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A 'couch potato' who regards herself as bond-like

Alexandra Macqueen

Geoff George/Geoff George

Alexandra Macqueen, 43

Occupation

Certified financial planner

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The portfolio

Mostly three exchange-traded funds: iShares S&P/TSX Capped Composite Index Fund, Vanguard Total International Stock Fund and Vanguard Total Stock Market Fund.

The investor

Alexandra Macqueen is a financial adviser and a director at BlueRush Digital Media, a company that develops online tools and media services for financial and other companies. She is also a co-author (with York University professor Moshe Milevsky) of Pensionize Your Nest Egg: How to Use Product Allocation to Create a Guaranteed Income for Life (John Wiley & Sons, 2010).

Her investment approach

Ms. Macqueen is a passive investor, with most of her funds committed to a "classic couch potato" portfolio. "I learned fairly early on in my investing career that I am not particularly interested in picking individual stocks or attempting to time the market," she discloses.

With her entire financial portfolio in stocks, she acknowledges that she is taking on more risk "than any investment adviser would likely advocate." That's because she believes in diversifying on the basis of her "personal balance sheet," which means including human capital (training, job skills, etc.) as a key asset.

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Thus, if you regard your human capital as bond-like (provides a secure source of income), you should go heavy on stocks in your financial portfolio - as Prof. Milevsky advocates. Ms. Macqueen agrees: "I relate to my human capital as more bond-like than stock-like, so I am loaded up on risk in the financial capital part of my overall balance sheet."

Best move

"It was cashing in a whole pile of unregistered tech stocks in March, 2000, to buy a house in downtown Toronto. My timing, in hindsight, was impeccable."

Worst move

Before she really knew anything about the financial services industry, she bought a bunch of retail mutual funds with high expense ratios and deferred sales commissions.

Advice

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Ms. Macqueen recommends focusing on what you can control. Two are costs and saving rates. She also recommends being wary of generic advice or conventional wisdom.

In her own case, she focused on saving at a high rate while young. "I have a lot of financial freedom now - relative to my peers - because I saved a lot of money very early in my career, before I owned a house or had a family," she says. What also helped was a decision to delay becoming a mom.



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