My Investment Portfolio

Time to start getting into the meat of things.

my investment approach and portfolio strategy have changed over time.

Going a bit back in time will hopefully help give some context on how I got to my current investment approach and why I feel this is the best approach to have taken for myself.

Prior to turning the age of majority (18 years old) and being able to make my own investment choices, my mother had put aside some money for me and had invested the funds in GICs (Guaranteed Investment Certificates). These are available in Canada and the U.S. equivalent would be called CDs (Certificate of Deposits). I’d also added to the total invested through self created small business ventures (you can only officially get a job at age 15 and I wanted to start working before that so I found ways to earn money myself) and part time jobs during that time. I’d learned the value of compound interest as my mother insisted that I sit in the personal banker’s office while the funds were invested or reinvested. The personal banker didn’t like having kids in her office however it was probably one of the best things my mother did for me on my path towards achieving financial independence. Heed my words for Lesson #1: Ignorance is not bliss when it comes to managing your money and investments. Understanding money will make anyone’s life easier. Not understanding it will make things more complicated. Watching the money grow year over year (those GICs paid 12%-13% annually back then as it was a time of high inflation) really got me excited, especially considering how long it took to earn and collect money from working. As I’m writing this, GICs pay much, much, much less. Should I have added “much” a few more times to emphasize that further?

By the time I’d turned 18, I’d picked up really informative (insert heavy eye-roll here) literature at the bank branch on other investing options. Namely, mutual funds. I’d had my prior experience with the personal banker when it came to GICs and they appeared to be the person to deal with to invest my money. Remember lesson #1 above? was I ever in for a shit-kicking (lesson #2 is coming shortly). Having read the glossy literature on the amazing superpowers of mutual funds and seeing the incredible recent returns in the precious metals mutual fund, I asked the personal banker to invest about half of my investments into that mutual fund. To be fair, she did try to dissuade me from putting so much of my money at the time into the precious metals mutual fund stating that it was a high risk investment. I was 18 with an intelligence far superior to the average person, I could do no wrong. I pushed ahead and had her place the order regardless. One week after the order had been placed, the precious metals mutual fund had lost 50% of its value. As I was so cooly calm and collected, I ran back to the bank branch with sweat running down my back and liquidated that mutual fund back to cash. I’d acquired Lesson #2: When something goes up in value, it can also go down. That was firmly burned into my psyche. I also came to understand Lesson #3: Buy low and sell high. Not the other way around. You need to know what you’re investing in and clearly I had not done my homework. Over time though, I would. This blog can’t just be about my stupid blunders even if they might be considered highly entertaining. As I write this blog post, my investment portfolio now sits at over $1.6 million so I did do some things right too.

As much as the mutual fund fiasco had humbled me, it didn’t deter me from applying lesson #1, lesson #2, and lesson #3 moving forward. I was going to acquire as much knowledge as possible in regards to investing and get my money to grow so it could eventually work for me. Not the other way around.

At this point, I’d been left with a bad taste in my mouth in regards to mutual funds. After some further reading, I was determined to beat the system. I wanted to buy broad based mutual funds which had gone down in price over a few days and then resell them a few days later when they would jump back up. Back to the bank branch I went and for a  few trades, it was going nicely. By the way, the internet was not a thing yet so I physically had to go there to complete the transaction each and every time. No big profits but I was growing my stash bit by bit. After about the fourth or fifth visit to the branch, the personal banker was fed up with me. She explained that I couldn’t buy and sell mutual funds at that frequency or additional fees would be charged. This is when she opened my eyes to opening a discount brokerage account.

From that point on, until 2017, I traded stocks using a swing trading technique. Mainly, I would buy a blue chip stock like a bank, a telecom company, a pipeline company, etc. I would watch that list of stocks and see if the price would drop over a few consecutive days. If the drop amounted to between 1%-2%, that was my trigger to buy it. Once bought, I immediately set a sell price at 0.25% above my purchase price and brokerage transaction fee combined. It worked even with only about $20,000 invested however I’d eventually work my way up to doing this with $700,000 to $800,000 a shot. I’d do this about four to six times a month. Most times, it would work in my favour selling within about 15 minutes after setting my sell order however sometimes it would not. Also, it was not replicable nor consistent. If it was that easy, everyone would do it and we’d all be driving lambos, chowing down on caviar while sailing the Mediterranean on our multiple mega yachts. So yeah, not that easy. Sometimes I would buy and I might have wait up to 6 months to see it go back to profit. Every transaction was a gamble (yes, looking back in time, I don’t consider what I had done as anything other than gambling). Also, it did wreak havoc on my nerves and required a very heavy, watchful eye. It was a full time job while holding a full time job. How do you maintain that when one day you should be retiring and enjoying the fruits of your labour? It was exhausting. And then, 2016 happened.

I was watching CBC News around August of 2016 and there was a story about a couple who had retired early in their 30s with a $1 million investment portfolio. I was intrigued. How? How did they manage it? The gist of it was investing in low cost broad based index ETFs (Exchange Traded Funds). Think mutual funds but traded like stocks on the stock exchange and costing very little compared to the fees charged on mutual funds. I had been completely unaware of this possibility until that time. I decided to investigate further as I’ve never found it good to rely on one source only even as good as it all sounded. It was a good decision. 

During that time, I continued my swing trading approach while setting up a spreadsheet of a mock balanced and globally diversified ETF portfolio. I wanted to see how it would perform in real time and at the same time backtrack as many years back to see if there was consistency throughout. This has allowed me to see how it reacts during boom times as well as during recessions. I also broadened my research on ETFs, along with acquiring the knowledge around the power of rebalancing (I’ll talk more on these specific topics in future blog posts). By early 2017, I had gone from a mock balanced and globally diversified ETF portfolio to the real deal. Over time, I would also come to see the value of holding a small amount of individual stocks in exceptional cases which I’ll explain more in a future blog post. The best part. It allowed me to free up my time and leave emotions, stress and uncertainty at the door. Something that had plagued me throughout my investing history. More to come on that too.

On that note, here is the overall investment portfolio setup:

My intent on a go forward basis is that whenever I make a material change to the portfolio setup, I will be posting it here so that things remain transparent.

In my next blog post, I’ll explain how to know whether the investment portfolio is competitive or not.

Anyone wish to share their investing journey? Investment plan? I’d love to hear from you.

9 thoughts on “My Investment Portfolio”

  1. 30% cash. I hope to use this to buy some safe stuff (as Garth would say).
    15% XIU
    50% XSP. I don’t trust Europe or Asia enough to buy there.
    5% in a mix of stocks that each have less than $1000 value. If I hear of a stock in the G&M that interests me, I buy it in the TFSA.

    Sold in January, just bought back in. Down 3.31% ytd.

    1. Thanks for commenting tkid. I appreciate it. You’re my first commenter! 😊

      Everyone has their comfort level. I elected to take the lump-sum of my employer pension right after my severance period ended with my former employer and the funds went to my LIRA (locked-in retirement account). The funds became available at the beginning of May 2022 and I bought ETFs on the spot with it. Markets had already dropped a bit before I bought but they continued to drop another 3% thereafter. As of today, not even a month later, the ETFs in the LIRA are sitting at +0.24% from the purchase price.

      From my own experience, better to be fully invested in the markets the moment you have the funds available to invest and leave them invested except for when you need to rebalance your portfolio to its target allocations. As an added bonus, I also receive the juicy dividends the moment I purchase the ETFs and that’s above and beyond the current +0.24% return mentioned above for the LIRA.

      I’ll write more on buying, holding and rebalancing an investment portfolio soon.

      Thanks again for your post.

      1. What keeps me out of the market is this is the year I may have to retire. I don’t have a house and am on leanfire standing financially. It’s hard to endure the losses when one doesn’t have enough.

        That said, if it wasn’t for Garth and his wisdom I would be in a much deeper financial hole.

        1. I don’t know the particulars of your circumstances however if you have the ability to hold back before retiring, it is something I would consider and did do myself. When my portfolio hit the $1 million value, I had debated retiring. After reviewing things, I decided to continue working a bit longer. It was the right thing to do at the time considering my circumstances.

          What really helps me sleep easier is that my portfolio churns out a dividend in the 3%+ range. Since I consider a 4% annual withdrawal to cover my expenses, it means I only need to consider potentially cashing out another 1% or less to cover the difference. This too will be part of an upcoming blog post…ugh…so many topics to cover. As I get better at writing all this out, hopefully I can pump out new posts more quickly.

  2. Thanks for sharing!
    Is this similar to the weightings you had in 2021?
    I’m keeping the same weighting this year as I ended with last year (I only plan to rebalance using the 5/25 rule)
    20% HTB (16.4% current)
    13% XIU (15% current)
    67% VOO/ZSP (68.6 current)

    One thing sticks out to me: the small weightings. What’s the point of 1% in BMO? if that was allocated to your worst (or best) performer instead it would make a ~$3K difference which amounts to a 0.17% change in your outcome. It doesn’t really seem worth the hassle.
    Personally, I don’t feel that any weighting under 5% serves any real purpose unless it’s a big gamble like crypto (which I am against) If I wanted something, but wanted it less than 5%, then there’s usually an existing ETF that captures it (like my XIU holding)

    1. My pleasure SoggyShorts. In regards to the BMO stock, it was the remnants of my Employee Share Ownership Plan (ESOP) when I left my former employer. I agree it’s not a lot but I’m very focussed on providing full transparency. Normally, while still working there, I would cash them out every 2 years as we could do so without any penalty (they would give you 50% top up of what you contributed yourself so not worth losing that free money unnecessarily) and then purchase ETFs. I’m currently sitting on enough cash for now so don’t see the need to liquidate it yet and I’ll collect the dividends in the meantime. It will eventually go though. I’ll be doing a blog post on why I hold all the various allocations of the investment portfolio in an upcoming blog post.

      As for your question on my 2021 portfolio, it is very close. I had debated posting the past portfolio allocations but decided against it. This blog is really about about the present as well as looking forward and I didn’t think it would add much value. I’m already having difficulty pacing myself with all I want to share (aka brain dump) on the blog so adding that on top of everything else might become overwhelming. I will be posting any changes I make going forward though as they occur as well as explaining why I’m doing it.

      Thank you very much for your comments and questions!

  3. Your investing experience is not unlike that of most people. Most of us have similar beginnings and also made less-than-optimal investment decisions.

    It’s pretty magical when one finally “sees the light” and realizes how easy and effective index ETFs can be. Like you, everything changed for me when I discovered this style of investing.

    Thanks for sharing your story! I’ll read your next post now. Looking forward to more from you.

    1. “Sees the light”! Lol. Quite true, Chrissy. It really was such a relief to learn about this investing option. I appreciate you passing by. Really appreciate reading your blog as well for the last few years. Hope you and M are doing well in your retirement.

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