Do-it-yourself Investment Portfolios: Overview

In this section of our website we want to show you what an investment portfolio looks like and how you would manage it using our balanced IFM Approach. Keep in mind that there are a number of different types of investment portfolios (such as conservative, balanced, growth, aggressive growth, etc.) and there are a number of different approaches you could use to manage your investment portfolio (such as passive, active, trading, growth, dividend, value-oriented, hedging, etc.). For more information about the different types of investment portfolios and approaches, see our section Portfolio Design.

Note: Our Sample DIY Portfolios are intended as educational tools and should not be misinterpreted as investment recommendations or advice. Visitors should ensure that the investments they purchase meet their own personal investment constraints and risk tolerances. The Portfolios are intended for those investors that view their savings as their own personally managed pension fund (i.e. a conservative, safe reliable investment portfolio). The sample portfolios are not intended as an example of a trading portfolio (a more risky, volatile, complex investment vehicle).

While there are many different investment processes to choose from, the IFM Approach is simple, consistent, and reliable. To further enhance your understanding of designing your own investment portfolio, we have put together the following three sample investment portfolios:

 

Sample Income Portfolio: Our Income Portfolio is a conservative investment portfolio with its primary investment objective being to preserve your precious hard-earned savings – i.e. safety first. This portfolio invests in individual bonds, Guaranteed Investment Certificates (GICs), and preferred shares. The income portfolio has two objectives:

  • to safeguard your savings, and
  • to generate a steady investment income stream

 

Sample Balanced Portfolio: Our Balanced Portfolio is a portfolio that uses an investment approach that is similar to that of an old-time pension fund.  The portfolio’s foundation has been built with individual bonds, GICs, and preferred shares, and upon this foundation individual common shares and Exchange Traded Funds (ETFs) have been placed. The balanced portfolio has three objectives:

  • to safeguard your savings,
  • to generate a steady investment income stream and
  • to provide an opportunity for future growth from capital gains

Building our DIY sample portfolios with individual investments

Our portfolios are designed and constructed with a focus on owning individual investments. Our preference for individual investments (including bonds, GICs, preferred shares, common shares, and ETFs) is motivated by our desire to

  • maximize investment control
  • minimize investment costs, and
  • maximize investment performance

 

Maintaining a focus on these three areas provides a number of benefits:

  1. With greater investment control comes a better understanding and comfort with your investments. Because each individual investment has a specific job within the portfolio, you are better able to gage how each investment is influenced by changes in the economic, business and market cycles. Greater control enables you to better measure, monitor, and modify your investments thereby increasing your success in reaching your financial goals.
  2. Investment costs are usually easier to determine for individual investments than they are for more complicated investments like Principal Protected Notes (PPNs), Index-linked Guaranteed Investment Certificates, mutual funds and segregated funds. By identifying and understanding the individual investment costs you are in a better position to ensure that you are not over paying for investments that under-perform.
  3. Finally, by investing in individual investments you gain the ability to quickly identify and monitor weak, under-performing investments. This will enable you to make timely changes thereby enhancing your investment portfolio's overall performance.

Background information: Do-It-Yourself Sample portfolios

Both the income and balanced investment portfolios share a number of common characteristics including the following:

  • Each portfolio was designed and the investments were purchased in June of 2010.
  • Each portfolio began with $100,000 of savings and assumes no further deposits or withdrawals will occur.
  • Each portfolio assumes all income (interest, dividends and capital gains/losses) are retained within the portfolio.
  • Each portfolio records the interest and dividend income received quarterly as an addition to the portfolio's cash balance.
  • Each portfolio's accumulated cash balance will be reinvested during the July to September quarter.
  • Each portfolio's performance is measured as of June 30th and is measured in terms of a simple, average annual rate of return with no adjustment for timing of investments or receipt of income.
  • Each portfolio's performance is assessed a success or failure when compared with its specific benchmark that has been established with the help of the Projected Annual Portfolio Value Comparison calculator found in the InvestingForMe Tools section.

Reports and summaries also included

We also support our DIY Portfolios with a number of useful reports and summaries. These provide a greater understanding of each portfolio’s management and the purpose of each specific investment held within the portfolio. The reports and summaries are used in the ongoing monitoring, management and measurement of each portfolio. Note: Once an investment portfolio has been designed and the investments purchased it becomes important for a process to be established for the monitoring, measuring and management of the investments toward the portfolio’s goals. Just as there are many different approaches to designing a portfolio, there are numerous different approaches to monitor, measure and managing an investment portfolio. The IFM Approach has developed a series of nine summaries and reports to help monitor, measure and manage the Portfolios. Every investment portfolio should be supported by a similar series of summaries and reports for measuring its success. 

Here is a list and a brief description of the reports and summaries that we use in our Sample Portfolios and update at the end of each quarter:

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