As experienced investor, we all know that small percentage have huge effets over a long period of time. Right now, I stick with my RBC Index Fund simply because it enables me to purchase shares on a regular basis at no cost. That's where lies the advantage. For now.
You all know by now, I don't want to hold too many stocks. The reason : I don't have time nor the passion to closely follow more than 15-18 stocks. (even that number is outrageous. I have to work for a living, work out, eat, etc.) I now hold 22 stocks. I know, that's insane, Check it out here. I doubt that most of you can follow more than 20 stocks, unless you are still living in the basement of your parents. If it' the case, you might have other worries than following stocks... (just joking).
So how did I end up with 22 stocks? Basically greed and the fact that I'm a man and therefore I think I'm the king of stocks. I most certainly aren't. I have many stock stories that went sour and could confirm this. ABX get out of my body!!!
I believe the less you do while managing your portfolio, the better it will fare over time. We are always tempted to diversify, buy this new attracting stock or add some of this and some of that to average down our cost. By the end of the month and the years these commissions pile up and eat up our performance. (yes it does)
Where am I getting at? I guess I'm getting at Index Investing.
I've been thinking about Index Investing for a while. But never got my head around it. I think I might consider this option starting this year. Will I sell my actual stocks? I might get rid of some of them (POT, COP, ABX...) but I will keep the others. I sure won't touch to my main holdings, namely JNJ, BNS, RY, POW, etc.
I 'm thinking more of developing an hybrid approach. I would keep roughly 16-18 stocks and would add 3 or 4 index funds. It's in these funds that I would inject new money. Once a month or every quarter. Then I would rebalance the whole thing just once a year to match my initial strategy.
This initial Index strategy could resemble this :
- 35% Vanguard Canada All Cap Index ETF (VCN) | MER = 0,11%
- 35% Vanguard US Total Market Index ETF (VUN) | MER =0,16%
- 20% Vanguard FTSE Developed All Cap ex North America (VIU) | MER = 0,20%
- 10% Vanguard FTSE Emerging Market All Cap Index (VEE) | MER = 0,29%
Just that simple. Actually, back in the days I should probably have opted for this sort of strategy right away. Any Millenials listening out there?
All in all, the management fees would represent an average total of 0,19%. Not bad to hold pretty much the entire world of stocks!
This is indeed a Couch potato strategy. You won't beat the Market for sure. But you will do just as well. And that's much better than a whole lot of active managers.
So I'm thinking more and more about making this move. Will see how it goes. Stay tune.
What do you think about this move? Should I do this? And would you consider doing some Index Investing?