J. Douglas McLarty, 56
Occupation: Managing Director of McLarty & Co., a public accounting firm in Ottawa
Portfolio: A variety of income-producing securities, notably dividend-paying common stocks (TransCanada Corp., Bank of Nova Scotia and others), income trusts (Inter Pipeline Fund, Bonavista Energy Trust and others), corporate bonds and preferred shares; for diversification, country-specific exchange-traded funds (iShares FTSE/Xinhua China 25 Index Fund, iShares S&P Latin America 40 Index Fund and others)
Investment path:"Like many investors I made a number of mistakes when I started because I thought I was smarter and in the know," Mr. McLarty says. "Eventually I learned the hard way that it was far better to delegate my investment decisions to a qualified professional… ."
Investment approach: "Like other owner/managers who have a significant portion of their net worth invested in their businesses, I want less volatility with my external investments," he says.
"I use a discretionary money manager who customizes my portfolio using individual securities rather than mutual funds. The focus is on investing for income, with particular attention on tax efficiency," he says.
"Preferred shares and common shares are held outside of my RRSP where dividends and capital gains receive preferential treatment. Interest-bearing investments are held in my RRSP. Management fees are completely transparent and they are tax deductible for the investments held in my non-registered account."
His corporate bonds are organized into a five-year ladder (an equal portion matures each year) as a hedge against rising interest rates because bonds maturing in a given year can be reinvested at prevailing interest rates.
Best move: It was purchasing a lakefront property 30 minutes from downtown Ottawa on the Quebec side of the Ottawa River in 1983 when the Parti Québécois was in power. Later, as the separatist threat eased, the property's value shot upward.
Worst move: It was buying into a commercial real estate development when the market was peaking in Ottawa. "After 10 years of rent issues and cash calls, we sold the high-rise office building at a loss. This experience taught me that real estate is not a liquid investment."
Advice: "Use a discretionary money manager who employs chartered financial analysts. They will have the expertise and time to monitor the portfolio and keep emotion out of the decision-making," he recommends.
Special to The Globe and Mail
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