# reduce my stock holding number from 86 to 40



## Walksing (Oct 16, 2012)

Dear All,
I am seeking for advice to reduce my stock holding number from 88 to 40. I do realize it is really difficult to manage my holding with such high number stocks by myself. all the stocks have been accumulated over years while I followed lots of tips and recommendations from different sources including CMF. I start planning reduce the holding number but hard to make decision to let anyone go . I put my holding below and would like to get your review and criticize. will highly appreciate if you can point out any stock you don't like and tell the higher risk of them. I understand the favor is too big to ask but still look forward to getting your insightful inputs. many many thanks!


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## james4beach (Nov 15, 2012)

Yeah, that's really too many to manage. Have you benchmarked your portfolio over multiple years? All the discount brokerages now provide tools to look at performance. I suggest looking at your performance vs the TSX Composite and TSX 60. If it looks like you're doing worse, or about the same, you might want to replace some of them with XIU. (_Stock picking is worth the effort if you are beating the benchmark index_).

Here's an idea of how to trim the number,

1. Calculate the weight of each stock you hold
2. Sort them by weight (% of total portfolio)
3. Keep your largest weights, but remove all below a certain weight
4. Use the money to boost positions in others, or just buy XIU


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## mordko (Jan 23, 2016)

It's simple: take each stock and calculate its intrinsic value based on EPS and your required rate of return. Sell all stocks that fail the test.


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## hboy54 (Sep 16, 2016)

There are a number of strategies you might employ but I would first load this monster into a spreadsheet so you can begin to understand what you have here. Get a cost, market, dividend , yield, sector for each holding etc. and then calculate summary figures such as sector percentage of total portfolio, total portfolio yield etc. This will keep you busy a number of days while you can at the same time contemplate trimming strategies.


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## Beaver101 (Nov 14, 2011)

^ Or if that task is too overwhelming, throw some darts (to keep or not to keep?) on it. Of course, this is a joke. Your homework to shrink your list is cut out.


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## londoncalling (Sep 17, 2011)

hboy54 said:


> There are a number of strategies you might employ but I would first load this monster into a spreadsheet so you can begin to understand what you have here. Get a cost, market, dividend , yield, sector for each holding etc. and then calculate summary figures such as sector percentage of total portfolio, total portfolio yield etc. This will keep you busy a number of days while you can at the same time contemplate trimming strategies.


+1

Have you ever created an Investor Policy Statement? This will provide you an Investing blueprint. It should include max number of positions (in your case 40), asset allocation, target weighting, sectors, etc.

If these positions are held outside of a registered account (RRSP,TFSA) you may want to consider tax implications. How much capital gains/losses do you want to declare this year?

Best of luck.


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## Walksing (Oct 16, 2012)

james4beach said:


> Yeah, that's really too many to manage. Have you benchmarked your portfolio over multiple years? All the discount brokerages now provide tools to look at performance. I suggest looking at your performance vs the TSX Composite and TSX 60. If it looks like you're doing worse, or about the same, you might want to replace some of them with XIU. (_Stock picking is worth the effort if you are beating the benchmark index_).
> 
> Here's an idea of how to trim the number,
> 
> ...


thank you ! I will work on your suggestion and update my outcome later


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## gibor365 (Apr 1, 2011)

DO you hold all those stock in the same account or several accounts? Is your total market value more than 1 mil?



> I am seeking for advice to reduce my stock holding number from 88 to 40. I do realize it is really difficult to manage my holding with such high number stocks by myself


How exactly you are managing your holdings?! If you have 88 stock only on TSX (btw, why only on TSX, not on NYSE?) , you are just buying and not really managing.  
Did you compare performance of your portfolio to TSX index? Looks like you covering all TSX with your holdings.
Check what is your sector allocation and if you are really overweighted in one sector, start rebalancing...

btw, I don't thing it's a good idea to set up your goal as 40 , why not 30 or 60?! Sell only what you think should be sold.

not sure if it's a good idea to dump all what you sell into XIU, XIU extremely overweighted with financials, energy and materials... esp if you already overweighted in those sehactors.

P.S. I personally have dilemma with some very small positions in stocks a got from small spin offs, like HYH, VSM, PSK ... if I have $200 in such stock, I don't want to spend trading fees to sell it off


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## Walksing (Oct 16, 2012)

Hi Gibor365;
it is a half million joint unregistered margin account with my wife. the main goal is focusing on dividend growth stocks. you can tell it is not getting there. meanwhile, I start to sell naked PUTs following DMONEY's approach. over the time, I do find the difficulty to actively manage such number of stocks. it is why I am seeking to reduce number of the holdings. If anyone point out any stock you don't like , I will consider to sell it off after my home work.


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## My Own Advisor (Sep 24, 2012)

Have you considered to just own the "top" stocks in the ETF XIU - banks, telcos, insurance, pipelines - own a few REITs - and then index everything else?

You can replicate XIU nicely by holding the top 25 or so companies and then pour your money into 2 or 3 CDN or US-listed ETFs that own the US market or the world for diversification.

Just a thought. It would likely reduce your holdings by half, give you just as much income, and provide greater diversification.


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## Argonaut (Dec 7, 2010)

You've created a bit of a monster. It's now out of control because you can't solve this problem easily due to commissions. Given that it's unregistered, you've also created a self-induced nightmare surrounding tax time. There's REITs in there too, oh boy.

If I was you, I would see if I could get some deal with my broker surrounding commissions for a period of time. And then just sell everything and rebuild from scratch once you have an overall strategic plan. That's if I was in this situation myself. I like slash and burn when things aren't working. The new trees tend to grow better.

As far as what you should do, some advice upthread about taking an assessment of where your portfolio is at, what is the profile of its holdings, and how well it's doing against the benchmark is a good start.


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## Eclectic12 (Oct 20, 2010)

Argonaut said:


> You've created a bit of a monster. It's now out of control because you can't solve this problem easily due to commissions. Given that it's unregistered, you've also created a self-induced nightmare surrounding tax time. There's REITs in there too, oh boy.


It is not clear whether the OP has an appropriate bookkeeping system as well as understanding of the tax implications. There may be some time needed for learning as well as gathering data. 

I tend to shy away from calling the bookkeeping/math as a nightmare as I have seen too many investors give up without attempting to understand. Being comfortable with spreadsheets and simple math - once the process was understood, the nightmare for me has been digging out the info where buyout happened. Where info is readily available, it was definitely tedious but not terribly complex.




Argonaut said:


> ... I would see if I could get some deal with my broker surrounding commissions for a period of time. And then just sell everything and rebuild from scratch once you have an overall strategic plan. That's if I was in this situation myself. I like slash and burn when things aren't working.


It is a good plan to see what can be worked out for commissions. If the broker isn't co-operating, another way to reduce or eliminate the commissions is to talk to other brokers to see if transferring means the new broker will cover the transfer fees (looks like one account but may be more, where the fees are per account) as well as throw in a block of free trades.

As fro the investments, I'd pick and choose first ... where one plans to own the investment in the new strategically planned end state - doubling up on the commissions (i.e. have a sell then a re-buy) does not seem like the way to go.


The first question IMO is ... has the REITs that pay high % of return of capital (RoC) been dealt with correctly? 

NWH-UN has what looks like 2015 to 2013 as 100% of the cash paid RoC, 2012 to 2011 as 95% RoC then 2010 is back to 100%. Depending on when it was bought - with such a high % of RoC that is reducing one's cost base (ACB) with each payment - it only takes a short period for the cost base to be negative. At that point, one is supposed to report the cash paid as a capital gain on that year's tax return, until another buy or other transaction turns the ACB positive again.

http://www.taxtips.ca/personaltax/investing/taxtreatment/incometrusts.htm

CSH-UN is another REIT with years of high RoC (ex. 78% to 100% from 2014 to 2007). If this not been considered/tracked, there may be several tax returns from previous years that need adjusting.

Each investment may need to be reviewed to figure out which ones pay mixed types of income then filter down to which ones pay a high percentage of RoC.

Run of the mill stocks like AGU or TD that pay only eligible dividends will be easier to figure out, likely have had the annual tax implications handled by the T5 forms from the broker. These will be more deciding what to sell, whether there are capital losses to reduce/eliminate the CG from selling and whether it is an advantage to spread the selling over a couple of tax years (i.e. sell some winners & losers in 2017 to buy the new strategy investments then another batch in 2018).


Perhaps it would be easier if the OP gave an idea of whether the investments have been treated the same for bookkeeping/tax purposes? Or have they treated by the type of income paid?




Walksing said:


> ... it is a half million joint unregistered margin account with my wife.


This also raises the question of who provided the funds for the investments bought.
http://blog.turbotax.ca/can-i-split-my-capital-gain-with-my-spouse/


It seems like any outstanding issues should be cleared up first, any learning be done, a new strategy be set then the plan to get from what's owned now to what the future is should be worked out.


Cheers


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## gibor365 (Apr 1, 2011)

Walksing said:


> Hi Gibor365;
> it is a half million joint unregistered margin account with my wife. the main goal is focusing on dividend growth stocks. you can tell it is not getting there. meanwhile, I start to sell naked PUTs following DMONEY's approach. over the time, I do find the difficulty to actively manage such number of stocks. it is why I am seeking to reduce number of the holdings. If anyone point out any stock you don't like , I will consider to sell it off after my home work.


The major reason I don'r have non-reg account.I don't want to deal with all those Canadian taxes ****  , so I stick only to registered accounts in my discount brokerage ... I just want to understand what do you mean by "do find the difficulty to actively manage such number of stocks." ?! How exactly do you actively manage?!
P.S. What your list I cannot tell that I really dislike any stock, even though I'm not familiar with half of them


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## Eclectic12 (Oct 20, 2010)

Argonaut said:


> ... There's REITs in there too, oh boy.


With more time to think about it ... I would be more worried about the ETFs than the REITs. From those I have had to deal with or that I have looked at, the REITs provide a much better breakdown. 

The Canadian domiciled ETFs OTOH, have all of this plus figuring out if there has been a phantom distribution.
http://www.theglobeandmail.com/glob...by-phantom-etf-distributions/article18225076/
http://www.theglobeandmail.com/glob...n-with-phantom-distributions/article18409698/


There seems to be more choices for finding the published breakdowns as beyond the company web site, there's:
https://services.cds.ca/application...s/-EN-LimitedPartnershipsandIncomeTrusts?Open
http://www.acbtracking.ca/




gibor365 said:


> The major reason I don'r have non-reg account.I don't want to deal with all those Canadian taxes ****  , so I stick only to registered accounts in my discount brokerage ...


Whereas I use both types of account where the tax advantaged stuff is in the taxable account (ex. 100% RoC cash payments) and the high tax or big effort stuff is in the registered.

As I plan to retire in Canada, I figure knowing what is what is important as eventually, there will only be the TFSA available for me to use.




gibor365 said:


> ... P.S. What your list I cannot tell that I really dislike any stock, even though I'm not familiar with half of them


For fun I went though the list to see how many I hadn't heard of before. That was 21 of 86, or 25% or so.
I am probably being over cautious as stuff like the BMO US PUT WRITE ETF probably shouldn't be included.

I can't comment much either as knowing the business they were in the last time I looked doesn't really help for what the situation is now and the prospects going forward.


Cheers


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## AltaRed (Jun 8, 2009)

Walksing said:


> Hi Gibor365;
> it is a half million joint unregistered margin account with my wife. the main goal is focusing on dividend growth stocks. you can tell it is not getting there. meanwhile, I start to sell naked PUTs following DMONEY's approach. over the time, I do find the difficulty to actively manage such number of stocks. it is why I am seeking to reduce number of the holdings. If anyone point out any stock you don't like , I will consider to sell it off after my home work.


Well, you do have a heap of a mess. First thing you have to do is stop chasing tips. They are only worth what you paid for them and I suspect your portfolio isn't doing any better than the TSX Composite Total Return index. 

1. Work out a plan around the TSX60 and decide to hold maybe 20-25 positions from the TSX60. Figure that out first what stocks you wish to hold.... or go Couch Potato with a few ETFs.
2. Since this is a margin account and thus I assume a taxable (non-registered accounts), then figure out the ACB of each of your stocks. As noted by others, trusts, including REITs, ETFs and certain others with a UN designation will have ROC components, and in the case of ETFs, possibly phantom re-invested distributions that must be taken into account to calculate ACB.
3. Also along with point 2 above, you mention this being a joint account. Have you kept track of which stocks your money was used to purchase them and which stocks your spouse's money was used to purchase them. CRA is very interested in which spouse has what in cap gains and cap losses. It is not 50-50 unless you and your spouse each contributed the exact same amount of money to this account each and every time. Attribution of income (on yearly tax returns) and cap gains (on sale of stocks) is important. 
4. AFter sorting out points 2 and 3 above, consider cap gain/cap loss status of each of your stocks so that over a few years, you can manage the cap gains situation, i.e. balance off those with capital losses with those with capital gains to mitigate your cap gains tax bill. That said, it appears you have enough of a challenge ahead of you that trying to optimize the tax bills of you and your spouse may be the least important. What is important is to re-organize your portfolio to something manageable.

Good luck with this. It will take some work, but now is the time to do it, i.e. winter time when there is less to do outside.

Write yourself an Investment Policy Statement (can be as simple as one page of 'commandments') which is your guideline for future investment so you won't be tempted to go down this path again. Be sure to write in a statement that says.... Stop chasing hot tips from the Internet, and write in a statement about a ceiling in number of holdings.


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## Eclectic12 (Oct 20, 2010)

^^^

Generally a good summary and plan.

The one part I'd bump to the front is looking for high RoC REITs that have been held around 3+ years without any buying or automatic rolling of distributions into more units. At the time/price I bought CSH-UN, it was roughly three and half years of payments to make the cost negative, triggering the need to report payments as capital gains on that tax year's tax return.

When my cost was close to negative, I did one of several things to avoid reporting yearly capital gains. I bought more units (making the ACB positive), transferred to a TFSA (triggering a capital gain but making the cost base irrelevant) or signed up for a broker DRIP (i.e. automatically bought more units without a commission).

If CSH-UN is a recent buy (say two years), all is good. If it has been a buy and hold from say ten years ago without any additional purchases, then may be years of tax returns missing some capital gains with associated taxes. 


Cheers


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## AltaRed (Jun 8, 2009)

Eclectic12 said:


> When my cost was close to negative, I did one of several things to avoid reporting yearly capital gains. I bought more units (making the ACB positive), transferred to a TFSA (triggering a capital gain but making the cost base irrelevant) or signed up for a broker DRIP (i.e. automatically bought more units without a commission).
> 
> If CSH-UN is a recent buy (say two years), all is good. If it has been a buy and hold from say ten years ago without any additional purchases, then may be years of tax returns missing some capital gains with associated taxes.
> 
> ...


Good point. If one does not keep track of REIT ACBs on an annual basis, it could be easy to get into an 'unreported cap gain' situation over time. I am guessing very few investors, especially non-CMFers, stay on top of this.

I hope my point 3 is not the nightmare that it could be. Until the OP indicates how the joint account has been funded over time, we won't know if this is a problem area. That nightmare could be like going to war without knowing how to operate the equipment, or in this case, investing without knowing applicable tax law.


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## gibor365 (Apr 1, 2011)

> Whereas I use both types of account where the tax advantaged stuff is in the taxable account (ex. 100% RoC cash payments) and the high tax or big effort stuff is in the registered.


 I have a threshold of 40% Cash (HISA+GIC+ATL5000) in out global allocation, so 2 RRSPs + 2 LIRAs + 2 TFSAs are providing enough room for equities , actually the only Cash account we (my wife) has in US brokerage with only 1 stock (INTC) from ESP my wife had when worked there.... we don't do anything with this account except withdrawing once per year dividends about 1K US$ ....



> As I plan to retire in Canada


 most likely we 2 , so I just trying to increase our retirement plans (+ TFSA) income stream.... 
Now we have about $80 cash in discount brokerage reg. account that I need to deploy 

I "play" with Cash portion moving cash betwen 4-5 online banks and buying GIC when there is some promos, so far our average interest on Cash is about 2.5-2.6% that IMHO is not too bad in current environment .... so no intention to open non-reg account in discount brokerage + as I mention, don't want to deal with taxes.


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## gibor365 (Apr 1, 2011)

> CRA is very interested in which spouse has what in cap gains and cap losses. It is not 50-50 unless you and your spouse each contributed the exact same amount of money to this account each and every time





> Until the OP indicates how the joint account has been funded over time, we won't know if this is a problem area.


I don't think it's an issue if source of money is joint cash account (where income of both spouses is deposited). In this case it's just impossible to calculated what % of income/CPG should be allocated to each spouse.

As an example, me and my wife have joint cash account, we transfer those money to different online banks and buy GIC and HISA (that mostly also joint)... my wife has bigger salary .... however, majority of T5 income I attribute for myself (when doing taxes). 
And this is logical , my wife contributes much more to RRSP and her spending 10 times bigger than mine 

CRA never asked any questions.


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## AltaRed (Jun 8, 2009)

gibor365 said:


> CRA never asked any questions.


That is a non-answer, indeed a naive response. An analogy is someone who regularly speeds and has not yet been caught. CRA has not asked yet, but they could any given year ask for the paper trail, and then want to go back several years if what you are doing is not correct. There are several examples via Tax Court where attribution and ownership have been questioned. We've had this discussion before. The clear message is to pay attention to attribution.


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## Eclectic12 (Oct 20, 2010)

AltaRed said:


> Good point. If one does not keep track of REIT ACBs on an annual basis, it could be easy to get into an 'unreported cap gain' situation over time. I am guessing very few investors, especially non-CMFers, stay on top of this.


A lot of them don't have much to worry about. Take RioCan ... with RoC being about $0.14 or $1.41 in 2015, then $0.70 in 2014, $0.01 in 2013 - there is enough other source to stretch out the time required.

The issue for the OP is that at least two of the REITs listed are high and have several consecutive years of high RoC. It also looks like TTE-US is another high percentage RoC trust.

CHE-UN seems to be reporting zero RoC but is also reporting a lot of "other income", "non-eligible dividends" and "foreign non-business income". This suggests it is much better in a registered account versus say, CSH-UN. The high RoC for most years means that whether one needs to pay this tax year or out into the future, the cash is largely capital gains at a preferred tax rate.




AltaRed said:


> I hope my point 3 is not the nightmare that it could be. Until the OP indicates how the joint account has been funded over time, we won't know if this is a problem area. That nightmare could be like going to war without knowing how to operate the equipment, or in this case, investing without knowing applicable tax law.


Hopefully it is easy for the OP to sort out. Where the money came from should be relatively easy compared to "this much is RoC" which means ... , this much is "income" that the broker's T5 likely has already taken care of ... and "this is an ETF - is there a phantom distribution?"


What I found when I discovered that unlike my assumption, trust cash payments do not have the same tax treatment as eligible dividends is that:
a) investigating tax treatment first
b) learning what happens for any new tax requirements
c) making sure one's bookkeeping as well as data collection is up to what is needed to keep up on a timely basis
makes tax time as well as the work tedious but manageable.

Being under time pressure to learn, get it done and find missing data is not so fun.


The main reason I am concerned about the high RoC paying trusts is that should it be CRA that is notifying the OP of the issue ... the penalties and interest that CRA can tack on far outweigh the difference of paying CG on a string of tax returns versus paying the CG as one big lump sum when one sells the investment.


Cheers


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## Eclectic12 (Oct 20, 2010)

gibor365 said:


> I don't think it's an issue if source of money is joint cash account (where income of both spouses is deposited). In this case it's just impossible to calculated what % of income/CPG should be allocated to each spouse.


The tax blogs I have read say if the account was funded 60% and 40% then the gains/interest/whatever are split 60%/40%. Several tax programs I have used explicitly ask for each stock transaction "what % belongs to this tax payer".




AltaRed said:


> gibor365 said:
> 
> 
> > CRA never asked any questions.
> ...


In my case, the CRA data entry clerk over-wrote instead of adding to RRSP contribution room. There were no questions asked (despite a good record for respecting the limits), just a notice of assessment saying the contribution limit had been exceeded with $##,### of penalties and interest to pay now and should no action be taken, more coming.

CRA didn't ask a co-worker until the day they did. After lots of paperwork exchanges, he realised he had not done his tax return correctly. He was able to get some of the interest waived but it didn't change that he had to pay up.


Cheers


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## gibor365 (Apr 1, 2011)

> The tax blogs I have read say if the account was funded 60% and 40% then the gains/interest/whatever are split 60%/40%. Several tax programs I have used explicitly ask for each stock transaction "what % belongs to this tax payer".


Have no idea about stock, we're getting only T5's from GIC/HISA.
I just don't understand how it can be calculated accurately. When we came to Canada we brought more than 100K , we were rolling those money from bank to bank , from GIC to GIC, from HISA to HISA together with other annual incomes that are coming to joint checking account.


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## AltaRed (Jun 8, 2009)

gibor365 said:


> Have no idea about stock, we're getting only T5's from GIC/HISA.
> I just don't understand how it can be calculated accurately. When we came to Canada we brought more than 100K , we were rolling those money from bank to bank , from GIC to GIC, from HISA to HISA together with other annual incomes that are coming to joint checking account.


In which case CRA would likely assign a 50/50 split. If all income is going to the joint account, then money taken from the account to investments whether GICs, HISAs or stock would most likely be attributed 50/50. What CRA won't likely accept is disproportionately declaring income from investments to the lower income spouse.

Anyways, this has gone off-topic from this thread. ..so back to regular programming waiting for the OP to respond.


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## mordko (Jan 23, 2016)

^ The following is my opinion, I am not 100% certain:

- tax will be paid in proportion to the funds contributed by you and your wife to this joint account. If you brought in $100k from the sale of a joint property then the initial contribution is 50/50. 
- From then on contributions should be judged in proportion to your salaries at that time. At least that's how I understand CRA will interpret it.

There are a couple of ways around this, e.g.:

- Loaning/interest paying between spouses. 

- Keeping a couple of accounts between spouses. The rainy day/short term expenditure HISA account with lower expected income could be with the spouse that has higher income. The non-registered share account could be with the low income spouse. As long as overall contributions are split in proportion to each spouses salary this should be kosher.


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## gibor365 (Apr 1, 2011)

Simple example, let’s say year 1 spouse A had 40% and spouse B 60% contributed to joint account , they got T5 amount 3,000 and filled out taxes accordingly. But next year spouse A has 90% income and spouse B 10% and they got 4,000 income. How they gonna split this 4,000 for taxes?! They cannot do 90/10, as previous year low-income spouse contributed 60% . Now imagine that those income % changes for 20 years and they have GIC/HISA in 5-6 different banks. I don’t think it’s feasible accurately to calculate splits on 5 or 6 T5s 
And for OP question.... go calculate the same for 88 stocks dividends and which stock was bought with what % .... truly, this is crazy .
If CRA would question, I’d mail them with hundreds of pages of printouts from all banks and let them calculate if they are so smart


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## Walksing (Oct 16, 2012)

hi all, lots of good discussion here. I do see it is derailing from my question on stock selection and reduction . but lots of good insight on tax that nobody can avoid . I really appreciate your insight whether or not address my main challenge. I can provide a little bit of more information here : 
we clearly documented individual contribution , gain/loss or dividend should be proportionally split, let's say 70% from wife and 30% for me. Also , 40% fund from line of credit since we are trying "Smith Manoeuvre". pursuing dividend to cover borrowing cost is a must. we definitely have all fully funded registered accounts and will convert unregistered fund into registered when room available or short of other source for contribution .
our big plan is building a diverse dividend growth portfolio and using margin to play options for income as DMONEY does. we start it a couple of months ago , the outcome is promising so far. 
welcome all comments and criticize that would be beneficial for everyone including ourself. many many thanks


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## TomB19 (Sep 24, 2015)

I'll offer an opinion, for what it's worth.

I make a point of never following Internet "hot leads". Having said that, I did follow one. That one, being HWO. It was discussed here extensively, I looked at it, and let it drop but I left it in my watch list of stocks. When it fell to $2.98, I pulled the trigger on a bunch of it. It's the star of my portfolio for this year.

On the other hand, you seem to action nearly every hot lead that has come through this place. It looks like you're playing the stock market like a casino.

It seems to me, you need to do two things. First, I suggest adopting a policy of studying a stock for a few weeks, before buying it. Learn as much as you can before jumping in, no matter how urgent the hot tip is. Slow play until you feel you understand it.

Second, the only way forward is to manage the portfolio you have. I happen to know that some of those holdings are performing well. I suggest you look for opportunities to sell your under performing stock. Even bad companies have the occasional up swing. Once you have some cash, look for opportunities to buy the stocks you want to hold. Don't rush.

I can't imagine anyone can stay on top of 86 companies. I doubt you can stay on top of 40 companies. I suggest you will do well to keep up with 5 ~ 15, unless you are doing it full time. It's a lot of work to keep on top of companies, their market segments, and industry trends.

If you don't understand the company enough to want to be in business with them, you need an index. You will probably end up, ideally, with a few stocks and a few indices.

Stop trying to make a lot of money quickly and start buying companies you feel good about owning. Remember, you will be in business with those companies for a long time.


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## Eclectic12 (Oct 20, 2010)

Walksing said:


> hi all, lots of good discussion here. I do see it is derailing from my question on stock selection and reduction . but lots of good insight on tax that nobody can avoid . I really appreciate your insight whether or not address my main challenge.


Part of the problem for addressing the stock selection and reduction is that there are many different strategies that will change what to sell and what to keep.

There's been suggestions from those who go the cheap fees, minimal number of investments indexing route. Suggestions from those who look at the value of the company. Suggestions from those who pick stocks that one way to cut down is to take the top picks.


Regardless of what you do choose and regardless of whether tax reporting in previous years has been missed ... understanding the taxes is going to be critical as cutting down means selling that triggers capital gains or losses. Planning to minimise the impact can make a huge difference between what the tax bill is plus what $$$ are available for re-investment into the newer, leaner taxable portfolio.




Walksing said:


> I can provide a little bit of more information here : ... pursuing dividend to cover borrowing cost is a must. we definitely have all fully funded registered accounts and will convert unregistered fund into registered when room available or short of other source for contribution.


Have you figured out what percentage of the cash payments will cover the borrowing costs as well as any buffer to future increases in the borrowing costs?

I say "cash payments" as some investors assume cash paid = tax friendly eligible dividends. For some investments, like Chemtrade most of the cash paid is being taxed at or close to the same rate as employment income. Others such as NorthWest pay RoC that is taxed at a better rate but also require rules be followed to keep one's interest costs tax deductible.
http://www.milliondollarjourney.com/key-tax-considerations-on-an-investment-loan.htm


Also, while you may be aware of it but just in case, when you convert unregistered to registered funds - whether one sells the investment or transfers the stock "as-is" (aka transfer in kind) to a registered account, a capital gain or loss will be triggered. If the investment is in a loss position, cash makes it easier to avoid the loss being disallowed under the superficial loss rules.
http://www.taxtips.ca/personaltax/investing/transfersharestorrsp.htm


No matter how one slices it .... taxes and planning for them are in your future.


Cheers


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## gibor365 (Apr 1, 2011)

> I can't imagine anyone can stay on top of 86 companies. I doubt you can stay on top of 40 companies. I suggest you will do well to keep up with 5 ~ 15, unless you are doing it full time. It's a lot of work to keep on top of companies, their market segments, and industry trends.


Just curious what do you mean by "stay on top"?! There are bunch of the stocks that "buy and hold", just make sure you are not too overweighted in one stock/sector.
imho. 40-50 stocks is completely normal alloction for 500+K portfolio


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## Argonaut (Dec 7, 2010)

Walksing, the problem is that you are trying to follow every single strategy, all at the same time and same place. You've got dividend growth, put selling, ETFs, preferred shares, Smith Maneuver, joint account, and unregistered margin as variables. When you combine them, what's left is not a strategy at all but a bit of a mess. Unless you're able to nail yourself to a disciplined strategy (asking CMF which 46 stocks to sell is not it), I would say the best course of action would be to work on a deal for commissions, sell everything, and buy an index.


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## gibor365 (Apr 1, 2011)

Walksing, you were asked several times , but I don't recall you answered 
Did you compare performance of your portfolio to index?


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## OnlyMyOpinion (Sep 1, 2013)

Argonaut said:


> Walksing, the problem is that you are trying to follow every single strategy...


^+1. Yes, OP says their priority is dividend growth but they have a real mix of equities. They need an overarching plan to provide focus and discipline to their investing.

It might be worth a browse of chapters 10,11 and the Conclusions of the book _The Empowered Investor (Keith Mattews)_ that MOA provided a link to via his site in another thread today. http://www.myownadvisor.ca/saving-investing-resources-newbies/. I checked and the link to _A free copy of ..._ still works. 

Our primary focus is dividend income (anticipating sufficient growth to stay ahead of inflation), we have 23 individual common or reit Cdn/US long-term-hold companies (i.e. not incl prefs) in a much larger portfolio. I would have a hard time getting to 40.


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## hboy54 (Sep 16, 2016)

OnlyMyOpinion said:


> Our primary focus is dividend income (anticipating sufficient growth to stay ahead of inflation), we have 23 individual common or reit Cdn/US long-term-hold companies (i.e. not incl prefs) in a much larger portfolio. I would have a hard time getting to 40.


Agreed. Currently 18 stocks here plus two legacy mutual funds that my wife brought to the marriage 19 years ago. Maybe been as high as 25 or 26 stocks over the years. Might get back to that many again one day, but certainly no desire or need for even 40 let alone 86.


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## AltaRed (Jun 8, 2009)

^+1 Agree that maybe 25 stocks makes a solid portfoilio.... no matter what the size of one's portfolio. That provides about 3-6% weighting range on individual holdings.


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## gibor365 (Apr 1, 2011)

From Investopedia 


> First off, there is no single correct answer to this question - it will depend on a number of factors such as your country of residence and investment, your investment time horizon and your propensity for reading market news and keeping up-to-date on your holdings.
> 
> Read more: What is the ideal number of stocks to have in a portfolio? | Investopedia http://www.investopedia.com/ask/answers/05/optimalportfoliosize.asp#ixzz4SNDsHQIK





> For investors in the U.S., where stocks move around on their own more (are less correlated to the overall market) than elsewhere, the number is about 20 to 30 stocks. Predominant research in the area was conducted prior to the revolution of online investing (when commissions and transaction costs were much higher), and most research papers put the number in the 20-30 range. More recent research suggests that investors taking advantage of the low transaction costs afforded by online brokers *can best optimize their portfolios by holding closer to 50 stocks*, but again there is no consensus.
> 
> Read more: What is the ideal number of stocks to have in a portfolio? | Investopedia http://www.investopedia.com/ask/answers/05/optimalportfoliosize.asp#ixzz4SNE50ZKa
> Follow us: Investopedia on Facebook


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## AltaRed (Jun 8, 2009)

Good luck staying on top of 50 companies. I have a life outside my financial screens.


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## james4beach (Nov 15, 2012)

Step 1 is to evaluate his performance and see how he does against benchmarks. If the sector is mix is reasonably similar to the broad market, then compare to XIU.

Unless someone has an organized methodology and game plan, I would be shocked if they can outperform XIU long term. And it pays out very significant dividends... along with "dividend growth" which seems to excite everyone.


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## gibor365 (Apr 1, 2011)

AltaRed said:


> Good luck staying on top of 50 companies. I have a life outside my financial screens.


Do you really should "stay on top"big 5 Canadian banks, big 3 Canadian utilities and telcos?! or some US dividends kings like JNJ?! I just hold them and adding on dips....


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## AltaRed (Jun 8, 2009)

There may be 15 stocks or so that one can 'set and forget'. but I can't imagine many more than that. Certainly nothing cyclical and remember how many of the big US banks and insurance companies blew up? How about our insurance company price crashes? How about the Enrons and Worldcoms and the like? Those would have burned a 'set and forget' investor. Bottom line: Few stocks are set and forget. They have to be monitored monthly, if not weekly, including business media reporting on them. 

How much of our precious time we want to spend doing this obviously varies amongst us, based on our age and family/work commitments, interest, etc.


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## gibor365 (Apr 1, 2011)

> There may be 15 stocks or so that one can 'set and forget'. but I can't imagine many more than that. Certainly nothing cyclical and remember how many of the big US banks and insurance companies blew up? How about our insurance company price crashes? How about the Enrons and Worldcoms and the like?


Maybe 15-20 on TSX and more on NYSE , Maybe I'm stupid , but I don't even think about selling JNJ, MCD, PG, EMR, KMB, UL, KO, PEP, LMT, MO, PM ans some others. On opposite, I was adding on dips  and I don't think you can compare those blue-chips with Enrons and Worldcoms.



> They have to be monitored monthly, if not weekly, including business media reporting on them.


 Agree to some degree as retail investors gonna get this reporting too late . When you will read those news , everything will be priced in. It s doesn't matter if you hold 15 or 50 stocks.


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