2019-12 Portfolio Update – Started VDY in Non-Reg

“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

1,300

15,144

XAW

0

13,531

XIC

0

6,050

ZDB

0

18,937

GIC

0

12 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.
  • Decrease number of GICs by rolling into ZDB whenever one matures.

RRSP (Tax Deferred) Portfolio

ETF

Shares Added

Shares Total

VAB

607

5,514

GIC

0

38 strips

  • VAB: Vanguard Canadian Aggregate Bond Index ETF

RRSP Plan

  • With the new Corporate Tax changes, I need to use the RRSP again.
  • 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.

Non- Registered (Taxable) Portfolio

ETF

Shares Added

Shares Total

VDY

402

402

  • VDY: Vanguard Canadian High Dividend Yield Index ETF

Non- Reg Plan

  • Sold my small tranche of VGRO in November.
  • Buy VDY to allow some tax efficient income with eligible dividends from Canadian companies.

Estate Portfolio – TFSA (Tax Free)

ETF

Shares Added

Shares Total

VGRO

0

5,542

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

I treat all the accounts as one portfolio excluding my TFSA since I use it for estate planning. Current asset allocation is 20.5% equities.

I sold the tranche of VGRO in our personal non registered account. This is the first time I have ever had a personal taxable investment account. It is taking some getting used to.

I am buying some VDY as per my husband’s sole request for the portfolio. He wants to “try” some dividend paying companies. We shall see how this goes. I plan to keep my portion of VDY to less than 10% of our equity holdings. That is my ceiling.

VDY is a very concentrated fund. But I am too lazy to buy the top companies individually as many Canadian DIY dividend investors tend to. I would rather pay a small MER than rely on myself to keep my eye on the ball. I will NOT keep my eye on the ball.

Our RRSPs hold VAB (bond ETF) since I do not need this one to grow that quickly. These are the accounts which have the RMD (required minimum distributions). Aka. Government wants their taxes back. Fair enough.

Using all the available accounts in Canada has proved valuable. The government keeps going after more taxes from those who have saved. I tell my children not to stress over work all that much. It isn’t worth it in Canada. Maybe that is an odd thing to say as a parent.

However I see that there is intense competition for university and professional programs. I do not believe that it is as slam dunk as many parents hope. I certainly know my fair share of unhappy physicians. There is no nirvana in the career-o-sphere.

I review my portfolios once a month to stay on track. I prefer to keep to this schedule nowadays. Perhaps an advisor can make a better portfolio but what I have planned should be good enough.

Furthermore, keeping it this gawd awful simple should be easy for anyone in my family to manage if need be.

The world continues to encourage complexity. I hope to preserve this small part of my world as a sanctuary.

2019-11 Month Review

What Do You Believe?

Money is a mental construct. I have always known that money would have limited use for me.

Money is odd. The less you need it, the more it grows. Weird. Honestly.

If you can picture a life without much need for money, you will be set free.

What Does Not Take Much Money?

  1. Good health. We are already blessed with clean air, water and relatively safe environments.
  2. Good relationships.
  3. Education. I used the educational system to train in a profession. My real learning was all free from libraries and the internet.
  4. Hobbies. Think about walks, running, reading, writing.
  5. Transportation with walking, bikes and public transit.

Stop Buying Liabilities

  1. Houses you can’t afford easily.
  2. Cars you can not afford easily.
  3. Travels you can not afford easily. No, you really do not deserve it.
  4. Expensive meals you can not afford easily. Eat simpler.
  5. It takes very little to have a wonderful life. Try not to forget that.

Want To Retire Early?

If someone wants to retire early, they probably have to build perpetual wealth. Basically live on 2-3% of their portfolio. And keep enough of their investments in equities to keep pace with inflation.

Want to retire without using real estate or another uncorrelated asset? Simply save a lot more money. Make sure you at least have a paid off home. And generally live frugally. There is always a trade off with anything financial related.

Are you concerned about the buy, hold and pray passive investing? Do what Rich Dad Poor Dad advocates suggest. Buy 10% of your investable assets in gold and silver. Make sure to build businesses and then invest in positive cash flow real estate.

The only issue with that is it takes skill. And they do not advocate small businesses, the goal is to build larger businesses with over 500 employees.

Those are the two camps I have read about. The issues arise when paper based passive investors think that there is a guarantee. I do not believe there is. The oft quoted line is “past performance does not guarantee future performance”. So no guarantee with that one.

That is why the truth likely sides with one needs to be Uber frugal. And I don’t believe frugality is something one can force themselves to do. Not for the long term anyhow. So for those who are spendy, it’s unlikely that a pure passive paper approach would be enough.

That is unless one spends less than 2% of their investable assets. Then those investors can do paper solely. In fact that is what happened to us. We certainly have no issue owning rental real estate. However I soon realized that we have quite a low spending ratio.

That is the advice I give my children. Save a lot and spend only some of it. You can control what you spend. Make sure to get the housing sorted out. It has to be sustainable. Spend happily and consciously. Some types of spending are more valuable during one’s youth. Waiting to spend money only when one is old is also a source of failure.

If they ventured into investment real estate stay with multiplexes. Apartment buildings require a lot of skills and good networks. One likely needs to be a quarterback of sorts.

And if they started a business be a solopreneur. It is possible in this day and age.

I Just Don’t Care

I do not care about picking the perfect ETF.

No one else knows. All the folks who have all this “knowledge” can not promise you anything. They will get caught in the downdraft no different than a DIYer.

Just like medicine. Many know lots of regurgitative information but it doesn’t really help anyone. I find that useless and I have always been able to block that noise out.

Paper Investing Has Been Solved

  1. Be broadly diversified.
  2. Keep costs low.
  3. Invest for the long-term, like maybe forever.
  4. Automate as much as you can.
  5. Allow the magic of compounding to work.
  6. I just use asset allocation funds because I really don’t care. And it won’t matter how much I care. I will get the same result.

Keeping abreast of financial information is very easy nowadays. Most of it does not apply to me. It has become similar to studying in the past. I could take large amounts of information and condense it to a single page before the finals.

Just be clear on what you want. Then all the noise in the world won’t matter much to you.

2019-11 Plan Review

Networth %

Investable Assets

71%

Personal Residence

27%

Estate

1.5%

Investable Assets – 71% of Networth

  1. Real Estate (unleveraged) – 19%
    1. Commercial unit – 37%
    2. Residential unit- 63%
  2. Paper Investments – 81%
    1. Equities – 20%
    2. Fixed Income – 80%

Month Changes

Equities dropped 24.5% to 20% during the month.

My equities portfolio decreased significantly. This was due to selling Amgen as well as liquidating VGRO in my personal taxable account. Once again we are going to invest in VDY.

My husband wants a portion of the portfolio in a dividend ETF. I could not find too much fault with this. I only requested that I set a limit to the amount this would be. I will make certain that it remains a small percentage.

SBD Issues

With the sale of Amgen, we have breached the SBD limits.

Our solution is to work less next year. My husband is looking forward to having more free time. He has already started decreasing his clinical work. It is not worth trying to optimize everything. Plus no one wants to work for diminishing returns.

Being flexible is an important skill in life. It helps one with their relationships (think children) as well as with one’s finances.

100% Equities?

I will never have 100% equities. I like owning VGRO which is made up of 94% of the global investable stocks and bonds. I prefer the process of rebalancing between stocks and bonds.

Thus no “road to 100% equities” for this doc.

No evidence or excel sheet could nullify my disbelief if I ever did that to our portfolio. I know myself too well. I may not be risk averse but I am not a risk seeking type of investor either.

Why Choose So Few ETFs?

The reason I am using ETFs is to hope to keep up with inflation over the long haul. I am too lazy and lack adequate skills to build a large investment real estate portfolio. I do not lie to myself and say I would not want to. Instead I admit that I am likely unable to.

I accept the volatility of these paper investments. I do not believe equities investing is for the faint of heart. One almost requires great dissociative skills to not allow the market wobbles to impact one psychologically.

Using few ETFs allow me to see what my plan is for our portfolio. Furthermore, I believe that there are numerous ways to build a good enough portfolio.

But the ultimate way to sink one’s portfolio is to sell off when the markets have taken a beating. That would be a certain strategy for failure.

The honest reason I am using so few ETFs is because I don’t think it really matters. Just get some low cost, broad based index funds. Many would have done the trick. I have no idea which ones are much better and I don’t believe anyone else knows either.

Retirement Plan

  1. To 65 years old
    1. Draw salaries from our corporation.
  2. 65 to 70 years old
    1. Dividends
    2. Rental income
    3. RMD? May need to draw down the RRSP to optimize taxes.
  3. 70 years +
    1. CPP
    2. OAS
    3. RMD – required to draw at 72 years +
    4. Dividends. Withdrawal rate from this should decrease when CPP and OAS fully online.

Estate Plan

  1. TFSA
    1. VGRO 80/20 AA
  2. Principal residence exemption (aka leave the house to the kids)
    1. Urban multiplex
  3. CCPC
    1. Trust
    2. Estate freeze
    3. Charitable donations
    4. Life insurance
  4. The Basics
    1. Will
    2. Power of attorney – including medical
    3. Plan funeral costs. We bought our burial plots in our 30’s when we had the children.

I hold only one ETF in our TFSA accounts. I am investing these accounts as if they were for my children. I am not interested in forking over large amounts to my kids at once. But with their decades of compounding, even small amounts will be significant. That is the plan.

It will be a very simple plan if it works out. I contribute the full TFSA deposit on January 1st and invest it on the first trading day of the year. I also set up a dividend reinvestment plan. I essentially do nothing for these accounts all year.

I wish all my accounts were this easy.

It would be great if my children can use their TFSA and RRSP accounts alone to save for retirement. It would be simple and elegant.

The personal residence exemption wherein one can sell their principal residence tax free may be altered in the future. There is stirring that the government may diminish this last bastion of Canadian tax exemption.

Thank goodness I did not listen to my first accountant who told me to buy the most house that I could afford. Things that worked in the past are not guaranteed to work forever. I had learned NEVER to be too attached to one strategy since almost anything can be changed in the future.

The benefit of owning an urban multiplex is that we all start living our lives optimally now. No one has to wait for someone to die before they get to use the asset. Believe me, this is something that I am seeing more with the high price of real estate in Canada. I witness vultures circling some seniors.

With all the legislative and government changes, it makes sense to not try that hard. That is why passive paper investing works for me. I simply do not care much about any of it anymore.

I can see that it will likely not make a huge difference either way. I would rather focus on making my paperwork simpler, my investments simpler and spend my energy on things I enjoy.

Planning For My Kids

  1. Avoid large educational debt
    1. Attend public schools
    2. Live at home during undergraduate degree.
  2. Transportation
    1. Live close to school, work and shopping. This makes life so much easier.
  3. TFSA & RRSP
    1. VGRO with dividend reinvestment plan. Set it and forget it.
    2. Keep finances simple. There is zero need to increase financial complexity. Best to avoid the complexity to begin with.
    3. Just use the tax deferred and tax free accounts for as long as you can.

2019-11 Portfolio Update – Sold Amgen

My Current Portfolio

ETF/ Stock

Shares Added

Shares Total

BRK.B

0

950

VAB

1,979

4,907

VGRO

2,251

15,577

XAW

0

13,531

XIC

0

6,050

ZDB

4000

18,937

  • Brk.B: Berkshire Hathaway Class B
  • VAB: Vanguard Canadian Aggregate Bond Index ETF
  • VGRO: Vanguard Growth ETF Portfolio
  • 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

The name of the game currently is to buy consistently. And when the price goes down, just buy more. It is very annoying to time the market. I do not get it right very often.

It is imperative that I understand what I own and why I own it. It is too easy to treat this like a junk drawer. There is no magic product. It is likely a process instead.

Equities are used in a portion of my plan. I do not use them as blunt instruments of force. Equities make no sense for certain parts of my financial plan. The volatility of the market forces me to develop a safety plan.

Sold Amgen

I am pleased to declutter my portfolio of all individual company stocks. I never followed this company and thus I am better off getting rid of it. I owned it for over twenty years.

It feels great to declutter.

I will hold Berkshire until we are working significantly less. The current small business deduction limits me from selling this right now. If I sold it, we would lose all the favorable business tax room for the year.

The Markets

The markets could care less about me. So I do not waste much time worrying about it. The market will likely not solve all my financial problems. It really should play just a part of my plan.

The market does not care if I reach my life goals. Thus I think deeply about what I want and try to get it with or without the market.

I look to unlevered real estate and work as underpinnings in our overall plan.

Everyone talks about diversification. I am aware that I diversify because the strategies that require concentration and leverage I am not particularly good at. A good example is cash flow positive real estate investing. Dr. Networth is able to do this.

I do not dislike investment real estate. But I know that I would not be able to maintain anything larger than a residential multiplex. I lack the knowledge and networks to make it run efficiently. That insight routed me to invest in equities. So it was more of a last resort.

For the right individual, positive cash flow real estate and businesses would work smashingly better. I am not one of them however.

True wealth is built with concentration and leverage. Buying VGRO is not meant to shoot the lights out. It is the opposite. I only use equities to hopefully keep up with inflation. If I could time it right, I would be rich. But alas I can not do that either.

There is a reason I use an asset allocation ETF. I know that I am the risk. Having insight can be rather unpleasant at times.

One of my best friends is married to a teacher. She will not have to worry about the markets. His pension will more than take care of them.

For the rest of us. Why subject your entire wealth to the financial markets if you do not have to?

For some it seems like a badge of honour. If you possess 50 times your expenses and you are 65 years old, you probably can increase your asset allocation aggressively. But can you handle the volatility? This is not something I want to find out after the fact.

Are equities safe? Who knows. I have learned to keep a hand in all the pots and be flexible. I do not tie myself completely to one approach. No path is 100% safe. I truly believe in the concepts of resilience, optionality and agility.

If the markets don’t get you, the government and regulators will. Save some energy to appreciate what you already have. There is limited upside from striving and then having more than half taken away.

That is why I believe in decluttering and simplifying. Simplifying is always better for me. I win right now. No matter what happens in the future.

Those are the odds that I like.

2019-10 Passive Income

2019-10

YTD

CCPC

12,206

73,535

Personal

1,681

19,281

Total

13,887

92,816

True passive income is what I am seeking. Like zero hour work week income. I am beginning to enjoy this new financial focus.

I dislike busyness for its own sake. The concept of doing nothing works well for my personality. With my recent trip, it highlighted the benefits of a passive portfolio. I use public wifi while traveling and had no interest in signing into my financial accounts.

The travel was a distraction. But I seriously have just as much fun closer to home. Honestly EVERYONE travels now. It is quite unpopular to state that one finds travel rather meh.

I realize that I am not seeking anything. Thus it is much harder for travel to deliver anything to me. I also have a great lifestyle already. We don’t even need the relaxation. I am already quite relaxed normally.

I have enough.

I am not seeking more or different experiences.

What I value does not even require money. Such as limiting waste and limiting further global warming by flying. Good grief my lifestyle is going to become even more affordable.

Travel hack? Like I really want another credit card? I have an aeroplan credit card and can barely use the silly points that accumulate. There is so much tail wagging the proverbial dog with all this stuff.

Maybe the better approach is to not want any of it. That has always been the simpler, easier and saner approach.

No one can entice you with free travel and applying for umpteen credit cards. If you don’t care about traveling so gawd awful much you won’t jump through all the hoops to attain more points.

I can no longer be tempted with luxury, status, popularity, power or influence.

I have none and I want none.

I enjoy a simple life with my family and friends. I enjoy simple hobbies like reading and walks. I have no idea what everyone is running around searching for. It does not appear as if anyone is finding it.

Once they reach one level, it is a slingshot onward to the next. It all appears rather tiring.

I also do not waste much energy naval gazing. I know what I like and it works for me. I do not bother justifying it. Simply because no one would care.

That’s why owning some passive ETFs work well. I do not need to do anything and it’s actually better if I don’t.

It’s probably like iatrogenesis in Medicine. I try to follow the oath of “do no harm”. I see many going out of their way to do harm to themselves via their finances.

A dear friend once asked me, “How do you avoid the urge of wanting things?”

She could not understand that someone could simply not want it. She thought I was expending effort and willpower to that end. She could not comprehend my aversion to most things. I have often recognized owning more and doing more just came with it’s own inherent hassles.

All it took for me was to pay attention since I was a child. My parents did not take care of everything for me. I was often left dealing with whatever I brought into my life.

One of the best things I can do for my children is to allow them to experience the consequences of making their own decisions. If you allow your children to deal with their own stuff it would be unlikely they keep adding to it. So no helicopter parenting from me thanks.

I do not have any goals for our passive income per se. I am more of a process oriented person versus goals based.

But passive income is great. My husband is still adjusting to the fact that “investing” could be this dead simple.

The more nuanced stages come when one starts to decummulate. That stage is more interesting to me.

I need assurances that the funds will be there when we need to use it. All the tips and tricks won’t matter if one does not accomplish that.

The point of personal finance is the ability to define your personal objectives. Then optimize one’s assets whether financial or human capital to achieve those ends.

One must properly insulate oneself against the whims of the financial markets.

That is my main objective now.

2019-10 Vacation

We are in Southeast Asia for a couple of weeks. I notice that I am unable to eat as much. Plus I detest shopping and that is what is all currently around me.

I enjoy seeing some sights but what I notice is that it is all the same wherever one goes. I think I enjoy the light packing more than my actual destination.

Traveling is similar to hosting dinner parties. It forces one to re-evaluate ones stuff and routines. I make sure to walk a lot and eat a healthy diet.

Rest is more difficult with the jet lag but one copes. The more I travel, the more I see that the world is similar all over.

Everyone around the world works diligently with the hopes of providing a better future for themselves and their family. People are not different in other countries.

The wealthy are similar in many countries while poverty appears similar as well.

Travel is a welcome break from routine but do not kid oneself that there is a lot to be learned. The internet has solved that eons ago. If one knows what questions to ask, one need not even leave their home.

In any case I left some orders for my monthly ETF buys if the market dropped while I was away. However it appears that the market has gone up instead. My husband was amused to see that investments do their own thing without management from us. This is still a relatively novel concept for him.

Traveling is simply consumption much as I had imagined it would be. There is nothing about it that takes skill. Thanks to the internet, there are barely any surprises.

Perhaps the better ideal is to sculpt a life one loves daily. I value travel to see family and friends who live afar. But simply for sight seeing, I think I have seen it and done it. I can not pretend to being all that enriched by any of it.

Society is beginning to see that maintaining stuff is a hassle. Now the race is on for “experiences”. I still believe this is code for “give me your money”.

Some youth are starting to understand that ongoing air travel is likely unsustainable. I tend to agree. My husband and I have decided that we will limit overseas travel. The world does not need us to stare at their tourist attractions. We shall leave that for those who care about such things.

I will try to do my part to limit my carbon foot print. I already walk as my main mode of transportation. Plus we eat a mainly vegetarian diet and hopefully that will help as well.

There is no point in having money if our earth is uninhabitable. Furthermore I feel that I have been blessed with enough and I feel zero desire to continue taking more than I need.

In my ongoing quest to simplify it is time to drop the air travel significantly. This is the fifth overseas travel in my life. For a physician that is NOT a lot. Most of my friends’ toddlers have traveled that amount.

But I can not pretend that this is meaningful for me. The assault on the planet is likely not good. I have never been one to tells lies to benefit myself.

It’s all good since I enjoy camping and the outdoors much more. I can enjoy most of that close to home.

The best part is that my investments require zero input from me. This is the ultimate point of passive income after all.

2019-10 Month Review

My daughter and husband were both very ill with flu symptoms earlier this month. Their symptoms lasted a long time. And my daughter had to write midterms during her illness. Oh yay. Whatever doesn’t kill you makes you stronger. Maybe.

We also had a friend who lives overseas visit us this month. His son wants to attend an Ivy League university. Thank goodness our family doesn’t care about such things. It sounds like it costs a mint and it is only for an undergraduate degree. No thanks.

We pay if we think the degree may help our kids get a career. Not some name brand university. I do not believe that any of this stuff is a guarantee.

Simplify – Finances

  1. Decided to only keep two accounts for my son. Just use the TFSA and RRSP. Forget about taxable accounts for now. Avoid tax complexity if possible.
  2. I have auto payments in our numerous bank and credit card accounts. I made an excel spreadsheet which showed the days of the week that the payments were coming out as well as the associated account. And I left these with the kids while we’re on vacation.
  3. I also made a binder which had all our bills and financial accounts in it. Having everything online is useful for the person who is managing the accounts regularly. But if something were to happen to the main person it would be very difficult to locate these accounts. In the past people have statements laying all around their home office which made it easier.
  4. I also set buy orders for VGRO in case the market moves while I am on vacation. Very handy. This allows me to ignore my accounts while I am on vacation and using public wifi. That is the point of what I am trying to accomplish. I want to be able to walk away and it is all managed with minimal/zero input from me.

Insight

I think my financial superpower is that I have insight into what makes me happy. And I have insight into my abilities and definitive lack thereof.

Over the years I have come to realize these things about myself.

  • I am not an amazing investor.
  • I do not want to start a side hustle.
  • I do not want to start a business.
  • I do not enjoy managing real estate. I like renting to our own practice in the commercial unit and allowing family to live in the residential units instead.
  • I do not like relying on networks. I can barely get my accountant and lawyer to manage my accounts on time. I am merely one of their many clients.
  • I enjoy my privacy.
  • I really enjoy having good relationships and good health.
  • Almost every additional thing one brings into one’s life is a hassle in time and energy. I am at the age where I just have zero interest in any of this now.

And on that note, I am off to Asia for a couple of weeks for funsies with my hubby.

My pack weight is 8 lbs including my backpack. Let’s see how this holds up for my travels.

2019-10 Plan Review

Life is all about the plan. One can not guarantee outcomes but one can try to plan.

Networth %

Investable Assets

71.1

Personal Residence

27.4

Estate

1.5

Investable Assets – 71.1% Networth

  1. Real Estate – 18.5%
    1. Office unit – 37%
    2. Another unit- 63%
  2. Paper Investments – 80.8%
    1. Equities – 23%
    2. Bonds & GICs – 77%
  3. Commodities – 0.7%

I continue to buy VGRO monthly and that is good enough at this time. We have likely over saved and my husband has no plans to decrease his work.

I equate risk with not having the money ready when we need it. Volatility by itself is not risk.

Personal Residence – 27.4% Networth

I plan for this percentage to decrease with time. It is not a great idea to keep so much in one asset. But Canadian real estate has been mildly euphoric. Plus I love my home.

Goals Based Plans

Short Term

  1. Enjoy my current standard of living easily.
  2. Use:
    1. My home
    2. Salaries from our corporation

Medium Term

  1. Education for our children
  2. Earlier retirement for hubby if wants
  3. Use:
    1. CCPC – ZDB
    2. Office unit rental

Long Term

  1. Retirement
  2. Use:
    1. CPP + OAS – government benefits (Plan 50% of living expenses)
    2. RRSP – VAB
    3. CCPC – VGRO + ZDB

Estate

  1. TFSA – VGRO
  2. Personal residence exemption
  3. Universal life insurance

VGRO – 80/20 asset allocation ETF

ZDB + VAB – bond ETFs

As one can see, my short term and medium term plans do not involve any equities. I save VGRO for my long term and estate plans.

That is the only way that I can think about all this.

After all my essentials are taken care of, I would use the market to attain loftier goals. But none of it is promised. However I have no better vehicle to attain investment growth.

Here is how I am looking at retirement risks and how to use the products at my disposal.

Risks

SWP

CPP + OAS

Longevity

+

Inflation

+

+

SORR

+

Liquidity

+

Behavioral

+

Legacy

+

SORR – Sequence of return risk

SWP – Systematic Withdrawal Plan (equities, bonds)

Give With Warm Hands and a Warm Heart

Multiplex

I have been witness to many generational conflicts when it comes to money. That is what happens when patients get to know you well enough to divulge family matters.

I have seen families where the younger generation required a helping hand. But the senior family members would not assist. What a shame those situations were.

It’s reasonable when one does not have the ability to assist to lend a helping hand. But these families have significant wealth. Unfortunately it often served as a means of controlling one another.

Good grief. That is the last thing I want money to do.

It made sense for us to assist our children but strategically. I bought our multiplex when my daughter was one years old. I bought it close to the university. I figure that that would be one of our largest expenses. It certainly was my largest expense as a young adult.

Having the kids live at home while they pursue their education has been helpful. We would not have rented the unit so there is no lost income. It serves as a home base for them as they figure out this part of their lives.

TFSA

That is also why I am using the TFSA.

The TFSA will not amount to much during our lifetime. However, for our children, it can become valuable. They will have the decades required for these modest sums to grow. The benefit for us is that we can contribute modest amounts and there is no tax when we transfer the assets.

The rules may change but currently we make certain to have our children named as the beneficiaries. My husband and I are the successor holders.

The point of money is to make life easier for those I care about. But it is also about making life easier for my hubby and I.

That is why there will be no massive money gifts for the children. They will have to learn to share with the multiplex and waiting with the TFSA.

I love the saying “values are caught, not taught”. How true that is.

These are the values I plan to impart. Much can be accomplished with sharing and patience.

2019- 09 Passive Income

2019-09

YTD

CCPC

7,312

61,329

Personal

816

17,600

Total

8,128

78,929

Time to celebrate passive income once again. I am transitioning out of my GICs. That will take another four years. Yay.

I am starting to get the hang of this dividend income. I see the allure of dividend growth investors who increase the yields so that they do not have to sell principal for living expenses.

I am too rational for that. I have zero desire to delve into individual stocks because I stop closely watching the investments after awhile. I just stop looking at them because I know I will not do anything differently.

I am aware that there is no free ride in life. When one spends the juiced up dividends during a down market, you are still eating into your capital. The only difference is that the company made the decision and not yourself.

I am planning to build dividend income from our broad based index fund. I may plan to spend 2% during down and flat markets and 3% otherwise. I haven’t etched this in stone since I am far from having to think about income from our investments.

Goals Based Investing. AKA What Do You Want?

I think I review this often but I need to remind myself.

I do not ascribe to this treatment of one’s savings as “one big portfolio”. I think it makes it easier for an advisor but that is not how my brain works.

That is why our TFSAs will be used in our estate portfolio. That is also why I have this invested with an asset allocation of 80/20. I do not even count this money in our passive income.

My husband is planning to work part time for at least another five years. We will re-evaluate at that time.

The biggest goal that requires funding is the post secondary education of our two children. They may even attend trade school if that will secure work for them.

Either way, we plan to support our children with whatever education or training is required. I want them to find something they enjoy enough to keep doing for a good long while.

They need to find something they enjoy that earns a living and that they are good at. Those are the main stipulations.

I want to give with warm hands and a warm heart.

I plan to help my kids. They are not spoiled. I just take care of the basics plus some fun spending.

There are moments in most young adults’ lives where the bills come quickly. It is often when they are just starting their career, meeting partners and having to rent/ buy their home. They might even be starting families. That is when I will be glad to help out.

I do not understand this belief that the kids need to “have skin in the game”. That’s a bunch of hooey. Who doesn’t remember when times were tough?

It would have been wonderful to have a helping hand. I see my sister do this with her kids. They think they are “teaching” their kids good money management by never helping them when they run out. Instead they have electrified money. It is all her kids think about. I just send them some money to help them out. Good grief already.

Money is simply a way station. It is not the destination. Money can make your life simpler, easier and foster well-being. That’s my ultimate journey.

2019-10 Portfolio Update

My Current Portfolio

ETF/ Stock

Shares Added

Shares Total

AMGN

0

390

BRK.B

0

950

VAB

DRIP

2,928

VGRO

1500

13,826

XAW

0

13,531

XIC

0

6,050

ZDB

0

14,937

  1. Plan to sell when husband not working full time:
    1. Amgen
    2. Brk.B
  2. Plan to tax loss sell prn and switch to VGRO:
    1. XAW
    2. XIC
  3. Keep:
    1. VGRO – (80/20 asset allocation ETF)
    2. ZDB – discount bond ETF in CCPC
    3. VAB – intermediate bond ETF in RRSP

Current AA – 23%

The Ultimate Plan:

  1. CCPC – VGRO + ZDB
  2. RRSP – VAB (dripped)
  3. TFSA – VGRO (dripped)
  4. Taxable – VGRO + High Interest Savings Account

Plan is to eventually move all assets to VGRO and ZDB. This will involve some tax loss selling when the opportunity arises.

It’s not like I invested when the markets were low. Trust me it will happen.

The market has been volatile the past week. I snagged some more VGRO. Yay.

I buy my usual tranche on the set time each month. However, as the market takes a dive, I tend to add a bit more.

My asset allocation is quite low so I have zero issue with dumping in more. We are also in accumulation mode thus whatever happens will not impact us all that much.

I have been listening to various experts and their asset allocation percentages. John Bogle’s was 50/ 50. Various folks mentioned that he used his social security as part of his bond.

Larry Swedroe once mentioned that he used a lower AA since he relied on factor investing to give his equities a bigger return. I think he mentioned that he had about 30% at the time.

However, I have NO idea what is a great asset allocation to be honest. My husband says 60/40 forever. We will see about that shall we?

I can live on our funds with a GIC. I would not recommend that but I probably could. That was what I originally thought we would do. Pay less taxes while saving in the corporation and then dribble it out.

It is wise to keep the stash in a lower equity allocation as one approaches retirement. That is when one has the largest stash so it makes sense not to risk the whole pile.

I see many of these bloggers with 80+ asset allocations. I would use that for my children. Not for us thanks. Maybe if we could live on the dividends alone as I have stated in my dream scenario post.

Checking Your Accounts

I have been reading about folks not wanting to check their accounts. And they are also DIY investors.

I check my accounts regularly. The difference is that I feel nothing when I do. I simply record it for my personal tracking and move on.

You have to know yourself. If you freak out when you check your account, I suppose you should not check it. However, if you tend to be emotional about the numerical changes then perhaps you should NOT DIY.

I have a feeling that some folks will find out that they are not suited for DIY investing when the crap hits the fan next time.

That is not a great plan but it will be a lesson that only they can learn. It seems you can never really warn people about most things.

Owning Other Assets

I have stopped posting networth updates online. Thanks hubby.

But I recognize that my paper portfolio is only part of the whole picture. I would prefer to have other assets around since the world can be unpredictable.

Assets I can sell or generate cash flow:

  1. Residential unit
  2. Commercial unit
  3. Commodities

Guaranteed inflation adjusted income:

  1. CPP
  2. OAS
  3. Plan to cover 50% of income/ year after 70 yrs old

You can guess from my planning that I do not rely on any one thing. I believe in diversifying across all assets and all tax structures.

I did this even with our careers. My husband chose to have a career tied to hospitals and all its inherent admin headaches. Thus even though I trained in a hospital based specialty, I chose general practice instead.

No one was ever going to tell me when I needed to work. I tolerated this during residency but I was having none of that when I came out to practice.

I think that’s why many women don’t try for all those careers with loads of titles. It’s not that we can’t do it. It’s because some of us don’t want it.

I wanted to be available for my own family. My husband’s work was already going to be unpredictable.

Now it has zero to do with sexism. When my husband was in general practice, he took care of our babies and let me work whenever I wanted. Women GPs are more in demand. We clearly swung both ways.

I am grateful my husband was happy to do that. I have met many of my girlfriends’ husbands who can not generate the income of their wives. But they also feel they are beyond household duties even when they are a stay at home parent.

I simply roll my eyes. And people are often shocked when they have problems.

Burnt Out Docs

It’s in the Canadian news today about burnt out doctors.

I recall a women doctor once telling me with clear resignation. “Medicine is a career where you have to leave your own sick child but get to take care of other peoples’ sick children.” She seemed to have plenty of regrets.

I don’t believe any of us do not want to care for other people’s sick children. Or else why choose medicine? But it is not talked about how many of us get ZERO support ourselves.

I saw a whole day of patients while having a miscarriage. I quietly went to the ER after my shift.

And the scary thing is that I would do that today. It’s like so many of us are just built this way.

So what would I tell others even when I would not follow the advice?

Take care of yourself first. You will be of no use to anyone else otherwise. Or worse, you take care of everyone else at work but shortchange those you love.

Because those who love you will be the ones who will put up with the worst of your behaviour.

Oh yeah and the silliest reason to run like hell is because you went and spent it all on shiny baubles. Trust me, you will make plenty of mistakes even when you try to “do the right things financially”.

The federal government will change the goal posts. Think of our small business deductions.

The local governments will impact your real estate. Think about all the weird real estate taxes popping up.

That is my reason for making things simple. If all these external processes will be moving the goalposts, why twist oneself into a pretzel?

So no matter what happens, I did not expend much energy over it. That makes me super happy.

It is all about risk management. Avoiding regret is a serious form of risk management.

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