Baby R2R’s Portfolio Update – Q2 2018

This is the fourth 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? šŸ™‚

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, IĀ  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 Q2 2018, the total account value is $9,149, of with 44% 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%).

YTD returns have been (excluding dividends): ZCN (0.5%), VXC (3.29%), ZAG (-0.96%), ZEF (-7.39%); appalling results, but 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 šŸ™‚

Portfolio Composition and Returns

This portfolio consists of 3 dividend growth stocks:

YTD returns have been (excluding dividends): BMO (1.02%), BAM (-2.54%), FNV (8.82% since position initiation); a much better performance thanks to buying the dip in FNV.

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 $162.33 between the two portfolios).

As of Q2 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.

3 thoughts on “Baby R2R’s Portfolio Update – Q2 2018

  1. What fantastic parents you are. That is probably the best gift you could ever give a child, more financial freedom. How lucky you are to be in a position to help your baby.
    Well done to you!

    • Thanks BHL. We are hoping that we will have a nice little nest egg ready to pass on to our daughter when she becomes an adult. We have time on our side to do all the heavy lifting šŸ™‚

      cheers
      R2R

  2. Keep up the good work for your child. That graph paints a nice growing picture that should continue for many years to come. Compounding will work magic on these accounts given all the time they have to grow. I’ll be posting my quarterly results soon for baby DH. Thanks for sharing.

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