September 2020 Financial 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. Live enjoyably within your means.
  2. Avoid debt.
  3. Keep things simple.
  4. Keep costs low.
  5. Diversify. Investments and taxes.
  6. Do nothing. Automate.
  7. Know nothing. Because “nobody knows nothing.”
  8. Embrace compounding. Buy low and hold.
  9. Embrace social indifference.
  10. Embrace margin of safety. The unlikely is not impossible and the likely is not certain.

Networth% – September 2020

 

Fixed Income

34.9%

Equities

27.1%

Personal Residence

24.7%

Extra Unit

6.9%

Commercial Unit

5.3%

Other

1%

Our Portfolio

I treat all the accounts as one portfolio.

Portfolio – September 2020

 

 

 

Account

Ticker

Asset

Portfolio %

Corporate

BRK.B

Berkshire Hathaway

4.4

Corporate

VGRO

80/20 Asset Allocation ETF

43.7

RRSP1

VAB

Aggregate Bond

2.1

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

0.7

Taxable

VGRO

80/20 Asset Allocation ETF

0.4

 

GIC

 

8

 

Cash

 

32

Total

 

 

100%

Asset Allocation

 

 

43.7%

Portfolio Change 2020 ($$)

 

 

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

80,935

209,762

July

159,767

369,860

August

110,281

480,141

September

-23,809

456,331

Mailbox Money- September 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.

Mailbox Money – September 2020

 

 

 

Asset

Ticker

$$$

% Total

Aggregate Bond

VAB

744

20.9%

Canadian Dividend

VDY

229

6.4%

Interest

2,580

72.6%

September 2020 Total

 

3,553

 

Mailbox Money 12- Month Trailing

 

117,791

 

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

86,858

August

73,229

88,339

September

81,357

91,897

October

95,968

 

November

101,828

 

December

107,264

 

Kids’ Portfolios – September 2020

 

 

VEQT 4% SWR

Son, 21 years old

6,528

Daughter, 19 years old

720

VEQT = Vanguard All-Equity ETF Portfolio

Retirement

Accumulation is rather simple now. The introduction of asset allocation ETFs work well for lazy people such as myself.

Figuring out retirement income will be more challenging.

Most physicians do NOT have any meaningful pensions.

Here are my thoughts on our retirement plan.

Current Retirement Plan By Age

  1. < 65 years old:
    1. Draw salaries to fund CPP
    2. 58,700 = 2020 CPP Maximum Pensionable Earnings
  2. 65 – 70 years old:
    1. Retire from medicine
    2. Spend mailbox money.
    3. Bridge asset:
      1. Sell our office unit.
      2. Allow us to delay government benefits until 70 years old.
  3. 70 years old:
    1. Drawdown Sequence:
      1. OAS & CPP
        1. Delaying these are the best annuities.
        2. Guaranteed, inflation adjusted income.
        3. Plan to have ⅓ to ½ of our spending from this source.
      2. RRIF RMD
        1. Use maximum ALDA rules to monitor RRSP values. Current maximum is 150,000 or 25% RRIF, whichever is less.
        2. Use RMD tables to spend efficiently.
      3. Taxable
      4. CCPC
      5. TFSA

Estate:

  • PRE – Principal residence exemption. Can pass our home to heirs tax free.
  • Universal life insurance policy. Bought in our mid 30’s.

September 2020

Financial Stuff

I bought a smidge of VGRO with the dividends from VDY in my personal taxable account. I do not have dividend reinvestment in the taxable accounts.

I would like to sell VDY but I am waiting for the value to recuperate from the COVID crash. Everything else has recovered except for VDY.

I am waiting for the last two GICs to mature in my corporate account in late October.

My portfolio is on autopilot now. I will buy more VGRO if the asset allocation drops below 40% equities.

Otherwise I just do nothing.

Life Stuff

How weird has this year been? My children are attending university online. So weird.

My husband is grateful to be working. It can not be that much fun to retire and have nowhere to travel. So I am glad that we are not retired yet.

I missed camping this year. I would have been on a trip right now. I spent the time organizing all our old photos instead. We had this on our to-do list for over a decade. We finally got around to it this summer.

I have been teaching my children about working consistently but having low expectations. I know it is an odd thing for a parent to teach their children. Most parents tell their kids that they can “be anything”.

I am teaching them to be active with their education and careers. But I am teaching them to be passive with their investments.

Doing nothing is not natural. Most people strive to be busy. But the best strategy for health and wealth is probably prevention. Avoiding the bad is more valuable than all the so-called “good” that you can do.

Do I Need An Advisor?

The most useful information that I have encountered came from Justin Bender of Canadian Portfolio Manager.

He showed his Ludicrous portfolio options. I am very close to Example 4 where he built a portfolio with two ETFs.

I will never have a wonderful portfolio. But I will have a good enough one.

I am keeping our retirement plan simple so that my husband can follow it with minimal effort. When I make things this simple, what the heck can an advisor do for me?

They might “save” some taxes and MER but would this offset the AUM one would be paying? No one can guarantee a stock market return.

The reality is that most physicians could use a pension. I am planning to delay our CPP and OAS. Even a small stream of guaranteed, inflation adjusted income will make my plan work. It also helps that I have a solid handle on my expenses.

You don’t need an advisor to delay your government benefits. You don’t need an advisor to draw out the RRIF with RMD tables. There simply are not many levers one can pull without adding more complexity, expense and hassle.

There will always be people who will take your money to do the simplest of things for you.

August 2020 Financial 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.
  4. Keep it simple.
  5. Keep costs low.
  6. Automate
  7. Diversify – invest globally.
  8. Embrace social indifference. Learn to care less what others are doing.
  9. Embrace 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% – August 2020

 

Fixed Income

34.2%

Equities

27.4%

Personal Residence

24.6%

Extra Unit

6.9%

Commercial Unit

5.3%

Other

1%

Our Portfolio

I treat all the accounts as one portfolio.

Portfolio – August 2020

 

 

 

Account

Ticker

Asset

Portfolio %

Corporate

BRK.B

Berkshire Hathaway

4.4

Corporate

VGRO

80/20 Asset Allocation ETF

44.5

RRSP1

VAB

Aggregate Bond

2.1

RRSP1

VGRO

80/20 Asset Allocation ETF

1.6

RRSP2

VAB

Aggregate Bond

4.0

TFSA1

VGRO

80/20 Asset Allocation ETF

1.4

TFSA2

VGRO

80/20 Asset Allocation ETF

1.3

Taxable

VDY

Canadian High Dividend

0.8

Taxable

VGRO

80/20 Asset Allocation ETF

0.4

 

GIC

 

10

 

Cash

 

30

Total

 

 

100%

Asset Allocation

 

 

44.5%

Portfolio Change 2020 ($$)

 

 

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

80,935

209,762

July

159,767

369,860

August

110,281

480,141

Mailbox Money- August 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.

Mailbox Money – August 2020

 

 

 

Asset

Ticker

$$$

% Total

Aggregate Bond

VAB

730

49.3%

Canadian Dividend

VDY

154

10.4%

Interest

597

40.3%

August 2020 Total

 

1,481

 

12- Month Trailing

 

122,376

 

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

86,858

August

73,229

88,339

September

81,357

 

October

95,968

 

November

101,828

 

December

107,264

 

Kids’ Portfolios – August 2020

 

 

VEQT 4% SWR/ month

Son, 22 years old

536

Daughter, 19 years old

61

VEQT = Vanguard All-Equity ETF Portfolio

Retirement

Accumulation is simple. The introduction of asset allocation ETFs work well for lazy people such as myself.

Figuring out retirement income will be more challenging.

Most physicians do NOT have any meaningful pensions.

Here are my thoughts on our retirement plan.

Current Retirement Plan By Age

  1. < 65 years old:
    1. Draw salaries to fund CPP
    2. 58,700 = 2020 CPP Maximum Pensionable Earnings
  2. 65 – 70 years old:
    1. Retire from medicine
    2. Spend mailbox money.
    3. Bridge asset:
      1. Sell our office unit.
      2. Allow us to delay government benefits until 70 years old.
  3. 70 years old:
    1. Drawdown Sequence:
      1. OAS & CPP
        1. Delaying these are the best annuities.
        2. Guaranteed, inflation adjusted income.
        3. Plan to have ⅓ to ½ of our spending from this source.
      2. RRIF RMD
        1. Use maximum ALDA rules to monitor RRSP values. Current maximum is 150,000 or 25% RRIF, whichever is less.
        2. Use RMD tables to spend efficiently.
      3. Taxable
      4. CCPC
      5. TFSA

Estate:

  • PRE – Principal residence exemption. Can pass our home to heirs tax free.
  • Universal life insurance policy. Bought in our mid 30’s.

August 2020

I have more or less fully transitioned to online shopping. It. Is. Fabulous.

Thankfully I am not very picky and thus if the fruits and veggies are not amazing. I don’t care. I will eat it enjoyably.

Our family is doing well. I am grateful for our multiplex. I hear of many families who are getting on each other’s nerves now.

August has been a relaxing month. I am continuing with telehealth. My husband’s work had returned to full time capacity. We took half of August off to relax around our local community.

I do not bother reading or listening to more financial information. None of it helps me much anymore.

Having more information will not help me with the type of investing that I have chosen. I am not clever enough to figure out a way to avoid drawdowns when they occur.

My only plan is to save more and spend less. I don’t think that there will be any magic bullets for us.

I spend most of my energy thinking about risk management. I have no control over the markets. I only think about what levers I can pull when something goes wrong.

Hiring an advisor would not help me. My accountant does my taxes but he is focused only on the taxes. I need to focus on the whole picture.

There are no right or wrong answers. For my children, they can be 100% equities. For us, it’s closer to 50- 75% equities. I have minimums and maximums but no fixed goals.

When my government benefits start at 70 years old I may allow the allocation to drift higher.

I will continue to keep about 25% of our net worth in real estate. If I was to acquire another piece of real estate, it would likely be another multiplex.

If the whole stock market implodes, I would still have my homes and cash.

I have no earth shattering insights for anyone. Sadly I see none from anyone else either.

But the adage of staying safe especially around retirement makes sense. I did not research sequence of returns risk in the past. But I also would not have stopped working when I reached financial independence.

Financial independence is about options. It is not about stopping. I liked my career enough to keep doing it. Plus I am well aware that the best plans can be messed up. Because in life, it’s always something.

Asset allocation is not a goal per se. I could care less if one always carried 100% equities during their entire investing timeline. I am certain one’s tolerance for volatility drops to their boots once the regular income stops. I suspect that would be the case for us. I have zero desire to have side hustles or to hack stuff. If I need more money, I would just keep working.

I continue to DIY this month.

I have started FaceTiming more friends. It feels commonplace now. And it is a wonderful way to connect with distant friends.

I continue to make no knead bread. All. The. Time.

I am the family barber now. I find it relaxing. I am grateful that everyone appreciates my simple haircuts. Cuz if they want anything fancy, I do not know how to do it.

We even groomed the dog at home since COVID started.

My life is filled with lots of baking and lots of gardening.

Plus my home gym rocks. Big time.

My current netflix binge is Modern Family.

I still have the lifestyle of my university days. Except now, I have a career, a 24 year marriage, raised a couple of children and bought the requisite homes and cars.

But overall I still enjoy the same things as I always did.

It is interesting in life how so much changes but so much stay the same.

July 2020 Financial 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. Embrace social indifference. Learn to care less what others are doing.
  9. Embrace 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% July 2020

 

Fixed Income

34.9%

Equities

26.8%

Personal Residence

24.9%

Extra Unit

7%

Commercial Unit

5.4%

Other

1%

Our Portfolio

I treat all the accounts as one portfolio.

Portfolio – July 2020

 

 

 

Account

Ticker

Asset

Portfolio %

Corporate

BRK.B

Berkshire Hathaway

4.1

Corporate

VGRO

80/20 Asset Allocation ETF

44.0

RRSP1

VAB

Aggregate Bond

1.7

RRSP1

VGRO

80/20 Asset Allocation ETF

1.6

RRSP2

VAB

Aggregate Bond

4.1

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

 

10

 

Cash

 

31

Total

 

 

100%

Asset Allocation

 

 

43.5%

Portfolio Change 2020 ($$)

 

 

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

80,935

209,762

July

159,767

369,860

Mailbox Money- July 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.

Mailbox Money – July 2020

 

 

 

Asset

Ticker

$$$

% Total

80/20 Asset Allocation ETF

VGRO

15,599

69.2%

Aggregate Bond

VAB

732

3.2%

Canadian Dividend

VDY

273

1.2%

Interest

5,944

26.4%

Mailbox Money Total July 2020

 

22,548

 

Mailbox Money Trailing 12- Month

 

122,577

 

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

88,858

August

73,229

 

September

81,357

 

October

95,968

 

November

101,828

 

December

107,264

 

Kids’ Portfolios – July 2020

 

 

VEQT 4% SWR/ month

Son, 21 years old

578

Daughter, 19 years old

59

VEQT = Vanguard All-Equity ETF Portfolio

My finances are on cruise mode again. Thank goodness. I do not plan to make any outsized changes. I will be tracking monthly and that’s about it.

That is the point of this journey. To develop a simple process whereby I can easily manage my finances. I do not want to rely on too many “helpers” along the way.

This is how I had imagined it to be. I can leave it alone and update my totals monthly. I do not bother to read any financial news or forecasts. I try to keep an eye on changes our Canadian government is making to regulations.

One can follow the financial noise too closely. My accountant tells me what to do each year. If there are any big changes I will find out. As I discovered lately, even when changes occur, it’s not like I can do anything about it.

I am beginning to love my Loblaws grocery pick up. We did not use it during the height of COVID but we love it now. I do not plan to physically shop at Loblaws from now on.

So that has been a huge addition to my life. I love being able to spend well now.

Personal finance is really simple. Just keep doing the really boring stuff over and over. Plus automate as much as you can.

That’s it.

So many words spilled on this. It is not needed.

2020 Simplify Finances

Type

Number

Investment Accounts

8

Bank Accounts

5

Credit Cards

4

Total

17

Investment Accounts

Brokerage1 – Pre-tax accounts

  1. Holdco CCPC – CDN
    1. VGRO
    2. GIC
  2. Holdco CCPC – USD
    1. Brk.B
  3. Opco CCPC USD
    1. Brk.B
  4. RRSP – Mine
    1. VAB
    2. GIC
  5. RRSP – Hubby
    1. VAB
    2. VGRO
    3. GIC

Questrade – Post tax accounts

  1. Taxable
    1. VDY
  2. TFSA – Mine
    1. VGRO
  3. TFSA – Hubby
    1. VGRO

Banks

Credit Union

  1. Opco
  2. Holdco
  3. Trust
  4. Personal

Tangerine

  1. Personal

Credit Cards

  1. TD Visa
  2. Amex Bonvoy
  3. CIBC Visa
  4. Mastercard for Costco

My journey started with the realization that my finances were too complex. And it was not the clever kind of complexity but the junk drawer kind. I started accounts on a whim and due to pure inertia did not take the time to close them down. So they just accumulated.

At this point I am close to the number of accounts that I want to maintain. Until we retire, there is no benefit to minimizing the accounts further.

When we fully retire from Medicine, we will sell the Corporate USD accounts since these hold Berkshire. We currently can not liquidate due to the small business deduction limits. But once retired, the SBD will not matter and I will sell Berkshire.

The only addition that was made in 2020 was to start the AMEX Bonvoy card. This was my husband’s idea.

It was also my husband’s idea to start dividend investing with VDY. I plan to sell VDY once it recovers to my initial book value. Thankfully, my son’s VDY has already been sold.

We do not have much in VDY. But my husband seriously needs to listen to me about keeping things simple.

That is why I often chuckle when I read about usually husbands who want to be “aggressive” with their investments. Many of them think that their wives are onboard with the whole idea. I have a feeling most of these investment aficionados will leave their wives with unmanageable portfolios.

A few guys make sense such as Gasem. He clearly states that he uses a well respected advisor whom he has given clear instructions to.

Try not to leave your spouse with complicated DIY portfolios.

I am simplifying everything because I recognize that my so-called “helpers” love complexity. My accountant and lawyer do not dislike legislative changes.

I will gladly accept complexity when there is a lopsided benefit. Otherwise I plan to keep it simple.

I performed an estate freeze for our corporation and started another family trust. I can not make these things simpler. I need help with these things. The rest I can do myself.

Other “helpers” are telling us to start another permanent life insurance policy. No thanks. I am not interested in maximizing money for my heirs. I insist that we maintain full liquidity of our investable assets during our lifetimes.

That’s another rule that I have had to implement. I tend to be overly supportive and will make poor financial decisions because of that.

So my first rule now is to make sure that whatever I do, it has to be easy and enjoyable for me. I shall do no harm to myself, first and foremost.

I have seen family members generously giving away what they could barely afford. And then resentment reigned supreme when they watched their gifts spent frivolously. Money just isn’t worth ensuing drama for.

Thus we decided to support the children’s education. We encouraged them to stay locally for their undergraduate degree.

We will support their housing by encouraging them to stay in our current units. I do not plan to give them large down payments for their future home purchase. Homes are too expensive in our area anyhow.

And do not get me started on weddings. We paid for our own and it was great. They can certainly do the same. I have zero need for these displays of largesse.

Now our finances are more manageable. My investments are really simple. I barely look at them anymore.

But it has been a process. I started with ETF investing in early 2018. Even though VGRO was around at that time I was concerned that it was not optimal for my CCPC.

Then Dec 2018 hit with the drawdown and I tried my hand at tax loss selling on Christmas Eve. That did not go well. Not only was it stressful, I think I lost money as I used market orders. The MD website is terrible for DIY trading urgently. Plus I likely just stunk at it.

There is all this talk about increasing tax rates, etc. Thus if they are planning to take my profits away, I plan on not working too hard for it. That is one of the reasons that I decided against more investment real estate. It would have been too much work for us.

Risk is not just about losing money. Risk is also about damage to one’s psyche. I just buy the global market with an index fund.

If it does not work, I haven’t spent much bandwidth being clever either. Furthermore I have no idea how to rescue the plan except to hold more fixed income. And maybe we could keep working and spend less. Otherwise I have nothing else up my sleeve.

There is a lot of peace that comes from knowing that there is only so much that I am able and willing to do for my finances.

Now that I have simplified things, dealing with my finances is a more enjoyable process. Whatever happens will happen without my meddling.

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.

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