Kevin Stone, 24
Occupation
Graphics designer
Portfolio
Includes shares in Allied Properties REIT, Halliburton Co., Premium Brand Holdings Corp., SNC-Lavalin Group Inc., Intel Corp., McDonald's Corp., Enbridge Inc., Baytex Energy Corp., Cineplex Inc., Goldcorp Inc., and Silver Wheaton Corp.
The investor
Kevin Stone graduated from college and got a job in 2008, bought a Vancouver condo in 2009, and began investing in stocks in early 2010. By the age of 35, he hopes to have achieved financial freedom, which means being able to live comfortably off income generated from his investments.
His focus is laser-like. He saves a third of income, has postponed marriage, and tracks his progress on freedomthirtyfiveblog.com. He writes that his net worth has already gone from "negative five figures (mostly student loans) to positive six figures."
How he invests
Mr. Stone has long-term positions in value and dividend stocks, and does swing trading (buying stocks for one to four days to ride short-term momentum). The common thread in this approach is frugality and buying on margin. "I don't have any ground-breaking investment strategies but I've discovered that thrift and leverage are the main catalysts that helped me grow my net worth," he explains.
"Using leverage as part of my investment strategy has been one of my best decisions," he continues. Whether it's borrowing to buy a home or stocks on margin, "the benefit of owning more appreciating assets than I could otherwise afford ... has paid off."
Mr. Stone acknowledges the added risk of using leverage to invest. But he believes the risk can be mitigated by buying solid, large-capitalization companies with growing dividends. They often have yields higher than borrowing costs.
Best move
It was buying shares in Inmet Mining Corp. on margin in October, 2011, and selling in early 2012. The stock price rose 20 per cent but, because of leverage, he made 60 per cent on his cash outlay.
Worst move
In 2011, he bought shares in U.S. private equity firm KKR & Co. LP in his RRSP, thinking there would be no tax withholding on the dividends. But he discovered the rule does not apply to limited partnerships, and sold his holding.
Advice
"The largest risk to our investments is not the fluctuating market or the economy, but it's our own psychology."
Want to share your strategies?
E-mail mccolumn@yahoo.com
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