Saturday, March 31, 2018

Investing Performance Q1 2018



It's been a brutal start to the year with the S&P TSX down -5% so far and only up a scant 6.7% in the last 5 years. The US S&P 500 is down -1,1%. Having a portfolio made up of only Canadian Bacon stocks has NOT been the place to be.

Well, it hasn't for me so far, but I have another 9 years before I will tap this fund for retirement income.


I currently collect $2300 a month in pension income and am fully retired. This account is a supplement to that.

You should be invested in a portfolio that is globally diversified in index funds in my opinion like I have in my wife's RRSP and LIRA. This will help you sleep at night and remain balanced. I am 100% Canadian Bacon individual dividend paying stocks.

Let's see how we all did compared to the index and also her funds overall performance.


My Account

Started the year with $89,656 and ended the quarter with $83,888. That's a loss of -6.4%. That is also more than 1.5% of what the index lost. Looks like so far in 2018 I am not smarter than the index.

I also contributed 3K in cash to the fund as my annual RSP contribution. This brings my realized loss to -10%. I still have 10K in room but I didn't have enough cash to fund the limit. Maybe next year.

My stock holdings are; AQN, BCE, BMO, BNS, CM, ECI, EMA, ENB, FTS, NA, POW, RY, TD & TRP.

Cash = $241.40

The account distributes $3,869 in dividends annually. That is another $322.41 every month I can add to my income when the time comes. That monthly will grow in the next 9 years as the companies I own increase their dividends. That is why I'm invested here. I plan on keeping an income producing portfolio now and continuing when I turn 71 and convert to a RRIF.

Total Dividend Yield is 4.83%

Her RRSP Account

Started the year with $99,161 then added 3K in cash to total $ 102,161. Her RRSP is now at $103,234 which represents a gain of $1,073 or 1%.

This globally diversified portfolio of index funds beat the index by 6%.

It consists of XAW, (40%) XIC, (20%)  XQB (20%) & ZPR (20%)

I have split her portfolio into a traditional 60/40 balanced portfolio (except for the addition of a preffered ETF). Boring as hell YES. She wants it that way and doesn't want me to take any unnecessary investment risk with her retirement savings. I can't really blame her as it seems to me I suck at picking stocks. Not really, I just leave her money alone and watch it grow. So far so good as she is way ahead of the TSX in the first quarter of 2018.

Cash = $7,597. 94

Her PF throws off $2,564 dividends annually.

Total Yield = 3%

I have modelled her PF after heeding the advice of Garth Turner over at greaterfool.ca

You would do well to become a regular reader of his blog IMO.

So far it's working out. We just take what the market gives us.


Her LIRA (Locked In Retirement Account)

This is a hybrid portfolio which I'm going to change to a complete Greater Fool PF as mentioned above.

Started the year with $72,874. Her portfolio now stands at $71,330. This is a cash loss of $1,544 or -2.1% in percentage terms. We can't contribute to this account, all I can do is reinvest the dividends it throws off. 


I have screwed with this account during the quarter after the volatility in February and March. I wanted to bring some fixed income into her account after also investing 100% in Canadian Bacon dividend paying stocks. To do this I sold off EMA, FTS, ECI, T, KDX and ENB.

It was tough letting go of these dividend payers but necessary to bring her PF to balance. The biggest loser was one of my worst investments ever. It figures it would be a gold stock. It is being sold to Hecla Mining and I don't want to own any gold companies in the frightened states of america. So I dumped it for a total loss of about 50%. Ouch!

Right now the portfolio components are; BNS, CM, NA, RY, TD, ZAG (20%) & XPF (20%)
It is still too Canadian bank heavy. I have also decided to sell all her individual stocks and buy index funds with a target date of May 1 2018 to implement that.

That again would bring this account to a 60/40 balanced portfolio as recommended by Garth Turner. With 20% of the fixed income component coming from prefered shares to juice the return a bit.


My wife still works PT so the goal here is to preserve what she has and invest in a low risk PF. I am still screwing with the mix and really need to stop and leave it alone. Once she has a PF of index funds I won't ever touch this account again except to re-balance once a year.

Cash = $9,020.91

She earns $2,278 in annual dividends

Total Yield = 4.49%

My Q1 Takeaway

I'm the biggest loser and my wife's accounts in total are basically flat. When compared to the index it is best to get the fack out of Canada eh!

At least look at some index funds to help you accomplish that and make some money. My goal is just to grow my dividend income and not to stress over minor short term losses. It really means nothing to me as I am an income investor. Growing the income in retirement is the ultimate goal. If my yield goes down then I have to revisit what stocks I own.

Until that happens I will continue to hold what I have.

I also hold an emergency cash fund with close to 25K in it.

It's fun and necessary to look at short term performance but this is a long term plan.

I also have an open investment account that is 100% to the nuts invested with borrowed money. It is funded by a HELOC. I will be winding it down by by May 1 because I don't want these high interest payments in retirement and my wife is not on board investing with leveraged money.

Lessons and Looming Changes 

  • I am NOT smarter than the market
  • to become more of an investor in 2018
  • implement a PF re-balance in May 2018
  • with a small amount of money these index funds give greater exposure to the rest of the world
  • Canadian Bacon tastes great but sucks as an investment
  • only in a stock market meltdown do you learn the best lessons
  • I need to add more fixed income to my retirement portfolio
How are you doing so far in 2018? Has the latest market action caused you to make any changes to your PF?


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7 comments:

  1. Here's some advices:

    Don't worry about the exchange rate and invest some of your portfolio in the US (25-50%).
    Look for high ROE and good growth stocks.
    Dividends are interesting but usually, high ROE means mature business so you'll get less growth with your stocks.

    ReplyDelete
    Replies
    1. I suck at picking US stocks but will look at the Dogs of the Dow for ideas. Thanks for dropping by Penetrator.

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  2. With a minimum of $150,000 to invest you can get Turner Investments to do your portfolio and probably get a better return....you can still invest money yourself with the remaining money

    ReplyDelete
  3. When we were in the accumulation phase we held about 34 stocks and 5 funds. Of the 34 five were US stocks. We also sold at times to take profit and would re-buy or add a new stock. After about 6 years we were about even, which means we actually lost money.
    Then we found Connolly and began getting rid of the funds, GIC's and Non-dividend growth stocks. We ended up with about 20 stocks, some were higher yields. Another 6 years and we began trimming again, realizing the higher yields were not growing and did not do well through the Fin Crisis. In the end we now own 12 DG stocks in our 2 RRIF's, 2 TFSA and 3 Non Reg accounts. We have 5 banks, 3 Pipeline, 2 Comm and 2 Utl. We did have 2 US stocks but sold them when the Cdn$ was low and they were high.
    From the time we found Connolly our capital has grown, but more importantly our Income, from $15k to over $100k. We don't watch price or care about the market value of our holdings, just if the Income continues to grow. I would not suggest others follow our strategy, but I do know we’d be much further ahead (our Income) had I trimmed the 34 stocks to just those 12. We have the history since that time and went back to calculate what our income would be if we had invested in the concentrated portfolio.
    We might have a bit greater growth had kept the US stocks, but I don’t regret just holding Cdn.
    I’ve recommended to our son, who lives in the US, to consider:
    LOW 1.94%
    HRL 2.10%
    CAR 3.54%
    MDT 2.12%
    VFC 2.21%
    BEN 2.77%
    OTW 2.20%
    APD 2.60%
    PEP 3.45%
    JNJ 2.95%
    These were the best of the Dividend Aristocrats with DG of 10% or higher per year.

    ReplyDelete
    Replies
    1. Once again great advice. I hardly ever look at my RRSP. I'm happy with the stocks I have and will buy more or add to positions as the dividend income builds up or I have new money to put in. I love the DG strategy and firmly believe it is the best way forward and to stay that way in retirement. Continued success:)

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