When Tom Drake was featured in the Me and My Money column in 2009, he was a passive investor, using the TD e-Series group of index funds. His portfolio looks much different now.
Tom Drake
Occupation
Financial analyst and Web entrepreneur
The portfolio
A diversified portfolio of Vanguard and iShares exchange-traded funds (ETFs); also includes shares in TransAlta Corp., Royal Bank of Canada, Liquor Stores NA Ltd. and Canadian Oil Sands Ltd.
The investor
When Tom Drake was featured in the Me and My Money column in 2009, he was a passive investor, using the TD e-Series group of index funds to keep annual fees low and make regular, commission-free monthly contributions. His portfolio looks much different now.
How he invests
Mr. Drake has switched to Vanguard and iShares ETFs to lower his annual fees even more. And his broker, Questrade, allows commission-free purchases of ETFs.
In addition, Mr. Drake is using the Smith Manoeuvre to make his mortgage tax deductible and build up a dividend portfolio in a non-registered account. Under the manoeuvre, he first pays down the mortgage principal, which increases the equity in his house. Then he borrows against this equity to buy dividend stocks. These transactions are carried out through Scotiabank's Scotia Total Equity Plan, which functions like a home equity line of credit (HELOC) whose line of credit automatically increases as the mortgage principal is paid down.
How has his portfolio done since 2009? "While I've had investment gains, a lot of growth at this point comes from the contributions themselves," he replies. "I was probably too heavily invested in the energy sector, which has had tough times in 2015."
Best move
"Building my portfolio with ETFs. … They reduce my fees even more, which is one of the only sure gains when investing."
Worst move
Buying Canadian Oil Sands last fall at $16.40, then watching it drop $10 lower along with the dive in oil prices."
Advice
"My advice to anyone that isn't sure how to invest their savings would be to keep it simple and their costs down by investing in a diversified portfolio of ETFs or index funds."
Want to be in Me and My Money? Contact Larry MacDonald at mccolumn@yahoo.com or his Website.