Finance

Do You Have Control?

How much control do we really have? Here is my take on some random topics.

Control? Yes

How Much You Earn

As a Canadian physician you are usually self-employed. You can ramp it up or down as you darn well please. No one says that you cannot do locum work and work more on the weekends.

If you need to earn more money just get out there and do it. That once again is the benefit of being an independent contractor. Most of us are familiar with how to work hard.

How Much You Save

This one is self-explanatory although many choose to ignore this. There are innumerable ways to save money. It is so much easier to save money by just leaving things alone.

Almost anything one needs can be acquired from Costco. No one says that you need to go to some high class, high society blah blah. Seriously? Thank goodness I would not even have been admitted to such things. That saved me a lot of money and hassle.

I am not even very frugal. It just happens that my consumption habits are similar with what a Costco warehouse sells. I keep it simple that way. If I can’t find it at Costco, I probably don’t need it.

Where To Invest

You just have to know yourself with this one. In fact spend more time thinking about this than anything else.

If you are someone who has to always be doing something and you need to have a lot of control, active real estate investing may work.

But I tend to be lazy and efficient. Index funds will work for me. The biggest problem with index funds is if you try to do too much.

I know nothing and tend to do nothing so this is a good enough strategy for me.

Of course there are ways for people to buy winning stocks. I have done that myself. The only difference for me is I sort of lost interest along the way. At least I have learned a lot more about my investing habits over time.

Remember that just because someone else CAN’T do it, doesn’t mean that you can’t. But on the flipside, just because someone else CAN do it, doesn’t mean that you can.

I wish someone had given this advice to my younger self. It would have saved me a lot of effort and frustration.

When To Buy And Sell

I am a big believer of buy and hold real estate. I am also a believer of buy and hold for equities. I have zero belief that any movement that I make will make a big dent in my overall performance. All it will do is increase my transaction costs.

You have to be someone who is vigilant to effectively pull off the busy stuff. I recognize that I regularly drop the ball and therefore I spend more effort limiting periods where I have to actually be on.

That is my point with debt. You might get lucky and be able to leverage and gain a greater return than without the leverage. However when the knife cuts the other way, you might be unable to hold your asset. Or worse, lose more than you actually have.

Control? No

The Stock Market

This one is a no brainer. No one controls the stock market. There are so many smart people and smart computers who are unable to control the market. I would not be able to beat them. And I wouldn’t try nowadays.

That is why I ascribe to the principle of planning around these volatilities. There’s nothing wrong with volatility. The only problem is trying to draw a stable income from volatile assets. Solving that problem can be hazardous to your wealth if you called it wrong.

Legislative Changes

We have seen a flurry of tax changes with our professional corporations. We’ve also seen tax changes come from holding real estate in various jurisdictions. I no longer doubt that there can be real legislative risk for my assets.

I believe in diversifying my asset allocations. I also believe in diversifying my product allocation.

I believe in using government benefits, tax-free, tax deferred, taxable as well as corporate accounts. I even believe in buying annuities when one can benefit from mortality credits.

The only sure thing is that change will occur. Don’t say I didn’t warn you.

Financial Mishaps Of Your Family

Unless you live under a rock, the financial lives of those close to you will impact you. I don’t believe some of those seniors planned to go bankrupt. It was usually due to some spending shocks. These could come in the way of unexpected home maintenance, auto maintenance or unexpected health expenditures.

But it could also come from parents wanting to get their children into the housing market. It is challenging to help with buying another home as one careens towards retirement. Or worse yet, they were already in retirement. That is a large expense burden.

I have read on the internet the financial plans for some young people. There is usually extreme simplification. There are people who retire with multiple young children. And both parents simply decided not to work.

My kids were very inexpensive when they were younger. But there was a massive uptick once they became university aged. There were expenses that came about that I never saw coming. I do not believe that I’m alone.

I have a feeling that these younger families do not even know what to be afraid of. And they believe that a modest amount of money will be enough.

The problem with curveballs is that they come fast and out of nowhere. Because if you could see them coming, you could have planned for it. Dah!!

We have some semblance of control in our lives. But it would serve us well to recognize that it is often better to have back up plans for all those moments we can not control.

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