Wednesday, December 12, 2018

Baby R2R’s Portfolio Update – Q3 2018

Another late quarterly update, but for the sake of documentation still going to post this as I want to track the progress when I look back & review later.
This is the fifth update in a new(-ish) series where I intend to share the progress of Baby R2R’s investment portfolio. I started documenting this in Q3 2017 and intend to provide quarterly updates.
Baby R2R was born in Spring 2016 and a few months later, I setup her education fund to which I contribute on a regular basis. We live in Canada, so we take advantage of the RESP program (Registered Education Savings Plan), an account type where we can save and invest for our child’s secondary education. In addition to tax advantages, we also receive an education grant, which matches upto 20% of the saved amount (upto a max of $500 per year). How can anyone say no to free money? ðŸ™‚
In addition to the education fund, we also decided to start a Nest Egg fund, where we save and invest for Baby R2R and let compounding do its job over the course next couple of decades. The two accounts take different approaches to investing strategy.

The Education Fund

For the Education fund, I have chosen to go with index funds. The details of portfolio construction are shared in this post. While I contribute regularly, I  invest at a slower rate and leave a healthy sum of funds in cash and dollar cost average over the months.
To get full benefits from the government, I contribute $2,500 per year and will receive $500 in grants. So, the total contribution amount going into the account is (and will be) $3,000 per year.
As it stands at the end of Q3 2018, 47% invested in the funds and the rest in cash.

Portfolio Composition

This portfolio consists of four ETFs giving exposure to Canadian Equities (20%), All World Ex-Canada Equities (40%), Canadian Fixed Income (20%) and Emerging Market Fixed Income (20%).
More recently, I am considering simplifying this portfolio even further. Vanguard Canada introduced one-fund portfolios recently and I like the simplicity of it. I am still weighing on the option of going with one of these funds for Baby R2R’s education fund.

The Nest Egg Fund

The Nest Egg Fund is extra savings and contributions that I earmark part of my tax free savings account for Baby R2R. The goal was to save an extra $100-$200/month, although I may have been a bit more generous with the contribution in the last few months ðŸ™‚

Portfolio Composition and Returns

This portfolio consists of 3 dividend growth stocks:
  • Bank of Montreal (BMO.TO)
  • Brookfield Asset Management (BAM.A.TO)
  • Franco Nevada Corp (FNV.TO) – Added to position in Q3 (see this post)

Summary

Between the two accounts, I am happy with the progress we are making for our daughter’s future. The account values have grown and Baby R2R has started earning dividend income (to date, just the dividend income has added up to $220.55 between the two portfolios).
As of Q3 2018, Baby R2R’s total portfolio value and dividend income looks like this (cant see the numbers, but income for the quarter was $58.22):
What are your thoughts on these portfolios and the plan going forward? Share your thoughts below.
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