Placing Portfolios into Account Types

This is part 2 of the interview with Peter. If you missed part 1, it's the episode right before this one.

Episode Description: Today I'm thrilled to have Peter Hodson on the show who is the owner of 5i Research, the Canadian MoneySaver Magazine, and in his investment career, has managed over $1-billion dollars in assets.

I've always wanted to have Peter on the show to pick his brain about investing best practices here in Canada, and see what he learned over his decades of professional investing.

Peter and his team have also been generous in providing Build Wealth Canada listeners with a special offer where you can get your investment questions answered, and learn more investment best practices by getting a free trial membership over at www.buildwealthcanada.ca/trial. As a "thank you" for taking a look at their research, you'll also receive a free 1 year digital subscription to Canadian MoneySaver magazine (Canada's largest personal finance magazine).

• Free 1 month trial plus free 1 year subscription to Canadian MoneySaver Magazine: www.buildwealthcanada.ca/trial
• Top Tools and Resources for Financial Independence (for Canadians): Sign up anywhere on www.BuildWealthCanada.ca for a free guide on all the top tools and sites that I've personally used to help us achieve financial independence in our early 30s. They're also what we use now to optimize and manage our finances, and ensure that we're paying the lowest fees while getting solid returns on our investments.
• Kornel's investing course with free sample lessons at www.BuildWealthCanada.ca/invest

1. Can you start by telling us your background, and your story from your days on Bay Street, to now running 5i Research and owning Canadian MoneySaver magazine?

2. In Canada it seems that investors fall into one of 5 main categories. They either:
   1. Buy mutual funds
   2. Buy indexes
   3. Buy individual stocks for growth
   4. Buy individual stocks for dividends
   5. Buy a combination of the above.

Can you walk us through these options and how do we decide what type of investing is right for us?

3. Before we dive into more detail and talk about 5i, what are some key investing lessons that you've learned over the years that we can apply to our own investing lives?

4. Let's talk about 5i Research. For those Canadians that haven't heard of 5i, can you tell us more about what it is that you do, and how is 5i different?

5. You have a model portfolio for growth, and another for income on 5i. Can you explain the difference between the two and how do we know which one to follow based on our situation?

6. How do we choose between a growth vs a balanced portfolio?
7. How have these portfolios been performing compared to the index?
8. Why don't I just invest in indexes instead of following the 5i portfolio? Is it just because of the potential for higher returns or are there some other advantages or disadvantages? (ex. greater diversification among different industries)

9. What if I don't want to be researching and analyzing individual companies. Is 5i still a good fit for me? (i.e. can I just model your portfolio and not do anything else other than re-balance?). Or, do I need to be actively researching the companies you suggest after your initial recommendation to ensure that they are still a good fit?
10. Is your portfolio just for Canadian companies? If so, what sort of asset allocation do you suggest outside of Canada for diversification purposes?
11. Would you recommend using the 5i portfolio completely for the Canadian portion of our portfolio, and then use ETFs for international exposure?
12. ETFs that model a broad market index can now be purchased for free from certain discount brokerages here in Canada. If we are to follow the 5i portfolio, then we now have to deal with paying transaction costs every time that we purchase a stock. If somebody would like to invest a set percentage of their salary every month, what's the step-by-step process that they should take to do it most efficiently and to minimize fees while still being diversified (which is hard to do if you're only buying one company or two at a time)?
13. Would this workflow/strategy change depending on how much someone has to invest every month? What if we have a lump sum to invest?

14. Should I use my TFSA or RRSP for the 5i portfolio? What about using an unregistered account? Should I ever be using that instead? (i.e. preferential tax treatment on dividends). Does this vary based on whether I follow your income portfolio vs your growth portfolio?
15. Your portfolio has done really well. What if we're concerned that we've missed the boat and are now buying these companies when their prices are already at their peak (especially for those companies that have done really well)?

16. What are your thoughts on asset allocation between stocks and bonds? Do you recommend bonds? If not, what do you suggest?
17. You assign a letter grade to the stocks in your portfolio too. Is that more if we aren't following your portfolio and are just picking and choosing stocks?
18. For our ETF portion of the portfolio, what are your thoughts on more targeted ETFs like small cap ETFs vs just going for the broad market index? The more targeted ones can have higher fees so is it worth it since now your return has to try to offset those?