How I built a solid portfolio

Learn how Canadians achieved their financial dreams and how you can too. This is the seventh instalment in our seven-part series entitled “Making it Happen.”

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by Julie Cazzin
December 26th, 2012

From the December/January 2013 issue of the magazine.

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Urbaniak_322

“I built a solid portfolio of dividend-paying stocks that will help me retire earlier”

Frank Urbaniak, 49 // Aurora, Ont.

Five years ago I became motivated to build my own stock portfolio. I’m a project manager for a telecommunications company, and I had just read some books on dividend investing that encouraged me to take the plunge. I was interested because this type of investing has been so successful that it’s allowed some of its followers to retire before age 55.

I developed a structured approach to buying blue-chip stocks and adopted a dividend reinvestment plan (DRIP) as my primary strategy. This means instead of receiving cash dividends, I automatically purchase new shares of the companies. I also developed a DRIP app to help me track my stocks and tell me when I should be topping up my $5,000 annual investment so I stay on track.

For me, it’s all about retiring as soon as possible. Age 55 would be nice, but for me it will probably be age 60. If I had started a bit earlier with my strategy I would have probably made the age 55 target. I always worried about my money and realized that my previous strategy of using mutual funds just wasn’t working. My RRSP mutual fund account just never increased at all. The fees were killing me. It was ridiculous.

I started my stock portfolio with a $5,000 investment in the Bank of Montreal. I soon wanted to diversify and now hold Enbridge, TransCanada Pipeline and Fortis. I’m happy with my returns, which are averaging around 8% a year. I stick to Canadian stocks because they’ve done really well for me. Blue chips will be here for the next 100 years. I really believe that.

My goal is to use my investment money to eventually retire some place hot like Costa Rica. I’m a beach guy who loves snorkelling and motorcycling. Opening a small coffee shop there also appeals to me and I know that staying on track with my dividend investing will help me get there more quickly.

My key tips for anyone interested in becoming a successful investor is to concentrate on buying blue-chip stocks and to reinvest all dividends. Don’t worry about price fluctuations or even falling prices.

In fact, those times often present the best buying opportunities. Have a goal in mind and stick to it. If you follow these steps, you’re certain to be successful.

More from the “Making it Happen” series:

How we paid off our debt
How I started and sold my business
How I thrived financially after divorce
How I became a landlord
How we paid off our mortgage early
How I graduated without student debt

5 comments on “How I built a solid portfolio

  1. hi, what dividend investing book did you read? i wanted to learn how to build a solid portfolio like you did. thanks!

    Reply

    • Read all the books from Derek Foster!

      Reply

  2. It sounds like Mr. Urbaniak has found a way to invest that is working well for him. I'd just caution that any stock, no matter how blue it seems, can falter or fall. Nortel for years was considered a blue chip. So was GM. I'm sure, though, he knows that and keeps current on the companies he invests in, to make sure their fundamentals seem sound.

    Reply

  3. Leila, I'm almost certain he read Derek Foster's books. His first book was "Stop Working: Here's How You Can". It's seven years old, so some of his advice is outdated, but it's a good introduction to DRIPing and dividends. http://www.amazon.ca/Stop-Working-Heres-How-You/d… .

    Reply

  4. I like the dividend approach. Have you read Jeremy Siegel's The Future for Investors? He talks about how reinvested distributions are Bull market accelerators and bear market protectors. In reading this book I discovered how old tried and true companies are best for this strategy. Car companies like airlines are very fickle and probably not suited to long term strategies because they often have terrible balance sheets. There are just stocks that are meant for trading.

    Reply

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