Investment/portfolio advice

[fjdude]

It's been a while since I've posted however since there are financially savvy investors on this board i figured i'd get some advice on building my portfolio. I have a long term hold strategy so with that in mind, in these markets do you terbites have any insight into where best to park money. I save/make enough to max out on my RRSPs and TFSA and all my self directed investments (which i thought were sound) from last year have seemed to plunge. I put quite a bit into AAPL and MBS REITs and pharma last year. Luckily i had slowly moved out of holding investments in CAD and switched to USD, so my fx gains made up a bit for the losses in AAPL and my high yield REIT.

For 2016, i'm thinking of allocating more to REITs (high yield ones - AMTG etc.). My overall portfolio is quite diversified so my overall returns have been ok over the past 3 years but I feel like the markets don't make sense anymore or perhaps i'm losing touch and I need to become risk averse. I'm in my early 30s so like I mentioned i have a long term horizon.

Anyway, any advice is appreciated.

cheers
fj
p.s. I've stayed away from options trading and trading on margin - my job doesn't allow me to monitor markets full time anymore.

 

[bazokajoe]

Friendly piece of advise. Do what your comfortably with. Sounds like you know what your doing already. If 100 guys reply here you will get 100 different answers on why you should do this and that,and why everybody else is wrong.

 

[trm]

If you have a long term horizon you don't need to make risky investments. Look for slow, steady growth and don't panic when the market goes down, as it will from time to time. The law of gravity applies to the financial markets too. Stay away from commodities, options and buying on margin, those are for professionals, not amateurs like us.

 

[Tau]

My advice is to use ETFs (if you are not familiar with what they are, google it); and use a passive investment strategy -ie; instead of trying to pick winners. I have learned that trying to pick stocks or buying mutual funds are poor investment strategies.

 

[explorerzip]

Do a lot of reading before putting your money at risk. Personal favs of mine are The Wealthy Barber and it's sequel The Wealthy Barber Returns, and Rich Dad Poor Dad. Those books generally follow the mantra of picking investments (stocks, bonds, funds, etc) that return cash to you in the form of dividends, interest, etc. There are other investments like physical real estate or building a business that can return cash to you, but they are obviously more difficult and risky to get into.

Markets will go up and down, but good investments always generate cash flow regardless. Then again any cash flow investment like stock can stop returning cash to you e.g. dividend cut, tenant leaves, business failure, etc.

 

[SkyRider]

Good article in to-day's Star about hedge funds. Stay away! Hedge funds are created to make the hedge fund owners rich, not you.

 

[Lady fisher]

Investments

If you have a long term horizon you don't need to make risky investments. Look for slow, steady growth and don't panic when the market goes down, as it will from time to time. The law of gravity applies to the financial markets too. Stay away from commodities, options and buying on margin, those are for professionals, not amateurs like us.

Last year I did very well considering all the goings on in the markets since august was my best part


I do cash covered selling of puts on high volatile stocks like Canadian Solar very profitable

And trading in usd is key. Usd is the king dollar

Although last week I did dabble in a quality junior oil Cardinal Energy paying last week about 11 %

A year on dividends hopefully this won't get cut. But it could if oil goes lower

Your right pay off your margins as soon as you can

 

[glamphotographer]

Did you see the big short? Buy up those CDOs. LOL!

 

[Occasionally]

1. Just buy market index funds. Don't bother trying to pinpoint sector funds or companies. Your potential to make big bucks is less, but also is your risk to losing big bucks.

2. Canadian real estate has been reliable for 20 years. Unless home builders make too much compared to Canadian population increases and/or interest rates skyrocket, it should be a reasonably safe bet.

The advantage of #1 is that you are nimble to buy and sell daily and you can do it with little money. While #2 you will get locked into something for years where you don't feel the gain until you eventually sell (and hopefully make profit). And it takes big money to get it up and running...... mortgages, lawyer fees, down payments etc.... Real estate is for people who have already piled up assets to do it. It's more of a wait and see on an annual basis, while #1 can be a daily or weekly grind if you are easily panicked as the markets can skyrocket or tank fast.

3. Never ever gamble in the markets if you can't afford it. So no borrowing, no margin calls, don't do any of that BS. Every bank and investment place will entice you to do it as it gives people more opportunity to do trades (which is where they make money). Whether you make money or lose money, they don't care. That's on you. They care about the fees.

Although unrelated, always pay off your credit card bills. If you must carry a balance, ditch it and have a debt in line of credit. A typical credit card is 15-25% interest. A line of credit is maybe about 5% (depends on your history). Never carry a credit card/LOC balance in hope you can make it all back or more by investing. The chances of you making more than the interest charge you are getting dinged is low.

 

[bigshot]

Friendly piece of advise. Do what your comfortably with. Sounds like you know what your doing already. If 100 guys reply here you will get 100 different answers on why you should do this and that,and why everybody else is wrong.

I agree with your comments, and figured that he would indeed be given a hundred wild and crazy pieces of advice from all over the map. However, having read the various replies to the OP's question, it looks to me like he's been given some valid points of view on how to move forward from here. It looks like TERB has some fairly savvy investors on board. There's no "one" strategy for managing your investments, but I would say that if you have a decent strategy and a belief system in place, you will be able to make it through the current volatility.

I don't consider myself to be a genius investor, but was fortunate enough to beat the market significantly in 2015. The TSX was down about 10% at year-end, so the bar was set quite low!. A good deal of this was being in a position to benefit from the huge swing in FX that paid off large. I was actually positive on the year until the final two trading days in December, which were not good for anyone holding equities.

Buy companies with a long term record of returning value to shareholders, collecting your dividends, and being fortune enough to have purchased some good U.S. companies certainly paid off. You do not have to swing for the defences.

I'm a long term investor and don't have the mindset to be an active trader. One good piece of advise that I was given was to view your investments like a bar of soap. The more you touch it, the quicker it disappears...

 

[explorerzip]

One good piece of advise that I was given was to view your investments like a bar of soap. The more you touch it, the quicker it disappears...

Cool analogy that I generally agree with. You do have to touch your investments once in a while though to make sure they are still performing as expected. IMO now would be a good time to sell US investments simply because of the exchange rate.

 

[bigshot]

IMO now would be a good time to sell US investments simply because of the exchange rate.

Yes, I kinda' wrestle with that one. On the one hand you have a currency that will likely come into balance at some point (i.e. the Canadian dollar will appreciate to more traditional levels over time), and on the other you have the U.S. market that is outperforming the wrest of the world and should continue to do so. At this point in time, I'm more comfortable continuing to hold U.S. equities for the superior performance, despite the fact that there is FX risk in the neat to mid term. My U.S. dividends will continue to get a boost from FX, despite the potential gain in CAD. This will not change. As a long term investor, I'm betting on performance over time over currency risk. My U.S. holdings would have proven to be a better play even without the currency moves...

 

[alex52]

There is one simple advice and that is if you invest in Canada you will always get poor returns. Canadian investments are in in Banks and commodities. Canada has no real world class international companies. I cashed all my investments in Canada few years back and transferred to the US. Currently I only invest in the US.
The simple brutal fact is that Canadian economy is subservient to the commodities cycle. Recently the low oil price and the low Canadian dollar has crushed the Canadian economy. Go south to make money.

 

[explorerzip]

Yes, I kinda' wrestle with that one. On the one hand you have a currency that will likely come into balance at some point (i.e. the Canadian dollar will appreciate to more traditional levels over time), and on the other you have the U.S. market that is outperforming the wrest of the world and should continue to do so. At this point in time, I'm more comfortable continuing to hold U.S. equities for the superior performance, despite the fact that there is FX risk in the neat to mid term. My U.S. dividends will continue to get a boost from FX, despite the potential gain in CAD. This will not change. As a long term investor, I'm betting on performance over time over currency risk. My U.S. holdings would have proven to be a better play even without the currency moves...

Some of my equities (that I've already sold) are up by double digits. One particular holding appreciated by 110% with the exchange and that's a boring dividend stock. IMO, it's a smarter move to lock in that gain, wait until the CA$ comes back (and it will) then buy back the stock. Sure you don't get the dividend while you're waiting for the CA$ to come back, but it will take a while for the stock or dividends to appreciate by double digits.

 

[pusher69]

My first advice to all you... junk the RRSP as an investment tool. Most that park most of their money in RRSP never live long enough to reap the benefits of it.
Get an adviser that will do the leg work for you and will be compensated by how much they make for you.

Free stock advise anywhere mostly goes sour for the investor as they never really understand the market or the investment (equity stock or fund).

One resource that everyone will require in the future is water and its a hot topic at my firm.

 

[Tau]

I would be very careful with using investment advisers. Really good advisers, if you can even find one, are very expensive. And the rest will usually take care of their interests first before taking care of yours. With all the investment tools out there today, you don't really need an adviser, if you educate yourself - which is something you should do anyways.

 

[bigshot]

I would be very careful with using investment advisers. Really good advisers, if you can even find one, are very expensive. And the rest will usually take care of their interests first before taking care of yours. With all the investment tools out there today, you don't really need an adviser, if you educate yourself - which is something you should do anyways.

I agree generally with your statement, but there are a (very) few good ones out there who put the interested of their client first. Most don't. And yes, I did work in the industry so I know first hand how so many of them go about their business.

I once read that when searching for an advisor, you should "view the guy on the other aside of the desk as a hardened criminal. Then you might have a chance".

 

[Barca]

Markets will be volatile for some time to come. Building a portfolio is a very delicate process because of the biggest factor: a person's risk profile. So no one portfolio should look like another because we're all different. Asking a general question about investing is good. But getting individual investment suggestions is a dangerous proposition. For example one post here recommends Canadian reits. However in my personal opinion you're better off with American reits. Which opinion is better? How does a regular person know?

For those who slam investment advisors, it's easy for someone comfortable with markets to build their own portfolios (even though from what I have seen, people who trade for themselves generally have much riskier and more volatile portfolios than those professionally managed) and I have not seen proof that in general, individuals are better at investing than advisors. And given the peripheral benefits that come having an advisor (tax a estate planning being the most obvious) I'm not sure why a person should be dissuaded from seeking professional help. Much like with any other professional, you just have to look for the good ones instead of throwing a dart on the wall at any name.

All I know is that if left to themselves, my parents for example wouldn't know the first thing about how to manage their investments. For them it's been worthwhile. And for busy professionals that have other things to take care of like their careers, checking markets daily isn't of particular interest. And all too often there are individual investors that blow themselves up thinking they can do better than an advisor when in reality having an advisor may have saved them much grief and avoided losses. Sometimes that in itself is worth the cost of advice. Much like the guy who decides he doesn't need a lawyer, in the end you get what you pay for.

I am someone who definitely sees the value in paying for professionals. I believe in paying for a good mechanic, good lawyer, good accountant and yes, good investment Advisor.

 

[openwide]

www.wealthsimple.com

If you are interested in low cost, exchange traded funds this is a really good place to start. Check out who they are and what they do. It is one of the most inexpensive ways to invest in index funds which unless you have time and a substantial sum of money is likely better than using a bank or broker.

On the other hand if you have at least a million dollars(likely more) in financial assets and the time to manage it there are a myriad of ways to try and better the indexes. I think it is quite challenging to go through the process of finding people who match up with your values and objectives. If that is what you want then I would consider engaging either Bullwealth or Bell Kearns & Associates to help manage the managers. It is an additional cost but keeps all the fee collectors on their toes.

My two cents for what its worth!

 

[SkyRider]

It is an additional cost but keeps all the fee collectors on their toes.

Yeah, watch the fees. That is one reason why many managers don't beat the market. Here is the typical hedge fund fee: 2% off the top plus 20% of any upside and 0% on the downside. Yes, other than the 2% fixed fee, they won't charge you extra if your portfolio declines in value.