A few weeks ago, I had a post on my monologue with myself on what I should do with the $100,000 that you often see sitting there in my net worth updates… that has been the case for many many months. So thank you for your patience and I listened to your nagging and monthly questions as to why I had over $100,000 in cash sitting there.
Well, I finally faced my investing inertia and did something with the $100,000. I spent hours and hours (sometimes I get manic and spend a whole day just thinking about the different options and calculating the potential losses, the potential gains, the potential monthly interest income) thinking about it and finally took action.
Investing is akin to starting a new relationship… there are risks involved but there is also plenty to gain. There is so much uncertainty before you commit. But once you committed the relationship will unfold and hopefully the gains will be fantastic! But if you don’t do anything you will never know.
So… Yay me! For taking action haha.
So to recap, the options I considered were investing in United States real estate, looking at implementing the Smith Manoeuvre, and looking at buying exchange traded funds. So what I decided in the end was to buy exchange traded funds. I pretty much revamped my RRSP portfolio and sold everything to start a new portfolio (minus the Bell and Telus shares that I own).
Here is what I ended up doing with the $100,000:
I put $10,000 into the RRSP and basically I have paid off my Home Buyers Plan.
I put this extra money into the RRSP account I have with Questrade. I used the Canadian Couch Potato’s suggested Exchange Traded Fund model portfolio (why mess with success, I ask?) after researching each component of the model portfolio.
So to summarize here is what I put in my newly revamped RRSP (which is about $20,000 worth):
- 15% ZCN (BMO S&P/TSX Capped Composite Index ETF)—> I actually kept this outside of the RRSP in my margin account because it’s not taxed heavily like other things in my RRSP
- 25% VTI (Vanguard Total Stock Market ETF) —> I had this from before but just added more shares
- 20% VXUS (Vanguard Total International Stock ETF)
- 10% ZRE (BMO Equal Weight REITS Index ETF) —> this satisfies my lack of rental income and rental property at present
- 10% XRB (iShares DEX Real Return Bond Index Fund)
- 20% XBB (iShares DEX Universe Bond Index Fund)
I also looked into NLY which is a US REIT and bought a few shares in this, again satisfying my lack of rental income and US real estate (thanks Liquid Independence!)
I also saved $5500 of this $100,000 for my TFSA contribution for 2014.
Then I proceeded to buy a lot of ETFs.
I bought $50,000 worth of CPD Claymore S&P/TSX Canadian Preferred Share ETF (haha thanks for the suggestion, reader of my blog!) and set a stop loss. Stop losses are my friend. Best Friends Forever.
I then bought Vanguard exchange traded funds (check out the Vanguard versus TD e-series post) with the remainder of the money.
- 30% in VUS Vanguard U.S. Total Market Index ETF (CAD-hedged)
- 30% in VEF FTSE Developed ex North America Index ETF (CAD-hedged)
- 15% in ZDV BMO Canada Dividends ETF
- 25% in CLF ISHARES 1-5 YR LADDER GOVT BOND FUND
So, with all my purchases going to planned (some have yet to be executed because they haven’t dipped to the price I want to buy in at), here is my updated dividend income chart for your viewing pleasure (NB: I haven’t included all of the dividends and monthly income from the RRSP portfolio, I will update that next time!). Exciting to be over $5000 in income though!
As of today, I am down $200 in CPD already haha but once I get paid my monthly income that should counteract this minor set back. I still have over $50,000 in cash savings which is nice and appeases the non-risk taker in me.
So my dear readers, what are you thoughts? Dividend lovers, should I have gone dividends all the way? Are we going to start an Exchange Traded Fund versus Dividend Lover debate here?