If you’ve ever invested in mutual funds, hopefully you have done the math and were appalled by just how much you’re paying in management fees over the course of your life. This is why some cost-conscious Canadians have decided to ditch those high-fee mutual funds and take retirement into their own hands by opening a Questrade brokerage account and following a Canadian Couch Potato ETF portfolio.
It’s now possible to automate Canadian Couch Potato ETF portfolios in Questrade by setting up recurring contributions and using a portfolio management tool called Passiv. In this article we'll show you how.
Before we dive in, here's a bit about Passiv.
Passiv is a portfolio management tool that makes investing a breeze by automatically calculating available trades based on your target portfolio and the amount of cash in your account. Even better, it lets you execute those trades in your brokerage accounts in less than 10 seconds with its one-click trading feature. This means no more time spent doing calculations, maintaining spreadsheets and making trades.
Are you sold and ready to get started automating your Canadian Couch Potato ETF portfolio? Here's what you need to do.
Open a Self-directed Questrade account
First you'll need to have a self-directed investing account with Questrade account in order to use Passiv. That's because Questrade is the only Canadian broker that is able to integrated with Passiv securely via an open API (Application Programming Interface). Questrade is Canada’s top discount broker and has been in operation since 1999. Clients of Questrade can purchase ETFs for free which is ideal for anyone wanting to follow the Canadian Couch Potato model ETF portfolios. One thing to keep in mind when rebalancing is that you will pay a fee for selling your ETFs.
Questrade has a variety of account types such as RRSP, TFSA, RESP and Margin accounts. Clients also get access to a wide variety of tools. If you'd like to learn more about Questrade, here's a recent review.
Create a Passiv Account and Setup Your Target Portfolio
Assuming you already have an account with Questrade that's fully funded. You'll need to create an account Passiv and link your Questrade account to it. After you'll be prompted to set up your target portfolio by either importing your existing holdings or building your target portfolio manually.
Passiv will display the trades needed to maintain your portfolio's target allocation and give you an accuracy score to indicate how close you are to your target. By default it will show you which underweight ETFs in your target allocation should be purchased based on the available cash in your account. However you can alter the calculated trades to let you sell overweight assets, keep currencies separate and do dollar-cost averaging. Elite users can have those calculated trades placed in their Questrade account using one-click trades.
Bonus: Questrade is currently covering the cost of Passiv Elite for their clients.
Set Up Pre-authorized Deposits to Your Questrade Account
There's no reason to have your cash sitting idle in your chequing account. Instead, set up a pre-authoized deposit to your Questrade account and put your money to work. It may take a day or two for the money to enter your account, but don’t worry Passiv will let you know when the money arrives. Here is more information on how you can set up pre-authorized desposits.
Put Your Feet Up and Retire Easy
Occasionally, Passiv will send you notifications whenever dividends are paid or your portfolio drifts. To turn off cash notifications and adjust your portfolio drift threshold simply visit the Settings page found in the left pane.
Congratulations, you’ve just automated your Canadian Couch Potato ETF portfolio. Now you don't have to take shorter lunches or spend your precious free time making trades and updating spreadsheets. All you have to do is stick to your investment plan and not panic whenever there's a downturn in the markets.
Here are some key things you should know about Passiv:
- Passiv is an official partner with Questrade.
- Using Passiv will not void Questrade’s terms of service.
- Passiv takes security seriously and does not store your Questrade credentials or financial data.
- Passiv is not a financial advisor and does not make recommendations for your portfolio.
- You can link other Questrade accounts to your Passiv dashboard and manage them all as one target portfolio using the multi-account portfolio feature.