Just over 1 year ago I did a deep dive into my portfolio. I looked at things like:
You can look back at last years deep dive HERE
The key takeaways from last year were:
I first started tracking my investments closely in January 2015. At the time, my total portfolio was valued at $160,314.49. It has now been 57 months since I started tracking my journey….let’s see where are now:
My early retirement portfolio now sits at $347,088.02. This means in 57 months (4.75 years) my portfolio has grown by $186,773.53 or $39,320.74 per year. To break it down even further, this means my portfolio has been growing on average by $3,276.72 per month. Obviously these numbers include new capital going into the portfolio as well. I’ll get into actual total returns later.
A few observations on portfolio’s growth:
To reiterate, the last time I did a deep dive into my portfolio there were 3 key areas I wanted to work on. They were:
When I wrote this last time my personal yield was 1.7%. This means for every $100 invested I was receiving $1.70 in dividends or distributions per year. Typically a well balanced portfolio would be around 2-4% depending on multiple factors (risk tolerance, years from retirement, etc). The main reason my yield was so low was because I had about half of my portfolio invested in 2 funds that didn’t pay any distributions. I have since moved one of the funds over into my direct investing RRSP account, and into two funds that do pay distributions. The funds I selected were Ishares XAW and RBC Canadian Equity Income. Although the year is not over yet, I expect my yield to be somewhere around 2.6%. This would still be considered on the lower side, but I am happy with the balance of lower yield, but high overall gains. I also still have about 20% of my total portfolio in a fund that pays zero distributions.
Another reason my yield has gone up slightly this year is due to multiple stocks I own increasing their dividends. Some notable increases over the last 12 months were:
So simply by swapping a couple of funds and letting dividend growth companies do their thing (consistently increase their dividends) I was able to increase my yield by almost a full percent over the last year. With continued dividend increases, I expect by next year my yield will be over 3%. Here is a quick chart of total passive income by month and year. For the most part, things are trending the right way.
Yearly dividend income since I started tracking:
2015: $3341.30
2016: $5015.90
2017: $4650.16
2018: $6731.42
2019: $9133* (on pace for)
Last year when I broke down my portfolio I noticed I had WAY too much invested in Canada. My Canadian exposure was almost 70% of my total portfolio! The reasons for this were simple:
I decided I needed to add more USA & global exposure. To do this I picked up some more of the Ishares XAW fund (which owns over 8000 stocks from countries all around the world EXCEPT Canada), and I increased contributions into my spousal RRSP which was invested in a 100% US Equity index fund.
Fast forward to today, and my Canadian exposure, although still too high has decreased from 69% to 59%. The goal is to get this down to closer to 35%. One main reason my Canadian exposure isn’t dropping as fast as I’d like it to is because each month I am dripping over $300 worth of the Canadian Equity Income fund. Obviously this is a nice problem to have, but I still need to do something to get my Canadian exposure reduced.
This was by far the one area I needed to work the most on, and admittedly the one area I had previously paid the last attention to. I had let my RRSP account for 82% of my total holdings, meaning, if I let this continue I’d be due for a big tax bill when the time comes to withdraw those funds. It doesn’t make sense to have 1 large RRSP, especially when there are (legal) ways to split it into 2 medium sized RRSPs (Spousal account). It also doesn’t make sense to have a large RRSP but not max out my TFSA. After my last deep dive, I started putting less money into my RRSP and increased the amount into my spousal RRSP. I have also since reduced both again, and started putting more into my TFSA.
Here is how the accounts looked last year vs today:
Ugh, the most important thing I wanted to focus on, and I barely made a dent. I’ve officially stopped contributing to my own RRSP, but because the account size is such a high percentage, the compounding/dripping is making it hard for my other accounts to catch up. The one bright spot here is that in just over a year, I’ve managed to grow my wife’s spousal RRSP to 7% of our total portfolio. Obviously the goal would be at retirement, these two accounts are about equal, so that we can withdraw a smaller amount from each, to reduce taxes. My TFSA has also gone up by 2%, and I expect by next year it should continue to increase, since all money I WAS putting into my RRSP in the past, is now being split between the TFSA’s and the spousal RRSP.
The good:
The bad:
Well, it’s a a bit of mixed review. Some things are looking pretty good – while others clearly need a lot of work. The most important thing is that I keep looking at this, and writing about it, because it puts pressure on me to continue to improve. Hopefully at this time next year I’ll have a few more wins in the “good” and can eliminate the “bad” stuff.
Cheers!
Its always an ongoing process, isnt it. You are doing very well Jordan and kudos for the portfolio growth over the years. I love reading these kind of long term trends and the subtleties that go into asset allocation etc.
Having a big chunk of savings in RRSP mat not necessarily be a bad thing…you are saving a lot in current income taxes by doing so. I follow a similar methodology — focus on RRSP and max it out, while also contributing to RESPs and TFSAs. I am still not at a place where I can max out all RRSPs & TFSAs…but all accounts are growing well.
Re your Canadian holdings, do you consider how the companies generate their revenue? For e.g., AQN is Canadian…but a big part of its revenue comes from US and other Intl assets in addition to Canada. Same can be said of companies like RY, TD, BAM, ATD etc.
cheers
R2R
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An ongoing process indeed…
Obviously having a huge amount in an RRSP is better than not..haha…that said, About a year ago or so, I realized that if I never contributed to my RRSP again, by the time im ready to retire, it would be worth at least 1-2 million depending on age of retirement and returns.
At that point I thought..well, why don’t I start putting into a spousal RRSP – rather have 2 accounts I can draw down from at a smaller rate. I’m in the same boat as you though, my RRSP is so large, because when I was younger thats what we were told – so i kept socking money into my RRSP. It wasn’t until a few years ago I started putting money into the TFSA.
Regarding Canadian exposure – I get what you are saying, and I suppose with so many companies being global companies now, it’s probably not AS important…but I definitely still want to diversify a bit away from Canadian companies…even with almost all of them being major global players, if ONE crazy thing happens in Canada, people could start pulling their money away – and any time you can limit even a bit of risk (without hurting gains) It probably makes sense to do it (especially as we get older/closer to retirement.
All the best!
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Re the spousal RRSP, agreed that its probably prudent to split the RRSP instead of just cramming into yours….even though income splitting is allowed for retired folks/seniors. But who knows how tax laws will change in a few years…the gov will find a way to create more taxes out of thin air.
Agreed on having less Canadian exposure. I have been working on reducing my Canadian exposure for a while too.
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Nice Jordan
great work and progress to achieving even more diversity.
I have debated adding a global etf for more international exposure. It’s hard though when they consistently show lower gains.
Based on rbcs trailing 12 month gains I’m at 17.74%. I dont think that includes dividends. do you know?
Add that on top and I may be north of 20%. very nice.
previous yr was 9% because of losers like highliner and corus though… haha
c.a.n.i – continous and non stop improvements (tony robbins)
keep it up man!
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I’m not 100% sure but I would ASSUME RBC would include the dividends (most do show total gains).
My RBC Series D fund has been great: 10 year avg return of 10.6%
XAW although only around for a few years is around 8% I believe.
Although both still lower than my TFSA returns where I pick my own stocks, I’m okay with a slightly lower return for the diversification – helps me sleep better haha
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