DIY Investing

When TFSAs were launched in 2009, investors were thrilled with their new tax-free growth potential. However, the new account type also created another asset-location decision to wrap our heads around. We’ve already explored the impact of asset location between TFSAs vs. RRSPs, as well as between RRSPs vs. taxable accounts.

One of the most common questions I receive from investors is whether it’s more tax-friendly to hold equities in their RRSP or taxable accounts first. In this comparison, I’m about to demonstrate that your post-tax asset allocation and asset location both determine your post-tax portfolio value in approximately equal measure – unlike in our TFSA vs. RRSP scenarios.

There’s never a lack of free advice in this world. If you’re determined to get in shape, for example, you can find any number of infomercials touting THE fitness equipment, diet plan or video series guaranteed to give you Zac Efron’s six-pack abs … or your money back.

You know that old saying about how watched pots never boil? That may be true in the kitchen, but your well-managed ETF portfolio still needs a watchful stir now and then if you want it to keep simmering along according to plan. That’s what rebalancing is for.

Hang out at a gym for long and, someone will probably ask you: “How much can YOU bench press?” Or is that mostly a guy thing? In any case, investors have a similar custom. Of course we want to know our own rate of return.

Now that you’ve completed all your inputs, the calculator provides you with your accurate return over the timeframe you’ve specified. That’s nice. But how does it compare to the “suitable benchmark” I mentioned at the outset? Please feel free to download the model portfolios from my blog before getting started.

Before BlackRock Canada created the iShares Core MSCI All Country World ex Canada Index ETF (XAW) back in 2015, we had no decent way to test our lung capacity. Can you say the entire fund name in one breath?

When it comes to sniffing out deals, my real-life bro is every bit as talented as the fictional George, so I wasn’t surprised when he asked me to create a set of commission-free ETF portfolios he could implement in his Scotia iTRADE account.

Today, I’ll explain how to estimate the taxable dividends on the equity ETFs in my model portfolios. We’ll then review the taxes payable in 2016 on each of the ETFs for residents across Canada. I’ll wrap up with suggested taxable account asset locations for top-rate taxpayers in each jurisdiction.

It’s all relative. Your tax situation probably started out simple enough. (Remember the good old days when you only had a T4 slip to worry about?) As your career took off, your accountant encouraged you to set up a corporation to defer taxes.