Investment Goals: 2017

It’s that time of year where we start looking at investment goals for the new year.

I didn’t really have any goals F2016, except to become a member of thediv-net.com, which I’m happy to say that I was successful in accomplishing! I also mentioned in several posts in F2016 that up until recently I had lost focus on my investment portfolio. Well, for F2017, I plan on changing that trend.

To that end, the goals!

Goal 1: Increase TFSA Contributions

I have been an infrequent contributor to my TFSA for the past 2+ years. To pay off my business school loan, and to purchase a new house with my family, I made some significant withdrawals. Taking into account the $5,500 contribution limit for F2017, I have a little over $40,000 in contribution room in my TFSA. My goal for F2017 is to contribute to at least 50% of that limit, or $20,000.

Goal 2: Minimize Taxes

My investments fall into five investment books: a taxable margin account, a tax-free account, a tax deferred account, a certificated account, and a LIRA. My second goal for F2017 is to minimize taxes by consolidating investments into my tax deferred and tax-free accounts, where it is sensible to do so.

Selecting which investments go into tax sheltered accounts is not a trivial task. On the one hand, moving investments from my taxable account will defer any taxes payable (in the case of my RRSP), or eliminate taxes completely (in the case of my TFSA). However, tax sheltered accounts have a disadvantage in that any losses cannot be used to offset capital gains. This means that I will have to take a close look at the investments to ensure they are good fit to go into an account where I am unable to do any tax loss harvesting. Put another way: I have to ensure I am comfortable (financially, and psychologically) to move investments, confident that they will not go down in value to the point where I sell them at a loss.

That said, Goal 1 and Goal 2 are complementary: by moving investments from my taxable margin account to my tax-free account, I can easily come within throwing distance of Goal 1.

Moreover, by moving my US investments from my margin account to my tax deferred RRSP, I will reap an immediate 15% cost avoidance: US based stocks are not subject to the (15%) withholding tax on US dividends, which means I will receive the full amount of dividends from my US holdings.

Goal 3: Rebalance my Total Fund to my Target Allocation

When I started investing in earnest in F2012, I had a very rigid target allocation. The past few years I have deviated very far from that. So my third goal (and arguably the most important) will be to revisit my investment policy statement, and determine the appropriate asset mix for my investments.

Goal 4: Increase Passive Income by 5%

As I am a dividend investor, passive income is my primary goal for investing. Following my December 2016 results, I will be baselining my F2016 income, with a goal of beating that income by 5% this year.

I plan on accomplishing this goal through three key strategic activities:

  1. Re-allocation. I know for a fact that my portfolio is overweighted in some areas. Once I complete Goal 3, I will be reallocating funds to other holdings, to increase exposure to some of my more successful dividend holdings.
  2. DRIP Investing. I plan on increasing exposure to DRIP investments, as they provide a frictionless vehicle for quickly growing dividend income.
  3. TFSA Contributions. As mentioned with Goal 1, I plan on increasing my TFSA exposure. This increase will undoubtedly bring more passive income into the total fund.

Goal 5: Update and Expand Investment Research

Many of my investment research posts are horribly out of date. As the calendar year is starting, many companies I follow will be releasing their annual results in the coming months. I plan on updating all of the companies I follow based on F2016 results. Moreover, I am targeting to analyze at least four new companies this year.

And there you have it; the F2017 goals! I would love to hear what everyone else’s goals are for F2017.

Onwards and upwards!


Portfolio Update – November 2016

Before I begin, there was a minor issue with the October update benchmark numbers. I had made an error in the benchmark passive income: Vanguard’s VAB declared an October dividend, but the actual payment date was in November 2016. This means that my actual income in October surpassed the benchmark income by an even wider margin.

I’ll jump straight to the chase and say that November was a disappointing month. Odd, because following the winning of president-elect Trump, US markets were on a tear. Unfortunately, my Canadian holdings did not do as well.

Portfolio Monthly Returns as of November 2016

The benchmark return was 0.912%, but my total fund was -0.413%, more than a 1% difference. My LIRA portfolio came in at a respectable 0.902%, and the 0.010% variance I can attribute to tracking error. The TFSA portfolio dominated at +2.522%, but my margin account was pummeled at -4.918%! Inspecting the margin account, this somewhat makes sense: it is 2/3 in Canadian equities, which came in at -8.898%, which was the primary source of the losses.

But, as a long-term buy and hold investor, you’ve got to take the bad months with the good months. My TTM is still exceeding the benchmark:

Portfolio TTM Returns as of November 2016

Total fund TTM is 7.989%, while the benchmark is 6.705%: so when you take into account all ups and downs over the past year, we are still doing pretty well.

Of course, let’s remember that I am a dividend investor, and that is where I count the majority of my returns. November was a good month: total income was practically double the benchmark income (97.514% more to be exact), and TTM income is also exceeding the benchmark, by 7.918%.

Portfolio Monthly Income as of November 2016

Portfolio TTM Monthly Income as of November 2016

As I have just started to aggressively focus on my portfolios again, I don’t expect to have stellar returns in the short-term. However, as I plan out my F2017 goals, I expect that to change.

Onwards and upwards!