For all you Canadian CFA’ers - Where would you place CAD $1million in today’s market if you had to retire on just that? Assume you had 25yrs of retirement, no debt, and you were very risk averse. Interested to hear your thoughts.
very risk averse? according to level III, that’d be something that keeps up with inflation and modest spending needs at the most. high grade corporate bonds - 75% blue chip stocks - 15% Treasury Securities - 5% thats a very basic portfolio composition i rattled off the top of my head. in no way does that constitute actual investment advice.
One stock… Hemisphere GPS, ticker is HEM.TO
BSC call options
bet against the leafs. In all seriousness i’d give a general answer like Jeff’s rather than specific stock selection. (which is what i think you were looking for). I’d be ok upping dividend paying stocks past 15% though. That being said “very risk averse” is ambiguous. How important is tax efficiency? Would they freak out in a downturn market and sell their dividend paying RBC stock because it’s at a 52 week low?
1mln and 25 years - i would recommend an above average risk tolerance and conselling to reconcile the difference between your ability and willingness to accept risk. In the meantime, you would start your portfolio at a below average risk tolerance with the goal of maintaining your real purchasing power of your assets. I would recoment 25% canadian large cap equities, 30% foreign equities, 20% Canadian bonds, 20% foreign bonds and 5% in an alternative asset (fund of funds or something similar)... Since you have a long term nature you can't have 75% of your in long term corporate bonds as you need to at least keep pace with inflation and over the long term, equities have proven to be a better hedge to inflation than jeff_s recommendation of heavily fixed income weighted. Equities also tend to be more tax efficient than fixed income and with a long time horizon this is important. I personally think my recommendation of 40% fixed income is to high at this point but your willingness to accept risk and ability don’t align so for now your portfolio would tend to be more conservative than need be.
If it were possible, I would buy futures on TTC tokens… guaranteed 10% annual return 
With cheap dollar and cheap house in US…your CAD will go furthur. I will buy some real estate as rental property…talking about total return potential.
Really, if nothing else, I would like to know at least what the required return is. If the person can happily live on CAD$40k, then clearly Jeff’s answer provides a margin of safety, should the investor be fortunate enough to live beyond 25yrs.
islandergold Wrote: ------------------------------------------------------- > For all you Canadian CFA’ers - Where would you > place CAD $1million in today’s market if you had > to retire on just that? Assume you had 25yrs of > retirement, no debt, and you were very risk > averse. > > Interested to hear your thoughts. The hedge fund I just started
If you read all the financial planning literature that comes out of CFAI (enough to bury you) you’ll see that the number one mistake in retirement planning is not buying income annuities. (Current thinking: behavioral biases are preventing people from purchasing these.) There’s no other financial product currently available that can eliminate longevity risk. See e.g. http://www.cfapubs.org/toc/rf/2007/2007/3 ; e.g. http://www.cfapubs.org/doi/pdf/10.2470/rf.v2007.n3.4905.4b Products are getting better all the time; check out references to GMAB, GMIB, GLWB, etc. Pricing pressures are also tightening margins considerably, to the benefit of consumers.
Everytime when some client told me that “so and so on the radio says that annuity is too expenseive and is not good for me”, I just shot back saying that jacka** on radio doesn’t take the time sit down with you and actually foud out about your investment profile.
Probably Canadian Oil Sands, Canadian Natural Resources [CNQ], a bank, say, Royal. And…ummm…probably Gold Corp Barrick or some Gold Major and Potash and may-be Cameco. If long-term is your question, why should valuations be part of your answer? Willy
Buy yourself Versace shirts and jeans, a ferrari, go eat red tuna and foie gras everyday, go out with hot chicks, paid for if necessary. At least you’ll die with a smile on your face.
Why do people always say “long term” these stocks will be great, valuations are irrelevant… they said that during the dotcom bubble and they said that about real estate. It was unimaginable that AOL could ever fail. And remember Worldcomm?.. They owned the internet backbone. They said house prices in Santa Monica wouldn’t go down. Now they’re saying the same thing about fertilizer stocks, oil companies, and gold miners. Meanwhile, I just bought a technology company trading at 50% of book value and half of it’s share price is cash. The long run is a series of short runs. Remember that when you’re investing for the future.
“The long run is a series of short runs.” Bro, you just got yourself a future cover on Forbes. Amen to that.
“The long run is a series of short runs.” Classic
No question, interesting play on words. Good work CFAHooker. But all you’ve provided us with is a short-term sales argument for a trade, at best. But you have to seperate cyclical blips from secular trends and - I think - [some] of the stocks I talk/illude to are designed for the later not the former. My 2 cents… Willy
7 shareks of BRK A, and spend the rest at emprior’s vip.
Interesting thoughts so far. I appreciate them all…