≡ Menu

Millionaires Corner: QCash’s Portfolio Holdings

Yet another update from our favorite young millionaire, QCash.  For those of you who are new here, QCash is a self made millionaire who retired at the age of 36 with a net worth of over 1.5 million.  This post gives us a glimpse of what he holds in his portfolio.

In response to a reader question, I am providing a comprehensive listing of my portfolio holdings.

If you refer to my account structures, you will see what all the account numbers mean and what I am trying to accomplish with them.

Ironically, as I was looking at FT’s Smith Manoeuvre portfolio, it occurred to me that we are pretty sympatico on our dividend paying stocks.

I have also made some moves in the last month to reduce the mutual funds (with their yucky MERs) from my wife’s portfolio and move the cash into a few bargains. I also made a foray into a few Income Trusts. I looked for some energy trusts that have been hammered because of the falling oil prices, looked at their distributions when oil and gas were at their current levels and examined their long term cash flow potential.

I did manage to catch a few falling knives and got cut as a result, but overall, I remain content with my strategy. As I mentioned before, I am not losing a lot of sleep through this market turmoil as I still have my RRSPs and real estate to fall back on.

Since recently dropping $200k in paper losses, I lost an additional $75K, but has since rebounded to total losses of only $125,000.  Not enough to have me crawling to the window ledge any time soon.

So here you go (comments, criticisms and kudos) welcome:

I1 – Growth/Dividend account

With this account, I tried to mimic the dividend growth fund from Bank of Montreal. I was not always successful in picking up the stocks I wanted at the price I wanted. While this is not a comprehensive list, this represents my top 10 holdings:

  1. Barrick Gold
  2. Bank of Nova Scotia
  3. Canadian Natural Resources
  4. Canadian National Railway
  5. George Weston
  6. Manulife Financial
  7. Power Financial Corp
  8. Talisman Energy
  9. Suncor Energy
  10. Sun Life Financial

I2 – Income Generating – Joint

1250 shares of BMO
10000 shares of PMT.UN (I also own a few of these shares in my RRSP – see below)

I4 – Non-registered – My Account

25000 shares of EIT.UN (this is the one that it is causing my stomach to rumble the most). At the time, this represented only 5% of my portfolio and I like it as it was diversified over a large number of trusts, much like XTR). I am watching the exchange offer closely and will decide what to do with my warrants, when issued. However, it does generate $1750 per month for me.

I5 – Non-registered – Wife’s Account

My wife was a mutual fund gal and still is. She currently holds:

  • 7200 units of BMO Monthly Income Fund
  • 1800 units of Mavrix Dividend and Income Fund
  • 4800 units of TD Monthly Income Fund
  • 6000 shares of Consumers Waterheater Fund

I have been slowly weaning my wife off mutual funds, especially ones she has “duplicate” of. All of the above funds essentially hold the same stocks. The same stocks I have been accumulating in our I1 account. The only reason I haven’t dumped them in their entirety is that she has held these over several years and has some significant capital gains. I am trying to avoid triggering them until I get a real firm grip on what the tax implications on our overall portfolio will be.

In our registered accounts, I have become more aggressive as I didn’t have to worry about taxes on capital gains on the stuff that was in there:

R1 – My RRSP

  • 1500 PMT.UN Paramount Energy Trust
  • 500 PWT.UN Penn West Energy – I actually sold these shares from my I1 account earlier this year, but decided I like the yield.
  • 1000 ROI Fund shares – these were a Labour Sponsored Investment Fund I picked up a few years back. This was a classic example of investing in something for the tax implications rather than the underlying company (generally a very bad idea). I have to hold onto them for a couple more years without having to pay back the tax credits I received for them.)

R2 – My other RRSP

This has two private mortgages and represents my “fixed income” component. I have one mortgage at 10% and another at 5.5%. Both pay weekly and I transfer the cash to my R1 account annually.

R3 – My wife’s RRSP

I finally got my wife out of all her various mutual funds this year, only to invest them as the market collapsed (she is still not talking to me :-) but we have some principal protected notes through BMO – Skylon (this is because of her aversion to risk, which has been rewarded this year) and I also put her into the ROI Fund when I took my shares as I wanted the tax credits (again, this is a bad reason to invest).

The rest of my wife’s portfolio represents the rest of our “real estate” holdings:

  • 300 Canadian Real Estate Investment Trust
  • 1200 H&R Real Estate Investment Trust
  • 1000 Riocan Investment Trust

She also holds 5000 shares of MacQuarie Power & Infrastructure Fund. While she has taken a hit on the capital, the return adds up nicely in her account each month. And she doesn’t really need the money for another 30 years or so, so I hope we can keep on top it.

I moved her RRSP money mostly into trusts to try to increase her return. Holding the trusts in an RRSP is great, but I am sure there will be implications come 2011 as the tax changes take place. I am still educating myself on what these changes will do to the distributions, etc…

I have been building a spreadsheet (that is getting more and more complicated) that outlines monthly/quarterly distributions to these accounts, and sorts all the holdings by type across my entire portfolio so that at any given time I can see my asset allocation by type.

If you would like to read more articles like this, you can sign up for my free newsletter service below (we will not spam you).

About the author: QCash is a young retiree and self made millionaire. He has built his net worth up to $1.5 million by the ripe age of 36. QCash writes the occasional article for Million Dollar Journey to share in his experience of obtaining a large net worth at a young age. You can read our interview with him here.

{ 26 comments… add one }
  • The Reverend November 5, 2008, 11:09 am

    Very impressive portfolio QCash.
    You even anticipated some of my questions as I was going through (ie why hold TD monthly income, BMO monthly income, and all the underlying stocks at the same time).

    I was surprised there weren’t any broader index funds for greater diversification. Is this because, being retired, you are income focused or do you just not like them relative to other options?

  • Dividend Growth Investor November 5, 2008, 11:24 am

    Thanks for sharing your portfolio Qcash. It’s good to see that most of your stocks are canadian dividend achievers. My only concern is that your portfolio consists only of canadian equities, and that you don’t have much international exposure ( which could of course add or detract from performance).
    What’s your take on that.

  • Nurseb911 November 5, 2008, 11:37 am

    That’s one comment I would make too – where is the (if any) global diversification aside from some of these Canadian companies having international operations? Our economy, while relatively strong, only makes up a small component of the global economy. As a young investor wouldn’t you want increased exposure to emerging markets for growth despite the short-term volatility? Or is your intention to gain minimal exposure through the likes of SLF, MFC & others?

  • QCash November 5, 2008, 1:02 pm

    Reverend

    I am currently more income focused and as such I have not been looking at too many broad index funds. With that said, my children’s RESP, which has an 10 to 15 year horizon does hold a few broad index funds, which I am changing to etfs.

    Q

  • QCash November 5, 2008, 1:06 pm

    DGI

    A very valid point, and that is mostly a tax related measure and a decision to “buy canadian” :-)

    Ideally, I will be adding more american dividend paying stocks, but I will hold them all in my RRSP, so I am just waiting to accumulate a little more cash in those accounts.

    Realistically, I would like to have all my income in eligible canadian dividends, but I am also expanding my horizon.

    And, as I said to Reverend above, my kids RRSP has some global funds, but it is a small part of the overall portfolio.

    Q

  • QCash November 5, 2008, 1:09 pm

    Nurseb911

    Yes, I am missing out on some growth potential.

    However, I have a portfolio that is generating income regardless of the underlying value and I am not required to sell any of my investments to sustain my income levels.

    With that said, I would agree that my RRSPs (which I don’t need yet) should be more aggressive and that should form part of my overall plan on balancing the entire portfolio.

    Q

  • QCash November 5, 2008, 1:19 pm

    To all

    I just want everyone to be clear that I don’t think I have all the answers, and I take your suggestions to heart.

    My guess is that at my next update, you’ll see some global exposure :-)

    Q

  • Dividend Growth Investor November 5, 2008, 1:44 pm

    QCash,

    I am not very diversified internationally either, holding a small portion in international dividend stocks, mainly UK and Canada. ( i do hold international mutual funds in my 401k which only lets me buy index funds).
    However most of my dividend payers are global players in their fields, generating large percentage of their revenues from outside the US…

  • Acorn November 5, 2008, 4:12 pm

    QCash,

    Thank you for this post. I guess the important thing to watch is this “energy trust” business. I wonder if they will be able to maintain a high yield after January 1st, after establishing a new monthly payout target for 2009. If yes, it’s time to buy more…

  • Jordan Clark November 5, 2008, 9:26 pm

    QCash, thanks for sharing your investment portfolios.

    I’m wondering how much income does your 1.7M portfolio produce annually after taxes?

  • QCash November 5, 2008, 9:29 pm

    Acorn

    I invested in Energy trusts that a) remain cash flow positive and b) had a distribution rate similar to when oil was at $50 per barrel. If you keep in mind that while oil has spiked, a year ago it was $60. Most of these trusts jumped up in value on the assumption that distributions would double/triple/etc, but the ones I have invested in maintained a pretty even distribution rate.

    I will monitor the trusts on an ongoing basis (as I do with all my holdings).

    Q

  • QCash November 5, 2008, 9:37 pm

    Jordan

    The after tax income last year for my wife and I was 78,000 or 4.5% of the total, but keep in mind, the 1.7 includes my home and my RRSPs (which I didn’t include in my returns).

    On investment portfolio of just under 800,000 and two rental properties with an ACB of approx 400,000 our ROI was about 6.5%.

    On that after tax income of $78,000, we only paid about 5,000 in tax due to the structure of the investments (dividends, rental income with capital allowance, carrying costs, etc.)

    Q

    • FT FrugalTrader November 5, 2008, 11:50 pm

      QCash, that sounds like it could be an interesting post. “How I pay 6% income tax.” :)

  • Mai November 5, 2008, 11:50 pm

    QCash,

    With so many dividend stock shares, are you also supplementing your income by selling options ?

    Mai

  • QCash November 6, 2008, 12:13 am

    Hi Mai

    I don’t do options. My goal is to be as passive as possible, and monitoring options would involve a greater deal of involvement than I already do :-)

    Q

  • Ed Rempel November 6, 2008, 1:55 am

    Hi QCash,

    Do you think that you are adequately diversified? What portion of your overall portfolios is in only resources/energy and financials (“rocks, trees and banks”)? And what portion is just in Canada?

    What do you plan to do when you turn 65 and dividends become much more highly taxed (because the clawbacks on many tax credits are grossed-up by 45%)?

    Ed

    • FT FrugalTrader November 6, 2008, 8:10 am

      Ed, I would say that by the time that QCash is 65, he’ll have most of his non registered portfolio in a TFSA so clawbacks will be less of an issue.

  • Stuart November 6, 2008, 2:30 am

    Hi Qcash

    I admire the structure and of what you have acomplished I am sure you will recover your losses and more. I already like others think we have passed the bottom, in todays market things happen at light speed all the cash that was taken off the table will be quickly move back into the market three or four years of 20% gains will once again be the norm of course in fits and starts as the market always does. Personally I sensed a downturn two years ago and moved into GICS your wife was partialy right but staying is gics is futile for growth. I personally like individual stocks small cap with good dividends MTK-T and growth MTK-T

    About trust companies I used to own some gci.un It did great loved the distributions and great gain in the share price I like many others are staying miles away from them now do you know of any that will continue to be trust companies and pay distributions after the change.

    Thank you Stuart

  • Nabloid.com November 6, 2008, 3:04 am

    I’d say your portfolio is plenty diversified. You don’t want to diversify your way to being average and making it impossible to beat the market. If you have too many companies, you become statistically tied to market average.

    I really like the fact that you have decided to invest your money at HOME, where you understand the politics, economics and culture. Sometimes keeping the money at home, helps local industry, which is an added bonus. Besides, you’re more likely to understand those companies better, since you may see them or deal with them.

    I’d rather keep the money at home than ship it off to Wall Street or Asia… At least I own a piece of companies in a democratic country that I’m a resident of, a country I understand better than any other, and a country I’m comfortable with. Besides, I’m hugely bullish on Canada. We are destined to be one of the richest countries on the planet with our vast resources AND democratic processes with a stable government AND a highly trained population. I’m bullish on Canada… Why wouldn’t I keep the bulk of my money at here?

  • QCash November 6, 2008, 2:29 pm

    FT

    I am going to defer a comment on taxes until next year. I made some significant changes to the overall portfolio this year and I think I need a year to settle down.

    But if I can’t think of anything to post, I’ll pull out my 2007 returns and figure it all out.

    Q

  • QCash November 6, 2008, 2:33 pm

    Ed

    The diversification question does nag at me, but I try to consider my entire portfolio holistically and as such I am heavily weighted in Real Estate (both through my holdings and REITs). My stocks are heavy on Financials and Energy (which is what Canadians are good at, so we tend to weight heavy).

    I am looking at more consumer discretionary and transport, but I am not sure I am ready to pull the trigger yet.

    Again, I recogonize I am heavily invested in Canada, but it’s what I know.

    As for the problem when I turn 65, I have another 27 years (as of December) to worry about that, and I expect there will be other issues to deal with then.

    I don’t panic about clawbacks to OAS and GIS as I don’t expect to qualify for them.

    Q

  • QCash November 6, 2008, 2:37 pm

    Stuart,

    I am keeping my eye on the changes. As it stands now, I beleive EIT has indicated they will remain in a trust structure, but the trusts they hold will change (EIT is like a trust of trusts).

    Others, like consumers waterheater, don’t necesarily require the increased capital that a corporate structure would allow, so I don’t believe (though I stand to be corrected) that they will be changing.

    I will continue to monitor these as they go forward.

    Q

  • QCash November 6, 2008, 2:39 pm

    Nabloid –

    Agreed.

    FT – re Ed’s comment

    I haven’t even really explored the impact that the TFSAs will have on our life style, but given that between my wife and I, we will be able to put $270,000 in today’s dollars, we should be able to live pretty well on that when the time comes.

    Q

  • Paul December 5, 2008, 9:21 am

    QCash
    Congrats on retiring early with a very impressive networth. Can you give us some info on how you developed this impressive networth and how is it, that you have very little debt.
    Thanks
    Paul

  • Deb December 5, 2008, 11:48 am

    QCash, how did you reduce a $250K paper loss to $125K? What did you buy that has gone up?? I am still sitting on my $200K+ loss and every month seems to be getting worse. Unfortunately my losses are real capital losses, not just giving back profits. Thanks! Deb

  • QCash December 5, 2008, 2:57 pm

    Paul

    I don’t know how to put the links here (perhaps FT can help out), but I have a few articles in the archives that discuss most of what I did and how I did it. As well as a few of my blunders.

    Deb nu

    At the time of the post, the market had rebounded a little. Now it’s back down again and I am on holidays so I haven’t taken a good long look at my net worth statement (as I am trying to relax :-)

    Having a look at my portfolio, I am going to guess I am back down over $400K since my all time peak of $1.8 Million (this past August). I will crunch some numbers when I am back and get a better picutre and hopefully FT will let me blog and update.

    Q

    PS I made some movers just before I left to take advantage of some high yields on MBT, TD, GWO and IGM as well as picking up some YLO.UN and XTR

Leave a Comment