[In yesterday’s post, Phil gave us some background on his situation and his portfolio. Today, he talks about how current holdings are split between his and his wife’s registered and taxable accounts.]
Our Portfolio
Our portfolio is comprised of six different accounts. I’ve listed our target weight and the actual market weight of each security as of June 15/09.
Phil’s RSP
Below are the holdings of my RSP, with target weights and actual weights (both expressed in terms of the overall value of the account, not the portfolio as a whole). The securities marked with a * are the ones I plan to sell as soon as I can cover my average cost. I have made several mistakes in assembling this portfolio. For example, I bought XSP and XIN before I learned about the cheaper USD denominated alternatives. The clear message I get from looking at my RSP portfolio is that I need to dramatically bump up my fixed income.
| Security | Target Weight | Actual Weight |
|---|---|---|
| Candian Equity | 8% | 26% |
| XIC* – 0% XIU – 3% XEG – 5% | XIC – 15% XIU – 5% XEG – 6% | |
| US Equity | 19% | 17% |
| VTI – 7% XSP* – 0% CLU – 8% VBR – 4% | VTI – 5% XSP – 2% CLU – 5% VBR – 5% | |
| International | 14% | 6% |
| VEA – 7% XIN* – 0% CIE – 7% LifePoints Fund* – 0% | VEA – 0% XIN – 6% CIE – 0% LifePoints Fund – 34% | |
| Emerging Markets | 9% | 4% |
| VWO – 5% CBQ – 4% | VWO – 4% CBQ – 0% | |
| Fixed Income | 32% | 5% |
| Govt. Bonds – 5% RRBs – 5% Corporate bonds – 5% Preferreds – 3% XCB – 2% Short-term GIC – 4% Mid-term GIC – 3% Long-term GIC – 3% | XCB – 5% | |
| Cash | 2% | 5% |
| Alternative Investments | 16% | 5% |
| XRE – 5% GLD – 5% CIF – 2% CWW – 2% COW – 2% | XRE – 3% CWW – 2% |
Bonnie’s RSP
Like my RSP, Bonnie’s RSP is almost 40% tied up in the Life Points fund. Bonnie has more protection on the fixed income side with a 3 year GIC from TD Mortgage Corp and a corporate bond from Scotia Capital (maturing in 2011), but apart from that our RSPs are very similar. Like my RSP, the investment horizon for this account is definitely long term (+30 years). [Ed. Note: For the sake of brevity, I’ve dropped the actual allocation but it is similar to Phil’s table above]
| Security | Target Weight | Actual Weight |
|---|---|---|
| Candian Equity | 8% | 16% |
| US Equity | 19% | 11% |
| International | 14% | 52% |
| Emerging Markets | 9% | 7% |
| Fixed Income | 32% | 12% |
| Cash | 2% | 0% |
| Alternative Investments | 16% | 3% |
Joint Non-registered brokerage account
This account is in shambles. In addition to putting us in the Life Points fund, our advisor also suggested we dump a sizeable sum on a basket of six Canadian securities (CIBC, Royal Bank, TD Bank, Potash Corp., Shoppers Drug Mart plus Enbridge, which I recently sold for a small profit). The US ETFs are pet projects of mine and have taken a big beating in recent months. I do not think 5 stocks (or 7 if we include the ETFs) are enough to eliminate market risk (especially since 3 of them are in the same industry – Canadian banks). I don’t even feel 100% comfortable holding individual stocks, but if one wants to go down this path a much broader basket is needed. [Ed. Note: The Canadian Equity portion targets consists of 2% each in Royal Bank, TD Bank, Potash Corp., Barrick, Encana, Shopper’s Drug Mart, Canadian Hydro Developers, Rugged.com plus XIC, XEG, CDZ and CPD. The US ETFs include VTI, PZD and PBW].
| Security | Target Weight | Actual Weight |
|---|---|---|
| Candian Equity | 46% | 96% |
| US Equity | 9% | 4% |
| International | 4% | 0% |
| Emerging Markets | 4% | 0% |
| Fixed Income | 20% | 0% |
| Cash | 12% | 0% |
| XRE | 5% | 0% |
Phil’s TFSA
My TFSA is currently empty. In a very foolish attempt to time the market, I liquidated my TFSA account in early January and put all of it into HOU, a leveraged ETF offered by Horizons Beta Pro that is long on oil (NYMEX crude futures). I made the trade through an account with Questrade (See Questrade Review). I have not included the Questrade account in my portfolio because I intend on shutting it down once (and if) HOU returns to my average cost. It was very foolish to get involved with a product I didn’t fully understand (e.g. I’m not convinced HOU actually does what it says it does). So it’s a waiting game for now.
Bonnie’s TFSA
We made the full contribution to this account (ING High interest savings) in January but subsequently withdrew the full amount to put against our mortgage. We are waiting until 2010 to re-contribute. Our intention for both TFSA accounts is to concentrate on building a bond ladder through direct bond purchases.
Joint Savings Account
Come June 2009, our intention is to plough anything we have leftover (after monthly RSP and TFSA contributions and a small contribution to our non-registered account) into this account. We would like to build a large cash cushion to prepare for a potential maternity leave and to save for a hopeful cottage purchase one day. The yields right now are very low but I’m OK with this because it’s risk free (if and when our balance ever exceeds $100 k we will open an account at another branch, or open individual savings accounts, etc. so as to qualify for full CDIC protection)
What we are hoping to get is candid feedback on the target weights of the securities in our portfolio, our choice of securities and our strategy with respect to spreading our investments out across the six accounts that comprise our portfolio.
