TFSA Louis Simono: work and investment

The 35-year-old carpenter has $ 44,000 in his TFSA. Through individual stocks and ETFs, he wants to have more financial flexibility in his 40s. (Image: kindly)

The focus of MY TFSA is the section where individual investors share with us their successful and bad investment steps, while presenting their portfolio for professional analysis.

(Illustration: Camille Charbonneau)

This builder from Victoriaville has an inherent quality for everyone who seeks prosperity: he is hardworking, very hardworking. “I got it from my dad. When I was young, he took summer vacations to pick strawberries with me. A very young collector (9 to 15 years old) spent part of the summer in the field. “I wrote down my earnings in a book. On a really good day, I could make a hundred dollars. In the fall, he put the amount of his harvest into a savings account and made himself the only gift. “I bought an article at the end of the season. One year it was a bicycle, another a TV, ”he recalls.

It was at school, as part of his middle V course in economics, that he first became acquainted with the world of securities. “We were modeling the stock market, and I liked it so much that my mother, who worked at a financial institution, helped me open a brokerage account the following year, on my 18th birthday. But his lack of knowledge and exorbitant commissions at the time ($ 28.95) would slow him down. “I invested about $ 500 in Bombardier and Mitec Telecom. I lost a little with the first and doubled my bet with the second, and then closed my account six months later. “If he stops his investment career, he will not stop saving and will continue to earn money working on a dairy farm.

Having built his own house and started a family, the young carpenter-carpenter returned to the stock market in 2017, at the age of 30. Discussions with an acquaintance from his son’s hockey community will arouse this long-standing interest in him. “He told me about the ability to manage your investments yourself and save money on management fees. It challenged me a lot, but I also felt fear and insecurity.

After careful consideration and some reading, he opens another brokerage account and transfers assets from his RRSP, invested in mutual funds. You also open your own TFSA account. “Of course, I made a few mistakes for beginners, but it allowed me to learn. He will, among other things, burn his fingers with lithium Nemaska, resulting in the loss of more than $ 2,000. But he makes up for it with the title of clothing manufacturer Canada Goose (GOOS, $ 32.56), which he will buy for about $ 20 and resell for almost $ 90. Gradually, over the years, it will change its portfolio, including exchange traded funds (ETFs). “My husband invested entirely in ETFs and worked better than I did, who spent too much time reading and researching. Today, ETFs from BlackRock and Vanguard make up more than 50% of its TFSA. He also owns stock-type stocks that pay growing dividends, such as Enbridge (ENB, $ 58.43) and Royal Bank (RY, $ 138.96).

At work, a young investor is counting on a pension fund. Therefore, he is more aggressive in his investments; he would like his TFSA to serve as an additional financial cushion in the long run. “Which gives me more flexibility and allows me to work at a slower pace in the late 40’s or early 50’s. To achieve this, Louis Simono makes weekly deposits to his TFSA and RRSP. He now manages a portfolio worth $ 86,000. “We do not have a great way of life. We make one trip a year, but would like to travel more in the future. Expecting to travel the planet, he continues to study personal finance and investing. He recommends reading Peter Lynch’s “And If You Knew Enough to Invest in the Stock Market,” Michel Will’s “Pile et Face,” and Luc Poirier’s “Thinking Big: A Lesson in Business, Life, and Freedom.”

In the eyes of a professional

“Pay yourself and invest first, this is often the first piece of advice I give people. There is no doubt that Louis Simono uses this method, ”said Luke Girard, portfolio manager at Noël Girard Lehoux, Desjardins Securities. He also welcomes his hard work and thrift. “It simply came to our notice then. He generally likes the design of this TFSA, which consists of both individual stocks and ETFs. “I like his hybrid approach. You see, he did his homework. This may even include mutual funds. »

However, he wonders about the share of fixed income securities, ie about 4% (present in his ETF VGRO), the balance of shares (with 3% cash). “The term of his fixed income, ie the maturity of his bonds, is about eight years. In the context of rising interest rates, this seems long to me. Luke Girard believes that investors need to think about whether they want to increase the risk of their bonds (and reduce their maturity) to make them profitable, or focus on 100% of the stock portfolio. “What is his investor profile? He must clarify his choice and assume it. »

Geographically, its position in equity is well diversified, with a distribution of approximately 54% in Canada, 41% in the United States and 5% internationally. “If we go into recession in two years, can the US dollar still be a safe haven?” Luke Girard believes that he could slightly increase his position in both American and international markets.

From the sector’s point of view, it considers the TFSA portfolio to be overweight in financial terms (34.26%) (which it combines with real estate), healthcare (23.56%) and discretionary consumer (12.35%). “He should pay attention to this, because these three sectors make up 70% of the portfolio. He also expects the real estate market (17.42%) to face a headwind due to rising interest rates. “We are in the midst of rising rates. This will increase the cost of mortgages and pressure on property prices. »

Finally, he warns the young investor against more speculative securities, such as Aurinia Pharmaceutical, which bring more volatility. “This is 10% of its portfolio, and the company with a market capitalization of $ 1.6 billion is not yet profitable. »