The Sleepy Mini Portfolio was launched in 2007 to demonstrate how a mechanical investment program can slowly but surely build wealth over the long term. All you need to implement such an investment program are (1) some initial effort in mapping out an asset allocation strategy (2) a calculator to divvy up your regular contributions and (3) discipline to stick to the strategy through all kinds of market conditions. I have personally implemented this portfolio for our kids’ RESPs and if you want a more sophisticated portfolio you may to check out the Sleepy ETF Portfolio that adds a few more asset classes.

The portfolio kicked off with an initial infusion of $1,000 with a target allocation of 20% bonds, 20% Canadian stocks, 30% US stocks and 30% International stocks. Another $1,000 was added to the portfolio every quarter since then for a total investment of $26,000 so far. Here’s how the portfolio looks as of March 25, 2014:

TDB909 – Canadian Bonds – $7,213 (19.4%)
TDB900 – Canadian Equities – $7,526 (20.3%)
TDB902 – US Equities – $11,472 (30.9%)
TDB911 – International Equities – $10,924 (29.4%)
Market value – $37,136
Total Invested – $26,000

I’m going to add another $1,000 to the portfolio and rebalance it to the original target allocation using this rebalancing spreadsheet. Here are the results:

Transactions

TDB909 – TD Canadian Bond Index (e-Series) – Buy units for $414.
TDB900 – TD Canadian Index (e-Series) – Buy units for $101.
TDB911 – TD International Index (e-Series) – Buy units for $485.

Notice that due to strong recent returns from the US market, we are not adding new money this time around.

The following chart shows the performance of the Sleepy Mini Portfolio for the past year.

sleepy_mini_portfolio_q1_2014

The portfolio has returned an annualized 10.45 percent since inception. A word of caution: don’t let the recent returns fool you. Long-term returns from this portfolio can be expected to be much more modest (in the low- to mid- single digits).

This article has 10 comments

  1. I like the index fund strategies. Would love to load up on equity index funds but don’t want to buy so high or look too far internationally. Opting for buying large caps like CVX and KO the last few months near 52 week lows in the mean time.

  2. Pingback: Links and Blog Posts – March 2014 | The Canadian Dividend Blogger

  3. I use TD e index funds as well – any suggestions of what to replace the bond fund with from TD that is a less sensitive to rate increases than the TDB909?

    • Look at iShares 1-5 Year Laddered Govt Bd Comm (CLF) which has shorter term bonds.

    • @Nav

      If you really want a fund that is impervious to interest rate increases, then TDB8150 is a Investment Savings Account fund that currently pays 1.35% but is like a savings account, so there’s no risk of capital loss.

  4. Is this being updated elsewhere?

    • Ram Balakrishnan

      @Kyle: The portfolio will be updated shortly right here. Sorry for the delay. Been busy with personal projects.

  5. Hello,

    Since this is for a child’s education, do you plan to change the asset allocation closer to when the funds will be needed?

    Cheers,

  6. I am a big fan of your site and have been learning a lot from your posts. Although these funds claim great returns over a 5 year or 10 year period, it was always based on the assumption on how your money would have grown if you had invested ‘X’ dollars at that start of the period. However, I wanted to calculate the real returns based on recurring investment in these funds. So, I downloaded the historical prices from http://www.finance.yahoo.com/funds and then used the adjusted price (for splits and dividends) to calculate the returns over a period of 10 years, assuming that I added “X” dollars at the start of every month starting Jan 2004. I arrived at an average return of ~3% on these funds, which was shocking as I expected something close to at least 6%. However, after reading your post, it seems like you have ~3.5% returns over 7 years, which closely aligns with what I calculated. Now, I am left wondering if it is really worth going through all this pain for a meagre return. Any thoughts?

  7. A correction to my earlier post: It looks like your return is not 3.5% (wonder how I came up with that #) as mentioned earlier. However, using ‘adjusted price’ from yahoo for these funds, I still end up with only ~3% returns for a period of 10 years (and ~5% for the same period you have invested) for recurring investment at the start of every year. What am I doing wrong?

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