I suppose the impetus to start a slow process of my investment portfolio makeover was from a number of different events that made me go “huh… maybe I should do something about that”.
Initially I was really happy with the plan for the extra money I had saved up if and when I needed a down payment for a home with my future prince charming. However, as the months and years passed, the plan didn’t cut it for me anymore.
Here are a Few Reasons why my Portfolio Needed a Change:
- One example is that the markets are so flat so far this year and my portfolio has been pretty flat
- Another reason, my financially savvy (swoon) boyfriend had a look at my portfolio and was surprised by the number of stocks that I had in my TFSA, and my RRSP, and my non-registered.
- Deep down (actually, not that deep down, both deep down and on the surface level but I just ignored it really) I knew that my asset allocation was off because I never really sat down to check my asset allocation.
- My preferred shares tanking and making up such a large portion of my total portfolio
- Not being able to buy more USD stocks because they were in my RRSP and my RRSP contribution room had already been filled
- I had three ETF portfolios but I didn’t like to split them up between my TFSA, my RRSP, and my non-registered, and I liked to have ETF portfolios (or different ETF portfolios) in each account in their own little portfolio. The desire to have each ETF portfolio (mind you, they were different portfolios) in each account could have been my pseudo-OCD tendencies acting up, I’m not sure.
Well, three different portfolios in their own microcosm and duplicating themselves doesn’t make a right, unfortunately.
The Painful Process of Change:
As with most processes of change you need to take a good look at the current situation. So I did a few things. I calculated since the beginning of 2015 my return year to date, quarterly and compared it to the benchmark. Also, I finally checked out my asset allocation for my ENTIRE portfolio and was a little appalled by the end result.
Here below is my current asset allocation of my entire investing portfolio:
- 13% Bonds
- 15% cash (not including the cash savings I have outside of my investment portfolio, which some people count as part of their portfolio)
- 52% Canadian
- 10% US
- 8% International (including Emerging Markets)
- 1.4% REITs/ Real estate
There is obviously something glaringly wrong with that (other than the terrible asset allocation and it being a mess). The high percentage of Canadian allocation is… well…very high!
In addition, reading Boomer and Echo’s surprising post about him selling all of his dividend babies opting for growth instead and focusing on two Vanguard stocks inspired me to check the growth of my investment portfolio.
My YTD (since beginning of 2015) growth of my portfolio has been a dismal 0.5%, mind you, the benchmark index I compared it to was Canadian mainly and it was a 0.35% so far in 2015. I know previous years my portfolio had been on fire, so perhaps it is just this year that drove to re-evaluate my portfolio.
I wasn’t seeing the growth I wanted to see and felt that I had too much Canadian allocation.
The New Plan of Action
I plan to “spring clean” my portfolio and slowly sell a lot of the ETFs that I have that were in multiple portfolios. There was a lot of repetition and redundancy in my portfolio. I also will plan to sell some of the dividend stocks (of course I will still keep Fortis and Husky among other stocks) that I have bought recently which are not as good value as my dividend darling/favourites. I also plan to get rid of some preferred shares ETFs.
I will aim to have my ETFs be about 60-70% of my portfolio and the remainder can be my favourite dividends.
Then I plan to switch over $3000 a month (mostly from selling ETFs/ stocks and using my Questrade account to purchase ETFs for free) over 20 months (to dollar cost average) with the asset allocation (thanks to my favourite site Canadian Couch Potato) of:
Then I will contribute regularly after that per my investing contract with myself.
Readers, what do you think of this plan? Should I instead thinking about just taking the ultimate step in simplicity by opening up a robo advisor account, or is it still worth my time to purchase and rebalance these ETFs individually?