Investing Strategy with Transfer Agents

Who’s got boat load of cash to invest early on in life? Who’s got loads of cash to invest after paying all the bills and supporting a family? We’ve all heard of pay yourself first so that you can manage to save some money for the long term. In fact, many mutual fund companies will want to help you do that because it can be easy and you can start with little money. I was so frustrated with that process and the lack of performance from mutual funds that I was determined to move on to stocks. I finally did it a couple of years ago and moved away from mutual funds. That’s when I was introduced to the Transfer Agents: Computershare and CIBC Mellon.

Long before buying stocks, I was a dividend and income investors as I believe in the following principles of investments:

These tenants make up the basis for growing my nest egg and reaching my goal of Financial Freedom @ 45.

Transfer Agents Strategy

You may have gotten a hint of my strategy in my GDRIP guide post last week and today I’ll go over it. It’s pretty simple in fact. As I started my post, I wanted to indicate that, like many others, I don’t always have thousands of dollars to initiate positions. On the other hand, I can usually find $100 to $200 a month on top of my usual RRSP and RESP contributions to invest. The small amounts I have is what makes the Transfer Agent strategy possible as you can invest small amounts at no cost – and avoid mutual funds. The only downside is that you can’t really pick the purchase price. Not having a say in the purchase price is why you need to be very careful on the companies you elect to invest in.

Company Selection

I have been pretty selective (or at least I’d like to think that I was selective) in the companies I have picked. My rule is that is must be a blue chip (with exceptions of REITs) and must provide an essential service needed by society on top of being well-managed companies. As you can see in my monthly Dividend Income reports, I own the following sectors with the Transfer Agents.

  • Financial – Mostly Canadian Banks to be specific
  • Utilities – Wide range across Canada
  • Telecoms – They are practically utilities. Really, who can live without them?
  • Real Estate – Who doesn’t need a roof

Investment Size

The most important factor to take away with the Transfer Agents is that they are a tool to allow me (and you) to invest small amounts regularly. The fractional shares they provide is a benefit when you don’t have much to invest or to DRIP. Once a holding reaches $10K for example, the fractional shares may not have the same benefits. As I mentioned in my ‘Guide To DRIPing‘ post, my DRIP strategy will change when I have a larger amount invested in each holding. At some point, my monthly and quarterly earnings will be enough to make better strategic investments for my portfolio.

My initial target is to grow each holding to $5K, at which point I may just transfer them to my discount broker account. I have 12 investments which total approximately $3,000 leaving me with $57K to go to reach the total target within the Transfer Agents.

There you go, slow and steady wins the race as they say. As you can see, the Transfer Agents are a tool to help me invest.

DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.

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