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Discussion Starter #1
relatively new to investing, need some feedback on current portfolio:

- MCLEAN BUDDEN FIXED INC FD CL (MBU004) = 10%
- PHILLIPS HAGER & NORTH TOTAL R (PHN340) = 5%

- BMO (BMO) = 20%
- FORTIS (FTS) = 3%
- NTL BK (NA) = 5%
- RIOCAN REAL EST INVESTMENT TR (REI.UN) = 5%
- TRANSCDA CORP (TRP) = 4%
- CITIGROUP (C) = 4%
- APPLE (AAPL) = 10%

- ISHARES CDN S&P/TSX CAPPED ENE (XEG) = 10%
- ISHARES CDN MSCI EMERGING MKTS (XEM) = 10%
- VANGUARD EUROPE PACIFIC ETF (VEA) = 15%
- VANGUARD INDEX FDS VANGUARD TO (VTI) = 10%

have listed the % of each stock/ETF relative to current market value for total portfolio(120,000), my plan is to retire in 12.5 yrs but will work part-time after retirement and only draw a minimum amount monthly(est.$1000) from the portfolio, would like to moderately aggressive for the next 12.5 yrs and I guess my question is how does my portfolio look in regards to goals

really appreciate advice, thanks
 

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Can you tell us more about the kind of advice you are looking for?

Are you asking whether you have "good" funds or an appropriate asset allocation?

Are you asking whether we think you have a sustainable retirement portfolio?

I think you may be asking whether we think your current portfolio will be able to provide $12,000 in (inflation-adjusted) income starting in 12.5 years. Is that right?
 

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You have generally picked good funds and stocks, IMO. However, I would say this portfolio is more appropriate for someone who is going to retire in 20 years rather than 12.

I would lean towards higher levels of fixed income (probably at least double) and would prefer ETFs over mutual funds for this component. (Although PHN and McLean Budden have very good reputations.)
 

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DITTO to what Moneygal said. Off the top of my head it's a bit unusual for a portfolio of only $120K to be vested in both stocks and mutual funds/ETFs. 7 common stocks don't usually make an adequately diversified equity portfolio. You might be better to focus on ETs/Mutual funds.

Otherwise I'm too busy to figure out your current asset allocation for you. Figure it out yourself and post again with more information on your investment objectives.
 

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Discussion Starter #5
Can you tell us more about the kind of advice you are looking for?

Are you asking whether you have "good" funds or an appropriate asset allocation?

Are you asking whether we think you have a sustainable retirement portfolio?

I think you may be asking whether we think your current portfolio will be able to provide $12,000 in (inflation-adjusted) income starting in 12.5 years. Is that right?

realize somewhat vague in question, I guess my question(s) are what you mentioned, e.g. good funds, appropriate assest allocation

I would like to be somewhat aggressive for the next 12 yrs with my portfolio and then switch to less aggressive after, e.g. more % of fixed income

I am questioning my choice of funds/stocks/etfs to achieve my 12yr goal
 

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Discussion Starter #6
You have generally picked good funds and stocks, IMO. However, I would say this portfolio is more appropriate for someone who is going to retire in 20 years rather than 12.

I would lean towards higher levels of fixed income (probably at least double) and would prefer ETFs over mutual funds for this component. (Although PHN and McLean Budden have very good reputations.)

which higher level of fixed income ETFs would you consider?

Thanks

P.S. like I mentioned in my 1st post, I am novice in investing and do not have a firm grasp on all the proper concepts/lingo needed to achieve my goals, hence the posting for advice
 

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FYI, your portfolio adds up to 111%.

I'd say you're heavy on financials. Why do you have 20% in BMO?

How much you should have in fixed income is dependent on how much you intend to be contributing over the next 12 years to your portfolio. If it's substantial relative to the $120k you already have in there, it should be fine, as long as you're moving toward a heavier bond allocation as you contribute. Don't know what the MER is on those bond funds, but you could look at something like CBO, which ought to pay a pretty good return for low risk.

You have a pretty strange allocation to Canadian equities at the moment. You're heavy into financials (hope nothing untoward happens to BMO!) and energy. You don't own much of the rest of the index. If I were you, I'd consider rolling out of the individual equities and into something more diversified like XIU for your Canadian equity. Your foreign equity exposure seems good to me.
 

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I would consider CBO, XSB, XRB, XGB, XBB. You can check the Ishares or Claymore websites to see which would be more appropriate for you. Generally, I prefer these because the MERs are lower. However, if you are uncomfortable with these products the one's you picked are okay. In that case, I would probably stick with PHN - they have an inflation protected bond fund, a high yield bond fund, short-term bond fund, etc. I still hold some bond fund money with them.
 

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Discussion Starter #9
FYI, your portfolio adds up to 111%.

I'd say you're heavy on financials. Why do you have 20% in BMO?

How much you should have in fixed income is dependent on how much you intend to be contributing over the next 12 years to your portfolio. If it's substantial relative to the $120k you already have in there, it should be fine, as long as you're moving toward a heavier bond allocation as you contribute. Don't know what the MER is on those bond funds, but you could look at something like CBO, which ought to pay a pretty good return for low risk.

You have a pretty strange allocation to Canadian equities at the moment. You're heavy into financials (hope nothing untoward happens to BMO!) and energy. You don't own much of the rest of the index. If I were you, I'd consider rolling out of the individual equities and into something more diversified like XIU for your Canadian equity. Your foreign equity exposure seems good to me.

realize the %'s are slightly off, should be more like this:
- MCLEAN BUDDEN FIXED INC FD CL (MBU004) = 8%
- PHILLIPS HAGER & NORTH TOTAL R (PHN340) = 4%

- BMO (BMO) = 18%
- FORTIS (FTS) = 3%
- NTL BK (NA) = 4%
- RIOCAN REAL EST INVESTMENT TR (REI.UN) = 4%
- TRANSCDA CORP (TRP) = 4%
- CITIGROUP (C) = 3%
- APPLE (AAPL) = 9%

- ISHARES CDN S&P/TSX CAPPED ENE (XEG) = 9%
- ISHARES CDN MSCI EMERGING MKTS (XEM) = 10%
- VANGUARD EUROPE PACIFIC ETF (VEA) = 15%
- VANGUARD INDEX FDS VANGUARD TO (VTI) = 9%


1) MCLEAN BUDDEN FIXED INC FD CL (MBU004) - MER 0.65 last 10yrs 6.1%
2) PHILLIPS HAGER & NORTH TOTAL R (PHN340) - MER 0.57 last 5yrs 5.3%

as far as Canadian equities was trying to invest in growth dividend stocks and using DRIPs, not a good idea?
 

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Discussion Starter #10
wasn't planning on contributing to the portfolio over the next 12yrs just trying to let it grow with a good investment strategy which obviously I don't have(considering how my portfolio looks)

my confusion lies in proper asset allocation and investing in the correct sectors, andrewf mentioned I don't own much of the rest of the index(believe he said high in financials and energy), can you expand on this and should I be investing in more than XIU considering they seem to heavy on banks and energy

say for example I was going to use IShares ETFs for my portfolio, which ones should I look at to get exposure to the whole index
 

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You're right that XIU is heavy on financials and energy. But they only make up about 60% of XIU. You have some REITs and utilities, but you're missing broad exposure to the rest of the TSX. My suggestion would be to replace your Canadian holdings (BMO, NB, Fortis, Riocan, and Transcanada) with XIU. You also have a pretty big bet on Apple. Apple may do well, but realise that you basically making a pretty big gamble on it at the moment.

If you want somewhere to start for info on a low-fuss, low-fee investment plan, google the couch potato ETF portfolio. If you don't plan to make additional contributions, I'd recommend something like 30 - 40% fixed income allocation. I hope you have other sources of retirement income, because $120,000 won't get you far.
 

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Discussion Starter #12
You're right that XIU is heavy on financials and energy. But they only make up about 60% of XIU. You have some REITs and utilities, but you're missing broad exposure to the rest of the TSX. My suggestion would be to replace your Canadian holdings (BMO, NB, Fortis, Riocan, and Transcanada) with XIU. You also have a pretty big bet on Apple. Apple may do well, but realise that you basically making a pretty big gamble on it at the moment.

If you want somewhere to start for info on a low-fuss, low-fee investment plan, google the couch potato ETF portfolio. If you don't plan to make additional contributions, I'd recommend something like 30 - 40% fixed income allocation. I hope you have other sources of retirement income, because $120,000 won't get you far.

Thanks andrewf,

realize a gamble with Apple but am watching it daily and will sell probably soon, have researched the couch potato portfolio and definitely like the simplicity of it but would like to try a more aggressive approach right now

in 12 yrs will start to draw some money out each month but no more than $1000 and will be working part-time, mortgage will be paid and my wife will be still working full-time for a few more years, have a RESP that we contribute to monthly, will also have a pension(not a great one as retiring early but moderate none the less), RRSP as well that contribute monthly

I don't foresee relying on taking larger amount of monies from the portfolio for about 20yrs, if I can achieve 8-10% over the next 12-13 yrs with my portfolio should be good, wishfull thinking?, ya maybe

thanks again for the advice, was researching XIU on the IShares site and plan to go with it
 

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Oh, so you do have other savings. In that case you could probably go with a lower fixed income allocation.

FYI: you should include all your holdings, regardless of account, as your 'portfolio'. Which account you hold it in is basically an artificial segregation of your assets, and only really important for tax implications. It's also worth considering that your pension (depending on how reliable it is) can be considered part of your fixed income. If you want to assign a value to it, take what it would pay per year and divide it by maybe 4 or so percent.
 

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Discussion Starter #14
how can I compare my fixed income bond funds(perfomance, returns):
1) MCLEAN BUDDEN FIXED INC FD CL (MBU004)
2) PHILLIPS HAGER & NORTH TOTAL R (PHN340)

to XSB, XBB, CBO, XRB?
 

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how can I compare my fixed income bond funds(perfomance, returns):
1) MCLEAN BUDDEN FIXED INC FD CL (MBU004)
2) PHILLIPS HAGER & NORTH TOTAL R (PHN340)

to XSB, XBB, CBO, XRB?

Morningstar.ca - Type in either Ishares or Claymore under "Funds" and check the returns. One problem with the comparison may be that some are too new to have a longer track record.
 

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The difference between the best managed bond fund and the average (or worst) is vanishingly small. It tends to get eaten up by fees. More important is duration (bond jargon-the length of time the money is invested) and credit/currency risk, if any. In other words, stick with lower fees. There is no value in paying someone 0.4% more MER to eke out an extra 0.2% return (if you're lucky).
 

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According to my calculations you have:
Fixed Income:12%
CDN Equity: 42%
US Equity: 22%
International Equity: 25%

Adds up to 101%, but I guess that is rounding error. Overall allocation sounds OK for a growth portfolio, but I see a lot of problems with the details.

Your expectations for a rate of return are a little high - more realistic to aim for 8% at best.

You don’t have a diversified equity portfolio - you are dabbling in 5 CDN and 2 US stocks that you hope will do well. Any diversified Canadian Index fund or ETF is going to be heavy into financials, energy, and utilities as well, but at least it wil be spread amongst a number of companies.

2 of your index funds are sector funds: iShares XEG and iShares MSCI Emerging Markets. So although 88% of your portfolio is in equities, the only part that is well diversified is the 15% in the 2 Vanguard funds - and they are just US & International. The rest is in a handful of stocks and 2 sector funds. This is not what most people would consider a well-balanced porfolio.
 

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Discussion Starter #18
The difference between the best managed bond fund and the average (or worst) is vanishingly small. It tends to get eaten up by fees. More important is duration (bond jargon-the length of time the money is invested) and credit/currency risk, if any. In other words, stick with lower fees. There is no value in paying someone 0.4% more MER to eke out an extra 0.2% return (if you're lucky).

andrewf,

fair to say I should dump Mclean Budden for XBB considering returns are similiar and XBB's MER is 0.3% compared to MB's 0.65%
 

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Discussion Starter #19
According to my calculations you have:
Fixed Income:12%
CDN Equity: 42%
US Equity: 22%
International Equity: 25%

Adds up to 101%, but I guess that is rounding error. Overall allocation sounds OK for a growth portfolio, but I see a lot of problems with the details.

Your expectations for a rate of return are a little high - more realistic to aim for 8% at best.

You don’t have a diversified equity portfolio - you are dabbling in 5 CDN and 2 US stocks that you hope will do well. Any diversified Canadian Index fund or ETF is going to be heavy into financials, energy, and utilities as well, but at least it wil be spread amongst a number of companies.

2 of your index funds are sector funds: iShares XEG and iShares MSCI Emerging Markets. So although 88% of your portfolio is in equities, the only part that is well diversified is the 15% in the 2 Vanguard funds - and they are just US & International. The rest is in a handful of stocks and 2 sector funds. This is not what most people would consider a well-balanced porfolio.
great advice, thanks

today I sold the 5 CDN stocks and purchased XIU, will keep a close eye on Apple and will probably sell soon, any ideas what to purchase to have a more well balanced portfolio (e.g. will the money from the Apple stock), going to keep Citigroup and gamble in it's return someday
 

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Discussion Starter #20
made some changes today:

- MCLEAN BUDDEN FIXED INC FD CL (MBU004) = 8%
- PHILLIPS HAGER & NORTH TOTAL R (PHN340) = 8%

- XIU = 28%
- CITIGROUP (C) = 4%
- APPLE (AAPL) = 10%

- ISHARES CDN S&P/TSX CAPPED ENE (XEG) = 9%
- ISHARES CDN MSCI EMERGING MKTS (XEM) = 10%
- VANGUARD EUROPE PACIFIC ETF (VEA) = 14%
- VANGUARD INDEX FDS VANGUARD TO (VTI) = 8%
 
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