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Project manager relies on ETFs and 'emotional fortitude'

KEVIN KANE, 35


Occupation

Project manager for a transportation company.

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The portfolio

One-third in each of the following exchange-traded funds (ETFs): Vanguard Total Stock (U.S.) Market, Vanguard Total International Stock and Vanguard FTSE Canada Index.

The investor

"It's futile to try to beat the market by picking individual stocks or managed funds," Kevin Kane says. "Nobody can consistently do it. Okay, maybe Warren Buffett can, but even he implores you to invest in index funds."

How he invests

"I don't invest in bonds. If you have a long investment horizon, I think you'd be better off to develop the emotional fortitude to invest in equities because in the long run, equities beat bonds. So when your portfolio drops, tough it out, princess!"

What helps is rebalancing "without emotion or analysis" back to the target asset allocation about twice a year or after major market moves. This is done by selling units in leading ETFs and buying some in trailing ETFs.

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Mr. Kane prefers to own ETFs from Vanguard Group because it is a mutual company where the unitholders are also shareholders. This aligns the firm's interests with unitholders, resulting in some of the lowest management fees around. It's the "only fund company that is a true fiduciary of your money," he believes.

His costs are reduced further by using discount broker Questrade Inc. They let him "buy ETFs at no cost and avoid other fees."

The importance of saving

"The biggest impact on your net worth is how much you save. Almost everyone has the power to invest $2,000 a month, even with a modest income. I'm proof that you can."

Best move

"Taking a part-time job when my income fell. … It allowed me to keep investing."

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Worst move

"Buying ETFs when in university. … I had to sell them at a loss later to pay for school expenses."

Advice

"Index investing will beat the returns of 93 per cent of the people picking stocks and funds."

"Have the emotional fortitude to keep holding, and even buying, when the stock market falls."

"Invest as soon as you have the money. Trying to time the market is a fool's errand."


Want to share your strategies?

E-mail mccolumn@yahoo.com

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