Quote:
Originally Posted by kn
Thanks for the responses.
I'll admit to being tempted by DIA and XIU even though I know they're not completely representative of the market. I figure if 30 stocks is good enough for Graham, then 90 stocks is good enough for me to cover two major asset classes.
Still debating whether I need to invest outside North America for "diverstification" and whether currency hedging is something I want to consider despite the greater MER and tracking-errors...
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I'm at best an amateur investor, so don't take this advice as coming from a professional. That said, I'm figuratively putting my money where my mouth is with what I'm about to post:
If you're relatively young, have a portfolio consisting of four simple index funds (remember to rebalance every year): 25% Canadian equities, 25% US equities, 25% international equities, 25% Canadian bonds. You'll have excellent diversification across different asset classes, industries, and geographies. Don't bother worrying about your day-to-day portfolio valuation. You're investing for ~20-25 years at this point, so you can expect a large amount of volatility but a steady rise in value over the long term (an average ROI of 5-10% per year is a reasonable assumption).
As you reach middle-age (say age 45+), adjust your portfolio to have a lower percentage of equities (more volatile, higher risk/higher reward) and a greater percentage of bonds (less volatile, lower risk/lower reward).
When you get close to retirement (60+), switch entirely to asset classes that have
very low risk like GICs. If the market crashes when you're 63, you don't have many more working years to recover if you're still heavily invested in equities at that age.