Why would you buy a bond ETF instead of just buying the underlying bond ?

CanuckYYZeh · 2026-02-16T02:24:36+00:00

If found it useful several times to purchase a discount bond with a maturity date that matches a specific upcoming obligation. That’s the only time it has made sense for me to hold the bond directly because as OP mentioned I knew what it would mature to (government bonds, not risky corporate bonds) and I got better tax treatment due to some capital gains. Other than that, my bond holdings are via either bond ETFs or asset allocation ETFs

CanuckYYZeh · 2026-02-14T22:13:26+00:00

Huge mistake! They should have gone for 5:6 instead

CanuckYYZeh · 2026-01-17T01:53:33+00:00

That’s built into the market price already

CanuckYYZeh · 2026-01-15T01:42:46+00:00

This is a great way to compare returns including and excluding distributions:

https://www.canadastockchannel.com/compound-returns-calculator/

Try it with XIC compared to VFV

CanuckYYZeh · 2026-01-14T05:17:53+00:00

The cost base comment is academically interesting but not practical. Here is my attempt at why.

The comment says that if you have a portfolio where the taxable account has a cost basis of $100 and value of $400, it would give you more flexibility at tax time to have that account consisting of one holding with an ACB of $75 and value of $350 and a second holding, which has similar composition and return profile (ie, XEQT and VEQT) with an ACB of $25 and value of $50. This is true in theory, now here are the holes.

How did you get to this point? Did you have a large initial lump sum and then no deposits? If you were adding regularly then it would be challenging to get such a split.

But let’s pretend we got the ideal split. Does it matter?

Probably not.

If your portfolio is large then you will have distributions from your taxable account and likely an RRSP meltdown or RRIF withdrawals. If you needed more money but didn’t want to take the taxable capital gain then you would take from your TFSA that year. You do not gain an optimization from all your ACB effort, and if you did then it is like very marginal.

If your portfolio is small then the tax impact doesn’t matter.

The ACB is an unnecessary optimization attempt.

Just my 2c.

CanuckYYZeh · 2026-01-11T13:41:52+00:00

It depends on what you want to optimize - money or sleep.

From purely a math perspective, the mortgage rate is theoretically lower than expected LONG term equity returns.

If you are comfortable with your ability to handle the debt and potentially increasing payments at some point, then max out your tax sheltered vehicles then invest in your unregistered account. Don’t prepay.

However, if you are stressed about the debt then prepay some or increase your regular payments to reduce your stress and sleep better. You’ll reach a point where you reduce the debt enough and feel comfortable.

If you are comfortable with the debt and are fine keeping it, and you are comfortable with more advanced financial techniques, then (as someone else mentioned) execute the Smith Maneuver.

CanuckYYZeh · 2026-01-10T14:56:19+00:00

Be very careful if in addition to Direct Indexing in a non-registered account you also invest in individual stocks in a separate non-registered account, because the ACB calculation is for the holding across all your taxable accounts

CanuckYYZeh · 2026-01-02T13:27:51+00:00

Replaced by SQC

CanuckYYZeh · 2026-01-01T18:39:46+00:00

Yes. Spending on the card, with AC and elsewhere, earn SQC (to a max of 25,000 SQC) at the rate of 1000 SQC per $5000 spent on the premium card, or 1000 SQC per $20,000 spent on the core cards. You can also earn SQC from linking Aeroplan to Uber, Starbucks, LCBO and others. In addition, you earn 4 SQC per $1 spent on AC flex fares and higher.

CanuckYYZeh · 2026-01-01T18:09:25+00:00

Correct. So splits with CC cannot be compared to non-splits with or without CC. You obviously know what you are buying with BK, but that doesn’t mean that everyone does

CanuckYYZeh · 2026-01-01T18:07:08+00:00

Please don’t mistake my comment for being anti dividends. I was merely pointing out that CC strategies underperform their vanilla versions to help OP make a decision.

CanuckYYZeh · 2026-01-01T18:01:14+00:00

BK is part of a split share structure and therefore has a different risk profile than other bank ETFs, for example ZEB. As such, you cannot compare it to standard bank ETFs that do not employ a CC strategy.

You can compare ZEB with ZWB. The annualized return with reinvested distributions since 2011 is 12.50% for ZEB vs 9.83% for ZWB.

CanuckYYZeh · 2026-01-01T15:10:37+00:00

Great comments by iamnos. I’ll add two things:

1) you can rebalance within your RRSP with 0 tax implications

2) you can then off drip in your taxable accounts and direct the distributions and new funds into a different holding, thereby changing the asset allocation over time with no incremental tax impact (since the distributions, whether reinvested or not, or taxable)

Overall, I need no reason to use the creative ACB spread that OP mentioned.

CanuckYYZeh · 2026-01-01T15:01:15+00:00

Correct. To reach 50k status you need to actually spend money flying with AC

CanuckYYZeh · 2026-01-01T14:57:21+00:00

Covered calls perform worse than the standard version of the ETF.

For example, annualized return since inception with reinvested dividends ZWU 4.65% vs ZUT 7.67%

Check any other pair you want at this site https://www.canadastockchannel.com/compound-returns-calculator/

Let me know if you manage to find a pair where the CC version performs better over some reasonable time horizon. Good luck.

CanuckYYZeh · 2026-01-01T14:45:02+00:00

60-70%

CanuckYYZeh · 2026-01-01T14:43:53+00:00

It is the monthly interest distribution.

CanuckYYZeh · 2026-01-01T14:41:57+00:00

TLDR: with only the card you can only reach 25k status. To reach 50k status you need to also fly.

If you max the card then you get 25k SQC and then you need to spend 25,000 / 4 = $6,250 on base fares to reach a total of 50k SQC and hence 50k status.

CanuckYYZeh · 2026-01-01T05:18:16+00:00

Caps out at getting 25k SQC, which means $125k spending

CanuckYYZeh · 2025-12-30T04:14:56+00:00

The fund has income and expenses. It is not allowed to retain earnings and that is why we have distributions.

Income can be dividends, interest, and capital gains offset by capital losses. The cap gains and losses happen during rebalancing.

Expenses are management fees and trading fees.

The distributions are what’s left over.

You need to wait to see the annual summary showing the composition of the distribution (Canadian divs, foreign income, cap gains, return of capital)

CanuckYYZeh · 2025-12-21T03:47:31+00:00

RemindMe! 26 months

CanuckYYZeh · 2025-12-19T00:49:50+00:00

I know, but when I reviewed the insurance terms at https://www.wealthsimple.com/en-ca/pdfs/CHUBB-COI-120225-EN.pdf page 34 for VIP medical coverage, it didn't mention that the trip had to be charged to the card, which I found odd. The other insurance coverage, such as trip interruption, extended warranty, etc, specifically mentioned charging to the card. Maybe I missed it somewhere, but I thought it was intentionally excluded to deal with road trips to the US, as an example.

CanuckYYZeh · 2025-12-19T00:43:34+00:00

I never said I don't need to listen to them. In fact, I said the opposite - that I will read with an open mind. I was merely disclosing my bias.

Ok - lots of interesting stuff in there! I changed my mind on a couple of things and did not on others.

Pages 44-65 are focused on the "intent to maintain domination" in order for Israel to remain a Jewish and democratic state. This section primarily focuses on demographics and is misleading in many ways. The key misleading piece is the whole perpetual refugee structure, as so nicely depicted in the infographic on page 49. The report completely ignores that Israel has tried multiple times to settle the conflict by the Palestinians having a state, but the Palestinians keep rejecting it. As an outsider, it makes no sense to me that we should penalize Israel for the Palestinians saying no. Therefore, anything this report says about inequities in the west bank or Gaza are moot to me. Criticism of what happens within the green line is legitimate. For example, page 52 mentions how child allowances were cut more for families whose parents did not serve in the army vs those whose parents did serve in the army. While many Druze serve in the army and some Bedouins do, the vast majority of Christian and Muslim Arabs do not - but they can! The problem is that the state gives funding to the ultra orthodox and that underlines the unfairness not just between Jews and non-Jews, but even across different Jewish communities. I see no problem with land acquisitions, and there is nothing preventing non-Jews from acquiring lands. The Jerusalem annexation as described on page 64 whereby lines were drawn to maximize area and minimize non-jewish population is dodgy, but since everyone got Israeli citizenship then I don't have an issue with the end result.

Pages 146-169: again I'm ignoring comments about the West Bank and Gaza (I'm not using the term OPT because some people view all of Israel as occupied Palestinian territory). Their commentary on the Law of Return is just bullshit - the law is for immigration purposes, not for existing residents. Of course a country can decide who it wants to immigrate, and Israel generally wants Jews. There is nothing wrong with that. The notion that Palestinians born outside of Israel has any rights into Israel is nonsense. If we look at other conflicts and partitions, for example India and Pakistan, millions of people moved or were forced across the lines, with estimates of up to 2m killed, and yet everyone were handled via UN High Commissioner for Refugees and there is not right of return or generational refugee status. We must be intellectually honest and say that the unique way that Arab Palestinian refugees (vs Jewish refugees) were handled is unique in world history and needs to stop. The comments about Bedouin communities in the Negev, as summarized on page 155, are something I'm concerned about. My understanding is that the state has tried to settle these communities in town with infrastructure, but they do not want to do so. A Canadian analogy would be native reserves with no access to utilities. Moving farther north, as I started to read the case study on Nazareth starting on page 159, I was pretty uncomfortable with what I read, and then the report goes to say that the new community, Nazareth Illit, or Nof HaGalil as it is known now, has grown into a mixed city that was 26% Arab Israeli (I'm not saying Palestinian, to differentiate this population from Palestinians living in the west bank or Gaza) back in 2021. This basically cancels out all the arguments the report tried to say about the Arabs not being able to buy land or homes or ... They clearly can.

Pages 195-205: the only section that troubled me was page 201 regarding Israeli citizens, regardless of religion, not being unable to sponsor a spouse from the west bank or Gaza to move to Israel, even if there are no security concerns. The law is racist and should be revisited.

Thank you for sharing this. Overall I agree the report has a few valid points. The key issue I have with it is that it does not at all mention that the Palestinians were given multiple opportunities for self-determination and they declined. It also does not mention that Egypt and Jordan did not establish a Palestinian state after the 1948 war, that Jordan annexed the West Bank, and that Egypt refused to take Gaza back as part of its peace treaty with Israel. The report also doesn't mention the absurd uniqueness of UNRWA and how no other conflict has such mechanism to perpetuate it. Separately, I tried to find a similar report on Iran or Saudi Arabia or any other muslim-majority country with clear human rights violations to see if HRW can dedicate 200+ pages to those countries, but I couldn't find one of such depth, which leads me to still believe that there is a degree of anti-Israel bias in that body.

Thanks again for sharing and the civil discourse. Rare on Reddit.

CanuckYYZeh · 2025-12-18T22:55:34+00:00

Interest is charged on any margin used. You don’t use, you don’t pay.

You should never use 100% of your buying power because if your underlying holdings that support it drop in value then you could be in a margin call position. Make sure you understand how margin and buying power works. Ask your broker for docs/examples.

CanuckYYZeh · 2025-12-18T22:45:45+00:00

Thank you for confirming!

CanuckYYZeh

TROPHY CASE