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.

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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.

2019-09 Month Review

2019 is going quickly. Our fall weather has certainly started. It changed very quickly this year. Once the kids started school, the rain started as well.

I have two university aged children living in one unit in our multiplex. This has been working smashingly. They have a lot of privacy. I also have a lot more privacy. Do not discount that as a parent.

Live At Home During Undergrad

I have outfitted the children’s level with a good washer, dryer and a Roomba. Then all that is left is to send down some prepped meals occasionally.

I plan to install a dishwasher next Spring. They will be so pleased.

There has been multiple benefits to owning a multiplex. This has allowed my children to stay home during university. The public university is a 10 minute drive from our home. It has allowed us to share one family car. But usually my children take public transit.

I have many friends whose children are living away from home during their undergraduate university years. They say it is approximately an extra $15,000 beyond tuition.

And this is after-tax dollars. This 15,000 is only for eight months of living.

The only reason I went into debt after university was because I had to live away from home. I did not want this for my children.

I figure that they may not have the ability to stay locally for postgraduate studies. I am under no delusion that the savings will be perpetual. But this allows us to have a buffer in case their education becomes prolonged.

Retirement Risk Mitigation

My outlook on retirement finances are becoming clearer. I will not juice my dividends and end up lacking diversification. I believe there is no free lunch so why trick oneself unnecessarily.

I think it is very important to develop some inflation adjusted guaranteed income stream. I have reviewed many approaches and none of them have an easy solution.

There is all this talk about buffer assets. All this means is having more money around. One could use cashflow real estate or higher paying dividend income assets. This all comes with some risk. There’s definitely no one-size-fits-all.

Retirement will be tricky to say the least. Thankfully we live in Canada and have a solid healthcare system. It might be very difficult to get super wealthy in Canada but we have a good social system.

One of the best things in retirement is to have a large portfolio with some fixed income or bonds. And delay your government benefits which will be better than any annuity you can purchase.

I plan to keep our living expenses close to what our government benefits will pay out. Here are some resources I plan to use.

  1. CPP/ OAS
  2. RMD – required minimum distributions of the RRIF
  3. Dividends & Interest
  4. Commercial Real Estate Unit

That should do it overall. I am confident that I can live on the government benefits alone. I have zero issue with frugality.

I doubt that I would liquidate during a market downturn.

But that is because my buffers are built in. I do not invest with need for massive growth. I assume that some growth will happen but I do not plan with that in mind.

My husband says that perhaps the government benefits may be cut. I remind him that the government benefits impact everyone. If the government cuts one part they will have to supplement it with another.

I trust the government benefits more than I trust my own investment acumen. Good gracious yes!

Many personal finance folks are quite vigilant. But I find that I often take my eyes off the ball. That is why these asset allocation funds will be perfect for me. I will stop watching this after a while. I know what I am like.

Stop Electrifying Money

I recently listened to a podcast about kids and money. The guy has a laundry list of things to do. I admit that my kids have NEVER asked me for anything. Seriously.

Perhaps it was because I never electrified money. Their cousins talk about money all the time. But they simply regurgitate the values of their parents.

I think my children have watched me closer than I cared to think. They have always seen my relative disinterest in material things. They have watched me sculpt a wonderful life which is extremely affordable. I do not tell them one thing while pining for something else.

They have observed how there is almost zero correlation between my happiness and how much I spend. They have witnessed my allergy to luxury. They have certainly heard me call out bull crap about things that do not make sense.

That is the most powerful message that I have always conveyed. You get to decide what you want. You are not an automaton.

And if you want something, just own it. Don’t make excuses. Seriously that is all I ever expected of them. Just be conscious.

Okay that was my rant after watching this dad’s talk trying to teach a course about kids and money. Good luck with that. Kids do not learn via PowerPoint presentations.

How about this. Teach yourself about money first. Hem in your needs and wants. Figure out a life where money is just something whirling in the background.

Many parents who are anxious about how their kids will turn out with money. The more worried or afraid one is of something, the more the subconscious will make that very thing appear in your life.

The subconscious is a veritable magnet for one’s deepest fears.

All parents want the best for their children. I would rather focus on the things I can control.

I can control allowing them to live in the unit of our multiplex. I can control owning a home in a convenient location so they are not forced to buy cars. I can control locating a home close to a University so that they are not forced to move away during undergraduate years.

But I tell them that this is what I want to do. If they want something else, they can plan for it themselves.

My parents did not have to do back flips for me and my siblings. We all did just fine.

I want to make sure that when we help them, we do not over stretch ourselves. That would not benefit either of us.

Just think about that Operation Varsity Blues scandal. That should remind parents of the harm that can occur from trying too hard for your kids.

2019- 09 Do Nothing

I am a female physician.

I am interested in building long term wealth.

I am also extremely lazy and do not believe that I am clever like. at. all.

If there is an easier way to get something done, I usually find it.

I rarely care about more, better or different.

I have often found that less is more. In many beneficial ways.

As a physician, one earns much more than the average.

Save on the big three- house, cars and food. It seriously is that easy.

There are three main ways to build wealth.

  1. Real estate
  2. Start a business
  3. Equity investments (paper)

My thinking has evolved.

I always knew that I had zero desire to start a business short of our medical practice. That was enough.

We dabbled in real estate investments. The best investments were our multiplexes and our office unit.

We ended up using both of them ourselves. It was very efficient and effective.

Aside from holding our office unit and another two rentable doors, that’s enough real estate for me.

All my real estate is paid off. The cash flow from those paid off units can support our living expenses alone.

Real estate on a bigger scale is very doable but I am too lazy for that.

There must be others out there who are truly as lazy/ disinterested as I am.

I do the least amount for “travel hacking”. Since even after collecting the points I have to waste energy trying to get the best deal on how to optimize the spending. Ick.

I limit my energies on things that I do not care about. I avoid luxury travel. I am one of those folks who would literally say no even if you gave it to me for “free”.

I realize that I cringe at any thoughts of side hustles. If I need more money I would simply work more.

It took me a long time to realize that “there is always a price”. Nothing comes for free. That is a fallacy.

I am very careful of the price that I am willing to pay nowadays. The payment comes from many unsuspecting places.

I am unwilling to pay the price of wasted mental bandwidth. There is a reason I buy these asset allocation funds.

I know that there are more tax efficient ways to invest. But I frankly don’t give a darn anymore. It’s good enough for me.

Furthermore my accountant has more tax minimizing voodoo up his sleeve than I could ever dream up. So hire a dang good accountant. Pay up for good financial advice.

My accountant can promise me the tax refund. Your financial advisor can not promise you a return on your investment. So I pay for real advice not woo woo.

Building wealth for us comes down to earning a good enough income. And avoid/ limit the top three big expenses. Then invest in a low cost broad index fund.

That is the building block.

Know thyself. If you are as lazy as I am, do not start a side hustle. Do not leverage real estate too aggressively. Just keep things simple.

I agree with spend on what you truly value and limit spending on the rest.

I value my home.

Here is a sprinkling of how I built wealth.

  1. I had a lower cost lifestyle.
  2. My kids went to public school.
  3. They currently attend public university and live at home.
  4. My kids take public transit or carpool.
  5. Almost all our entertainment expenses are low or free.

Our biggest expense.

  1. We dine out a lot. We are improving.

It is fine to make occasional large purchases. Just don’t make a habit of it. Do not chronically elevate your lifestyle. It is the recurring expenses that really eat away at wealth.

Whenever you think that you could have done better. Realize on the flipside, you could have also done a lot worse. Hope that helps you feel better because it certainly does for me. Be grateful.

My favourite hobbies are all free or low cost.

  1. Reading
  2. Writing
  3. Walking
  4. Running
  5. Weight lifting
  6. Bingeing Netflix
  7. Listening to music, audiobooks and podcasts.
  8. Knitting
  9. Meal prepping

And I have had almost the same hobbies since I was a kid. Life is not complicated. People really do so much badness to themselves.

And I can say that because I certainly did badness early on during our marriage.

I learned in time that all the things that made me happy, I already knew as a child.

Adults over complicate everything. And many of them are very unhappy. Maybe strip away all pretense and examine what actually makes you happy. The problem is folks keep adding more complexity and busyness.

I just tell the truth when friends ask me what I’m up to. I just say “not much”.

My good friends already know that that’s closer to the truth. So why bullshort each other?

So you can build wealth by avoiding things.

  1. Avoid luxury.
  2. Avoid clever investment strategies. It’s only clever for the folks selling it to you. You will likely be taken. I need to follow the simplest of strategies.
  3. Avoid busyness. Most things are not worth even striving for. Figure out the few you actually care about.
  4. As a woman investor I avoid anything which requires networking. I realized that I could never build those networks reliably. Major insight when I figured that one out. That’s why I stick with super duper simple ETFs now.
  5. I avoid “exclusive”. Any high end exclusive strategy scares the hell out of me. I am often the patsy during these exchanges.
  6. I avoid “exclusive” education. I have minimal ability to not call out BS. I would have never kept a straight face for the silly private school applications. What 5 year old has references? Are you kidding me?
  7. I think most things can be learned for free off the internet.
  8. Every time I learn from a mistake. It is always from another lame brain idea I followed AGAIN.

The only passive income I have seen is from interest and dividends.

Real estate is not passive.

Side hustles are NOT passive. Good grief.

If I were super wealthy, I would just live off my interest and dividend income. Period.

I would buy VGRO (80/20 asset allocation fund) and live off the dividends. That’s it.

I would not try to juice the returns with dividend strategies which limit my investment diversification.

I would not care about sequence of return risk. Since I would not need to touch the principle. Ever.

I would not care about “spending efficiency”. If there is money left over, I have kids and other family who can use it.

I do not believe in organized charity. I just give money away to people I know. I do not need or want the tax break.

I think there are plenty of women who would like this. Most women I meet don’t give a darn about investing. But many of them leave it to their husbands who fritter it away.

I just went out to dinner with my male plastic surgeon friend who trades naked put options. He’s likely picking up pennies in front of a steam roller.

It took us decades to learn this in our marriage. But I kept track.

Every time my husband managed the money, we lost more. And every time I managed the money at least I didn’t lose it. Trust me, neither of us grew it.

Insight again.

So the easiest way to build wealth is to avoid all the baubles almost everyone tries to sell you.

Avoid luxury, exclusivity, being clever and aggressive leverage. There is nothing more, better or different out there.

And the best thing I learned in all my years is this.

Even if it works for someone else. It still might not work for me.

Because my strengths and weaknesses are very particular to me. Da dum!

2019-08 Passive Income

2019-08

YTD

CCPC

915

54,017

Personal

768

16,999

Total

1,683

71,017

Well this certainly has been a month of low passive income. However, it is because I have stuck most of our cash into 1 year GICs in our local credit union. Those will not show income until I cash them out.

I will have a better idea of what my true passive income will look like once I streamline my investments.

All of this writing and documenting is really for my own benefit. I need to write this down to make myself accountable. Each week I am forced to review the clutter in my finances. That changes how one behaves.

I used to just glance at it superficially. But I have to explain my own reasoning now. It does help to keep me on track.

There are many ways to FI. There are many ways to define FI. The most important aspect of it all is to be able to define it for yourself and those you love.

I know the real wealth from equities do not come from the buying and selling. I know it is from just owning and waiting for it to grow. But as you can see, when you have a large amount to throw down, it is behaviorally very difficult.

I find it extremely easy to buy the investments for my kids’ accounts. Once they have the money, I just go and buy the ETF. I barely even register what price I bought it for. And I simply do not care. They have decades and decades for it to marinate.

That is the best way to buy your investments. Buy it when you have the money.

I have decided to stop posting networth numbers. I can continue reporting the passive income. Plus I can start to build my kids portfolios. That will be fun.

Now anyone can relate to that. Furthermore it is much simpler to start with a blank slate.

I would advise my kids to keep it very simple. I will warn them against collecting accounts. It is very annoying.

One will not get clever here. Because I am not clever. I need simple since I find it very hard to keep things straight otherwise.

That was my insight with respect to real estate investing. I could see the benefits of leverage and the inherent power of it. However, I realize that I was likely average as a manager. I could do it but I was never trying to optimize this.

What I know how to do is to leave things alone when bad things happen. I enjoy not being called into action. That is why I love these asset allocation funds.

Are they the most efficient tax- wise? Nope. Are they the best strategy out there? Probably not. But the strength is that I can do this easily.

The whole point of wealth in this stage of my life is for simplicity and ease. If I have to vault massive hurdles for a higher reward, I would not bother.

I am like most women. I have to manage the money but it is simply another thing on the to do list.

And I am planning to shorten my to do lists.

That is my laser focus now. All women can relate to that.

2019- 09 My Dream Portfolio

I am focusing on my dream portfolio more and more. It is not about adding but about streamlining.

I started this blog with way too many accounts. My finances were bleeping complicated. And I never intended for any of this to happen.

Financial complexity are like weeds in your garden. If you do not guard against them, they will creep in.

I am certain that I can keep things relatively simple by gunning for this structure.

Wrapped Accounts- Retirement Use

  1. CCPC:
    1. VGRO- 80/20 AA ETF
    2. ZDB- discount bond ETF
  2. RRSP:
    1. VAB- intermediate bond ETF

Unwrapped Accounts

  1. Personal Taxable:
    1. VDY- Canadian High Dividend ETF
    2. HISA for contingencies
  2. TFSA:
    1. VGRO- 80/20 AA ETF
    2. Use for estate planning

And that’s all I really need.

My retirement account will have an overall AA of about 60/40 when fully invested. While my estate planning account will be 80/20 AA since it is being invested with the kids in mind.

My Son’s Accounts

  1. TFSA- VGRO (80/20)
  2. RRSP- VGRO (80/20)
  3. Taxable- VEQT (100%)

General Plan

  1. Dividend reinvestment plan in all tax sheltered accounts.
  2. Avoid dividend reinvestment plans in taxable accounts.

I am keeping this very simple because I recognize the inherent market risk.

Risk mitigation will not come from only my paper investments. It will be about the whole picture.

First of all, we plan to keep working. So I suppose we are still in the accumulation phase. Okay I will come clean. I have not really worked for almost a decade. But if my husband did not earn, damn right I’d get my butt out there and earn it.

My husband and I are a team. We have long decided that either one of us can earn money. We never cared who did it.

There is a reason Warren Buffett continued to draw his 100K salary. I heard he even takes his full social security. Good man.

The reason he is able to withstand these 50% drawdowns is due to the fact that he needs very little of it. His living expenses could likely be taken care of by his salary alone. Plus he is a billionaire.

I saw an interview where Charlie Munger said he could handle a 90% drawdown. Holy crap. But it puts it into perspective how these guys look at the markets. It truly is a game for them.

But I am ‘’tis an average investor. Risk mitigation will not come from my stock portfolio.

I plan to keep working and continue with our modest spending.

That has always worked.

No More Networth Reports

We recently went out for lunch with some friends. Our friends started to talk about personal finance blogs. One of the guys started chatting about my blog bud Dr. Networth’s site. This peaked my husband’s interest. Oh no!

So I best get these networth reports off the site. It will be okay if my husband finds my site. But he might recognize our numbers….dang it.

Oh well. It was a tad fun while it lasted.

Rather I will continue documenting my portfolio building. I am loving the passive income we are starting to generate. I admit passive income is something that I have a bias towards.

I can see that over time I won’t focus on the portfolio totals. I will focus on the income it generates instead.

That is what I want my kids to learn. I want them to focus on the shares they own and what that means for them.

Simplicity Quest

I tried to simplify my accounts by switching them all to MD. It seems they don’t want my business.

My advisor tells me that they will “grandfather” my accounts. But any new accounts will need “approval”.

I think they are moving to more AUM portfolios.

I treat my MD accounts like discount brokerages. I do not pay any extra fees. It’s no wonder they don’t want my business.

Thus I opened my first personal taxable account with Questrade instead. It was so easy. So thanks MD for making the decision easy for me.

Like, whatever eh?!

2019-09 Portfolio Update

The school year has begun. My children are attending university with their cousins. I still believe school is for socializing. That was always the most fun aspect of it all.

I am happier that they can support one another during this life phase than what they major in.

They will carry the memories of this stage of their lives together than what they actually learned in class.

Woo woo done. Onto my investment journey.

I bought another 1500 shares of VGRO in my CCPC. Nothing all that exciting.

ETF

Shares Added

Shares Total

VGRO(80/20)

1500

12,326

I plan on revving up to 25-30% equities in our asset allocation.

But asset allocation is not a goal. It is more of a guideline. It appears to be a rather sloppy science.

While designing our retirement plan, asset allocation would make a part of it. However the other parts are more important. Such as flexibility in spending, knowing our numbers for a basic versus a more spendy budget, and simply saving more. That’s where tracking comes in very handy.

Being able to define the amount we would need from a guaranteed, inflation adjusted income. I would need a safety floor since I would be unlikely to tolerate market risk without it.

I have been giving some thought to how I would like my portfolio to look like in their various accounts.

My Dream Portfolio “Someday”

Taxable- CCPC (Retirement)

VGRO + 500K ZDB

RRSP (Retirement)

VAB (DRIP)

TFSA (Estate)

VGRO (DRIP)

Taxable- Personal (Spending)

VBAL + 100K HISA

  • VGRO: 80/20 All In One ETF
  • VBAL: 60/40 All In One ETF
  • VAB: Intermediate Bond ETF
  • ZDB: Discount Bond ETF (better for taxable accounts)

It will take time to get here. Folks underestimate the energy required to build a simple portfolio.

The energy comes from unwinding prior inefficiencies. There are tax consequences which must be adhered to.

If one had all their investments in tax sheltered accounts this would be simple. However even my 21 year old son does not possess that so I don’t feel so badly about my complexity.

I plan to enforce simplicity by moving my TFSA accounts to the same brokerage as my other accounts. Currently I am with Questrade and MDM. I will only be with MDM after 2020.

I am getting annoyed with having to log into so many different accounts. With our accounts at one brokerage I can sign in with one password.

Furthermore I was becoming concerned that Questrade did not have a physical presence in my city. I figure if we lost all our paperwork, we could head on down to the MD branch locally and see our advisor.

Come to think of it, my husband should visit him since he hasn’t seen him for over a dozen years.

My children’s accounts will stay with Questrade since they have a nicer trading platform. Furthermore my children have much less assets.

Many have dreams of massive wealth. I dream of a simpler financial life. I am on my quest for less accounts and to streamline the institutions I deal with.

My husband and I recently went on a trip. I wrote down all our accounts for the kids “just in case”. It was freaking brutal. And I have been actively trying to simplify this for the past year. Good grief.

I need to keep making all this simpler. That’s why I am beyond caring about being clever. I care about not losing my stuff. Literally.

I am clearly on a different trajectory. I don’t really care all that much about asset allocation. I don’t really care about minimizing every fee imaginable.

If I can just stay in my all in one funds, I will be happy.

The whole point of my quest is to build the simplest portfolio that I can get away with. I have a feeling that my risk management will have minimal to do with my investments.

Buy and hold index investing will be fine for what I need to accomplish. In fact I could likely do all this with minimal investing.

I am beginning to sense that maybe all this investing might not move the needle much for us.

I plan to break up our portfolio and set the asset allocations for what each portion needs to accomplish.

Retirement funding will likely account for most of it except for our TFSA (tax free) account. That portion I plan to leave as our estate. That is also why it is sitting in an 80/20 allocation.

I will likely have our “retirement” funds in a 60/40ish portfolio.

The only benefit of increasing the equity allocation is to have a larger terminal portfolio value. But that will come with higher volatility.

One does not get to increase their safe withdrawal rate just by increasing ones’ asset allocation.

But all this will depend on how much our government benefits will top out at. Also we do not know how much our portfolio will pay out in dividends.

I simply have not invested this way long enough to know if my numbers are accurate yet.

Plus we plan to keep working at least part time for another decade. So we are a bit far off from needing to live off our portfolio.

Perhaps I will get more accurate with the passage of time. But for now this will be good enough.

My quest for financial ease and simplicity continues.

2019-08 Month Review

There is something awesome about technology nowadays. I am currently sitting in a Starbucks while waiting for my husband who is fishing. I can write this post on my iPhone. That is amazing.

New Stuff

I made a great purchase this month. I bought a new MacBook Air since my current laptop is over 9 years old. My old laptop seems to not want to die so I will keep it as a backup in my office. I am sure it will succumb to something bad just when I need to rely on it the most. Thus I got a new computer.

We also started a new personal taxable investment account at Questrade. I love the Questrade platform. It is so easy to use. Plus I dislike paying 9.95 per trade and I can buy my ETFs for free instead. Fees matter and I do not like paying them. I will buy VDY in this. This will be a spending account.

I am currently with MD Financial which has been bought by Scotiabank. I have a feeling they will try to drive us to an AUM model. Or else they will siphon us to the discount brokerage Qtrade. So I may have to port my accounts to another bank in time.

My husband is well on his way to part time work. We are not big travellers but we enjoy outdoor activities close to home. I simply love being in nature. He has too many interests so I do not think being bored will be a problem.

My current investment tenets are simple.

  1. Asset allocation funds
  2. Automate as much as I possibly can.
  3. Simplify as much as I can.

I had been wasting energy this year wondering what the better strategy would be in terms of withdrawing our OAS or RRIF earlier.

After meeting with my accountant, it seems it does not matter. He insists that we wait till the latest moment to draw all of it- CPP, OAS & RMD. He needs the time to perform accounting voodoo on our corporate account.

I have limited idea what he is doing but it involves taking funds out of the corporation more tax efficiently. And I am all for that.

He laughs at my CPP plan. However, in the next breath he also talks about how strained many doctors are for retirement income. Interesting.

I love how Gasem describes embracing a middle class life. That is a fact lost on many physicians. We might all earn a lot but most of us are going to spend a lot for our own retirement plan and benefits package.

Folks who are employed forget that their employers subsidize their lifestyle massively.

We pay for our own health and dental benefits, retirement plan, sick days, vacation pay and way higher taxes. The list goes on.

After paying all of that, you are likely left with a middle class paycheck.

As a self employed doctor, I have never been paid for a sick day or vacation pay. I never even had a maternity leave. I took three weeks off for my son and two weeks off for my daughter.

If a female employee had to do that, there would be hell to pay. So I think most folks should stop the whining and think about how good they really have it.

I am grateful for how I did it. I am designed for being self employed even with its drawbacks. I have always had difficulty with working slower just to fit in. I prefer to “eat what I kill”. I prefer to be rewarded if I work harder.

That was why salaried positions were always toxic for me. Everyone worked so bleeping slow. I wanted to get home to my see my little kids. I had zero desire to waste time at work.

My patients often worked with me to make that happen. I respected their time and they returned the favour. Folks generally treat you fairly if you do the same for them.

Doctors are easy prey for financial complexity.

I recently met up with a friend. He is the head of urology in his big city hospital. Blah blah blah. I can not keep up with his ever expanding titles.

He tells me he is having a bet with his surgery colleagues to see who can make more in the stock market over a few months. I tried to tell him about index funds and he was having none of that.

That is the biggest problem with physicians. They think they are clever and many have massive egos which require tending to. That is a deadly combination when it comes to investing. Sharks love to circle this easy prey.

Doctors do not realize the real world is NOT about how well one can memorize and regurgitate facts.

Even within the financial blogging world. I start to see the oft quoted fatfire. And all these guys own mainly equity portfolios.

I am a recent convert to equities. But already I can see relying on a fixed income from such a volatile base would be fraught with land mines.

And then needing a six figure income from these volatile assets would only exacerbate this.

The only way to mitigate this is to keep a large pile of fixed income and keep your withdrawal percentage very low.

There is a reason the super frugal FIRE guys survive. They do not seem to “need” that much income. When you have such a low burn rate, it is very easy to grow wealth.

It is only when folks develop fuzzy logic with this that it all breaks down.

I read recently that the best correlation with wealth is the ability to save a lot and to start early. I think it really is that simple. Everything else is just noise.

I plan to stop doing more stupid to ourselves. I plan to guide my children to avoid stupid and save themselves lost decades.

Money has certain immutable rules for the majority of us. It is best to obey these to some extent.

I would have never FIRE’d. My ole plan of keep earning to pay for yearly expenses is solid. It is the same plan I want us to follow until we are 65 years old.

No need to freak ourselves out by relying on our savings until we are much older. And I never would have fully retired with kids still young. I don’t see the point? There are too many unknowns in that scenario.

Then I will start using the phrase “the kids need some skin in the game” verbiage because I forgot to fully fund their university expenses. That is pure silliness when you make as much as a physician.

2019-07 Passive Income & Portfolio Review

2019-07

YTD

CCPC

1,756

53,102(1)

Personal

4,829

16,231

Total

8,158

69,333

  1. Estimated Loss in SBD room = 15,060.

I update these numbers monthly now. It makes one look at their finances differently. I have never looked at the cash flow from our paper investments in the past. I was used to reviewing cash flow for our rental properties. Admittedly this is more fun. Because to receive this income, I do nothing.

This is my definition of passive income.

You might get a 50% plop down in your capital value with equities. However, nothing in life is free. The ability to capture investment returns by doing nadda is something that I am immensely grateful for.

My children are very fortunate to start investing during the release of the all-in-one funds and the index revolution in Canada.

On a side note, I added another 1000 shares to VGRO in my CCPC.

I could not resist with the recent volatility.

This money stuff is a bit of a game. One needs to be a tad philosophical about it all. If you are one to react with great emotion to this type of investing, perhaps real estate would work better. Or hire a financial advisor who can talk you off the ledge when the need arises.

I have come to the conclusion at this stage in my life that I want less hassles. I want investments that I can walk away from and they pretty much take care of themselves.

I am doing this with Vanguard Asset Allocation ETFs, intermediate bond ETFs and dividend reinvestment plans for almost all of it.

The more that I can take me out of the picture, the better my results should be.

Here are my current portfolios.

  1. Retirement Portfolio– @ 40% equities
    1. CCPC:
      1. VGRO [DRIP]- 80/20 ETF
      2. ZDB [DRIP]- intermediate bond ETF (tax efficient)
      3. Currently at 22% equities, will be 40% at year end.
    2. RRSP (tax deferred):
      1. VAB [DRIP]- intermediate bond ETF
  2. Contingency Fund:
    1. Tangerine HISA (high interest)
  3. Estate Portfolio:
    1. TFSA (tax free)
      1. VGRO [DRIP]
  4. Kids’ Portfolios:
    1. TFSA- VGRO [DRIP]
    2. RRSP- VGRO [DRIP]
    3. Taxable- VEQT– 100% ETF

We reached our plan of 5 M in our retirement fund. My husband is working on a 500K amount to use for laddered GICs when he actually retires. This will serve to buffer the portfolio if dividends do not meet our living expenses.

The newest iteration was adding VEQT for my son’s taxable account. It makes sense since he is only 21 years old. It only has cash distributions once a year which will make the paperwork less cumbersome during tax time.

I had entertained having him buy VDY (high dividend ETF) in his taxable account. However, he was crystal clear that he does not want to stop working completely even with FI. He did not feel the dividend tax credit was worth building a less diversified portfolio. I agree with him.

I swear he makes clearer decisions than my husband when it comes to investing.

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