In May 2016, I started my ETF experiment buying Vanguard FTSE Canada All Cap Index ETF ("VCN") and Vanguard FTSE All-World Ex Canada Index ETF ("VXC") for my son's Registered Education Savings Plan ("RESP"). Since that time, I added my daughter to the RESP, and have continued buying shares in VCN and VXC each year. After four years, it seems like a good time to check-in to see how this experiment has progressed.
I've stuck with the two ETF strategy for four years since it's fast, low cost, low maintenance and the ETFs produce returns in-line with the respective indices. Expanding a bit further, the time commitment to implement the strategy is about 5-10 minutes a year. After making my RESP contribution and waiting for the government of Canada to match 20% of it a couple months later, I simply calculate how much of the two ETFs I need to buy to maintain an equal dollar weighting. The low cost refers to the $20 per year I'm charged for buying shares in VCN and VXC. Unlike my other investment holdings which I monitor via news articles and filings, I don't monitor either ETF actively. When I'm conducting the performance analysis of my portfolio at year end, I usually spend a couple seconds seeing how closely each of the ETFs tracked their respective indices (answer: very). Then there's nothing to do until after the Government of Canada matches my contribution in the next year.
As smoothly as the ETF experiment has been going, I'll admit to making a stupid mistake for the second straight year. I bought shares in VCN and VXC earlier this month before the Government of Quebec added their Quebec Education Savings Incentive ("QESI") in the RESP. I keep forgetting that the QESI exists and to wait for it to be deposited before buying shares of the ETF. Now I'm stuck trying to figure if it makes sense to add a small number of shares to one of the ETFs by overweighting a position, or just wait until 2020.
Despite the dumb mistake, I continue to enjoy the ETF experiment and have every intention to continue it until my kids head off to college, university, or a trade school. If anything, I have considered taking a two ETF approach to my personal investing. The simplicity makes the strategy very tempting. For those of you who are interested, my Investment Holdings to show the updated positions in VCN and VXC after the buy earlier this month.
