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As retirement drew near, Gail Bebee decided to sell her “high-priced mutual funds” and take control of her money. (handout)
As retirement drew near, Gail Bebee decided to sell her “high-priced mutual funds” and take control of her money. (handout)

me and my money

This retiree puts her investment portfolio on autopilot Add to ...

Gail Bebee

Occupation

Semi-retired/personal-finance writer, speaker and teacher

The portfolio

Exchange-traded funds (ETFs), including Horizons S&P/TSX 60 Index, BMO Low Volatility Canadian Equity, Vanguard Total Stock Market, BMO Aggregate Bond Index and Vanguard Intermediate-Term Corporate Bond ETFs; mutual funds from Mawer Investment Management Ltd.; high-interest savings accounts (HISAs) and guaranteed investment certificates (GICs)

The investor

As retirement drew near, Gail Bebee decided to sell her “high-priced mutual funds” and take control of her money. She joined an investment club, read voraciously, passed the Canadian Securities Course and opened a discount brokerage account.

What she learned was distilled into a book, No Hype – The Straight Goods on Investing Your Money, now in its third edition. It led to speaking engagements and writing assignments with financial publications such as Morningstar.ca.

How she invests

When Ms. Bebee became a do-it-yourself investor, she bought and sold individual stocks. Now, easing into full retirement, she is switching to “a hands-off, balanced portfolio” made up of ETFs, mutual funds and cash.

Her new portfolio eliminates the demands of stock picking, leaving more time for family, friends and leisure. It will also be good to have a low-maintenance portfolio in the event her health becomes an issue or the portfolio passes to heirs not keen on stock picking. Through ETFs, half of her portfolio follows the passive approach. They reap market returns at the lowest cost. The “multifaceted diversification” that yields her desired mix of performance and volatility is enhanced by ETFs tracking bonds (including corporate bonds) and equity subclasses such as small-cap and low-volatility stocks.

The other half of her portfolio takes an active approach through the Mawer group of mutual funds. They are among the lowest cost in the active category and have one of the best track records for outperforming the market.

Best move

Buying shares in real estate company Melcor Developments Ltd. before it was “widely known.” Over the three years to 2007, they went up nearly fivefold in value.

Worst move

She bought a Labour Sponsored Investment Fund for the tax break. But redemptions were blocked and the fund folded. The lesson: Always buy “investment quality first.”

Advice

Her No. 1 rule for investing is: “Think for yourself.”

Want to be in Me and My Money? Contact Larry MacDonald at mccolumn@yahoo.com.

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