Early Career: Keen Beginner - Dylan's Annual Review

Keen Beginner

Strategy

Portfolio composition: Pre-built portfolio investment fund, a stock portfolio and cash.

Tips

• Don’t ignore the pre-built portfolio investment funds in your employer’s group plan. Analyzing stocks is a fun and informative venture. However, for rookies wanting to increase their knowledge, also use the tools and investment reports available on the pension plan administrator’s web site. They offer a vast array of in-depth investment and planning information.
• Regularly monitor the individual stock portfolio’s parameters. Track the return. Identify the winner(s) and loser(s) and why it performed as it did. Establish clear investment objectives and create a plan to implement these objectives.

To-Dos

1. Check for suitability:

• Has the personal situation changed (such as a job change, marital status)?
• Is the combination of funds and other investments still suitable?
• Has the target asset mix changed?
• Is the cash reserve still required?
• Would it be appropriate to open a TFSA to complement the RRSP?

2.     Monitor, report and evaluate portfolio parameters to evaluate the portfolio and increase your investing knowledge and skills:

• Does the portfolio’s asset allocation match the target asset mix?
  • Does the stock portfolio skew the allocations? What modifications can be made to diversify around any single-industry concentration?
• Is the percentage held in the stock portfolio and in cash within the pre-set range?
• Were funds added, removed or modified over the year? For what purpose?
• Review the total of the pre-built portfolio fund investment report and the stock portfolio (as if it was an investment fund):
  • Against appropriate benchmarks and complementary funds.
  • Is performance within an acceptable range above/below the benchmarks?
• Review fees of funds held and those available through an employer’s group plan
  • Are any lower fee alternatives available?
  • Monitor fees across many institutions to discover the range that exists.
• Are returns as expected? If not, is it due to an under-performing or high-cost investment versus a broad decline in the markets?

3.     Identify required changes and implement portfolio adjustments:

• Best practice: annually update a current asset mix spreadsheet to track where the portfolio doesn’t match the target asset mix.
• By design, the pre-built portfolio fund requires no adjustment because rebalancing is done automatically.
• Identify investments that need to be realigned, bought or sold and investigate replacements based on suitability, fund performance and fees.
• Invest surplus cash according to your investor profile.
• Reallocation in the short-term should not be necessary.
• Spend 15 minutes per month on your plan administrator’s website or ProsperiGuide exploring a new concept or tool.

To review Dylan's story, see Early Career: Keen Beginner - Dylan's Story.