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Ben Felix - Pre VS After Tax Asset Allocation

Thumbnail of the video “Ben Felix - Pre VS After Tax Asset Allocation”
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Author: Ben Felix
Categories: Personal Finance
Tags: finance
Views: 2 · Last viewed: 2026-10-16 10:03 UTC

Short Summary

Main recommendation: Evaluate your asset allocation on an after-tax basis, and hold the same asset mix across all account types rather than placing bonds in an RRSP and stocks in a TFSA. Because the government has a claim on part of an RRSP balance, an RRSP holding bonds effectively shrinks the bond share and makes the overall portfolio more aggressive than intended.

Key Points

  • An RRSP balance is only partly yours: in the video's example, a $50,000 RRSP at a 30% withdrawal tax rate is worth $35,000 after tax.
  • Placing all bonds in the RRSP and all stocks in the TFSA turns a 50/50 pre-tax mix into roughly 59% stocks and 41% bonds after tax.
  • Holding identical proportions in both accounts keeps the pre-tax and after-tax allocations the same, avoiding the hidden shift.
  • In the video's scenarios, the after-tax allocation determines the after-tax dollars in your pocket: the $88,550 result from the equal-mix case matches the 59/41 case, while a 50/50 after-tax mix yields $88,400.
  • Many investors look only at pre-tax allocation, so an asset location strategy can unintentionally leave them more aggressive than their risk profile supports.

Details Worth Noting

  • Concrete instructions: Estimate your after-tax asset allocation by accounting for the expected tax liability on RRSP holdings, then check whether that after-tax mix matches your risk profile.
  • Concrete instructions: If you hold the same asset mix in all accounts, your pre-tax and after-tax allocations match, so no separate tax adjustment is needed.
  • Concrete instructions: If you use asset location (for example, bonds in the RRSP), offset it by adjusting the rest of your holdings so the after-tax mix still matches your target. The video's third example did this: $50,000 bonds in the RRSP, $7,500 bonds plus $42,500 stocks in the TFSA, giving 42.5% stocks and 57.5% bonds pre-tax and a 50/50 mix after tax.
  • The video's assumptions were 5% annual return for stocks, 3% for bonds, a 30% tax rate at withdrawal, and a one-year horizon, all for simplicity.
  • The speaker notes that a more aggressive-than-intended allocation may produce higher expected returns, so it is not always a bad outcome, but it still means the portfolio carries more risk than planned.
  • Accounting for after-tax allocation adds complexity to portfolio management, which the speaker says makes optimizing asset location harder; holding the same mix everywhere avoids these issues.

Bottom Line

Asset location decisions can quietly change your real risk level, so check your allocation after tax, not just on the statement. Holding the same mix across accounts is the simplest way to keep the two aligned.