2023-11-23 20:42:41

Aged 96, the retired designer focuses on dividend stocks. (Photo: courtesy)

SPOTLIGHT ON MY TFSA is a section where individual investors share with us their good and bad investing experiences while submitting their portfolio to a professional’s analysis. To participate, write to us at [email protected].

(Illustration: Camille Charbonneau)

“My aunt Gisèle was always a woman regarding her business, thrifty, yes, but very generous: we argued regarding paying the bills at the restaurant,” remembers her nephew, Me Guy Gélinas, a retired notary who has been for almost 10 years her representative, that is to say her trusted person who makes decisions for her since she is incapable of doing so.

After studying at the Academy of Fine Arts of Quebec, Gisèle Gélinas settled in the national capital. There she found a job at Bell Canada, where she spent most of her professional life as a designer. It was there that she joined the employee stock option plan and that her interest in investment and securities was born. “She often told me how happy she was to have made this choice.”

Her nephew remembers her as a quick-witted woman who enjoyed life to the fullest and traveled widely. “She has always been rebellious and resourceful. She has visited Alaska, Europe, Israel and even China. This was unusual for the time. » Before her illness, her aunt was a very curious person, who loved to learn and continued to closely follow current events. “She read the newspapers every day. She was self-taught and enjoyed managing her investments and, above all, collecting her dividends. Even at the age of 80, she still followed her actions on her computer.

Foresighted, she had taken care to designate her trusted person, her nephew on her father’s side, and to have a protection mandate prepared with an independent notary. “The notarized power of attorney specifies how I should take care of her; she gives me full powers over her property. I make decisions in his interest by taking into account his wishes and preferences,” explains Guy Gélinas. He recommends people think regarding this avenue before problems arise, whether physical or mental. “We have to think regarding this trusted person, this incapacity mandate and the person who will take care of us and our property.”

As soon as he begins his role as agent, he observes that his aunt’s portfolio is very concentrated. “She clearly liked dividends, but her investments were limited to a handful of stocks.” He will then diversify his positions, while remaining faithful to the style of the primary manager. That is to say a strategy focused on star stocks (“Blue Chips”), which are rather stable and pay good dividends. “My aunt told me that she had burned her fingers investing in Nortel and I thought that more diversification would be appropriate.”

Currently, the TFSA of Gisèle Gélinas, 96, has 12 securities, the majority of which generate a dividend yield of at least 4%. “I consider his positions conservative. With her pension fund and public benefits, my aunt has much more income than expenses.” Added to this are investments that provide him with additional income that the agent estimates between $5,000 and $6,000 per year.

In the eye of a pro

“I salute the foresight of this well-prepared lady who adopted good savings and investment habits early in her professional life,” says Sylvain Tremblay, vice-president of Private Management at Optimum Investment Management. He also recalls the importance for financial advisors to know their clients, their families and the people designated as agents well. “This also applies to self-directed investors. The population is aging and the issue of protection mandates will become more common,” he says.

The portfolio manager likes the quality of the securities he finds in Gisèle Gélinas’ portfolio. “These are well-established companies with a history of paying dividends that are growing.” He mentions that the rise in interest rates this year has adversely affected these securities which are appreciated by investors looking for income. “BCE (BCE, $53.31), which makes up more than a third of the portfolio, has lost 13% this year. The banks also suffered.”

The portfolio being composed of securities in the telecommunications sector (BCE represents 37%) and banks, which he evaluates at 38% of the TFSA, Sylvain Tremblay is of the opinion that the agent should consider diversifying further by expanding to other sectors of activity, basic consumption in particular. “A more defensive sector where we find solid companies like Loblaw (L, $119.87), Empire (EMP.A, $40.01), Metro (MRU, $74.25) and even Dollorama (DOL , $98.18). He might also consider an exchange-traded fund (ETF) or an index fund that targets this sector or the infrastructure sector.

He believes that the agent might equip himself with an equally weighted portfolio, that is to say with a similar weight for each of the securities held. “We need to rebalance. It’s not necessary to own all the banks either.” Depending on the interest and time available to the agent, he or she might also opt for passive management with a simple low-fee asset allocation ETF. “He has a slightly longer investment horizon, since he manages for the heirs.”

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