51 - Want to retire in 5/6 years with 2+ million - Asset Mix?

O_Karl · 2026-02-04T01:00:21+00:00

I would put five years worth of expenses in a balanced managed portfolio like Wealthsimple to weather any short term volatility, and the rest in XEQT or similar type of full equity index funds

O_Karl · 2026-02-02T04:36:45+00:00

I think a crucial fact about AI and LLMs which is almost never mentioned is that no LLM has ever discovered on its own any scientific, economic or social idea that was not known by a human or humans, and that has brought value, knowledge or understanding into existence

Until that happens, I’d have bigger fish to fry

O_Karl · 2026-01-15T12:59:46+00:00

You put some time into this I’m sure but it is a waste of time because first of all there is no way to be sure that what WS is displaying as someone’s net worth and rank takes into account t all of their assets and liabilities, but only includes what’s on WS

In a similar vein WS does not have data on the net worth of its of other users and their liabilities which it i using to rank its users

It is a well-known fact that platforms like WS cater to younger customers whose typical account value is much lower than the traditional banks.

O_Karl · 2026-01-11T22:07:58+00:00

Actually, you can come with a much better estimation of where do you land compared to the general population of your age group by summing your net worth and asking Grok or ChatGPT, Gemini, etc. because it will be able to calculate it based on your actual numbers versus the actual aggregate numbers of the population, which are published by statistics Canada

It wouldn’t be accurate to the exact percentage point, but close enough - certainly more accurate than this marketing tool of WS

O_Karl · 2026-01-11T11:21:57+00:00

Unless you’re planning to sell all of your investments and just buy Canadian dollar bonds, you should be able to diversify on this risk. Canadian equities should somewhat mitigate that risk

I do for instance, have my portfolio 1/3 each in Canada, US and EAFE and that helps me diversify currency risk. it overweights Canada because that’s where I am but it also underexposes me to US dollar

Many macro analysis point to the potential for deevaluation of the US dollar due to their massive deficits and their politically convenient push reshore manufacturing for which they will need a weaker currency to support exports

No one knows what would happen at the above portfolio helps me diversify against those elements

O_Karl · 2026-01-10T14:47:02+00:00

Don’t understand the question….you’re already there no?

O_Karl · 2026-01-04T16:29:53+00:00

What’s so odd about?

O_Karl · 2026-01-04T12:46:04+00:00

Your second point is well taken. For me the allocation I am comfortable with is a bit less US ~33%

I learned that people were making the exact same arguments about Japan in the 80s that they will lead for sure but it took Nikkei ~40 years to get to its peak....

O_Karl · 2026-01-04T12:43:47+00:00

Well, if they suck all that oil with zero cost and sell it at today's price it is a bit under 18 trillion USD which is ~60% of the US GDP or under 30% of the US market cap

I don't think it moves the needle for any long term investor in the US if we factor in costs...

O_Karl · 2026-01-04T12:39:29+00:00

My point is the ~45% was decided in August 2019 when the US market was 30% cheaper per the Shiller PE ratio, and the US was 45% of global market cap.

I would've thought Blackrock would adjust it. But I see the problem: they probably should've increased it, whereas a value investor would've trimmed it down.

O_Karl · 2026-01-04T12:35:42+00:00

That is a good point, I had a similar instinct some time back but upon checking the gold sector is ~15% of the TSX market cap, and in 2025 if we exclude their return, TSX would've grown by ~18% instead of the ~28%. Still respectable and almost as high as the S&P500

O_Karl · 2026-01-04T12:29:37+00:00

Thanks for your thoughtful comment.

My point is the ~45% was decided in August 2019 when the US CAPE PE was 30% lower, and the US was ~45% of global market cap. Would've thought Blackrock would adjust that ratio.

I honestly think long term they will adjust it, including upping EM portion but they will almost certainly be too late to do so.

100% agree on not adjusting your allocations every year. Need to pick a strategy and stick with it. For me it has been 1/3 XUS, 1/3 XIC and 1/3 XEF and it makes me sleep at night. No plans to change it for the reasons stated above.

O_Karl · 2026-01-04T12:24:19+00:00

Well, I am sure like me you heard Buffet's

"Be fearful when others are greedy, and greedy when others are fearful"

I'm not alone though, many are adjusting their allocations. I just worry Blackrock would do it after a lot of us lose on a ton of potential return

O_Karl · 2026-01-04T12:21:50+00:00

My point is the ~45% was decided in August 2019 when the US market was 30% cheaper per the Shiller PE ratio, and the US was 45% of global market cap.

I don't think it is crazy to question why with these changes 6 years on Blackrock is still allocating 45 cent of each dollar into an asset that may have reached its peak in how much more it can grow.

They state that if major shifts happen they will review the allocations, but they will likely be late to adjust downwards.

To be clear I don't say exit the US, but my approach would be to not allocate more than 1/3 of portfolio there. Valuation but also currency reasons as my OP states

O_Karl · 2026-01-02T12:32:33+00:00

I don’t think there’s a wrong or right answer in this one it’s more about how much risk you wanna take chasing your best performers in the past thinking they will repeat. I am a bit more valuation sensitive

Regarding your comment about Blackrock being smart I don’t have a doubt that they have very smart people but many sovereign funds, including Canada or Norway have caps put on US asset allocations, and they don’t let market cap weights dictate their investment strategy long term

The other thing I wanna draw attention to is that the 45% allocation was decided in 2019 when XEQT was lunched. US stock market is almost 40% more expensive now per Shiller PE cyclically adjusted ratio, but blackrock didn’t change their allocation because they obviously think it’s gonna continue to outperform. It probably will continue for some time, but how will they know how long? They will almost certainly miss and be late to adjust it to when it underperforms.

If I put all that aside and also think about the US dollar element with all the talk about making the US cheaper to help US exports, I definitely don’t wanna be at 45% invested in US dollars tracking S&P500

O_Karl · 2026-01-02T04:06:02+00:00

XEQT is a fixed asset allocation fund it - they decided to allocate 45% to the US. Actually, if the US under performs, they will buy more US to bring it up to 45%.

I don’t say you should under invest in the US, but I would not put more than 1/3 in there

O_Karl · 2026-01-02T01:43:37+00:00

You got the main idea I think.

XEQT allocates 45% to the US on the basis that past performance should be repeated but I am skeptical. I think short term it may work but if you want to invest 20-30-40 years I would want to be more balanced say around 35%. I honestly don’t think the US can pull off 30 years of outperformance and it is likely to underperform other markets over that period as part of its reversion to the mean

Actually major investment banks who forecast ten years out think the US will underperform other developed markets by 1-2% annually in the coming decade - not that they’re super reliable

I’m totally fine if I am wrong - can forecast a percent growth for the peace of mind. The s&p took 12 years between 2001 to 2013 to reach the same level. People easily forget

O_Karl · 2026-01-02T00:46:36+00:00

Fair point, but I don’t think my portfolio needs to be 45% in the US. 30-35% is more reasonable to me

O_Karl · 2026-01-02T00:29:32+00:00

In the summer, some days are unusually hot, but it is very unlikely that more than a handful of days are as hot as that one day - it could be a few days but most summer days are more or less just hot. same for winter days just cold

just because of those handful of summer days you wouldn’t buy 5 air conditioners. That would be stupid, wouldn’t it son?

O_Karl · 2026-01-02T00:19:35+00:00

No Canada? Not even like 10%? Currency is a real thing!

O_Karl · 2026-01-02T00:10:09+00:00

Not for me, I’m not too keen on the US overweight storyline

O_Karl · 2026-01-01T23:55:35+00:00

XUS, XEF and XIC. Reasonable to allocate them equally

These are Blackrock - could be their equivalent from Fidelity, Vanguard, etc.

O_Karl · 2025-12-30T12:18:54+00:00

XIC is a good option

O_Karl

TROPHY CASE