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Mutual Fund News

ME AND MY MONEY

Special to The Globe and Mail

Stephen Gauer, 59

Occupation

Freelance technical writer and novelist

The portfolio

Includes Royal Bank of Canada, Bank of Nova Scotia, Toronto-Dominion Bank, BCE, Telus, TransCanada, Power Financial, Emera, Fortis, and iShares DEX Universal Bond index.

The investor

Stephen Gauer is "saving like mad" and hoping to semi-retire in the next 10 years. Last year, he took charge of his own investments. "I fired my ... adviser and got rid of all his recommended mutual funds, most of which I didn't understand," Mr. Gauer reports.

How he invests

He opened a self-directed RRSP at RBC and put 80 per cent of his money into 11 dividend-paying Canadian stocks. The other 20 per cent went into bonds via the iShares DEX Universal Bond Index Fund. "My stock portfolio did 17 per cent last year ... and this year is down 1.57 per cent on a year-to-date basis, versus a 14-per-cent drop for the S&P/TSX composite," notes Mr. Gauer.

His stocks must be large-cap, pay a dividend of 3 per cent or more, and have a reliable record paying dividends. He likes the solid dividends of the banks, and always has cash on hand to buy when their share prices drop.

"I use DRiPs [dividend reinvestment plans] as much as possible. This way, I get additional shares ... every quarter without trading fees."

All his stocks come from four regulated sectors: financial, utilities, telecoms, or energy transmission. He likes the regulated sectors because they tend to be steadier: a small number of firms "share the pie" and the prices of their products are not subject to a great deal of volatility.

"There is something very Canadian about these regulated markets. They're part of our history, our culture, our way of organizing the world. Regulators won't let the players in these regulated markets fail, either!"

Best move

"Parting ways with my financial adviser in 2010 after 17 years ... I now know exactly what I hold and how well it's performing ..."

Worst move

"Not buying stocks in the 1990s when prices were much lower than today."

Advice

"A self-directed investor should never stop learning. Write down your investment strategy before you begin and then stick to it. We all make mistakes; be sure to learn from yours."

Want to share your strategies?

E-mail mccolumn@yahoo.com

© 2007 The Globe and Mail. All rights reserved.

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