Spring clean your portfolio

Spring clean your portfolio

You’ll be surprised how easy it is to set up a portfolio that delivers both the growth and the peace of mind you need.


One of the things I love about investing is that it’s not that complicated. Sure, some advisers (and index investing enthusiasts) make it seem that way, but once you understand the basics, you’d be surprised by how easy it is to set up a portfolio that delivers both the growth and the peace of mind you need.

If you’re not happy with your investments right now, I can help. As you do a bit of spring cleaning around the house to get ready for summer, you might want to give your portfolio a once-over too. The benefit? Clarity on how much risk you’re taking, a realistic idea of the growth you can expect, and the confidence that comes with knowing you actually have a strategy—rather than a tangled mess of investments that resembles that bundle of Christmas lights in the basement.

You might be reluctant to plunge in because it sounds like a lot of work, but if you have $100,000 or less invested, I have a surprising recommendation for you: a single balanced mutual fund. Yep, it really can be that simple. You can sell off that morass of stocks and specialized funds and plunk all your cash into a single fund. The ones I like include the BMO Monthly Income fund, the CIBC Balanced Index fund, the RBC Monthly Income fund, the TD Balanced Index fund, the Scotia Diversified Monthly Income fund, the Tangerine Balanced Portfolio, and the Mawer Balanced fund. Each offers a healthy ratio between stocks and bonds to keep your risk in check, a reasonable annual management expense ratio (or MER), and there is no fee for additional contributions.

Those who are a bit more experienced might also consider putting together a simple portfolio of exchange-traded funds (ETFs) or index funds. This takes a bit more time, but will produce better results because you’re essentially getting the performance of a mutual fund for a fraction of the cost, so there’s less drag on your growth. (There’s a handy guide to assembling such a portfolio online at canadiancouchpotato.com.)

As your portfolio grows, you’ll find there are other options. You may decide to become a stock picker, or go for a more sophisticated index portfolio that’s finely tuned to your exact risk profile. But here’s a little secret the financial services industry doesn’t want you to know: If you get the big stuff right—if your portfolio is properly balanced and your fees are reasonable—you’ll do just fine, no matter which investing strategy you choose.

I know a one-fund approach sounds absurdly simple, but in my experience there are an awful lot of people using “advanced” techniques who aren’t even getting the important stuff right. They acquire an emerging markets mutual fund here and a gold ETF there, plus a few stocks they read about in the paper, and before you know it, they have no idea what they’re invested in or how much they’re paying in fees.

If that’s you, it’s spring cleaning time. Work with your adviser or bank to sell off the jumble of poorly performing investments you have now, and try again—a fresh, clean start that will generate the returns you need for years to come.

By the way, I’m delighted to be back at the helm of MoneySense. Special thanks to Jonathan Chevreau for a fantastic job editing the magazine over the past two years. Jon has now achieved his ‘Findependence Day’ (if you don’t know what that means, check out his blog at findependenceday.com), but I’m happy to say that he has agreed to stay on as Editor-at-Large going forward and his column will continue.