My Investment Philosophy
By Steve Nyvik
Investing your money wisely by selecting the right asset mix, selecting quality income oriented investments, sheltering income from taxation, and controlling risk.
I build, from blue-chip dividend paying stocks and bonds, a tax efficient ‘pension’ designed to meet your needs through time without taking unnecessary risk. Your portfolio is put together so that it is well diversified with an emphasis of controlling risk as a poorly designed portfolio can wipe out a lifetime of savings (we manage company risk, industry risk and your level of equities).
- Building you a pension from Quality Income Oriented Investments
I focus on high quality income-generating businesses that:
- produce goods and services needed for our economy in good or bad times (like banking, insurance, pipelines, energy, electricity, telephone and television (telecom), food, etc.),
- are dominant where they operate,
- are profitable, and
- produce a good dividend yield where the company income is more than sufficient to cover the dividends.
These types of businesses help you to sleep soundly at night as they are unlikely to disappear no matter how bad things get.
I believe through holding primarily good dividend yielding stocks and high quality corporate bonds:
- the cost advantage through time (versus expensive mutual funds) translates to additional return;
- the dividends and interest income is a return that’s “baked-in” without having to rely on (or hope for) capital gains;
- the dividend tax credit for Canadian stocks held in a taxable account provides a tax effective return;
- the earnings on stocks retained may make the business more valuable which can result in capital growth.
While you are in your working years, you are adding to your portfolio to grow the annual amount of pension income that the portfolio can generate. You add to your portfolio each year until the income is sufficient to meet your retirement living needs. This stable income of businesses you know help you to sleep soundly at night.
- Low Cost
I believe in value for money by providing portfolio management at a very competitive cost. I do not like expensive mutual funds as I feel that you can cut your cost by 50% or more through direct ownership of quality stocks and bonds. And I don’t normally like ETFs as I believe you can do better by constructing a quality dividend income oriented stock portfolio at good prices and avoid the expensive businesses and bad ones included in the ETF.
- Controlling Risk
Your portfolio is put together to get the right asset mix so that you get the growth you need without taking unnecessary risk. Your investments are well diversified to control risk as a poorly designed portfolio can wipe out a lifetime of savings (we manage company risk, industry risk and your level of equities).
Having a lower volatility portfolio matters especially in your retirement years if you have to eat capital to meet your needs. Higher volatile portfolios means eating assets when they are down making it tough to impossible to recover to previous levels. That can lead to early depletion of your portfolio and outliving your money.
Through time, the cost advantage, more certain returns (from dividends and capital gains from earnings that were retained) and lower volatility translates to much better returns.
Financial planning advice and service is included as part of the service to my clients to make sure that if ‘life happens to you’, your goals aren’t derailed in the process.
The Next Step
If you don’t understand your financial advisor’s investment philosophy or don’t agree with it, then maybe it is time you consider switching to another advisor. To obtain a free no obligation second opinion, please call me at 604-288-2083 or email me at Steve@lycosasset.com.
Written by Steve Nyvik, BBA, MBA ,CIM, CFP, R.F.P.
Financial Planner and Portfolio Manager, Lycos Asset Management Inc.