Kyle Prevost, 25
A couch potato portfolio consisting of three exchange-traded funds (ETFs): Vanguard Total Stock Market, Vanguard MSCI Canada and Vanguard Total International Stock Market.
Mr. Prevost is one of the two bloggers behind MyUniversityMoney.com and YoungandThrifty.ca. He also is co-author of the book, More Money for Beer and Textbooks – A Financial Guide for Today’s Canadian Student.
How he invests
“While I am intrigued by certain small- and mid-cap value-based stock-picking strategies, I don’t yet have the leisure time needed to properly pursue those strategies,” Mr. Prevost says. “Consequently, being invested in broad-based indexes and being able to invest my capital in roughly 6,500 companies from around the world sounds like a pretty good deal to me.”
Beside the small amount of time required to manage his portfolio, Mr. Prevost likes the low cost. “With commission-free purchases and falling management fees in the ETF market, there has never been a better time to be a couch potato investor,” he declares.
Mutual funds don’t appeal to him. “I have yet to see a study that convinces me more than 2 per cent of mutual fund managers can beat their benchmark indexes over a substantial period of time.”
He considered hedging his exposure to the U.S. dollar by purchasing currency-hedged ETFs. But the Canadian dollar isn’t far from its historical highs against the U.S. dollar, and unlikely to appreciate much. So he did not see a need to hedge the currency risk.
It was reading dozens of books, studies and various blogs, and discovering that couch potato investing had a better foundation than stock-picking strategies and mutual funds.
“Since I’m a dedicated couch potato investor with a relatively short investing history, it’s tough to have a true worst move.”
“I would advise investors to stay away from mutual funds no matter what commission-based advisers tell them. Finally, take a few hours to educate yourselves on investing basics, and if you need help, go with a fee-only financial adviser.”
Special to The Globe and Mail.
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