Federal civil servant
Mainly TD e-Series index funds (including Canadian Index, Canadian Bond Index and International Index funds); some bank stocks.
There was bad news for Alan Whitton in 2008. He was laid off from Nortel Networks Inc. and his stock holdings plunged in value.
But then fortune smiled. Mr. Whitton got his entire pension transferred out of Nortel into a locked-in retirement account (LIRA) – just a month before the troubled company went bankrupt and pension benefits were cut.
His LIRA invested in some TD e-Series funds at what turned out to be the bottom of the 2008 bear market. At the same time, some surplus pension and severance money went into the TD e-Series funds within his registered retirement saving plans.
He later found work in the federal civil service, and rolled his LIRA into the Public Service Pension Plan. The rollover was worth 18 years and four months of contributions into the plan.
How he invests
Prior to 2008, Mr. Whitton had been a stock picker, with positions weighted toward banks and Nortel (accumulated through the company's employee stock purchase plan). Now, he is mainly a passive investor focused on index funds, a conversion that arose from reading financial blogs.
Passive investing makes things easier, but what he especially likes is how investing becomes much less stressful. "The indexes shield me from the fluctuations of individual stocks like Nortel," he declares. "This kind of investing helps me sleep a great deal better these days."
Along with some bank stocks bought before 2007, performance has been pretty good – more than making up for the losses in 2008. But the returns were mainly due to the good fortune of receiving that lump sum of pension and severance money at the bottom of the bear market in 2008.
He has opened a registered disability savings plan for his autistic son. Setting up and running the plan is documented in his blog at canajunfinances.com. So too is the process of liquidating registered education savings plans to pay for his three daughters' post-secondary education.
"The best thing was investing in 2008 at the bottom of the market and later buying into the Public Service Pension. I was lucky … I was able to use my pensionable work time at Nortel to do a buyback in the PS Pension."
"The worst thing I did was not cashing out of some of the equity I had in Nortel."
"Do not invest too much in your employer. I paid the price of having too much of my income and investments tied up in Nortel, when I should have been diversifying."