This post is part of the series where I 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
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.
For the Education fund, I have chosen to go with index funds. I used to hold four different ETFs to construct a global balanced portfolio, but with the introduction of new multi-asset balanced ETFs, I have decided to switch for the sake of simplicity. I still hold a couple of bond ETFs in the account, but will eventually liquidate in coming weeks.
As of today, this portfolio only consists of the following three ETFs.
- iShares Growth ETF Portfolio (XGRO.TO)
- BMO Aggregate Bond ETF (ZAG.TO)
- BMO Emerging Market Bond Hedged to CAD ETF (ZEF.TO)
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-$200/month.
This portfolio consists of 3 stocks:
- BCE Inc (BCE.TO)
- Brookfield Asset Management (BAM.A.TO)
- Franco Nevada Corp (FNV.TO)
In Q3 2019, I sold the Bank of Montreal (BMO.TO) position and decided to consolidate into the Brookfield Asset Management (BAM.A.TO) investment. Over the long term, BAM provides a much better investment outlook than BMO does, so am happy holding more share of BAM for Baby R2R with this move.
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 $496.42 between the two portfolios).
As of Q3 2019, 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 (except BMO) & funds mentioned above. Our full list of holdings is available here.