Wednesday, July 10, 2013

What would you do with $10,000?

I'm currently reading the book "All The Money In The World" by Laura Vanderkam in which she asks some interesting questions about money and time. One of the questions she raised that got me thinking was 'What would you do with $10,000?'

Since $10K was about the amount of cash I held in my portfolio until near the end of last month, I guess my answer was buy 100 shares of Potash, 100 shares of Telus (at near its 52-week low), and add 30 shares of National Bank. Assuming no dividend cuts/growth, my answer should add about $380 to my investment portfolio over the next year.  Given I have no interest in selling any of the shares in the great companies I bought, the amount of principal at the end of the next year won't matter to me.

One of my positions I'm currently thinking of selling (Walgreens), will yield approximately another $10K. I'd like to re-invest this in another US stock (my two likely candidates are McDonalds and Johnsons and Johnson), but given the crummy CAD/USD exchange rate, and that both of my two likely picks are trading near 52-week highs, I'd have to hold the money again until the Canadian dollar appreciated, or a more interesting US company went on sale.

Although Ms. Vanderkam's hypothetical question is enticing, in reality, for dividend growth investors focused on buying high-quality companies at attractive prices, it's more complex than what meets the eye. Ah well, given I have no problem being patient with the market, time is on my side.

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