This is called tax loss harvesting. For example, Vanguard’s version of XGRO is VGRO, and BMO’s version ZGRO. I also invest in some low-cost U.S. Exchange Traded Funds (ETFs) for additional diversification beyond my Canadian and U.S. stocks.. For my taxable account, I have the 3 funds as mentioned in this blog post. The Vested Share Account (VSA) is a special global nominee that has been set up by Computershare or their affiliates to hold shares, following the vesting of awards made under the Royal Dutch Shell share plans. One important thing to remember about non-taxable accounts is that they might be tax-deferred accounts.� This means that there are no VEQT in taxable account. As an alternative portfolio, you could build: Then decide on your own ratio. Plan on investing $40-$50k in a few weeks in the new year. Many thanks, Catherine. Moreover, the tax effects of investing inside of a taxable account are arguably pretty light relative to historical norms. Hi Catherine, check out the post today about having “one big portfolio” (https://milliondollarjourney.com/maxed-out-rrsp-and-tfsa-now-what.htm). However, ZDB is tax efficient in a non-reg account. Personally, most of my Canadian equity ownership is through Canadian dividend stocks, so our family owns a lot of XAW (or equivalent through XUU/XEF/XEC) as you can see here. It’s one of five asset allocation ETFs offered by Vanguard. The ONLY rebalancing I do is in my taxable account. Please check your email for further instructions. 2. Rumours of an increased capital gains tax were put to rest last week when the Liberals unveiled their second federal budget with no mention of a change to the inclusion rate. Math aside, I would maintain that most DIY investors would be wise to stick like glue to their one-fund solutions, even as their RRSP values continue to grow. Foreign Dividends – In non-registered accounts, foreign dividends are taxed 100%at your marginal tax rate (ie. A taxable investment account (also known as a brokerage account) is funded with any amount of after-tax dollars and can be invested in virtually any type of security, including stocks, bonds, mutual funds, and exchange-traded funds (ETFs). Vanguard VEQT All-in-One 100% Equity Portfolio ETF, Best Canadian Online Discount Stock Brokerage, Wealthsimple Review 2020 – Robo Advisor & Wealthsimple Trade [UNIQUE PROMO], Questwealth Portfolios (Robo Advisor) Review, CI Direct Investing (Robo Advisor) Review, Canada’s Best Dividend Growth Stocks for 2020. Dividend Kings List – Companies with Annual Dividend Increases for Over 50 Years! Investing. You have shared the tax drag costs for holding VEQT are about another 0.25% (give or take) on top of the 0.25% MER product cost. 5 Useful Retirement Calculators (2019) – How Much Do You Need to Retire? If you are extra fancy, you could consider a slightly lower cost 3-ETF portfolio like: View our comprehensive comparison of the best all-in-one ETFs in Canada to decide which is best suited for your needs. Bonds and REITs and the like have higher turnover, so those should go in the tax advantaged accounts. VEQT in taxable account. An advantage of taxable accounts is the ability to use the losses that inevitably occur in some years to lower your tax bill. If you already have a lot of Canadian equity exposure, then you may not want that much in Canada from an ETF. XEQT has a slightly higher exposure to tech stocks in the top 10 (8.88%) compared to VEQT’s 8.19%. To have a 70 equity/ 30 bond ratio would it work to do this: I'm planning to do the same one my registered accounts are maxed. Horizons also has the HGRO which is 100% equity. And, … The Vanguard All Equity ETF Portfolio trades under the ticker symbol VEQT. Re-balancing multiple ETF's is not an issue for me Thanks Option 1: VUN (30%) , VIU (25%) VEE (5%) and ZDB(40%): Bond ETF more efficient in taxable account Option 2: VEQT (60%) ZDB (40%) Option 3: VBAL (the bond part not as tax efficient as ZDB) Which one do you thing would be more tax efficient in the taxable account. Withdrawing from your RRSP, TFSA, and Non-Registered Accounts for Retired Canadians, How I Plan to Withdraw from my RRSP/TFSA to Fund Early Retirement, Early Retirement (FIRE) on Dividend Income – Dividend Taxes in Canada, Save Money with USD to CAD Foreign Exchange using Norbert’s Gambit, Canadian Investing Taxes: Dividends, Interest, and Capital Gains, SimpleTax Review: File Your Canadian Tax Return for Free, Canadian Legal Wills Review: Canada’s Best Online Will Kit, getting easier and cheaper to build a solid globally diversified portfolio using all-in-one ETFs, even cheaper with commission-free ETF trading. If your taxable account has a fund that is less than ideal but remains a suitable holding, you might want to take dividends in cash from that fund. Some folks say keep buying good dividend stocks, they are taxed at a lower rate and will reduce your average tax rate. Author . • In a TFSA or RESP, Level I withholding taxes apply and are not recoverable. Don’t hold the RSU shares. One last thing, if I maxed my allocation for VCN in my taxable account (20 %) and don’t have room left for contribution in my registered account, should I rebalance with ZNB in my taxable account ? Financial Freedom Update (Q1) – March 2019 ($48,200 in Dividend Income)! Dividend Tax Credit 101 Once your account is created, you'll be logged-in to this account. The only downside I can see is that it locks you into 30% Canada. Learn how your comment data is processed. Great Taxable Account ETFs #1: iShares Russell 3000 ETF (IWV) One of the reasons why ETFs are great for taxable accounts is that they track indexes. Cue Vanguard’s All-Equity ETF Portfolio (VEQT). If you have to own bond funds in a taxable account, you may earn a higher after-tax return using tax-free bond funds rather than taxable bond funds. Depending on your contribution room, it could look something like: grant to vest). Thanks so much! For example, if you have Vanguard 500 Index Fund with a large amount of unrealized capital gains, and your asset allocation calls for Vanguard Total Stock Market Index Fund for domestic stocks, you may want to take dividends from Vanguard 500 … Great Taxable Account ETFs #3: SPDR Short Term Municipal Bond ETF (SHM) Municipal bonds are made for taxable accounts. You pretty much nailed in with the cap gains and annual dividend. Dogs of the TSX (Beating the TSX) Dividend Stock Picks – 2020 Bear Market Edition, Mastering the Smith Manoeuvre and Turning Your Mortgage Into a Tax Deductible Investment Loan, Top 6 Indexing Options for Your Portfolio, All-in-One ETFs Battle: Vanguard vs iShares vs BMO, Simple Low Cost Diversified Index ETF Portfolios, Building a Simple Low-Cost Indexed ETF Portfolio in USD, A Super Tax Efficient Index ETF Portfolio for your Non-Registered Account, The Real MER on ETFs – Foreign Withholding Taxes on ETFs, Best Free Canadian Chequing Bank Account for 2020, Fixed Income Faceoff: Bond ETFs vs GICs vs High Interest Savings Accounts, Easy Index Mutual Fund Portfolios with the Big Banks. But investors in taxable accounts have only pocketed a 7% return over the past 10 years, dropping the fund’s aftertax return into the large-blend group's bottom half. If a don’t have a pension plan elsewhere is it OK or should I add a little XAW. Individual Account (taxable) This is a basic brokerage account. First, tax losses represent an interest-free loan that defers capital gains taxes you would otherwise owe into the distant future, and can even eliminate them entirely when you die. As an alternative, I would suggest you look at products like iShares Core MSCI All Country World ex Canada Index ETF (XAW). Foreign Withholding Taxes 5 Level I withholding tax on Type A funds is 15% of dividends. There are several scenarios where investing in a non-registered account makes sense. The only thing I have in my taxable account is a total stock market index mutual fund (Fidelity's Spartan series - comparable to the Vanguard version). When securities are sold for a profit, there are generally taxes due. In recent weeks, I’ve been writing about how it’s getting easier and cheaper to build a solid globally diversified portfolio using all-in-one ETFs. I read that people thinks there is too much canadian exposure with this ? Capital One Aspire Cash World and Aspire Platinum Review, The Ultimate Guide to Safe Withdrawal Rates in Canada (For Any Retirement Age). Is it tax sheltered? Hence, it is taxable income of the employees under Section 17(1) by classifying them as perquisites. We also get your email address to automatically create an account for you in our website. At an estimated MER of 0.25%, is it worth the convenience? My TFSA is full and my RRSP room is pretty much full from my RPP from work. Unless you have a burning need, to determine the CDN dividends component, you'll have to break own the entire ETF, which is not worth the hassle. With all these new choices to build a solid low-cost portfolio (even cheaper with commission-free ETF trading), it really is a great time to be an investor. VEQT Number of stocks 12,521 Median market cap $53.6B Price/earnings ratio 20.2x Price/book ratio 2.0x Return on equity 14.1% Earnings growth rate 12.5% Equity yield (dividend) 2.5% Sector weighting VEQT Technology 18.0 % Financials 17.8 % Consumer Discretionary 13.2 % Industrials 12.6 % Health Care 9.0 % Basic Materials 7.1 % If the employee is non-resident, with no taxable services in Ireland, then the awards are not taxable i.e. Let’s take a look at various investment instruments and their tax consequences: 1. If not then I want to dramatically reduce my dividend based holdings in my non registered account. I have the following question regarding the taxable account: Now that Vanguard introduced the all equity etf:VEQT I have three options: (60% stocks 40% bonds) Option 1: VUN (30%) , VIU (25%) VEE (5%) and ZDB(40%): Bond ETF more efficient in taxable account Option 2: VEQT (60%) ZDB (40%) Option 3: VBAL (the bond part not as tax efficient as ZDB) Which one do you thing would be … Now I am not sure what the best method for investing in a taxable account is. TFSA (30%-40%): VAB (fixed income) and possibly a REIT ETF like VRE Justin March 3, 2020 at 6:43 pm - Reply @Grant: You’re bang on with your reasoning. I think you’ll agree, it’s hard to put a price on that convenience. Canadian Dividends – Dividend tax credit makes Canadian dividendincome relatively tax efficient in a non-registered (ie. Please check your entries and try again. This site uses Akismet to reduce spam. Doing a typical 3 fund portfolio, but have money spread through several accounts, but the taxable account is growing the fastest and will continue to do so. Does it provide a DRIP? Just to confirm there is no taxable event if I just buy and hold correct? Otherwise put the money into a diversified portfolio in a taxable account. VEQT is an amazing product but they missed the mark by not making it a Canadian-equivalent of VT. Having a home bias is one thing but having one of 10x is such a bad idea so XAW remain the best option. So, I’m considering owning Canadian dividend paying stocks in my taxable account for the Canadian Dividend Tax Credit like you – is that wise? Taxable account: If the assets are in a taxable account, and you cannot be sure that you will not be trading them, you should assess if moving the holdings over to Betterment would make you better off in the long run. I read that people thinks there is too much canadian exposure with this ? The scuttlebutt around capital gains, however, got me thinking about investing in a taxable or non-registered account. If I understand correctly, theoretically you could report a tax loss with TIPS in times of severe deflation. Or if you have a defined benefit pension that you consider the bond portion of your portfolio. Valid receipt for 2016 tax preparation fees from a tax preparer other than H&R Block must be presented prior to completion of initial tax office interview. I set it to DRIP in Questrade. Reply. Jordan, your broker should be able to enable a synthetic DRIP for any equity that pays a dividend. Ontario. As a result, you would prefer to hold the U.S. dividend stock in your RRSP rather than in a taxable account. Other than ACB tracking for taxes if I sell and when I get a dividend, what other things should be known of when putting VEQT in a taxable account? Q. Sorry for the typo ! I invest in HGRO in a corp account to avoid the tax headache and for preferential tax treatment. 1 day ago. But what if you are just starting out in your 20’s and have a super long time frame until retirement which would justify having no bonds in your portfolio? Or are you better off picking your own ETFs?