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.

6 thoughts on “Baby R2R’s Portfolio Update – Q3 2017

  1. It’s great to see that other families are investing for a better future of their children as well. And what a fantastic way to support parents. I wish we would have a similar education grant in Germany. Do you receive any additional public benefits like some kind of child allowance in Canada?

    • Thanks Jung. Yes, we receive some tax free benefits currently. Depending on income, that benefit can be miniscule and our current household income is pretty decent, so the benefit program is very small compartively.

      R2R

  2. Thanks for the DivHut mention. Much appreciated. Looks like things are progressing just fine with Baby R2R’s portfolio. The bottom line when it comes to starting an investment portfolio for your child, no matter the route your take (stocks, bonds, ETFs, metals, etc.) you are taking advantage of their greatest asset, time. For now, baby DivHut is concentrated in just one account. We didn’t open an education fund. Also, we went the route of individual stocks only and no funds. Of course, nothing is written in stone and seeing these updates definitely helps can open my eyes to other potential investments. Looks good to me 🙂

    • Thanks for the inspiration, DivHut. Yeah, theres plenty of different routes to take for building a sizeable portion. As mentioned in this post, I have chosen a hybrid — between active and passive investing. Hopefully this will grow into something sizeable in the coming years.

      cheers
      R2R

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