My 2018 Investing Strategy

My 2018

Hello everyone and welcome to my 2018 investing strategy post. Tell me do you come up with an investing strategy? I have never had a strategy before and I am really looking forward to see if this helps me achieve my goals. Back in late December and early January I decided I wanted to try and focus on growing my portfolio and the value of that portfolio, also diversifying the portfolio. How was I going to do it? I could invest more money, buy more stocks etc. That is why I decided that I needed a strategy to help me accomplish my goals.

2018 Goals

Just to refresh my investing goals for this year are to invest at least $10k and to receive at least $6k in dividends.

Well those goals are great and all, but what would I do with that $10k that I invested buy all new stock? Buy more shares of the same stocks I own? Leave it in cash?

Strategy

  1. At the beginning of the year I made the decision that I didn’t want to buy many new stocks maybe two or three, this year I was going to try and focus mostly on growing my position in the stocks I already own.
  2. Also I plan on diversifying my portfolio currently 85.2% of my value is in the Canadian market that is far too much.ย  I plan on buying US stocks once again.
  3. Replace non-core stocks that don’t increase their dividends as often with stocks that raise theirs more frequently.

Locked In RRSP

If you have been reading my blog for awhile you will have noticed that I haven’t mentioned the Locked In RRSP that I have very often only in my net worth posts.ย  The reason for this was because the money was invested in mutual funds from the bank. I didn’t pay that much attention to it.ย This money is pension money that I had from a previous employer. The value of this money was just over $4,000 as of this past Monday.

Yesterday I decided that I wanted to control these funds and invest it in stocks so I opened an account and filled out and submitted all the paperwork (14 pages). So some time in February that money will get transferred over to my brokerage and I can begin buying stocks. This move will definitely help me get closer to my dividend goal.

DRIP

Back in 2016 I turned the DRIP (Dividend Re-Investment Plan) off and I took my dividends in cash. Well in an effort to help build up my positions I turned my drip back on. Beginning in February I will start dripping my stocks if the dividend is large enough. With my brokerage I can only receive whole shares, if I don’t receive a big enough dividend I will then just get cash.

Diversify Portfolio

I guess you can say I have home country bias with 85.2% of the value of my portfolio in Canadian equities. In 2018 I plan on buying US stocks again in order to help bring that 85.2% figure down. There are so many excellent US stocks out there I should have been buying and holding them sooner. The stocks that I do buy will go into my RRSP account this is because there is a tax treaty with the US, we are allowed to hold US stocks in our RRSP and the dividends received in that account are tax free.

So in 2018 I plan on building up my position in the stocks I already own. I am going to diversify my portfolio by buying US stocks again. Finally I will look to sell stocks that don’t raise their dividends as often and replace them with stocks that do. I believe if I follow these three things in addition to taking control of my Locked In RRSP, and turning on my drip that 2018 will be a successful year for me.

What do you think? Is my strategy a good one? Maybe it’s a start and I can go further? Please feel free to let me know what you think.

Thanks

Matthew

35 thoughts on “My 2018 Investing Strategy

  1. Hey! Your strategy looks real solid for 2018.

    I have 2 questions for you just out of curiousity;

    1. will any of your buys be defensive plays in case of a market correction?
    2. you spoke of buying more US stock, do any UK stocks interest you?

    All the best,

    Liked by 1 person

    1. Thanks for the comment. For the US stocks I’m not really looking at defensive plays, I’m looking for stocks that you would what to hold no matter what the market is doing. For example I don’t have and tech or health care stocks in my portfolio, so I may look at a Johnson & Johnson and let’s say Microsoft. As for UK stocks I must say I haven’t thought about them I probably should, for international exposure I may just purchase an ETF. I am undecided on that.

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    2. Dear RichestManInLondon,

      I am very interested in holding UK stocks but have no idea how to do it from within a Canadian Brokerage account except by holding a CDN$/USD$ ETF (I currently hold VGK:US).

      Is there any stocks in particular that you would recommend?

      Besos Sarah.

      Liked by 1 person

      1. Hey Sarah,

        I’m no expert so I wouldn’t feel comfortable giving recommendations or investment advice but I can give you a list of stocks that I either own or watching:
        Own: GSK, NG., LGEN, ULVR, DGE, LLOY, EZJ, BT.A
        Watching: VOD, RDSB, AZN, RB, ABF

        Not sure about buying UK stocks from a Canadian brokerage – sorry! I’m sure there will be a brokerage that trades UK stock somewhere?

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  2. Nice Matt sounds like a great plan. When transferrring from mutual funds to direct investing it took about 6 weeks for us. Was really annoying. Haha. I think your plan is solid. Like you im heavy canadian stocks, but thats because of the tfsa. Its hard to not top that off first =)

    Look forward to following your moves!
    Cheers

    Liked by 1 person

    1. When you transferred from mutual funds to direct investing did you transfer from the Royal Bank or from another bank? I agree it’s hard not to top that account off first (I’m trying to do that now). I will post next week some of the moves I’ve made so far.

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  3. Looks like a good plan Matt.

    Have you considered just getting a US Equity Dividend Aristorcrat ETF or something? Will offer you more diversification, without having to worry about researching all the US stocks on top of the Canadian stocks.

    My plan is fairly similar for this upcoming year – cancelling my Mutual Funds – replace with ETFs & Individual Stocks. I don’t have time to research stocks enough – so i buy individual Canadian stocks (TFSA’s) and Funds/ETFs for Global/US.
    Also – Good call on turning DRIP back on…love seeing new shares DRIP each month ๐Ÿ™‚

    Liked by 1 person

    1. Hey Jordan I do own a US Dividend ETF that has 101 holdings in it. I think to start I may look to add just 4 or 5 US stocks build up my position in them and see where things go from there. I like your strategy stocks vs ETFs.

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    1. Hello in regards to taxes here in Canada we can buy and hold and collect dividends from US stocks in our RRSP (Registered Retirement Savings Plan) tax free. I believe that account is like your 401k? As for entry point if it’s a huge company for example Johnson and Johnson that company is huge so I wouldn’t look at how high its share is I buy and have the belief that I will make money in the long run. For other stocks I tend to look at P/E ratio, are they raising their dividend, what do there earnings look like. I hope that helps. How about yourself? How do you decide?

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      1. Hi Matt, it’s always interesting to see how different people determine the entry point. I have a huge Google Sheets spreadsheet that has a bunch of rankings based on calculations. I basically use P/E and compare to the median historical P/E and the industry P/E. If lower than historical and industry P/E, chances are it is at a good price. I do this for P/E and Shiller P/E. I also perform a crude Dividend Discount Model calculation, and subscribe to Morningstar to get their fair value estimate. I average all these fair value estimate to get a fair value. I then drop that down by 10%, and the price is lower than that, then I think it is at a good buy price. Of course, it’s not all numbers, as I have to do some more research on the company to see if I want to own them, but that’s how I figure out a target buy price. I know it’s probably overkill, and just comparing the PEs probably works just as good. But I’m a numbers nerd, so I like the exercise!

        Liked by 1 person

      2. Wow that is a lot of numbers lol. I must admit looking at median historical and industry P/E is something I never thought about. I’m a fellow numbers nerd ๐Ÿค“ for my next purchase I may look at those ratios and see what I find. Thanks for sharing.

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  4. It absolutely makes sense to diversify with Yank stocks but in this hyper over-valued market what will you buy? Some argue WMT is fairly valued but I’d rather wait to buy it and similar stocks (JNJ, MMM etc) at a more reasonable price when there is a correction. I’ll be watching with intrigue to see what you buy!

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  5. Yeah, makes perfect sense with companies like J&J and MS. I have my eye on MS atm too as I think it is a strong dividend play.

    Also, an ETF is a great idea but we have plenty of dividend stocks over here worth checking out (GSK, NG., LGEN, ULVR, DGE, LLO, VOD, RDSB, AZN to name a few!).

    Liked by 1 person

  6. “The odds will always favor the man with a plan”. My plans for 2018 is to increase my income, so I can then invest more in the stock market, therefore increasing my dividend cash flow.

    As for your investing in U.S. stocks, I don’t know what your timeframe is but you may want to wait at least a couple of weeks to see the currency exchange. In the last couple of days, Trump reiterated that he prefers a weak U.S. dollar. That statement, in turn, helped bump up the Canadian dollar a bit. Hopefully, the Canadian dollar will rise a little more, given that I’d also like to diversify a bit by buying U.S. and foreign stocks.

    Good luck with your strategy!

    Liked by 1 person

  7. Dear Matt,

    I too think that I should diversify more (mostly in Canada). I’ve been wanting to own Colgate-Palmolive for a really long time but the high US Stock market and US/CDN exchange rate (although lower right now) have kept me from investing.

    I’m struggling more right now with how much cash to hold. Not just because the stock market is “higher” but because we are in the process of retiring/not earning a salary so it’s something that I need to think about for when (not if) there is a market correction.

    Sounds like a great plan. I look forward to reading about all your successes.

    Besos Sarah.

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    1. Thanks. I would really like to get that percentage down but as I focus on investing my money in my TFSA account it may go higher unless I go with an ETF. My US plan is to add maybe 4 to 5 stocks. I would like to add at least one tech and health care stock.

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  8. The strategy is good. Not all stock pickups are winners and there is need to get rid of those that do not perform well. I also tend to put US stocks in RRSP because of the reason you mentioned and trying to increase my holdings to enable DRIP where possible. Have a great 2018!

    Liked by 1 person

  9. Nice strategy. I think DRIP is the way to go. Although like you said it depends on your broker. My broker let’s me buy half shares though DRIP. So it builds up my positions and doesn’t cost me anything extra in trade fees. I only have a few companies built up enough to DRIP whole shares anyway so it works out. Best of luck in 2018!

    Liked by 1 person

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