Re-balancing act. Kind of a journal...

[K-ice]

I wanted to share my investment plan.

I am going over some historical data and have spent the last 8 months or so trying to have a better asset allocation and location.

My Pie   Ideal (Subject to change)
Cash   5%
Bonds 15%
REIT   10%
Canadian   30%
US   20%
International 20%

OK so back in August 2015
Cash   15%
Bonds 0%
REIT   0%
Canadian   85%
US   0%
International 0%

Most of the above is in Taxable accounts and I do have some TFSA and RRSP I should use.

I am keeping this as a journal to myself as well as to invite some criticism. 

I will catch-up on what happened over the past 8 months add a few updates soon.

My main plan is to re-balance with new savings if possible. Maybe I can also help others re-balance a bit.

I am still not at my ideal but getting closer.

[Heckler]

Most of the above is in Taxable accounts and I do have some TFSA and RRSP I should use.

 

You'd rather pay taxes to the man than max your TFSA first?   Justin thanks you. 

[K-ice]

It's complicated. With new funds I would rather max the TFSA then RRSP. However,  I was not able to shelter my current Canadian stocks at the time I purchased them. One was just prior to the TFSA introduction. The other was a private placement.

Moving them over now would be a much bigger gift to Justin than just paying the small dividend tax that trickles each year.

[Heckler]

That explains it, and makes sense, but your post was misleading as you seem to have started investing in 2015, not pre-2009.



Are you considering your whole pie as one?
 ie do your shown allocations include holdings in all accounts?

[MustacheAndaHalf]

Is the 10% REIT Canadian, US, or international real estate?

[K-ice]

Are you considering your whole pie as one?
 ie do your shown allocations include holdings in all accounts?

Mostly.  I have some old RRSP GIC that are locked in and would be costly to move to this brokerage account. They are probably another 5%

I hate that when I was young and uneducated I just did the safe thing the bank adviser suggested. At that time (mid 20's) I should have been investing in stocks.
Also, I put small amounts into RRSP but I should have saved the deduction for future years.

Ideally, everything would be consolidated and simplified but the transfer fees are not negligible.

Is the 10% REIT Canadian, US, or international real estate?

My plan is VRE, so Canadian equity, but I am open to suggestions as this is at 0% of my pie so far.

Thanks

[K-ice]

That explains it, and makes sense, but your post was misleading as you seem to have started investing in 2015, not pre-2009.

Sorry to mislead.  My first small RRSP contribution was 2000.

(Canadians, if you haven't logged into the CRA website you should. There is great info there.)

2008 was my first try at stocks.

2009 was when I had my first real income, but I made mortgage payments a priority until .... 

August 2015 was when I woke up and decided to make balanced investing a priority.

I am inherently a good saver but (I was) not a good investor. 

[K-ice]

OK

So late August I get over analysis paralysis and invest in Vanguard for the first time

I bought:
VAB into the RRSP
VXC into the TFSA


Here is how the "fullness" of my accounts went up:
Month   RRSP    TFSA
July       51%       24%
August   64%      46%

Market timing was kind of bad and they both dropped shortly after.  Why did they both drop? This rookie first investor was asking. I thought one should go up as the other went down. Oh well whatever, I had started investing and I am not going to worry about a short term blip.

So the tax sheltered accounts are filling up now back to the pie

My Pie   Ideal (Subject to change)
Cash   5%
Bonds 15%
REIT   10%
Canadian   30%
US   20%
International 20%

Late August 2015
Cash   10%
Bonds 10%
REIT   0%
Canadian   62%
US   9%
International 9%

[K-ice]

Early September.  One of my Canadian stocks is down. Still more than I paid but down a lot from its peek 50%.

I decide now is a good time and transfer it "in-kind" from my taxable account into my TFSA.

I learn some new terms "" as this is considered a "deemed disposition" and I will need to pay tax on the capital gains.

But I believe it will climb from this point. My plan always was to buy and hold. However, I would rather any gains in my TFSA than my normal account.   

Month   RRSP    TFSA
July       51%       24%
August   64%      46%
Sept.      64%      82%


.... So what happened to that stock?  It was quite stable most of the fall but took a dip in January.  In hindsight that was the lowest point in the past year but it is up from when I first transferred it into my TFSA so I am happy.

Making this "in-kind" trade didn't change my pie.

[K-ice]

I suffer from investment paralysis Oct, Nov and Dec because the markets seam to be falling.

Both VAB and VXC are less than what I paid in August.

I have never been an automatic saver, for example transfer x every month from checking to savings.
So it will be hard to train myself to be an automatic investor.

Investing regularly every month is supposed to take the emotions out of it.

I have a pattern of letting savings build then doing something with it every year.
But that stock-pile savings then go to the bank and do something with it didn't work so well for me with my crappy RRSP GICs investments from 2000 to 2015. 
My two big jumps into individual stocks have done well but created a very unbalanced risky portfolio.

I'm getting a bit better and I seam to be on a 3 month invest in something plan.
And now that something will be Vanguard ETFs.

I also suffer some insecurity on the Job front around Christmas time so keeping a bit more cash seams prudent not just procrastinating. 

[K-ice]

February 2016

I make an RRSP contribution and purchase VAB.

Month   RRSP    TFSA
July       51%       24%
August   64%      46%
Sept.      64%      82%
Feb. '16  86%      73%   

The fullness of my TFSA is down due to the new contribution room in January.
New goal: max out both of those suckers by August 2016. Don't be a last minute contributor as you loose interest earning potential.

My Pie   Ideal (Subject to change)
Cash   5%
Bonds 15%
REIT   10%
Canadian   30%
US   20%
International 20%

Late February 2016
Cash   7%
Bonds 20%
REIT   0%
Canadian   63%
US   5%
International 5%


I put no more money in the Canadian but they are up about 10% on their own.

So even though I added more money to my pie, this re balancing with just new savings is becoming challenging. 

[K-ice]

OK so I think I am now up-to date with my re-balancing journal.

I have a cash stash again and need to do something with it.


Here is the room I have:

Month   RRSP    TFSA
May '16   77%      73%  I have more RRSP room after filing my taxes.

Just when I think I am close to catching up :)  However, I can't complain that I have some room to invest in tax deferred accounts.


Early May 2016
Cash   6%
Bonds 18%
REIT   0%
Canadian   66%  (I didn't add anything, it just went up a bit on its own)
US   5%
International 5%


OK so I am still lacking in REIT, US and International.

I plan to invest in VRE, VXC and maybe VTI.

Here is what I am thinking...

The next chunk I get will go towards VXC in my TFSA

I still haven't invested in any REITs, VRE to be specific.
When I do invest, I am not sure what account REITs should be in.


My RRSP has room but my bond allocation is now full. 

Should I get some VTI in my RRSP?

With the American conversion etc. what do you think is the min I should invest?   I read $50K somewhere, which I do not understand why or have. Since the stock sells for about $100 I don't see why I would need so much. My transaction fees are $10 so I always invest $1000+ to keep it below 1%.

[K-ice]

Just an update:

I hit Vanguard funds with another lump sum today & actually last week.  Some into my RRSP and the rest into my TFSA.

Also, it is about 1y since I started taking control of my own investments and purchasing Vanguard.

My Pie   Ideal (Subject to change, but hasn't since last year)
Cash   5%
Bonds 15%
REIT   10%
Canadian   30%
US   20%
International 20%

OK so back in August 2015
Cash   15%
Bonds 0%
REIT   0%
Canadian   85%
US   0%
International 0%

Today August 2016
Cash   17%
Bonds 12%
REIT   1%
Canadian   42%
US   12%
International 16%

The biggest difference is that my Canadian weighting is down from 85% to 42%.
The value did drop a bit, but the largest change is that I have been contributing all new funds to VXC or VAB.
I did not sell anything. The re-balancing has been a bit slow since things were so out of whack and my plan was, & still is, to re-balance with new contributions.

My RRSP is now maxed out for the first time in my life.
My TFSA is 92% full and will get filled on my next lump payment.

After that I will suffer from the Mustacain People Problem of having no more tax advantaged room.

I am still not "balanced" but I think I could be in about 8 months time.

[Retire-Canada]

If your goal is 5% cash and you currently have 17% cash why don't you invest the excess money?