The One Fund Solution

Categories Personal Finance

By now, you are well aware that I detest complexity in most areas of life. I am beginning to declutter my financial life as well.

The release of the Vanguard All-In-One Funds in January 2018 have been a game changer. VGRO is the one I currently own.

I have decided to follow the simplest strategy of all.

Buy VGRO in the TFSA each January.

With no RMD requirement, a TFSA should be the longest of long-term investments.

I love the pure simplicity of a financial plan that involves:

  • No financial advisor
  • No accountants
  • No lawyers
  • No insurance agents
  • No further taxes
  • Estate planning- All I need to do is complete the successor and beneficiary agreements on the account.
  • If I use an online discount broker there is no ETF purchase fees eg. Questrade is who I use.
  • TFSA is a TAX FREE account so:
  • No tracking ACB (adjusted cost base)
  • No tax loss harvesting
  • No tax gain harvesting

What other financial instrument or plan can you devise with a structure such as this?

Successor allows the TFSA to pass to my husband if he survives me and it continues on as a TFSA.

Beneficiary status allows the TFSA monies to flow to my children tax free. They will unlikely have any TFSA room but it will still pass tax free to them. My children will have 50% each of our TFSA.

VGRO is essentially an 80% global equities and 20% global bonds ETF. I will have immense diversification with just one ETF. Vanguard will take care of the rebalancing. And being in a tax free account, there is no adjusted cost base to track, no tax loss harvesting or tax gain harvesting issues. Plus the TFSA will not impact any pensions from their work or government programs in the future.

That means once I buy it- I DO NOTHING!

And that is what pure simplicity looks like.

I believe this product in this tax free vehicle will work very well for our family. There are no guarantees when investing in equities since I have zero control over it. All I can do is invest in an account with tax efficiency and buy a low cost broad based ETF with an excellent company such as Vanguard. It likely is as good as I can expect from equities investing.

And the greatest benefit would be that I would not waste another moment thinking about it after my yearly purchase each January. That alone is priceless.

I am on my path to design a financial life with decreasing complexity. This is certainly one part of it.

Blogging has been extremely helpful to focus my research to topics which interest me. You are welcome to agree, disagree or chuckle at my simplistic thinking and strategies. It’s all good.

I am trying to figure this all out for myself. I hope tracking all this online will serve to keep me accountable to myself. It is a journey after all. So cliche but so true.

5 thoughts on “The One Fund Solution

  1. That really is an elegant solution and using it in an amazing tax vehicle. I guess our equivalent in the US is the ROTH IRA but there are so many restrictions to it (phase out with higher incomes so you have to play the game and do backdoor IRAs, etc) and it only allows a $5500/yr/individual contribution.

    As you get older the mental faculties decline as well so having a 1 fund solution do the work for you is very appealing.

    1. Hey XRV!

      Our TFSA is your ROTH. But no restrictions on income. You can contribute 5500/ year once you turn 18 years old. Can also take it out anytime without taxes.

      This is a must do for any young person. And especially estate planning for professionals. Our children have DECADES to allow the assets to grow. I have read articles about families handing down their ROTH like investments generation after generation.

      XRV, the elegance of this approach is we all look at this 5500 as nothing. But when you stick this in the hands of an 18 year old- the excel spreadsheets take on this log growth after 30 plus years. It’s rather insane actually.

      And after 30 years, they would only be our ages!!!

    1. Hey GYM!

      This ETF will form a staple in my ETF investing. I have never been one for detail but I often know a good thing when I see it.

      I really liked your grocery shopping post. You can always tell the posts written by women. We are so practical!! 😊

  2. Hi Dr. MB!

    I think the TFSA is one of the best financial weapons for Canadians that is unfortunately misunderstood and under-utilized by most.

    Your plan to use VGRO is great! Simple and effective! Years from now, your family will thank you for this decision.

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