Tag: superficial loss

dollar cut in half

Kicking USD out of my retirement portfolio

RobH1 Comment

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

While doing all of this, I’m trying to be mindful of my asset allocation targets which are (newly set as a result of my analysis at Are my portfolio’s asset allocation targets “correct”?)

  • 5% Cash
  • 15% Bonds
  • 23% Canadian Equity
  • 37% US Equity
  • 20% International Equity

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.

You’ll be able to see my progress in my next instalment of What’s in my retirement portfolio (May 2026) which I should have ready at the end of this month!

  1. Rogers Mastercard and Wealthsimple Visa, as detailed in What are the best credit cards? ↩︎
  2. e.g. Wealthsimple does not currently (June 2026) support USD RRIF accounts. ↩︎
  3. e.g. QTrade USD accounts are always separated from CAD accounts. So instead of 4 RRIF accounts, I could have 8 at QTrade. Painful. ↩︎
  4. I guess that’s actually a “reduce complexity” argument. Don’t tell anybody. ↩︎
  5. https://www.bogleheads.org/forum/viewtopic.php?t=370885 shows me that my fears are unfounded. It’s practically a normal distribution. ↩︎
  6. A subscription service offered by Questrade to give you free journaling. And other things I don’t really care about. ↩︎
  7. Average duration is longer, which makes its price more sensitive to changes in the overall interest rate environment. ↩︎
  8. FTSE Canada all cap rather than S&P/TSX for the others ↩︎
  9. And therefore avoids CRA’s superficial loss rules ↩︎

MyACB: A new ACB Tool

RobHLeave a comment

ACB stands for “Adjusted Cost Base”, and is something you need to care about if you have non-registered stocks/ETFs that you buy and sell. If you don’t track your ACB, you can’t calculate the capital gains and losses for a given asset sale.

“But that’s what the T5008 is for, isn’t it?”

Theoretically, yes, but online brokers are notoriously sloppy with tracking ACB and hence your T5008 may not track capital gains properly. Some common reasons why this is are:

  • You hold the same asset at multiple brokers (or even within multiple accounts at the same broker). The CRA doesn’t care where you own the asset, they only care that you own the asset. No matter how many ways and in how many accounts the asset is sliced, CRA considers there to be only one ACB for all of them.
  • You move the asset from one broker to another and the ACB gets set incorrectly by the receiving broker
  • Your asset is priced in USD and your broker is using a different FX rate from you1
  • Your asset delivers a return of captial (RoC for short) which lowers your ACB (and increases future capital gains); your broker may or may not track this on your behalf
  • Your asset reinvests dividends into the fund (this sounds the same as a DRIP, but it isn’t — it’s commonly known as a “phantom distribution”). This increases your ACB.
  • Your asset undergoes a share split or share merge.

For these reasons, I don’t trust T5008s, and I track my own ACB. In Tools I Use I mention the ACB tool I use; it’s the one I have been using for many years now, namely Adjusted Cost Base. (Before that I think I used an Excel template…which I converted to ClarisWorks format, but I digress…)

I use the free version of Adjusted Cost Base because it suits my needs, and I wasn’t aware of a reasonable alternative, and I’m a cheapskate. But it seems there is one now — MyACB. I gave MyACB a quick spin this week, here’s how it compares to Adjusted Cost Base, both in “Free” mode:

User InterfacePortfolios Automated FX Automated RoC and phantom distributions Import from other sourcesPay models
Adjusted Cost Base Not pretty; subscription eliminates ads– two; 5 with subscriptionNoNo, requires subscriptionNo, requires subscription$49/year
MyACB Pretty– one; 5 with family subscription,
100 with “pro” subscription 		YesFor one asset only; more assets require subscriptionYes$29/year for family

$99/year for pro2

User Interface

Adjusted Cost Base won’t win any graphic design awards3. The design is functional but not at all modern looking. MyACB looks like a modern website. Dark mode? Check. Logical layout? Check. And at present, MyACB is ad-free4.

One big thing MyACB does better than Adjusted Cost Base is its support for editing portfolios, specifically related to deleting symbols. It’s far too easy to accidently trash an in-use symbol in Adjusted Cost Base. MyACB makes it very clear how destructive your desired action will be and asks for a specific and impossible-to-click-too-fast confirmation!

Portfolios

Tracking ACB for me means tracking it in my account, my spouse’s account, and our joint account. So that’s three portfolios. And I try to hold different assets in different portfolios to avoid raising the CRA’s ire.

Anyway, my three portfolios exceed the “free” capacity of both products; I get around the restriction by having my spouse have her own Adjusted Cost Base account to track her portfolio. Not a big deal, just a minor inconvenience. With MyACB it would be a bit trickier.

Once nice thing that MyACB does here is support for a “Group” of portfolios. This allows for a user to have multiple portfolios at multiple brokers to keep an eye on superficial losses. I wasn’t able to test this function, since MyACB is limited to one portfolio in the free version. But I can see it as being useful. (In my case, as an Adjusted Cost Base user, I just merge all my transactions across multiple accounts into one portfolio and achieve the same result. The MyACB model is cleaner and more useful).

Automated FX

Since I trade in both USD and CAD, I need to know what the CAD<->USD exchange rate is on day of settlement5. If you only hold CAD-denominated assets, then this won’t matter to you.

Here the free version of MyACB wins hands down. MyACB will do FX calculations for you by looking up the FX rate on the day of settlement. This is a something Adjusted Cost Base makes you enter manually.

Automated RoC and phantom distributions

ETFs have a habit of using these means of distributing money to their unit holders. I’m no tax accountant, but you can read all about these weird distributions over on both of the websites

Both tools offer support for these, no issue there. I’ve been tracking these distributions in Adjusted Cost Base for years.

MyACB adds a small teaser in the free version that allows you to automatically add these transactions for any ONE asset in your portfolio6. So if your non-registered account has one asset, this might be construed as useful. For me, and my 10 different non-registered assets, it’s merely an effort to entice me to pony up and pay for the family version of MyACB. Anyway, I tried it out and it performs as advertised, and is an exceedingly useful feature, but in the free version, it’s really just a way to kick the tires for most of us.

But compared to the free version of Adjusted Cost Base, one thing missing is support for multiple portfolios. Adjusted Cost Base’s free version supports two portfolios. I actually need three portfolios: one for my account, one for my spouse’s account, and one for our joint account. To get around that restriction, my spouse tracks her portfolio in her own Adjusted Cost Base account.

.

Import from other sources

Adjusted cost base doesn’t offer this in their free version, but it’s in the subscription version.

MyACB allows this in the free version, not too surprising, since it’s the new kid in town. The feature seems well thought out, and includes contributions from others (“schemas”) to save you time in figuring out how to map fields to MyACB.

I did try to do an export from Adjusted Cost Base to MyACB and ran into a few problems:

  • The way splits are modelled in the two platforms is different. MyACB puts the split ratio in a dedicated field, whereas Adjusted Cost Base puts in two places — once in the Transaction field and once in the Shares field. A bit of Google Sheets post-processing can fix this, but this may be a problem for a user less familiar with string manipulations.
  • In MyACB, the ticker symbol is mandatory, whereas in Adjusted Cost Base it isn’t.
  • Adjusted Cost Base doesn’t call out the currency used, just the exchange rate, and a “yes/no” if it’s a foreign currency transaction. MyACB stores the currency “kind” (e.g. USD, EUR etc). Again, a minor difference, but one that requires some thought as to how to covert one to the other.

Am I switching?

For the moment, no. Adjusted Cost Base meets my needs, and it would require some work for me to move to MyACB. To get the most out of the switch, I would have to pony up for a family plan given the portfolio limitations in MyACB’s free version. If you’re just starting out in getting help with your ACB tracking, either tool will meet your needs. MyACB has some nice features in the free version (automatic FX lookups, transaction importing) that warrant giving it a close look.

What do you think? Let me know at comments@moneyengineer.ca!

  1. There’s more than one acceptable way to do this. What I do is find the Bank of Canada rate on the settlement date and use that. ↩︎
  2. “Tax pros” is an assumption on my part. I don’t see how even the most dedicated DIYer has a need for 100 portfolios… ↩︎
  3. I see that the top hat guy for Adjusted Cost Base’s logo has had a makeover; he looks a little less scary and seems to have given up cigars. ↩︎
  4. I do respect the need for content creators and developers to be compensated somehow for the work they do. The ads on Adjusted Cost Base are quite prominent and can be quite distracting. ↩︎
  5. You track your ACB in Canadian dollars, always. And you convert each transaction — buy or sell — to CAD. ↩︎
  6. The UI to do this is a bit (uncharacteristically) clunky, in my view — you can only import one year of transactions at a time, which gets tedious pretty quickly. ↩︎