Baby R2R’s Portfolio Update – Q1 2018

This is the third update in a new series where I intend to share the progress of Baby R2R’s investment portfolio. I started documenting this in Q3 2017 and intend to provide quarterly updates.

Baby R2R was born in Spring 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 we can save and invest for our child’s 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, we also decided to start a Nest Egg fund, where we 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  invest at a slower rate and leave a healthy sum of funds in cash 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 Q1 2018, the total account value is $6,443, of with 60% invested in the funds 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%).

So far, the results have been appalling with the portfolio down 1.9% YTD. However, the yield on the portfolio helps cushion the blow a bit.

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 3 dividend growth stocks:

This portfolio has also performed badly in Q1, although that is not the real return value, since I only initiated FNV in Mar 2018.

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 (to date, just the dividend income has added up to $112.41 between the two portfolios).

As of Q1 2018, 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.

11 thoughts on “Baby R2R’s Portfolio Update – Q1 2018

  1. Hey road does the all world ex canada fund have any tax implecations in the resp? Ie withholding tax etc. What symbol is it?

    Im down too on our resp but the dividends help for sure. Enbridge has killed us. Haha cheaper drips though! 14 years before he needs it is a long time to recover though.

    Keep it up and baby r will have no worries (financially)

    Also the individual savings would when you give that to baby r. For a car at 16-17 or house at a older age?

    Cheers

    • Hi PCI,
      The All-World Ex-Canada is a Canadian-listed ETF (ticker VXC on TSX). The tax implications are no different any other Canadian ETFs.

      Im hoping to keep building Baby R2R’s nest egg up before she becomes an adult…hopefully that will help her out pretty well.

      cheers
      R2R

  2. I have VXC too (but in my own portfolio and not our RESP). Love your colourful graphs, that’s great that you have allocated a portion of your TFSA for your baby in addition to the RESP! She will be set for post secondary! I love the $500 grant, the RESP is such a great thing. We decided to front load our contribution but haven’t fully invested yet. Just using TD e-series and some individual stocks (which have yet to be determined, like BRK.B’s (not A’s of course)).

    • TD e-series can be good funds, but TD’s interface for management is horrible and confusing. I tried going the e-series route when I first started investing about a decade ago, but it was not user friendly at all and had a hard time figuring the system out. Now, with ETFs theres no looking back. VXC is a great ETF to hold.

      BRK is a fantastic long term wealth builder…I have looked at it and shied away in the past, but may initiate during the next economic cycle.

      Best
      R2R

  3. Keep up the progress, that’s the main goal. Stick with funds, stocks, whatever. The end goal is definitely long term and while, “results have been appalling,” as you stated, keep in mind that in any one year or two or three or more results can be terrible. The beauty of starting an investment fund for our babies is that they have time on their side. Love seeing the progress made for your child. Time for me to post baby DivHut’s quarterly results soon 🙂

    • Thanks DivHut. I hear you…thats what I am keeping in my mind that I do not intend to touch this money for the next 2 decades or so…so these small movements will seem paltry when we look back. Looking forward to your update.

      R2R

  4. RICARDO says:

    My son set up the RESP in Dec 2017. That got him the $500 from the Feds for 2017 and has put in another $4.5K for 2018. Living in QC gives an extra $250 per year on the investment ($2.5K). So this gives us a total of $6.5K in principal investments.
    Went all in with DRG for both 2017 and 2018. Drip the stock as this allows for the divs to be re-invested without the brokerage fee and at a lesser than market price.
    On the initial Dec 2107 investment it has given 1 extra stock per month and cap gains of approx. 11.9%. The 2018 investment was just placed so we’ll have to wait and see what becomes of it as per cap gains but it will allow one more stock to be purchased every month.
    So far so good

    RICARDO

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