That is one of the questions that I have been asked by many folks, and as most of my regular readers know, I am not that sophisticated when it comes to investing. I borrow ideas from folks who seem smarter than me, for the concept of ideal portfolios.
The first sample portfolio I started with and the one I base a few of my Investment Vehicles on, is the Sleepy Mini-Portfolio which I first read about on the Canadian Capitalist (under its previous editor). This is an easy enough portfolio to start with, but you need to open either an account with TD/Waterhouse or an E-Series Mutual Fund account with TD. The basis of this is the following TD Mutual Funds
TDB909 – TD Canadian Bond Index (e-Series)
TDB900 – TD Canadian Index (e-Series)
TDB902 – TD US Index (e-Series)
TDB911 – TD International Index (e-Series)
As the CC mentioned in his article:
The initial asset allocation will be quite simple: 20% bonds, 20% Canadian equities, 30% US equities, 30% International equities.
Now that is a very simple portfolio for those who really don’t know much, but want to start learning about investing. Do you have to follow those breakdowns ? Of course not but if you don’t know your elbow from a hole in the ground this is a nice ground floor Couch Potato Like passive investment portfolio. Re-balance in some fashion every year and that’s it. Also note that the CC has moved on to BMO Investorline as his investment house.
Think that is sissy kids’ stuff, you could look at the CC’s Sleepy Portfolio which has more aspects to it, and does rely on having a real trading account. It uses Exchange Tradeable Funds (ETF’s) but follows the same kind of Couch Potato concepts.
Other folks have their ideas too, friend of this site Larry MacDonald has his own One Minute Portfolio which he boasts only needs about a minute’s attention every year (fighting words in the investing world). What is in this Miracle Portfolio? To quote Mr. MacDonald (noted former Economist and current Financial Writer):
Consisting of just two exchange-traded funds (ETFs), one tracking stocks and the other tracking bonds, the portfolio requires little time or effort.
Sounds simple enough that even I might understand it!
What’s that you said, these portfolios are not Macho enough for you? Go visit our old friend Mr. Dan Bortolotti at the Canadian Couch Potato. He has remodelled many of his Couch Potato Portfolios for 2014, and has a plethora of different ideal portfolio choices:
- Global Couch Potato
- Complete Couch Potato
- Or the Ultra-Macho Uber-Tuber Portfolio
All you need to do if you want to start DIY investing is look at a few of the better writers out there, who specialize in Fund Analysis and Portfolio discussions. Start with one of their examples, you would be surprised how much you will learn just from doing this. You can even “Ask the Spud” a question if you wish (Dan will answer, most of the time).
Yes, you can go to a financial analyst if you wish, but you might end up with a similar portfolio, or worse a bunch of funds with much higher MERs, in areas that you don’t understand.
Ideal Portfolio Addendum
This was written many years ago. I didn’t really know about some great ETF’s out there. How big or small your portfolio ends up being, is up to you. It is possible to have the greatest couch potato portfolio, which is a two Index Fund.
Personally, I found sleep (and ~12% CAGR) somewhere between a basket of ETF’s and scouring the ‘net for solid advice and analysis: relying on the top 5 dividend yielding issues of the TSX60 – excluding recent income trust conversions and miners – re-investing dividends and re-balancing yearly. Rinse, repeat … 🙂