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BMO Short Corporate Bond Index ETF (ZCS $13.95)
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iShares Core Canadian Short Term Bond Index ETF (XSB $26.80)
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Vanguard Short-Term Government Bond ETF (VGSH $58.43)
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Global X High Interest Savings ETF (CASH $50.04)
largely thanks to you, I have made a fair bit of money over the past few years. Certainly, more than I would have made on my own. Thank you. But, I am thinking that in my mid 70's I should start thinking about preserving it in order to pass it on. I know that stocks are you're forte, but i noticiced that you have been generous enough to give advise on other matters, as well. I will try to make this question not too close to portfolio planning advice and so hope you can advise me. In reviewing literature I notice that people say at this stage in life, we should not be looking out too far. Therefore shortterm bond etf's are best. AGG, which I own, for instance, is discouraged because it goes out to six years and there could be a downturn at just the wrong time. They also mention holding tips, corporate bonds and a GI C ladder. I didn't think that I would need these latter assets. Just bond etf's in US and CDN. I also thought government would be better than corporate, as well, because they would be more secure. Anyway, I hope that at this point in the game you can also dsirect me to the right choices, as you have in the past. Here is a list of assets suggested:
short-term Canadian bonds XSB or VSB Core stable income
Short-term corporates ZCS Slightly higher yield
Laddered GICs (1–5 yrs) GICs from brokerage Guaranteed principal
U.S. short Treasuries VGSH Safe USD diversification
U.S. short TIPS VTIP Inflation hedge
High-interest savings ETF CASH.TO or PSA Liquidity buffer
We do think it can be wise to get more conservative on one's mid-70s, but there are many considerations here. Investors with a pension plan, for example, may see the need for very little fixed-income allocation. Much depends on income needs and total expenses. The real question is whether any capital will needed to be withdrawn from a portfolio, or can one just live on dividends and interest. Taxes play a role too. If income is low, it can be actually more beneficial to focus on Canadian dividend stocks, to take advantage of the dividend tax credit. We do think it is helpful to allow for extra conservatism as one never knows what monthly costs will be if there are health issues. We are fully comfortable with the securities listed in the question. Shorter term is safer than longer term for bonds, and a laddered GIC approach will maximize guaranteed income and also allow for some interest rate protection. What's missing here is some inflation protection, really. And if one has zero exposure to stocks then there will of course be minimal growth. In the question, the phrase 'in order to pass it on' leads us to believe that there is likely to be portfolio value at life's end. In this instance, if this is true, it may be quite beneficial to heirs if there is at least some growth exposure via equities. There is a technique called 'immunization', which is when an investor sets up their portfolio to allow for ALL expenses, plus a cushion. Then, once this is done, the balance of the portfolio can be used to allow for some more diversication and growth opportunities. This works very well in such instances, as long as the core part of the portfolio covers all expenses plus a cushion.