2020-03 Mailbox Money

Mailbox Money- March 2020

My investment philosophy is simple.

I have zero alpha.

I want “know nothing, do nothing” mailbox money.

March 2020 Mailbox Money

Asset

Ticker

$$$

% Total

Aggregate Bond

VAB

628

4.2%

Canadian Dividend

VDY

148

1.0%

Discount Bond

ZDB

928

6.3%

Interest

13,092

88.5%

Total

14,797

100%

Cumulative Mailbox Money

Month

2019

2020

January

10,329

17,295

February

26,294

29,166

March

32,239

43,963

April

49,742

May

55,856

June

64,013

July

71,546

August

73,229

September

81,357

October

95,968

November

101,828

December

107,264

My March 2020 passive income was 14,797. It was truly passive. I simply added it up. That is my idea of passive income.

The markets have been extremely volatile.

I will just update my numbers.

I sold ZDB this week, my discount bond fund. There goes another passive income source. Currently the high interest accounts have been hammered. Understandably. Liquidity will cost you. However it is much better than watching a 20K+ drop in my ZDB ETF. For any monies I want soon, it is best to keep it out of these bond ETFs. I prefer the bonds to form part of VGRO. This way I do not have to think about it.

It will be “interesting” to see how much my mailbox money drops during this period. I think it is a good thing for us to see this in action well before we retire. This will give us time to plan around shortfalls.

I am glad that I do not have to wear a mask and wash my hands after checking on my accounts. That is a bright spot….

2020-03 Portfolio Update

“Don’t tell me what you think, tell me what you have in your portfolio.”

― Nassim Nicholas Taleb, Skin in the Game: Hidden Asymmetries in Daily Life

CCPC (Corporate) Portfolio

ETF/ Stock

Shares Added

BRK.B

0

VGRO

49,750

GIC

Maturity x 1

  • Brk.B: Berkshire Hathaway Class B
  • VGRO: Vanguard Growth ETF Portfolio (80/20)
  • ZDB: BMO Discount Bond Index ETF
  • GIC: Guaranteed Investment Certificate

CCPC Plan

  • Keep Berkshire as a legacy stock until we fully enter part time work or retire.
  • Sold ZDB late March because bonds are behaving badly. I did not particularly enjoy losing 20K capital in a week.
  • XAW & XIC:
    • Plan to tax loss sell when possible.
    • Canadian Couch Potato Portfolio
    • Sold both mid March 2020

Non- Registered (Taxable) Portfolio

ETF

Shares Added

VDY

591

  • VDY: Vanguard Canadian High Dividend Yield Index ETF

Non- Reg Plan

  • Buy VDY to allow some tax efficient income with eligible dividends from Canadian companies.
  • I mainly have this because my husband wants it.
  • I bought more VDY too early as usual. Oh well I hope the dividend income will work.
  • This month highlights how dividend investing is NOT fixed income. Canadian dividend investors might not want to look at their portfolios.
  • High interest savings accounts have slashed their rates. My GIC’s are not looking so bad after all.

RRSP (Tax Deferred) Portfolio

ETF

Shares Added

VAB

0

GIC

Maturity x 0

  • VAB: Vanguard Canadian Aggregate Bond Index ETF

RRSP Plan

  • Whenever a GIC matures, I buy VAB. I have too many GICs.
  • VAB is on a dividend reinvestment plan. So easy peasy.
  • Use this account to hold bonds. This is as complicated as my asset location strategy gets.

TFSA (Tax Free) Portfolio

ETF

Shares Added

VGRO

0

  • VGRO: Vanguard Growth ETF Portfolio (80/20)
  • This is the easiest account. I fill this up every January and set this on a DRIP.

My Whole Portfolio

I treat all the accounts as one portfolio.

Here is the portfolio broken down by account into overall percentages. I find it more useful to get an overall view of it.

This is just the way I am doing it. I have different goals, traits and triggers than others.

Taking anyone else’s plan off the internet must be one of the silliest things one can do to their financial health.

Everyone has to do the heavy lifting required to regularly define exactly what you want your portfolio to do for you. Thinking and making decisions is hard. I get that.

Account

Ticker

Asset

Portfolio %

Corporate

BRK.B

Berkshire Hathaway

4.6

Corporate

VGRO

80/20 Asset Allocation ETF

42.6

RRSP1

VAB

Aggregate Bond

1.8

RRSP1

VGRO

80/20 Asset Allocation ETF

1.5

RRSP2

VAB

Aggregate Bond

4.0

TFSA1

VGRO

80/20 Asset Allocation ETF

1.3

TFSA2

VGRO

80/20 Asset Allocation ETF

1.3

Taxable

VDY

Canadian High Dividend

0.8

GIC/ Cash

42.1

Total

100%

Networth (YTD -2.4%)

Investable Assets

66%

Personal Residence

27%

Other

7%

Investable Assets – 65% of Networth

  1. Real Estate (unleveraged) – 9%
    1. Commercial unit
  2. Paper Investments – 90%
    1. Equities – 42.6%
    2. Fixed Income – 57%

Well I have once again proven to myself that I am a terrible market timer. Thank goodness I am a long way off before I ever need this portfolio. In a way it is better that my husband and I see how this strategy will work in real time. If we never put enough into the market, we would not know how we will truly handle it.

I have invested in individual companies and have watched my investments crater in the dot com crash. I recently sold Amgen which I had held for 20 years. I sold because I have no desire to watch individual stocks. I did not even watch it when I held it.

I am sure I bought too early in this downturn. However I still have a lot of cash. Not even bonds, just cash. And now the banks will not pay anything for cash in the bank. Now that cratered bond ETF does not look nearly so terrible after all.

Our networth has gone down. Whenever I buy VGRO it keeps cratering. I will be relieved to get enough of the ETF and then start a quarterly investment process. I will be relieved when this throwing in part is done.

It might whip around a lot but I do not have to do anything once it is in. I was even happier to get rid of my XAW ETF which was part of my original couch potato portfolio. I still would rather declutter when possible.

I plan to spend the portfolio dividends when we need to for wants. I think our government benefits and RMDs from the RRSP will likely be enough to live on anyways.

I don’t think most folks should look at their portfolios during times like this. I am grateful that there are products such as these asset allocation funds. I do NOT want to deal with this stuff forever.

I am only trying to buy in at a better price than originally lump sum investing during 2018 and 2019. I am glad that I held off. We never rode the market up so I will attempt to get some slightly on sale for my husband.

This month ain’t over yet.

I just want to get this done. Thankfully I had zero illusions that I would do this well. I told you I rarely get anything on a deal. Good enough is about all I ever achieve.

Besides, staying healthy is much more important than one’s portfolio.

Notes

Mar 13, 2020 – The trading week is over. I was able to sell XIC in the final half hour and get to the simplified portfolio that I want. I have no control over the market but I can still declutter.

Mar 22, 2020 – Have been busier with working than worrying about my portfolio. I have been setting limit orders early in the day and following up at night to see if they fill. Otherwise more pressing things to deal with. The bigger deal is figuring out cash flow. I have cash but I would prefer to use this for investing than managing overhead expenses. Times like this I am grateful that we run a tight ship. And plenty of intelligent folks warn that this will end very badly for investments. Oh well. I do not have anything else up my sleeve. If this form of investing does not work, then it kind of makes things easier. Since what is the point of worrying about any of this anymore. I would just earn enough to live on each year enjoyably and call it a day. Whatever. I don’t particularly have attachment to however this works out financially.

Mar 31, 2020 – Sold ZDB mainly to simplify my accounts. I now have all the ETFs with Vanguard. Easier to track dividend payment dates. Furthermore bonds are behaving oddly. I saw how ZDB reacted to the panic selling period. I do not want to be caught in that rout again. I want to keep my ZDB capital as dry powder if the opportunity arises.

Avoiding COVID from working is more important than the portfolio. All the more reason to keep this thing simple.

2020-02 Mailbox Money

Mailbox Money- February 2020

My investment philosophy is simple.

I have zero alpha.

I want “know nothing, do nothing” mailbox money.

February 2020 Mailbox Money

Asset

Ticker

$$$

% Total

Aggregate Bond

VAB

773

6.5%

Canadian Dividend

VDY

82

0.7%

Discount Bond

ZDB

928

7.8%

Interest

10,087

85.0%

Total

11,870

100%

Cumulative Mailbox Money

Month

2019

2020

January

10,329

17,295

February

26,294

29,166

March

32,239

April

49,742

May

55,856

June

64,013

July

71,546

August

73,229

September

81,357

October

95,968

November

101,828

December

107,264

My February 2020 passive income was 11,870. It was truly passive. I simply added it up. That is my idea of passive income.

The markets have been seriously volatile. I have no reassurance for anyone. I am also not spooked by it either. In fact, this pull back allowed me to add more VGRO to my portfolio. It is starting to actually resemble a portfolio. Yay.

I could wait for a larger pullback. But I was about to lump sum invest a huge amount. I am happy to get any discount at all. Life is all relative ya know.

I think we have oversaved for our retirement. However, I will watch the cash distributions and taxation for our portfolio for at least a couple of years. I will have a better idea then.

My husband is finally onboard with my plans to simplify everything. He is aware that all his grand schemes never amounted to anything. In fact, all our investments that went to zero or nearly zero were thanks to him.

Thankfully I do not have an emotional attachment to money per se. I always laughed at him that thank goodness I did not have any material aspirations for the money. I also reminded him that he lost his luxury items whenever he lost money.

Like, there goes another BMW!

I realize that no amount of convincing would have made my husband not pull the trigger on his prior investments. But it is also these past experiences that have allowed him to see that there may be an easier way.

That is why I want to do zero for our investments. I will not be clever. I will not bother optimizing. I will barely strategize. I will use simple options available to anyone.

What will I do instead?

  1. I will have a paid off home. I like my home. Like a lot.
  2. I will use simple structures like my TFSA and RRSP.
  3. I will use my corporate account as simply as possible. I will defer the initial taxes and then draw it out slowly when we retire.
  4. I will use as few ETF’s as possible because it can be done.
  5. I will use asset allocation funds because it is good enough for my family.
  6. I will design the investments so that a child could follow it.

I have also been reminding myself why I am even in the market. I suppose it is for safety. In the short term, I rely on cash, GICs and bonds for safety. However in the long term I am relying on equities for safety. It is my only option to keep pace with inflation.

That in essence is why I am in the market.

I received an email about whether I would use a pension as my fixed income allocation. Well I do not have a pension but I would not use it as my fixed income portion.

How exactly would you rebalance with your pension? I can not use my CPP or OAS to balance my VGRO.

Instead I would figure out what income I want to receive when I retire. Then I would deduct any pensions or government benefits.

Whatever amount is left over is the amount that your cashflow or passive income would need to support. Then use a reasonable asset allocation to achieve this.

And let’s hope this amount will be less than 3% withdrawal rate. I am planning on using 2%.

Maybe total return works. But I plan to oversave. It will be simpler to use mailbox money instead.

Accumulation is simple. It is the drawdown that takes some planning.

2020-02 Portfolio Update

“Don’t tell me what you think, tell me what you have in your portfolio.”

― Nassim Nicholas Taleb, Skin in the Game: Hidden Asymmetries in Daily Life

CCPC (Corporate) Portfolio

ETF/ Stock

Shares Added

BRK.B

0

VGRO

28,501

XAW

0

XIC

0

ZDB

0

GIC

4 Matured

  • Brk.B: Berkshire Hathaway Class B
  • VGRO: Vanguard Growth ETF Portfolio (80/20)
  • XAW: iShares Core MSCI All Country World ex Canada Index ETF
  • XIC: iShares Core S&P/TSX Capped Composite Index ETF
  • ZDB: BMO Discount Bond Index ETF
  • GIC: Guaranteed Investment Certificate

CCPC Plan

  • Keep Berkshire as a legacy stock until we fully enter part time work or retire.
  • XAW & XIC:
    • Plan to tax loss sell when possible.
    • Canadian Couch Potato portfolio.

Non- Registered (Taxable) Portfolio

ETF

Shares Added

VDY

2

  • VDY: Vanguard Canadian High Dividend Yield Index ETF

Non- Reg Plan

  • Buy VDY to allow some tax efficient income with eligible dividends from Canadian companies.
  • I mainly have this because my husband wants it.
  • I need to send the monthly cash dividends to my bank account or else I will buy 2 shares again. This is mildly obsessive and idiotic.
  • Wealthsimple Cash accounts offer 2.4% rates. I might not even need a taxable investment account. I will finalize my decision on this during the year.

RRSP (Tax Deferred) Portfolio

ETF

Shares Added

VAB

1,757

GIC

2 Matured

  • VAB: Vanguard Canadian Aggregate Bond Index ETF

RRSP Plan

  • Whenever a GIC matures, I buy VAB. I still have 32 GICs. Good grief.
  • VAB is on a dividend reinvestment plan. So easy peasy.
  • Use RRSP to hold bonds. This is as complicated as my asset location strategy gets.

TFSA (Tax Free) Portfolio

ETF

Shares Added

VGRO

0

  • VGRO: Vanguard Growth ETF Portfolio (80/20)
  • These are the easiest accounts. I fill them up in January and set them on a DRIP.

My Whole Portfolio

I treat all the accounts as one portfolio.

Here is the portfolio broken down by account into percentages. I find it more useful to get an overall view of it.

This is just the way I am doing it. I have different goals, traits and triggers than others.

Taking anyone else’s plan off the internet must be one of the silliest things one can do to their financial health.

Everyone has to do the heavy lifting to regularly define what you want your portfolio to do to meet your goals. Thinking and making decisions is hard. I get that.

Account

Ticker

Asset

Portfolio %

Corporate

BRK.B

Berkshire Hathaway

4.7

Corporate

VGRO

80/20 Asset Allocation ETF

22.8

Corporate

XAW

All World ex-Canada

6.3

Corporate

XIC

All Canada Index

2.8

Corporate

ZDB

Discount Bond

9.3

RRSP1

VAB

Aggregate Bond

1.8

RRSP1

VGRO

80/20 Asset Allocation ETF

1.7

RRSP2

VAB

Aggregate Bond

4.0

TFSA1

VGRO

80/20 Asset Allocation ETF

1.4

TFSA2

VGRO

80/20 Asset Allocation ETF

1.4

Taxable

VDY

Canadian High Dividend

0.6

GIC/ Cash

43.3

Total

100%

Networth

Investable Assets

66%

Personal Residence

26%

Other

8%

Investable Assets – 67% of Networth

  1. Real Estate (unleveraged) -9%
    1. Commercial unit
  2. Paper Investments – 91%
    1. Equities – 36%
    2. Fixed Income – 64%

What a ride the past week has been. If you can not stomach the recent downturn then paper investments might not work well for you. I am still buying so the volatility has been fine.

But when I review these price swings I realize that equities are not for the faint of heart. One has to be clear about why they are even in the equities market. Growth is good but growth has a price.

I use the market to hopefully maintain pace with inflation. So my view is for the long term. Plus this reaffirms that one needs a strategy to deal with these swings in one’s networth. I plan to focus on cash distributions and other forms of passive income.

There are risks with investing. There are risks with not investing. I find reviewing my numbers methodically each month helps.

It has highlighted my need to streamline my accounts somewhat. With the advent of everything being online, I can see the ease of forgetting about an account.

The week is not over yet. Let’s see if I add more VGRO over the next two days.

Addendum Feb 27, 2020 – Yeah, I bought more VGRO. I am definitely averaging into a lower price. No one ever promised that this would be pleasant. The Toronto Stock Exchange halted trades since the afternoon due to some order entry issue. Oh well, it’s always something isn’t it?

Addendum Feb 28, 2020 – The week is over for the market. I am buying in at 2018 prices for VGRO. Do I time the market? Sort of. I have been buying regularly. I just buy more when it goes on sale. This is the path I have chosen for better or for worse.

What’s The Plan During A Crisis?

This is a good thing to wrap one’s mind around. I admit I did not take risk seriously during our earlier career days. We would lose 100K in a couple of weeks during the dotcom era and just laugh about it.

I still laugh about it now. Scary really. But isn’t that how life is? The best advice is usually recognized by those who do not have the time to capitalize on it.

I have been investing for over a quarter century. I have come to learn how I handle risk is.

I think the current valuations for the equity market are high. But I will not be dancing in or out of the markets. I will likely use a sliding scale to adjust the level of risk that I am willing to take.

I can handle about 40% equities risk currently. I did not ride the market up to this point. Thus no need to dump unleveraged monies fully into the market.

See this is my issue with advice and the internet bickering. Even though I show my current portfolio, only I know what other levers I can pull. Everyone’s situation is different.

That is the point with all this. One best think, like really think about what one’s true situation is. And then adjust the “advice” for yourself.

That’s why I don’t care if people do not agree with what I think. It doesn’t really matter. Only I have to live with the consequences of my decisions.

So here is my current plan.

If markets go up I will capture enough of the gains with a 40/60 portfolio.

If markets stay sideways I will continue with our current plan to invest our new monies into VGRO monthly.

If markets go down I have given myself a max limit of 80% by converting it all to VGRO.

That’s all.

I have fully paid off real estate. We have saved for my daughter’s education. We already take care of my parents.

And we both have our careers. My husband still works full time and I am part time.

After a while, you realize that there is nothing more one can do.

What if there is a depression like event? I would move into my smaller home and rent out my current nicer home. And we would all keep working. I would just work more.

Plus I spend so freaking little. Spending more has had zero to do with my quality of life for such a long time.

I live about the same level of comfort as I did during medical school. I was pretty happy during med school. Life was easy and simple. I was surrounded by friends, worked out regularly and was learning an interesting field.

Probably the main reason I was never disappointed in Medicine is because I sort of fell into it. I did NOT spend a decade dreaming of this career. There is nowhere to fall when you don’t put things on a pedestal.

I always knew Medicine was just a more colourful wrapping to something called work. I am definitely a realist.

FI Practice Guidelines – Keep It Simple

I will start to document for our children why we are doing what we are doing financially.

I do not pretend to know what others should do but I know my children.

Keep things simple.

No surprise that this one is front and center as advice for my children.

We lost so much in terms of time, money and energy by dancing with complexity.

If anyone offers two financial options. A simple one and a more complicated one, on average chose the simpler one.

Actually this strategy applies to most arenas in life.

Your father and I would have less grey hairs and more wealth had we chosen simpler options.

That is why I am limiting the investment options to the asset allocation ETFs.

You will use VGRO because the plan is to save more rather than needing to build a 100% stocks portfolio. I am trying to teach you to NEVER need to go all in for any investment.

Once one tends to go all in, it will be as if you are tempting fate. Besides just save more, you can control that instead.

You can control your savings rate and your expenses. That is about it in life.

We did not keep things simple when we bought individual stocks.

Your father did not keep it simple when he bought a house he could not afford before we married.

So buy a house you can afford easily. Either rent it out for years or buy something cheaper. You do not need or want to keep moving up the house ladder. Houses are consumption items. It would be best to limit it.

But choose where you want to live. I recommend living close to work, school and shopping. It is good to be close to public transit. Cars can be very expensive.

Meal planning is something to get proficient at. You need to eat daily. Eating out all the time tends to be inconvenient, unhealthy and expensive. Expensive is the least important of those three.

When it comes to investing use asset allocation ETFs. I like the Vanguard ones. Your accounts are full of VGRO.

And stay with these investments. You will not rebalance these better than Vanguard. The MER of 0.25 is a small price to pay.

And if you play your cards right, this may be all you would ever need. An 80/20 global portfolio from your late teens. Now that would be the penultimate in simplicity.

Even when others have a so-called better strategy. Please ask yourself if you can or want to actually follow it. Many times the answer will be a fervent no.

Because the goal of money is not necessarily about gaining the largest pile. True wealth is when you do not have to pay much attention to it. It simply swirls in the background and is working when you do not want to.

And worrying about money is the opposite of wealth. No matter how large the numbers are.

Money is a tool to assist you in having a life you want. It is not an end in itself.

The most valuable thing that money can buy is the freedom to pursue work you enjoy.

2020-01 Mailbox Money

Mailbox Money- Jan 2020

My investment philosophy is simple.

I have zero alpha.

I want “know nothing, do nothing” mailbox money.

Cumulative Mailbox Money

Month

2019

2020

January

10,329

17,295

February

26,294

March

32,239

April

49,742

May

55,856

June

64,013

July

71,546

August

73,229

September

81,357

October

95,968

November

101,828

December

107,264

January has been productive. I still have too many GICs and splotchy short term fixed income investment products. It is always the fixed income that I have a problem with.

I am looking forward to getting most of my cash into VGRO and let Vanguard do “it’s thang”.

I am beginning to see the truly sloth like nature of my money personality. I am coming to the realization that I have money because I am too lazy to spend it. I am also too lazy to try for optimal ways to invest it.

So I will just show you what I do which is track. I do not even count anymore. My excel sheets do that for me.

My husband will not even go part time. He is not done with Medicine yet. I think Medicine is one of those professions where you just know when you are done. It is a challenging profession to white knuckle through.

No point stopping too early nor working well beyond one’s best performance date. And everyone’s mileage varies.

But get the financial parts of your life right. Then you get to decide where that expiry date lies for your career. You owe the public your focus when you are serving them.

My blog serves to keep me on track. You will see that I do absolutely nothing exciting.

I did not realize ETFs paid cash distributions until 2019. Sad and funny really.

I have zero investment acumen. I have zero investment knowledge. That is why my posts are brief. I have nothing to add.

For Pete’s sake, I buy an asset allocation ETF.

The same one as my children.

Go figure.

2020-01 Portfolio Update

“Don’t tell me what you think, tell me what you have in your portfolio.”

― Nassim Nicholas Taleb, Skin in the Game: Hidden Asymmetries in Daily Life

CCPC (Corporate) Portfolio

ETF/ Stock

Shares Added

Shares Total

BRK.B

0

950

VGRO

3,651

21,060

XAW

0

13,531

XIC

0

6,050

ZDB

12,000

30,937

GIC

1 Matured

11 strips

  • Brk.B: Berkshire Hathaway Class B
  • VGRO: Vanguard Growth ETF Portfolio (80/20)
  • XAW: iShares Core MSCI All Country World ex Canada Index ETF
  • XIC: iShares Core S&P/TSX Capped Composite Index ETF
  • ZDB: BMO Discount Bond Index ETF
  • GIC: Guaranteed Investment Certificate

CCPC Plan

  • Keep Berkshire as a legacy stock until we fully enter part time work or retire.
  • XAW & XIC:
    • Plan to tax loss sell when possible.
    • Canadian Couch Potato portfolio.

Non- Registered (Taxable) Portfolio

ETF

Shares Added

Shares Total

VDY

21

923

  • VDY: Vanguard Canadian High Dividend Yield Index ETF

Non- Reg Plan

  • Buy VDY to allow some tax efficient income with eligible dividends from Canadian companies.
  • I mainly have this because my husband wants it.

RRSP (Tax Deferred) Portfolio

ETF

Shares Added

Shares Total

VAB

17

10,351

GIC

4 Matured

34 strips

  • VAB: Vanguard Canadian Aggregate Bond Index ETF

RRSP Plan

  • Whenever a GIC matures, I buy VAB. I have too many GICs.
  • VAB is on a dividend reinvestment plan. So easy peasy.
  • Use this account to hold bonds. This is as complicated as my asset location strategy gets.

TFSA (Tax Free)

ETF

Shares Added

Shares Total

VGRO

34

6,024

  • VGRO: Vanguard Growth ETF Portfolio (80/20)

I treat all the accounts as one portfolio.

Networth

Investable Assets

67%

Personal Residence(s)

26%

Other

7%

Investable Assets – 67% of Networth

  1. Real Estate (unleveraged) – 8%
    1. Commercial unit
  2. Paper Investments – 91%
    1. Equities – 25%
    2. Fixed Income – 75%

I have nothing new to add with respect to financial advice. I care about following a simple plan. I have made peace with the fact that others have a more efficient and better plan than I do. But since it would pain me to have to adhere to their rules, I will just stick to my dum dum plan.

My main drive is focussed on ignoring my investments except to buy bimonthly when we get paid. This has been the simplest strategy of all.

I plan to hold just one or two ETFs within each account if I am able to tax loss sell during the next market downturn. That would be nice.

I love decluttering my portfolio.

That’s it until next time.

2020-01 FI My Kids

I will just say this outright. Gaining financial independence as a physician is super easy. If you can not obtain FI as a doctor, you are simply not too sharp with money. There is no nice way to say it. You SHOULD get an advisor because you clearly could not scale this yourself. Enough said.

But attaining FI when you do not make a lot of income is much more interesting. My children may not have reliable and/or large incomes. But I will prove to them that none of this will matter.

They are starting so young.

So much of financial fitness is about prevention. So much is what you do not do.

My son is a rational saver and investor. He has zero interest in managing others’ money but he is quite focused on his own.

One does not need to be amazing when it comes to money. It is about getting enough best practices nailed down. That.is.it.

Live within your means. So simple. Yes, the truth hurts. It does not really matter if you make more but just gorge on more. Either way your results will be meh.

And it is not about community. Many have reached FI without ever reading a blog. The steps to reach FI are really not that challenging.

Both my children want FI.

Their strategies will be slightly different.

My daughter plans to attend university for a good long while. She only needs to open a TFSA which we did on her 19th birthday.

Here are their current portfolios.

Son, 21 years old

Account

ETF

Shares

TFSA

VGRO

1,170

RRSP

VGRO

118

Taxable

VDY

1,551

Networth

90,028

Mailbox Money – YTD

190

Daughter, 19 years old

Account

ETF

Shares

TFSA

VGRO

652

Networth

17,832

Mailbox Money – YTD

68

My son has started working. He is a prodigious saver. He wants to attain FI but has zero plans to retire early. Thank goodness since he is only 21 years old. I tell my children to like what they do. Just like it, you do not have to be “passionate” about it. There is no job charming.

He will be using VDY which is a high dividend ETF. He knows that it is not well diversified. But hey, we only need it to be more reliable than his industry. He will rely on VGRO for his actual retirement funds.

My daughter can keep it simple for now. She can use her TFSA account. I love the tax free status of this account. She loves the fact that there is a limit for contributions each year. She likes to spend the extra. And that is fine as long as she saves for her TFSA first.

They both live at home. I stress to them that this might be their highest savings rate ever. Just wait till life and responsibilities start to catch up with them. Let’s see how much they will be able to save then.

They both know to take advantage of the opportunity now.

2020-01 VGRO Cheatsheet

I am using VGRO for my family’s investment. Therefore it is probably a good idea to think through why I chose this particular ETF out of the myriad of options available.

VGRO Pros

  1. It is an asset allocation ETF. It invests in about 94% of the global investable equity and bond markets. I certainly do not have that reach.
  2. It is managed by Vanguard. I really like Vanguard.
  3. It is automated. The fund managers will balance back to 80/20 within a 2% band. Mostly with incoming cash flows.
  4. I can use VGRO for our portfolios. When the children are younger, they can use these solely. As they get older, they can add on government benefits, annuities, extra fixed income alongside this.
  5. Lower fees. Less trading costs, avoid bid-ask spread needlessly plus goodness knows what other fees I can’t see.
  6. Behavioral costs. I would be less inclined to tinker with this. It helps me be lazy and I enjoy being lazy.
  7. Less tracking error since it would be done by Vanguard professionally. I am sure that I would otherwise mess it up.
  8. Simplify adjusted cost base (ACB) tracking. I tend to avoid DRIP for my taxable accounts. However having fewer ETFs makes it all simpler.

VGRO Cons

  1. Foreign withholding tax is about 0.19% in an RRSP. To avoid this you would have to use US ETFs which would involve currency conversion. That is because the US has a tax treaty to avoid foreign withholding taxes for an RRSP.
  2. Tax inefficiency of premium bonds in a taxable account. Justin Bender of Canadian Portfolio Manager estimated this to be about 0.05% for VGRO.

VGRO Estimated Total Costs 2020

TFSA

RRSP

Taxable

MER

0.25

0.25

0.25

FWT

0.19

0.19

0.02

Premium Bonds

0

0

0.05

Easy – Costs

0.44

0.44

0.32

Optimized Costs

0.32

0.16

0.21

Difference

0.11

0.28

0.11

Maybe this is not such a terrible trade since I pay no AUM fees. I also make under 30 trades a year. My trading costs are about < 300 per year. Not too bad.

I have no idea if this is the best portfolio. I am sure that it isn’t. But it should be good enough. And that is all that I can expect anyhow. Recall that I am not clever, I have no networks, I tend to take my eyes off the ball like all the time. Need I say more?

Nowadays with all the legislative and taxation risks, why bother trying so hard to optimize it all? I often tell my husband, if they want to take it, it’s fine as long as I did not have to waste extra time and mental bandwidth for it.

I can spend my time doing what I enjoy and I am able to direct my children to do that as well. Then I am at peace with whatever the government dreams up. It is what it is.

But I would not sacrifice time for myself, with loved ones and my sanity in the hopes that any of this is suppose to make sense or be fair. We each can adjust accordingly to what our tolerance is for the trade off between more money and our lives.

Just make sure that you have decided how it is fair enough for you. Then all the blah blah out there will fall away since you are clear about what you want.

I like VGRO. I will use it unless someone in the know can clearly tell me that this is an insane approach.

Thus far no one has yet. Thank goodness.

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