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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Thank you for answering my question on the names of the companies that have been deleted from the portfolios for underperformance. You told me in advance that it would take some time to respond, but you did. And that's why I subscribe. It's great to align with people who keep their word and are up-front. While some of the choices we make could turn out well or not, integrity can always be upheld. I hope you charged me about ten or twenty questions for the response. -Jerry
Read Answer Asked by Jerry on June 20, 2017
Q: I manage an income portfolio for my wife who is 69 years old. The sole purpose of this portfolio is to provide income for life. Therefore the dividends are important and the actually ups and downs of the price of the stock less so. Some of these stocks pay quite high dividends. My question is are any of these company dividends at high risk of being cut due to raising interest rates or a downturn in the market and should be replaced with stocks that have lower yield but with safer dividends. The stocks are:

A&W Revenue Royalties

Artis REIT

BCE Inc.

Bank of Nova Scotia

Brookfield Renewable Partners

Chartwell Retirement Residence

Chorus Aviation Inc.

Cineplex Inc.

Dream Global REIT

Enbridge Income Fund Holdings

Extendicare Inc.

Pure Industrial Real Estate

Richards Packaging Income Fund

Royal Bank of Canada

Sun Life Financial Inc.

TransCanada Corp.


Apple

Whirlpool Corp.

Read Answer Asked by David on June 19, 2017
Q: Preference shares
How does the market value preference shares? Disregarding variables such as credit quality and characteristics of different issues, these shares strike me fundamentally as a series of cash flows discounted to a present value. I suspect that the market is driven by institutional traders who are guided by a particular benchmark to establish a discount rate to determine the value of the cash flows If I am correct, what benchmark rate do the market makers use and does it vary? For example, do traders always use a benchmark of x bps over Canada bond yield for equivalent terms and is there an established amount for x which doesn't change over time? Without predictability in this regard, there would be no way to assess whether reset shares will trade at par on their reset date.
Read Answer Asked by Carl on June 19, 2017
Q: Whenever I rebalance my portfolio, I find it somewhat troubling that I am treating a dollar in my RRSP account as equivalent to a dollar in my TFSA account or a dollar in my unregistered account. I am very near to the time when I will be converting my RRSP to a RIF and withdrawing mandatory amounts starting at 5.28% and rising in subsequent years. I will have to pay tax on these withdrawals and my marginal tax rate is not much below 50%. Moreover, I do not expect my marginal tax rate to change much over the remainder of my life. This means those withdrawals will be worth only about half as much to me after tax. Of course, when I withdraw a dollar from my TFSA or my unregistered account I get to keep the entire dollar. So I am inclined to treat a dollar in my RRSP account as equivalent to just 50 cents or so when I am totalling up my total assets and doing the rebalancing. Does this make sense to you?
Read Answer Asked by Philip on June 19, 2017
Q: Hi 5i,
My understanding is that if I buy units in a flow-through shares partnership, I can’t sell them until they are rolled over into a mutual fund, 1-2 years after the partnership is established. My question is: if I were to buy the flow-through shares themselves, direct from the issuing company, would there be any similar minimum holding period, during which the shares would not be tradeable, or at least not without transferring away the flow-through tax benefit? Thanks!
Read Answer Asked by Lance on June 15, 2017
Q: My wife and I are in the process of building our retirement income portfolios in each of our RRSP’s by following your Income Portfolio.
My question is would it be advisable for my wife to have a different mixture of equities than I have in my portfolio? We want to keep it a simple as possible but want to limit risk at the same time.
The same question pertains to RRSP VS TFSA. Should my RRSP hold a different mixture of stocks than my TFSA.
To begin accumulating my portfolios, I plan on using the same assets allocation in each account. 50% Equity 50% fixed income
Please answer this question as it pertains to diversification as I know there are many tax reasons why I might hold one equity vs another in these different accounts.
Read Answer Asked by Stephen on June 15, 2017
Q: Hello 5i
With talk of capital flow rotation, Pundits claiming dooms day freely in the media, some stocks and sectors seeing chart patterns rounding out in topping formation........and all the other market topping signs,

what are the portfolio review activities an investor should be conducting today?

As you can imagine, some of my longtime winners are giving back gains and other stock prices have stalled. It will be disappointing to me if I just sit and watch as my gains evaporate.

Short of telling me you are not market timers, do you have thoughts on what an investor is to do in the current environment to hold onto profits, while managing behaviours and emotions?

Portfolio is widely diversified including pension split between CAD, US and EAFE. There is very little fixed income utilized given expected low and negative bond returns.

Thanks
Dave
Read Answer Asked by David on June 14, 2017
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