The Great TFSA Race 2015: 6th place

Jin Won Choi // 32 // London, Ont.

TFSA: $70,474

Investment strategy: Flexible and opportunistic

You may remember Jin Won Choi, a software developer with a Ph.D in mathematics, from our TFSA contest winners a year ago. Jin came in fifth in 2013 with a TFSA total of $50,876. And even though he now has $20,000 more than last year his ranking has slipped to sixth. “This year the stock markets were much more volatile and I had to do some creative things to boost my returns.”

Although Jin has invested in blue-chip and small-cap stocks, he’s had the most success with micro-caps—those with a market capitalization of $50 to $300 million. But he changed his strategy in 2014. Believing that the bull run of the last five years was due for a correction, Jin bought put options—contracts that allow the holder to sell a specified amount of stock at a set price within a specified period. (Buyers of put options believe the underlying stock will drop in price.) Jin bought put options on several holdings, including iShares S&P/TSX 60 Index Fund (TSX: XIU), which tracks large-cap Canadian stocks, as well as on a couple of banks and energy stocks. “A lot of people don’t know that you can hold put options in your TFSA but you can,” says Jin, now the father of a three-month old daughter. “Holding put options is an insurance policy, but fires don’t always happen. In my case, I lost money on the options themselves, but I was able to mitigate my losses in other areas of my portfolio.”

Over the years, Jin has found great opportunities in large-cap stocks, including buying General Electric (NYSE: GE) for $5 and Bank of America (NYSE: BAC) for $3 in 2009. Then he focused on retail stocks, mainly because he saw the sector struggling, and growing income inequality wasn’t helping. “I just asked myself, ‘What do I want?’” says Jin. “I’m a busy guy who wants good food but doesn’t have the time to cook.” So he bought shares in Tim Hortons (TSX: THI) at an average price of $43 throughout 2013 and early 2014, and sold them all last August for $60, just before the Burger King merger jacked up the share price to $86 later that month.

Jin continues to own Calgary-based Perpetual Energy (TSX: PMT), and although natural gas prices have dropped, the company continues to hold plenty of valuable land and several gas plants, he explains. “I bought shares at $1 last year and after the stock price touched $2 in July, it’s fallen back to $1.39, so it’s still up 39% from where I bought it.”

Jin’s ultimate goal has remained the same: to reach $1 million in his TFSA by 2033. “But who’s to say I should stop there? Maybe I’ll have $10 million by 2040.”