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 month1. On August 27th before the markets opened, this is what it looked like:
More progress has been made on my plan to kick USD out of my retirement portfolio; it’s proceeding faster than I originally planned thanks to Questrade’s offer of free Norbert’s Gambit to all Questrade users for a few months. I’m expecting that it’ll all be gone by the end of September.
AOA is largely being replaced by XGRO, but because AOA is so heavily US Equity weighted, I always have to pick up VFV to make up the difference — I’m kicking USD out of my portfolio, not the US market. ZST is my pick for the RRIF to replace ICSH. It’s a similar idea to ICSH, but since Canadian interest rates are lower, I expect I’m sacrificing a bit of return there. I hope this will work itself out in the long run.
And I’m trying to respect my asset allocations at the same time, which remain unchanged:
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. Every time I get rid of some AOA or ICSH, it gives me an opportunity to make sure I respect the splits. Here’s what it looks like:
Plan for the next month
With the asset class splits under control, next month will see the last vestiges of USD gone from the portfolio. And I expect I’ll do a bit of shifting to bump up the Interational Equity portion of the portfolio, which is a little light. And I plan to celebrate a bit, because the removal of USD from my retirement portfolio should reduce complexity significantly.
Overall
Part of using VPW2 as a strategy is the need to calculate your retirement net worth on a monthly basis. Net worth clawed its way back to June’s levels, but no complaints — it’s still 20% above where it was when I started on my retirement journey 20 months ago.
My VPW-calculated salary has now increased for 8 straight months, it’s nice getting a monthly raise!
The exact day is variable because of the timing of the end of the month. Payday has to fall on a trading day. ↩︎
Variable Percentage Withdrawal, a structured way to decumulate your portfolio. ↩︎
There have been pretty big changes since last month as my strategy to Kick USD out of my retirement portfolio continues in earnest. This has focused on getting rid of AOA and ICSH in my spouse’s RRIF account this month as she takes advantage of the free Norbert’s Gambit included in her trial subscription to Questrade Plus2.
AOA is largely being replaced by XGRO, but because AOA is so heavily US Equity weighted, I always have to pick up VFV to make up the difference — I’m kicking USD out of my portfolio, not the US market. ZST is my pick for the RRIF to replace ICSH. It’s a similar idea to ICSH, but since Canadian interest rates are lower, I expect I’m sacrificing a bit of return there. I hope this will work itself out in the long run.
And I’m trying to respect my asset allocations at the same time.
Plan for the next month
The asset-class split looks like this; you can read about my asset-allocation approach to investing over here.
The moves I made to start reducing USD in my portfolio have quickly allowed me to get to my recently revised target allocations I have for each asset class:
5% cash or cash-like holdings like ZMMK and ZST
15% bonds/income (most are buried in XGRO and AOA, rest are in XCB)
23% Canadian equity (mostly based on ETFs that mirror the S&P/TSX — HXT and XIC); this is up from the old 20% target
37% US equity (dominated by ETFs that mirror the S&P 500); this is up 1% from the old target
20% International equity (mostly, but not exclusively, developed markets); this is down 4% from the old target
With the asset class splits under control, next month will see more moves to get rid of USD in my portfolio. There’s only USD in my RRIF accounts now, all invested in AOA and ICSH. These positions will be reduced by 1/5th in August as my target is to be fully USD free by the end of the year.
My timing for conversion looks to have been pretty decent; the USD/CAD rate continues to run north of 1.40, which for me is a good thing.
Overall
Part of using VPW3 as a strategy is the need to calculate your retirement net worth on a monthly basis. My three month winning streak has come to an end as I took a slight step back month over month. However, I’m worth 19% more than when I started my retirement journey in January 2025.
Irrespective of my net worth stumble, my VPW-calculated salary continues to increase, albeit at a more modest rate, as expected. The VPW cash cushion (now 100% invested in ZMMK) acts like a shock absorber to my salary, smoothing out the more volatile month to month variations in my net worth.
I did all the trading I needed to do on the 24th; it takes a few days for everything to settle and for money to get sent to the bank account. My net worth is quite a bit lower after the mini-crash on the 29th! ↩︎
Questrade Plus is 11.95 monthly, but offers a 30 day free trial. I’m a cheapskate, remember? Norbert’s Gambit is otherwise 9.95 a go plus HST. ↩︎
Variable Percentage Withdrawal, my chosen decumulation strategy. ↩︎
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, so that’s a good trigger to update this post. On June 30 before the markets opened, this is what it looked like:
The portfolio is dominated by my ETF all-stars, (and if not an all-star, they are probably on the Magnificent Seven ETFs list). But the observant reader will start to see some changes from last month as my strategy to Kick USD out of my retirement portfolio starts to take effect. The contributions of AOA and ICSH (both USD funds) to my retirement portfolio are notably down and SCHF has disappeared entirely — SCHF was the last bit of USD in my non-registered accounts. ZMMK, XGRO and VCN, on the other hand, have gained in importance to make up for the USD-denominated departures. And ZST (ultra short-term bond fund) and VFV (S&P 500 US Index fund) have begun to make an appearance; you’ll see more of these funds in future months. My ETF all-stars post has been updated accordingly.
Plan for the next month
The asset-class split looks like this; you can read about my asset-allocation approach to investing over here.
The moves I made to start reducing USD in my portfolio have quickly allowed me to get to my recently revised target allocations I have for each asset class:
5% cash or cash-like holdings like ICSH and ZMMK
15% bonds/income (most are buried in XGRO and AOA, rest are in XCB)
23% Canadian equity (mostly based on ETFs that mirror the S&P/TSX — HXT and XIC); this is up from the old 20% target
37% US equity (dominated by ETFs that mirror the S&P 500); this is up 1% from the old target
20% International equity (mostly, but not exclusively, developed markets); this is down 4% from the old target
With the asset class splits under control, next month will see more moves to get rid of USD in my portfolio. There’s only USD in my RRIF accounts now, all invested in AOA and ICSH. These positions will be reduced by 1/6th in July as my target is to be fully USD free by the end of the year.
My timing for starting the conversion looks to have been pretty decent; the USD/CAD rate moved significantly in my favour this month. I don’t expect that to last!
Overall
Part of using VPW1 as a strategy is the need to calculate your retirement net worth on a monthly basis. And once again, a new all-time high:
My VPW-calculated salary continues to increase, albeit at a more modest rate, as expected.
Variable Percentage Withdrawal, my chosen decumulation strategy. ↩︎
After much consideration, I’ve decided that holding USD-denominated assets during retirement is no longer a good idea. I have been struggling with this question for a while now.
There are a few reasons why I’ve reached this conclusion:
I no longer spend USD. I have two credit cards1 that allow me to avoid foreign exchange fees.
Complexity. The USD in my RRIF accounts needs to be converted periodically since withdrawals are in CAD. The USD in my non-registered account might eventually lead me to have to file a T1135, and I hate new tax wrinkles. And of course the USD funds add to the universe of funds I have to manage in all the accounts. Fewer is better!
Choice. Without USD in my portfolio, the universe of DIY brokers opens up2 and the number of accounts I have to have is also reduced34.
The fluctuating CAD/USD FX rate might be another reason, but that hasn’t really bothered me. In the long term, it’s reasonably stable.
So how to go about doing it, and what impacts will this have? Let’s take a look.
General considerations
So of course, the only real way to convert USD into CAD at Questrade is to use Norbert’s Gambit. Performing the Gambit is a multi-day activity:
Day 1: Sell the USD asset and buy DLR.U with the proceeds; make journaling request to convert DLR.U into DLR
Day 2: Wait for settlement of trades made on day 1
Day 3: Wait for journaling to complete
Day 4: Wait for journaling to complete
Day 5: Sell DLR and buy CAD-listed assets to replace what I sold on day 1
Each time I do this exercise, it makes me a little leery since
I have to pay $9.95 plus GST to journal the shares on Questrade (not a huge deal, but as you have read elsewhere on the blog, I am a cheapskate)
I’m out of the market for 3 days. I really hate being out of the market since big moves can happen over short periods of time. Of course, this cuts both ways; I could miss a big rally or a big meltdown as a result5.
I’m making a bet on favourable FX rates. FX rates don’t typically swing much in short periods of time, but since over 50% of my retirement portfolio is in USD I’m not willing to try to find the “right” time to make such a trade.
As a result, I’ve made the decision to
Sell off 1/6th of my USD portfolio every month for the next six months (or thereabouts). This will allow me to smooth out any FX speed bumps and limits how much of my portfolio is idle at any one time.
Take advantage of a free month of Questrade Plus6 and do a few journaling requests during this month and save a few bucks
I’ll try to start moving my portfolio to these new targets as I make this shift, but given the targets are brand new, I’m in no particular time constraints; I’m expecting the portfolio to slowly move from the old targets to the new ones, finally landing at some point later in 2026.
Kicking USD out of my RRIF accounts
Of the 5 RRIF accounts I have in the household (three for me, two for my spouse), only two of them have USD in it, and the USD portion is 100% invested in either AOA (an 80/20 all-in-one global equity fund) or ICSH (an ultra short-term bond fund that stands in for cash)
AOA can be replaced with XGRO but it’s not an exact replacement. AOA has almost no Canadian Equity content and a higher US Equity content than XGRO. This means that a one-to-one switch will cause my Canadian Equity content to increase and my US content to decrease. I’m expecting this will eventually cause me to need to replace some of my AOA with a pure play US Equity asset. I’ve chosen VFV since it mirrors the S&P 500, an index that won’t be adding the mega-IPOs any time soon 🙂
ICSH can be replaced with ZMMK since they are similar in nature, but I’m not going to do that. Why? Because I hold ZMMK in my non-registered account as a VPW cash cushion, I do make trades in ZMMK from time to time. I don’t want to end up in a situation where I’m selling ZMMK in my non registered account and buying it in my RRIF, since this could deprive me of possible (small) capital losses — CRA does not look kindly on trying to “artificially” generate capital losses in this way.
So after mulling it over a bit, I’ve decided to replace ICSH in my RRIF accounts with ZST. It’s a short term bond fund which is a bit riskier than ZMMK7, but I’m counting on it being cash-like for my purposes. Neither has been around all that long, but it appears they are pretty close on the performance front with a slight edge for ZST.
So when all is said and done, my RRIFs should have three holdings: XGRO (mostly), VFV (some), ZST (about 2.5% of overall portfolio),
Kicking USD out of my non-registered accounts
Here there are two holdings
ICSH in my VPW cash cushion account
SCHF, an international equity fund I’ve held for years and years
The ICSH replacement is easy — move it to ZMMK. I’ll do that all at once. It will mean a loss of over a percentage point in gains at the moment, but this is the price of simplicity, I guess.
The SCHF sale is a bit like selling 6 months of RRIF payments all at once, which will attract a capital gain. I’m ok with that, but I’d prefer to avoid more capital gains for the rest of the year (I didn’t budget for that when I tried to work out my likely tax bill for 2026). Since selling SCHF is actually helpful in getting my new asset allocation targets right, I don’t need to replace it with another International Equity fund. My calculations tell me that I’ll probably need to replace it with a Canadian Equity fund. Here I’ve chosen to use VCN since it uses a different index provider8 and would be considered different from my other non-registered Canadian equity funds, namely XIC and HXT9. Buying VCN and selling it in subsequent months to fund my retirement salary should result in minimal capital gains for the remainder of the year.
So when all is said and done, the VPW cash cushion account should be 100% ZMMK and the other non registered account will be 100% CAD-listed ETFs, mostly tied up in Canadian Equity.
As readers know, I’m strictly1 an index investor. Boring, yet very effective over time. Buy a basket of stocks that are based on public indices (e.g. S&P 500, TSX 60, MSCI World) and forget about it. Since it’s not possible to buy an index directly, ETFs exist to do that for you — you buy the ETF, the ETF managers buy the underlying stocks, and life is good.
This means a few things:
You don’t actually own the stocks of the index yourself; the ETF manager does
You rely on the ETF manager to do the work of adding/removing stocks from the index when the index does (and this happens all the time2)
You rely on the ETF manager to pay out the dividends the underlying stocks hold; this isn’t on the same schedule as the underlying companies themselves — the ETF manager will pay out dividends annually, semi-annually, quarterly or even monthly.
You are implicitly investing in everything the chosen index invests in. Some folks may have reservations about investing in sectors like defence industries, oil and gas, tobacco and alcohol, gambling or anything involving Elon Musk, etc.
You pay a (hopefully small) premium to have someone else do this work3
Now. the super cheapskates out there will rightly point out that with commission-free trades on many DIY platforms4, why bother with an index fund? Why not just own all the stocks of an index yourself and cut out the intermediary step (and the associated fees)?
Two of Canada’s DIY providers (Wealthsimple and Questrade) are now offering products that may meet that need. Although I am a client of both providers, I don’t use either of these services.
Wealthsimple Direct Indexing
Wealthsimple was the first to introduce a product that allows investors to own the underlying stocks of an index. The full story is here, but it’s not exactly what you might expect:
Good: You can buy either the S&P 5005 or the TSX Composite6 (about 200 companies)
Good: You can exclude stocks from the list if you wish
Bad: You can only use direct indexing in a non-registered account.
Good (?): You don’t actually hold all the stocks in the underlying index; sampling is used to approximate the overall index (this is done in order to facilitate tax loss harvesting)
Good: Trades are done automatically on your behalf to take advantage of tax loss harvesting. The idea being that (for example) an underperforming bank stock is sold and replaced with a different bank stock
Terrible: Although you can hold the S&P 500, you can’t hold it natively in USD. This means lots of FX fees for Wealthsimple 🙁
Neutral: Direct indexing costs 0.15% of holdings
Bad: The service sounds like it will generate a lot of trades, which means a lot of tracking of gains and losses. Wealthsimple helpfully(?) suggests using CRA’s “Autofill my return” feature.
The main value proposition of direct indexing offered by Wealthsimple is the idea of automating tax loss harvesting. For people with large non-registered portfolios, this can be an attractive proposition. Of course, you have to be able to FUND a large non-registered portfolio in the first place. In my case, this would mean liquidating my existing non-registered portfolio and incurring all the capital gains at once. No thanks.
And, I can’t stress this enough: using this service in its current incarnation to buy the S&P 500 is a terrible idea. The FX fees will eat into your returns as sure as the sun will rise tomorrow!
Questrade’s Custom Indexing
This is a brand new product from Questrade. All the details are here.
Good: You can define your own index, either starting totally from scratch or using one of the existing templates7.
Bad: It only works for USD stocks8 at the moment. It goes without saying that you should invest using USD and not CAD if you were to choose this route910.
Good: It can be an RRSP, TFSA, FHSA or non-registered account.
Bad: It doesn’t include RRIF accounts.
Neutral: It has to be a new account dedicated to this strategy
Good/Bad: Rebalancing (with “one click”) is in your hands. Good because you maintain total control, Bad because you can be inclined to try to time the market, which is almost never a good idea.
Neutral: Your custom index is limited to 600 holdings.
Good: There’s no charge!
This is a great looking service on paper. I thought that perhaps it would work for my TFSA accounts since I only hold XIC and XEQT in them but I see some limitations in doing that:
Custom indexing doesn’t (yet) support CAD-listed stocks
XEQT holds international stocks; custom indexing can’t. I suppose I could use ETFs to get around that.
XEQT holds ~8500 individual companies, whereas custom indexing is limited to 600 stocks
I suppose I could decompose my all-in-ones (XGRO/XEQT) into their ETF components and build a custom index based on that. This would replace the all-in-one MER with the MER of the individual components, which as I’ve shown previously, would save you money.
I could do this immediately with AOA (my USD all-in-one), but I only hold that in my RRIF account, and direct indexing doesn’t seem to allow RRIF accounts.
Anyway, it’s an interesting offering, and one that I’ll keep an eye on!
My Take
Wealthsimple’s direct indexing might be attractive to someone in the accumulation phase of their investment journey. For me, all the things I have in my non-registered accounts will eventually be sold off to fund my retirement — I’m not adding to that part of my retirement holdings.
Questrade’s custom indexing might be interesting to me once they add support for Canadian equities. Until then, another button to ignore.
Well, for 80% of my portfolio anyway. The equity part. ↩︎
Expressed as MER (Management Expense Ratio). This is the percentage of your holdings that goes to pay the expenses of the fund manager. For passive index funds, it should be low — 0.25% or lower. If it’s higher, it should lead you to question what, exactly, the fund is doing. ↩︎
Wealthsimple, Questrade, QTrade, National Bank Direct and Moomoo all offer commission-free trading for stocks and ETFs without restrictions. ↩︎
I’m simplifying here. Wealthsimple’s US offering is actually based on the Morningstar US Target Market Exposure Index which is slightly broader in scope than the S&P 500. But for all intents and purposes, close enough. ↩︎
There’s not a lot of templates but they include S&P 500/200/100 and a few sectors. There’s also user-submitted templates, not sure how these are curated by Questrade (they appear to be rather polished, so I’m thinking these are seed ideas, TBD how many of these become visible over time) ↩︎
This is because Questrade only support fractional shares of USD stocks and ETFs. CAD is “coming soon” but has been for about a year now. ↩︎
