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These days, no investment is safe – not even cash, whose purchasing power is eroded by inflation.

Last year was one of the most difficult for investors in a generation. This year should be somewhat better, as long as inflation keeps moving down and the central banks don’t go on another rate-increase spree.

But we won’t know that until 10 months from now. In the meantime, we need to pay close attention to RRIF portfolios with a view to minimizing risk and preserving capital.

My model RRIF portfolio was created for The Income Investor newsletter in February 2013 with an initial value of $49,910.30, so this month marks its tenth anniversary.

This portfolio differs from an RRSP in two fundamental ways. First, it is lower risk. RRIF investors are in their retirement years, and preservation of capital becomes more important as a result.

Second, the portfolio should generate income to provide cash for the annual withdrawals. That means focusing on securities with good yields as opposed to those that depend on capital gains for investor returns.

Here are the current positions with a commentary on how they have fared since the last review in August. Prices are as of the close on Feb. 17.

EQ Bank GIC. We invested $8,343.95 in a one-year GIC at 4.4 per cent from EQ Bank that matures in mid-August. EQ Bank is a member of the Canada Deposit Insurance Corporation, so our capital and interest are protected.

iShares Core Balanced ETF Portfolio (XBAL-T). This is a fund of funds that invests in eight basic iShares ETFs, with a current mix of about 61-per-cent stocks, 39-per-cent bonds. Last year was rocky for both bonds and stocks but the units managed a small gain of 42 cents in the latest period. We received two quarterly distributions totaling 23 cents per unit.

Royal Bank of Canada Non-Cumulative 5-Year Rate Reset First Preferred Shares Series BO (RY.PR.S-T). This preferred was added two and a half years ago. It produced a total return of 30 per cent in its first year, but the shares gave back $3.58 in the latest period. It pays a quarterly dividend of 30 cents ($1.20 per year). The next reset date is the fall of 2023.

Granite REIT (GRT.UN-T). This REIT operates the properties of Magna International and has diversified into other areas. REITs struggled in 2022, hurt by rising interest rates and fears of a recession. But Granite did better than most and gained $5.36 per unit in the latest period. We received distributions of $1.566 per unit.

BCE Inc. (BCE-T). BCE shares were hurt by rising interest rates and lost $4.26 in the latest period. We received two dividend distributions of 92 cents each.

Pembina Pipeline Corp. (PPL-T). Pembina shares pulled back in the latter part of 2022, with interest rate hikes partially responsible. The stock lost $2.85 in the latest six-month period. The monthly dividend was increased to 21.75 cents in September. We received six payments totaling $1.30 per share.

Brookfield Infrastructure LP (BIP.UN-T). This limited partnership invests in infrastructure projects around the world. After a 3-2 share split in June, the shares pulled back and were down $8.22 in the latest period. We received two distributions of 36 US cents each (adjusted for split).

Firm Capital Mortgage Investment Corp. (FC-T). Like many of the holdings in this portfolio, the share price was hurt by rising interest rates. The stock price dropped $0.53 in the latest period. But we continued to collect a steady monthly dividend of 7.8 cents (93.6 cents a year), with a small year-end top-up in December. The dividends almost made up for the drop in the share price in the latest period.

iShares S&P/TSX Capped Utilities Index ETF (XUT-T). This ETF invests in a portfolio of utilities stocks traded on the TSX. Utilities were another sector hit by interest rate increases, and the units lost $5.32 in the latest six months. We received distributions totaling 50.5 cents per unit.

Innergex Renewable Energy Inc. (INE-T). After a brief rally, green energy stocks are under fire again. The shares were down $3.72 in the latest period. The stock pays a quarterly dividend of 18 cents (72 cents a year).

Toronto-Dominion Bank (TD-T). Banks normally do well during periods of rising interest rates, so we added 100 shares of TD to the portfolio last year at this time. It didn’t go as planned. Bank shares fell on fears a recession would result in reduced borrowing. As a result, we lost 16 per cent on this investment during the period from February to August 2022. But the banks are recovering, and TD gained $5.42 a share in the latest period. Also, the bank raised its quarterly dividend by almost 8 per cent, to 96 cents, effective with the January payment.

Cash. We deposited retained earnings of $1,536.55 with Saven Financial, which was paying 2.85 per cent on its high-interest savings account. We earned $21.90 in interest.

Here’s a look at the RRIF Portfolio as it stood at the close of trading on Feb. 17. Note that commissions are not deducted. Although this is a RRIF portfolio, withdrawals are not factored in, as this would make it impossible to track performance accurately.

Income Investor RRIF Portfolio (a/o Feb. 17)

SecurityWeight %Avg. costShares/unitsBook valueCurrent priceMarket valueRetained incomeGain/loss %
1-yr GIC10.3$8,343.95 1$8,343.95 $8,527.52 $8,527.52 02.2
XBAL6.1$26.10 200$5,220.00 $25.30 $5,060.00 $103.00 -0.1
RY.PR.S6.8$20.30 270$5,481.00 $20.72 $5,594.40 $324.00 8
GRT.UN6.2$78.22 60$4,693.20 $85.27 $5,116.20 $186.84 13
BCE11.9$48.96 160$7,834.15 $61.78 $9,884.60 $588.60 33.7
PPL9.4$46.84 170$7,962.80 $45.76 $7,779.20 $435.20 3.2
BIP.UN21.3$18.55 375$6,957.35 $47.00 $17,625.50 $540.00 161.1
FC7.1$13.77 490$6,784.40 $12.02 $5,889.80 $335.32 -8.2
XUT5.7$25.61 170$4,354.20 $27.84 $4,732.80 $179.18 12.8
INE4$22.35 210$4,693.00 $15.75 $3,307.50 $151.20 -28.3
TD11.2$106.23 100$10,623.00 $92.87 $9,287.00 $363.00 -9.2
Cash0$21.90 $21.90
Totals100$72,700.89 $82,826.42 $3,206.34 18.3
Inception$49,910.30 72.4

Comments: Interest-sensitive stocks were hit hard by rising rates during the period, and that included almost all the stocks in the portfolio with the exception of TD Bank and Granite REIT. We were spared a worse loss because we sheltered over $8,000 in a GIC.

As of Feb. 17, the total value (market price plus retained earnings) was $86,032.76 compared with $90,370.10 in August. That represents a loss of 4.8 per cent for the portfolio in the latest six months.

As of Feb. 18, 2022, the total value was $88,770.89. So, our one-year loss was 3.1 per cent. I don’t like losing money at any time, but given the state of the markets, this wasn’t a bad result.

Since inception 10 years ago, we have a cumulative total return of 72.4 per cent. That works out to an average annual compound rate of return of 5.6 per cent. Our target is in the 5-per-cent to 6-per-cent range, so we are on track.

Changes: This is a very difficult market right now. Many dividend-paying stocks, which form the backbone of our equity holdings, are interest sensitive, and their performance over the past year underlines the impact rapid increases in rates has on their market value. The Bank of Canada has signaled a pause in rate hikes, but if inflation doesn’t ratchet down, we could see a renewal of increases later this year.

That tells us we need to be cautious with this RRIF portfolio until the situation clarifies. Accordingly, we will make the following moves.

Almost a quarter of the portfolio is invested in Brookfield Infrastructure. It’s done well for us in the past, but this is too heavy a weighting. Accordingly, we will sell 175 units at $47, for a total of $8,225. That will leave us with 200 units.

We will also sell our position in Innergex, which has turned out to be more volatile than I expected. That will generate $3,458.70, including retained earnings.

We will put the total of $11,683.70 into a six-month GIC with EQ Bank that pays 3.6 per cent annualized. That will mature at about the same time as our existing one-year GIC. Hopefully, we’ll see a clearer direction in the markets and can make new purchases accordingly. For now, we must focus on reducing the risk in this portfolio.

We will use retained earnings to add another 10 shares of Firm Capital at $12.02, for a total payout of $120.20. That will give us an even 500 shares. Our retained earnings will fall to $215.12.

We have cash and retained earnings of $2,956.84, which we keep with Saven Financial, which is paying 3.75 per cent on its high-interest savings account.

Here is the revised portfolio. I will revisit it in August.

Income Investor RRIF Portfolio (revised Feb. 17)

SecurityWeight %Avg. costShares/unitsBook valueCurrent priceMarket valueRetained income
1-yr GIC10.3$8,343.95 1$8,343.95 $8,527.52 $8,527.52 0
6-mo GIC14.1$11,683.70 1$11,683.70 $11,683.70 $11,683.70 0
XBAL6.1$26.10 200$5,220.00 $25.30 $5,060.00 $103.00
RY.PR.S6.7$20.30 270$5,481.00 $20.72 $5,594.40 $324.00
GRT.UN6.2$78.22 60$4,693.20 $85.27 $5,116.20 $186.84
BCE11.9$48.96 160$7,834.15 $61.78 $9,884.60 $588.60
PPL9.4$46.84 170$7,962.80 $45.76 $7,779.20 $435.20
BIP.UN11.3$18.55 200$3,710.00 $47.00 $9,400.50 $540.00
FC7.1$13.81 500$6,904.60 $12.02 $6,010.00 $215.12
XUT5.7$25.61 170$4,354.20 $27.84 $4,732.80 $179.18
TD11.2$106.23 100$10,623.00 $92.87 $9,287.00 $363.00
Cash0$21.90 $21.90
Totals100$76,832.50 $83,097.82 $2,934.94

Gordon Pape is Editor and Publisher of the Internet Wealth Builder and Income Investor newsletters. For more information and details on how to subscribe, go to