This is my scenario:

TFSA is maxed and has the emergency fund in CBIL. I have roughly equal money in RRSP (maxed) and my non-registered account.

I like to keep my overall portfolio at 50% stock ETFs (primarily VFV) and 50% low duration bond ETFs (primarily CBIL). I understand that this is a sub-optimal allocation, and I’m okay with that. This is thanks to childhood trauma from growing up too broke, and I’ll make up for the lower returns by spending less and investing more.

So far, I’ve kept VFV in my RRSP and CBIL in the non-registered account.

However, I’ve been wondering if it’d be better to switch the two around: Buy CBIL in the RRSP account and buy VFV in the non-registered account.

PROs:

  • CBIL-RRSP will grow less than VFV-RRSP -> lower “income” in retirement -> lower tax consequence.
  • VFV-non-reg profits will be taxed at the 50% (maybe higher in the future) inclusion rate.

CONs:

  • Can’t think of any at the moment. Help?

I’m also considering switching the TFSA to hold stocks instead of bonds, and have the emergency fund in the non-reg account. This makes sense too, right?

  • Victor Villas
    2•4 days ago

    My goto for this is Asset Location by Ben Felix.

    I just don’t care enough and hold the same ETFs in same proportion everywhere.

    But yes, to answer your question, it probably makes more sense to prioritize CBIL in RRSP. But the only way to answer this properly is to actually calculate the tax drag and make some assumptions on future returns.