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A 'bomb-proof' portfolio lets world traveller live her dreams

Nora Dunn, 34

Occupation: Full-time traveller and freelance writer

Portfolio: Investors Group funds, such as Investors Group Dividend Fund and Investors Group Corporate Class family of funds

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The investor

In 2006, Nora Dunn sold her Toronto-based financial planning practice and most of her possessions to travel the world. She's still at it and recently completed a three-day train excursion across central Australia.

For the first two years, Ms. Dunn drew from her capital to keep going but is now able to sustain her travels by keeping costs low (for instance, house-sitting arrangements) and earning income from freelance writing (wherever there is an Internet connection for her laptop and digital camera).

She blogs about her journey on her website, The Professional Hobo. Tips on travelling, location-independent careers and personal finance can also be found there.

Her approach

Ms. Dunn has a portfolio of registered funds where retirement money is invested, "awaiting her golden years." She also has a non-registered portfolio where the proceeds from selling her business and belongings are conservatively invested, earmarked for buying a house or starting a business whenever she decides to settle down.

"I believe that setting the proper asset allocation for your risk tolerance is the key to performance, rather than chasing high-performing investments," Ms. Dunn says. "So I set up a 'bomb-proof' portfolio of approximately eight funds that is well diversified for each of my registered and non-registered portfolios."

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"When the original allocations become more than 3 per cent 'out of whack,' then I rebalance," she adds. "I sell a portion of the funds that are doing well, and with that money, buy a portion of the funds that have gone down. It allows me to sell high and buy low. And it's easy, fairly passive and effective."

Ms. Dunn holds her non-registered portfolio within the Investors Group Corporate Class family of funds. Corporate class funds are a special class of non-registered fund: there is no tax to pay on capital gains realized when switching between funds. So "rebalancing the portfolio and other similar transactions don't trigger taxable capital gains, as would happen with most other non-registered investments."

Best move

"Diversification - and keeping an iron stomach so I wouldn't worry during periods of market turmoil. Another good move was finding money to invest whenever the market took a nosedive."

Worst move

"Watching the markets too much."

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"Instead of being transaction-oriented, I am focused on engineering my finances to help me live the life of my dreams responsibly. I have better things to do than track portfolio performances."

Special to The Globe and Mail

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