Couch potato investing for the last 9 years

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
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adrian2
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Re: Couch potato investing for the last 9 years

Post by adrian2 »

ockham wrote:Time to reconsider the "Conventional volatility management is harmful" stuff in your signature line.
:thumbsup:
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Re: Couch potato investing for the last 9 years

Post by AltaRed »

Flaccidsteele wrote:I would like to read other posts on this forum which have outlined their method of holding 70%+ equities for almost a decade. Any links appreciated.
There are many members here who have high allocations to equities....perhaps close to the 100% level. Their volatility/risk tolerance is obviously higher than conservative investors. I've typically been at the 65-75% level for over 20 years but I also now have a fairly small non-indexed DB pension (in my 9th year of retirement) to mitigate a major and prolonged equity funk. There is no single right answer to asset allocations and to chastise those with more conservative allocations and regular re-balancing is a disservice to investors everywhere.
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BRIAN5000
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Re: Couch potato investing for the last 9 years

Post by BRIAN5000 »

Don't take advice from people who haven't done what you're looking to do.
Conventional volatility management (diversification, re-balancing and asset-allocation) is financially harmful. The earlier one starts and the longer one employes these techniques the more fragile one's retirement.
IMHO Total Nonsense! :roll:
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Re: Couch potato investing for the last 9 years

Post by j831robert »

Re Flaccidsteele's query above I'm on record here as having rarely willingly held anything but Canadian equity investments although in my earlier days I have owned entities that were bought out by US companies and which I disposed of as quickly as I could. Difficult to avoid some involvement South of the Border eg: I hold Emera, Enbridge, Crescent Point and Medical Facilities, all of which earn from properties located in the USA . My rationale is that what I eat and spend are in Canadian dollars so that's where I choose to invest. I didn't start 'investing' until I retired at which point I owned a paid for home and receive federal pensions more than adequate to maintain our lifestyle of choice. My wife went back to school and earned several degrees while I needed a hobby and took up investing. Learned a lot from this group and their predecessors, lucked in mostly by getting in and out of whatever was the 'flavour of the days' early, and eventually settled in to mostly Canadian dividend paying stocks. Over a period covering 27 years I've graduated into management of personal investments which earn us the priviledge of being is 'claw-back' OAP-wise (which when you consider the time frame isn't all that unusual). For all intents and purposes I am a 'buy n' holder' now although I have recently nosed into some BMO ETFs. Couch Potato style worked out pretty well for us !
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Re: Couch potato investing for the last 9 years

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I am a passive buy and hold investor. My investment returns are therefore reflective of the underlying indices.

The crash in 2008 just looks like a small blip now, but it was a very stressful situation for me and it even affected my health. I developed a gastritis and needed to take medications. In the end I stuck to my plan and it turned out well.

I do not sell anything to rebalance. Instead, each time I invest money I determine which asset class is furthest away from its target allocation and purchase this one.

I always kept my fixed costs low. My fix cost are only around $960 a month (Rent:850 (everything included); Bus pass: $60; Internet: $50, cell phone: paid by my employer; no car) leaving me with plenty of free cash flow I can use for investing, travelling and going out with friends.

If I buy something I always make sure I get a good deal. All my contracts (internet, cell phone etc.) were always negotiated with the "loyalty" department. A short phone call can save you hundreds of dollars a year.

I also do credit card arbitrage, which earns me around 1K a year.
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Re: Couch potato investing for the last 9 years

Post by Flaccidsteele »

OP is on the correct path. Hyper saver. Portfolio is majority low-fee equities. Higher % if possible. For as long as possible (9 years is a fantastic start and you have done better than most individuals who have invested over twice the time period). Also, good job in avoiding selling to re-balance. The OP is doing a fantastic job of securing a pleasant retirement by disregarding conventional diversification, asset allocation and re-balancing. Only threat is falling into the belief that conventional wisdom is better than what the OP is doing. Kudos and godspeed. :thumbsup:

PS: OP have you made any changes to your strategy since posting this on RFD? If so, what are they? Thanks.
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Re: Couch potato investing for the last 9 years

Post by SQRT »

AltaRed wrote:
Flaccidsteele wrote:I would like to read other posts on this forum which have outlined their method of holding 70%+ equities for almost a decade. Any links appreciated.
There are many members here who have high allocations to equities....perhaps close to the 100% level. Their volatility/risk tolerance is obviously higher than conservative investors. I've typically been at the 65-75% level for over 20 years but I also now have a fairly small non-indexed DB pension (in my 9th year of retirement) to mitigate a major and prolonged equity funk. There is no single right answer to asset allocations and to chastise those with more conservative allocations and regular re-balancing is a disservice to investors everywhere.
Agree. Although in my case I have always been 100% equity if you ignore my pension. Hardly ever trade. Never owned a bond. Retired 8 years and portfolio is up about 75% plus divs. Don't recommend this approach and I recognize it is an outlier, but has worked well so far for me. Wouldn't do it this way if I was starting from scratch and I fully recognize my approach is a legacy of special circumstances. This is from a guy who fully understands investment theory (have a CFA). There are many ways to skin a cat.
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Re: Couch potato investing for the last 9 years

Post by trf1066ca »

Flaccidsteele wrote:The OP is doing a fantastic job of securing a pleasant retirement by disregarding conventional diversification, asset allocation and re-balancing.
uh, except the OP is following "conventional diversification, asset allocation and re-balancing" in an almost textbook fashion!

One gets the feeling that you don't want to "see" somebody succeed that way?
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Re: Couch potato investing for the last 9 years

Post by Germack »

Flaccidsteele, I actually follow conventional diversification, asset allocation and re-balancing.

I have not changed my investment strategy so far.
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Re: Couch potato investing for the last 9 years

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Flaccidsteele wrote:The OP is doing a fantastic job of securing a pleasant retirement by disregarding conventional diversification, asset allocation and re-balancing.
Except he is... doing all those things?

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Re: Couch potato investing for the last 9 years

Post by Flaccidsteele »

That's amazing! I guess we're all securing a very nice and early retirement by following conventional diversification, asset-allocation and re-balancing with our low-fee, high equity allocation all without selling to re-balance. Kudos! :thumbsup:

PS: con·ven·tion·al
/kənˈven(t)SH(ə)n(ə)l/
adjective
based on or in accordance with what is generally done or believed.

It is comforting to know that most Canadians are following (or being advised to follow) the conventional/typical/orthodox method of investing as outlined by the OP since it will insure a very comfortable retirement. :thumbsup:
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Re: Couch potato investing for the last 9 years

Post by randomwalker »

Germack wrote:Hi FWF,

I have never posted much on this forum, but I have been following it for a very long time and read it almost on a daily basis. I learned so much from this forum and it made me a much better investor. My deepest thanks goes to all members of this forum for educating me about financial planning and investing.

After I graduated from university 9 years ago I decided to save around 50% of my after tax income and invest the savings in a low cost diversified portfolio using TD e-series index funds and ETFs.

My asset allocation is as follows:
- Around 20% of my money is invested in Bonds/GICs
- Around 10% is invested in Real Estate (XRE)
- Around 17.5% is invested in Canadian equities
- Around 17.5% is invested in US equities
- Around 17.5% is invested in Emerging Market equities
- Around 17.5% is invested in European equities

I have been applying this investment strategy for the last 9 years and I would like to share my progress with you. My net-worth over the last 9 years is shown in the image below.

With this post I hope to inspire others who are thinking about following a similar approach.
Edited, my thinking and mathere wrong, sorry.
Last edited by randomwalker on 13 Oct 2014 09:05, edited 1 time in total.
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Re: Couch potato investing for the last 9 years

Post by SQRT »

Haven't you left out the returns on the $50k per year over 9 years?
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Re: Couch potato investing for the last 9 years

Post by randomwalker »

SQRT wrote:Haven't you left out the returns on the $50k per year over 9 years?
Yes who are correct I have edited/removed above post, thanks. The actual return would be about 10.7%
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