At the risk of looking like an idiot or someone who doesn’t know what they are doing, I’m going to share with you some recent decisions I’ve made and a recent move I made in my Registered Retirement Savings Plan (RRSP) account. Back on September 17th I wrote a post where I shared with you all of the portfolio changes I made, I showed you all the stocks I sold and bought. I also provided you with a plan that I was going to follow that would in my opinion set me up for success and diversify my portfolio. To refresh your memory I came up with a plan for my Tax Free Savings Account (TFSA) where I would buy the Canadian stocks that are currently sitting in my RRSP. Once I had bought the same amount of shares of a particular stock I would than sell it in my RRSP account and convert the money to $USD and buy US stocks.
To me this was a good plan as it would help (eventually) diversify my portfolio away from my home bias of the Canadian market. Since writing that post I have had doubts with this plan, one being it would take years to complete and two because I would be tying myself up buying and selling the same stocks and could potentially miss out on other investments.
So after all that I have decided to changes things for the better. I have not bought or sold any stocks other than what I have shared with you through the blog. I spoke with a couple friends and fellow investors who made a lot of sense in regards to a better way of doing things when it comes to diversifying my portfolio. One recommendation I received was to journal my stocks in my RRSP to their US equivalent. I am a little embarrassed to say this but I never even thought about doing this and it made a ton of sense.
What is Journalling a Stock?
The process of transferring a share across stock exchange is called ‘journaling’. It is a term used with the discount brokers for moving cross-listed stocks between exchanges. The end result is that you can hold Canadian blue chip companies in US currencies generating US dividends.
(Source : Dividend Earner)
In order to do this you must for Canadians have a US cash account inside your RRSP like I do with RBC Direct Investing.
A couple of weeks ago I sent RBC a message requesting that they journal the following stocks because they also are listed on the US exchanges BCE, Bank of Montreal, Enbridge, Royal Bank of Canada, Telus and TC Energy. That has since been completed and I own the same amount of shares as I did before but now they are in US.
Effect on RRSP
My RRSP now currently has only one stock on the Canadian side of my account Power Corp of Canada (ticker: POW) as it doesn’t trade on the US exchanges I think, the rest of my account is now all in US dollars. For January I’m not sure if the dividends I will receive from BCE and Telus in January will be in Canadian dollars or US since I journalled the stocks after their ex dividend date. Going forward though these stocks will pay me in US dollars and will help grow that side of my portfolio quicker.
By making this move my dividend income might be lower next year as the money will be converted into $USD when received. This might hinder my ability to drip new shares of these stocks, if it does it means my cash will grow and at this stage I’m willing to make that trade off.
TFSA Going Forward
Your probably saying by now so what does this mean for his TFSA account? Or why doesn’t this guy just sell his stocks and go with index investing lol? To be truthful I’m not sure yet what I will buy with the $6,000 in contribution room we will receive in 2021. I can tell you for certain that I want to get out of the habit of selling my investments, so that being said I am not planning on selling any of the stocks I currently hold in this account. I’m fine owning these in two accounts, I also think they provide me with a good dividend base for this account. I believe once the pandemic ends all of the stocks/ ETFs will reinstate their dividend or begin to raise them (banks).
In 2021 I think I will take a look at possibly reinvesting in the following stocks:
- Alimentation Couche-Tard
- Sun Life
Also I will look at adding some stocks I haven’t owned before such as:
- TD Bank
- National Bank
- Brookfield Infrastructure Partners
Well folks that’s it for me this week. I hope you all have a good New Year’s and I will see in 2021.
Thanks for making this the best year for my blog.