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.

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Baby R2R’s Portfolio Update – Q4 2017

This is the second 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 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, 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.

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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.

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The Book Value

In this article, I take a closer look at the book value of the company and why you should consider it when picking your investments. The book value, also called net book value, or net asset value, is the total value of the company’s assets that the shareholders would theoretically receive if a company were to be liquidated. In other words, the net asset value of a company, calculated by total assets minus intangible assets (patents, goodwill) and liabilities.

The Book Value

So, the book value is a pretty important factor when considering and evaluating companies, and for this reason, I use it extensively when I publish my dividend stock analysis of a company. It is so important in fact, that it forms the basis of the Graham Number (more on this below), which is a calculation of the fair value of a company as per Benjamin Graham – the father of value investing.

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The PEG Ratio

Stock Valuation The PEG Ratio, short for price-to-earnings to growth ratio is a quick short hand of figuring out which stocks are possibly undervalued. The current conditions make for very elevated levels of market valuation of most equities except for a couple of sectors (commodities and energy). In searching for undervalued stocks, looking at the PEG ratio may provide you with a clue.

The PEG Ratio

A stock’s PEG ratio is simply the Price-to-Earnings ratio divided by the (expected) earnings growth rate. Note that technically, PEG ratio can indicate “forward PEG” or “trailing PEG”. Since we are only concerned about the future earnings for new investment dollars, it is a good idea to look at the forward PEG ratio in evaluating stocks. The lower the PEG ratio, the more undervalued a stock is. A rule of thumb used in the industry to evaluate stocks is looking for a number less than 1 – indicating that a stock is possibly undervalued. The PEG ratio provides a better picture than simply looking at the P/E of a stock. For e.g., you may choose to use a screener and exclude high P/E stocks, say anything over 20. This may not be the best course of action, as the high P/E might be justified if the company is expected to grow its earnings aggressively over the next few years.

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