You can check this for yourself by writing down the trailing return
of a Couch Potato Building Block portfolio and then comparing it against the «Category Average» figures on the Morningstar website.
Not exact matches
Sure, there are pieces that wouldn't look out
of place in West Elm, but then there are furnishings tailor - made for the middle - aged man cave, such as a massive black leather sofa with
built - in surround sound, a power - reclining feature, phone - charging ports and Bluetooth connectivity to allow
couch potatoes to play music from their smartphones.
Instead
of having received a big inheritance recently, let's say it arrived several years ago and you used it to
build a
Couch Potato portfolio with a mix 60 % stocks and 40 % bonds.
The
Couch Potato Portfolio is an investment strategy that keeps costs low by
building a diversified portfolio
of index funds.
An investor
building a small Global
Couch Potato portfolio could use VXC in place
of separate US and international holdings: that would reduce trading costs and complexity, as well as adding a bit more diversification with a slice
of emerging markets.
ETFs, or exchange - traded funds, have long been the cheap, boring
building blocks
of MoneySense's
Couch Potato portfolios.
If you're thinking about using ShareOwner's service to
build a
Couch Potato portfolio, I'll make a couple
of suggestions.
Dan is the contributing editor at MoneySense and author
of the Canadian
Couch Potato blog and is a big fan
of the low cost and simplicity
of portfolios
built on a relatively small number
of exchange - traded funds (ETFs)
After all, banks already offered index mutual funds with fees in that neighbourhood, and the TD e-Series Funds are dramatically cheaper: you can
build the Global
Couch Potato for a total cost
of just 0.37 %.
That's why I'm uneasy when I receive e-mails from readers who tell me how pleased they are with the results
of Couch Potato portfolios they've
built in the last couple
of years.
An investor can now
build a
Couch Potato portfolio with an annual management fee
of just 0.12 %, less than half what it cost just a few years ago.
Methodology: None
of the products we use to
build our
Couch Potato portfolios has been around for 20 years.
A
Couch Potato investor can
build a very efficient portfolio using a combination
of Canadian and U.S. - listed ETFs, but cross-border shopping involves a little savvy.
Then he evaluates the pros and cons
of the two main types
of building blocks for the
Couch Potato: index mutual funds and ETFs.
This includes a list
of 21 ETFs that can form the
building blocks
of virtually any
Couch Potato portfolio.
You can see a good example
of one in «
Build your own
Couch Potato Portfolio,» to the left.
We flirted with the idea, even going so far as programming a
couch -
potato style DIY portfolio into the calculator, but ultimately decided against it, because the DIY option is hands - down the cheapest across almost all cases, and we didn't want to waste all
of the time and effort we put into
building the calculator for it to always and forever return a DIY portfolio as the result.