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Perfect Stocks for your portfolio

Professionals use various ratios and trends to analyze suggest the stocks and ETFs. I will focus on some basics and not go in technical details in this article.

What is important to understand is the timing of the market. Take an example of Apple (AAPL), it is a choice of many investors including the portfolio of Warren Buffet. If I need to buy it, I would check at what price it is trading. If it is trading at 52 weeks (1 year) high or close to high, I would wait. For any stock or ETF you want to buy check the price in 6 months, 1 year and preferably 5 years and make a wise judgement if the price you are buying is worth it. It is as simple as you shopping during Thanksgiving or Back to school or Black Friday sales. In stock market just use your common sense  – if the market is down buy and if it is at peek you have opportunity to take profit. Unfortunately many of us get emotional and start selling when prices go down, watch the market and tread carefully. You can incur losses from the best stock and you may get profit from a bad performing stock if you watch the price carefully.

Another point I suggest is to divide your portfolio into Balanced and Growth mix. A simple formula is (100 – your age) should be growth and remaining balanced approach. e.g. if you are 30 years old then you can have 30% of balanced portfolio and 70% as growth portfolio. Now what is balanced and what is growth portfolio? Different experts have different approach but my approach will be to have mix of good stocks in growth portfolio and ETFs, Bonds (Corporate, government) in balanced portfolio.

Another approach is to use your pension or child education related account (e.g. RRSP, RESP) for a safer or balanced approach try to earn maximum profits from margin or tax saving accounts(like TFSA).

Now let me give some practical examples and recommendations from my judgement:

Suggestions for Growth portfolio:

  1. Technology stock like Apple (APPL)
  2. Visa (V)
  3. Leading Banking stocks e.g. JP Morgan Chase, Charles Schwab, Citigroup, Bank of Nova Scotia(BNS), TD Bank, RBC Bank
  4. Some large infrastructure development semi or government undertaking like Canadian National Railways (CNR)
  5. You may look for something which is trending in market but use it for profit e.g. Weed. Remember this may not be a long term investment

Suggestions for Balanced Portfolio:

  1. Vanguard ETFs like
    1. VTI (Vanguard Total Market)
    2. VUN (Vanguard US Total Market)
    3. VHT (Vanguard Healthcare)
    4. VBAL (Vanguard Balance ETF which is 60%  equity)
    5. VGRO (Vanguard Growth ETF which is 80% equity)
  2. Other ETFs
    1. XIU (iShares S&P TSX 60)
    2. XLV (Healthcare)
  3. Bonds, GIC, Treasury Bills (T-Bills) : These are low income and safe options

There are many other options and combinations you can try but do not forget to spread your portfolio in different markets and growth parameters. The old proverb “Do not put all your eggs in the same bucket holds true.”

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