this post was submitted on 24 Jul 2023
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Would be nice to get a sanity check: I'm planning my portfolio as 40% CASH, 40% VEQT, 10% private credit and 10% managed portfolio (Wealthsimple). Is that reasonable? Am I silly for using those WS offerings and would be better to just focus on CASH/VEQT? Should I balance 1/2 CASH and 1/2 VEQT on all self directed (TFSA, FHSA, RRSP, non-registered) or is there a more efficient allocation?
Depending on your risk level, it should be equivalent to 50% VEQT-50% CASH, but with more fees. IMO, you're better off with CASH/VEQT, as I hate WS habit of tinkering every few months with their managed portfolios in order to justify their higher fees.
One question: why? What are you trying to achieve? The fees are quite high (asset management fee of 1.25% + Wealthsimple’s standard managed account fees + a 15% performance fee on returns over 5%), and the results are completely unproven at the moment.
There is indeed a more efficient allocation: basically, you're better off keeping your equities in registered accounts, and your CASH in NREG, but the math get quite complicated quickly. Justin Bender has had a few articles on the topic, for example here and Ben Felix has a great video on this topic.
Sounds plausible, thank you for your input!
An experiment. I believe in the power of index funds but I also believe that we're living weird times and I'm curious to see if they can deliver on the promise.
Amazing, that's what I was looking for. Thank you!