Lessons learned in diversification – reducing my Canadian home bias

Lessons learned in diversification – reducing my Canadian home bias

Many financial advisors, analysts and investing gurus alike tout the merits of portfolio diversification. In this updated posted, you can read on about my recent lessons learned in diversification, including reducing my Canadian home bias since becoming a DIY investor well over a decade ago. 

Theme #1 – how many stocks are enough?

This answer depends on who you ask but there are some experts who claim owning about 30-40 individual stocks, in various industry sectors, will provide modest diversification to mitigate portfolio risk. Here are some examples:

Lowell Miller author of The Single Best Investment:

“In our portfolios for individuals and institutions we tend to carry thirty to forty stocks.”

“The more stocks you have, the more your group will behave like an index.”

“If you don’t want to hold the thirty to forty stocks that satisfy my personal comfort level, you can reduce the number – bearing in mind that each reduction increases the risk that a single bad apple in your bushel will have an excessive impact on results.”

Gary Kaminsky author of Smarter Than The Street:

Holding 100 stocks is yet another myth of the great Wall Street marketing machine.”

“If you’re going to do your own work/research, you should feel comfortable that with 25 to 30 names, you have enough diversification and you have enough skin in the game.”

Gail Bebee author of No Hype – The Straight Goods on Investing Your Money:

“A popular rule of thumb asserts than an individual stock should represent no more than 5% of a portfolio.  This would mean owning at least 20 stocks.”

“Some studies of past stock market performance have concluded that owning about 15 to 20 stocks provides the best return for the least risk.”

Stephen Jarislowsky, Canadian billionaire and author of The Investment Zoo:

“Out of the many thousands of stocks I can choose from worldwide, I therefore really only need to look at 50 at most.”

Those estimates seem about right to me as a practising DIY investor.

When it comes to individual stocks though, dedicated readers of this site will know I’m a fan of portfolio diversification myself and practice the following personal rules of thumb to avoid individual stock risk:

  • I strive to keep no more than 5% value in any one individual stock, and
  • I’m working on increasing my weighting in low-cost ETFs over time to avoid my bias to Canadian dividend payers in my portfolio while generating total returns. Read on…

You can always review some of my current stock holdings on this standing page here.

Theme #2 – why diversification? 

Portfolio diversification aims to lower the volatility of my portfolio because not all asset categories, industries, nor individual stocks will move together perfectly in sync. By owning a large number of equity investments in different industries and companies, and countries, those assets may and do rise and fall in price differently; smoothing out the returns of my portfolio as a whole. 

There is a close logical connection between the concept of a safety margin and the principle of diversification.” – Benjamin Graham

While I/we continue to hold no bonds in our portfolio at this time, as I contemplate semi-retirement in the coming years, I am seriously considering ramping up our cash on hand to counter any bearish equity markets when we’re not working full-time. 

How much cash should you keep?

Theme #3 – how can I reduce my Canadian home bias with ease?

During the pandemic, I decided to make a few portfolio changes to simplify my portfolio more as semi-retirement planning continued. These were my decisions related to asset location and further diversification.


In the past, I’ve held all Canadian dividend paying stocks inside this account.

During early 2020, in looking at my sector allocation to the oil and gas industry, I decided to cut complete ties in late-2020 with Inter Pipeline (IPL) after their dividend cut of 72% earlier in the year. You can see some of that dividend news I reported in this previous dividend income update.

April 2020 Dividend Income Update

I used the proceeds gained from IPL over the years to invest in low-cost ETF XAW.

My theory then was while XAW will provide far less yield inside my TFSA going-forward, which will impact my TFSA income generation and reporting on this site, owning XAW will provide some much needed total return growth from ex-Canada.

XAW iShares December 2020

Since fund launch by iShares, I’ve long since listed XAW as one of the many great funds to own on my dedicated ETFs page.

So, I’m eating my own cooking. I bought more XAW inside my TFSA during the pandemic and since the pandemic was declared over. 


Don’t forget about the many great things you can do and invest with, inside your TFSA:

Great things you can do with your TFSA


In a taxable account, Canadian dividend paying stocks earn favourable tax treatment thanks to the dividend tax credit. So, I am keeping those Canadian stocks there and see no reason to change that approach. I’m sitting on some decent capital gains via my taxable account at the time of this post. 

Investments inside our RRSPs and my Locked-In Retirement Account (LIRA) are different.

As referenced above, in recent years I’ve gravitated to owning more ETFs for low-cost investing to capture U.S. market returns. In fact, before the pandemic I sold off many individual U.S. stocks. While I keep a few “moaty” dividend stocks in our portfolio the RRSP and LIRA assets are being streamlined.

Weekend Reading – Building a moaty stock portfolio

As an example, I now own more low-cost ETF QQQ than I did in 2018-2019. 

Like XAW, my theory then was while QQQ will provide far less yield inside our registered accounts as time goes on, price gains should be realized from the continued tech boom using a lazy total return approach.

So far, so good since pre-pandemic days.

QQQ ETF August 2023

It’s certainly hard to argue with the results that passive investing can offer from part of the U.S. market. This is why I own a bit of QQQ – it’s a nice tech kicker that Canada doesn’t really have. 

Lessons learned in diversification – reducing my Canadian home bias changes

Am I done with the portfolio changes?

Not sure yet. 🙂

But I am convinced that more diversification and simplification of our portfolio is wise over time because managing dozens of stocks from both Canada and the U.S. was getting a bit unruly. 

I’ve been very fortunate with my decisions in recent years. My collection of moaty Canadian and a few U.S. stocks provide some porfolio offence and defense.

In sports, a good offence can begin with a great defence. You can do the same with your investments too.

As you consider semi-retirement or retirement have you thought about the following?

  1. A tilt towards some low-vol stocks as part of your equity allocation?
  2. A tilt towards some U.S. tech – to juice some returns when tech cycles back into favour?
  3. A review of your mix of stocks and bonds and cash that focuses on meeting your income objectives while matching your tolerance for risk?

I continue to answer all these questions myself as part of my ongoing investment plan. 

Lessons learned in diversification – reducing my Canadian home bias plans

For the coming years, I see us sticking with the following asset location and general investment plan:

  1. Maintain existing Canadian dividend paying stocks inside our taxable accounts. 
  2. Max out TFSA in 2024 and potentially 2025 (?) and own more low-cost XAW. 
  3. Max out RRSPs in 2024 and own more low-cost QQQ or cash-alterntive assets as a buffer. A smart mix of growth and “safe assets” inside our RRSPs will be important – RRSPs will be the first account we withdraw money from as part of our draw down approach as required as part of any live off dividends approach:

March 2023 Dividend Income Update - Live off Dividends

Are Cash-Alternative ETFs Right for You?

I’ll keep you posted as other portfolio changes occur over time to share how we are realizing our portfolio objectives. It is my hope sharing these insights can help you out too.

What do you make of our diversification moves in recent years? What are you planning to do this year and in future years to manage diversification in your portfolio?

As always, I look forward to your comments. 

Thanks for reading,


Further reading aligned to this post:

Benefits of The 6-Pack Portfolio


Weekend Reading – Playing portfolio defence and offence

My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

84 Responses to "Lessons learned in diversification – reducing my Canadian home bias"

  1. Hello Mark.

    Have to say I have dug deep into your writings that span several years. Thank you for the time you’ve put into it.
    Through that time, it seems you’ve made a change.

    Please correct me if I am mistaken:
    Previous: CDN dividend stocks were held in your TFSA
    Current: Taxable account

    TFSA is now being used mainly for ex-Canada XAW

    Your RRSP is home to US listed ETFs such as VTI/QQQ and US dividend stocks

    You have VTI and ITOT and am wondering about the redundancy of holding both.

    For the record, I keep it simple.
    VTI is in my RRSP and LIRA. Looking into QQQ as read on your site to add to RRSP
    XAW is in my TFSA
    Scattered CDN Div stocks in TFSA and RRSP (probably should pick one location).

    Although not financial advice, is this a setup you would improve on? IS there something I could be missing…hypothetically.

    1. Dig away!

      Just a reminder due to privacy reasons, I don’t disclose everything on my site but I do share what I feel I can to always help others and pay it forward…

      On My Dividends page, link below, I have highlighted some Asset Location information in general terms, what I tend to own and where.

      Canadian stocks were always held in my taxable accounts and TFSAs.
      I have been diversifying more over time inside the TFSAs and RRSPs.

      I no longer have ITOT in my portfolio, simplifed from that link above.

      I like and have liked based on QQQ returns, QQQ as a tech-kicker in my portfolio.

      Owning VTI is great and unless you have an equivalent via a all-world or ex-Canada ETF probably good to keep. An excellent fund for your RRSP.


      1. Yes, I understand the privacy reason and what you share is wonderful. So is your reply response time!

        QQQ has done well through the years and no reason to think it will not continue giving a little bump to the portfolio

        You got me…I clearly have overlap by holding XAW and VTI. I imagine I could unload VTI and use those USD funds to purchase QQQ. (although I do like the cost of doing business with VTI)

        I do have dividend stocks in my TFSA – Dogs of the TSX breakdown. I am considering VCN or XIU since I am a little light on CDN exposure on an overall basis.

        An XAW (RRSP/TFSA) + CDN div stocks (mostly TFSA) + VCN/XIU (RRSP/TFSA) for CDN exposure + perhaps QQQ tech kick (RRSP) portfolio mix (I did purchase some JEPQ – RRSP) seems to be a good mix. Probably could simplify even more going forward.

        Again, thank you for this site.

        1. Hey, not a must…the future is wildly uncertain!

          QQQ should do well in the future, as well, better, slightly less – who knows!? I own just a bit just in case 🙂

          VTI is an outstanding low-cost fund and no reason to unload, if ever, for long-term U.S. stock market gains. All good. As you know, you just need USD $$ to buy it. Otherwise, in CDN $$ VUN does the same thing….

          VCN, XIU, ZCN, XIC, etc. are all outstanding funds for Canadian stocks to own. I have a bias, to XIU, since I have long since thought that if the top-60 companies in Canada can’t make money, we have bigger issues… Returns from XIU, VCN, etc. are all very comparable. I just happy to own a few XIU top-stocks outright (banks, telcos, railroads, etc.).

          XAW (RRSP/TFSA) is lazy and simple.

          You are most welcome for the informtion and I simply do what I can with our investing to meet our financial goals but certainly if I help others by sharing what I know or sometimes don’t yet know (!) then all good too 🙂


  2. Hi Mark,
    Nice article as always I checked out your portfolio page mentioned in this article : https://www.myownadvisor.ca/dividends/

    I notice that your condo fee is pretty low
    Shelter (home/condo maintenance/expenses) $800 $9,600

    How you have managed to keep it so low ? how old is your Condo ? can you share some tips/tricks in Condo buying and how to keep the cost so low? Did you avoid buying a condo with swiming pool gyms etc? Please do some write up on that for the first time home buyers on Condo buying what was your research thought process like when you were buying etc. I like the idea of low mantainance which can do wonders in investing journey but when I see 900 1200/month condo fees that really puts me off.

    1. Pretty new condo Zasid, but the fees will go higher over time. Any condo that has maintenance fees ~ 1% of the value is pretty good IMO.
      i.e., if your condo is worth $1M but your fees are about $10k per year, that’s pretty good.

      Yes, I would avoid a building with lots of ammenities since you must subsidize/pay for those.

      Happy to do some thinking and offer up a post about that 🙂 Thanks for the inspiration and reply with a list of questions for me!

      1. Go for it Mark! looking forward to some detailed write up on that by keeping some personal finance in view. Thank you for some valuable content as always!

  3. Hi
    Not sure how to pose this ? honestly but from a tax perspective and diversified perspective if you have maxed out your TFSA and are drawing down Riff before age 71 but do not need the $ to cover expenses what the heck do I do with it? If I go non-registered and buy dividend Cdn stocks for tax reasons I will lose my diversification. Holding individual US stock in TFSA is that tax smart??
    I have a sizeable amount in my RRSP and need to withdraw atleast 50k a year or get nailed with taxes once minimum withdrawals start at 71.
    Is there a calculator you know of that can help with this .
    I currently own some non regsitered US stocks which pay dividends is it worth moving those in kind to an RRSP for the next 10-15 years to avoid the tax on the dividends or just leave it there?
    I used a few based financial planner who helped with determining budget,
    withdrawals etc but he by no means looked at it from a tax perspective. He is a speaker at the Summit so I was pretty disappointed he didn’t help much with my deaccumation strategy

    1. Hi Jane,

      Sorry to hear about those planner experiences, they are hardly created equal 🙂

      A few ideas.

      1. check out this post, I think you’ll find the tools both free and interesting:

      2. I believe, for many retirees, it absolutely makes sense to start drawing down the RRSP/RRIF before age 71. Why? To “smooth out taxes” to your point. 🙂

      3. Holding U.S. stocks inside a TFSA is fine, but there are withholding taxes. Best put those inside RRSP/RRIF IMO.

      4. My partner and I run retirement drawdown projections – you can find us here for a very modest to low fee:

      5. Finally, I wouldn’t worry too much about moving assets now. Don’t get hit with capital gains unless you are ready. Rather, consider your drawdown order with non-reg. + RRSP/RRIFs, first, and then usually TFSAs “until the end” for any estate planning.

      Do hit us up at Cashflows & Portfolios for any work – happy to support you.

  4. Hi Mark
    You mentioned owning some US stocks with little or no dividends in your non registered account. Are there some stocks you would consider?
    Is there an US ETF that could be used here instead of individual stocks?

    1. Nothing I can recommend Pat. Very technical but a good read:

      The challenge with owning U.S. stocks in a taxable account are highlighted in that post.

      Personally, when it comes to taxable investing, I would only own U.S. stocks in my taxable that don’t pay a dividend. E.g., BRK.
      If I owned U.S. ETFs in my taxable account (I don’t), I would also only own Canadian ETFs due to estate and tax planning:

      Any Canadian client who, at death, owns more than US$60,000 of “U.S. situs” property, which would include U.S.-listed ETFs in a taxable account my expose his or her estate to a U.S. federal estate tax-filing obligation.

      Lots to think about I believe…when it comes to taxable investing in the U.S. in particular.

      Hope that helps!

  5. Great blog Mark to bring the climate crisis to our attention. I used to hold Raytheon and when it tanked in 2020, I couldnt wait to recover my initial investment , afte I realized that it was associated with providing military equipment. With regard to buying utilities, for the dividend I am in a similar quandary. Was about to buy Emerson Electric as it met lot of a dividend investing theme, but then wondered how much of the elctricity generated is coal powered.

    1. Thanks Thara. I used to own Emerson Electric but dumped it a long time ago in favour of some renewable stocks like AQN, BEPC and others. Coal-powered utilities are really killing this planet.

  6. Mark, I am new to your blog and it is very informative, definitely lots to learn.

    On the topic of portfolio diversification, this is super important. As an example, we all know Financial Stocks in the US have underperformed the S&P 500 over the last 10 years. However, within the financials ETF (XLF), there are some stocks that are up over 500% but they are not in the business of lending money.

    As an example, Nasdaq – Ticker NDAQ is up 590% over the last 10 years. Intercontinental Exchange (ICE) is up 420%. S&P Global is up a whopping 920%! These are names of stocks that you will typically not see being recommended on CNBC or Bloomberg or FOX.

    What do you think about investing in these financial companies that act more like technology companies serving the financial markets?

    1. Yes, it is 🙂

      Thanks for visiting the site and glad you are a subscriber – stick around – lots of great stuff to come in 2021!

      I’m a big fan of the Nasdaq. Own QQQ to ride those returns.

      I have no problem in investing in various financial companies (that act more like technology companies) but the challenge is knowing how they might rocket-off in advance! I can’t predict that, so I index a good portion of the U.S. market for that reason.

      On your line of thinking, thoughts on just owning ZQQ or XQQ or QQQ – or even some ARK funds?

  7. You’re right–there does seem to be a home bias to Canadian portfolios and the downside is the range of choices/industries is so limited. I’m at 50/50 Can/US and despite a lacklustre performance in Canada last year I beat the S&P 500 last year (total return 24%) due to some luck with big cap tech(AAPL/AMZN/MSFT) and BEP. I got out of all oil&gas producers and IPL/PPL in 2016 after reading The Domino Effect by Russell (Rusty) Braziel. He’s an energy analyst and the book talks about the effect of fracking on the industry and likelihood of depressed oil/gas prices for a long time. Well worth reading if you own any energy stocks. I kept a little TRP/ENB but with their big US mergers they are fairly diversified away from the oil sands and they’re only small positions for me now anyways (total <3%). Another good read is Concentrated Investing by Alan Benello. Some essays about great investors who used concentrated investing with a lot of success. Diversification is good, but don't be too aggressive in cutting your winners. Cut the weeds, not the flowers!

    1. Ha, weeds vs. flowers.

      I strive to be closer to 50/50 CDN and U.S. myself Ed. Not quite there yet, but that’s my plan at the time of semi-retirement so I figure I have ~ 4-5 years to get there.
      Yes, with thanks to BEP, BIP (or now BEPC and BIPC) + MSFT + BLK I’ve been thankful to get about 14% or so from my U.S. holdings for the last 5-years. That’s pretty much bang on with VTI returns of which I own some and will buy more over time for lazy investing.

      I keep ENB and TRP for U.S. exposure and their network but otherwise I am out of oil and gas mainly and don’t intend to go back.

      Thanks for your comment!

  8. Hi Mark, you’re correct re QYLD. Since we don’t contribute every month and convert to US, we’re using QYLD to buy other stocks with the dividends on a monthly basis.

    The condo is ready, and hopefully, we will be able to travel to get the keys 🙂 This is definitely more exciting, and we’re looking forward to sharing the pics.

    Stay safe!

    1. Wow, re: condo. Share some pics on your blog once done 🙂

      FYI – I should be posting my dividend income update today!

      Stay well back Gean and stay in touch in 2021!

  9. Great post and comments, Mark. Happy New Year, and wishing you, your family, friends, and followers a joyful and successful investment year.

    We used Norbert’s Gambit strategy in the past, allowing us to trade in US dollars inside the RRSP. One strategy in use is with covered calls ETFs. Since we don’t have any experience with options. We own QYLD (~10% yield and monthly dividends). The goal is to use the dividends received and buy more US stocks. In our case, instead of VTI, we’re buying ITOT.

    Stay safe!

    1. Yes, the Gambit is good. Big fan of VTI (own hundreds of units) and ITOT but I believe QYLD is mostly return of capital so you’re getting your money back.

      How is the condo coming along Gean? 🙂

      That’s WAY more exciting than VTI or ITOT!! Ha.

      Happy New Year,

  10. I also built my portfolio with many US stocks in a non-registered account originally. However there are many I would like to keep so rather than selling them off I’ve been transferring them to my kid’s RESP and TFSA accounts which I’ll be doing more in 2021. There is a 15% withholding tax on dividends, but because I think many are hard to replace so I’ll just bite the bullet for now on the 15% withholding tax.

    1. Ya, I mean, I’ve gone back and forth for some time about the withholding with XAW but at the end of the day, I need more U.S. and international exposure since my CDN stocks may or may not beat those other returns over time.

  11. It was about 7 years ago that I shifted to a simple diversified investment plan through CanCouchPotato and Dan’s early model etf portfolios. I have changed that up a few times in the past years. I swapped to ZAG, XAW & VCN when he updated the new suggested ETFs but haven’t made the newest change as I preferred to keep it simple. Last year because I am FI(re)* upped my bonds to 20% , kept VCN at 20% and stayed 60% in XAW. Then my most recent change (prior to the covid rollercoaster) was to rebalance my TFSA with 100% XAW for tax efficiency of the US stocks in it. I then put the remaining XAW in my RRSP to reach my AA% followed by ZAG & VCN. This super simple plan is diversified across the glob with some bond stability.

    My only question for 2021 will be if I should be taking more than I need out of my RRSP for my living expenses (as mentioned above I am FIRE) and put the extra into my TFSA annual limit. Slowly shifting a portion of my RRSP every year into my TFSA which should have lower tax implications in the future for me.

    1. Those are great funds Chris, re: ZAG, XAW & VCN.

      I mean, it’s hard to argue with that lineup for low-cost, diversified investing.

      I’m a bit wild in that I have 0% bonds and don’t intend to. That could also be a blindspot for me. You could argue that beyond a healthy cash wedge, say 1-2 years’ salary then an investor could go with VCN + XAW across all registered accounts, and a bit of VCN in taxable if any money left.

      I know many retirees and early retirees do exactly that now: shift assets from RRSP to TFSA as much as they can every year. A smart strategy is always to max out TFSA every Jan. 1 almost regardless where the money is coming from 🙂

      Happy Holidays!

      1. I had that cash buffer when I first left work but used it to fund my first 18 months of enjoying life. As for maxing out the TFSA, totally agree and I did that every year. Just didn’t have the funds in the recent years as mentioned not working in the traditional sense any longer enjoying my financial independence.

  12. Good moves on all Mark.

    Excellent choice with VTI, XAW and with simplifying your US stock stable. I can recall a few years ago discussing all that with you.

    1. Yes, I was overdue on this and I finally did it. VTI I figure is very tax smart considering where I own that fund and XAW is diversification smart. I haven’t bought it yet but I intend to within a week or so.

  13. I bought VTI a little over 5 years ago in my RRSP. I had owned individual US stocks up until then but it became too much for me to research and follow the US and Canadian markets. I am very pleased with the outcome and it has done quite well including a good dividend which I now DRIP to slowly increase US holdings without doing much work. I am still uncomfortable with US and foreign stocks in my TFSA considering the tax implications. With my new contribution in 2021 I have decided to buy Air Canada AC.
    Of course COVID has killed it but I can not see how we will ever let our national carrier go under. Besides, when we ever get over this virus, the pent up demand for travel will be tremendous. This time around I am looking for growth not dividends. Time will tell if I totally flubbed this one. Cheers and a Happy New Year!

    1. The ability to DRIP VTI is great Mary-Lynn. Kudos! We’ll see what happens with AC stock. Could be some massive upside coming on it, you never know!!
      Happy Holidays 🙂

  14. I am in shock! Following you and Mike and Dale, I finally get my portfolio of TFSA (Canadian dividend growths stocks) and RRIF (US ETFs) in comfortable order, and you start to change the game! Anyway, I shall keep things the way they are, and continue to follow your progress. I am fortunate in having a Defined Benefit Pension, so the TFSA and RRIF are supplentary. Good luck!

    1. Ha. Doug, rest assured I have >20 stocks I don’t intend to sell right now including some of those major U.S. stocks I listed in my post. My TFSA also remains full of CDN stocks. I simply need more diversification as best as I could find it.

      I also have a DB pension in my future, so I consider that “a big bond”.

      Beyond XAW I might also buy a small portion of AQN or INE. Not sure yet! Thoughts?

  15. I find it so odd that the all-in-one funds hold ~30% Canadian funds when Canadian GDP makes up ~4% of the global economy. Does anyone outside Canada have that much weight in Canadian funds? Highly highly unlikely and crazy home country bias going on. And when that country is heavily tilted in banks and energy, manly oil & gas, I’m out as that’s not where I see the future heading. Personally I’m heavily loaded on the US side and have very minimal exposure to Canadian funds. Good for you for seeing the light and further diversifying 😉 I’m looking to throw some Emerge Ark funds into my TFSA this year to see where it could go.

    1. Hi Court, people living outside of Canada don’t need to spend their money in Canadian dollars. There’s good research that shows a home bias of 25-30% Canadian stocks leads to less overall volatility (due to foreign currency risk) and better returns. That’s why the asset allocation ETFs have constructed their portfolios this way.

      1. Hey Robb – True but I’d argue that there’s just as good of research showing the other side of the story that tilting towards Canadian does not make sense from a volatility and returns standpoint. Ben Felix would agree with you while Ed Rempel would not – both of which are two individuals I have much respect for. That’s the beauty of being individual investors – we can choose our own paths. To me, it makes no sense to be a Canadian working say in the oil and gas sector and then be heavily tilted in that sector being 30% Canadian as well. Many of these employees both lost their jobs and saw their portfolios tank all congruently. That is not a recipe for success to me. If Canada was focused in other industries I could somewhat justify it (for the forex and currency reasons you mentioned), but with FinTech and Renewables I am not eager to have any extra emphasis on the Canadian markets. Of course the Canadian market makes up more than this, but this is definitely the majority.

    2. I agree Court. The S&P/TSX Composite Index is heavily weighted towards three economic sectors: financials, energy, and materials, which means Canadian investors are essentially incapable of effectively diversifying their portfolios to reduce risk.
      Numbers speak for themselves, my US TFSA is averaging 24% annually since its inception 4+ years ago vs. 10% for the (much smaller) Canadian TFSA.

      1. Yep, exactly Alex. It really is hard to be truly diversified when you look at the S&P/TSX index and what it entails.

        The US has been on a tear and helped to allow us to reach FI as fast as we did, and for that I am very grateful. But it’s also important to remember the US/international performance tends to be cyclical so I do still feel some weighting in international exposure is important (but not 30% Canadian!).

        1. “The US has been on a tear and helped to allow us to reach FI as fast as we did…”

          Well stated since history could repeat (or not) but I’m confident my overall portfolio returns will be better with time, with more diversification beyond Canadian borders.

    3. I think if you’re a Canadian retiring in Canada or living abroad, most Canadians probably would have up to 30% CDN.

      That said, to answer your question, I doubt very much much most non-Canadians own >30% let alone >20% in CDN stocks. It would make little sense and in Canada maybe more so than other countries, there is an extreme home bias here.

      I think you’re smart to be “loaded” on the U.S. side and beyond some international stocks, you could argue it’s all you need for long-term equity returns.

      I have considered some ARK funds myself or Bitcoin but I’ve decided for now to avoid both.

      1. I’ve been looking at Bitcoin too. Haven’t jumped on that as I definitely need to do more research on it. The tech is impressive but I’m still very weary of hacking/security of any purchases.

        Definitely home country bias here and just trying to make it be known in this little pocket of the world.

          1. I was looking at QBTC too. Need to figure out the proper exchange platform for it though.

            This would be a pie in the sky bet where I’d be ok if it tanks to $0. At most, I’d put in $10k but again haven’t done anything yet.

            This podcast series on bitcoin has been quite interesting


            And oh yes, the TFSA is magical and we will invest in it every single year. Even once we FIRE we plan to pull money from our taxable/RRSPs into our TFSA and save that account for the very very end.

            Since I’m a dual citizen I personally don’t have a TFSA open due to the US not recognizing it for a retirement/tax advantages account (grrr!) but we have one open under my partners name.

            1. I emailed the folks at 3iQ and they said it was eligible for TFSA investing…..so…. 🙂

              Anyhow, I’ve made my decision to invest in XAW inside the TFSA and will likely buy at least 200 units.

              The TFSA is magical! Ha. Smart, re: I know many early retirees are doing just that – pulling out money from RRSP, spending a bit, and moving the residual to max out their TFSAs in 2021. Very smart to keep this account maxed out as you know for your partner.

              You’re in a very fortunate position with your partner Court – well done!!

                    1. I’ve advised my parents FWIW to sell RRSP assets and then move the cash into the TFSA as they please – for new purchases. Two transactions essentially. In some cases, they have simply spent the RRSP funds and not moved any money into TFSA.

                      Essentially it’s a two-stage process that I have helped my parents with:
                      1. Withdraw/sell RRSP assets, to a non-registered account; the amount will be added to your income for that tax year. As a result, the financial institution will hold back some tax: 10% up to $5,000, 20% from $5,000.01 to $15,000, and 30% for more than $15,000. (Withholding tax rates are different in Quebec.)
                      2. Then money or assets go into TFSA.


      2. I read about the ARK funds. Is it true that there are some potential issues with the CIO/portfolio manager and Resolute Investment management wanting to take over the company in 2021? I read the article from Nov 18 2020 in Barron’s.

        1. Interesting, I didn’t see that. I don’t invest in any ARK funds yet and don’t intend to for 2021 although I have considered it. I will however invest in the XAW fund inside my TFSA since I’m on public record now 🙂

  16. It wasn’t too long ago that a Canadian investor could only own up to 30% of their RRSP in foreign content, is that correct?
    It seems that over time many people have come to understand the need to invest outside of Canada. Well done Mark for your work in progress makeover.

    I have XAW in my corp.investment account and its individual holdings in an RRSP for hubby. Both doing very well.

    1. Yes, I think it was just over 10 years ago they changed that rule. Wild it took them that long!

      Sue, I was considering that for my future corporate investment account – what to hold. XEF is a great fund on it’s own. I was considering VEQT for my corporate account but not sure yet. I hope to invest in a taxable corporate account in another few months. Thoughts?

      1. in my corp account I started with Mawer tax effective balanced which I still like a lot. I added in XAW before they had come out with VEQT, VBAL etc. for some additional equity exposure. The Mawer fund I use because in the brokerage I have, it still costs me commission to buy ETF’s and I am cheap LOL. I also like it because its for the most part been beating its index (to justify its MER in my head at least) and I can contribute as often as I want to.

        If I had to do it all over again or just starting out, I would stick with an all in one ETF- I don’t want to sell what I have because of the capital gains issue (yes I know a nice problem to have 🙂 )

        I am aware that you have fixed income accounted for so I do think VEQT or even XEQT are some good options for a taxable corp account- especially if the focus on growth oriented investing is something you are considering now.

        I am wondering what the Fed. government is going to consider doing with the taxation of capital gains and for that matter, dividends in the corporate investment account space in the future

        and also be mindful of the passive income limit of 50K before it starts to impact on the SBD rate if that may be a factor in the decision making process for you

        and another website to review- I also like the Loonie Doctor (looniedoctor.ca)- you may already be familiar with this one- Mark has some good information on this site about corp investing

        my financial advisor is suggesting I look into getting some fixed income of a global nature in our registered accounts so that is homework I am looking into now- so that may help some of my home country bias LOL

        and my bigger project is adding to the TFSAs and have appreciated your approaches about dividend generating stocks for these- so far it has worked out

        Here is hoping 2021 will be good to you and all your followers 🙂

        looking forward to your upcoming posts

        1. Mawer has some great funds for sure… I recall MAW104 (Balanced Fund) is one of their flagships.

          I hope to talk to a tax pro in the coming weeks about corporate account investing. I might consider VEQT or similar for me but I am leaning towards a Horizons HGRO ETF. I actually had an interview with the VP there, who was great, and hope to post that interview in Jan.

          Lots of capital gains are always a “great problem to have” Sue!

          Yes, the government can always change taxation rules but hopefully they are for the better. The inclusion rate moving from 50% to 60% or higher seems like a move they will make in the coming years to pay for COVID. Just a hunch.

          Yes, I am aware of the LoonieDoctor.ca and need to visit his site more. I recall he is a physician and has designed his site around tax-smart investing for corporations/small business owners as many physicians are.

          Happy Investing!

          1. I think you are right about the government’s plans

            It was funny when I came across his website that talked about RESP’s and different contribution scenarios. I thought I had made an epic faux pas regarding making a few lump sum payments in our RESP in the early years- it turns out that was a good thing to do and naively I had no idea at the time LOL.

            HGRO ETF- an interesting idea- I will look forward to your post of the interview

              1. I bought a bit of a position of ARKK today, TFSA account – didn’t consider the Emerge EARK because its MER is 1.7%. .Are you still considering buying some ARKK? and is the foreign withholding taxes only on the dividends generated in this account, which is very small anyway?

                1. I am considering it – the MER is scary high though and goes against my thesis and how I personally invest as I share it on the site! Then again, I figure “if you just can’t help yourself” there is no harm in throwing up to 5% of any portfolio value in a speculative investment. It could work out (or not) and all investors (myself included if I were to invest) need to be comfortable at that.

                  ARKK is the innovation ETF (MER = 0.75%) I recall and I would have to read the fund’s prospectus to be sure on the withholding taxes but 15% is withheld on U.S. dividends/distributions paid inside a TFSA. The good news is, many of these companies don’t pay a dividend so it’s all growth/capital gains. TFSA = tax free growth.

                  For the TFSA, I’m planning on some XAW for sure and potentially other stocks (AQN?, INE?) – not sure yet….still debating and I will put the money in likely on Monday and decide then 🙂

                  I have to start deciding on some taxable investing in 2021. That’s the next thing to tackle. Potentially some Horizons ETFs there. I have to finalize my interview with the team and VP there soon.

                  Happy New Year!

  17. Mark, while I agree with your diversification beyond Canadian borders, I still find I’m hesitant to do this in my TFSA because of the required withholding taxes. For non-Canadian assets, I prefer to keep them wthin my RRSP where they are sheltered from these taxes.

    1. MikeyP, I struggled with this decision as well but after consulting with a few other FI bloggers, other folks, I decided it was also going to be a good fit for me too. They have favoured diversification over withholding taxes for many years, although these folks are also withholding tax mindful.

      I will continue to try and own more U.S. assets inside my RRSP in 2021. That’s my plan too. What do you own there yourself?

      1. Interestingly enough, I own some US stocks that matched to some of the ones you owned – but I purchased them long ago 😉 On the good side, that includes MSFT, PG, JNJ (all fantastic performers). But on the bad side, it unfortunately includes GE (gotta love their 1c/share dividend – lol). Also looking to increase my positions in some ETFs including VFV and XQQ (but was first looking for a bit of a market pullback – which if it doesn’t come soon – will just jump in).

        1. XQQ seems like a great fund and I own the equivalent in USD (QQQ) for a small tech-growth kicker. A reader asked me some questions recently…

          Been very happy with PG, JNJ, MSFT over the last decade and more recently BLK.

          Otherwise, beyond a few other stocks, going with very lazy VTI to ride U.S. market to simplify things.

          1. I’m ok with “very lazy”. As discussed in the great book (recommended on your site) called Retirement Income for Life (Vettese), it’s hard for active to beat passive (index-tracking) ETFs – despite the financial industry claiming they always can. 😉 And even if they do, by how much – and is it worth the extra fees?

            1. That’s the thing MikeyP. I mean, I’ve done well with my CDN and US dividend payers – boring stocks really – but over time I know I’ve always needed growth and some diversification away from these companies “just in case”.

              There will always be some stocks and funds that own stocks that outperform the market, the challenge is knowing those companies in advance and holding them assuming they’ll always continue to perform this way.

              I wouldn’t be/our portfolio wouldn’t be where it is without some dividend paying stocks in a great bull run from 2010-2020 ish but I know it’s time for me to slowly simplify the portfolio. I will continue to own about 20-30 dividend paying stocks for the foreseeable future, but now, the portfolio is simplified a bit which is nice 🙂


  18. In like the ARK family of funds that have provided returns of 100% or more over the years. They are among the best and top funds you can find these days. These funds are managed by renowned picker Cathie Woods and her team who have done an outstanding job so far. I continue to trust their super ability to produce super returns in the years to come. Just my humble opinion.

    1. Ken, I have seen those ARK returns and they are outstanding. I have considered that for my TFSA as well to juice returns but will history repeat?
      Which ARK fund is the question!?
      100 shares of ARKF could work??

      Amazing how well these funds have done….

    2. They have done a great job! But I’d be wary of chasing last years returns, especially when market P/E’s are at all time highs. If you look at their charts a lot of their bigger part of their run has been since March.
      Good luck

  19. I know I have a short history in diy investing but i was always hesistant to pick stocks because i read it over and over that it’s hard to pick the winners and i was always affraid to pick the ” flavor of the day”, I read how a lot of companies used to be the amazon of today like GM and AT&T and others and now you look at GM it’s size is so minuscule and this is why perhaps i adopted a ccp portfolio from the beginning not that I’m saying that index investing is better then stock picking because i know Mark that you’ve done pretty well and so many other investors here on this site and all over the world but for me i embraced the simplicity of indexing specially for the peace of mind that gave me even though i know in a bear market everything will go down index or not but the thought that i have a piece of thousands of companies all over the world let me sleep better at night 🙂
    I’ve read few books about indexing from John bogle to William bernstein David chilton and JL collins which he describes in his book the “Simple path to wealth” the index as self cleansing and that any company can lose 100% of its value and it drops from the index and get replaced by a new company.
    Recently I’ve been putting all my fresh contributions from my TFSA and RRSP into VGRO because of it’s simplicity and because it has everything and my goal is to switch my 5 etfs portfolio into just VGRO not sure if I’m right or wrong but i honestly don’t think there’s a perfect portfolio but i believe there’s a simple and effective one.

    1. Gus, your simple approach is quite wise overall – VGRO is a simple but easy way to capture market returns from around the world with a small bond element for market corrections.

      I’m often reminded as I focus on more capital preservation myself in the coming years, that the best investors only take on the risk they need to and nothing more.

  20. I’ve long given up on the word Diversification because most believe it means owning a bit of everything. Personally I’ve switched to the word Concentration. It does not mean the thing, but it help me to focus my choices. I want a diversified portfolio, but just those chosen among the best dividend growth stocks I can find. I may loose or exclude some great growth stocks, I may also not own any International or Emerging holding and I won’t hold any fixed assets, but I know that what I do own will provide me with the best chance of generating the most income from my choices.
    It’s a different choice, not necessarily a better one.

    1. That’s very fair cannew. I guess I have realized that over time, while I have been lucky with a number of stocks, I have not made the best decisions with others. IPL being one of them. It was great until it wasn’t. I suspect IPL will come back in price but through owning a basket of stocks beyond Canada’s borders I also no longer need to worry about it and neither does my wife 🙂

      I will continue to hold many CDN payers for the same reasons you do!


      1. Sorry to see you abandon IPL a Canadian company actually trying build up our industry – I guess i have a Western bias. I bought down in the Spring massacre and did contemplated selling too but decided to have some patience and bit of diversify from all etfs and have some growth optionality in the mix. This will be back in the 20’s soon enough

        1. Good on you to continue to hold it Ken – I do continue to hold other pipelines and have done so for the last 10 years.
          It will be interesting to see how fast it comes back. I could be totally wrong on this call of course!

          You own IPL and other pipelines too?

      2. Like cannew, I am working to concentrate my portfolio in 20-25 stocks maximum. I select Canadian stocks for financials, utilities, telecommunications and some consumer companies. I buy U.S. stocks for exposure to healthcare, industrials and consumer packaged goods. When you limit your holdings, you tend to only buy the best stock(s) in each sector.

          1. The performance of my TFSA has been poor because the deep value stocks that I purchased have not performed up to expectations. I am looking for a market pullback to buy a couple of high-quality dividend growth stocks, but there are not many bargains in Canada other than some of the banks.

            1. I agree Stuart. I don’t see any screaming deals right now. Unless you want to invest in some speculative plays, i.e., some growth stocks like LSPD, DOC, and a few others, I don’t see many dividend payers at cheap prices per se although CDN banks are very appealing. I like some renewable stocks going forward like AQN and INE and CPX. I feel there is much more room to run there.

              My approach is boring big caps per se and indexing. It has served me well. Like hitting singles and doubles vs. trying to hit a home run too often.

              1. AQN is one of the stocks on my TFSA watchlist to potentially buy on a pullback. Another stock that I am watching closely is Nutrien (NTR). Both stocks stand to benefit significantly from a growing world population.


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