Hello, I'm 23. I was injured at work and I have recieved $40,000. Realizing that this amount of money will not do much for me unless I invest it wisely, I turn to you all for your heartfelt advice. I would appreciate any of your ideas and thoughts.
I can afford to invest it for atleast the next two or three years, at which point I may use it to buy a home or use towards starting a business.
Currently it is just sitting there, shamefully it isn't even in a high interest saving account. Obviously i'm looking for huge risks here, but an intelligent way to invest it so that it grows to it's fullest potential.
You need a portfolio that is relatively stable if you are likely to pull it out in that time frame. I don't particularly like bonds right now. What I would do in your situation is weight my portfolio towards a range of defensive stocks or their ETFs - utilities, consumer staples and health care, [EDIT: pipelines] and maybe some integrated telecommunications. Stuff people buy even in bad times.
BMO has a utilities ETF: ZUT that is worth considering. It holds 17 Canadian utilities stocks with equal weighting.
You could also consider buying directly the Canadian dividend aristocrats in the above listed sectors. For a small portfolio the trading fees could bite, but at least there would be no management fee on directly held stocks.
For the remainder of your portfolio you could include some low MER, low fee mutual funds like the TD e-series, that track the indices of Canada, US, and MSCI EAFE.
I guess the question is how much money are you willing to lose? Most asset classes with some chance of making significant gains also carry high short-term risks. You may be best off just buying some GICs of various lengths.
EMP.A looks interesting. This is a grocery store company, dividend aristocrat.
The beta is 0.05. The price variation over the past three years has been around $35 to $54, but out of step with the rest of the market. The price is variable (!your principal is not secure!) but when included in a portfolio that otherwise follows the market you will get some very good diversification of risk, about as good as bonds.
The dividend payout ratio is ~20%, meaning that if price gains follow earnings, you should expect about 80% of your gains to be capital gains which has a low tax rate. So this security is a good candidate for an unsheltered account.
Recent earnings are about 8% of today's price. The worst year of the past few was 2008, at 6.1%. Not a world beater, but very stable.
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