2020-06 Mailbox Money

Mailbox Money- June 2020

“Life is really simple, but men insist on making it complicated.” Confucius (BC 551-BC 479) Chinese philosopher.

My investment philosophy is simple.

I have zero alpha.

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

June 2020 Mailbox Money

Asset

Ticker

$$$

% Total

Aggregate Bond

VAB

664

28.0%

Canadian Dividend

VDY

788

33.2%

Interest

922

38.8%

Total

2,374

100%

Cumulative Mailbox Money

Month

2019

2020

January

10,329

17,295

February

26,294

29,166

March

32,239

44,380

April

49,742

56,975

May

55,856

61,936

June

64,013

64,310

July

71,546

August

73,229

September

81,357

October

95,968

November

101,828

December

107,264

My June 2020 passive income was 2,374. It was truly passive. I simply added it up. That is my idea of passive income.

My 12-month trailing passive income is 107,562.

I have locked my cash into bank terms that vary between 30 days to 1 year. I do not get the interest until I cash them out. I keep the money guaranteed with my provincial credit union deposit insurance.

I also use CDIC insurance. I figure that I will have enough assets that do not have any insurance whatsoever.

When I say that I am a “know nothing, do nothing” investor, I am not joking. I do not bother reading forecasts. I barely read the news except to keep track of local events.

I am back to obsessing about my running. I am bingeing Modern Family on Netflix. I am still doing telehealth. I love telehealth.

Oddly everything seems simpler.

It has been much easier to invest with my Vanguard asset allocation funds. They are not perfect. But I am too old to believe in perfection at this point.

They are simply good enough.

That is the thing. I know now that I only need to get “enough” of my life correct. Especially when it pertains to finances. There will always be someone who games the system. There will always be a so-called “better” way. There will always be someone who is more clever/ smarter/ faster…who really cares?

That is why I tend to just keep track. And to keep simplifying it all.

There will be no great financial insights from me.

2020-05 Mailbox Money

Mailbox Money- May 2020

My investment philosophy is simple.

I have zero alpha.

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

May 2020 Mailbox Money

Asset

Ticker

$$$

% Total

Aggregate Bond

VAB

700

14.1%

Canadian Dividend

VDY

130

2.6%

Interest

4,131

83.3%

Total

4,961

100%

Cumulative Mailbox Money

Month

2019

2020

January

10,329

17,295

February

26,294

29,166

March

32,239

44,380

April

49,742

56,975

May

55,856

61,936

June

64,013

July

71,546

August

73,229

September

81,357

October

95,968

November

101,828

December

107,264

My May 2020 passive income was 4,961. It was truly passive. I simply added it up. That is my idea of passive income.

My 12 month trailing passive income is 113,346. Cool.

I have locked my cash into bank terms that vary between 30 days to 1 year. I do not get the interest until I cash them out. I keep the money guaranteed with my provincial credit union deposit insurance.

I tend to use the CDIC insurance as well. I figure that I will have more than enough assets that do not have any insurance.

Due to Covid our summer travel plans have been curtailed. It is no big deal since I just wanted to camp anyways. The local weather has been lovely so I am fine with staying close to home.

I have been thinking lately about how little guaranteed, indexed to inflation income we get as physicians. Very few of us get any pensions. In fact, your current work is governed by policy making government employees who are going to collect generous pensions. Good grief.

I plan to combat this by delaying my CPP and maybe even my OAS. I will maintain a bond tent in my RRSP. But mainly, I intend to live a simple, low upkeep life. Plus we are a family of sharers. I expect we will all lower our expenses by helping one another out.

But what the heck will all those doctors who spend multiple six figures per year do? How the heck can anyone make the numbers work with safe withdrawal rates, passive income etc?

What is apparent with safe withdrawal rates is that one is using such small percentages of one’s wealth. Think of the eye popping wealth that needs to be accumulated to allow six figure spending.

I now understand why so many doctors keep saying that they will keep working. Perhaps some of them realize they can not afford to retire.

Retiring without a pension and high living expenses probably does not work well in real life.

2020-06 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

My Philosophy

  1. Put money in its place. Otherwise you will NEVER have enough.
  2. Live within your means.
  3. Avoid debt. Period.
  4. Keep it simple.
  5. Keep costs low.
  6. Automate
  7. Diversify – invest globally.
  8. Develop social indifference – limit social media.
  9. Love subtractive knowledge. Ignore forecasts and “experts”. None of it helps much.
  10. Do not treat the unlikely as impossible. Nor treat the likely as certain.

Networth%

Fixed Income

34%

Equities

26%

Personal Residence

25%

Extra Unit

7%

Commercial Unit

5%

Other

2%

Our 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 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

3.9

Corporate

VGRO

80/20 Asset Allocation ETF

44.2

RRSP1

VAB

Aggregate Bond

1.8

RRSP1

VGRO

80/20 Asset Allocation ETF

1.6

RRSP2

VAB

Aggregate Bond

3.9

TFSA1

VGRO

80/20 Asset Allocation ETF

1.3

TFSA2

VGRO

80/20 Asset Allocation ETF

1.3

Taxable

VDY

Canadian High Dividend

0.7

GIC

12

Cash

29

Total

100%

Asset Allocation

43.4%

Our Portfolio 2020 Change ($)

2020

Month/Month$

YTD$

January

37,361

37,361

February

-111,757

-74,396

March

-208,404

-282,800

April

272,159

-10,641

May

139,468

128,827

June

81,265

210,092

Kids’ Portfolios

VEQT 4% SWR/ month

Son, 21 years old

565

Daughter, 19 years old

57

VEQT = Vanguard All-Equity ETF Portfolio

Jun 8, 2020

As you can see, it has been a rather wild ride so far this year. It does not matter what I think about any of this. I will continue to strive for a simple portfolio that will allow me to achieve my plans.

One begins to realize that most of my time is spent unravelling prior decisions. Because guess what I have been doing last week? Selling VDY (high dividend ETF) in my son’s account. And we plan to sell our portion of VDY as well. I kept telling my husband that we needed to limit the amount of the high dividend ETF. That spelled the death knell for that ETF.

I have learned from past investments to cut the cord quickly. I do not hang onto equities once I decide to sell them. I make a very simple plan and then I follow it through as soon as possible.

And I have to learn to move into my next plan right away. But alas I am still a bit of a market timer. At least now I build a 60/40 portfolio instead of keeping the whole amount out of the market. I have been caught on the wrong side of that enough times to know better.

So as it stands, my husband and I will hold VGRO, the 80/20 portfolio. But my children will hold the 100% equity ETF, VEQT. I also plan to set them up for dividend reinvestment plans in all their accounts. This ETF distributes once a year so this could be an almost set and forget portfolio.

Now wouldn’t that be lovely?

Jun 12, 2020

Why do I continue to write this? I do this to review my thoughts as I transition to my investment plan. It may also be a way to track how this strategy works in the long term.

There is something rather tiring to read all this stuff online and then have zero idea how to implement.

The majority of what I do is to build something my family can take over eventually. I want to simplify so that they do not have to rely on a middle man which I feel is not needed nowadays.

If they want more security, just keep more fixed income or cash around. I don’t think there is any financial security that one can buy with a financial product.

The best security is likely to delay your government benefits. Guaranteed and indexed to inflation, what can you buy that would be better than this?

Furthermore we live in a country with free healthcare. What more security does anyone need? You do not have to look very far but at our American neighbours and see how good we have it.

Plus I’m beginning to realize that those who need bulletproof security will never achieve it. Their fears are too great. People have to realize that there is no security. It is all about trade offs.

The best thing about the market is that it does not discriminate. It does not care about your age, sex or ethnicity. Everyone has a chance at the table. We live in an age where we have access to portfolios that only the wealthy and well connected could have had access to in the past. Investing has become democratized for sure.

Now the biggest enemy is likely your own behavior. That is why my plan is to find something that I can stick with over the long run.

Investment risk does not only come from lost money. It can also come from losing one’s peace of mind. I am careful to make sure that no amount of money should ever come at that expense.

I could care less about being right. I would rather not be haunted from being really wrong.

Jun 19, 2020

Make Life Easier

I started using PC Insiders. It is great. I have not held back how much I detest shopping. I shop online with an app now. The whole family shops for themselves and one person picks the order up. It.Is.Fantastic.

I also started cutting my husband and son’s hair during Covid. I find it rather relaxing. I am grateful that they are not fussy with their haircuts. They would rather avoid the hassle of waiting in line at the barber.

Funny thing about haircuts. Aside from paying for gyms after university, my haircut was one area that I tried to systematize. I have had very cheap haircuts, free haircuts by my mom and very expensive haircuts. The overwhelming fact remains that it never looked different after a couple of weeks. Perhaps it is because I don’t even own a hair dryer and could not style it like the professionals.

So I have now just grown it to shoulder length and I think I’ll let my husband cut it next month. Because my haircut simply does not matter.

People With Excel Portfolios

The reason I simplify everything is because I believe in automation. I like excel but I would not have my husband and children rely on them.

I read about people who build excel sheets for their optimized portfolios. But what if you die and the spreadsheet stops working? What the heck is your spouse and children supposed to do then?

Unfortunately I think about stuff like this. Everyone thinks things work until they don’t.

I was reminded of this because my google sheets just stopped updating my Berkshire price today.

All I know is that I am not clever. I can not predict taxes blah blah blah. I can barely predict my own behaviour sometimes.

I doubt if there is even “optimal” after witnessing the changes to our corporate accounts made by the government. You can make plans but it might not work out. But you still pay for the complexity to accountants and lawyers.

So here is what I rely on. Whatever happens, I am going to make it easy. So easy that anyone else can maintain it.

Unless the entire capital markets stop functioning, I have a chance to achieve growth as much as the next person. And if the markets stop functioning then I have a stash of cash, keep working and live a simple life I can afford.

I’d rather spend my time planning our Father’s day get together this weekend.

June 28, 2020

I am beginning to think about my life in terms of quarters. If I am lucky, I may be in the third of four quarters. This period of my life is the one that I want to cherish. The time between 50 – 75 years old is the time I can be active with my husband.

The children are young adults now. I tell them that all they should need from us at this point is money for university. They can stay in the home units as needed but daddy and I are going to do our own things now.

The past twenty five years have been busy. We started our careers, raised our family, bought homes and cars. Started and flamed out on multiple businesses and investments. We have the battle scars. It is what it is.

I have made solid plans for my parents, my siblings and my children. It is time to spend more effort on my own dreams again. I remind my husband that this is the time to be selfish. It is time to down-age.

I remind him that if we are lucky, we will only get older. This may also bring illness and disability. Now is the time to do whatever else one had planned to do.

My husband has started to cull aspects of his work he does not want to do. He is ramping his hobbies back up. I regularly find him exercising and playing his guitar. He has even taken over the bread baking.

Our rhythm has changed.

I have zero bucket lists however.

I have a serious case of *uck-it lists.

What professional woman has not experienced the fact that you do all your career tasks and then you get to be the one to do EVERYTHING else?

  1. Living:
    1. The household shopping.
    2. The cleaning.
    3. The cooking.
    4. The laundry.
    5. The family health maintenance schedules.
    6. You have to know where everything is. Mom is always the one to call.
  2. Money:
    1. The household finances.
    2. The taxes.
    3. The investments.
  3. Family:
    1. Organize your husband.
    2. Organize the children.
    3. Organized the extended family issues.
    4. Organize the social activities.
    5. You get to be the one who is supposed to manoeuvre the unspoken issues amongst all the family members including the extended family. Yikes.
    6. You get to plan all the vacations. And for all the husbands who think they plan, I bet most wives take care of the buttoning down the house and the packing.
    7. Organize the dog.
  4. Stuff:
    1. The home(s).
    2. The car(s).
    3. And all the kids’ and husband’s stuff.
  5. Career:
    1. CME
    2. Manage the office
    3. Manage the billings

And practically every list has multiple sub lists.

Eventually the career ends and you get to just spend time on your hobbies. Eventually your children grow up and they manage their own stuff.

As a middle aged woman, I have to stop helping everyone else. It is the season to relish that my children are grown up and to stop doing things for my husband. If we are to enjoy our retirement together, he needs to be self sufficient.

That is why I have this intense drive to simplify. Life has veered too far off from how I wanted to live when I was younger.

I want to take care of a minimal amount of stuff. I want my home and to eventually own one car. My daughter can take the second car.

I want my investments and financial structures to be simple and efficient.

I want to have shorter to-do lists.

I want my to-do lists to be things I do for myself. For too long, my to-do list has been filled with things for everyone else.

I once asked my husband for his to-do list. And he was honest and said “honey, I don’t have one”. OMG already.

2020Q1 FI My Kids

I have two children.

Both of them want financial independence.

Neither care about early retirement.

They have certain advantages.

They have no debt and live simply. They get to save almost everything they earn.

I have advised them to live at home during undergraduate studies as we live close to a university. We will gladly pay for their education.

Neither of them want cars. They can use Uber. Or walk, bike or take the bus.

Plus they have frugal friends. Their friends prefer to buy groceries and come over to make dinner, watch netflix and play board games.

So much of personal finance is what you don’t do.

I hope to show my children how simple and easy all this can be.

Son, 21 years old

Account

ETF

TFSA

VEQT

RRSP

VEQT

Taxable

VDY

Daughter, 19 years old

Account

ETF

TFSA

VEQT

The financial plan for my children is simple.

  1. The Basics:
    1. Live within your means.
    2. Do something you like, can get good at and is helpful to society.
    3. Reasonable is more important than rational because you are a human after all.
    4. A good strategy will get you closest to your goal with the fewest number of decisions needed along the way.
    5. Remember that when it comes to investing “Nobody Knows Nothing!”
  2. Investments:
    1. VEQT – Vanguard All- Equity ETF
      1. You could hold this forever.
      2. Use DRIP in tax deferred accounts.
    2. Tax diversification with TFSA, RRSP and taxable accounts.
    3. Financial Independence:
      1. When you can live on 3-4% of your investments.
    4. Retirement:
      1. Build a guaranteed, indexed to inflation income stream which can cover all essential expenses.
      2. And/ or save 5- 10 years of living expenses in cash or bonds before you retire.
      3. Best annuity is to delay government benefits if that still exists.
  3. Insurance:
    1. For Yourself:
      1. Health insurance
    2. For Your Stuff:
      1. Home insurance if needed. Renting is an option.
      2. Auto insurance if needed. Walking and biking are options.
    3. If you have kids:
      1. Life insurance
      2. Disability insurance
      3. Self insure when you reach FI.
  4. If you have kids:
    1. Public school or home school.
    2. Go to the local university.
    3. Live at home during undergraduate. If you have a multiplex like we do, move them to the other unit so they need to cook, clean and do their own laundry.
  5. Expenses:
    1. Housing:
      1. I would rent if I were you guys.
      2. Or live in our family units.
    2. Transportation:
      1. Live close to amenities, school, work and shopping.
      2. Walk or bike.
      3. Public transit
      4. Car share
    3. Food:
      1. Shop once weekly. People shop way too often.

Current 4% SWR

4% SWR per month

Son

539

Daughter

55

They both wanted 100% equity portfolios. They were not pleased when I recommended VGRO. So they switched it to VEQT today.

It will be interesting to see if they can maintain this path. Alas it is only a guideline. If they show me a better way, I am flexible.

Either way, I am grateful that they have started investing at such an early age.

2020-05 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

My 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 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

4.1

Corporate

VGRO

80/20 Asset Allocation ETF

44.0

RRSP1

VAB

Aggregate Bond

1.8

RRSP1

VGRO

80/20 Asset Allocation ETF

1.6

RRSP2

VAB

Aggregate Bond

3.9

TFSA1

VGRO

80/20 Asset Allocation ETF

1.3

TFSA2

VGRO

80/20 Asset Allocation ETF

1.3

Taxable

VDY

Canadian High Dividend

0.7

Cash

41.3

Total

100%

Asset Allocation

43.5%

Networth%

Personal Residence

25%

Commercial Unit

5%

Equities

26%

Fixed Income

35%

Other

8%

My Portfolio 2020 Change ($)

2020

Month/Month$

YTD$

January

37,361

37,361

February

-111,757

-74,396

March

-208,404

-282,800

April

272,159

-10,641

May

139,468

128,827

May 8, 2020

Since I have no insights to add in terms of investing, I would rather just follow my portfolio. Everyone pontificates about theories. I have no idea what will happen.

Even those with theories, if it is unactionable, then it is essentially useless to me anyhow.

I can only control very few things. COVID reminded me that the unlikely is not impossible.

So I go back to tracking. I keep some part of our money in equities because I am too lazy to do real estate investing or start a business.

I will focus on keeping the portfolio simple so that my family and I can maintain it.

I am looking forward to a wonderful Mothers’ Day this weekend!

May 15, 2020

I have stopped following the news. It is all noise.

I care about managing risk in my life. The stock market makes up only a portion of the risk. Just limit the amount you have in the markets if it gives you an ulcer to watch it.

I tend to be lazy so I would likely not even rebalance. That is why I buy an asset allocation ETF. When I buy VGRO it is similar to buying real estate. I tend to hang on to real estate forever. That is the plan anyhow. The difference is that VGRO will never contact me to solve any problems.

One can limit risks with low expectations. Plus having a minimal of needs.

I need to own my home. I need a place for my kids and parents to live comfortably. I need to be able to easily afford heat and light for my home.

I need food to eat. I need reliable transportation or to be close to amenities. I need good wifi.

Covid had highlighted what we all need as a family.

So how does one make money last? Humans can be flexible. Like really flexible. People can try and debunk that but I don’t buy it.

Plus there are no guarantees. Everything you do or don’t do has a risk attached to it.

Covid was an impossible personal finance problem to plan for. What doctor in their right mind would think that their income would crater like it has?

So don’t feel bad if you were caught out.

I saved a year of expenses for our practice. But I surely NEVER thought we would ever even think of using it.

Well in March 2020, I had to think about it.

May 30, 2020

So many news things with this COVID. Telehealth is definitely a thing now. I have started to cut my husband’s hair. It is very simple.

I have also started to buy groceries online. I pick it up at the local grocery store. It is wonderful since I can shop for the multiple families that we care for and makes it easier overall.

Really makes one realize how much of our lives can easily be automated. And made easier and simpler.

This buy, hold and pray investing works for me just fine. I am too lazy and just don’t care enough to bother trying anything else that is new.

If I worry about the market, I will just spend less, work longer and keep more cash around. It is scary how simple my strategy will be.

My kids started VEQT this week. It is a 100% equity ETF. They can hold this ETF forever. It is great these ETFs are around and that they know to use them.

But knowing and doing are very different things. That is why I plan with the intention that they need to do very little with their investments. The plan will mainly be automated.

I told my husband that my work will be done when I can hand everything over to him and he can take care of it all. We are not there yet but it is getting closer and closer.

The investments are simpler. I have fewer accounts. The taxes are even becoming understandable.

And our plan is so gawd awful simple.

2020-04 Mailbox Money

Mailbox Money- April 2020

My investment philosophy is simple.

I have zero alpha.

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

April 2020 Mailbox Money

Asset

Ticker

$$$

% Total

Aggregate Bond

VAB

745

5.9%

Canadian Dividend

VDY

179

1.4%

80/20 Asset Allocation ETF

VGRO

10,356

82.6%

Discount Bond

ZDB

928

7.4%

Interest

326

2.6%

Total

12,534

100%

Cumulative Mailbox Money

Month

2019

2020

January

10,329

17,295

February

26,294

29,166

March

32,239

44,380

April

49,742

56,975

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 April 2020 passive income was 12,534. It was truly passive. I simply added it up. That is my idea of passive income.

I will just update my numbers.

Finally the largest payout is beginning to come from VGRO. It will be the fixed income once again which will be the busiest part of my portfolio. There is nothing to do once I get it into VGRO.

I sold ZDB (bond ETF) to give us some liquidity since I have an amount locked into GICs for six months. Needing liquidity with my fixed income begins to create all sorts of burnt bandwidth. I will be pleased when the corporate GICs mature and I can stick the tranche back into an intermediate bond ETF.

Then it can just sit there in the bond ETF. I do not plan to use this for rebalancing since I do not plan to rebalance. Furthermore during panic times I have seen how well it performs. It plummeted along with everything else. No negative correlation there.

COVID has highlighted for my children that they best work in fields where it will be possible to work from home. And to live close to work, school and amenities.

Perhaps public transit was an avenue of spread during COVID. Particularly in urban areas. I tell my kids to just be close enough to walk or bike to things you need to get to. Problem solved. Having access to shared vehicles is completely different than having to commute.

I have zero idea how all this will play out. And it does not matter. I never go all in for anything. One never knows when one is wrong.

In fact this recent downturn showed once again that no one knows anything.

My time is better spent hanging out with my family and my dog.

2020-04 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

My 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 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

4.4

Corporate

VGRO

80/20 Asset Allocation ETF

43.8

RRSP1

VAB

Aggregate Bond

1.8

RRSP1

VGRO

80/20 Asset Allocation ETF

1.6

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

Cash

41.1

Total

100%

Networth

Investable Assets

66%

Personal Residence

26%

Other

8%

Investable Assets – 66% of Networth

  1. Real Estate (unleveraged) – 9%
    1. Commercial unit
  2. Paper Investments – 91%
    1. Equities – 43%
    2. Bonds – 15%
    3. GIC – 15%
    4. Cash – 26%
  3. Equities/ Networth – 26%

April has been a very quiet month with respect to buying equities. Which is fine with me. I have zero desire to own more equities than we need. We currently own a balanced portfolio. That is good enough.

The best part is that I have simplified my portfolio. Big time. We are even planning to get rid of VDY in our taxable account when it recovers. We have decided to only use VGRO for our equities portion in the future.

Finally my husband sees my point of making things easier. It will make doing our taxes easier. I will only need to keep track of the adjusted cost base of VGRO in our corporate account.

I see the benefits with optimizing. But at this stage, I see way more benefits with simplifying instead.

I have seen that no one knows what the heck is truly going on. It is best to simply protect oneself with whatever scenario occurs.

For our family it will be having zero debt and maintaining a low expense burn rate. It is hard to reach for growth in one’s investments if one is concerned about taking care of the basics.

There is an inherent complexity with having a corporation. Thus it is crucial that I simplify anything and everything else.

I view my plan through various lenses. I review the asset allocation which lets me see the relative risk I am taking. I also review how liquid and illiquid my investments are.

Plus I am beginning to think that in time I might just keep a healthy slug of cash and then let VGRO do it’s thing.

I also review the ratio of equities to my networth. It is currently 26% which I am fine with.

Developing a sense of an overall wealth plan is more important than just thinking about asset allocation. At least that is how I approach it.

Lessons from COVID

I have learned a few lessons about my own investing styles money management during this bear market.

Some lessons are the same. Relationships and health are more important than finances. I do not get impressed with “expert” opinions. Finance has more voodoo than medicine, by a long shot.

We can only follow certain best practices. But there is simply too much that we have zero control over.

Simple money lessons I have learned and re-learned recently.

  1. Cash is king. I should not try to get a great return from this asset class. But it is VERY handy during times of financial stress.
  2. My bond ETFs may not be reliable for rebalancing during times of panic. These things can drop like a rock.
  3. The US dollar is also king. I almost missed the entire financial crisis in 2009. I barely noticed my US equities tanking. They were converted into Canadian dollars and the currency exchange buoyed the portfolio values in my account.
  4. Try not to waste cash. I pulled too early during the drawdown. Thankfully I still have some dry powder left.
  5. I really like my asset allocation ETF. Once the money is in VGRO, I just don’t care about it all that much. Vanguard can do its “thang”.
  6. I already knew that my Canadian high dividend ETF was not diversified. But boy can this thing get hammered. Thankfully I barely put any money in this ETF. It is definitely more suitable for my son.
  7. My retirement income floor of government benefits and RRSP bonds although modest will at least be reliable. I am sure my husband would not be able to handle this volatility during retirement.
  8. “Make and Take” is NOT a strategy. Just save more. Medicine may be recession proof but it might not be pandemic proof.

Finally I am reminded how little I know about this investing stuff. I go on forums occasionally and I barely understand what the heck some of these posters write about. It is way over my head.

But I also realize that no one can guarantee anything. We are all trying to achieve a return on our investments.

I am grateful that I bought ETFs rather than investment real estate. I would not want to be holding the bag on real estate debt at this time. I always get caught on the losing end of deals such as these.

This paper investing is nothing short of simple. I just do not do anything. I can pull that off.

I am aware that I do not know anything more than anyone else. I also have no better options for long term investing. So this is as good as it gets.

I take this approach because I have nothing else to fall back on. That sounds defeated but it really isn’t. It is self awareness at this point.

I only know how to live simply and do nothing.

There might be an art to “doing nothing” after all.

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

44,380

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.

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