Vanessa Arsenault’s TFSA: a good basis for growth

Vanessa Arsenault: 31 years old, the personal finance advisor has $26,000 in her TFSA. Through individual stocks and ETFs, she wants to achieve some financial freedom. (Picture: courtesy)

SPOTLIGHT ON MY TFSA is a section where individual investors share with us their good and bad investment moves while submitting their portfolio to the analysis of a pro.

1649874681 101 Vanessa Arsenaults TFSA a good basis for growth
(Illustration: Camille Charbonneau)

Vanessa Arsenault, originally from Beauce, experienced a sort of financial “Big Bang” in her early twenties. “I’m not sure how my interest in investing arose, but it was very real. I am a curious person and like to learn. After studying psychology at university, she spontaneously began to read about the stock market. It must be said that her baccalaureate years at the University of Quebec at Trois-Rivières had trained her well, by force of circumstance, in introspection and research, but also – like many students – in learning to live with few resources. “I had $20 a week for groceries and my pair of Converse were like winter boots,” she recalls. Never mind, she managed the little money she had sparingly. “I have always been thrifty and avoided getting into debt. But I wanted more.”

Against all odds — in an environment that was “a priori” unknown to her — she quickly rose through the ranks of a financial institution which led her to work everywhere in Quebec: from the South Shore of Montreal, to Abitibi-Témiscamingue and Quebec. “I started as a cashier and today I am an advisor in investment savings, personal loans and mortgage loans. »

She meets a variety of clients on a daily basis and can put into practice both what she learned at school and in her reading. “I like to listen to people and provide solutions to their problems. The best advice she can give anyone is to invest regularly. “It has to be automatic. She does this by investing a fixed amount each month. “We invest in the ups and downs of the market. Not seeing the money in our account also prevents us from spending it. »

The one who considers herself an autodidact in investment decided to launch herself in 2019 in the management of part of her portfolio. “I did it in both my RRSP and my TFSA. She gets her information from the Internet, including blogs, books (she’s read “The Smart Investor,” by Benjamin Graham) and YouTube. “I like Graham Stephan’s and Brandon Beavis’ investment channels. She started investing by buying mutual funds and ETFs. “As an independent investor, I had the idea of ​​holding only ETFs. »

The siren song of the individual titles, however, will be hard to ignore. “I decided to buy company shares. I think it personalized my portfolio more. She finds that growth stocks are harder to value and prefers to focus on established companies that dominate their industry and have a history of dividend growth.

“I consult the list of dividend aristocrats and consider companies whose sectors are affected by the economy. I sort of buy against the tide of stocks at a discount according to economic cycles. This is how she will grab hold of stocks like Canadian Tire (CTC.A, $193.87), Bank of Montreal (BMO, $148.10) and Rio Can REIT (REI.UN, 25, $56). She also grants a portion of her portfolio to cryptocurrency. “I’ve read about it and it’s fascinating. I believe it is democratizing and sooner or later there will be a real application for this blockchain technology. »

Vanessa Arsenault has a long-term horizon for her portfolio. “I follow a few groups on social media whose members identify with the financial independence movement FIRE (Financial Independence, Retire Early) and that resonates with me a lot. She would like her stock market assets to eventually provide her with enough income to be able to devote more time to hobbies, such as writing and photography. “I would like to continue working later, but at my own pace. She is not so much looking for money as for time. “I don’t want to have money with my time, I want to buy time with money. »

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In the eye of a pro

“I like his approach,” says Martin Lalonde, president and portfolio manager at Rivemont. “She built a portfolio with exchange-traded funds (ETFs) and individual stocks with a core-satellite approach. He finds it attractive to have both ETFs and stocks. “This allows you to benefit from well-diversified funds with very low management fees and at the same time to take a close interest in the portfolio by making individual decisions. It must remain pleasant to invest. »

For the core of the portfolio, Martin Lalonde likes the VEQT product, from Vanguard, which brings together four funds under a single title. “It’s very diverse, there’s practically the whole of the Earth in this product: the United States, Canada, emerging markets and international. »

However, he considers it superfluous to hold the bond ETF XBB. “She only owns 4%, it’s kind of pointless, because the point of owning bonds is to reduce your risk. Maybe if she had more…it also depends on her risk tolerance. He also believes that the timing is bad for this type of product that is highly correlated with interest rates. “Bonds fall in value when interest rates rise. »

The Rivemont manager questions the high cash weighting (29%) in the portfolio. “In inflationary times, with a portfolio focused on the long term, cash is not necessary. He points out that if the person thinks the markets are going to go up and down, they can choose to invest gradually. “The best thing is to regularly put your money to work by investing either in your funds or, depending on the opportunities of the moment, in companies that generate significant cash flows. »

He likes his cryptocurrency exposure which amounts to 4% and is split between two ETFs, Ethereum (ETHH-B, $15.10) and Bitcoin (BTCC-B, $8.66), which are quite liquid, have different utilities and which, according to him, are the two leading cryptocurrencies. “I think it’s a good weight, around 5%. It’s enough to make it look, if it goes well, and not enough to weigh down his wallet. In my opinion, everyone should have 5% exposure to crypto. »

The manager is of the opinion that when we have done research on a security and decide to include it in our portfolio, we have to commit ourselves to the trouble. “She has a lot of stocks with a weighting between 1% and 3% and that’s too little. A good investment idea should have a weighting of 5%. He realizes that she may have favored Canadian securities for her TFSA, leaving US securities for her RRSP. However, he suggests paying particular attention to sectors of activity such as health, high technologies (semiconductors) and industrial stocks (railways, in particular). He points out that in the current state, there are some duplications. “The XRE ETF already includes Rio Can REIT and the XEI ETF includes the major Canadian banks. »

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Vanessa Arsenault’s TFSA: a good basis for growth

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