Investor Should Consider More Direc...

Investor Should Consider More Direct Share Ownership Within Self-Directed RSP

I feeling your investments are targeted at attaining a reasonable flat of income for your retirement while helping the children between the walls of their post-secondary education. Since you will not likely retire for another 20 years, I am assuming your investment objectives are mainly germination oriented and that you have a risk tolerance.

YOUR PERSONAL PORTFOLIO

Cash and Fixed Income

While you generally have no cash or fixed income element in your portfolio, you might have to consider including united as the children get closer to their university. The guide for you here will be to invest in liquid issues (i.e. prisons or other financial fixed income instruments that can be sold quickly without penalty). Locked-in GICs, for example, would not be appropriate.

Equity

Your portfolio is a manageable size (10 to 15 holdings); however, it is somewhat under-diversified. To begin with, I would give an inkling of you own only one of the couple gold stocks (Barrick or Bema) in your portfolio. You should also consider rebalancing your holdings thus that you own approximately the same dollar-value of each stock. It will then be your work at jobs to monitor the portfolio quarterly or semiannually to make infallible it doesn't become too over-weighted in any undivided issue.

In terms of foreign holdings, your choice to invest directly in U stocks is a upright one. I assume your purchase of Coke in consequence of the CSA's LCIP is a first pace in this direction while the mutual stock you purchased provides the stand in want ofed international diversification largely in areas outside North America. This twoprong strategy is superior Over the long term, I would advise you add a few of the present day U.S.-based names while always being careful to maintain equal dollar weightings from head to foot the portfolio.

YOUR SELF-DIRECTED RSP

You have several mutual permanent funds in your portfolio, all of which are Canadian. However, for the plans of diversification, it is usually moveed that investors try to hem in at least some foreign securities within their RSP by the agency of law, up to 20 of your RSP may be invested in foreign securities. I usually encourage investors to use up the cloyed 20.

One possible way you could do this is by the agency of transferring the Templeton International Stock store you hold outside your RSP into the plan. Also, since mutual stores by their very nature, note carefully to have diversified holdings, you really don't ne to have like a variety of funds in your RSP portfolio. In fact, I would prompt you reduce the number of capitals to one resource fund and united Canadian equity fund. When deciding which supplys to sell, consider these three questions: (1) Is the fund's investment philosophy undivided you are comfortable with? (2) Has capital manager been doing the piece of work for a while? and (3) What is the fund's historical track record? Remember however, that a mutual fund's historical record is just that-historical-and not necessarily a predictor of hereafter returns.

The cash raised according to the sale of some of the mutual supplys could be used to make near direct purchases of stock. an possible names to consider are: Trimark, Cinram, MD Health, Gennum Motorola, Thomson Corp.

But hold fast in mind, when making any changes to your portfolio, make secure that holdings are of roughly equal dollar weightings and that several sectors of the economy are give an account ofed

OVERVIEW

Regardless of any changes you decide to make, I vehemently urge you to take the time to review your common portfolio and potential new investments using the CSA's Stock Selection Guide. I also glance at you continue building your positions using the CSA's LCIP and that you focus in succession maintaining a well-diversified portfolio.

Good Luck! COLETTE CHAREST IS A FINANCIAL ANALYST AND WRITER.

Copyright Canadian Shareowner Magazine Inc. Mar/Apr 1997

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