Sunday, August 17, 2014

My Investment Strategy Part 1 of 3 - Stocks

When I first started working, I was a fairly involved investor.  I read books on how to invest, research the stocks, and invested in equities.  As time went on, I find that with limited free time and so many other things I'd like to do, I have less and less time to actively manage my own portfolio.  Also, as a hobby investor, it's hard to achieve good returns.  I switched to a more passive and laid back investment strategy: indexing based on Exchange Traded Funds(ETFs).

I did my research and looked at my risk tolerance to decided what sectors & the ratios of my portfolio I want to invest in each sector.   Then I picked the ETF I wanted to use to index each sector.  Then once a year, I re-balance to ensure the ratios are back to originally decided.  In my portfolio I have ETFs that index the US market, Canadian Market, Emerging Markets, International Markets, and Bonds.  I still reserved about 5% of my portfolio to purchase one or two stocks for fun.  This has served me well since I can pay more attention to the stocks I purchased.

So that's my investment strategy Part 1.  For me another type of diversification, in addition to diversifying in the market is to diversify the type of invest. 

Coming up:

My investment strategy Part 3 - Real Estate 
My investment strategy Part 2 - Private Equity