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.

2019-08 Portfolio Update

Buying time folks.

I can not time the market. I keep trying and I keep failing. I understand the futility but I trudge along.

My crux is my husband who continues to think that this can be gamed somehow. Thus rather than continue to explain that this is a silly exercise, I will continue to dollar cost average our portfolio monthly until the end of 2019. We will be in 40% equities at this time.

This is my hybrid method. It usually is the only logical compromise to the tendencies of my husband. It is no surprise that he is a surgeon. I heard somewhere that they tend to make the worst investors on average. And I am no better either.

The number of bad investments that I have had to dissuade him from are numerous.

And folks wonder why I am so risk conscious. I have had decades of practice.

The market is jetting to another all time high. No surprise to me by now.

Here is my purchase for August 2019 of VGRO- 80/20 All-In-One ETF.

ETF

Shares Added

Shares Total

VGRO(80/20)

1500

10,826

I meet with my accountant in a couple of weeks. This meeting should prove enlightening. We started a new trust as well as corporate amalgamations last year. We also did an estate freeze.

This meeting will hopefully bring the whole plan into alignment. I am looking forward to this meeting. It has been a long time coming.

I rely on my accountant along with his legal team. I do not pretend to understand the voodoo they perform in the background. I admit that I have never really tried.

I spend my efforts explaining to him what I am trying to achieve and he often just blurts out a simple plan. Over the years, he has admitted that he tells his clients mainly the same plan but no one wants to do it.

For almost a quarter century of owning my corporation, the game plan was simple. Take out just enough income to match the provincial doctor association RRSP rebate.

Then live within your means with that income. They currently match a 60K yearly salary.

Thus we have lived in middle class salary status for our entire careers. When we made doctor incomes, we simply never saw it. So when it came to designing our retirement, I have zero issue with designing a middle class lifestyle. This is all we have known for our entire adult lives.

This led to us buying into a middle class neighborhood. I am grateful my kids grew up this way.

Kind of keeps the whole shebang simple really.

I keep reminding my husband that it is likely the whole “investing” thingy won’t even matter all that much. We have bigger fish to fry in figuring out how to manage the stash in the Corp.

One fell swoop by the government can ruin a lifetime of wise choices. I see this happening around Canada. Folks who plan well and are disciplined are NOT rewarded.

I have come to believe that I can only plan so much. And since there is zero belief that any of this will work out, let’s just keep it simple.

That way, we win no matter what happens.

The more I research this stuff. The more I realize that you cannot control the markets. You cannot control taxation. You cannot control government legislation. You cannot control what family members decide to do.

But on the corollary it is a freeing moment. Too many of us actually think we have control.

Newsflash. We don’t.

Maybe my new motto is to try not to lose too badly. Hee hee.

2019 Retirement Plan

The ultimate reward for a well oiled retirement plan is not need to return to work unless you want to. That’s my current definition. YMMV.

The only way that I know how to plan anything is to begin with the end in mind.

This is similar to investing. Always know your exit strategies.

That is why retirement planning is crucial. It is the ultimate manifestation of a life investment exit plan.

I admit that I never thought of retiring completely. I never heard about FIRE until a few years ago. I had always planned to save a large chunk of cash early. I had planned to work part time making 100K/ year until I was much older.

I had spent over a decade working 6-7 days a week with only about 1- 2 weeks off a year.

Working just two shifts a week would have felt like retirement.

I never heard of safe withdrawal rates since I had not planned on withdrawing from investments before 65 years old. I agree with my friend Gasem that the math is likely not that simple.

To Do List Before Retirement

  1. Make sure our kids receive their education. We will pay for it all. The kids have already done their part to stay at the local university. The least we could do is pay for the tuition. My daughter wants to continue with professional or graduate work. We will pay for that as well.
  2. No debts of any sort.
  3. My parents are well cared for. We pay for all the property tax, insurance, utilities, cable and any maintenance for their home. I have been doing this since I was 30 years old. It is a blessing that my parents are healthy and able to take care of themselves.
  4. We have provided housing for our children as units in our multiplexes. We have two children and two self contained units that they can live in whenever they need to. This is their back up plan. We have no desire to dictate whether they live in those units. It will be based on the trajectory of their lives.

Retirement Plan Thus Far

  1. 5M is enough for us in our retirement accounts. We reached it last week. It is within the wrapped accounts of our CCPC and RRSP. But since we plan to “leak it out”, it should be tax efficient.
  2. We will not use these funds until my husband is 65 years old. That will be in 12 years.
  3. We will hold an additional 500K in laddered GICs. This will serve as a volatility ladder.
  4. The RRSP (tax deferred) account will hold mostly bonds as this will have RMD. No need to build these accounts up too much. Instead of getting rankled by RMDs, use them wisely instead. Just let it have a slow burn.
  5. Once the tax deferred accounts become drained, our retirement portfolio will hold mainly VGRO which is an 80/20 portfolio. This means the portfolio will be more aggressive as we get older.
  6. Our estate will mainly consist of our tax free accounts and our primary residence. We plan to give with “warm hands and warm hearts”. Our kids should be enjoying the benefits of the TFSA and our extra units while we are still alive. We also hold life insurance to help pay for taxes when we die.
  7. We will delay our government benefits until 70 most likely. This alone will provide us with 50% of our planned income.
  8. Our planned income will be about 100K per year. We have almost always taken less than this in salaries. We have regularly lived on this amount or less.
  9. We plan to draw income to the lower tax brackets around 50K each.
  10. Doctors with corporations should realize that the government has gotcha if you need to take out large salaries. So beware of expensive lifestyles.
  11. We plan to keep our medical licenses until 65 years old and work part time. This will mitigate SORR until we are ready to fully retire at 65 years old.
  12. Make sure all family members are doing well. Most spending shocks will come from those you love.
  13. We hold a fully paid off commercial unit which would cash flow another 30K/ year. This would be considered an uncorrelated asset.

Retirement Plan By Accounts

RRSP (tax deferred)

Mainly Bonds

CCPC

VGRO (80/20)

500K

5 x 100K GIC ladder

Contingency Fund

large cash reserve

Part time work until 65 years old

Why not eh?

70+

Government benefits + RMD

Retirement Plan By Age

Now to 65 years old

Work part time enjoyably

65 years old

Retire from MD

65 years – 70 years old

  1. CCPC dividends
  2. Laddered GICs if needed.

70 years +

  1. Government benefits
  2. RRIF RMD
  3. CCPC dividends

Retirement Budget

  • Plan 100K per year. We have lived on this salary for over the past two decades.
  • At 70 years old, 75% of our planned income will be covered by government benefits and RRIF RMD.
  • Our actual expenses are about 50- 60K per year.
  • Our essential expenses are about 36K per year.

And most of all, I am keeping this simple with proper use of beneficiaries on all accounts. Keep our will up to date. And talk to my family about things regularly.

None of our plans involve luxury. It is all about getting certain big ticket items done.

Life throws plenty of curveballs. Money alone won’t save you but it can help. It gives one options.

My husband used to scoff at how anyone could not take care of a house if it was handed to them. I reminded him our house still costs a mint even though we have paid it off. Run the numbers and you shall see how easy it is to not be able to afford a paid off home.

We are extremely fortunate in Canada to not have large health care costs. It does not sound good for our American neighbors.

When One Of Us Dies

The survivor will still get their government benefits at 25K/ year plus the full RMD of 25- 30K/ year. Expenses should decrease 25% to 75K/ year.

The survivor would likely jump up the next tax bracket.

The harsh truth is that if my husband predeceased me then my discretionary expenses will go down dramatically. He is the one I spend most of my time with. My life buddy would be gone and I can see not wanting to dine out very often. Or traipsing the globe. Or camping and fishing. So we want to do some of that now.

I think that is reality when your spouse dies.

Investing is not a proxy for my self worth. Omg nope. Or else I would be in a very bad state.

The advice I am giving my husband is this. He will enjoy more time off now when he is younger than to work full time to reach some mythical number a decade later. If one can not define “enough”, it will forever be an elusive concept.

Like seriously, how much money does anyone really need? It is the ability to not dig into the saved amounts that is important. Not the throwdown of more and more cash.

You can always ratchet it up later if needed. I surely can if need be. That is why I would not give up my license until I am 65 years old.

Money can be a mental crutch. If you can structure your life to NOT rely on external sources for many of your needs, you will have more wealth. And not just in monetary wealth.

Here are some examples of things I did/do.

  • Take care of my own children (minimal daycare).
  • Home gym
  • Gardening
  • Multiplexes in solid urban locations with good public transportation.
  • Live close to work and shopping- minimize car use.
  • Stay healthy- minimize healthcare costs.
  • Don’t be vain- eliminate all woo woo cosmetic procedures.
  • Dress simply- thus can ignore fashion.
  • Live simply- thus can ignore luxury.
  • Save before you buy something- then the bank and their loans don’t touch you. (Of Course during such low interest rate environments, you just have to do the math to see if it makes sense).
  • Pick simple hobbies. I don’t care if golfing or skiing gets expensive. I don’t do those.

I could go on and on. It is almost an opposite way of thinking. I am never trying to think of ways to “fit in”. I have always focused on what I need and want. And by being truthful, none of this involved beating my head against a wall to try to “get in” anywhere.

No one could tempt me with a prize. Since I became immune to all their shiny, shiny pretty objects long ago.

I care about freedom and convenience. None of that equates to status, power, popularity or luxury.

Anyhow this is my version of my current retirement plan. I will review this yearly.

2019-06 Passive Income

2019-06

YTD

CCPC

6,256

51,346

Personal

1,902

11,492

Total

8,158

62,748

It is passive income time again. I am beginning to enjoy this time of the month. This is the first full year that I am tracking my passive income diligently. I am not completely sure where the final total will be.

Regardless I am pleased that at 50 years old I am starting to focus on this. I understand the whole concept of “total return”. However I likely have the same behavioral biases as cult dividend investors who enjoy seeing their dividends.

I admit that I plan to spend mainly my passive income. We will spend “total return” if we are at a shortfall from dividend income alone. However I understand my own biases and I would prefer to set up a stream wherein I am not forced to liquidate equities during a downdraft.

We almost thought of buying a high dividend ETF such as the Vanguard Canadian High Dividend Yield ETF (VDY). But we realized that this fund was not very diversified with only 56 companies currently. Furthermore, we do not want more income in the Corporation at this time. This would only decrease our small business deduction further.

My husband would like to continue working until he is 65 years old in a part time capacity. However who knows how much he will want to. One thing I have noticed is that once you slow down, you rarely want to rev back up again.

Thus we are shoring up a tranche of “last in, first out” funds. It will likely be able to fund about 10 years of our expenses.

At first I had planned to put it all into fixed income. However we likely will not need all of this. It would be wise to invest a portion of it in equities. It really is just back up.

This will prevent us from being concerned when he is 60 and doesn’t want to work at all. That should cover us until we are ready to use our retirement portfolio at 65.

I would prefer to give ourselves options.

Simplify with DRIPS

On my quest to simplify all of this, I set up DRIPS for my ETFs. Dividend reinvestment makes sense since my brokerage charges 10 dollars for every transaction. My bond ETF distributes monthly so this could add up quickly. Furthermore who wants to make these transactions each month? I certainly do not want to once I am fully invested.

Thankfully the brokerage I use will keep track of the adjusted cost base for me. I will double check this against my own records initially.

This blog is really my investment diary of sorts. I do not have many answers for others. I am trying to figure this out for my family. Thus far I see that accumulation is simple. The distribution of the assets will be more challenging.

It will be interesting for me to see how my investing path will change (or not) in time.

2019-07 Portfolio Update

It is buying time again. Welcome to another month. One thing I can say is that equities are quite volatile. This makes knowing when to buy them kind of a crapshoot. Which is fine since I do not believe you can time the market. Goodness knows I try.

Here are my purchases for the month.

  1. VGRO (Vanguard 80/20 all-in-one ETF) – 780 shares [total shares 9270]
  2. VAB (Vanguard Canadian Aggregate Bond Index ETF) – 1427 shares [total shares 1777]

I am beginning to only look at my equities in terms of the shares that I hold. Focussing on the price of these equities would probably not be very healthy. Plus these darn things move all the time. But my share amount does not. And dividends are paid by the number of shares I own.

My equity purchases are becoming very similar to how I shop. I have never been one to shop for the absolute lowest price for anything. I prefer to get a sale but it doesn’t have to be the biggest sale of the year. And once I purchase something I never go back and re-shop the same item. That would only cause regret and be a complete waste of mental bandwidth.

I am starting to see that buying equities pretty much falls along the same line. These prices move all over the place. What is the point of believing that you are going to get it at the lowest price? That sounds like magical thinking.

My husband often thinks he can buy these equities at the lowest price. Which makes me realize that that is a very bad strategy.

I am methodically moving my cash and matured GICs into VAB in our RRSPs. This bond fund will make the portfolio much simpler to manage. Furthermore it will add the liquidity needed during market movements.

However I believe that this is as much as we want to fill our retirement portfolios. We feel it is time to start front loading a big cash bucket for using in our 60s.

I tend to prefer having a plan for my funds. I do not blend my retirement portfolio with my contingency funds. It might serve financial planners because it makes it easier for them to manage. But I don’t see the point of doing that myself.

The plan with equities should be to hold them forever. If you think of buying and selling all the time then equities might not be for you.

I plan to hold our retirement portfolio until my husband turns 65 years old. This will be in about 12 years. At that point I will be more than happy to spend the dividends and interest payments.

The contingency funds will constitute mainly cash instruments. I plan to spend this amount earlier. It will be the concept of “last in, first out”. There is no point in putting this into anything long-term. This will likely be a great option for GICs and high interest savings accounts.

So that’s it. I plan to keep it relatively simple. It is always a good idea to have some funds on the side so that you do not dip into your long-term retirement accounts.

I don’t know anyone whose life hasn’t had the occasional large unexpected expense. That is the point of our contingency fund. That has worked for our family thus far.

I do not stress about the portfolio much nowadays. Portfolio construction is a commodity. Planning one’s retirement will require a comprehensive overview. I doubt very many of us will have plans that look exactly the same.

This is the best part of some blogs. Many of us lay it all out there and have zero issue with questioning our own way of thinking.

That is one way to learn after all.

2019-06 Month Review

Travel

June was a great time for a road trip. Hubby & I were able to visit Yellowstone National Park. We saw bison up close while we were driving. The weather would change very quickly at the park.

The first evening we enjoyed a lightning storm with heavy rain. On our second evening, it snowed.

I thought I was leaving Canada to get away from the snow. Regardless I love seeing nature. National parks are my favourite. I figure I can always go on cruises when we are seniors.

We car camped which made us feel like we were 25 years old again. I told my husband that if I wanted comfort, I could stay home and sleep in my own bed.

That’s the part of camping I love best. Truly sticking with the basics is a good reminder of our usual pampered lives.

Invest

My son has been working part time. He has saved all his earnings and has fully contributed to his RRSP. This child is certainly more like me than his dad.

And he buys the ETF exactly as one is suppose to. He buys it when he has the money.

I am the one who has a harder time pulling the trigger. I keep saying things such as “You know the market is at another all time high. Do you want to wait for a bit before you invest all your RRSP money?”

But he is adamant that he just wants to buy VGRO since he has such a long time frame. Good boy.

Simplify

My latest craze has been finding out that there is a website which loads up the weekly specials at Costco warehouses. This is awesome. This will save me loads of time walking around the warehouse. Here is the link for Western Canada. https://cocowest.ca/ and Eastern Canada https://cocoeast.ca/.

I am mildly obsessed with making shopping simpler. Every Costco fanatic I have told about this has been seriously happy with me.

I plan to continue stripping and chiseling away at the unneeded extras in my life. I plan to be left with mostly what I want.

If I can be brutally honest, money mainly serves as a source of options and convenience.

I value my freedom of choice way more than stuff. Things just waste more time and energy.

I see this as a source of stress for most folks now. Life gets filled with loads of things that don’t fit. It’s akin to sitting in your home and looking around and realizing that you don’t even like half the stuff.

But you still need to clean it, store it and fix it. Like yuck already.

I enjoy the concept of less. I love less hassle. Most of our savings were built from that concept alone.

That is what I am proving to myself. Most things I do are extremely simple.

If you are able to save, it likely doesn’t matter how you invest. We are sort of proof of that.

Simple can be extremely powerful.

My life has been built from the many things that I could leave alone. It rarely was achieved by catapulting myself to grand heights.

Less has certainly been more for me.

Happy Canada Day Long weekend!!!

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