Archive for November, 2011

Sleepy Mini Portfolio Q4-2011 Update

November 30, 2011


You won’t know it from the wild swings experienced by the stock markets in the recent past but the Sleepy Mini Portfolio gained 1.65% since my previous update. To be fair, it should be pointed out that the portfolio showed gains for the last quarter only after the significant rally of the past couple of days. If I had computed returns the previous day the portfolio would have shown a loss of 1.1%.

It is, perhaps, unsurprising to see that bonds have held up their value in the past quarter but it is surprising to see that US markets have held up relatively well compared to Canadian and other foreign markets. Note that the Sleepy Mini Portfolio started out with an initial investment of $1,000 in August 2007 and $1,000 was added to the portfolio every quarter ever since. A total of $17,000 has been invested in the portfolio and as of November 30, 2011, here’s how it looks:

TDB909 – Canadian Bonds – $3,622 (20.0%)
TDB900 – Canadian Equities – $3,428 (19.0%)
TDB902 – US Equities – $5,719 (31.6%)
TDB911 – International Equities – $5,315 (29.4%)
Total – $18,083
Total Invested – $17,000

We’ll now add another $1,000 to the portfolio and rebalance it according to our original asset allocation — 20% bonds, 20% Canadian stocks, 30% US stocks and 30% international stocks — using this rebalancing spreadsheet. Here are the results:


TDB909 – TD Canadian Bond Index (e-Series) – Buy units for $194.23.
TDB900 – TD Canadian Index (e-Series) – Buy units for $389.12.
TDB911 – TD International Index (e-Series) – Buy units for $416.66.

We will not be adding any new money to the TD e-Series US Index (TDB902) because the new addition ($6.39) is much less than the minimum additional investment of $100. So, we’ll simply add that amount to the new money added to the TD e-Series International Index (TDB911) fund.

In a comment in one of the earlier posts, a reader wondered how much this portfolio has returned since inception. Using the Excel XIRR function, the annualized return works out to 2.8%. Hardly earth shattering but it is early days for the portfolio yet. I would expect a portfolio such as this to return 3.5% in real terms over the long term.

Why isn’t Ally more popular?

November 29, 2011


It is a mystery to me why Ally, which consistently offers better savings and GIC interest rates isn’t as popular as ING Direct. Take high-interest savings accounts: Ally has long offered a 2.0% interest rate compared to ING Direct’s 1.5%. And here’s how Ally’s GIC rates compare with ING Direct:

Ally ING Direct
1 Year 1.75% 2.00%*
2 Year 2.00% 1.60%
3 Year 2.25% 2.00%
4 Year 2.50% 2.25%
5 Year 2.75% 2.50%

* – Special “Cyber Monday” interest rate.

Now Ally’s product line-up is not as extensive as ING Direct’s (Ally does not offer RSP savings accounts, business savings accounts or chequing accounts) but as you can see from the table above, Ally’s GIC rates are consistently better than ING Direct’s. Even Ally’s early redemption rate is better: 1% compared to 0.5% at the big Orange. I have held savings accounts at both Ally and ING Direct and found little difference between the two – both offer much higher interest rates than the competition and typically do not charge any fees. One explanation for cool response to Ally may be its association with GMAC. However, Ally is a product of ResMor Trust Company which is member of Canadian Deposit Insurance Corporation. CDIC deposit insurance should provide peace of mind for savers worried about the financial health of Ally.

This and That: Europe, Housing Prices and more…

November 24, 2011


The top bid in Bloggers for Charity is now $250. The top three bids were made by Glenn of InsuranceSquared, Dale Rathgeber ($200) and The Cynical Investor ($88.88). Thanks guys! Do I hear a bid for $300?

Events in European financial markets continue to dominate the headlines. It appears that the contagion is spreading now to the core of the Euro zone. The Economist magazine explained what’s going on — higher bond yields, trouble at European banks and the spectre of a credit crunch.

The Economist magazine also published a column comparing housing price valuation in different countries. It found that according to its measures, housing is undervalued (when compared to rents and income) in the US, Germany and Japan. It also found housing is significantly overvalued in Canada. The magazine’s interactive tool allows you to examine and compare housing prices indicators over time and between markets.

A new report from BMO Economics makes a strong case for diversification by sector, by asset classes and across international markets.

Perhaps this is a wee bit off-topic but a recent New York Times column on decluttering caught my eye. We could definitely do with getting rid of unused items.

Around the blogs

Trying to invest like the rich is like trying to become a surgeon by walking around in scrubs says Michael James.

My Own Advisor explains why he signed up for the MBNA Smart Cash Platinum Plus MasterCard.

Jim Yih of the Retire Happy Blog explains the basics of estate planning and probate in this article.

Canadian Couch Potato panned a recent article by a well-known commentator that encourages performance chasing.

Million Dollar Journey weighed in on a Canadian Money Forum discussion on whether it is realistic to earn $90,000 in salary by age 30.

Christmas is just around the corner and Canadian Financial Stuff has some tips to plan for the holiday expenses.

The Bank Nerd rounded up the best financial websites for Canadians.

Congratulations to Squawk Fox who got married on a shoe string budget.

Money Smarts Blog has a very good tip for these turbulent times: tune out the financial media.