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Couch potato investor saves on time and costs

Kyle Prevost, 25

Occupation

High-school teacher

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The portfolio

A couch potato portfolio consisting of three exchange-traded funds (ETFs): Vanguard Total Stock Market, Vanguard MSCI Canada and Vanguard Total International Stock Market.

The investor

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.

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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.

Best move

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.

Worst move

"Since I'm a dedicated couch potato investor with a relatively short investing history, it's tough to have a true worst move."

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Advice

"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.

Want to share your strategies?

E-mail mccolumn@yahoo.com

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