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  5. GSY: Hi Peter, Ryan, and 5i Team, My wife and I need to reduce holdings in some stocks in our RRIFs to raise enough cash for the mandatory RRIF payments, which in our case is in late December. [goeasy Ltd.]
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Q: Hi Peter, Ryan, and 5i Team,

My wife and I need to reduce holdings in some stocks in our RRIFs to raise enough cash for the mandatory RRIF payments, which in our case is in late December.

Portfolio Analytics allows various ways to rank stocks, so I looked at the column "Total Portfolio Equity Weight" and ranked the stocks accordingly. For example, in my RRIF, my highest weight is with MG, and my wife's highest weight is with GSY. Not surprisingly, Portfolio Analytics also indicates that the Consumer Cyclical sector (MG), and the Financial Services sector (GSY) are overweight in our combined family portfolio (RRIFs, TFSAs, and non-registered accounts).

Is this a good way to determine the stocks that could be reduced to raise the required cash while at the same time putting sector weightings more in line with the recommendations of Portfolio Analytics?

I notice that many members ask questions about their holdings in various stocks, but 5i generally answers that weightings are personal.

Perhaps there's an alternative "rule of thumb" to use when going through this yearly process, and your valuable advice would, as always, be greatly valued.

Asked by Jerry on October 15, 2021
5i Research Answer:

Generally, we would consider 5% a good rule of thumb for a full position and we prefer to let winners run even to 7-8%, but would not be comfortable with any individual stock above 10% as the portfolio begins to move largely based on the moves of one company. The weighting one decides to keep in a single name, we think, should also be a function of the level of conviction one has on that name, time horizon and risk tolerance. That said, while it may make sense to trim names with a high weight that have had success, we would also consider trimming or completely selling names that one has a low conviction in to help get to one's desired sector exposure. Keep in mind, there is no silver bullet to this process as one has to consider various factors that are unique to one's portfolio.