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Mid Year Investment Portfolio Checkup 2008


I’m a little past due but it’s time to do a mid year portfolio check up. TheMoneyWriters came up with the idea of doing a portfolio update to see how we are all doing thus far. Honestly, I would be surprised to see anyone with any significant portfolio growth at this point in 2008

Non-Reg Account:

This account is difficult to track as most of the cash was withdrawn to increase the down payment for the house that we built. Ideally, I should liquidate the whole account, but I’m waiting for some of the securities to increase in value. Stubborn, I know.

This account consists of cash and individual securities.

  • Started year with: $45,200
  • Withdrawn for down payment: $24,300
  • Value after withdrawal: $20,900
  • Current Value: $19,200
  • Gain (loss): -8.1%

Smith Manoeuvre Portfolio

If you’ve been following, I have been posting a monthly update to my leveraged investment account.  If you’re interested in the contents of this account, check out my latest smith manoeuvre portfolio. Since that update however, I have initiated an energy position in my portfolio.

  • Started with: $50,000
  • Interest Cost: $575
  • Total Capital: $50,575
  • Current Value: $49,475
  • Gain (loss): -2.1%

Our RRSP Account

Our RRSP accounts consist of a self directed account with a major bank, a mutual funds account with the same bank along with a self directed RRSP account for my wife. With the Canadian markets just below breaking even so far this year, our RRSP accounts have been resilient with a small return.

The contents of our RRSP accounts are all over the place. A large portion are individual stock picks and a smaller portion are globally indexed via mutual funds. Moving forward, I will be looking to increase our indexed allocation.

Here are the details:

  • Started 2007 with balance: $48,300
  • Contributions thus far in 2008: $6,700
  • Current Value: $56,200
  • Organic Value (value before contributions): $49,500
  • Gain (loss): +2.42%

Overall Portfolio Performance:

  • Initial Capital: $119,775
  • Current Value: $118,175
  • Gain (loss): -1.35%

It seems that the big declines in the Canadian and U.S markets have resulted in a small loss in my portfolio thus far in 2008. How has your portfolio been performing this year?

Here are some investment portfolio numbers for the rest of TheMoneyWriters:

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FrugalTrader About the author: FrugalTrader is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.

{ 36 comments… add one }

  • Dividend Growth Investor July 28, 2008, 11:19 am

    Way to go MDJ.. Just down 1.35%. If you can outperform the S&P 500 by several percentage points every year, you can definitely reach your million dollar journey much earlier than you expected :-)

  • Four Pillars July 28, 2008, 11:23 am

    I’m afraid to look! :)

    I’ll calculate it on Jan 1 next year.

    Mike

    • FrugalTrader FrugalTrader July 28, 2008, 11:32 am

      Thanks guys. I was also nervous about checking my portfolio against the beginning of the year due to the bear markets and some of my individual holdings taking a dump. Hopefully things pick up by years end!

  • Chuck July 28, 2008, 11:41 am

    Interesting you did this post. I did my account review over the weekend. I’m down 4.7% on my accounts excluding dividends.

  • DividendMan July 28, 2008, 2:28 pm

    I was down a ton since I just bought BMO last year… but I kept buying and buying and now I’m about even – meh, I wish the price would stay low so I can buy more and more at a higher yield.

    Now that BMO is at my breakeven, I’m looking for some other bargains.

    • FrugalTrader FrugalTrader July 28, 2008, 2:40 pm

      Yea, BMO and CM are a bit more on the volatile side as they seem to take bigger risks. I’m anxious to see what their earnings will turn out to be like after all the charges.

  • Amit in Vancouver Canada July 28, 2008, 2:43 pm

    I am a late starter. I started investing on May 12th with a bunch of ETFs, keeping the following diversification: 22% – Canada, 40% US, 22% – Developed Nations, and 15% emerging markets, 1% cash (with 73% stocks, and 27% bonds), and since all the downturn started, SPY is down by 12.58%, while my portfolio is down by 6.34% excluding dividends. I still have a long way to go, and the true test will be after I have completed at least a year or two. But, it’s a good start.

    • FrugalTrader FrugalTrader July 28, 2008, 2:45 pm

      Amit, congrats on starting your portfolio! For the long term index investor, down turns like these are a great time to add to your positions. If you have some cash in your portfolio, this may be a good time to use it.

  • Amit in Vancouver Canada July 28, 2008, 3:36 pm

    Thanks Frugal. I was raised in a family where investing in Stocks is considered gambling. My parents never wanted me to invest in anything other than GICs or in savings accounts, and I heeded their advice for 34 years. But, last year I decided to expand my knowledge-base, and realized what I was missing. So, now I have become a long-term investor, and even though I am starting at a time of this major downturn in the world economies, but I am happy that Mr. Market is on sale. I am trying to add to my positions slowly every month. I also got inspired by you and have started keeping track of my Net Assets and Liabilities every month. Thanks to you, I am also keeping track of my passive income and it has reached to around $205 per month.

  • skube July 28, 2008, 3:44 pm

    I don’t know exactly, but I do know mine is in the negative territory as well. Good to see I have company.

  • Nate July 28, 2008, 4:00 pm

    I’m up about 20% for the year.

    ONLY because I made a big bet on Visa. Otherwise I would be down roughly -6%.

  • DividendMan July 28, 2008, 4:02 pm

    Yeah, I want to see next months earnings as well. But even if they (BMO, and CM to a lesser extent) don’t beat the street, their Tier 1 capital is strong enough that they can take substaintial additional write-downs and still not have to raise capital by a common stock issue or cutting the dividend. A 6% dividend yeild is worth a (hopefully short-term) paper loss in my books.

  • FrugalTrader FrugalTrader July 28, 2008, 4:06 pm

    Nate, wow, congrats! I’d am interested to hear more about your trade. When you bought, why, and if you’re still holding. Care to share?

  • payment service provider July 28, 2008, 4:28 pm

    mine arent any better… it stinks that yours fell but they will go back up soon enough :/
    -Ryan

  • Nate July 28, 2008, 4:54 pm

    Bought into the Visa IPO the morning it opened at $55 a share, sold in june at $87 a share and distributed it out into some oil/gas and mutual funds I have on the side. Bought back into visa at $69 a week or two ago (much smaller purchase) and now I’m just trying to decide if i want to make it a long term thing if they pay a nice dividend or just flip it on the next run up.

    Looking at buying a new home in a year or two, so this was all a bet on increasing my down payment. Risky but I’m happy to have probably knocked 5-10 years off of my future mortgage.

    • FrugalTrader FrugalTrader July 28, 2008, 5:04 pm

      Nate, why did you sell Visa @ 87? Was it with technical analysis, or you just thought it was overbought?

  • Nate July 28, 2008, 5:21 pm

    I suppose that I thought it was overbought, that and I was more than happy to take the profit and run.

    Price had been stuck in the same range since May and I also figured that banks would be dumping their holdings to offset the pain they were feeling from the credit crunch.

  • Brucie July 28, 2008, 5:33 pm

    A 6% dividend yeild is worth

  • Nate July 28, 2008, 7:59 pm

    Brucie, Is that what V is supposed to be paying?

  • Chuck July 28, 2008, 9:31 pm

    Visa’s paying $0.105 / share quarterly as a dividend.

  • The Financial Blogger July 28, 2008, 11:15 pm

    Quite impressive returns for this year ;-)
    I was +14% on my Smith Manoeuvre 2 months ago… I am now -3.5% with an overall return (non registered, leveraged and registered investment) of -3.16%… not too bad considering the “great” year we are having ;-)

    Canadian equities have saved me so far but it’s only a matter of time before it goes down big time… Anyway, 2008 is a year to forget and we must start planning on 2009 already :-D

    My next move will certainly to buy more financials :-D!

  • kjunk July 29, 2008, 12:01 am

    I was also up at the end of May by 3.88%. by the end of June I was up by 2.43%. As of today (Jul 28), I’m down 2.04%. Mostly Large cap Canadian stocks.

  • raven July 31, 2008, 5:08 am

    Oh, I’m on the lucky side: my overall ytd performance is up by 55%. Did not invest into the stock market this year.

  • FrugalTrader FrugalTrader July 31, 2008, 7:19 am

    raven, how is your portfolio up 55% if you didn’t invest in the market? Are you including your real estate appreciation?

  • raven July 31, 2008, 8:20 am

    @FT

    I put my money in cash instead of stock market.

  • Rita August 3, 2008, 12:23 pm

    Just started as a DIY investor on June 30, 2008 and immediately got a trial by fire during the following month. 8)
    So, my portfolio of the individual stocks is currently down by -0.45%, which I think is okay considering that all the indexes fell much more than that over the last month.

  • soremedic August 20, 2008, 6:18 am

    Ok I know hardly anything about MF’s, and I love this site for learning. I have a measly 3000$ in RSP MF’s, cashed out 10,000 last year for HBP and have managed to replace it with that 3000 but have already lost about 800…quick math=need help. I want to start investing in Nonregistered acounts in hopes of saving up enough the next 2+ years to buy an investement property. What would you guru’s suggest with the market not so good right now? Good time to buy while its low? If so what? Or stick to something more safe? I am a big fan of ING and have been investing in/through them? And can someone explain in Lamens terms a MF’s Tax-Adjusted Rank … is a morningstar of 5 good? and where do you find out about a MF’s dividend yeild…so many questions, hope you all can help :)

  • JP August 20, 2008, 8:25 pm

    Hi there,

    I need help on the following questions. As I could not determine where I can post them, I am posting them here.

    Q1. I am 34 years old and am planning to have the following ETFs for my equity portion of the retirement portfolio. The 3 ETFs (VTI, VEA, VWO) are in USD and are 70% of the equity portfolio. The key benefit is that MER is low (.12-.25%). But USD crashed recently against major currencies by 10-15% including CDN. Should I replace VEA/VWO with say XIN that is in CDN but has 0.49% MER? The USD crash wipes out MER difference for say 30 years (.3 per year)

    Equity Portfolio
    CDN Equity 30% – XIC (CDN)
    US Equity 40% – VTI (USD)
    International Equity 20% – VEA (USD)
    Emerging Mkt Equity 10% – VWO (USD)

    2. Should I tune my portfolio based on Global Market Capitalization as suggested by Efficient Market/Investing intelligently in the links below? This would increase my USD holdings further to 90% of my equity portfolio

    Equity portion of portfolio based on Market Capitalization Percentage
    CAN (XIC) 10%
    USA (VTI) 41%
    Europe (VGK) 26.5%
    Pacific (VPL) 14%
    Emerging (VWO) 8.5%

    http://www.efficientmarket.ca/article/Global_ETF_2
    http://www.investingintelligently.com/2007/04/15/my-new-passive-index-etf-portfolio/

    Thanks for your help in advance,
    JP

  • DAvid August 20, 2008, 11:00 pm

    JP,
    My opinion is not to worry about the currency fluctuations, you have 30 years to wait for your investments to grow, and invest where you feel you will have the best return. If the US dollar is low just now, now is the time to buy, as it will likely return to it’s ordinary place in the ranking of world currencies. Note that the agency overseeing the investments to fund the CPP for the future invests widely around the world, and does not hedge for currency fluctuations. It strikes me that in a widely diversified portfolio, a lessening of one currency’s value could mean cashing holdings in better performing currencies first.

    Just my $0.02

    DAvid

    • FrugalTrader FrugalTrader August 21, 2008, 10:09 am

      JP, I second DAvid’s advice. Currency flucuations over the long term even out. It’s generally not worth the extra MER to hedge your currency position.

  • JP August 21, 2008, 1:57 pm

    Thanks David and FrugalTrader.
    I agree with you that hedging for currency fluctuations may not be worth it in the long term.

    Any thoughts on my second question i.e. investment based on global market capitalization that would lead to 90% of equity investment in USD?

    David, can you please help me understand your below statement?
    “It strikes me that in a widely diversified portfolio, a lessening of one currency’s value could mean cashing holdings in better performing currencies first.”

    I could not understand ‘cashing holdings in better performing currencies first’.

    Thanks again for your help,
    JP

  • Ryan August 21, 2008, 2:38 pm

    Hi JP,

    I have a similiar portfolio as you do and the same issues with currency risk. The major differences between our two portolios is that a have a position in US small caps. The way I reduce my total exposure to US$ is to make sure my fixed income investments are in CAN$. This way my total portfolion is ‘only’ 40% US$.

    Canada Equity – 20%
    XIC – 20%

    Canada Fixed Income – 20%
    XSB – 5%
    XRB – 5%
    XRE – 10%

    US Equity – 30%
    VIT – 20%
    VBB – 5%
    VRB – 5%

    International – 30%
    VEA – 20%
    VOW – 10%

  • DAvid August 21, 2008, 10:53 pm

    JP asks: David, can you please help me understand your below statement?
    “It strikes me that in a widely diversified portfolio, a lessening of one currency’s value could mean cashing holdings in better performing currencies first.”

    I could not understand ‘cashing holdings in better performing currencies first’.

    IF you have holdings in Euros, Cdn$, US$, Yen, etc., and the US$ is low and the Euro high, you could choose to sell your Euro denominated holdings first, and wait for the currency markets to balance before selling your US$ denominated holdings.

    Trades within a currency do not matter, as there is no conversion.

    DAvid

  • DAvid August 21, 2008, 11:36 pm

    JP also asks: “Any thoughts on my second question i.e. investment based on global market capitalization that would lead to 90% of equity investment in USD?”

    Most Canadians at some point wish to receive tax advantaged returns on their investment. For example, in BC you can receive about $75,000 in dividend income untaxed. This has to be from Canadian companies, though, so if 90% of your holdings are US companies, you do not get this benefit. If on the other hand you are buying Canadian companies trading on the US exchange, you may be playing a fair bit of currency risk, though you will benefit from Canadian dividend credits.

    DAvid

  • JP August 22, 2008, 5:23 am

    Thanks David for the explanations.

  • JP August 22, 2008, 1:53 pm

    Thanks Ryan for sharing your portfolio.

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