Stella & Mat Stiver-Balla AGE: 28 and 32 PLACE: Toronto TFSA TOTAL: $77,210 STRATEGY: Growth and blue-chip stocks

Me and my TFSA

Four years ago was an important time for Mat Stiver-Balla. In 2013 he married his wife Stella, 28, and he began investing in his TFSA.

Like most young investors, Stiver-Balla started his TFSA without really knowing much about investing. The money sat in cash in his account for the first two years until his day, a mortgage broker, started giving him a few pointers on what to do with the account. That was the push Stiver-Bella need to start following the stock markets in newspapers and magazines. “I started teaching myself how to read balance sheets and I started picking stocks based on what numbers I thought looked good,” says Stiver-Balla. It was enough to make him more comfortable with stocks and investing.

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He credits MoneySense with his ability to read a balance sheet—especially when it came to understanding key stock metrics and ratios like price-to-earning and price-to-book ratios. Another resource that helped him was Morningstar, an investment research firm that compiles and analyzes mutual fund, stock, and general market data.

After those first two years when his money sat dormant in his TFSA, Stiver-Balla was ready to do his own stock picking. The first stock he bought: Encana Corp. “It had a solid board of directors, a low P/E ratio and at the time, energy stocks looked like a value buy,” says Stiver-Balla. He bought 1,000 shares at $9.10 each and they’ve done very well for him. In fact, the shares are up more than 60% in those two years.

Today, Stiver-Balla’s portfolio touches several different sectors, but with a greater emphasis on the financials and energy sector. Still, he makes a point of steering clear of telecom stocks and tech stocks. Stiver-Balla feels there is too much volatility and regulatory risk in sectors right now. “I just think these sectors will be very challenging to make any money at in the future,” he says.

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One sector he does like is medical marijuana. In fact, Stiver-Balla was drawn to the growth potential of Canopy Growth, (formerly Tweed Marijuana Inc.), a large medical marijuana company. “They have a high growth rate and they’re not meeting demand, so they’re growing. I hope this bet will pay off when legalization of marijuana comes in July,” he says.

Stiver-Balla also invests his wife Stella’s TFSA, which also totals about $75,000. But Stella, a teacher, prefers a passive approach to her portfolio, choosing to invest in low-cost exchange-traded funds (ETFs). “Stella has a defined benefit pension plan but her portfolio is invested in 100% equities in low-cost ETFs,” says Stiver-Balla. In fact, her portfolio is invested in all Vanguard ETFs, broken down 30% in an international ETF, 30% in a U.S. ETF, and the remaining 40% in a Canadian ETF.

What’s the couple’s long-term plan with their TFSAs? Stiver-Balla says the couple, who plans to have a child in a couple of years, will dip into the money at that time if they need it to pay for expenses and child care, but he hopes not to have to dip into it too much. “I believe TFSAs are the best way to build generational wealth and I plan to keep adding to them every year that I can to build our family’s wealth,” he says. “That’s the long-term plan.”

Mat’s TFSA holdings

Pro tip

Divert some energy to international stocks

Jon Parry, an investment manager and financial planner with Ironshield Financial Planning in Toronto likes that Mat isn’t afraid to invest in individual stocks and has done his own research. But his one piece of advice: easy up on the energy stocks.  “Mat has a lot of energy holdings, especially Encana shares,” says Parry. “I would suggest he take some of his profits off the table on that stock and add a tech or real estate holding to his portfolio.”

Another potential issue with Mat’s portfolio is that almost all of his holdings are Canadian equities. Given Canadian equities account for just 4% of the international market Parry would like him to diversify by adding some exposure to international growth stocks. “All Canadian investors should look at diversifying internationally. You really can’t get much exposure to the healthcare or tech in a meaningful way by holding only Canadian stocks.”

His suggestion: add a small percentage of a U.S. small- or mid-cap ETF in the tech sector to his holdings. “There’s many competitive products out there that he can choose from,” says Parry. “Perhaps a Vanguard ETF could work for him since his wife already holds some ETFs from that fund family and they seem comfortable with it.”

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