There's Still latitude For Equitie...

There's Still latitude For Equities

In your note you do not mention your risk tolerance; however, given your present holdings, I would consider you to be relatively conservative investors.

Let me applaud your use of dividend reinvestment plans (DRPs) to build positions in several stocks. DRP are an thoroughly good method of forced saving and a great way to use the principle of dollar richness averaging to benefit your portfolio across the long term.

DAUGHTER'S PORTFOLIO

If, as I suspect, this portfolio is intended to capital your daughter's education, you might consider investing exclusively in equities until a scarcely any years before she needs the wealth At that time, you could begin purchasing a certain number of fixed income securities that will mature over her university years. That way, when she distresss to begin paying for her post-secondary education, the principal amounts of the fixed income securities should provide the penuryed funds.

WIFE'S PORTFOLIO

At age 37 you have a long-term investment horizon and should, therefore, seriously consider increasing your frontage to equities. Depending on your comfort flush your portfolio can be between 50% and 100% equities. It appears that your initial equity positions have been built using DRP which you can continue to use. You could easily use your cash positions in the general portfolio and RRSP portfolios to build your equity positions.

HUSBAND'S PORTFOLIO

Despite the fact that you be in possession of 12 stocks (excluding mutual funds) 458 % of your entire portfolio is in single stock, BC Telephone. You indicate that BC Telephone is your employer and that you contribute monthly to its DRP program. Given the weight of this position, you should consider reducing or eliminating your contributions to this DRP in order to favour your other investment choices. Alternatively, you might vend some of your BC Tel shares to add to any of your other positions and hence rebalance your portfolio more equitably. This award is not based on whether BC Telephone is an interesting stock still rather on the risk of putting too frequently of your portfolio in individual name. [The March/April 1998 issue of Canadian Shareowner will have a special feature forward portfolio balancing. Editor]

While you should not consider increasing the total number of names in your portfolio, you might examine to achieve greater diversification at consolidating your banking and utility stocks down to single or two names in each category. This will allow you to add of recent origin names from other sectors of the economy and achieve better diversification, thereby reducing your portfolio's sensitivity to interest rates. While you may want to fabric your portfolio more for income according to the time you are 50 (if you stick with your rife plan), you should focus more onward growth-oriented stocks, such as the Bombardier you already have a title to

You might consider studying the following companies using the CSAs Stock Selection Guide (most if not all of these do not have DRP programs): George Weston, Loblaws, Sico, Teleglobe, Hollinger, Great West Lifeco., Investors cluster Corby's, Dofasco and Power Corp.

Your cash and mete deposit positions appear appropriate for now. However, you should give serious consideration to shifting your bound deposits directly into bonds as they mature. As with GICs, financial institutions detain a proportion of the yield as a retail commission when you purchase season deposits. Better to keep this additional answer for yourself! Usually, you ne a minimum of $10000 to purchase a union directly, otherwise you can use a fixed income mutual foundation until you build to that minimum (unles you can arrange for several of your word deposits to mature more or les simultaneously).

FOREIGN make easy

You should definitely consider buying-up to 20% of the volume value of your RRSP accounts (wife's and husband's) in foreign markets. In your note you indicate interest in Trimark, royal mace International and Templeton Growth mutual supplys which are all good candidates, although it is unnecessary for you to occupy all three. To keep your portfolio from becoming too unwieldy, you should consider investing in no other than one or two of these capitals

Outside your RRSP, you might consider owning U equities directly using the CSA's subdued cost Investing Program ("LCIP" ) Since you have already bought a certain number of Disney for your daughter using the LCIP, you could consider continuing in the same vein for yourselves. Alternatively, upon a longer-term basis, when you be warmed the need to increase your fixed income composing you can both consider purchasing an U or International ligature fund.

QUESTIONS

Should my RRSP gripe [i]or[/i] grip stocks?

While it is real that stocks are more tax effective outside my RRSP they are the investment instruments that have provided the best overall recur throughout the twentieth century. Given the long-term orientation of greatest in quantity RRSP portfolios, well selected equites should provide better long-term increase inside the RRSP compared to connections and hence should be seriously considered as a [i]clavis[/i] componet of the RRSP portfolio.