Baby R2R’s Portfolio Update – Q3 2017

This is a new series where I intend to share the progress of Baby R2R’s investment portfolio. Before I begin, a quick shout out to DivHut, who gave me the idea to write and document these updates.

Baby R2R was born in April 2016 and a few months later, I setup her education fund to which I contribute on a regular basis. We live in Canada, so we take advantage of the RESP program (Registered Education Savings Plan), an account type where you can save and invest for your child’s benefit for secondary education. In addition to tax advantages, we also receive an education grant, which matches upto 20% of the saved amount (upto a max of $500 per year). How can anyone say no to free money? 🙂

In addition to the education fund, I also decided to start a Nest Egg fund, where I save and invest for Baby R2R and let compounding do its job over the course next couple of decades. The two accounts take different approaches to investing strategy.

The Education Fund

For the Education fund, I have chosen to go with index funds. The details of portfolio construction are shared in this post. While I contribute regularly, I do not invest every last penny in the account. I have decided to invest slightly at a slower rate and dollar cost average over the months.

To get full benefits from the government, I contribute $2,500 per year and will receive $500 in grants. So, the total contribution amount going into the account is (and will be) $3,000 per year.

As it stands at the end of Q3 2017, the total account value is $5,900, of which 38% is invested and the rest in cash.

Portfolio Composition and Returns

This portfolio consists of four ETFs giving exposure to Canadian Equities (20%), All World Ex-Canada Equities (40%), Canadian Fixed Income (20%) and Emerging Market Fixed Income (20%).

Year-to-date, this portfolio has returned 5.8% + dividends.

The Nest Egg Fund

The Nest Egg Fund is extra savings and contributions that I earmark part of my tax free savings account for Baby R2R. The goal was to save an extra $100/month, although I may have been a bit more generous with the contribution in the last few months 🙂

Portfolio Composition and Returns

This portfolio consists of 2 dividend growth stocks: Bank of Montreal (BMO.TO) and Brookfield Asset Management (BAM.A.TO).

Year-to-date, these stocks have returned 10.9% + dividends (although that is not my real return value, since I only bought BAM in July 2017)

Summary

Between the two accounts, I am happy with the progress we are making for our daughter’s future. The account values have grown and Baby R2R has started earning dividend income. In fact, Baby R2R got her first pay raise in May 2017 when BMO announced a dividend increase of 2.27% 🙂

Baby R2R’s total portfolio value and dividend income looks like this:

What are your thoughts on these portfolios and the plan going forward? Share your thoughts below.

Full Disclosure: Long all stocks & funds mentioned above. Our full list of holdings is available here.

Investing in Weedstocks to Reach Financial Independence

The following is a guest post from Save Stacks

There are many routes to financial independence. The average Joe works at his job for 30 years and ends up with a nice fat pension. Most people reading this blog are taking a different approach, to limit time in the work force. The most common methods are usually dividend investing or real estate to reach FI.  I’ve gone on a completely different path, investing in the newly forming MJ industry.

Start of My FI Journey

I started my FI journey like others, stumbling across a blog like this one. You end up catching the bug, thinking there is a different way of life than being a cubicle slave.

I was on the verge of buying a $70,000 truck, luckily I was saved just before making that mistake.  Instead I started buying my company stock options, which pay out a decent dividend. I was now obsessed with getting more dividend income.

Dividend stocks are awesome, paying you 5% per month and also gaining value at the same time. A lot of wealth has been generated from dividend stocks.  Kevin O’Leary from the Shark Tank only buys dividend paying stocks.

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2 Recent Buys

BuySell

A quick update on a couple of purchases in our portfolio.

First purchase: I added to my position with in Fairfax India Holdings (FIH.U.TO). I added 100 shares @ $17.50, bringing down my average cost basis slightly lower. This is a company that I initiated a position in early September and provides me with an exposure to the Indian market. I wont repeat and will simply point to the other post for details.

Second purchase: Last week’s move down also gave me an opportunity to add more shares in one of the strongest performers in my portfolio and my largest holding overall. I added 100 shares in Kirkland Lake Gold (KL.TO) at C$16.75. So far, this stock has been on fire and I have more than doubled my initial investment, which I started about a year ago. Although I am tempted to sell and take some profits off the table, the good news just keeps rolling and I cant help but just buy more on this promising company. Some highlights on why I continue to buy Kirkland Lake Gold

  • Chaired by none other than Eric Sprott, KL has top notch leadership. The company is now well on its way to become the top mid-tier company in gold producing space
  • The Fosterville project has turned into a behemoth and the grades just keep improving. In addition, the Macassa mine also continues to deliver some great results
  • The strategic investments keep coming — buying equity interest in companies like Novo Resources (NVO.V). Novo is a company that slipped through my fingers and has seen some explosive returns lately, but atleast I can take refuge in knowing that as KL shareholder, I am still seeing some benefits from Novo’s move and resources in Western Australia.
  • Eric Sprott still continues to buy shares in KL hand over fist. His last purchase was 200K shares at $15.71. So, more great news on the way? I bet it is.
  • The company is also maturing and shareholder friendly with dividends (this purchase adds $4 in annual dividends — nothing to write home about) and share repurchases. CEO Tony Makuch has continued to reiterate over and over in every presentation that the management and board firmly believes that even at these prices the stock is severely undervalued.

What do you think about these purchases? Share your thoughts below.

Full Disclosure: Long KL.TO, FIH.U.TO. Our full list of holdings is available here.

Quarterly Update – Q3 2017

Welcome to the quarterly update for Q3 2017. This is part of  a series where I track our financial progress on a quarterly basis. I present three parts in this series: (i) Investment & Portfolio Update, (ii) Passive Income Update, and (iii) Goals Update.

1. Investment & Portfolio Update

Q3 2017 saw a lot of activity after a very quiet Q2 in our portfolio.
We added to the following positions.

We continued adding to the following funds

  • BMO S&P/TSX Capped Composite Index ETF (ZCN.TO)
  • Vanguard All-World Ex-Canada Index ETF (VXC.TO)
  • BMO Aggregate Bond Index ETF (ZAG.TO)
  • BMO Emerging Bond Index ETF (ZEF.TO)
  • Vanguard Emerging Market Bond ETF (VWOB)
  • US Equity Index (Seg) Fund
  • Intl Equity Index (Seg) Fund
  • Scotia Monthly Income (Mutual) Fund

Q3 saw 2 dividend increase announcements in our portfolios. The companies from our portfolios increasing their dividends and details of portfolio changes are summarized below.

Top Dividend Raises for September 2017

Dividend growth investing is a popular model followed by the investing community to build assets. Companies which not only pay dividends, but raise them year after year have been shown to perform better overall for investor returns. On the flip side, it is also important to keep an eye on the dividend cuts, which could signal troubling times ahead for a company. This post captures the announcements of changes in dividend amount for the week – both increases and cuts.

Note that only $2B+ (Midcap+) companies are included in this list.

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