Tag Archives: Retirement

All-in-one ETF showdown TD vs. BMO vs. iShares vs. Vanguard: Which is best?

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Image courtesy Tawcan/Unsplash

By Bob Lai, Tawcan

Special to Financial Independence Hub

Over the years, I have come to really like the all-in-one ETFs from Vanguard and iShares. I like these ETFs because they are a simple way to diversify your portfolio across different sectors and countries. These ETFs also automatically rebalance regularly, making an investor’s life much easier.

Due to the popularity of the all-in-one ETFs, both TD and BMO also created similar ETFs. Which company offers the best all-in-one ETFs? Are TD ETFs better? Are iShares ETFs better? Are Vanguard ETFs better? Or are BMO ETFs better?

Let’s find out!

TD ETFs

TD has many different ETFs, including active ETFs, special focused ETFs, and broad market index ETFs that are well-suited for different investment strategies. When it comes to all-in-one ETFs, TD offers three different ETFs that were created in 2020:

All three of these TD all-in-one ETFs have a MER of 0.17%. This means if you have $1k invested in one of these ETFs, you effectively would pay $1.7 in fees every year, which is extremely cheap if you think about it.

Here are the historical performances of these three ETFs:

1 Yr 2 Yr 3 Yr
TCON 12.48% 9.63% 4.41%
TBAL 19.27% 14.96% 8.04%
TGRO 26.27% 20.16% 11.70%

You can buy and sell all three ETFs via online brokers. Since many brokers offer commission-free trades nowadays, you can buy one of these all-in-ones regularly and build up your portfolio.

BMO ETFs

Like TD, BMO offers five different all-in-one ETFs (BMO calls them Asset Allocated ETFs).

All five BMO all-in-ones have an MER of 0.20%.

ZBAL and ZESG are very similar, except ZESG is for investors looking to align their investments with their social values.

Here are the historical performances of the five BMO ETFs:

1 Yr 2 Yr 3 Yr
ZCON 13.94% 9.74% 4.79%
ZBAL 18.67% 13.10% 7.25%
ZESG 18.63% 14.61% 7.68%
ZGRO 23.52% 16.49% 9.71%
ZEQT 28.35% 19.83% 12.09%

ZCON, ZBAL, and ZESG have more than 40% exposure to Canada, while ZGRO and ZEQT are more heavily exposed to the US.

iShares ETFs

Like BMO, iShares offers five all-in-one ETFs. 

All five ETFs have an MER of 0.20%.

Here are the historical performances of the five iShares ETFs:

1 Yr 3 Yr
XINC 9.97% 2.81%
XCNS 14.38% 5.07%
XBAL 18.81% 7.70%
XGRO 23.47% 9.65%
XEQT 28.06% 11.92%

Vanguard ETFs

Finally, Vanguard all-in-one ETFs:

VRIF has an MER of 0.29%, while the other five all-in-ones have an MER of 0.22%. VRIF probably has a slightly higher MER because of the fund structure. Interestingly enough, Vanguard all-in-ones have the highest MER out of the four fund companies (I said this because historically Vanguard has lead the way when it comes to lowest MER).

Here are the historical performances of the Vanguard all-in-one ETFs:

1 Yr 3 Yr
VCIP 8.90% 1.99%
VRIF 10.44% 3.08%
VCNS 13.61% 4.45%
VBAL 18.40% 6.90%
VGRO 23.39% 9.39%
VEQT 28.40% 11.83%

The best all-in-one ETFs for your investment portfolio

As you can see, all four fund companies offer all-in-one ETFs with different asset exposures. Which are the best all-in-one ETFs for your investment portfolio?

Well, that is totally dependent on your risk tolerance and your investment timeline.

If you are an investor who is approaching retirement or is already retired, you might want to invest in something more conservative. In other words, you don’t want to lose sleep whenever there’s a market correction. For you, a steady investment income and stable portfolio value growth is more important. Therefore, you probably will go with either a conservative all-in-one ETF or a balanced all-in-one ETF.

If you are younger with a longer investment time horizon, you want to aim for portfolio growth. Therefore, you’d probably go with either a growth all-in-one ETF or an all-equity ETF to maximize your return over the long term.

Best Conservative All-in-One ETF

As mentioned, if you are a conservative investor who needs a steady investment income with stable portfolio value growth, a conservative all-in-one ETF is probably the best choice for you.

The question is, which conservative all-in-one ETF is the best?

Let’s compare TCON, ZCON, XINC, XCON, VCIP, VRIF, and VCONs all of which are heavily exposed to fixed income.

Fixed income to equities Mix MER  1 yr return 3 yr return 5 yr return Yield %
TCON 70-30 0.17% 12.48% 4.41% N/A 2.26%
ZCON 60-40 0.20% 13.94% 4.79% 4.87% 2.45%
XINC 80-20 0.20% 9.97% 2.81% 2.86% 2.70%
XCON 60-40 0.20% 14.38% 5.07% 5.35% 2.17%
VCIP 80-20 0.25% 8.90% 1.99% 2.11% 2.86%
VRIF 70-30 0.32% 10.44% 3.08% N/A 3.55%
VCON 60-40 0.24% 13.61% 4.45% 4.71% 2.51%

Among ZCON, XCON, and VCON, which all have the same 60-40 mix, it’s interesting to see that XCON had the best returns consistently, but XCON has the lowest distribution yield.

Among TCON, XINC, VCIP, and VRIF, TCON has had the highest returns, most likely due to the lower MER fees.

Not surprisingly, ETFs with a higher exposure to stocks have had higher returns in the last five years. Continue Reading…

“Unretirement” — more than one in four near-retirees plan to work in Retirement to make ends meet

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My latest MoneySense Retired Money column has just been published. You can find it by clicking on the highlighted text here: Why “unretirement” may be the fate of so many Canadians.

Even before the Tariffs threats emerged under Trump 2.0, Canadian seniors were starting to find the economic uncertainty and rising living costs to be unmanageable. No surprise then that many seniors approaching Retirement Age are delaying their exit from the workforce.

According to a report by HealthCare of Ontario Pension Plan, 28% of unretired Canadians aged 55-64 say they expect to continue working in retirement to support themselves financially.  Here’s a screenshot from the HOOPP survey:

 

The Healthcare of Ontario Pension Plan (HOOPP) commissioned Abacus Data to conduct its sixth annual Canadian Retirement Survey in the spring of 2024.  The latest survey finds “persistent high interest rates and a rising cost of living continue to have a significant negative impact on Canadians’ ability to save and manage the cost of daily life, threatening their retirement preparedness.” While all Canadians are struggling, “women and those closest to retirement are especially hard hit with lower savings and higher levels of financial stress.”

While most Canadians are struggling to save amidst a high cost of living, HOOPP finds women are particularly affected. Half (49%) of all Canadian women have less than $5,000 in savings and almost a third (28%) have no savings (compared to 33% and 17% of men, respectively), similar to the 2023 results

 

The MoneySense column also looks at more recent Retirement surveys that also reveal anxiety about rising costs of living. One is from Bloom Finance Co. Ltd., conducted by founder Ben McCabe after Trump’s Tariffs started to kick in this year.

A Bloom study conducted with Angus Reid found 46% of Canadians thinking of working part-time in Retirement. That’s in line with a Fidelity survey in 2024 that found half of Canadians plan to delay Retirement. According to the Bloom Report [in March 2024], 67% of Canadian homeowners over 55 were concerned their savings would not sustain their quality of life through retirement. Only 29% considered downsizing or alternative living situations to access their home equity earlier than expected. 59% of the same cohort agreed accessing micro-amounts of their home’s equity would help maintain their desired living standard. Continue Reading…

7 Hidden Traps of Retirement

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By Fritz Gilbert, TheRetirementManifesto

Special to Financial Independence Hub

The article was from the Harvard Business Review and highlighted 7 Hidden Traps of Retirement, which the writers discovered during interviews with “dozens of highly respected former chief executives.”

As I read the article, I realized the traps of retirement don’t apply only to folks retiring from top management positions.

These traps present a risk to all of us.

Today, I’m presenting each of the 7 Hidden Traps of Retirement and my thoughts on how best to avoid them.

Be forewarned.

Don’t get trapped.

Don’t fall into any of these 7 Hidden Traps of Retirement. Use these tips to avoid them and live a great life in retirement. Share on X

7 Hidden Traps of Retirement

The article that made me think was The Challenges of Retiring from a High-Powered Job, written by three founders of ONYX, an invitation-only group designed to build a community for current and former CEOs.  I encourage you to read the article, but I’ll summarize the key points below.

In their work helping CEOs prepare for retirement, the team has discovered seven hidden traps of retirement. While focused on senior managers, I’m taking a different twist with their list and considering how these traps apply to all of us. I’ve taken the liberty of renaming each of the seven hidden traps of retirement to better align with the readers of this blog and providing my thoughts on how to avoid falling into each.

The risks apply during our planning for and transition into retirement.  If you’re struggling with the transition into retirement, perhaps it’s because you’ve fallen into one of these traps.

1. Focusing on who you are, instead of who you want to become.

Original Title:  Looking through the lens of the present impedes you from seeing future possibilities.

In your final years of work, it’s easy to procrastinate on retirement planning and focus on your current role.  You’re busy doing your job and you can deal with that retirement stuff after you’re done working.  That’s a dangerous approach that far too many people follow.  It’s one of the traps of retirement for a reason. Seeing beyond your current role requires a creative imagination, the type that has likely been dormant for years.  Losing your sense of identity can be a shock in retirement, but the impact can be minimized by the appropriate planning.

How to Avoid the Trap:

Forget about your current role for a minute.  After all, it will be irrelevant the day after you retire. (Let that sink in)

Think about what you want your life to BECOME in retirement.  You’ll no longer have that title, and that sense of identity you get from your work will be gone.  That’s scary, and something a lot of people avoid thinking about. Don’t be that person.  Rather, think about your new identity in retirement. What do you want to be known for? What areas are you curious about?  What did you do as a child that you’d like to revisit now that you’re free from those chains of work? Carve out time to think about what impact you want to have with your newfound freedom.  It takes some time, so be patient.  The important thing is to think beyond your current role and imagine what you can do to make a difference once the job is gone.

In What I’ve Learned From Writing 400 Articles About Retirement, I wrote about my new identities in retirement (writer, running a charity, grandfather, etc).  A quote from that article is relevant here, and I’d encourage you to adopt it as one of your goals in retirement:

“I’m not who I used to be, and I love who I’ve become.”

2. Focusing on too many options.

Original Title:  A wealth of options can overwhelm and paralyze decision-making.

That busy schedule and rigid structure will disappear when you retire, and you’ll be looking at a “blank sheet of paper.”  Having no schedule or structure to your day sounds appealing, but it becomes disorienting after a surprisingly short period.  Your brain will start searching for something to do, and you’ll have difficulty prioritizing what you want to do with your life.

How to Avoid the Trap:

Take some quiet time to think about what impact you want to make with your retirement years.  Think about the causes you have a passion for.  Listen to your inner curiosity, and take that first step to see where it leads. When you’re thinking about something you could do, compare it to that list of things that matter to you.  For example, you may have enjoyed working with younger people during your career and would like to find a way to do that in retirement.  Perhaps you’ll become a mentor, a Big Brother, or a business coach to the next generation.

Find your “North Star” and pursue only those opportunities with strong alignment to the things that matter to you.  Don’t pursue “busyness” for the sake of being busy.  Rather, invest your time in areas where you have a real interest (lack of experience doesn’t matter, as I’ll demonstrate below).

Using your time to impact an area you care about is the true path to happiness.

3. Not building relationships outside of work.

Original Title:  Relying on your old network can distract you from the critical task of building your new one.

Everybody thinks they’ll keep in touch with folks they worked with.  Almost no one does. It’s one of those strange realities of retirement, and it will likely happen to you.  (Note this statistic in “Shining The Light on Retirement Blind Spots”: 62% of retirees missed the relationships from work, whereas only 29% of pre-retirees expected it to be an issue).The relationships at work are about “work.”  Once you’re out of the scene, it becomes difficult and awkward to maintain those relationships.

And yet, relationships matter.

I dedicated an entire chapter in my book to relationships.  People think about their paycheck stopping when they retire, but they often overlook the “softer” benefits they receive from work which will also disappear:

  • Structure
  • Sense of Identity
  • Relationships
  • Sense of Purpose
  • Sense of Accomplishment

Ironically, these 7 traps of retirement align almost perfectly with that list.  That doesn’t surprise me in the least.  If you’re a regular reader, you know I’m passionate about the importance of the “soft side” of retirement.

How to Avoid the Trap:

In your final year or two of work, be intentional about building relationships outside your workplace.  Your mission: build relationships that will be there after you retire.  Spend a few Saturdays volunteering at a local charity.  Get involved with a few Facebook groups in your area that do things that interest you.  Join a gym and learn to play pickleball. Join a local hiking club. Go to a Trout Unlimited meeting.  Call an old friend. Attend a local church.

Explore whatever interests you and pay attention to the people in the groups you visit.  In time, you’ll find a group that feels “right.” Pay attention, that’s where you’ll get your retirement relationships.

They matter more than you expect.

4. Waiting to figure out retirement until after you retire.

Original Title:  Delaying retirement planning can lead to urgent, anxious, and awkward outcomes.

don't retire without a plan

A quote from the original article is telling:

“The majority of CEOs and executives we talked with told us they failed to appropriately plan for their retirement — and nearly all told us they waited too long to start.”

It is, perhaps, the most common of the traps of retirement.  Many people are nervous about retirement, and procrastination is a common response.  “I’ll deal with it when I’m retired,” many people think.  That’s one approach, but research has shown that taking that route will lead to a difficult transition. The cliff is coming, and you can prepare your parachute or just take the leap and figure it out once airborne.  I recommend the former approach, it makes for a much smoother landing.

How to Avoid the Trap:

As I was in my final working years, I was interested obsessed with figuring out why some people had a smooth transition to retirement, whereas others struggled.  As I’ve written before, there’s one single element that is the most highly correlated with the smoothness of your transition.  That element?

The amount of time you spend planning for retirement in your final years of work (both on financial and non-financial issues).

Spend a lot of time planning, and your retirement will be smooth.  Ignore it until you retire, and buckle in for a rough ride.  As I wrote in The 4 Phases of Retirement, only 15% of retirees skip over the dreaded Phase II.  I was lucky enough to be one of them.  So can you. Continue Reading…

Tariffs Troubles? Remember this Timeless Tip: “It’s already priced in.”

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Image: Canva Custom Creation/Lowrie Financial

By Steve Lowrie, CFA

Special to Financial Independence Hub

A key concern many investors have at the moment is the impact of Trump’s tariffs on goods produced outside the U.S. on the markets. I’m hearing from those wondering if they should do something to protect their wealth; their primary question is: What should I do with my investments?

My answer (as it usually is when investors are concerned about the geopolitical impact on the markets): stick with the plan because, by the time the news is public and you become concerned, the markets have already accounted for it/priced it in, so any reaction you take is too late.

A useful historical reference on tariffs is President Trump’s first term. Starting in 2017, his administration targeted China, implementing tariffs on a broad range of products by 2018. The following years saw ongoing trade negotiations that led to an agreement, though many tariffs remained. Despite the uncertainty, both U.S. and Chinese markets outperformed the MSCI World ex USA Index over Trump’s four-year term. Have a look at the data from 2017 to 2020, as Dimensional compares China MSCI Index to US S&P 500 Index to MSCI World ex USA Index.

Markets are forward-looking, meaning that the potential economic effects of tariffs are likely already factored into current prices. As a result, when these anticipated changes materialize, their impact on markets may be limited.

Understanding how Market Pricing Works

Let’s talk about the price of stocks.

It stands to reason: To make money in the market, you need to sell your holdings for more than you paid. Of course, we’re all familiar with good old “buy low, sell high.” But despite its simplicity, many investors fall short. Instead, they end up doing just the opposite, or at least leaving returns on the table that could have been theirs to keep.

You can defend against these human foibles by understanding how stock pricing works and using that knowledge to your advantage.

Good News, Bad News, and Market Views

How do you know when a stock or stock fund is priced for buying or selling?

The short answer is, we don’t.

And yet, many investors still let current events dominate their decisions. They sell when they fear bad news means prices are going to fall. Or they buy when good news breaks. They invest in funds that do the same.

While this may seem logical, there’s a problem with it: You’re betting you or your fund manager can place winning trades before markets have already priced in the news.

To be blunt, that’s a losing bet.

You’re betting that you know more about what the price should be at any given point than what the formidable force of the market has already decided. Every so often, you might be right. But the preponderance of the evidence suggests any “wins” are more a matter of luck than skill.

Me and You against the World

Whenever you try to buy low or sell high, who is the force on the other side of the trading table?

It’s the market.

The market includes millions of individuals, institutions, banks, and brokerages trading hundreds of billions of dollars every moment of every day. It includes highly paid analysts continuously watching every move the markets make. It includes AI-driven engines seeking to get their trades in nanoseconds ahead of everyone else.

And you think you can beat that?

We believe it’s far more reasonable to assume, by the time you’ve heard the news, the collective market has too, and has already priced it in.

  • News of a recession, under way or avoided? It’s already priced in.
  • Inflation on the rise, or abating? It’s already priced in.
  • A company suffers a calamity or makes a major breakthrough? It’s already priced in.
  • The government passes critical legislation that helps or hinders global trading? It’s…

And so on. Here’s your best assumption:

If it’s public knowledge, it’s already priced in. (And if it’s insider information, it’s illegal to trade on it.)

What we don’t yet Know

As soon as an event is priced in, several things make it difficult to profitably trade on the news:

You’re Buying High, Selling Low: If you trade on news after it’s been priced in, odds are you’ll buy at a higher price (after good news) or sell at a lower price (based on bad news). Continue Reading…

Looking to treat your loved one this Valentine’s Day? Give the gift of a financial conversation

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Only half of Canadian couples discuss finances in detail, an IG Wealth Management study conducted by Pollard found. This week may be a good time to examine your joint lifestyle and retirement goals.

 

Image by Deposit Photos

By Blair Evans

Special to Financial Independence Hub

Valentine’s Day is here and while love may be in the air, there’s an often-overlooked gift that can strengthen your relationship: a meaningful conversation about finances.

Unsurprisingly, many Canadian couples shy away from discussing money with their partners. According to a recent study by IG Wealth Management, in partnership with Pollara Strategic Insights, only half of married or common law Canadians discuss finances with their partner in detail, with roughly a third talking about it only briefly.

Yet, when thinking about your future together, especially retirement, these conversations are crucial. You and your partner should be aligned on your retirement goals and lifestyle to ensure you plan appropriately and are fiscally prepared to enjoy those golden years.

Transparency on Finances can pay off in multiple ways

Image by Pexels

Transparency around your finances and having proactive conversations with your partner can also pay off come tax season.

Working together to file each of your tax returns can unlock opportunities to maximize deductions and credits.

You may be able to transfer unused credits, like tuition and disability amounts, to your partner to help alleviate their tax bill.

Couples can also combine their medical expenses and charitable donations together to minimize their overall tax obligation.

If your relationship is built for the long haul, it’s important to plan for life’s uncertainties.  Building an emergency fund, as well as having an updated will and power of attorney, along with proper life and disability insurance plans are essential to prepare for any emergencies or untimely circumstances. Continue Reading…