Best way to structure TFSA portfolio

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I want to know the basic structure of how to build my TFSA portfolio. I have a 5 year timeline before withdrawing funds from it. I am looking for a blend of dividends and growth at a medium risk. I need to know how to blend the model portfolios – whether to use CAD/USD foundational stocks, growth or income late stage portfolios, etc…. thanks in advance. OR – is Dan’s portfolio the one to follow as I do not need funds for a while.

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Asked on January 23, 2025 11:22 am
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Hey there. I know 5 years seems like "a while" but in terms of the market, I'd very much view 5 years as a short-term time horizon. Over this time you're likely to realize some ebbs and flows of the market and although over longer durations of time (lets say 10+ years) the markets have, for the most part, generated strong returns, a 5 year time horizon adds a bit more complexity to it.

By "withdrawing funds from it" do you simply mean living off some of this income in retirement, or do you mean you need to sell all of the holdings and withdraw it for a purchase or something?

Either or, if you are looking for all equity, I'd definitely say the Foundational Stock list would be one you could utilize to build out the portfolio. However, with a 5 year time horizon it may not be all that bad of an idea to consider integrated fixed income into your portfolio, which would provide a little bit of a volatility buffer. Ultimately, when we look to equities, they're always going to be the "high risk" investment versus something like fixed income. Even a blue-chip dividend paying equity would be high risk in relation to fixed income assets.

We can look no further to something like BCE, which is now 40%~ off its highs and has slowed its dividend growth down to nothing. Situations happen with equities, no matter how low volatility they seem to be.

That said, if you're simply looking to start withdrawing the funds for retirement and not having to sell the entire portfolio in 5 years for some particular purchase and can withstand a little bit of volatility, the Foundational Stocks are definitely a good starting point

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Posted by Dan Kent
Answered on January 24, 2025 10:06 am
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I just turned 60 and will not need these funds for at least 5 years. I will be using them for income then. I want to build up as much value in this account as possible in that time and can take some risk as I have other sources of income. This was just going to be my bonus fund to live the good life. thanks If I do get a little cautious - is there one or two fixed income ideas you have that will yield the most bang for the buck? thanks again.
(john@shakerinteriors.com at January 24, 2025 12:25 pm)
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Hey John. Bonds have become relatively easy to own these days with all of the fixed income funds available. However depending on the makeup of the rest of your portfolio, it is kind of difficult for me to say if you even need fixed income in that TFSA. Ultimately if it this is just bonus capital that you're utilizing to live the good life, you may find equities are appropriate. The only difficulty here is we are at all time highs in the market so "building up as much value in this account as possible" over the next 5 years is a bit tricky, because although it is never guaranteed, we are likely due for some sort of correction or flat market environment over the next bit due to the large runup in returns we've had. That said, many of the Foundationals have provided very strong income generation over the years. These dividend stocks could certainly fall into one of your "buckets" in terms of income generation in retirement. In terms of fixed income, I do like the simple aggregate bond indexes that have pretty much all different types of bonds and maturities in them. ZAG is a solid one from BMO. On the short-term end, UBIL, although it is a USD fund, pays out a pretty nice yield considering the current environment. It holds short-term US treasuries.
(Dan Kent at January 24, 2025 12:48 pm)