Monday, August 25, 2014

Markets on a roll

The markets are still on a roll and to a certain extent I have missed some of the action. Am I sorry? Not really. Having a good chunk of my money sitting on the sidelines earning a little interest means that if there is a correction, I am ready.

Having the majority of my money invested in the market means I am enjoying some nice returns. My Aston Hill Financial is up more than 12.4 percent since I bought it just weeks ago. My Bank of Nova Scotia which I bought years ago is up 158 percent this morning. My Chartwell Retirement Residences is only up about eight and a half percent but it does pay a nice dividend and so I am quite content with my investment in this Canadian REIT.

One big shadow is Norbord. It is still down about ten percent since I bought in. Today some U.S. housing numbers are to be released. If they are positive, I might see NBD climb back up to where I bought in. I've decided to be patient with NBD. At some point, it will take off and I want to be there for the ride. In the meantime, it pays a nice dividend as a reward for waiting.

I hold all my NBD stock in my tax free savings plan. I only started my account about two years ago. The plan as a whole is up 24.375 percent. When I view my NBD investment in the context of the entire TFSP package, it does not seem a big problem. If one is going to invest in the market, one has to keep the big picture in view and not get too hung-up on this investment and or that one.

The only other acquisition I have made in the past year and still have on my books is Dream Office REIT (D.UN). Like Chartwell, it has climbed a little but the gains have come mostly in the form of the monthly dividend. D.UN is a classic dividend paying investment. Someday, when my RSPs have been weakened by withdrawals demanded by government regulations, D.UN will form a core holding in my income generating portfolio of stocks and fixed investments.

Am I looking to buy something soon? I'm always looking but I would not be surprised if I sit tight and enjoy my present holdings while waiting for the inevitable correction.

Wednesday, August 20, 2014

Attempting to lower risk of suffering a large loss

About a year ago my wife opened a tax free savings plan with $15,000 in seed money from the sale of my antique British roadster: A Morgan Plus Four. I divided the sum to invest by the going share price of Dundas Reit shares and bought 500 and kept the remainder in cash.

In total, she has made 8.93 percent on her initial investment and today cash makes up almost 11 percent of her total plan. She is enjoying a cash return of 7.63 percent based on her original contribution. I consider anything above seven percent a good return. Both my wife and I are satisfied. We are in no rush to invest the balance.

By the way, the cash is sitting in the TDB8150 investment savings account fund. There are no hidden charges and the account is paying 1.25 percent currently. This is not great but it helps to keep the cash from withering under the constant attack of inflation.

At some point, I will move the cash from TDB8150 to a bond fund - possibly one of the iShares offerings. But before than happens, I want to see interest rates climb somewhat.

The nice things about all of this is that this tax free savings plan is slowing evolving into a nicely balanced investment. At the moment the mix is 89 percent equity (risky) and 11 percent cash (safe).

At some point in the future, my wife will need to draw on this account to live. We need thousands every month to keep our books in the black. It is not hard to imagine this one account, with no more than its original $15,000 deposit, kicking out enough money annually to enable my wife to balance the books for one whole month. And she will be able to do all this without ever touching the principal which will be growing with inflation.

The really nice part here is that the money is tax free, it goes much farther, and the plan does not factor into the old age security clawback calculations.

Friday, August 1, 2014

My investments allow me to live

My portfolio is down today. I don't care. Stocks, ETFs and mutual funds are volatile places to put one's money. If you can't take the ride don't get on a financial roller coaster.

I know some really bright people who stay completely clear of the market. If they got up today, as I did, and found they had lost more than five thousand dollars in the market overnight, they would freak.

I can't say I don't pay any attention to the ups and downs of the market but I can say I pay more attention to my dividend earnings. For instance, last month my largest portfolio returned $1566.59 in cash. I haven't checked my other accounts but I assume they performed similarly.

I'm retired and so is my wife. We need money to live. Unfortunately, we both retired early and we took a financial bath because of that fact. My company pension was cut and it wasn't all the good to begin with. Both our CPP payouts took big hits. Without substantial RSP income, we would be in deep trouble.

If I didn't have the dividend income to balance our books, I would not sleep at night. Heck, I'd have a hard time affording the bed and the roof over our head would most certainly change. But, I do have the dividend income. When the market goes down, my wealth diminishes but my income stays essentially the same.

As my dividends pile up, and as I sell under performing investments, I reinvest in more stocks and ETFs that I feel stand a good chance of appreciating over time and will pay me a nice dividend while I wait.

I try not to but too many eggs in one basket; I don't put too much of my retirement funds in any one investment. I can't tell the future. Good companies today can become the bad companies of tomorrow. Never forget the lesson of Nortel.

That said, almost all my investments go up and down. Down times are expected even when they are unexpected. Which brings me to Norbord. NBD is on a downward spiral. Where it will stop I haven't a clue. But, if it drops below $20, I'll buy a little more. Not a lot but a little. I'm not fully invested in NBD at the moment. I thought it was a little expensive and I was concerned about the its recent continuing loss of share value.

On the other hand NBD pays a handsome dividend today and promises to keep it at its present level for the rest of the year. Unlike some other investors, I like the fact that Norbord is willing to cut its dividend if the payout ratio gets too high. I want a healthy company and I see dividends that are set too high as unhealthy.

Norbord shares have lost money but they have not lost their place in my portfolio.