Comments on: Sleepy Mini Portfolio Q4-2008 Update

By: Jane

Jane — Sat, 21 Feb 2009 17:08:02 +0000

Hello CC,
I have been been followed your MINI portfolio for a while, you have make it so simple I have also decided to open up a TD E-series account sometime next month and putting maybe $1000 or more each year depending on how much extra money I have. I have never done any investing beofore, and I do not have an RRSP account as well, but since I have 2 kids, I always get refund anyway. Do you recomend me to set up this account as regular investment account or for RRSP(I’m 29 right now)?
also, because I have no investment knowledge, will I be ok just follow your percentage investing stategy or I better do more homework and studying?

By: Canadian Capitalist

Canadian Capitalist — Mon, 08 Dec 2008 04:48:56 +0000

TJ: It is impossible to say if rebalancing today would turn out to be a good move. Personally, I found that bonds are now more than the 25% target of the portfolio, so I rebalanced it down to 20%. It may not turn out to be the best move timing-wise, but market timing is next to impossible to get it right (though I’m sure many will disagree).

Rob B: The Sleepy Mini portfolio rebalancing is done using contributions and not funds already invested. Since money is added quarterly, rebalancing is done at the same time. I suspect this is how most people starting out will be rebalancing. It is only when the portfolio grows to a significant size compared to the regular contributions that investors would have to worry about selling to rebalance. At that time, once a year might be enough (or even only if the percentages deviate significantly).

By: Canadian Personal Finance Blog » Blog Archive » Random Thoughts - Leaky Pipes Edition

Fri, 05 Dec 2008 06:58:43 +0000

[...] Canadian Capitalist updated us on the Sleepy Mini-Portfolio, which I am actually using in one of my investment vehicles, very useful for lazy investors like [...]

By: EconStudent

EconStudent — Wed, 03 Dec 2008 23:44:59 +0000

TJ: Professor Malkiel does his annual rebalancing every January. I thought you might want to know that.

John Bogle says one rule of thumb is to think about owning the same percentage of bonds in your retirement portfolio as your age. Depending on how much volatility that you are comfortable with, 20% target bond may or may not be appropriate. Even with 28% bond right now, one can argue that you are not overweight in bonds. However, you definitely do not go below 20% in bond allocation.

A concern that I have with your portfolio allocation is that you are heavily overweight in Europe. TD Int’l fund is based upon MSCI EAFE Index. EAFE stands for Europe, Asia, and Far East. However, EAFE has a 70% weighting in Europe (http://www.msci.com/licensing/eafe_factsheet.pdf), which overlaps with TD Europe fund. One thing that you can do is that use TD Japanese Index to represent Asia allocation and complement European allocation instead of using TD Int’l Fund.

By: Rob B

Rob B — Wed, 03 Dec 2008 21:06:30 +0000

NN – I’m not too concerned about my RRSP as I’m 37 and plan on working at least another 20 years as I enjoy what I do for a living.

My interest is that I was thinking of moving my emergency funds to a TFSA and using this type of Portfolio (or a more conservative one). I’m also thinking of just opening a TFSA and contribute monthly and using a portfolio as described in this post.

By: Sampson

Sampson — Wed, 03 Dec 2008 18:39:00 +0000

I think when rebalancing occurs will have huge effects on the return.

Certainly if you were overweight one asset during its rise, your portfolio will fare better, however this is a form of market timing. I think the key to maintaining asset allocation closely to your target will reduce risk and lower volatility and variance.

I suppose a big part of rebalancing strategy is deciding if you will only buy to rebalance and if so, how often you can make contributions.

For me, I need to sell to rebalance and the key for me is to not sit on the cash, sell then buy right away so that I don’t feel the effects of the volatility we are currently experiencing.

By: NN

NN — Wed, 03 Dec 2008 18:36:37 +0000

Rob B – I would suggest getting at least some kind of idea of your target asset allocation. How did the 40% loss make you feel? You seem pretty unruffled, suggesting that volatility does not concern you, and a high equity allocation is thus appropriate. I do not believe that it is absolutely necessary to have a fixed schedule for rebalancing. Personally I track my portfolio and only rebalance when the deviation from target asset allocation is ‘large’ enough in some sense, which may be a very subjective measure.

By: Rob B

Rob B — Wed, 03 Dec 2008 18:10:08 +0000

Instead of rebalancing quarterly, how would the Portfolio fared if you balanced annually?

The reason I ask is that today I have a mixed bag of funds at TD inside my RRSP and I’m down over 40% (I contribute bi-weekly) without any real allocation strategy. I like what you have done with this Portfolio but rebalancing bi-weekly would be more difficult so I’d consider quarterly or annually.

Thanks in advance for your answer.

By: Rocket Spanish

Rocket Spanish — Wed, 03 Dec 2008 17:19:17 +0000

I am just wondering whether you took the devaluation of the canadian dollar into consideration when you were calculating how much your portfolio was down or are you still treating it as a paper gain?

By: TJ

TJ — Wed, 03 Dec 2008 16:07:24 +0000

My current % in my TD efunds is

17% cdn index
20% us index
17% euro index
28% cdn bond
18% int’l index

Do you think this is a good time to rebalance to 20% each?
I took a hit this year. Would rebalancing help for the future now that the index prices are down? I’m 33 and not planning to retire for 25+ years