Markets don't just go up

Since I retired in early 2009, the stock market has generally been a damn fine place to have one's money. Oh, there have been downturns but they didn't last and they left few financial scars. Now, it is 2018 and the party is getting a little long in the tooth. I've been betting the correction would not arrive until 2020 but since expanding my portfolio recently, the market has been retracing its steps almost daily.

I had been sitting on a pile of cash. I was certain a 10% correction was in the cards. I waited and waited and waited. With every passing month I sacrificed dividend income. Finally, in the last month or so, I decided I was wrong. I should not be on the sidelines. I started buying.

I bought the following:

• ALA (Altagas)
• EMA (Emera)
• FTS (Fortis)
• H (Hydro)
• IPL (Inter Pipeline)
• PPL (Pembina Pipeline)
• SJR.B (Shaw Communication)
• TD (TD Bank)
• TCN (Tricon Capital Group)

And how have I done? I'm down. I've lost $1551.89. Oh, Emera, Fortis and TD are up but all the rest are down in varying amounts. Altagas is down a full 7 percent and Pembina Pipeline is following close behind with a 5.93 percent loss. One could argue that Pembina is a greater loss as I invested more in the pipeline and so have now suffered a three digit decline.

Am I kicking myself for making my recent stock buys? A little. But I'm kicking myself for not having simply stayed in the market. If I had, I'd have paid less for many of the stocks that I bought and I'd have collected a year's worth of dividends to cushion today's pullback. Investors are warned not to try and time the market. It is advise I usually follow.

There were no withdrawals, simply losses.

I turned 71 this summer. This milestone had a little extra meaning for me. It meant that London Life would finally be returning what's left in my Freedom Fifty retirement account. I invested about $4200 almost twenty years ago.

If I'd simply put that money in the TD Monthly Income Fund and reinvested the dividends, today I'd have about $14,000. Instead, I entrusted the money to London Life and today I only have about $2100. The only ray of sunshine brightening this whole story is that at 71 a guarantee kicked. London Life guaranteed if I waited until the age of 71 to ask for my money, it would send me at least seventy-five percent of my original investment. I'm hoping to have about $3150 returned. I say hoping because lately I have found getting London Life to put this in writing has proven difficult.

That said, I submitted a form last Tuesday. I should see the remnants of my investment soon and, when I do, I'll post the news.

The point of this post is to say, don't put all your bets on one horse when it comes to investing. If I'd have given my entire RRSP to  London Life, as was suggested by its rep, I'd have lost a massive amount of money. I'd been in financial trouble today and I'm not because I didn't.

If I were young and just starting out, and I knew what I know now, I'd take a big chunk of my money and invest it following the advice found on the Canadian Couch Potato investment blog. I'd hold a little money back to invest directly in stocks I really liked. Why would I do that? For fun. Investing can be, and should be, fun.

The last thing that I'd do is give my money to an investment advisor. I have seen two recently and both only made one solid promise: they would charge me to manage my money. One admitted to a fee of three percent of the value of my portfolio annually the other fudged their answer.

And I believe them. They will take out their fees without fail. London Life took out their fees annually. Their fees were part of the problem. Those fees made it very hard to earn enough money to replace the money that Freedom Fifty Five lost in the first year or two.

Finally, as I got older and got more and more comfortable with investing, I'd carefully prepare an allocation goal. I'd create a portfolio based on this allocation using the software supplied by whichever bank I was using to manage my actual portfolio. The practice portfolio would be based on my actual portfolio and then I'd sit back and see which approach delivered the best results.

And, I am actually taking my own advice even though I am now 71. I am tracking three portfolios: one my actual portfolio and two practice portfolios.

If my actual portfolio is worth X today. My allocation-based portfolio is up .14 percent and my Couch Potato Portfolio is down .08 percent. But there is one big difference between my present portfolio and the other two. My portfolio, structured for income, is paying thousands of dollars more than either of the other two portfolios.