When I started learning how to invest, I haven’t read any books and internet was my only resource.
I browsed personal finance websites and joined their forums. Actively, I posted questions and taught myself.
Couch Potato strategy was the model that was easiest to understand that I have adopted at first.
I dislike mutual funds due to the fees involved in maintaining the account and how much commission goes to fund advisors.
Here's the chronological order in my investing journey!
FIRST: Tangerine Investment Funds
I have been a client of Tangerine which was formerly known as ING Direct since our time living in Europe.
It is an online bank with zero fees on their checking accounts and minimal fees on their investment funds.
The Tangerine Investment Funds offer an index portfolio with five choices ranging from the conservative Balance Income Portfolio to Equity Growth Portfolio.
Management Expense Ratio (MER) is about 1.07% and have five funds to choose from.
I went for the Balance Growth Portfolio with the following asset allocation:
Canadian Bonds = 25%
Canadian Stocks = 25%
US Stocks = 25%
International Stocks = 25%
SECOND: TD E-series Funds
Upon learning more from the investment forums, I then set up Registered Education Savings Plan (RESP) for my kids. RESP is an investment vehicle available to parents’ in Canada to save for their children’s post-secondary education.
The TD E - Series Funds allow you to customize your portfolio with several asset mix.
This is also mainly an online investment account and you just have to set-up the account first by visiting any branches of TD Bank.
Once it’s set up, you just need to contribute regularly and it’s best in my opinion to contribute at the beginning of the year the maximum of $2,500 if you have the funds, as the government will contribute $500 per year. (You can’t bet that as that is 20% return on your investment!)
Lifetime maximum government contribution is $7,200 and lifetime maximum contribution each child of $50,000.
For my kids RESP I invested TD Canadian Index – e. It has a low Management Expense Ratio (MER) of 0.33%.
THIRD: Dividend Growth Stocks
Learning from the two above index funds, I understand that fees are very important. Minimizing fees to a bare minimum is the goal to a much better returns on your investment portfolio.
After learning about index funds, I finally evolved myself and learned about investing in individual common stocks.
The mentor I have met on one of the investment forums has been very diligent and patient in teaching the basics and the fundamentals of common stock investing.
I continue to educate myself and read books on investing and personal finance.
I've opened an account with one of the online brokerages Virtual Brokers which has one of the cheapest commission fees per trade.
This account was opened 6 years ago and I am fortunate as clients who have the account still benefited the penny per share commission which is no longer available to new customers.
Dividend growth stocks is my focus and I am for long term investing. Some of my holdings pay dividend on a monthly and quarterly basis. My dividend portfolio has an annualized return of 7-8%.
FOURTH: Exchange Traded Funds (ETFs)
For diversification, I have allotted small percent of my portfolio in Exchange Traded Funds (ETFs). It holds assets such as stocks, bonds or commodities and most ETFs track an index.
An ETF is an investment fund that traded on stock exchanges. There also lots of ETFs in the market and you can choose from that fits your age and your long-term goals.
I am adding ETFs to my portfolio that has very low fees and better returns.
In my humble opinion, I prefer investing in stock market as it is very liquid and you can sell investments easily unlike real estate rental properties.
My goal is to live off it’s dividend income and not touching my capital. It’s a long shot having learned the concepts of investing late in life, but I am willing to give it a go.
I no longer hold investments with Tangerine and TD e- series funds.
From the couch potato strategy which I have started, I have evolved and focused on dividend growth investing.
It wasn’t easy and made mistakes along the way, but I was consistent and a very eager learner. As a result I am more focused on achieving better results of my investments.
Knowledge is indeed power and practice makes it perfect.