ETF PROTFOLIO

A couple of weeks ago Rob Carrick from the Globe and Mail wrote an article explaining how to emulate the Canada Pension Plan's (CPP) portfolio using Exchange Traded Funds (ETFs). The article listed the CPP portfolio's investment mix (e.g. 25% Canadian equities, 34% International stocks, etc.) and gave examples of specific ETFs available to Canadian investors to replicate this portfolio. A summary of this portfolio may be found in the following Google spreadsheet.

I'm currently planning on replacing the mutual funds held in my RRSP with ETFs and found the article useful. I do, however, have the following reservations about the model portfolio:

1. International real estate has had amazing returns, especially over the last year. Historically low interest rates around the world have really inflated home prices. These may be due for a correction.

2. The private equity ETF is fairly new and I am skeptical of "trendy" financial products (think of all the technology oriented funds started during the dot com bubble). Private equity has been attracting a lot of attention and money lately (two years ago, the largest private equity fund was worth $6 billion; now the two largest firms -KKR and Balckstone- are worth around $15 billion each). I would hate to be the sucker that buys at the top.

These two reservations aside, the article is a good starting point for anyone looking to build their own ETF portfolio.

THE LAZY NINJA

I recently discovered that, instead of paying my bank $4 dollars a month to have access to my money, I can actually make them pay me $10 dollars a month. I have christened this Machiavellian scheme “the lazy ninja”. Here is how I pull it off.

First, I should mention that I have become incredibly lazy as of late. Going to the bank to withdraw money takes too much work. Consequently, I use my credit card for all purchases and have eliminated all trips to the bank. The direct result of this slothful habit is that my money just sits in the bank until the end of the month when the bills get paid. (Ninjas always pay their bills to avoid detection.)

Second, while scrutinizing my monthly statement, I found that the bank deposited 3 cents in interest income into my account. They might as well have spit in my coffee and called my mother a not so nice name. I immediately opened an online savings account that pays considerably more interest (3.5%).

Third, in the spirit of the first move (slothful behaviour), I got work to deposit my pay directly into the online savings account, thus avoiding yet another trip to the bank.

The fourth and last act involves me going about my usual (ninja) routine, with the exception that I am now maximizing the time my cash spends in the online savings account by making one lump sum transfer into my checking account at the end of the month to cover my bills.

Voila: The lazy ninja. My bank now pays me.