monthly, so appropriate4 purchases have to made there, too

So I will start looking at alternative (and more costly) arrangements. Right now, I’m thinking robo-advisors5.  Off the top of my head, there are three I want to take a look at:

  • Nest Wealth: They are immediately interesting to me because of their flat fee structure. Most other advisors charge you a percentage based on the size of your portfolio, which strikes me as unfair. Is a 50k portfolio really ten times easier to manage than a 500k portfolio? If you looked at the fees most providers charge, you’d believe it to be the case.
  • Wealthsimple: I do self-directed business with Wealthsimple today, and have actually talked to one of their advisors about this service. I need to understand their service better.
  • Questrade: I do self-directed business with Questrade today. I’ve not investigated their robo-advisor service much.

Is there a robo that you use that I should know about? Let me know at comments@moneyengineer.ca!

  1. Before I retired this year, I did pay for an advice-only advisor to make sure my retirement savings would support my retirement needs. I do recommend doing that, as it’s helpful to have somebody else look at your numbers if only for peace of mind. Beyond that, I don’t pay any management fees except what’s embedded in the ETFs I use, most of which are on my ETF All-Stars list. ↩︎
  2. Meaning, for example: should I sell HXT (a fund fully invested in Canadian equities) or HXS (a fund fully invested in US equities)? Should I sell from MY non-registered account or that of my spouse? ↩︎
  3. Currently quarterly, at a rate consistent with the percentages dictated by RRIF minimum. For example, at age 57, RRIF minimum is 3.03% of RRIF value. So in January, I look at how many USD I have in my RRIF, multiply that by 3.03%, and divide by 4. That determines how much USD I have to convert every quarter. . ↩︎
  4. Relying on my multi-asset tracker spreadsheet ↩︎
  5. This term seems to be falling out of fashion in favour of “managed” portfolios. As long as the fees are low, they will be robo-advisors to me… ↩︎

What’s in my retirement portfolio (Sept 2025)

RobH3 Comments

This is a monthly look at what’s in my retirement portfolio. The original post is here. Last month’s is here.

Portfolio Construction

The retirement portfolio is spread across a bunch of accounts:

  • 7 RRIF accounts (3 for me, 3 for my spouse, 1 at an alternative provider as a test)
  • 2 TFSA accounts
  • 4 non-registered accounts, (1 for me, 1 for my spouse, 2 joint)

The target for the overall portfolio is unchanged:

  • 80% equity, spread across Canadian, US and global markets for maximum diversification
  • 15% Bond funds, from a variety of Canadian, US and global markets
  • 5% cash, held in savings-like ETFs.

You can read about my asset-allocation approach to investing over here.

The view post-payday

I pay myself monthly in retirement, so that’s a good trigger to update this post. At market close, September 25, this is what it looks like:

Retirement holdings by ETF, September 2025

The portfolio is dominated by my ETF all-stars; anything not on that page is held in a non-registered account and won’t be fiddled with unless it’s part of my monthly decumulation. Otherwise I’ll rack up capital gains for no real benefit.

No massive changes this month; the one you might notice is a reduction in HXS, which holds US stocks exclusively. I picked this one to sell out of my non-registered accounts as my US equity allocation was a bit high.

Plan for the next month

The asset-class split looks like this

It’s looking pretty close to the targets I have, which are unchanged:

  • 5% cash or cash-like holdings like ICSH and ZMMK
  • 15% bonds (almost all are buried in XGRO and AOA)
  • 20% Canadian equity (mostly based on ETFs that mirror the S&P/TSX 60)
  • 36% US equity (dominated by ETFs that mirror the S&P 500, with a small sprinkling of Russell 2000)
  • 24% International equity (mostly, but not exclusively, developed markets)

I don’t need to make serious changes at this juncture, but there will be some need to make some noticeable tweaks in the coming month:

  • Q3 dividends will flow in to the account which will make for some movement, especially in XGRO and AOA. (Payout date for XGRO is September 29th , AOA is estimated to be October 8th.
  • I will need to convert some of my US RRIF holdings into CAD. I do this quarterly. Why quarterly? It allows me to smooth out any big swings in the FX rate over the course of the year. This will show up as a reduction in AOA and an increase in XGRO next month.
  • And, at the very end of October, AOA will rebalance. This is not foreseen to be a big deal.
  • All these moves will be tracked through my multi-asset tracker; it may be I have to buy a bit more foreign equity as I see I’m a touch light in that category.

Overall

The retirement savings had a great month, again. Overall, I’m now 8% ahead of where I started even though I’ve been drawing a monthly salary since the beginning of the year. This is aligned with what my retirement planner told me to expect, but as you can see, the journey has had some interesting ups and downs already.

Monthly retirement savings, as percentage of Jan 2025 value

My VPW-calculated salary has hit a new high this year, 4.22% higher than my first draw in January1. This is also expected, since it tracks the value of the retirement portfolio, albeit in a much more controlled way. The VPW “cash cushion” smooths out the ups and downs of the monthly returns. I suppose I really should see an increase in my salary on par with inflation so that I maintain my spending power. I’ll have to think about how to track that2.

Monthly salary, as percentage of Jan 2025 salary

Online brokerage promos: when does the gravy train end?

RobH3 Comments

Online brokers are busily throwing money around to attract new customers; a quick search reveals many active promotions as I write this from Webull Canada, RBC, TD, QTrade, Wealthsimple….All of it has a bit of “if this seems too good to be true, it probably is” flavour to it.

I asked this same question on Reddit and the consensus seemed to be that this is the new normal in the online brokerage world, just like it’s normal for telcos/cablecos/ISPs to throw around big discounts in order to steal customers from one another.

But yet, I feel a little uneasy how money for nothing has become the norm. For DIY investors like me, it’s hard to see how my providers make any money off of me. I did a bit of research into the best proxy I could think of…Robinhood.

As I mentioned in a previous post, Robinhood is now part of the S&P 500 lineup; this is no fly-by-night company. Their quarterly results are public, and it was quite illuminating. Robinhood’s most recent quarter’s results are shown below.

Robinhood revenue sources: Source Robinhood Q2 2025 Earnings Presentation

So it looks pretty straightforward; revenue is coming from three sources, and their average revenue per user (ARPU) is a pretty healthy $151 dollars. Let’s look a bit further:

  • Transactions: Options trading and Crypto trading make up the bulk of the revenues here, but roughly 15% of their transaction revenue comes from basic equity trades ($66M in Q2’25).
  • Interest: a large chunk of this is interest made from margin ($114M in Q2’25), but a growing percentage comes from credit card interest charges.
  • “Other”: not elaborated further, but it’s small, so we can ignore it. Perhaps this accounts for the revenue from their 3.5M “Robinhood Gold” subscribers1

The transaction revenue was surprising to me since equity trades are free on Robinhood, yet they are still finding a way to make money. Further reading indicates that the exchanges are sharing some of their bid/ask spread revenue with Robinhood, which seems like a win/win/win: Robinhood makes a tiny bit of revenue on each trade, the exchange gets more volume which allows them to make more spread revenue, and the customer gets free trades2.

Robinhood transaction revenue: Source Robinhood Q2 2025 Earnings Presentation

So, assuming the Wealthsimples and Questrades of the world are following Robinhood’s lead, they are making money off of me every time I place a trade. (Sorry, I don’t trade options, I don’t trade crypto, I don’t trade on margin, and I don’t run a balance on any credit card I use). Since switching to Questrade (and getting free trades) I can tell you that my own behaviour has changed; I have always hated seeing non-productive cash in any of my accounts, and so with free trades, I can freely buy one share of something to clean up the last dribs of cash I may have in any given account. My “getting paid in retirement” strategy also requires a monthly flurry of trades (see the details here).

All this to say I feel less uneasy about the free money being thrown around; Canada’s online brokerage community seems to be following a successful playbook:

  • Get lots of customers, even if you have to pay them to get on board
  • Expand your offers, especially profitable offers, and entice as many of your army of fans to use them (crypto, margin trading, options trading, credit cards, subscription offers)
  • Invest just enough in your platform to not lose too many clients; switching online providers can take a lot of work (I know, I did it: read more here)

So my advice is to absolutely take advantage of the free money out there and enjoy the gravy!

  1. Perhaps serving as the inspiration for Questrade Plus? ↩︎
  2. Not everyone thinks this is a great idea ↩︎

ZGRO versus ZGRO.T: what’s the difference?

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ZGRO and ZGRO.T are both asset allocation funds (aka all-in-ones1) offered by BMO. They hold the same assets, and they both generate the same (dividends-reinvested) returns. But ZGRO.T says it has a yield of 5.65% whereas ZGRO has a yield of 1.73%2. How is this possible? Full disclosure: I don’t own either of these funds because I have historically invested in a very similar-to-ZGRO product, XGRO, instead3.

Let’s start with a really high level look at these funds4.

ZGRO vs ZGRO.T, Overview Tab (source bmogam.com)

The first thing I’ll point out is one of caution: ZGRO and ZGRO.T have very similar tickers and it’s all-too-easy to mix them up. The fund names are also very similar, although ZGRO.T adds the words “Fixed Percentage Distribution Units” to the mix. That’s a clue. The other things we can learn from this first glance is that ZGRO.T is pretty new (Inception Date), is about 1/20th the size of ZGRO in terms of investments (Net Assets), has an identical MER to ZGRO, but whoa, that distribution yield is off the charts. Put simply, if you had $1000 in ZGRO, and $1000 in ZGRO.T, and the last distribution paid was assumed to be constant5, you’d get $11.73 from ZGRO and $56.50 from ZGRO.T over the next twelve months. Huh?

This is even more puzzling if one takes a look at what each of the two ETFs hold: it’s identical:

ETF HeldZGRO %6ZGRO.T %
ZSP – S&P 50037.037.0
ZCN – TSX Capped20.420.4
ZAG – CAD Bond13.813.8
ZEA – MSCI EAFE13.413.4
ZEM – MSCI Emerg6.76.7
ZUAG – US Bond5.85.8
ZMID – US Mid Cap2.02.0
ZSML – US Small Cap1.01.0
Cash00

Comparing top holdings, ZGRO versus ZGRO.T. Can you see a difference? I can’t see a difference.

I spent quite a bit of time searching on the BMO website trying to get their take on the difference. In a lot of places, (e.g. the simplified prospectus7), the two funds are treated as the same. After nearly giving up, I did come across this document which has a teeny tiny footnote, which I reproduce here:

These units are Fixed Percentage Distribution Units that provide a fixed monthly distribution based on an annual distribution rate. Distributions may be comprised of net income, net realized capital gains and/or a return of capital. The monthly amount is determined by applying the annual distribution rate to the T Series Fund’s unit price at the end of the previous calendar year, arriving at an annual amount per unit for the coming year. This annual amount is then divided into 12 equal distributions, which are paid each month.

BMO Asset Allocation ETFs Whitepaper

So the big difference as I see is is that ZGRO.T attempts to give a stable yield in 12 month chunks. It does this by

  1. Giving you dividends from the underlying assets (so does ZGRO)
  2. Selling underlying assets (and generating a capital gain)
  3. Giving you back your own money (this is known as as return of capital)

Let’s take a look at the two from a tax perspective (note that this only matters if you were to hold these funds in a non-registered account):

ZGRO vs ZGRO.T 2024 Distribution Tax Tab (source bmogam.com)

And here the distinction between the two becomes clearer: ZGRO.T is making good use of Return of Capital (RoC) to distribute a dividend with limited near-term tax implications. But as always, there’s no free lunch — using RoC means that future capital gains will be higher since RoC reduces the ACB8 of the funds in question, and if your ACB drops to zero, you have to treat RoC as a capital gain.

So when might you consider using ZGRO.T instead of ZGRO?

ZGRO.T makes sense in a RRIF account. It’s essentially automating some of the steps I have to take every month to get paid (you can see the mechanism I use here). Every month, I have to sell some of my holdings in order to get the RRIF-minimum payment out.

In a non-registered account, ZGRO.T’s monthly distributions might be useful if you had the need for consistent monthly cash flow; in addition, if you expect to at some point be in a lower tax bracket, it might help you save future tax, since it’s deferring some gains by using Return of Capital. In my case, I don’t see a good reason to use it since I would have to sell existing assets in order to raise funds to buy it, which generates capital gains.

So, in summary, the two funds are the same from a total return perspective, with ZGRO.T more monthly cash and ZGRO providing more paper gains. In a RRIF account, ZGRO.T automates some of the manual selling needed to execute decumulation. In a non-registered account, the tax treatment of the two is different, and you’d have to work out the numbers to see if it’s a benefit or not.

  1. If you want to read about all-in-ones, https://moneyengineer.ca/2025/01/21/why-you-can-fire-your-advisor-asset-allocation-etfs/ is a good place to start. ↩︎
  2. This yield is calculated by dividing the most recent per share distribution by the share price and multiplying by 12. In essence, this number is the value of the most recent (monthly in the case of ZGRO.T, quarterly in the case of ZGRO) dividend payout extrapolated over the full year. It may or may not represent what kind of yield you get in the future. ↩︎
  3. Why? Inertia. There are minor differences in the makeup of XGRO versus ZGRO but either is a fine choice for the lazy investor. ↩︎
  4. All the tables here are right off BMO’s ETF selector, which is excellent, by the way. ↩︎
  5. ZGRO is currently paying 7.3 cents per share every quarter and this has been stable since 2020. ZGRO.T is currently paying 6 cents per unit held every month and this has been stable since March 2025. ↩︎
  6. As of September 18, 2025 ↩︎
  7. which weighs in at ~450 pages. I’d hate to see the non-simplified prospectus. ↩︎
  8. Adjusted Cost Base. The average per unit price you pay for a share, necessary to track in order to accurately calculate capital gains (or losses). I use adjustedcostbase.ca for this, found in Tools I Use ↩︎