Category: Audience

What’s in my retirement portfolio (May 2025)

RobH3 Comments

This is a (hopefully 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 accounts1, (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.

The view as of this morning

As of this morning, this is what the overall portfolio looks like:

Retirement holdings by ETF, May 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.

The biggest changes were caused by two events that happened over the past 30 days:

  • I did a small rebalancing exercise to reduce my exposure to the Canadian equity market, selling VCN in favor of XEQT. (XEQT is only 23% Canadian equity per dollar invested; VCN was 100%). This sort of rebalancing happens whenever I drift more than 1% off of my target allocations.
  • I took some cash from a HISA and invested it in ZMMK; for reasons too boring to report here, that money was effectively not being tracked in these pages until this month — that anomaly won’t be repeated in subsequent months since ZMMK and ICSH are where I park the “cash” position of my portfolio.

Plan for the next month

The asset-class split looks like this

This looks to be pretty close to my target percentages which haven’t changed:

  • 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)

So, the plan for next month is, do nothing out of the ordinary. Reinvest cash (dividends, TFSA contributions) in one of AOA, XEQT/XGRO, ICSH or ZMMK depending on the asset category most in need on the day of the reinvestment. All these ETFs are covered on my ETF All-Stars page.

One thing I may do is to try to make shifts2 to get a little more return out of my cash position. US interest rates are quite a bit higher than Canadian rates, and so if my cash position is held in USD, I stand to eke a few more points of return there. TBD.

Overall

My retirement savings had a nice bounce-back this month, looks like I can cancel the mega-pack of pot noodles I had on order.

Monthly retirement savings, as percentage of Jan 2025 value

The salary I collect month to month recovered a bit, too, although not as quickly. That’s the magic of using VPW’s cash cushion — neither boom nor bust months translate into large changes in the take-home pay.

Monthly salary, as percentage of Jan 2025 salary

  1. That’s up one from the previous month. In order to collect on Questrade’s transfer bonus, (which they have yet to pay me, they are apparently in a world of hurt on the IT front) you have to have a non-registered account to get paid into. The other 3 are “normal” — one non-registered account for me, one for my spouse, and jointly held one that serves as a cash cushion to smooth out month to month variations in my retirement salary. Read more about that over at https://moneyengineer.ca/2025/01/31/im-retired-now-how-do-i-get-paid/ ↩︎
  2. With Questrade, all ETF trades are free to make, so I don’t have any real reason not to make such changes. ↩︎

What’s the deal with XEQT?

RobH3 Comments

***updated this post to reflect the fact that XEQT has dropped XUS from its portfolio as of July 2, 2025***

This post is inspired by my original on the topic, “What’s the deal with XGRO“? XGRO is great, but since my target asset allocation is only 15% bonds, and XGRO’s bond target is 20%, there’s some tweaking I have to do in order to reduce the bond exposure. That tweak is increasingly being provided by XEQT, part of the same iShares family that produced XGRO.

(As mentioned elsewhere, I rely heavily on all-in-one ETFs in my retirement portolio. New to all-in-ones? Read a bit about them here.)

XEQT, like XGRO, is actually investing in thousands1 of different stocks. Unlike XGRO, it does not hold any bonds at all. I thought it would be interesting to see what, exactly, is underneath every $100 you invest in XEQT. See the results below:

FundWhat is it?How much?Compare with XGRO23
ITOT/ XTOT4Broad US stock coverage that tracks the S&P Total Market Index, about 2529 companies (top holdings: Apple, Nvidia, Microsoft, Amazon, Meta)$43.62 of your $100 investment$36.32 of your $100 investment
XEFBroad international (Europe, Asia, Australia) stock coverage that tracks the MSCI EAFE Investable Market Index, about 2500 holdings$25.25 of your $100 investment
$19.76 of your $100 investment
XICBroad Canadian stock coverage that tracks the S&P/TSX Capped Composite Index, about 223 companies (top holdings: RBC, Shopify, TD, Enbridge, Brookfield)$25.71 of your $100 investment
$20.09 of your $100 investment
XEC3000+ emerging market stocks that track the MSCI Emerging Markets Investable Market Index$5.04 of your $100 investment$4.07 of your $100 investment

The top 10 stocks of XEQT as of today looks like this:

TickerCompanyInvestment for every $100
NVDANvidia$2.99
MSFTMicrosoft$2.70
AAPLApple$2.26
RYRoyal Bank$1.67
AMZNAmazon$1.54
SHOPShopify$1.35
TDTD Bank$1.15
METAMeta$1.09
AVGOBroadcom$0.96
ENBEnbridge$0.88
Total$16.59
Top 10 holdings of XEQT as of July 25, 20255

The top stock holding outside North America belongs to Taiwan Semiconductor, at 46 cents for every $100 invested. Additionally, the geographic exposure looks like this:

Geographic exposure of XEQT as of July 25, 2025

One other little tidbit that might be interesting: the distribution yield of XEQT is 2.94% compared with 2.91% for XGRO. This I find a bit surprising, since I would have expected XGRO’s yield to be quite a bit better.

  1. 8,550 to be precise, as of today ↩︎
  2. As of today, might be different from when I wrote https://moneyengineer.ca/2025/01/30/whats-the-deal-with-xgro/ ↩︎
  3. And, if you’re really paying attention, you’ll see that the dollar amounts of this column add up to roughly $80, in keeping with the 80/20 philosophy of XGRO. ↩︎
  4. i lump these together because they hold exactly the same thing. Some loophole that iShares needs to exploit, I gather. ↩︎
  5. On the date I pulled these numbers, cash cracked the top 10 for a holding of $1.34, which is not usual, so I just dropped it. Not sure why that is…perhaps by the end of the month it will resolve itself. ↩︎

Taxes in Retirement

RobH1 Comment

There’s really no avoiding paying taxes, even in retirement. You probably have to do some budgeting to make sure you aren’t being caught unaware, though.

My retirement today is funded from a combination of my spouse’s part-time salary, my/my spouse’s RRIF, selling off assets from my non-registered account, and interest/dividend income from non-registered accounts.

The big difference, as I’m slowly becoming aware, is that aside from my spouse’s paycheque (which has the usual tax deductions / CPP contributions / EI contributions), there is nothing being set aside to pay my tax bill come April 2026. So it goes without saying that I had better make sure there’s a nugget somewhere that I set aside for the upcoming tax bill.

How much should that be? Enter a tool I use to help figure out that sort of thing, referenced in the “Tools I Use” section of this blog: namely, the Basic Canadian Income Tax Calculator1.

The Basic Canadian Income Tax Calculator, from TaxTips.ca

The basic tool, as implied, is pretty basic. It doesn’t include any sorts of deductions aside from the basic personal deduction and dividend tax credits. There’s an advanced calculator that has a bunch more inputs, but for the purposes of this article, the basic tool is good enough.

For the purposes of this tool, your income is in 4 buckets:

  • Other income: This is how 100% of RRIF payments are treated, as well as interest from non-registered assets (e.g. interest from a GIC, bank account, HISA, some ETFs)
  • Capital gains: This is only applicable to non-registered accounts. Note that many ETFs actually generate capital gains and a corresponding T3/T5 slip even if you don’t touch the fund at all2. Larger capital gains are typically generated when you sell an ETF that you’ve held for a while, which includes everything I hold in my non-registered accounts.
  • Canadian eligible dividends: This includes dividends paid by all public companies in Canada.
  • Canadian non-eligible dividends: I don’t have any of those, but if you own shares in a private corporation, you might.

Since my 2025 strategy is to simply collect RRIF minimum payments, I already know what that dollar amount is. I also execute non-registered asset sales monthly to fund my retirement, as I mentioned here. This generates capital gains every month; the exact amount this will sum up to in 2025 is unknowable in advance since it depends on factors like:

  • what specific asset I choose to sell
  • the price of the asset at the time I choose to sell
  • how many shares of the asset I sell at that price

I do track a metric I call “capital gain dollars per dollar of asset sold3” so I can compare the capital gain impact of generating (say) $1000 cash for every asset I own in my non-registered account. So I have a bit of control over the capital gain metric for a given year, but not a lot. My spouse also has non-registered assets in her name, but since she’s earning a salary, I’ll let that be for now.

Some examples might help illustrate the different tax impacts of different withdrawal strategies.

Let’s consider 4 examples, all of which give you 100k gross salary, before taxes:

  • The “RRIF and interest only” strategy: All income for the year is generated by either RRIF payments or interest payments from non-registered accounts.
  • The “non-registered asset sale only” strategy: All income for the year is generated by selling assets in non-registered accounts that create 70 cents of capital gain for every dollar of income thus generated4.
  • The “Dividends only” strategy: All income for the year is in the form of dividends. You’d need a pretty large portfolio to generate 100k of dividend income, just sayin’.
  • The “Blended Approach” strategy: Income comes from a mix of RRIF payments, non-registered asset sales, and dividends. You could play with the percentages yourself; this is an excellent way to see how different liquidation strategies generate (in some cases) very different tax bills.

The table below uses the basic tax calculator to generate the tax bill of the different payment strategies.

Withdrawal strategyRRIF + Interest incomeIncome from asset salesActual Capital GainDividendsTotal Gross IncomeTotal Tax Bill (ON)Avg Tax Rate
RRIF and Interest only100k000100k21.4k21.4%
Non Registered asset sales only0100k70k0100k3.9k5.6%
Dividends only00100k100k3.3k3.3%
A blended approach50k25k17.5k25k100k10.6k11.5%

Fair warning: don’t try to use this table to estimate your own situation. I chose 100k to keep the math easy, but since Canadian tax brackets have different tax rates, the overall gross salary chosen makes a huge difference in the tax bill — enter the numbers yourself!

My retirement planner advised me to target an average tax rate of no more than 15%, and besides the “RRIF and interest only” approach, all of the withdrawal strategies in the table accomplish that. The other takeaway is that on an income of $100k, all of the approaches generate a tax bill in excess of $3k — which happens to be the magic number CRA uses to determine whether or not you have to pay tax in installments.

As a result of doing this exercise, I’ve started a monthly automated contribution to a separate “tax” account5 so that I have money at the ready to pay my tax bill next year. All DIY retirees may want to do the same!

  1. You will probably have to close a bunch of ads before ultimately getting to the page that matters. It’s a forgivable tax to for this useful site, IMHO. ↩︎
  2. If you prefer to avoid annual capital gains, dividends and interest payments, then Global X has ETFs that are designed to do just that. I hold HXT (for Canadian Equity) and HXS (for US Equity) in my non-registered accounts for this reason. ↩︎
  3. This is just the per share capital gain divided by the current share price. I use Adjusted Cost Base to keep track of my capital gains. ↩︎
  4. This is a bit higher than the average of my portfolio, which is about 60 cents for long-held assets. You could choose a different number based on your own holdings. You only pay tax on half of your capital gains, and the calculator knows this. ↩︎
  5. I used Wealthsimple for this since it’s stupidly easy to create a new investment account. And they pay a reasonable amount of interest. ↩︎

News: Wealthsimple AirPod promotion

RobHLeave a comment

Source: https://www.wealthsimple.com/en-ca/airpods

Wealthsimple is once again looking for new clients, or new investments from existing clients. Register by June 16, 2025, transfer $25000 or more within 30 days of registering, and receive an AirPod reward. If you prefer cash, the promotion website spells out the value:

  • Move $25k to $50k: $150 reward
  • Move $50k to $100k: $200 reward
  • Move $100k to $200k: $450 reward
  • Move $200k+: $900 reward

So not exactly a king’s ransom being offered here, but free money is free money.

The promotion registration ends June 16, 2025.

If you’re interested and want to send a little love my way, you can use my referral code: https://wealthsimple.com/invite/WOWQT1.

I’m an existing client and it’s a provider I would recommend.

RRIF and RRSP coexistence

RobHLeave a comment

Summary: It’s possible for you to collect income from a RRIF at the same time as contributing to (and taking deductions from) an RRSP.

If you’re new to world of RRIFs, or think that they only come into play once you turn 71, then you might want to give Demystifying RRIFs a read.

In my case, I worked until the end of 2024, having opened RRIF accounts and funding them with my RRSP holdings1 in the last quarter of 20242. Unsurprisingly, my Notice of Assessment for the 2024 tax year included the usual “new” RRSP contribution room based on salary earned during the 2024 tax year.

But what to do with that RRSP room? And if I use it, when should I take the deductions?

Can I even take advantage of it?

Answer: yes, as long as i do it before I turn 71.

The CRA rules are pretty clear on this topic. You can make and deduct contributions up until the year you turn 71, even if you’re retired.

Ok, but then there’s the problem of coming up with the money to MAKE the contributions.

Making contributions to the RRSP in retirement

One of the reasons you seem to have “more” money when you retire is that you stop saving money for retirement. RRSP contributions constituted a significant line item in my annual budget while working. In retirement, I don’t really need to save the money, but taking advantage of the possibility to defer taxes seems like a good idea.

One way to tackle the issue is to initiate a small monthly contribution to my RRSP; at least this starts to build up deductions I can use when it makes sense to; I don’t need to make it a huge amount, but over time it will build up a deduction that could come in handy later.

So, when is “later”, exactly?

When to take the RRSP deduction when retired

My annual salary in retirement, by design, is variable, based on my net worth calculated every month. You can read about it here. I expect that over time my salary will increase3, so “future me” will be the one taking the deduction.

My guess is that there will be a few places where having a deduction ready might come in handy:

  • Generally, I’m just trying to reduce my overall tax bill. My advisor suggested that I try to optimize my income every year to get to an overall (not incremental) tax rate of 15% for the household. The RRSP deduction is another lever I’ll be able to use to help accomplish that.
  • I’m trying to avoid paying tax by instalments. Looks like if your tax owing is >$3000 in two consecutive years, then you’re going to be asked to pay your taxes four times a year. Taking RRIF minimum payments (as I do) means no withholding tax, so it’s rather likely that at some point I’m going to be faced with this. Having the possibility to delay this is a nice thing; I hate giving the government access to my money any sooner than strictly necessary.
  1. Most writing on this topic talks about “converting” RRSPs to RRIFs. But that’s not really how it works, at least not with two providers I have dealt with. In reality, you open new RRIF accounts and move the RRSP assets in-kind to those RRIF accounts. The RRSP account remains intact, albeit with nothing in it. ↩︎
  2. RRIF payments become obligatory in the calendar year AFTER the year in which you open them. You can take payments sooner, but that’s a manual process, and any payment so taken will be subject to withholding tax. Since I wanted to take RRIF minimum payments in 2025, I had to have the RRIFs ready in 2024. ↩︎
  3. The percentage of my net worth used to fund my monthly salary increases every year, just like how a RRIF calculation works. In theory, the rate of return of my retirement investments is currently higher than my percentage withdrawal, meaning that future salaries are likely to be higher than current ones, but that’s not an ironclad guarantee. ↩︎