Canadian Couch Potato strategy

[Kim]

Since there is a fair number of Canadians here (including myself), I thought it would be beneficial to start a discussion about Canadian Couch Potato strategy. Since Canadian options are not very liquid compared to US, I don't trade them and place a chunk of my long term investments into Canadian Couch Potato.

 

Here is the link:

http://canadiancouchpotato.com/

 

And here are the model portfolios they recommend:

http://canadiancouchpotato.com/model-portfolios-2/

 

Here are the long term returns of different allocations for Vanguard ETFs:

 

 

What I find pretty amazing is the fact that if you look at 20 year annual return, there is only 0.3% difference between the most conservative allocation (30% stocks, 70% bonds) and the most aggressive (90% stocks, 10% bonds). But the difference in drawdowns in huge. 

[Stephen]

I agree just amazing.   Kim is your portfolio this uncomplicated/simple? I wonder how this portfolio will perform in a rising interest rate environment?  

[mike_tee_vee]

Thanks for this Kim.  It looks like VXC had a pretty good year in 2015, and a large portion of the gains likely came from the depreciation of the loonie (as this is an unhedged ETF).  The exchange rate looks to be the wind in the sails of a lot of Canadian ETFs that track the S&P 500 (i.e. VFV, ZSP, etc.)

 

Given the $0.70 loonie, is your preference to use ETFs that are hedged or unhedged for currency exchange for long-term investing?

[Kim]

In the long term, it should probably level out.

[Jesse]

Love the steady returns of the classic Couch Potato strategy? This spicier version beat it by 6.7 percentage points annually. It’s hot stuff

 

 

http://www.moneysense.ca/save/investing/stocks/a-spicy-alternative-to-the-couch-potato-portfolio/

 

For anyone interested in learning more about momentum, please see my LC Diversified forum where it's discussed extensively.