Skip to main content
Complete Olympic Games coverage at your fingertips
Your inside track on the Olympic Games
Enjoy unlimited digital access
$1.99
per week for 24 weeks
Complete Olympic Games coverage at your fingertips
Your inside track onthe Olympics Games
$1.99
per week
for 24 weeks
// //

Dear Nancy Woods,

I am a 68-year-old retiree. I am single and have a company pension that more than meets my expense needs. My portfolio is currently worth about $163,000. It consists of a cash account with $59,000, an RSP worth $76,000 and a TFSA worth $28,000. I used to use a mutual fund salesman for advice but found that he got me nowhere. Now I make my own investment decisions.

I am starting to question how good a job I'm doing. In these accounts I have various stocks and ETFs. I have nine stocks, two mutual funds and 14 ETFs. I've watched the market shoot up and recently pull-back. I'm still not making any money. What should I be changing?

Story continues below advertisement

Bob

Dear Bob,

Since you have a pension income, I would count that as the fixed-income component of your portfolio. The assets in the accounts can be invested in equity holdings.

To me, as much as I like investing via ETFs, you have too many. In my opinion you are over-diversified. I read the advice of an institutional manager that said that there is not a significant incremental benefit to owning more than 20-25 stock holdings. It is what economists refer to as the law of diminishing returns. To loosely apply it to a portfolio means that the marginal benefit that you would get for adding one more holding decreases after the 25th one.

With that said, I would suggest that you choose a couple of ETFs, one covering Canada, one the U.S. You can pick others to invest globally if you wish. Then pick 10 to 15 individual blue chip stocks from sectors that you think are going to improve. Pick quality stocks with a good dividend paying history and growth. Limit your speculative holdings to a very small percentage of your portfolio – I would say five per cent of the total.

(Note: I did have an in-depth conversation with Bob to give him a second opinion on his portfolio. The majority of the stocks he owns are what I would classify as speculative.)

Once your portfolio is cleaned up and starting to perform, be vigilant to sell when a company has had a fundamental change or the macroeconomics indicate a change needs to be made.

Story continues below advertisement

Try to avoid buying stocks just because they are in the news or what you see and hear in the media. You need to do your own research beyond the first recommendation if you are not getting other advice.

Having fewer holdings will be much easier for you to monitor. Hopefully you will start to see an improvement to your portfolio's returns.

Nancy

Nancy Woods is an associate portfolio manager and investment adviser with RBC Dominion Securities Inc. Visit her website www.nancywoods.com or send an email request to asknancy@rbc.com. You can send your questions to asknancy@rbc.com as well.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies