Request for help with portfolio [US ex-pat in Canada]

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g8tgod
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Request for help with portfolio [US ex-pat in Canada]

Post by g8tgod »

New to Bogleheads (first post) and looking for some help with asset allocation and reorganizing our accounts. Thanks for your help.

Emergency funds: We have six months’ worth of funds in checking accounts.

Debt: Mortgage 1: $200k @ 4.5%, Mortgage 2: $295k @3.88%. Both houses are being rented with a positive cash flow. No other debt. (We rent our current residence).

Tax Filing Status: Married Filing Jointly, and filing in both the US and Canada

Tax Rate: xx% Federal, xx% State. I’m embarrassed to say that I don’t know. But the questions are all about our tax-sheltered accounts, if that helps.

State of Residence: We are Americans living and working in British Columbia, Canada.

Age: husband 59, wife 57. We like our jobs and are not planning on an early retirement, and I thought we might work until 70. But it would be nice to be able to slow down in maybe 6 years and have the option of working less if energy is waning or if we find ourselves ready for more discretionary time.

Desired Asset allocation (domestic and international): This is part of my question. What should it be?

Current allocation: 67% US Stocks, 8.5% Intl Stocks, 16.5% US Bonds, 4% Intl Bonds, 3% Alternatives

Approximate size of your total portfolio: not including home equity, about $900k in combined accounts between husband and wife.

Current retirement assets

Taxable
No cash set aside for taxable investments.
No taxable retirement assets.

His Roth IRA
26% Vanguard Total Stock Index (VTSAX) (0.04%)

His IRA
31% Vanguard Total Stock Index (VTSAX) (0.04%)
15% Vanguard Total Bond Index (VBTLX) (0.05%)
3.5% Vanguard Health Care Index (VGHCX) (0.32%)
11% Vanguard Small Cap Index (VSMAX) (0.05%)
3.5% Vanguard Total Intl Bond Index (VTABX) (0.11%)

Her 403b
1.5% Fidelity Freedom Index 2030 (FFEGX) (0.08% - institutional premium class shares -- who knew?)

Her IRA
0.5% Vanguard Total Bond Index (VBTLX) (0.05%)

Her Roth IRA
7% Vanguard Total Intl Stock Index (VTIAX) (0.04%)

Contributions

New annual Contributions
No current contributions (as expats in Canada, we aren’t allowed to add to our Roth or IRAs).

Questions:

How we got here: We have always been modest income people, so for a long time, we only had a fund or two; eventually, it grew enough that we were able to subdivide it. But to take advantage of the low fees on the Admiral shares, we tried to do our asset allocation over our combined accounts.

Recently, we began the process of consolidating our accounts at one broker. This gives us the opportunity to redo some things:

1. We are currently about 75% stocks/20% bonds/3% alternatives (I know that’s not quite 100% - rounding?). What /should/ our allocations be? Does this make sense for our ages and overall goals (flexible as they are) or should we be more conservative? We were thinking of selling the VGHCX (health care index) and VSMAX (small cap index and folding them into other existing funds to make things simpler when we do the reallocation. Does a three-fund portfolio make the most sense, or should we consider VNQ (Vanguard’s REIT ETF) or VAW (Vanguard’s Materials ETF) for diversification? Do those funds even make us more diversified, or are they already owned in VTSAX (Total Stock Market Index)?

2. So far, those allocations are across all of our accounts combined. We were thinking of possibly redoing this, so that her combined accounts reflect the targets and his combined accounts reflect the targets. Is there any advantage/disadvantage to doing this? Things to watch out for?

3. We are overweight in US stocks (vs. international). What would you recommend as a weighting between these two – 50-50, 80-20 or something in between?

4. Is it helpful to have exposure to international bonds or should we fold back into US bond market? Does it make sense to own some SCHP (the inflation-protected treasury bonds ETF with Schwab)?

5. As you can see, we’ve been exclusively in mutual funds. But we are no longer making regular contributions to these accounts, as we are not allowed from Canada. Does it make sense to convert to ETFs for lower expense or not worth the trouble? Considerations?

6. How important is it to have investments in a taxable brokerage account? We have a little there, but it’s tiny and not for retirement.
Last edited by g8tgod on Mon Jan 17, 2022 2:51 am, edited 1 time in total.
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retiredjg
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Re: Request for help with portfolio [US ex-pat in Canada]

Post by retiredjg »

Welcome to the forum. :happy
g8tgod wrote: Sun Jan 16, 2022 12:25 am Current allocation: [/b] 67% US Stocks, 8.5% Intl Stocks, 16.5% US Bonds, 4% Intl Bonds, 3% Alternatives
For your ages, holding 20% in bonds seems a little aggressive to me, but it is not nuts. I think you have been investing long enough to know your risk tolerance pretty well.

If the market drops out, you will likely see about 35% of your $900k disappear, maybe 40%. Would you be comfortable with that? I'm not asking if you can gut your way through it for a year, I'm asking if you would be comfortable. If not, I suggest adding a bit in bonds.

As you get closer to retirement, there is less time for your portfolio to recover if there is a downturn. Keep this in mind...don't try to arrive at retirement at only 20% bonds. If the market goes south you may not be able to retire.


New annual Contributions
No current contributions (as expats in Canada, we aren’t allowed to add to our Roth or IRAs).
Are you planning to save any more money before you retire? How do you plan to invest that?

1. We are currently about 75% stocks/20% bonds/3% alternatives (I know that’s not quite 100% - rounding?). What /should/ our allocations be? Does this make sense for our ages and overall goals (flexible as they are) or should we be more conservative?
As I said above, I think it is a touch aggressive.

We were thinking of selling the VGHCX (health care index) and VSMAX (small cap index and folding them into other existing funds to make things simpler when we do the reallocation.
The health care index is not a large enough slice to have any effect on the portfolio. No reason to keep it. The small cap index is fine if you want to keep a SC tilt. It can also be folded into your US stocks if you don't have a believe that it will outperform.

Does a three-fund portfolio make the most sense, or should we consider VNQ (Vanguard’s REIT ETF) or VAW (Vanguard’s Materials ETF) for diversification? Do those funds even make us more diversified, or are they already owned in VTSAX (Total Stock Market Index)?
I think the REIT could go either way - some people do not believe that the amount of REIT stocks in the total stock market is adequate. I've never heard of anybody adding extra "Materials" but assume all of those stocks are represented in the total stock market.

Do you want to simplify or not? :happy What's the point of getting rid of health care if you want to add on some other little piece of something?

2. So far, those allocations are across all of our accounts combined. We were thinking of possibly redoing this, so that her combined accounts reflect the targets and his combined accounts reflect the targets. Is there any advantage/disadvantage to doing this? Things to watch out for?
There is no advantage to the portfolio. It will perform the same no matter which account things are in.


3. We are overweight in US stocks (vs. international). What would you recommend as a weighting between these two – 50-50, 80-20 or something in between?
This is not going to be very helpful. The usual recommendations for foreign stock range from 0% to about 50% of your stock allocation. You are at roughly 10%. There is nothing wrong with this number. There is nothing wrong with the other numbers either.

If you simply cannot decide, one suggestion is to hold 20% of your stocks in foreign stocks. The people who say no foreign stock is needed tend to be OK with a number up to 20%. The people who say you should hold the market weight of stocks tent to set 20% as the lowest number acceptable. Everybody has a different opinion on this. The important thing is to pick a number and stay there rather than change around all the time.

4. Is it helpful to have exposure to international bonds or should we fold back into US bond market? Does it make sense to own some SCHP (the inflation-protected treasury bonds ETF with Schwab)?
The important thing is to have some bonds. Vanguard is a big supporter of international bonds. Many of us older folks have just never jumped on that train and still just hold US bonds. I seriously doubt that international bonds are going to hurt the portfolio. I seriously doubt the lack of international bonds would be noticed. In other words....I just don't think it matters much.

5. As you can see, we’ve been exclusively in mutual funds. But we are no longer making regular contributions to these accounts, as we are not allowed from Canada. Does it make sense to convert to ETFs for lower expense or not worth the trouble? Considerations?
The difference in cost is absolutely minimal. If you expect to leave Vanguard's PAS and manage your portfolio yourself, stick with what you know unless you just have an interest in trying ETFs.

6. How important is it to have investments in a taxable brokerage account? We have a little there, but it’s tiny and not for retirement.
The important thing is to save enough money. Having some of it in taxable account gives you some flexibility. It seems unlikely that you should stop saving for the next 6 to 10 years before retirement. A taxable brokerage account is the logical place to do it.
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Re: Request for help with portfolio [US ex-pat in Canada]

Post by g8tgod »

retiredjg wrote: Sun Jan 16, 2022 11:13 am
Welcome to the forum. :happy
Thank you! I'm impressed with how much well-researched knowledge people have here.
g8tgod wrote: Sun Jan 16, 2022 12:25 am Current allocation: [/b] 67% US Stocks, 8.5% Intl Stocks, 16.5% US Bonds, 4% Intl Bonds, 3% Alternatives
For your ages, holding 20% in bonds seems a little aggressive to me, but it is not nuts. I think you have been investing long enough to know your risk tolerance pretty well.

If the market drops out, you will likely see about 35% of your $900k disappear, maybe 40%. Would you be comfortable with that? I'm not asking if you can gut your way through it for a year, I'm asking if you would be comfortable. If not, I suggest adding a bit in bonds.

As you get closer to retirement, there is less time for your portfolio to recover if there is a downturn. Keep this in mind...don't try to arrive at retirement at only 20% bonds. If the market goes south you may not be able to retire.
This is a good question and one I've been wondering about. If I want to be able to reliably 'slow down' in about 5 years, should I be 60/40? 50/50? I recognize that's a judgment call, but I am interested in well-considered, experienced opinions.
New annual Contributions
No current contributions (as expats in Canada, we aren’t allowed to add to our Roth or IRAs).
Are you planning to save any more money before you retire? How do you plan to invest that?
We are saving/investing here in Canada in an RRSP (roughly equivalent to a traditional IRA - tax-free growth, taxed withdrawals. We have another $63k USD here in our two RRSPs, split about 50-50 between VTI (Vanguard's ETF for Total Stock Market) and SCHP (Schwab's Inflation-protected treasury bond ETF) and will keep investing, though with our relatively short time horizon, I don't expect those contributions to be where the growth comes. Thank God for compound interest.

I recently upped my retirement savings to about $600 USD/month (and the company puts in about $300), though that's aggressive, and I may need to reduce it a little. Previously, it was about $600 USD/month with both the company's and my share.
1. We are currently about 75% stocks/20% bonds/3% alternatives (I know that’s not quite 100% - rounding?). What /should/ our allocations be? Does this make sense for our ages and overall goals (flexible as they are) or should we be more conservative?
As I said above, I think it is a touch aggressive.
Fair enough. I'm persuaded; just trying to re-think the appropriate allocation. Too many years in accumulation/growth mode. It's hard to switch!
We were thinking of selling the VGHCX (health care index) and VSMAX (small cap index and folding them into other existing funds to make things simpler when we do the reallocation.
The health care index is not a large enough slice to have any effect on the portfolio. No reason to keep it. The small cap index is fine if you want to keep a SC tilt. It can also be folded into your US stocks if you don't have a believe that it will outperform.
Sounds good.
Does a three-fund portfolio make the most sense, or should we consider VNQ (Vanguard’s REIT ETF) or VAW (Vanguard’s Materials ETF) for diversification? Do those funds even make us more diversified, or are they already owned in VTSAX (Total Stock Market Index)?
I think the REIT could go either way - some people do not believe that the amount of REIT stocks in the total stock market is adequate. I've never heard of anybody adding extra "Materials" but assume all of those stocks are represented in the total stock market.

Do you want to simplify or not? :happy What's the point of getting rid of health care if you want to add on some other little piece of something?
Just fighting that fear that we're not diversified enough. The health care thing was not so much for diversification as a misguided intuition about outperforming the market. :oops:
2. So far, those allocations are across all of our accounts combined. We were thinking of possibly redoing this, so that her combined accounts reflect the targets and his combined accounts reflect the targets. Is there any advantage/disadvantage to doing this? Things to watch out for?
There is no advantage to the portfolio. It will perform the same no matter which account things are in.
Check.
3. We are overweight in US stocks (vs. international). What would you recommend as a weighting between these two – 50-50, 80-20 or something in between?
This is not going to be very helpful. The usual recommendations for foreign stock range from 0% to about 50% of your stock allocation. You are at roughly 10%. There is nothing wrong with this number. There is nothing wrong with the other numbers either.

If you simply cannot decide, one suggestion is to hold 20% of your stocks in foreign stocks. The people who say no foreign stock is needed tend to be OK with a number up to 20%. The people who say you should hold the market weight of stocks tent to set 20% as the lowest number acceptable. Everybody has a different opinion on this. The important thing is to pick a number and stay there rather than change around all the time.
Understood.
4. Is it helpful to have exposure to international bonds or should we fold back into US bond market? Does it make sense to own some SCHP (the inflation-protected treasury bonds ETF with Schwab)?
The important thing is to have some bonds. Vanguard is a big supporter of international bonds. Many of us older folks have just never jumped on that train and still just hold US bonds. I seriously doubt that international bonds are going to hurt the portfolio. I seriously doubt the lack of international bonds would be noticed. In other words....I just don't think it matters much.
I've felt the same way. The downside of international bonds would be currency risk and higher expenses. But given all that's happened in the US over the past 5-6 years, I'm more concerned than ever about the stability of the nation and its institutions, including the financial ones.
5. As you can see, we’ve been exclusively in mutual funds. But we are no longer making regular contributions to these accounts, as we are not allowed from Canada. Does it make sense to convert to ETFs for lower expense or not worth the trouble? Considerations?
The difference in cost is absolutely minimal. If you expect to leave Vanguard's PAS and manage your portfolio yourself, stick with what you know unless you just have an interest in trying ETFs.
Per above, I've started purchasing ETFs (US-listed) since coming to Canada. So I'm getting comfortable with them. It is a bit more work than investing in mutual funds, but not ridiculously so. Based on your counsel, I won't switch just for the expenses.
6. How important is it to have investments in a taxable brokerage account? We have a little there, but it’s tiny and not for retirement.
The important thing is to save enough money. Having some of it in taxable account gives you some flexibility. It seems unlikely that you should stop saving for the next 6 to 10 years before retirement. A taxable brokerage account is the logical place to do it.
I'll double check what is allowed from here, but if taxable accounts are in-bounds, we can add something there in addition to what we're saving/investing in Canada. With the equity we've got in the two houses (over $1M - pre-tax), I'm hoping we're in decent shape.

Thanks for the helpful input. I appreciate it.
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Re: Request for help with portfolio [US ex-pat in Canada]

Post by retiredjg »

g8tgod wrote: Sun Jan 16, 2022 4:52 pm This is a good question and one I've been wondering about. If I want to be able to reliably 'slow down' in about 5 years, should I be 60/40? 50/50? I recognize that's a judgment call, but I am interested in well-considered, experienced opinions.
This is just my opinion. I don't think you have to get there right now, but in my opinion 60/40 is a good place to be or get to when you do the slow down. Then a little lower with retirement. But all of this has to do with your risk tolerance, not mine. :happy

We are saving/investing here in Canada in an RRSP (roughly equivalent to a traditional IRA - tax-free growth, taxed withdrawals. We have another $63k USD here in our two RRSPs, split about 50-50 between VTI (Vanguard's ETF for Total Stock Market) and SCHP (Schwab's Inflation-protected treasury bond ETF) and will keep investing...
This sounds good.

Fair enough. I'm persuaded; just trying to re-think the appropriate allocation. Too many years in accumulation/growth mode. It's hard to switch!
Many people do find this switch difficult. But you are approaching the time when preservation of what you have is more important than growing it faster. What do you think about adding 5% bonds now and then another few percent each year until slow down?

Just fighting that fear that we're not diversified enough. The health care thing was not so much for diversification as a misguided intuition about outperforming the market. :oops:
Since you hold essentially all the world's stocks you are plenty diversified as far as the financial markets are concerned. The only sector which might be under-represented is REIT and that is a matter of philosophy (smart minds differ). You already have the outside the market diversification of the two rental properties. Seems to me you are fine.

With the equity we've got in the two houses (over $1M - pre-tax), I'm hoping we're in decent shape.
Looks good to me.
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Re: Request for help with portfolio [US ex-pat in Canada]

Post by Peculiar_Investor »

The OP might want to read through the wiki article Taxation as a US person living abroad - Bogleheads because there are some tax pitfalls if they are not careful.

Two other wiki links that can help make sure you understand Passive foreign investment company (PFIC) rules and those for Canadian tax advantaged accounts.
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Re: Request for help with portfolio [US ex-pat in Canada]

Post by retiredjg »

Good reminder. There is also a sister site for Canadian investors.

https://www.finiki.org/wiki/Main_Page
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Re: Request for help with portfolio [US ex-pat in Canada]

Post by g8tgod »

Peculiar_Investor wrote: Mon Jan 17, 2022 10:13 am The OP might want to read through the wiki article Taxation as a US person living abroad - Bogleheads because there are some tax pitfalls if they are not careful.

Two other wiki links that can help make sure you understand Passive foreign investment company (PFIC) rules and those for Canadian tax advantaged accounts.
Perfect. Thank you for these recommendations. I'll get to them this week.
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Re: Request for help with portfolio [US ex-pat in Canada]

Post by g8tgod »

retiredjg wrote: Mon Jan 17, 2022 10:21 am Good reminder. There is also a sister site for Canadian investors.

https://www.finiki.org/wiki/Main_Page
Thank you. I had no idea. I'll take a look.

It's a little tricky for me, as I'm only sort-of a Canadian investor. As a US citizen, there are different rules for me than for Canadian citizens. It's honestly the worst thing about living in Canada. Well, that and the cold; we moved here from a tropical environment...
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Re: Request for help with portfolio [US ex-pat in Canada]

Post by g8tgod »

retiredjg wrote: Mon Jan 17, 2022 8:00 am
g8tgod wrote: Sun Jan 16, 2022 4:52 pm This is a good question and one I've been wondering about. If I want to be able to reliably 'slow down' in about 5 years, should I be 60/40? 50/50? I recognize that's a judgment call, but I am interested in well-considered, experienced opinions.
This is just my opinion. I don't think you have to get there right now, but in my opinion 60/40 is a good place to be or get to when you do the slow down. Then a little lower with retirement. But all of this has to do with your risk tolerance, not mine. :happy
True. But I'm glad for a little more objective perspective. Being this close to the trees, it can be hard to see the forest!
We are saving/investing here in Canada in an RRSP (roughly equivalent to a traditional IRA - tax-free growth, taxed withdrawals. We have another $63k USD here in our two RRSPs, split about 50-50 between VTI (Vanguard's ETF for Total Stock Market) and SCHP (Schwab's Inflation-protected treasury bond ETF) and will keep investing...
This sounds good.
Fair enough. I'm persuaded; just trying to re-think the appropriate allocation. Too many years in accumulation/growth mode. It's hard to switch!
Many people do find this switch difficult. But you are approaching the time when preservation of what you have is more important than growing it faster. What do you think about adding 5% bonds now and then another few percent each year until slow down?
Never thought about a gradual move into more bonds. Given that we're so aggressive at this point, I think we may go to 65% stocks/35% bonds immediately, then allow the 50-50 allocations we're making now (while in Canada) to gradually pull us toward 60-40.
Just fighting that fear that we're not diversified enough. The health care thing was not so much for diversification as a misguided intuition about outperforming the market. :oops:
Since you hold essentially all the world's stocks you are plenty diversified as far as the financial markets are concerned. The only sector which might be under-represented is REIT and that is a matter of philosophy (smart minds differ). You already have the outside the market diversification of the two rental properties. Seems to me you are fine.
I keep finding conflicting advice about how much diversification benefit REITs even add to a stock-bond portfolio. The longer I think about it, the more it seems clear that REAL real estate (i.e. owning actual houses and such) is a different animal that VNQ (Vanguard's REIT index ETF). Having learned that REITs are already 3.5-4% of VTSAX, I may just let it go.

Thanks again for the input.
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Re: Request for help with portfolio [US ex-pat in Canada]

Post by Peculiar_Investor »

g8tgod wrote: Mon Jan 17, 2022 12:15 pm
retiredjg wrote: Mon Jan 17, 2022 10:21 am Good reminder. There is also a sister site for Canadian investors.

https://www.finiki.org/wiki/Main_Page
Thank you. I had no idea. I'll take a look.

It's a little tricky for me, as I'm only sort-of a Canadian investor. As a US citizen, there are different rules for me than for Canadian citizens. It's honestly the worst thing about living in Canada. Well, that and the cold; we moved here from a tropical environment...
You should also take a look at the 'sister' Canadian forum, Financial Wisdom Forum (FWF) as we are the ones that manage finiki, the Canadian financial wiki.

FWF has a number of members who are US citizens who are living in Canada and there are discussions about the cross-border issues that can arise, an example that might apply to the OP is Taxable Account Planning - US Expat - Financial Wisdom Forum.
US Citizen working and living in Vancouver BC, Canada.
Another is Recommended US brokerage for IRAs for US citizen, permanent residents of Canada and I believe at least a couple of the posters in that topic are also Bogleheads forum members.

Disclosure: I'm a member on both forums and contributor to both wikis.
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Re: Request for help with portfolio [US ex-pat in Canada]

Post by Itogliano »

g8tgod wrote: Sun Jan 16, 2022 4:52 pm With the equity we've got in the two houses (over $1M - pre-tax), I'm hoping we're in decent shape.
Just curious, is this a very conservative value? Someone mentioned Vancouver so I have to imagine home equity might be almost double that.

Also would just like to say I am very jealous of you :D . I went to school in BC and absolutely fell in love. I would love to one day move back...
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Re: Request for help with portfolio [US ex-pat in Canada]

Post by g8tgod »

Peculiar_Investor wrote: Mon Jan 17, 2022 1:44 pm
g8tgod wrote: Mon Jan 17, 2022 12:15 pm
retiredjg wrote: Mon Jan 17, 2022 10:21 am Good reminder. There is also a sister site for Canadian investors.

https://www.finiki.org/wiki/Main_Page
Thank you. I had no idea. I'll take a look.

It's a little tricky for me, as I'm only sort-of a Canadian investor. As a US citizen, there are different rules for me than for Canadian citizens. It's honestly the worst thing about living in Canada. Well, that and the cold; we moved here from a tropical environment...
You should also take a look at the 'sister' Canadian forum, Financial Wisdom Forum (FWF) as we are the ones that manage finiki, the Canadian financial wiki.

FWF has a number of members who are US citizens who are living in Canada and there are discussions about the cross-border issues that can arise, an example that might apply to the OP is Taxable Account Planning - US Expat - Financial Wisdom Forum.
US Citizen working and living in Vancouver BC, Canada.
Another is Recommended US brokerage for IRAs for US citizen, permanent residents of Canada and I believe at least a couple of the posters in that topic are also Bogleheads forum members.

Disclosure: I'm a member on both forums and contributor to both wikis.
I'll take a look. Thanks for your help!
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Re: Request for help with portfolio [US ex-pat in Canada]

Post by g8tgod »

Itogliano wrote: Mon Jan 17, 2022 1:47 pm
g8tgod wrote: Sun Jan 16, 2022 4:52 pm With the equity we've got in the two houses (over $1M - pre-tax), I'm hoping we're in decent shape.
Just curious, is this a very conservative value? Someone mentioned Vancouver so I have to imagine home equity might be almost double that.

Also would just like to say I am very jealous of you :D . I went to school in BC and absolutely fell in love. I would love to one day move back...
You are right about real estate values in Vancouver. It's ludicrously expensive.

Sadly, I don't own any real estate here. Our homes are in the US.
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Re: Request for help with portfolio [US ex-pat in Canada]

Post by Valuethinker »

g8tgod wrote: Mon Jan 17, 2022 10:02 pm
Itogliano wrote: Mon Jan 17, 2022 1:47 pm
g8tgod wrote: Sun Jan 16, 2022 4:52 pm With the equity we've got in the two houses (over $1M - pre-tax), I'm hoping we're in decent shape.
Just curious, is this a very conservative value? Someone mentioned Vancouver so I have to imagine home equity might be almost double that.

Also would just like to say I am very jealous of you :D . I went to school in BC and absolutely fell in love. I would love to one day move back...
You are right about real estate values in Vancouver. It's ludicrously expensive.

Sadly, I don't own any real estate here. Our homes are in the US.
I follow Hillard Macbeth on Twitter. Financial Planner in Edmonton who has been through several market cycles. He has written a book too which one might pick up used. And Steve Punawesi (housing economics). I have been calling for a bubble blowup for at least 5 years, maybe longer (yes, longer). Things are worse than the USA in 2006. It's gotten too big to end happily.

Basically I think it's the world's biggest bubble right now. Toronto & Vancouver. But Halifax NS had, according to The Economist, a 50% housing price rise last year. Other Canadian cities seemed to be reasonably valued relative to income & mortgage rates - it was a GTA/ GVA thing. But it has clearly spread a lot in the last 3 years or so.

Houses are listing in not very easy commute Toronto suburbs at 800k and going for $1.1m with 20 offers. London, UK prices in a town where the average after tax of professionals is probably half of London -- and London has this huge reach due to the train & Tube system. People commute from Oxford (c 90 miles) because there are regular trains. This was pre Covid. Commuting from 90 miles to GTA? You'd live in hell.

It is insane. Because of geography, GVA is less senseless. And I imagine smart money is moving out of Hong Kong & trying to find a home that is also pro immigration & there is a settled community (for people with older parents, having a local community & services that speaks and understands Cantonese is really quite important).

I do believe it will crack. The mess will be awful- especially in the condo market, and a lot of the construction will turn out to have been slipshod. And Macbeth takes you through what will happen to the bank stocks - there are plenty of retired people who are carrying bank stocks at 10x book cost, paying chunky dividends. Due to capital gains, they won't sell. They will ride them back down. But because of the way the CMHC works, it is the taxpayer who will really carry the can when it hits the wall.

On weather, if you live in Vancouver, then that is not cold by any Canadian standard. It's the cloud & rain & grey which would get to me. But the people kind of make up for it (speaking as a former easterner).

I am with Margaret Atwood among others (Survival - her earliest book of criticism) that the harshness of the Canadian climate has shaped its people and their values "Peace, order and good government".

I miss it & I miss them. Hug it for me some morning. Pinch yourself and be glad that you had the chance to be a part of it, even if only for a time.
Topic Author
g8tgod
Posts: 9
Joined: Thu Jan 13, 2022 5:02 pm

Re: Request for help with portfolio [US ex-pat in Canada]

Post by g8tgod »

Valuethinker wrote: Tue Jan 18, 2022 5:47 am
g8tgod wrote: Mon Jan 17, 2022 10:02 pm
Itogliano wrote: Mon Jan 17, 2022 1:47 pm
g8tgod wrote: Sun Jan 16, 2022 4:52 pm With the equity we've got in the two houses (over $1M - pre-tax), I'm hoping we're in decent shape.
Just curious, is this a very conservative value? Someone mentioned Vancouver so I have to imagine home equity might be almost double that.

Also would just like to say I am very jealous of you :D . I went to school in BC and absolutely fell in love. I would love to one day move back...
You are right about real estate values in Vancouver. It's ludicrously expensive.

Sadly, I don't own any real estate here. Our homes are in the US.
I follow Hillard Macbeth on Twitter. Financial Planner in Edmonton who has been through several market cycles. He has written a book too which one might pick up used. And Steve Punawesi (housing economics). I have been calling for a bubble blowup for at least 5 years, maybe longer (yes, longer). Things are worse than the USA in 2006. It's gotten too big to end happily.

Basically I think it's the world's biggest bubble right now. Toronto & Vancouver. But Halifax NS had, according to The Economist, a 50% housing price rise last year. Other Canadian cities seemed to be reasonably valued relative to income & mortgage rates - it was a GTA/ GVA thing. But it has clearly spread a lot in the last 3 years or so.

Houses are listing in not very easy commute Toronto suburbs at 800k and going for $1.1m with 20 offers. London, UK prices in a town where the average after tax of professionals is probably half of London -- and London has this huge reach due to the train & Tube system. People commute from Oxford (c 90 miles) because there are regular trains. This was pre Covid. Commuting from 90 miles to GTA? You'd live in hell.

It is insane. Because of geography, GVA is less senseless. And I imagine smart money is moving out of Hong Kong & trying to find a home that is also pro immigration & there is a settled community (for people with older parents, having a local community & services that speaks and understands Cantonese is really quite important).

I do believe it will crack. The mess will be awful- especially in the condo market, and a lot of the construction will turn out to have been slipshod. And Macbeth takes you through what will happen to the bank stocks - there are plenty of retired people who are carrying bank stocks at 10x book cost, paying chunky dividends. Due to capital gains, they won't sell. They will ride them back down. But because of the way the CMHC works, it is the taxpayer who will really carry the can when it hits the wall.

On weather, if you live in Vancouver, then that is not cold by any Canadian standard. It's the cloud & rain & grey which would get to me. But the people kind of make up for it (speaking as a former easterner).

I am with Margaret Atwood among others (Survival - her earliest book of criticism) that the harshness of the Canadian climate has shaped its people and their values "Peace, order and good government".

I miss it & I miss them. Hug it for me some morning. Pinch yourself and be glad that you had the chance to be a part of it, even if only for a time.
Will do. It has been a blessing to be here the last few years, especially with the increasing craziness and instability south of the border.

And I know this is not cold, comparatively. We lived in Montreal for a few years and that was much more of a challenge. But having moved from a tropical climate most recently, the difference has been... bracing.

RE: real estate. I have not studied it at all, but what you say sounds entirely plausible -- and terrifying. Maybe my wife was right about not trying to get a condo here....
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