Category: DIY Investors

abundance of food on table

What’s in my retirement portfolio (October 2026)?

RobHLeave a comment

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

Portfolio Construction

The retirement portfolio is spread across a bunch of accounts:

  • 5 RRIF accounts
    • 3 for me (Questrade, Wealthsimple)
    • 2 for my spouse (Questrade)
  • 2 TFSA accounts (Questrade)
  • 4 non-registered accounts, (1 for me, 1 for my spouse, 2 joint, all at Questrade)

The view post-payday

I pay myself monthly in retirement, and the charts that follow reflect the view post-payday, which happens around the end of the month. On October 29th after the markets closed, this is what it looked like:

The portfolio is dominated by my ETF all-stars, aka the Magnificent Seven ETFs list.

This is pretty much the same chart as last month. I’m sort of expecting that to be the case month-to-month. Every month there are small reductions in my XGRO position1 since that’s what I sell to make my monthly RRIF payments. There are slightly larger reductions in the non-registered part of the portfolio to pay my salary, but their contribution to the overall picture is pretty negligible. HXT is the largest non-registered holding I have now, followed by ZMMK and XIC. Everything else you see on the chart above is either in my RRIF or my TFSA.

My asset allocation targets are unchanged, namely:

  • 5% cash/ultra short term bonds
  • 15% bonds
  • 23% Canadian Equity
  • 37% US Equity
  • 20% International Equity

The asset-class split looks like this; you can read about my asset-allocation approach to investing over here.

This chart is an almost-perfect reflection of my asset targets, with all categories within 0.5% of the intended allocation.

Plan for the next month

Nothing looming; no planned changes. My spouse’s RRIF is 0.24% larger than mine, which is a tiny improvement over last month; ideally the values of our RRIFs would be equal so we withdraw the same amount and draw the same RRIF salary. Makes things a bit easier to plan.

I have been looking again at perhaps moving XGRO over to ZGRO.T to take advantage of ZGRO.T’s automated payouts, which would simplify my monthly RRIF routine considerably. Unless I can be reasonably sure ZGRO.T will generate enough income on a monthly basis to fully cover my foreseen monthly payouts, there’s really no compelling reason to do that.

Overall

Part of using VPW as a strategy is the need to calculate your retirement net worth on a monthly basis. My net worth took a small hit this month, but the trend remains positive overall:

My VPW-calculated salary has now increased for 10 straight months; it’s nice getting a monthly raise! I should start to see the salary flatline if the net worth remains flattish (as it has for the past 6 months now).

  1. And 4 times a year, that reduction is VERY small since XGRO pays quarterly dividends which are by default used to purchase more of the same. ↩︎
yellow and white car drifting on road

Bank of Canada Up, US Fed Flat

RobHLeave a comment

Both the Bank of Canada and the US Fed announced their interest rates this week.

In Canada, the rate was bumped up for the first time in quite a while: it’s now a quarter point higher than it was previously, at 2.75%.

In the USA, the rate held steady, with a target in the range of 3.75 to 4.00%.

The only reason this is of any interest to the average DIY investor is that these rates tend to influence the kinds of interest you can earn using HISA (High Interest Savings Accounts). I’ve updated the HISA and short-term bond table (Canada & US) to reflect the new realities; the rates usually take a few days to be updated.

One more meeting for each entity this year, on December 9th.

high angle shot of two people working in the office

Retirement taxes versus paycheque taxes

RobHLeave a comment

I’ve talked about how to think about taxes in retirement before (and I re-read my post, it still holds up) but maybe something that isn’t clear how it differs from when you collected a steady paycheque.

The paycheque withholds tax et al at the source; retirement, maybe not

I think this is well understood. The government likes getting taxes all year round, not just in April. And so part of your paycheque is remitted to the government — taxes, yes, but also CPP/EI contributions and all that stuff that no longer applies when you stop collecting a paycheque.

Withholding tax is an excellent example of the “pay yourself first” principle popularized by The Wealthy Barber. You never see the money, so you sort-of forget it’s yours. Anyway, all things being equal, the withholding amounts should be pretty close to correct, but there are all kinds of things that can throw off the calculation: bonuses, charitable giving, and RRSP contributions are the main ones. I never quite understood people who were happy to get a tax refund. That’s your money you’re getting back, and you’ve given the government an interest free loan.

Anyway, in retirement, this may not be the case:

  • If you pay yourself RRIF minimum (as I do) then there is no tax withheld at source. Of course, you can take MORE than RRIF minimum, in which case you will experience withholding tax, just like the bad old days when you were working.
  • If you pay yourself from non-registered investments (as I do), you’re likely creating taxable income if you’re selling assets that have increased in value. And that taxable income contributes to (surprise, surprise) your tax bill. Now it bears repeating that only half of your capital gains attract the CRA’s attention: the other half, and the money you put in, are all yours to keep, tax-free.
  • And of course T-slip capital gains, interest income and dividend income isn’t taxed at the source either. All of it must be accounted for at tax time.

The implication of all this is that you have to be ready to pay some of your retirement salary back to the CRA. I have a special Wealthsimple savings account1 that I contribute to monthly; I “self-withhold” about 15% of my salary, fully expecting to drain this account come tax time2.

You care less about marginal tax rates, and more about overall tax rates

In case you weren’t aware, not every dollar you make is taxed the same way. Canada has tax brackets; each tax bracket has its own tax rate. Thanks to taxtips.ca, you can get a combined federal/provincial look for how your income is taxed:

This table (and most tables like it) are showing marginal rates. The marginal rate is the tax rate charged on the income that sits above the floor of the tax bracket. Lots of people mix up the idea of marginal rates versus overall tax rates. Let’s take a simple example of someone who is drawing a salary or getting their income from a RRIF: both are taxed as “other income” in the table above:

  • Net income: $50,0003. Tax bill: 19.05%*$50000=$9525. In this example, there is no difference between your marginal rate and your overall rate.
  • Net income: $55,000. Tax bill: $9525 on the first $50,0004, and 23.15%*$5000=$1,157.50 on the remainder. Your total tax bill in this case is therefore $9525+$1157.50=$10,682.50. Your marginal rate is 23.15%, but your overall rate is much lower: $10682.50/$55000=19.4%.

My financial advisor I hired pre-retirement suggested I should target a 15% marginal tax rate, blended between my spouse and I. That’s not easy to do on RRIF payments alone, but then of course you have to consider other income sources like capital gains and dividends.

Non-registered investments can pay a salary; but tax treatment is quite different

So I look for my non-registered investments to generous returns — whether those are capital gains or dividends is unimportant. From a tax perspective, capital gains are especially weird because when you’re paying yourself by selling assets, you are typically earning MORE than “just” the capital gain (i.e. the part that is taxable) part. An example may help.

Let’s say you bought $10000 of XEQT in January 2023. As of today (October 22), it would be worth $200005:

And say you sold it all on October 22m — you’d have $20000 in your bank account. Hooray. CRA would say you made a capital gain of $10000. So if that represented your whole taxable 2026 income, that would attract a tax bill of 9.53%*$10000 =$953.00. Thinking about overall rather than marginal tax rates, you’d therefore have an overall tax rate of $953/$20000 = 4.7%! Pretty sweet.

If instead that $20000 was a RRIF withdrawal, and you had no other taxable income, CRA would present you a tax bill of 19.05%*$20000=$3,810.00, an overall tax rate of 19.05%,

Maybe you’re counting on your non-registered investments generating $20,000 of dividends instead. This generates an overall tax credit in this case6!

Retirees are obsessed with how much tax they pay

Since taxes tend to be your single biggest expense in retirement, I understand why. I try to be smart without going to extreme lengths; as I learned managing my parents’ estate, there’s either going to be a tax bill while you’re alive, or a much larger one when you’re dead. Taxes you avoid in the early years of retirement are either going to come due once you start collecting CPP/OAS7, or when you’re dead. RRIFs8 and non-registered accounts are considered liquidated on the day of death, attracting all the income/capital gains in one calendar year, and hence the highest possible tax bracket.

  1. This account does NOT factor into my net-worth calculations. I’ve already, in effect, written it off. ↩︎
  2. And in my case, this I expect will start to be every quarter as I’ll shift to paying tax in instalments. Oh well. ↩︎
  3. Net income is lower than your salary, since everyone has (at least) the personal deduction. ↩︎
  4. using the calculation above ↩︎
  5. And doubling your money in less than 4 years is an excellent argument for holding equities. (Of course, you’ll all be crowing when the floor eventually falls out, but equities do outperform over time…) ↩︎
  6. If you’re in a lower tax bracket, it’s hard to beat dividends. They start to become less efficient as you climb the brackets, especially if you’re collecting OAS since grossed up amount of dividends are use to test eligibility for OAS. ↩︎
  7. OAS clawback is a particular obsession of the retired. ↩︎
  8. Unless you declare your spouse as a successor annuitant; you’ve already done that, right? ↩︎

expressive surprise in black and white portrait

News: Questrade changes how RRIF payments work

RobHLeave a comment

Questrade is my main provider of online brokerage services. They recently (this month) made a change to how periodic RRIF payments work. They unfortunately made no formal announcement about this, and the only reason I know it to be true is thanks to a helpful answer to my Reddit question from (presumably) an employee.

Questrade allows you to set up automatic withdrawals from your RRIF with (sigh) a form that provides options to withdraw monthly, quarterly, semi-annually or annually. As I’ve mentioned previously, I choose to use monthly withdrawals1 since that more closely approximates how I got paid when I was working.

Anyway, every month, Questrade sends you an email reminding you to make sure you have enough cash in your RRIF to make the payment. (Of course, they don’t actually tell you what that amount may be; they assume you know, probably after calling support early in the year.)

Prior to this month, they advised that cash needed to be in the account three working days before the withdrawal date (a date they never mentioned; I guess you’re supposed to know that too). Why three working days were required I have no idea2. Perhaps there’s an abacus powered RRIF processing centre in some corner of Questrade HQ?

All this to say if you didn’t happen to have enough cash in your account on the appointed RRIF withdrawal day Questrade used to:

  • Take the amount you were supposed to withdraw, let’s call it X
  • Divide X over the number of periods remaining in the year (e.g. you missed your February monthly payment: there’s 10 months left in the calendar year, so X/10, let’s call that Y).
  • Add Y to your old monthly payment amount going forward. Y is the new monthly amount.

Which, although a bit unexpected, has some logic to it.

Last week, I got another one of these reminder mails from Questrade, except the wording had totally changed. Now the notion of missing a payment was addressed directly:

If cash is unavailable:
We may still process your required payment on the scheduled date. If your cash balance is insufficient, your account will go into a debit cash balance. If you don’t take action to satisfy the debit balance, we may close positions in your account. If we need to close positions for you, we will charge a $45 fee for each trade we make.

— Questrade email from October 2026.

This is, I would venture, a rather significant change, yes? And the weaselly wording “may close positions….if we need” gives me zero information as to what rules are being applied here and when or if they would ever apply to me. The response to my Reddit post “the payment goes to our risk team for approval” means nothing to me. Will I get paid or won’t I? Will I get charged for my misstep or won’t I?

Anyway, I consider this another black mark for Questrade in the ever-evolving RRIF Support Showdown universe. It’s not the policy itself which annoys me; it seems fair enough, assuming “may” means “we will”. It’s the means in which it was communicated (or more accurately, not communicated) that leaves me cold.

With so many brokers throwing money at you to move funds, it’s hard to justify loyalty to ANY online broker, especially one whose loyalty bonus is coming to an end!

  1. I like monthly withdrawals; it allows me to keep a pretty manual process top of mind since I’m doing it every 30-odd days or so. The other benefit of going monthly is there’s not a huge number of shares being liquidated, so if the market is the midst of some temporary meltdown, I’m not risking a large amount of my net worth at any one time. . ↩︎
  2. When you’re comparing a hipster online broker’s SLA to be less attractive than that of one of Canada’s big banks, you know your bar is awfully low. ↩︎
hill on desert

News: Canadian Financial Summit Kicks Off Tonight

RobHLeave a comment

The annual Canadian Financial Summit starts this evening, and if last year’s event is any indication, it will be a mixed bag: some really good content, and some barely-concealed sales pitches. And, no, I didn’t get a speaking slot 😉

And the best part is, it’s totally free — the summit really pushes their all-access pass, but if you have some spare time over the next few days, you can see most of the content before it goes behind the paywall. All you have to do is register.

The speakers lineup includes certified all-star, the “retired” Rob Carrick. He always has useful information to share. I see BMO has made a bigger splash this year — among Canada’s big banks, they really do have some decent ETF products1, and their speakers are all coming from that side of the business, so that’s a session I’ll definitely check out.

If you attend, let me know what you thought was the best session, I’m always interested in what my readers find useful: you can reach me at comments@moneyengineer.ca.

  1. I hold ZMMK and ZST. ↩︎