Canadian Money Forum banner

1 - 7 of 7 Posts

·
Banned
Joined
·
6 Posts
Discussion Starter #1
Hi CMFers,

I am in the process of taking $100,000 cash and allocating it into a portfolio.

My asset allocation for this new portfolio is something like this: GICs and/or Bonds 45%, Large Cap Stocks 30%, Foreign Stocks 15%, and Small Cap Stocks 10%

My time horizon for growth is 10 years.

This is all in an RRSP umbrella.

I am looking at using a mix of primarily ETFs and GICs.

GICs - initially, I was considering setting up a 5 year laddered GIC; however, now with the possibility of rising interest rates on the horizon, I am considering a 2 year GIC ladder. This way I will secure that 45% of my portfolio with meagre returns, yet be placed strategically to reinvest into higher yields, when the GICs come due and interest rates likely rise.

ETFs - XIU for the 30% large cap portion, due to its low MER and largecap 60 Index,
Not sure about the smallcap 10% of my portfolio (unsure of which ETF to choose?? also, unsure whether I should simply forego the smallcaps and simply go for a U.S. ETF such as SPY or QQQQ (now that our cdn dollar is close to the us dollar).
As for foreign stock, as 15% of my portfolio, I am considering XIN, which is hedged to the cdn dollar or INDY as a play into the Indian growth story going forward into the next ten years' horizon (also, our cdn dollar to the us dollar being close, since this is a nyse traded ETF).

Any suggestions, ideas are greatly appreciated.

I, of course, am willing to wait 4, 6, or more months before investing my cash. I was thinking whatever I do decide, I will invest in two buying times to mitigate prices i.e., purchase half of XIU in one month and the other half in four months.

I wait for your sage ideas. Thanks-a-ton!!
audiobill
 

·
Registered
Joined
·
5,464 Posts
Your "tranche" buying strategy is really a volatility buffer.

Selecting a different asset mix is a more efficient way to mitigate this volatility, IMO.

I am the community's outlier on this point, though, I think. (But google "dollar cost fallacy" for lots of examples of peeps who agree with me, though. ;))
 

·
Registered
Joined
·
3,197 Posts
My asset allocation for this new portfolio is something like this: GICs and/or Bonds 45%, Large Cap Stocks 30%, Foreign Stocks 15%, and Small Cap Stocks 10%

My time horizon for growth is 10 years.

This is all in an RRSP umbrella.

GICs - initially, I was considering setting up a 5 year laddered GIC; however, now with the possibility of rising interest rates on the horizon, I am considering a 2 year GIC ladder.

ETFs - XIU for the 30% large cap portion, due to its low MER and largecap 60 Index,
Not sure about the smallcap 10% of my portfolio (unsure of which ETF to choose?? also, unsure whether I should simply forego the smallcaps and simply go for a U.S. ETF such as SPY or QQQQ (now that our cdn dollar is close to the us dollar).
As for foreign stock, as 15% of my portfolio, I am considering XIN, which is hedged to the cdn dollar or INDY as a play into the Indian growth story going forward into the next ten years' horizon (also, our cdn dollar to the us dollar being close, since this is a nyse traded ETF).

audiobill
If the time horizon for the whole account (not just equity) is 10 years, then 45% fixed income may be high given current interest rates, unless you need it to sleep well at night.

A 2yr. laddered GIC would seem to defeat the purpose of laddering GICs. If you want simplicity, and something that tracks pretty close to 5-yr. average GIC Index, try a mortgage/short term bond fund, or an ETF if there is one that tracks that index.

Making a play on the Indian stock market is a regional concentration that doesn't fit with your otherwise conservative asset allocation.

Finding good small cap can be a problem. The Canadian market is so small compared to US/Global that there are not too many good choices in CDN small cap. US or North American small cap appears to be a better alternative, but I'm still leery about the US recovery.
 

·
Banned
Joined
·
6 Posts
Discussion Starter #4
Thanks all for your suggestions.

Simply, waiting patiently, has given way to me deviating from my play. Just bought Suncor 15% of my portfolio. I know. I know. Not in the plan I outlined above, but it looked pretty good.

Any thoughts on the "double dip"?? Still, for the most part, waiting on the sidelines.

audiobill:D
 

·
Registered
Joined
·
12,447 Posts
That's a big bet on Suncor. Why are you deviating from your plan? It sounded pretty solid, except the GIC bit. GICs aren't really an investment, they are a store of value. Long-term, you can only really hope to preserve value after inflation and taxes.

Seems like you need to think some more about your plan. What if you buy and there is a double dip? What if you hold off and there isn't one? You need to have a plan, and confidence to stick with your plan.
 

·
Registered
Joined
·
3,197 Posts
If you want to treat your account as mad money, and can afford it, more power to you. But don't ask us for "portfolio" advice then.
 

·
Registered
Joined
·
2,626 Posts
GICs aren't really an investment, they are a store of value. Long-term, you can only really hope to preserve value after inflation and taxes.
This has not been true over the past 10 years - GICs have handily beaten most other 'investments' - at the lows, they easily outpaced stocks - but to this point are well ahead of inlation.
 
1 - 7 of 7 Posts
Top