2020-02 Mailbox Money

Mailbox Money- February 2020

My investment philosophy is simple.

I have zero alpha.

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

February 2020 Mailbox Money

Asset

Ticker

$$$

% Total

Aggregate Bond

VAB

773

6.5%

Canadian Dividend

VDY

82

0.7%

Discount Bond

ZDB

928

7.8%

Interest

10,087

85.0%

Total

11,870

100%

Cumulative Mailbox Money

Month

2019

2020

January

10,329

17,295

February

26,294

29,166

March

32,239

April

49,742

May

55,856

June

64,013

July

71,546

August

73,229

September

81,357

October

95,968

November

101,828

December

107,264

My February 2020 passive income was 11,870. It was truly passive. I simply added it up. That is my idea of passive income.

The markets have been seriously volatile. I have no reassurance for anyone. I am also not spooked by it either. In fact, this pull back allowed me to add more VGRO to my portfolio. It is starting to actually resemble a portfolio. Yay.

I could wait for a larger pullback. But I was about to lump sum invest a huge amount. I am happy to get any discount at all. Life is all relative ya know.

I think we have oversaved for our retirement. However, I will watch the cash distributions and taxation for our portfolio for at least a couple of years. I will have a better idea then.

My husband is finally onboard with my plans to simplify everything. He is aware that all his grand schemes never amounted to anything. In fact, all our investments that went to zero or nearly zero were thanks to him.

Thankfully I do not have an emotional attachment to money per se. I always laughed at him that thank goodness I did not have any material aspirations for the money. I also reminded him that he lost his luxury items whenever he lost money.

Like, there goes another BMW!

I realize that no amount of convincing would have made my husband not pull the trigger on his prior investments. But it is also these past experiences that have allowed him to see that there may be an easier way.

That is why I want to do zero for our investments. I will not be clever. I will not bother optimizing. I will barely strategize. I will use simple options available to anyone.

What will I do instead?

  1. I will have a paid off home. I like my home. Like a lot.
  2. I will use simple structures like my TFSA and RRSP.
  3. I will use my corporate account as simply as possible. I will defer the initial taxes and then draw it out slowly when we retire.
  4. I will use as few ETF’s as possible because it can be done.
  5. I will use asset allocation funds because it is good enough for my family.
  6. I will design the investments so that a child could follow it.

I have also been reminding myself why I am even in the market. I suppose it is for safety. In the short term, I rely on cash, GICs and bonds for safety. However in the long term I am relying on equities for safety. It is my only option to keep pace with inflation.

That in essence is why I am in the market.

I received an email about whether I would use a pension as my fixed income allocation. Well I do not have a pension but I would not use it as my fixed income portion.

How exactly would you rebalance with your pension? I can not use my CPP or OAS to balance my VGRO.

Instead I would figure out what income I want to receive when I retire. Then I would deduct any pensions or government benefits.

Whatever amount is left over is the amount that your cashflow or passive income would need to support. Then use a reasonable asset allocation to achieve this.

And let’s hope this amount will be less than 3% withdrawal rate. I am planning on using 2%.

Maybe total return works. But I plan to oversave. It will be simpler to use mailbox money instead.

Accumulation is simple. It is the drawdown that takes some planning.

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