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Discussion Starter · #1 · (Edited)
Hi everyone,

With the new year approaching and another $6,000 of contribution for 2020 available, I took a step back and looked at both my TFSA and my wife's TFSA and wonder... are we doing ok? I have 91k and she has 101k...mind you, this has been a fantastic year for returns across equities. We've contributed to our TFSA ever since we've opened it and currently hold 3 stocks and 1 ETF on one TFSA (101k - BCE, BNS, SLF & ZRE) and the other TFSA two ETFs (91k - ZDY & ZDV). All dividends are being reinvested.

I'm wondering if our performance is adequate or should we consider looking at another strategy. Curious to know what amounts people have achieved here and what their investment strategy has been.

Thanks all

B
 

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I think you’re doing well. From what I read in the MSM, most folks have theirs in a savings account barely making anything.

As of this morning I’m at $119.1K, but am nearly entirely in stocks:
ENB
IPL
NPI
PPL
RY
AQN (USD)

I capture the divvies in a TDB 8150 ISA over the course of the year, then combine the balance with the next year’s contribution. At some point in Q1 I’ll usually buy more of whatever tickles my fancy.
 

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Discussion Starter · #3 ·
I think you’re doing well. From what I read in the MSM, most folks have theirs in a savings account barely making anything.

As of this morning I’m at $119.1K, but am nearly entirely in stocks:
ENB
IPL
NPI
RY
AQN (USD)

I capture the divvies in a TDB 8150 ISA over the course of the year, then combine the balance with the next year’s contribution. At some point in Q1 I’ll buy more of whatever tickles my fancy.
Interesting that you don't DRIP but rather collect your dividends over the course of the year to buy more shares.
 

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Interesting that you don't DRIP but rather collect your dividends over the course of the year to buy more shares.
Yes, that’s because I like the flexibility to make my choices every year and they don’t always line up with what I hold. Dripping is certainly worth considering especially if you have a long time frame to work with.
 

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Interesting that you don't DRIP but rather collect your dividends over the course of the year to buy more shares.
I agree with Dilbert. I have never DRIP'd in all my decades of investing. I bought what I wanted with the cash and it is rarely more of the same thing I already have (since I buy full positions from the get go).
 

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"Interesting that you don't DRIP but rather collect your dividends over the course of the year to buy more shares. " I do the same thing.

My TFSA:

Telus
Suncor

Contributions maxed out

Wife's TFSA:

CHP.UN
AQN
AW.UN

Contributions maxed out

Non-reg Cash Account:

RY
TD
BNS
FTS
ENB

Still have approx $140k to deploy for that account.
 

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Discussion Starter · #7 · (Edited)
Not applying a DRIP, doesn't forefit the opportunity for dollar cost averaging? leveraging compounding effect? I guess this strategy has been working better for you guys given the amounts in your TFSA....
 

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Not if I dont want any more of that stock. If I already have a full position in a holding, I dont want more of it. I want to take the cash flow and invest elsewhere.

If you are still building a position, then re-investing the dividends in a synthetic drip makes sense.
 

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You seem to be doing great. As for your strategy, it's hard to say without looking at your entire portfolio across all your accounts. For example, my TFSA is mostly fixed income, because I prefer to keep my equity in my taxable accounts and my fixed income in tax shelters.
 

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Your TFSA values seem good, probably higher than average, so you are doing something right. But to really know how well you are doing you would need to calculate your return over time using something like internal rate of return. Then you would need to compare it to some benchmark that is relevant to your holdings (looks like you have mostly CAD dividend equities). Some investors I know brag regularly about their great returns, but when asked they don't have any idea about how to calculate rate of return.

For tracking rate of return the Bogleheads spreadsheet is very good:
https://www.bogleheads.org/wiki/Calculating_personal_returns
https://www.bogleheads.org/forum/viewtopic.php?t=150025

And for benchmarking you could use Canadian Couch Potato: https://cdn.canadiancouchpotato.com/wp-content/uploads/2019/03/CCP-Model-Portfolios-ETFs-2018.pdf
Or Norm Rothery's wonderful Stingy Investor Asset Mixer: http://www.stingyinvestor.com/cgi-bin/downside_adv.cgi

I also do not DRIP my dividends and distributions because I prefer to decide on how to reinvest. Being retired I withdraw small amounts annually from my non-registered and RRSP accounts. For those accounts I transfer cash distributions to TDB8150. For my TFSA and 2 LIRAs I reinvest distributions into a low-cost balanced mutual fund (TD Balanced Index TDB965), then when enough builds up or when it's time to rebalance I sell the TDB985 and reinvest according to my asset allocation target. This process keeps my cash invested while minimizing transaction costs.
 

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Discussion Starter · #11 ·
Thanks for the feedback guys! I'm considering looking at my overall strategy and see if I should too stop my DRIP program according to my financial goals.
 

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Bear in mind that I only make my “buy” once a year, so my commission cost is minimal. Dripping of course, avoids any commission.
 

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Discussion Starter · #13 ·
Bear in mind that I only make my “buy” once a year, so my commission cost is minimal. Dripping, of course, avoids any commission.
Yes, this is why I was DRIP'ing so I can avoid the commission fees and buy into the highs/lows..but didn't realize that dripping after achieving full position might not make any sense hence why I'm reevaluating my goals. Question - for the group, if these were ETFs, would DRIP make more sense then? I guess you're not trying to achieve full position since you're not holding specific stocks...right?
 

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Technically, one can have full positions in ETFs too, e.g. for specific asset allocations, e.g. 30/30/30 equity (Cdn, US, Int'l) and 40 fixed income, or VCN/XAW/ZAG, or whatever.... but must less important during accumulation phase since new money can be allocated to the weakest segment, and overall the portfolio is growing.

Of course that can happen with individual stocks too. A $1M stock portfolio of 20 stocks has twice as much in each stock as a $500k stock portfolio of 20 stocks.

It is matter of how one is building, or wants to build, their portfolio, how much new money is added and how often, how many new positions may be started each year, etc. There is no right answer but when I was accumulating, I've always avoided DRIPs since: 1) I don't like odd losts, 2) I don't like ACB tracking in non-reg accounts for DRIPs, 3) I want to feel totally independent on where new money goes, and 4) I was perhaps adding $50k or more each year to the portfolio (don't remember now).

In retirement, it makes no sense to DRIP when one should be automatically blowing.....err spending/gifting, at least 100% of their investment income each year in one form or another.
 

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Discussion Starter · #15 ·
Technically, one can have full positions in ETFs too, e.g. for specific asset allocations, e.g. 30/30/30 equity (Cdn, US, Int'l) and 40 fixed income, or VCN/XAW/ZAG, or whatever.... but must less important during accumulation phase since new money can be allocated to the weakest segment, and overall the portfolio is growing.

Of course that can happen with individual stocks too. A $1M stock portfolio of 20 stocks has twice as much in each stock as a $500k stock portfolio of 20 stocks.

It is matter of how one is building, or wants to build, their portfolio, how much new money is added and how often, how many new positions may be started each year, etc. There is no right answer but when I was accumulating, I've always avoided DRIPs since: 1) I don't like odd losts, 2) I don't like ACB tracking in non-reg accounts for DRIPs, 3) I want to feel totally independent on where new money goes, and 4) I was perhaps adding $50k or more each year to the portfolio (don't remember now).

In retirement, it makes no sense to DRIP when one should be automatically blowing.....err spending/gifting, at least 100% of their investment income each year in one form or another.
Thanks for your comments... very valuable points you made here. A couple of things, I'm nowhere near retirement, but if I was, yes I would agree with you that there is no sense DRIP. Most of my money is registered so your point #2 doesn't apply to me. But if you had a one fits all ETF, say VGRO that balances itself, I think dripping make sense as the newly added money can be rebalanced and be done commission-free.

This has been a good discussion so far ! learning a lot... keep those comments coming guys!
 

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True enough that it depends on where one is at in their investing journey. In a way, i don't 100% 'walk my own talk'. For example, my TFSA will be a legacy for heirs....so it is 100% in MAW104 mf with all distributions re-invested. Will just keep trucking for the next 10-30 years I remain alive I presume. The RESP I have just started for a grandchild will be 100% invested in VBAL*, potentially with distributions synthetically DRIP'd.

* Maybe. Have thought about VGRO for awhile but don't like the frothy markets. Would consider MAW104 too once a threshold of $5k is reached for minimum initial purchase.
 

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True enough that it depends on where one is at in their investing journey. In a way, i don't 100% 'walk my own talk'. For example, my TFSA will be a legacy for heirs....so it is 100% in MAW104 mf with all distributions re-invested. Will just keep trucking for the next 10-30 years I remain alive I presume. The RESP I have just started for a grandchild will be 100% invested in VBAL*, potentially with distributions synthetically DRIP'd.

* Maybe. Have thought about VGRO for awhile but don't like the frothy markets. Would consider MAW104 too once a threshold of $5k is reached for minimum initial purchase.
AltaRed, you are so knowledgeable in investment and put all your TFSA in MAW104. As a novice investor, it makes me wondering if I should also do the same way and just invest in MAW104.
My wife and I fully contributed our TSFAs and they are not doing that well. Current value at 78K and 82K.
 

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AltaRed, you are so knowledgeable in investment and put all your TFSA in MAW104. As a novice investor, it makes me wondering if I should also do the same way and just invest in MAW104.
My wife and I fully contributed our TSFAs and they are not doing that well. Current value at 78K and 82K.
1. It depends on where one wants to put their energy and time, their overall long term plans/goals, and where they are at in their journey.

2. For old geezers who mostly accumulated their portfolios pre-TFSA days (I retired in 2006), the TFSA is an after-thought. In many cases, total contribution room available is a small part of one's investments, and indeed, total TFSA capacity is about equal to the value of one of my non-reg stock holdings. I gain nothing from trying to 'beat the market' with my TFSA any more than I would with any other portion of my portfolio.

3. MAW104 has a very good track record. How can I not be happy with a 10 year CAGR of 9.33% or 8.4% since inception circa 1988? Or even 7.76% over 5 years? A 60/40 portfolio with 'minimum' volatility generating those kinds of nominal returns over those periods of time is a 'bell ringer'. A reason for the recent proliferation of asset allocation ETFs.

4. For a young investor with a 30 year investing horizon, a conservative CAGR of 5-7%, never mind adding new contributions every Jan 2nd, would provide an awesome sum at age 60 or so.

Ultimately, a person's time has to be allocated to where the most reward is. There is never enough time for everything. For a youngish investor, one's time is best spent investing in one's career and family, and budget management, so that one can pay off debt as quickly as possible and set aside funds for annual investment. Putting those investment contributions in a 'set and forget' mode maximizes return for time invested. I never paid any attention to stock investing until I was in my '50s and the kids were gone.

Disclosure: I passively invest everything except Canadian equity in my non-reg account where I actually stock pick, or maybe better said, I tinker around the edges of 'buy and hold'. That gives me some entertainment satisfaction since I became an empty nester (and eventually retiree) AND satisfies my testosterone need for having hands on the wheel.

Added: Consider using a spreadsheet to see what would happen with a 6% CAGR on your current TFSA value plus adding $6k each year on Jan 1, for the next 25-30 years. Your current $80k will be worth $320k in 24 years (the rule of 72, i.e. 6% for 12 years is a double, 6% for 24 years is a 4 timer). That is without making a single additional contribution every again. If you consider your TFSA as your primary retirement fund, and be disciplined like I suggest, you have a darn good retirement fund 30 years from now. All that is without any additional investments in RRSPs or a DB pension or a non-reg account, or the value of your principal residence. The power of compounding over decades takes care of almost everything.
 

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Of course another good thing with the TFSA is you can return any funds removed in the next calendar year. I’m thinking about taking my accumulated divs from this year out next month in cash, from the TDB-8150. Then in 2020, I can “journal in” some stocks from my non registered account equal in value to the contribution limit (presumably $6K) plus the value of the cash previously removed.
 

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Of course another good thing with the TFSA is you can return any funds removed in the next calendar year. I’m thinking about taking my accumulated divs from this year out next month in cash, from the TDB-8150. Then in 2020, I can “journal in” some stocks from my non registered account equal in value to the contribution limit (presumably $6K) plus the value of the cash previously removed.
A lot of additional steps to provide a bit of alpha (some of the time) from non-reg investments made throughout the previous calendar year. May be injurious to one's health if your non-reg holdings are mostly down and in a net loss position instead. Why not just save up $6k cash instead and invest that Jan 2nd?
 
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