Annual Update – 2018 Review

Welcome to the annual 2018 update. This is part of  a series where I track our financial progress on a regular basis. I present three parts in this series: (i) Investment & Portfolio Update, (ii) Passive Income Update, and (iii) Goals Update.

1. Investment & Portfolio Update

2018 was quite an interesting year. The broad equity markets performed very well for the first 9 months of the year, but ended the year poorly with the S&P 500 returning -4.4% for 2018. Regular readers of this blog may be aware that I have been defensively positioned with lots of gold equities, utilities and almost no allocation to the tech sector. As a result, my portfolio did pretty well for the year. I finished the year with a return of +4.86%, a difference of 9.26% compared to S&P 500 returns.

Changes to our portfolio are summarized below.

Portfolio Highlights

2018 saw our portfolio grow quite a bit thanks to big contributions into our tax sheltered accounts during the course of the year. Lots went right in 2018 for our portfolio with some of the highlights being:

  • Gold equities performing very well during the start of bear market in Q4 2018
  • Selling our broad equity index funds in Q3 and Q4 before the US markets took a hit
  • Booked pretty good gains in
    • Nevsun Resources (NSU) (albeit a bit too early before the Zijin Mining takeover was announced) – exited the position via covered call
    • Pan American Silver (PAAS) – exited the position via covered call
    • Canadian National Railway Ltd (CNR.TO) (CNI) – rode the train (sorry for pun) from low $70s to $105. Looking to buy back this stock during/after next recession.
  • Two new positions during the year with Origin House (OH.C) (previously called CannaRoyalty) and Equinox Gold (EQX.V)
  • We added to various positions through the year as shown in the image above & plenty of dividend raises to sweeten the deal going forward

2. Passive Income Update

Another great year on the passive income front. In 2018, we managed to earn a passive income of $9,238.40, which fell about ~$1.7k short of the $11K goal.

3. Goals Update

Onto the goals that I set and see how we did overall on that front.

  • Earn $11,000 in annual passive income Failed!
    • Passive income for 2018 was $9,238, which fell short by about $1.7k from the target.
  • Pay down an extra 25% towards mortgage debt Achieved!
    • We made big strides on this front. We went above & beyond and made about 112% extra payments on the mortgage debt.
  • Achieve better portfolio rebalancing and diversification Partially Achieved!
    • More passive investing vs. active investing approach – I decided against it after some more research and taking deeper dive into various ETF options. Long story short, I considered things like factor-based ETFs, but saw some idiotic compositions by providers which stopped me from going down this route. For e.g., one of the top holdings in both growth-factor ETF and value-factor ETFs was Apple Inc. What we know now that tech stocks were ridiculously overvalued over the course of the year, the fact that value-factor ETF had Apple as top holding made me run for the hills.
    • Rebalance stock portfolio to reduce materials/commodity exposure – I have sold some of the positions, but outperformace by other equities in the space still keeps my portfolio diversification high in the space. On one hand I want to protect myself, but on the other hand I also do not want to quit my winners too early. Tough decision that I revisit all the time.
    • Asset Class Diversification – I wanted to reduce my equity exposure which I managed to achieve. On Jan 1 2018, I had 72% in equities and by December 31 2018, my equities exposure was down to 60%.

Not the best achievement rate on the goals, with 1.5 out of 3 goals failing. Nevertheless, this shouldn’t be disheartening as it tells me that I am not aiming too low. I will up these goals for next year and work towards achieving them. Stay tuned for the upcoming post on the Goals for 2019.   Stay Connected / Subscribe You can follow Roadmap2Retire on Facebook, Twitter, or Pinterest. Be sure to subscribe to the newsletter to stay on top of the latest investment articles. Click here to subscribe.

That’s all folks! Thanks for reading. Be sure to leave a comment at the bottom – I love to hear from the readers on your thoughts and opinions.

2 thoughts on “Annual Update – 2018 Review

  1. Well done on the year. Paying down that much debt must be a nice feeling. Why was your dividend income down on last year? Was that because you reduced your exposure to equities from 71 to 61%?

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