Investable Assets – 71% of Networth
- Real Estate (unleveraged) – 19%
- Commercial unit – 37%
- Residential unit- 63%
- Paper Investments – 81%
- Equities – 20%
- Fixed Income – 80%
Equities dropped 24.5% to 20% during the month.
My equities portfolio decreased significantly. This was due to selling Amgen as well as liquidating VGRO in my personal taxable account. Once again we are going to invest in VDY.
My husband wants a portion of the portfolio in a dividend ETF. I could not find too much fault with this. I only requested that I set a limit to the amount this would be. I will make certain that it remains a small percentage.
With the sale of Amgen, we have breached the SBD limits.
Our solution is to work less next year. My husband is looking forward to having more free time. He has already started decreasing his clinical work. It is not worth trying to optimize everything. Plus no one wants to work for diminishing returns.
Being flexible is an important skill in life. It helps one with their relationships (think children) as well as with one’s finances.
I will never have 100% equities. I like owning VGRO which is made up of 94% of the global investable stocks and bonds. I prefer the process of rebalancing between stocks and bonds.
Thus no “road to 100% equities” for this doc.
No evidence or excel sheet could nullify my disbelief if I ever did that to our portfolio. I know myself too well. I may not be risk averse but I am not a risk seeking type of investor either.
Why Choose So Few ETFs?
The reason I am using ETFs is to hope to keep up with inflation over the long haul. I am too lazy and lack adequate skills to build a large investment real estate portfolio. I do not lie to myself and say I would not want to. Instead I admit that I am likely unable to.
I accept the volatility of these paper investments. I do not believe equities investing is for the faint of heart. One almost requires great dissociative skills to not allow the market wobbles to impact one psychologically.
Using few ETFs allow me to see what my plan is for our portfolio. Furthermore, I believe that there are numerous ways to build a good enough portfolio.
But the ultimate way to sink one’s portfolio is to sell off when the markets have taken a beating. That would be a certain strategy for failure.
The honest reason I am using so few ETFs is because I don’t think it really matters. Just get some low cost, broad based index funds. Many would have done the trick. I have no idea which ones are much better and I don’t believe anyone else knows either.
- To 65 years old
- Draw salaries from our corporation.
- 65 to 70 years old
- Rental income
- RMD? May need to draw down the RRSP to optimize taxes.
- 70 years +
- RMD – required to draw at 72 years +
- Dividends. Withdrawal rate from this should decrease when CPP and OAS fully online.
- VGRO 80/20 AA
- Principal residence exemption (aka leave the house to the kids)
- Urban multiplex
- Estate freeze
- Charitable donations
- Life insurance
- The Basics
- Power of attorney – including medical
- Plan funeral costs. We bought our burial plots in our 30’s when we had the children.
I hold only one ETF in our TFSA accounts. I am investing these accounts as if they were for my children. I am not interested in forking over large amounts to my kids at once. But with their decades of compounding, even small amounts will be significant. That is the plan.
It will be a very simple plan if it works out. I contribute the full TFSA deposit on January 1st and invest it on the first trading day of the year. I also set up a dividend reinvestment plan. I essentially do nothing for these accounts all year.
I wish all my accounts were this easy.
It would be great if my children can use their TFSA and RRSP accounts alone to save for retirement. It would be simple and elegant.
The personal residence exemption wherein one can sell their principal residence tax free may be altered in the future. There is stirring that the government may diminish this last bastion of Canadian tax exemption.
Thank goodness I did not listen to my first accountant who told me to buy the most house that I could afford. Things that worked in the past are not guaranteed to work forever. I had learned NEVER to be too attached to one strategy since almost anything can be changed in the future.
The benefit of owning an urban multiplex is that we all start living our lives optimally now. No one has to wait for someone to die before they get to use the asset. Believe me, this is something that I am seeing more with the high price of real estate in Canada. I witness vultures circling some seniors.
With all the legislative and government changes, it makes sense to not try that hard. That is why passive paper investing works for me. I simply do not care much about any of it anymore.
I can see that it will likely not make a huge difference either way. I would rather focus on making my paperwork simpler, my investments simpler and spend my energy on things I enjoy.
Planning For My Kids
- Avoid large educational debt
- Attend public schools
- Live at home during undergraduate degree.
- Live close to school, work and shopping. This makes life so much easier.
- TFSA & RRSP
- VGRO with dividend reinvestment plan. Set it and forget it.
- Keep finances simple. There is zero need to increase financial complexity. Best to avoid the complexity to begin with.
- Just use the tax deferred and tax free accounts for as long as you can.