By Scott Ronalds

Emmylou is a typical Steadyhand client (notwithstanding her mono-tooth). Like Bruce, we’ll follow her investing journey and provide periodic updates on the decisions and challenges she faces.

Profile

Age: 57
Status: Divorced
Children: 1
Occupation: Pharmaceutical Sales Rep
Residence: Winnipeg
Likes: Cross-country skiing, yoga, Tom Petty, Guinness, travel, The Amazing Race
Dislikes: Asparagus, lyrics to ‘American Woman’, January, Dancing with the Stars
Steadyhand Client Since: February 2012
Investments:

  • RRSP: $225,000
  • TFSA: $20,000
  • Non-registered: $150,000

Emmylou is 57 years old and divorced. She’s been down the road with a couple of potential partners since splitting with her husband 10 years ago, but is not seeing anyone at the moment. She has one daughter, Stacey, who is a 30 year old teacher in Toronto. Emmylou received her nursing degree from the University of Manitoba and was a nurse in Winnipeg and Calgary for 18 years. In her mid-forties, she moved back to Winnipeg and took a job as a sales representative with a large pharmaceutical company. Her dirty little secrets: Despite growing up in the ‘Peg’, she never liked The Guess Who; she religiously watches Curb Your Enthusiasm; and she prefers beer over wine.

Emmylou’s sales career has gone well and she’s able to live comfortably, pay the mortgage, max out on her RRSP contributions, visit her daughter regularly and fund her taste for travel. She owns a townhouse valued at $350,000. As for debt, she has a mortgage of $60,000 and a line-of-credit with a balance of $20,000 (used for home renovations).

Background

Emmylou held all her investments with one of the big banks prior to moving her accounts to Steadyhand this winter. She discovered the company through her son-in-law Paul, a lawyer in Toronto who has an RRSP with Steadyhand. Paul had often heard Emmylou grumble about her lack of understanding about how she’s doing and what she’s paying, so he suggested she contact Steadyhand for a portfolio review.

After spending some time on steadyhand.com and learning about the firm’s approach, she got in touch with us. We reviewed her portfolio and probed her on her investment objectives and risk tolerance. We suggested that while her asset mix was suitable, she should consider consolidating her investments to avoid over-diversification and unnecessary complexity. We also noted that she could reduce her fees. The simplicity aspect of Steadyhand particularly resonated with Emmylou.

Financial Goals

Emmylou enjoys her work, but would like to slow down in 4-5 years. Rather than retiring, however, she would like to work part-time if possible. She has some key financial goals that she would like to achieve by her 65th birthday:

1. Pay off her mortgage and credit line.
2. Grow her portfolio to the $750,000 mark (not including her townhouse).

Aside from the above, Emmylou has a keen interest in history and would like to spend some time exploring Europe and take part in an archaeological dig. She would also like to volunteer at future Olympic Games, after taking in the Vancouver Olympics with a friend.

Portfolio

Emmylou has a pension from her earlier career as a nurse. It will pay her roughly $1,200 per month (indexed to inflation). This source of retirement income, combined with the Canada Pension Plan payments, allows her to be a little more aggressive with her investments. In reviewing her portfolio, Emmylou also contemplated what other factors should impact her decisions: age (at 57 and in good health, she figures she has an investment time horizon of 30-35 years); potential inheritance (not counting on anything substantial); and children (her daughter is financially independent).

She is not comfortable taking on too much equity risk, however, so she decided on a strategic asset mix, in consultation with us, of 55-60% equities / 40-45% fixed income.

Emmlou is a perfect fit for the Founders Fund. It has an investment objective that lines up closely with hers, and she’ll get Tom Bradley’s oversight on asset mix and rebalancing. The current breakdown of the fund is (as of February 29th):

Savings Fund – 5%
Income Fund – 44%
Equity Fund – 24%
Global Equity Fund – 22%
Small-Cap Equity Fund – 5%

The resulting asset mix is roughly 30% bonds, 33% foreign equities, 27% Canadian equities and 10% cash. Emmylou will hold the Founders Fund in each of her accounts. We presented her with an option in which she would hold the underlying funds instead of the Founders Fund in order to structure her accounts in a slightly more tax efficient manner (i.e., the Income Fund would be held in her RRSP), but she opted for the benefits of Tom’s oversight and the simplicity of holding just one fund across all her accounts.

Her investments with Steadyhand totaled just under $400,000 at the end of February. At this level of assets, Emmylou’s annual all-in fee is roughly 1.09%.

We'll keep you posted on Emmylou's investing decisions as life plays out.