This is the fourth update in a new series where I intend to share the progress of Baby R2R’s investment portfolio. I started documenting this in Q3 2017 and intend to provide quarterly updates.
Baby R2R was born in Spring 2016 and a few months later, I setup her education fund to which I contribute on a regular basis. We live in Canada, so we take advantage of the RESP program (Registered Education Savings Plan), an account type where we can save and invest for our child’s secondary education. In addition to tax advantages, we also receive an education grant, which matches upto 20% of the saved amount (upto a max of $500 per year). How can anyone say no to free money? 
In addition to the education fund, we also decided to start a Nest Egg fund, where we save and invest for Baby R2R and let compounding do its job over the course next couple of decades. The two accounts take different approaches to investing strategy.
The Education Fund
For the Education fund, I have chosen to go with index funds. The details of portfolio construction are shared in this post. While I contribute regularly, I invest at a slower rate and leave a healthy sum of funds in cash and dollar cost average over the months.
To get full benefits from the government, I contribute $2,500 per year and will receive $500 in grants. So, the total contribution amount going into the account is (and will be) $3,000 per year.
As it stands at the end of Q2 2018, the total account value is $9,149, of with 44% invested in the funds and the rest in cash.
Portfolio Composition and Returns
This portfolio consists of four ETFs giving exposure to Canadian Equities (20%), All World Ex-Canada Equities (40%), Canadian Fixed Income (20%) and Emerging Market Fixed Income (20%).
YTD returns have been (excluding dividends): ZCN (0.5%), VXC (3.29%), ZAG (-0.96%), ZEF (-7.39%); appalling results, but the yield on the portfolio helps cushion the blow a bit.
YTD returns have been (excluding dividends): ZCN (0.5%), VXC (3.29%), ZAG (-0.96%), ZEF (-7.39%); appalling results, but the yield on the portfolio helps cushion the blow a bit.
The Nest Egg Fund
The Nest Egg Fund is extra savings and contributions that I earmark part of my tax free savings account for Baby R2R. The goal was to save an extra $100/month, although I may have been a bit more generous with the contribution in the last few months
Portfolio Composition and Returns
This portfolio consists of 3 dividend growth stocks:
YTD returns have been (excluding dividends): BMO (1.02%), BAM (-2.54%), FNV (8.82% since position initiation); a much better performance thanks to buying the dip in FNV.
Summary
Between the two accounts, I am happy with the progress we are making for our daughter’s future. The account values have grown and Baby R2R has started earning dividend income (to date, just the dividend income has added up to $162.33 between the two portfolios).
What are your thoughts on these portfolios and the plan going forward? Share your thoughts below.
Full Disclosure: Long all stocks & funds mentioned above. Our full list of holdings is available here.
