I was asked by a friend to put together a simple portfolio. One parameter was that it should not be ‘too risky’, but that did not mean a ‘temporary’ drop of more than 10% below initial cost would be unacceptable. Also, the expected return had to be more than what was currently offered in a savings account at a bank, or what could be obtained by purchasing a GIC – not a difficult target to achieve.
The portfolio was not expected to be liquidated within 10 years, and of course, diversification of risk needed to be achieved. So I came up with the following suggestion, based on an assumed CAD 100,000 available to invest. I called it the Simple Six, because it consists of only six ETFs.
The Simple Six portfolio consists of:
300 units of Vanguard Canadian Aggregate Bond Index (VAB)
400 units of iShares Core High Quality Canadian Bond Index (XQB)
400 units of Vanguard Canadian Short-Term Bond Index (VSB)
1,000 units of Vanguard FTSE Canada All Cap Index ETF (VCN)
100 units of iShares MSCI All Country World Minimum Volatility (ACWV)
500 units of Vanguard Total World Stock ETF (VT)
I’ll explain my rationale in my next post.