FI Practice Guidelines – Keep It Simple

I will start to document for our children why we are doing what we are doing financially.

I do not pretend to know what others should do but I know my children.

Keep things simple.

No surprise that this one is front and center as advice for my children.

We lost so much in terms of time, money and energy by dancing with complexity.

If anyone offers two financial options. A simple one and a more complicated one, on average chose the simpler one.

Actually this strategy applies to most arenas in life.

Your father and I would have less grey hairs and more wealth had we chosen simpler options.

That is why I am limiting the investment options to the asset allocation ETFs.

You will use VGRO because the plan is to save more rather than needing to build a 100% stocks portfolio. I am trying to teach you to NEVER need to go all in for any investment.

Once one tends to go all in, it will be as if you are tempting fate. Besides just save more, you can control that instead.

You can control your savings rate and your expenses. That is about it in life.

We did not keep things simple when we bought individual stocks.

Your father did not keep it simple when he bought a house he could not afford before we married.

So buy a house you can afford easily. Either rent it out for years or buy something cheaper. You do not need or want to keep moving up the house ladder. Houses are consumption items. It would be best to limit it.

But choose where you want to live. I recommend living close to work, school and shopping. It is good to be close to public transit. Cars can be very expensive.

Meal planning is something to get proficient at. You need to eat daily. Eating out all the time tends to be inconvenient, unhealthy and expensive. Expensive is the least important of those three.

When it comes to investing use asset allocation ETFs. I like the Vanguard ones. Your accounts are full of VGRO.

And stay with these investments. You will not rebalance these better than Vanguard. The MER of 0.25 is a small price to pay.

And if you play your cards right, this may be all you would ever need. An 80/20 global portfolio from your late teens. Now that would be the penultimate in simplicity.

Even when others have a so-called better strategy. Please ask yourself if you can or want to actually follow it. Many times the answer will be a fervent no.

Because the goal of money is not necessarily about gaining the largest pile. True wealth is when you do not have to pay much attention to it. It simply swirls in the background and is working when you do not want to.

And worrying about money is the opposite of wealth. No matter how large the numbers are.

Money is a tool to assist you in having a life you want. It is not an end in itself.

The most valuable thing that money can buy is the freedom to pursue work you enjoy.

2020-01 Mailbox Money

Mailbox Money- Jan 2020

My investment philosophy is simple.

I have zero alpha.

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

Cumulative Mailbox Money

Month

2019

2020

January

10,329

17,295

February

26,294

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

January has been productive. I still have too many GICs and splotchy short term fixed income investment products. It is always the fixed income that I have a problem with.

I am looking forward to getting most of my cash into VGRO and let Vanguard do “it’s thang”.

I am beginning to see the truly sloth like nature of my money personality. I am coming to the realization that I have money because I am too lazy to spend it. I am also too lazy to try for optimal ways to invest it.

So I will just show you what I do which is track. I do not even count anymore. My excel sheets do that for me.

My husband will not even go part time. He is not done with Medicine yet. I think Medicine is one of those professions where you just know when you are done. It is a challenging profession to white knuckle through.

No point stopping too early nor working well beyond one’s best performance date. And everyone’s mileage varies.

But get the financial parts of your life right. Then you get to decide where that expiry date lies for your career. You owe the public your focus when you are serving them.

My blog serves to keep me on track. You will see that I do absolutely nothing exciting.

I did not realize ETFs paid cash distributions until 2019. Sad and funny really.

I have zero investment acumen. I have zero investment knowledge. That is why my posts are brief. I have nothing to add.

For Pete’s sake, I buy an asset allocation ETF.

The same one as my children.

Go figure.

2020-01 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

CCPC (Corporate) Portfolio

ETF/ Stock

Shares Added

Shares Total

BRK.B

0

950

VGRO

3,651

21,060

XAW

0

13,531

XIC

0

6,050

ZDB

12,000

30,937

GIC

1 Matured

11 strips

  • Brk.B: Berkshire Hathaway Class B
  • VGRO: Vanguard Growth ETF Portfolio (80/20)
  • XAW: iShares Core MSCI All Country World ex Canada Index ETF
  • XIC: iShares Core S&P/TSX Capped Composite Index ETF
  • ZDB: BMO Discount Bond Index ETF
  • GIC: Guaranteed Investment Certificate

CCPC Plan

  • Keep Berkshire as a legacy stock until we fully enter part time work or retire.
  • XAW & XIC:
    • Plan to tax loss sell when possible.
    • Canadian Couch Potato portfolio.

Non- Registered (Taxable) Portfolio

ETF

Shares Added

Shares Total

VDY

21

923

  • VDY: Vanguard Canadian High Dividend Yield Index ETF

Non- Reg Plan

  • Buy VDY to allow some tax efficient income with eligible dividends from Canadian companies.
  • I mainly have this because my husband wants it.

RRSP (Tax Deferred) Portfolio

ETF

Shares Added

Shares Total

VAB

17

10,351

GIC

4 Matured

34 strips

  • VAB: Vanguard Canadian Aggregate Bond Index ETF

RRSP Plan

  • Whenever a GIC matures, I buy VAB. I have too many GICs.
  • VAB is on a dividend reinvestment plan. So easy peasy.
  • Use this account to hold bonds. This is as complicated as my asset location strategy gets.

TFSA (Tax Free)

ETF

Shares Added

Shares Total

VGRO

34

6,024

  • VGRO: Vanguard Growth ETF Portfolio (80/20)

I treat all the accounts as one portfolio.

Networth

Investable Assets

67%

Personal Residence(s)

26%

Other

7%

Investable Assets – 67% of Networth

  1. Real Estate (unleveraged) – 8%
    1. Commercial unit
  2. Paper Investments – 91%
    1. Equities – 25%
    2. Fixed Income – 75%

I have nothing new to add with respect to financial advice. I care about following a simple plan. I have made peace with the fact that others have a more efficient and better plan than I do. But since it would pain me to have to adhere to their rules, I will just stick to my dum dum plan.

My main drive is focussed on ignoring my investments except to buy bimonthly when we get paid. This has been the simplest strategy of all.

I plan to hold just one or two ETFs within each account if I am able to tax loss sell during the next market downturn. That would be nice.

I love decluttering my portfolio.

That’s it until next time.

2020-01 FI My Kids

I will just say this outright. Gaining financial independence as a physician is super easy. If you can not obtain FI as a doctor, you are simply not too sharp with money. There is no nice way to say it. You SHOULD get an advisor because you clearly could not scale this yourself. Enough said.

But attaining FI when you do not make a lot of income is much more interesting. My children may not have reliable and/or large incomes. But I will prove to them that none of this will matter.

They are starting so young.

So much of financial fitness is about prevention. So much is what you do not do.

My son is a rational saver and investor. He has zero interest in managing others’ money but he is quite focused on his own.

One does not need to be amazing when it comes to money. It is about getting enough best practices nailed down. That.is.it.

Live within your means. So simple. Yes, the truth hurts. It does not really matter if you make more but just gorge on more. Either way your results will be meh.

And it is not about community. Many have reached FI without ever reading a blog. The steps to reach FI are really not that challenging.

Both my children want FI.

Their strategies will be slightly different.

My daughter plans to attend university for a good long while. She only needs to open a TFSA which we did on her 19th birthday.

Here are their current portfolios.

Son, 21 years old

Account

ETF

Shares

TFSA

VGRO

1,170

RRSP

VGRO

118

Taxable

VDY

1,551

Networth

90,028

Mailbox Money – YTD

190

Daughter, 19 years old

Account

ETF

Shares

TFSA

VGRO

652

Networth

17,832

Mailbox Money – YTD

68

My son has started working. He is a prodigious saver. He wants to attain FI but has zero plans to retire early. Thank goodness since he is only 21 years old. I tell my children to like what they do. Just like it, you do not have to be “passionate” about it. There is no job charming.

He will be using VDY which is a high dividend ETF. He knows that it is not well diversified. But hey, we only need it to be more reliable than his industry. He will rely on VGRO for his actual retirement funds.

My daughter can keep it simple for now. She can use her TFSA account. I love the tax free status of this account. She loves the fact that there is a limit for contributions each year. She likes to spend the extra. And that is fine as long as she saves for her TFSA first.

They both live at home. I stress to them that this might be their highest savings rate ever. Just wait till life and responsibilities start to catch up with them. Let’s see how much they will be able to save then.

They both know to take advantage of the opportunity now.

2020-01 VGRO Cheatsheet

I am using VGRO for my family’s investment. Therefore it is probably a good idea to think through why I chose this particular ETF out of the myriad of options available.

VGRO Pros

  1. It is an asset allocation ETF. It invests in about 94% of the global investable equity and bond markets. I certainly do not have that reach.
  2. It is managed by Vanguard. I really like Vanguard.
  3. It is automated. The fund managers will balance back to 80/20 within a 2% band. Mostly with incoming cash flows.
  4. I can use VGRO for our portfolios. When the children are younger, they can use these solely. As they get older, they can add on government benefits, annuities, extra fixed income alongside this.
  5. Lower fees. Less trading costs, avoid bid-ask spread needlessly plus goodness knows what other fees I can’t see.
  6. Behavioral costs. I would be less inclined to tinker with this. It helps me be lazy and I enjoy being lazy.
  7. Less tracking error since it would be done by Vanguard professionally. I am sure that I would otherwise mess it up.
  8. Simplify adjusted cost base (ACB) tracking. I tend to avoid DRIP for my taxable accounts. However having fewer ETFs makes it all simpler.

VGRO Cons

  1. Foreign withholding tax is about 0.19% in an RRSP. To avoid this you would have to use US ETFs which would involve currency conversion. That is because the US has a tax treaty to avoid foreign withholding taxes for an RRSP.
  2. Tax inefficiency of premium bonds in a taxable account. Justin Bender of Canadian Portfolio Manager estimated this to be about 0.05% for VGRO.

VGRO Estimated Total Costs 2020

TFSA

RRSP

Taxable

MER

0.25

0.25

0.25

FWT

0.19

0.19

0.02

Premium Bonds

0

0

0.05

Easy – Costs

0.44

0.44

0.32

Optimized Costs

0.32

0.16

0.21

Difference

0.11

0.28

0.11

Maybe this is not such a terrible trade since I pay no AUM fees. I also make under 30 trades a year. My trading costs are about < 300 per year. Not too bad.

I have no idea if this is the best portfolio. I am sure that it isn’t. But it should be good enough. And that is all that I can expect anyhow. Recall that I am not clever, I have no networks, I tend to take my eyes off the ball like all the time. Need I say more?

Nowadays with all the legislative and taxation risks, why bother trying so hard to optimize it all? I often tell my husband, if they want to take it, it’s fine as long as I did not have to waste extra time and mental bandwidth for it.

I can spend my time doing what I enjoy and I am able to direct my children to do that as well. Then I am at peace with whatever the government dreams up. It is what it is.

But I would not sacrifice time for myself, with loved ones and my sanity in the hopes that any of this is suppose to make sense or be fair. We each can adjust accordingly to what our tolerance is for the trade off between more money and our lives.

Just make sure that you have decided how it is fair enough for you. Then all the blah blah out there will fall away since you are clear about what you want.

I like VGRO. I will use it unless someone in the know can clearly tell me that this is an insane approach.

Thus far no one has yet. Thank goodness.

2020-01 Financial Plan Update

2020 Financial Plan

Retirement Plan

  1. To 65 years old:
    1. Draw salaries from our corporation
    2. Contribute to CPP
  2. 65 to 70 years old:
    1. Dividends (135K+/ year)
    2. Office Unit Rental
    3. Optimize:
      1. RMD? May need to draw down the RRSP to optimize taxes
      2. OAS? May need to draw earlier than 70 years old.
  3. 70 years +
    1. Needs:
      1. CPP
      2. OAS
      3. RMD – required to draw at 72 years +
    2. Wants:
      1. Dividends. Withdrawal rate from this should decrease when CPP and OAS fully online.
      2. Office Unit Rental – if we still have this

Retirement Plan Notes

I reviewed some numbers with the CPP enhancement. Due to our ages, we would likely not benefit much from the increased amounts. I figured that it might decrease our salary draws by one year at most. I do not need to tap maximum CPP. I simply want to build enough CPP and OAS to cover about 50% of our expenses. That seems to be a good percentage for our needs.

The issue I have with most pensions is that the benefit would all but disappear upon death. That is a good strategy for some folks but probably not for us. I plan to leave some wealth to our kids. But delaying the CPP and OAS are likely the best forms of longevity insurance one can find. Especially for self employed folks.

The best time to optimize our decumulation would be between 65 to 70 years old. This will be during the period of time when we no longer need to draw salaries from the corporation. I will use some excel programs to figure out the best option at that time. This would be the time when I may start to draw from our RRSPs in case they grow too large. It would also be the time I would forecast any issues with OAS clawbacks and would adjust my plan accordingly.

We plan to grow our dividends and interest to 135K per year. It will take years before I can truly see the taxation incurred with our investment strategy. I will need to align my investment and drawdown plans with all the accounting voodoo that occurs in the background.

What is abundantly clear is that all the optimizations will need to be done by 70 years old. Once CPP, OAS and RMDs become activated, there is no dialing these amounts. These taps turn on and stay on. So one must plan for this.

Estate Plan

  1. TFSA
    1. VGRO 80/20 AA
  2. Principal residence exemption (aka leave the house to the kids)
    1. Urban multiplex
  3. CCPC
    1. Universal life insurance – bought in our 30’s
    2. Trust
    3. Estate freeze
    4. Charitable donations
    5. Permanent Life insurance?
  4. The Basics
    1. Will
    2. Power of attorney – including medical
    3. Plan funeral costs. We bought our burial plots in our 30’s when we had the children.

Estate Plan Notes

I plan on “living inheritances”. I want my children to use the assets we have saved as a family while I am still alive. That is why we carved out units in our urban multiplex for them to live in.

The only so-called sacrifice my husband and I incurred was from living in a smaller unit. But hey, it is less cleaning so I dare say we benefited from this.

Anyone can do this. Most folks just do not want to. But families engaging in multigenerational living have been like forever. Some likely had to due to need. I do it because it just makes sense.

My accountant has been telling us to look into permanent life insurance to help with the small business deduction limits. But I do not want to add further complexity and more middle men into our finances. We already have a smaller universal life policy we started in our mid thirties. I am sure one can buy better policies now but we are also 15 years older. So for now, I do not plan to add more life insurance to our CCPC.

Kids’ Plan

  1. Avoid large educational debt
    1. Attend public schools
    2. Live at home during undergraduate degree.
    3. We pay for all their educational costs.
  2. Transportation
    1. Live close to school, work and shopping. This makes life so much easier.
  3. TFSA
    1. VGRO with dividend reinvestment plan. Set it and forget it.
  4. Taxable
    1. VDY – aka “mailbox money”. It might be less diversified but so is your human capital. Just sayin’ 🙂

Kids’ Plan Notes

My husband and I have decided that we will pay for all educational costs for the children. That is the least we can do.

My only stipulation was that any monies to the children would go toward education or investments. I would support either of those.

My daughter would use her portion for future studies. My son would use his for VDY, the high dividend ETF. Whatever floats your boat. There is no right or wrong approach. It simply depends on the individual.

What I have started is a ledger for my children. I do not pretend to know what is “fair” but I can do even. The kids will have their expenses balanced out in the ledger. I will keep it available for all to see in our family. This is aligned with our approach to finances. Anything financial that pertain to the children is open and we can all talk about it.

I plan to review my overall financial plan yearly. It will be interesting to see any changes. I suspect there will be changes.

OMG. There is always something.

Thank goodness I recognize that planning is a verb.

2020-01 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

CCPC (Corporate) Portfolio

ETF/ Stock

Shares Added

Shares Total

BRK.B

0

950

VGRO

2,265

17,409

XAW

0

13,531

XIC

0

6,050

ZDB

12,000

30,937

GIC

1 Matured

11 strips

  • Brk.B: Berkshire Hathaway Class B
  • VGRO: Vanguard Growth ETF Portfolio (80/20)
  • XAW: iShares Core MSCI All Country World ex Canada Index ETF
  • XIC: iShares Core S&P/TSX Capped Composite Index ETF
  • ZDB: BMO Discount Bond Index ETF
  • GIC: Guaranteed Investment Certificate

CCPC Plan

  • Keep Berkshire as a legacy stock until we fully enter part time work or retire.
  • XAW & XIC:
    • Plan to tax loss sell when possible.
    • Canadian Couch Potato portfolio.

RRSP (Tax Deferred) Portfolio

ETF

Shares Added

Shares Total

VAB

4,820

10,334

GIC

4 Matured

34 strips

  • VAB: Vanguard Canadian Aggregate Bond Index ETF

RRSP Plan

  • With the new Corporate Tax changes, I need to use the RRSP again.
  • Whenever a GIC matures, I buy VAB. I have too many GICs.
  • VAB is on a dividend reinvestment plan. So easy peasy.
  • Use this account to hold bonds. This is as complicated as my asset location strategy gets.

Non- Registered (Taxable) Portfolio

ETF

Shares Added

Shares Total

VDY

500

902

  • VDY: Vanguard Canadian High Dividend Yield Index ETF

Non- Reg Plan

  • Buy VDY to allow some tax efficient income with eligible dividends from Canadian companies.

Estate Portfolio – TFSA (Tax Free)

ETF

Shares Added

Shares Total

VGRO

448

5,990

  • VGRO: Vanguard Growth ETF Portfolio (80/20)

I treat all the accounts as one portfolio excluding my TFSA since I use it for estate planning.

Networth

Investable Assets

63%

Personal Residence

27%

Other

10%

Investable Assets – 63% of Networth

  1. Real Estate (unleveraged) – 8%
    1. Commercial unit
  2. Paper Investments – 92%
    1. Equities – 22%
    2. Fixed Income – 78%

Mailbox Money- December 2019

My investment philosophy is simple.

I have zero alpha.

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

Cumulative Mailbox Money

Month

2019

January

10,329

February

26,294

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

The whole point of writing this stuff down is so that I can review how this strategy will work for my family. The premise is that a simple plan can work.

I condensed what made up three posts into one. I tend to make things easier for myself. It has become a habit by now.

Most folks venture toward greater and greater complexity. I do not.

Our simple plan is to make money, save some of that money and invest it. Our so-called investing ranged from GIC’s to investment real estate over the years.

Now that I am on the other side of 50, it is time to pare this down to something that I can follow forever. With the introduction of the asset allocation funds to Canada, it has been a veritable game changer.

My writing will reflect my clearer thinking about my plan. There is no need to write in a fractured sense any longer. I know what I want to track and how it will fit into my overall financial picture.

I like to show our trajectory to so-called mailbox money. I had plans to do this with my GICs but have since discovered that most ETF’s pay about the same dividend rate.

Plus I get a chance to capture growth which I used to believe that I had to do with real estate. I enjoyed investment real estate in the past.

However my main focus is to make our finances simple and easy. I want and need simple and easy. My husband and children will most certainly want that.

Since I have embarked on this plan, my husband and I have a crap ton of newfound time. We no longer have to worry about how much cash to keep around in case the deal of the decade in real estate comes along. I simply don’t care anymore.

I realized that there are so many other things that I would rather do than make more money. The reason we keep our money is that we do not require massive chunks of it like some of our colleagues.

I did the simple things. I bought a house I could easily afford. My cars were not fancy. My children went to public schools. I did not have to take international vacations to have a great time. I just did the simple things anyone could do. Like I say, I have zero alpha.

Plus when I achieved financial independence in my mid thirties, I always knew that I would continue to work part time in my career. The need for some guys to quit their career even with a stay at home wife strikes me as rather odd.

To each his own I suppose.

2019-12 Month Review

The end of a decade is just around the corner. This is very special indeed.

The past decade for our family has had its ups and downs. Much like everyone else.

This is my second year of maintaining a blog. I really enjoy it. Unlike most bloggers, I strive to maintain anonymity.

I like tracking numbers. That’s all I am good at. I have no desire to tell others how or what to invest in. I have no idea what the best financial plan is for anyone else.

I do not want this blog to grow. I prefer to keep this blog small and unknown.

There is a reason I moved to this free platform.

There is too much noise on the internet. There is too much garble. I definitely include my blog in this assessment. Thus my desire to keep it small. No need to enlarge whom I pollute with my ramblings.

I have decided to keep posting. Mainly to keep myself on a regular habit. Furthermore if I never leave comments with any links back to my blog, no one will find me. Yes I know that I have the opposite plan of most bloggers. But I have always had different plans in my life so why not with my blog as well?

The other benefit with being anonymous is that I can keep posting my real portfolio.

I prefer to see what people have in their portfolios than read a crap ton of woo woo.

You will have no woo woo here since I do not pretend to know what the heck you need to do with your finances. The basics is to live within your means. But no one really cares to acknowledge that one.

Personal finance has many variables. But if you can not save money, you’ve already lost the game.

No investment strategy, asset allocation, asset location, advisor or tax efficiency will save you. Sorry.

That is why I report numbers. Because this is how I have managed my finances since I first moved away to university at 17 years old.

I used to track on paper. Now I use google sheets. But the habit is the same. It is unemotional. The process is the same when I had negative numbers and when I have more.

Unfortunately during my penchant for decluttering, I got rid of my prior networth and expense reports.

But I discovered google sheets in 2013 and have not looked back.

My new thing is to track mailbox money. Because everyone can wrap their head around that one.

I plan to continue being a DIY investor. This blog will show whether I am able to do it or not. I will strive to be truthful since I have zero benefit otherwise.

I have nothing to sell. I do not want influence. I just want to track my mailbox money.

Interestingly I have deep dived for the last two years into personal finance. The overwhelming conclusion is that just like fitness, there is nothing new under the sun.

The process of money is and always will be the same. It is the emotional makeup of folks which make it really easy or really hard. For some it is next to impossible.

For average folks, it is about following a simple repeatable process. I know that for people who are amazing entrepreneurs and real estate investors this is laughable. But I need a repeatable process since I want my children to be successful at it.

I have no interest in approaches that require me to be a different person. I am lazy. I detest details for things I do not care about. All I like to do is update my spreadsheet.

In 2018 I started using index funds. Now these are truly “know nothing do nothing.” Exactly my cup of tea.

I even just buy asset allocation funds because I know myself. If the process takes too much vigilance or requires me being clever – just forget it. I will slip up at times and it will make all the decades of vigilance and being clever evaporate.

  1. Earn money.
  2. Live within your means.
  3. Invest what you have saved.

If you can not do 1 & 2, not much else will help you.

All 3 steps have innumerable combinations and permutations it would make ones head spin. Just pick something you can actually follow.

Don’t be a victim but don’t be greedy either.

I strive for financial simplicity, ease and wellness.

More money without financial simplicity, ease or wellness is not anything I want in my life nowadays.

More is definitely not better.

2019-12 Plan Review

Networth % – November 2019

Investable Assets

71%

Personal Residence

27%

Estate

1.5%

Networth Month/Month

0.5%

Networth YTD

9.0%

Investable Assets – 71% of Networth

  1. Real Estate (unleveraged) – 18%
    1. Commercial unit – 37%
    2. Residential unit- 63%
  2. Paper Investments – 81%
    1. Equities – 21%
    2. Fixed Income – 79%

Retirement Plan

  1. To 65 years old
    1. Draw salaries from our corporation.
  2. 65 to 70 years old
    1. Dividends
    2. Rental income
    3. RMD? May need to draw down the RRSP to optimize taxes.
  3. 70 years +
    1. CPP
    2. OAS
    3. RMD – required to draw at 72 years +
    4. Dividends. Withdrawal rate from this should decrease when CPP and OAS fully online.

Estate Plan

  1. TFSA
    1. VGRO 80/20 AA
  2. Principal residence exemption (aka leave the house to the kids)
    1. Urban multiplex
  3. CCPC
    1. Trust
    2. Estate freeze
    3. Charitable donations
    4. Life insurance
  4. The Basics
    1. Will
    2. Power of attorney – including medical
    3. Plan funeral costs. We bought our burial plots in our 30’s when we had the children.

Planning For My Kids

  1. Avoid large educational debt
    1. Attend public schools
    2. Live at home during undergraduate degree
    3. You do not need a university degree for certain careers, so think it through.
  2. Transportation
    1. Live close to school, work and shopping. This makes life so much easier.
  3. TFSA
    1. VGRO with dividend reinvestment plan. Set it and forget it.
  4. Taxable
    1. VDY – aka “mailbox money”. It might be less diversified but so is your human capital. Just sayin’ 🙂

December 2019 Plan

Added VDY

We decided to use VDY in our taxable accounts.

For our account, it is to peg us to spend mailbox money.

For my son, it will be to act as a background for his career. The field he has chosen will be part of the gig economy with plenty of contract work involved. This is the best use of a dividend strategy.

We do not need VDY to be the best way to invest. We want it to be more stable than his work options. VDY does not have a very high bar to hurdle. He should build this portion up ASAP.

Hold Off On RRSP For My Children

Both kids will need to use their TFSA.

Both should hold off on their RRSP. My son should use a taxable account rather than his RRSP. My daughter will likely be in school for a while and thus will need to have more cash for spending.

They should use their RRSP to deferred income taxes when they earn over 50K per year. Otherwise I do not see the point of locking the funds up.

Planning To Spend Mailbox Money

I have a feeling that I will be spending mainly my dividends and interest aka mailbox money. This is the first year that I have kept track of the distributions and it is already close to what I spend yearly.

I have researched about safe withdrawal rates and the total return approach. I know that drawing out 3% from investments would be sustainable. However, a simpler way would be to just spend the cash distributions instead.

The only disadvantage is that I will leave a lot of money unspent but I do not care about that at all. That is a good problem to have in my opinion.

It is akin to the environment. Is it our job to use up all the planet’s resources? Life is better if we can leave a bit for future generations. I already have a good life. I do not feel the compulsion to spend to my limit.

Each person needs to figure this out for themselves. But this has been my truth for a long time.

Asking Ben About My Good Enough Portfolio

I still believe that as long as one picks a decent strategy, many methods will get you where you need to go.

Index investing with paper is an option. It takes a heck of a long time, there is no downside protection and you need to use all your own capital. But it is simple.

There is also positive cash flow real estate. Works fantastically when one makes this happen. Takes know how and some business sense. Also allows for leverage which can accelerate your wealth if done properly.

I am picking index investing simply because I have become quite lazy. I know the issues with it and I am okay with that.

I do not pretend to know anything. All the knowledge in the world won’t help me if I panic and sell during market downturns.

Paper investing takes proper temperament. It does NOT take knowledge. It is seriously a know nothing do nothing approach.

I hold an asset allocation ETF for Pete’s sake.

It is not the most tax efficient. It is not the lowest cost. It is not perfect. But it is good enough for me.

I had to ask Ben Felix of PWL Capital if he thought I was being crazy with just using VGRO + ZDB in my CCPC.

He did not think that I am building an awful portfolio. I am sure he knows much better ways to build a portfolio.

I didn’t ask Ben if I was building a great portfolio. I asked him if I was building an awful one. Because that’s all I care about. I care about not doing something completely ridiculous and missing a big ticket hazard.

Thanks a ton Ben!!!

2019-11 Mailbox Money

Dr. MB & Hubby – 51 & 53 years old

2019-11

YTD

CCPC

4,282

77,817

Personal

1,578

20,859

Total

5,860

98,676

Son – 21 years old

2019-11

YTD

VGRO

0

2,031

VDY

0

4

Total

0

2,035

Daughter – 19 years old

2019-11

YTD

VGRO

0

1,492

I want mailbox money. I do not want side hustle income. I do not even want positive cash flow real estate income. Since let’s face it, it is not truly passive. Real estate investing will always be part business and part investment. One can do the paper forms of real estate investing but that has its own issues.

It takes a lot more capital to reach true mailbox money but it is the most replicable. Not everyone can build businesses. Not everyone can run a real estate portfolio effectively. Not everyone can side hustle effectively either.

But everyone can buy paper investments. And it is simple to DO NOTHING when the markets tank. Simple but not easy.

Having had to deal with real estate investment issues, I can promise you that I would be happier if the solution is to just do nothing. There have been many experiences with business and real estate where we had to do something. But we did not have the skills or networks to get it done. Having enjoyed those experiences allows me to be okay with the paper investments now.

I think people also underestimate their ability to be flexible. I have a myriad of things that I could do if my investments did not perform as planned. Short of the entire capital markets going down the drain, investing in a broadly diversified portfolio should be fine. Admittedly it is the best option for me.

Nothing is guaranteed in life. You can only do what you can with what you’ve got. And if the entire capital markets crumble, then mankind likely has bigger problems than their portfolio.

Building back up plans make sense since why the heck not? But the simplest plan is to live a modest lifestyle so that one is never living so close to the red line. It could also be a more pleasant way to live.

True passive income can only come from publicly traded stocks and bonds. It can also include interest from GICs and high interest savings accounts. Everything else is not truly passive.

So those are the rules of the game. It can not come from anything that reeks of business. You can not be an active trader. This has to be know nothing, do nothing money. It can not be from being too clever. It can not come from having special networks that no one else has access to.

Because that has always been the most annoying thing about most strategies with money. You have to have excess amounts of energy, you have to be amazing, you have to network, you have to be a risk taker. I say yuck to all of that.

I am generally rather sloth-like and thus my money should be as well.

I can not outsmart the markets. I can not outsmart the government. I can not out hustle the next person. Just reading about other’s side hustles simply makes me roll my eyes and go back to sleep.

I just want mailbox money thanks.

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