Tag: vsc

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 ↩︎

What’s in my non-registered portfolio? (Oct 2025)

RobH3 Comments

Every month, I try to share with you what’s in my overall retirement portfolio (September 2025 post is here). That retirement portfolio is actually distributed over a bunch of accounts held by me and my spouse and includes RRIFs, TFSAs and non-registered accounts. This is what it looks like at the moment:

Retirement savings as of October 1, 2025 by account type

(My multi-asset tracker is a handy tool to help you quickly create charts that look like the above one).

My current strategy for these three account types looks like this:

  • RRIF: This is 100% invested in my ETF all-stars. I’m currently withdrawing RRIF minimum payments for two main reasons:
    • To avoid problems with attribution. I cover that topic over here.
    • To avoid withholding tax. RRIF minimum payments don’t attract withholding tax, but I am setting aside some of my payments to deal with the unavoidable tax bill come April 2026. I talked about that topic over here.
  • TFSA: This is mostly invested in the ETF all-stars, but there’s a few stragglers in here1 that I really ought to get rid of. Nothing wrong with the funds in there, but it’s a needless complexity. The TFSA continues to get new funds since it’s hard to beat tax-free growth, and I only buy all-stars with those funds. It will get drawn down last in my retirement planning.
  • Non-registered accounts: Here it’s a bit of a dog’s breakfast, with very little invested in the all-stars, mostly because most of the equity found here was bought long ago, and changing what I hold would attract capital gains that I would prefer to take on my own terms. It’s where the majority of my early-retirement decumulation takes place.

Here’s what that breakfast looks like:

What’s in my non-registered portfolio, October 2025

Here’s a look at each holding, from highest to lowest percentage.

HXT: This is a Canadian equity ETF that does not pay dividends, instead using some wizardry to bury it all in the per-unit price of the ETF. This simplifies taxes, and I have held this fund for a long time. Due to increasing costs of this ETF, it’s among the first to get liquidated as I need funds.

XIC: Canadian equity fund, very popular. I think I bought it to create a bit of dividend income. It will get liquidated after the Horizons funds go (HXS, HXT, HXDM).

SCHF: A very low-cost international equity2 fund in USD that I’ve held for a very long time. It’s funds like SCHF that attracted me to investing in USD, which, at present, adds a lot of complexity.

ICSH: This is one of the all-stars. It is what my VPW cash cushion is invested in3. I use ICSH more than ZMMK in the cash cushion because US interest rates are quite a bit higher than Canadian rates at the moment. I talked about that here.

HXS: Same idea as HXT, except it invests in the S&P 500. This one is held only by my spouse who is still working for a living, so this will just stick around a while, until she stops working and can take on the capital gains.

VSC: A bond fund held by my spouse. I may sell this to harvest some capital gains losses.

HXDM: Same idea as HXT, except international equity. It is on the list to liquidate.

ZMMK: An all-star, held in the same account as ICSH.

The rest (XEQT, TEQT, XGRO) are all new arrivals in the portfolio, purchased using dividends4 from the other funds as well as the bonus payments I keep collecting from Questrade for switching to them.

My non-registered accounts are only a small portion of my retirement holdings, but there’s a fair bit of complexity there. Over time, these accounts will go to zero other than the cash cushion portion (ZMMK, ICSH or whatever replacements I discover) which will remain as long as VPW is my decumulation strategy.

  1. Mostly pure Canadian equity funds. This is to offset AOA that has next-to-no Canadian equity component. ↩︎
  2. 0.03% MER. Cheap! ↩︎
  3. VPW = Variable Percentage Withdrawal, an absolutely brilliant strategy for making sure you don’t run out of money in retirement and don’t leave a lot on the table. Read all about it here. ↩︎
  4. With all ETF trades being free, I hold very little actual cash in any of my accounts. ↩︎