No plan survives contact with the enemy... - Page 3
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Thread: No plan survives contact with the enemy...

  1. #21
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    If I did this calculation right, your net worth is increasing at 9.1 K per month (a rate of +109 K per year)

    You said that your income is 100K-175K. Is that net income? The numbers don't add up if those were gross numbers.

    In any case, it looks like you're able to save at a rate of over 100 K per year. Why bother with stocks at all? Just do 5 years of this pumping the money into GIC ladders, and you will have well over half a million $, with no equity risk at all. Furthermore, your line of work is likely highly correlated to equities. "You are a stock". Why take on more stock risk? If stock markets tank, your income will also likely fall.

    If you're in corporate law, I would guess that when stocks fall, the wealthy people paying your bills will become tighter with money, less likely to do M&A, etc.


  2. #22
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    Quote Originally Posted by james4beach View Post
    If I did this calculation right, your net worth is increasing at 9.1 K per month (a rate of +109 K per year)

    You said that your income is 100K-175K. Is that net income? The numbers don't add up if those were gross numbers.

    In any case, it looks like you're able to save at a rate of over 100 K per year. Why bother with stocks at all? Just do 5 years of this pumping the money into GIC ladders, and you will have well over half a million $, with no equity risk at all. Furthermore, your line of work is likely highly correlated to equities. "You are a stock". Why take on more stock risk? If stock markets tank, your income will also likely fall.

    If you're in corporate law, I would guess that when stocks fall, the wealthy people paying your bills will become tighter with money, less likely to do M&A, etc.
    I never really thought of how much net worth increases per month or ran that number. However, from my records (only going back 2 years) it looks like it increased around $90,000.00 from October 2, 2014 to October 2, 2015 (so about $7,500 per month if you annualize things). The year before (October 2, 2013 to October 2, 2014) was an increase of $58,000, though I am making more now than then.

    However, this year is likely not an entirely accurate number as this is the first year incorporating my practice so there is a large inchoate tax liability that will arise at year end that is not reflected in the numbers for this year as yet since installment payments don't start until year 2 and I am 'catching up' on payroll deductions since I didn't start salary until late in the year but want to have salary high enough to maximize RRSP contribution room for next year -- meaning I have to draw off more than I'd like in the last months (with associated remittances) to draw the $135,000 or so required to generate this room before year end.

    With that said, hard to get an accurate picture for this year. I expect this means that once taxes are determined and deducted, that around $60,000 - $80,000 per year contribution is more likely than $100,000. Based on my records, I contributed $63,000 last calendar year (don't have records handy for the calendar year before) and I am drawing a bit higher this year than last so should be able to contribute a bit more, we will see.

    So although it might not be half a million contributed in the next 5 years, it will be at least a third of a million. I'm taking the equity risk for a few reasons:
    1) I like watching the numbers go up and down -- a bit of a hobby;
    2) half a million is really not enough to do much with long term (this may sound crasser than intended)-- I likely won't hit my retirement target at that rate of savings and GICs are returning below inflation;
    3) I'll need to stop renting sooner rather than later ($20,000 a year at the moment) so won't be able to continue with this contribution rate forever, so I want to get a good 'starting buffer' in the retirement accounts before having to allocate money for a house, other side business ventures, etc..

    I'm sure I am quite correlated to stocks; this is one of the reasons I avoid Canadian Oil and Gas stocks (and am trying to reduce my Canadian exposure) to try to externalize this risk a bit whilst still maintaining return.
    Last edited by Sm5; 2015-10-03 at 04:17 PM. Reason: clarity

  3. #23
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    November 2015

    Extrapolating for rent payment on the 1st as nothing will post to accounts over the weekend otherwise. It has been a pretty dull month financially. Had to borrow some cash out of the corporate investment account for a few weeks for cashflow purposes but promptly put it back. Also, getting a bit cash heavy at the moment, normally I'd be allocating this but given the upcoming year end, I think I may just hold on to the cash (or at least most of it) until January and put it into TFSA (how much depends on Trudeau) and RRSP and taxes...


    Current asset allocation:
    25% Canadian Equities currently at 27.7%;
    35% US Equities, currently at 30.6%;
    35% overseas Equities, currently at 30.3%;
    3% fixed income, currently at 2.0%; and
    2% cash and equivalents, currently at 9.5%.

    As of November 1, 2015 (anticipated for rent):

    Assets
    TFSA 1: $40,900 ($100 monthly contribution)
    TFSA 2: $9,000 (no contributions)
    RRSP: $58,800 (no contributions)
    Non-Registered (CAD): $ 44,700 (no contribution)
    Non-Registered (USD): U$350 (no contributions = C$450)
    Savings Account 1: $2,200 (once rent clears)
    Savings Account 2: $60

    Corporate Current Account: $9,300
    Corporate Investment Account: $35,500 ($12,000 contribution, currently sitting predominately in cash ISA earning next to nothing).

    Liabilities
    Margin Loan: $10,500
    MasterCard: $2,500 (revolving balance, paid monthly, car insurance was paid this month which made this high)
    Visa: $0
    Line of Credit: $0
    Corporate MasterCard: $370 (revolving balance, paid monthly)

    Estimated net worth is now $187,500 (+$20,800). However, we will see how much the tax man is entitled to.


    Rates of return:
    Non-registered CAD, (heavily Canadian financials) at -0.497% YTD return; TFSA 1 (balanced in its own right) is at +5.099%; TFSA 2 (global small cap) is +3.891% YTD; RRSP (foreign / USA) is +14.783% YTD, and corporate investment account (global small cap, and a lot of cash) is at 5.069% YTD, which gives an overall investment return of +6.860% YTD (+8.349% annualized).

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  5. #24
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    Dec 1, 2015

    As at December 1, 2015. Not much of note, still holding far too much cash in anticipation of tax liabilities (once determined this can/will be allocated).

    Assets
    TFSA 1: $41,600 ($100 monthly contribution)
    TFSA 2: $9,200 (no contributions)
    RRSP: $59,900 (no contributions)
    Non-Registered (CAD): $ 45,900 (no contribution)
    Non-Registered (USD): U$350 (no contributions)
    Savings Account 1: $3,800
    Savings Account 2: $60

    Corporate Current Account: $4,900
    Corporate Investment Account: $35,700 (no contribution).

    Liabilities
    Margin Loan: $10,500
    MasterCard: $1,100 (revolving balance, paid monthly)
    Visa: $0
    Line of Credit: $0
    Corporate MasterCard: $370 (revolving balance, paid monthly)

    Estimated net worth is now $191,000 (+$3,500). However, we will see how much the tax man is entitled to.


    Rates of return:
    Non-registered CAD, (heavily Canadian financials) at +3.368% YTD return; TFSA 1 (balanced in its own right) is at +6.542%; TFSA 2 (global small cap) is +5.564% YTD; RRSP (foreign / USA) is +17.109% YTD, and corporate investment account (global small cap, and a lot of cash) is at 5.412% YTD, which gives an overall investment return of +9.065% YTD (+9.978% annualized).

  6. #25
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    January 1, 2016

    Happy (and productive) new year!

    December was a bit turbulent, firstly, there were a lot of one off or annual expenses (Christmas bonuses, annual permit renewals, etc.) which made everything a bit up in the air. Had to borrow $5,000 from the corporate 'reserves' account to keep the float high enough to avoid bank fees for a day or two between receivables -- the downside of running a small float. Also, drew a bunch of extra income in December instead of next year in case the liberals make detrimental changes to the tax act for incorporated professionals moving forward (risk aversion wins out to a small tax savings). Overall, the year was successful, not too many rash expenses.

    As for the year's goals:
    1) Get a net worth of $160,000.00 (estimated) or better on or before December 31, 2015 I'll say done, I can't say I will have to remit that much in taxes to drop under $160,000 for the year.
    2) Put $4,000.00 into Savings Account 1 as part of 'cash reserve'; Not done.
    3) Make a 2015 TFSA contribution ($5,500), and use it to re-balance; Done; however the limit increased for the year and contributed $10,000.
    4) Make a 2015 RRSP contribution (whatever the 2015 maximum is), and use it to re-balance; Done.
    5) Put a base of $4,000.00 into corporate account to avoid bank fees; Done.
    6) Open and fund with at least $15,000.00 (to avoid small account fee) a corporate brokerage account; and Done.
    7) Get each asset category within 3% of their target allocation. Not done. Close, but looking at the allocation my Canadian Equity is still 3.3% over target, US equity is 3.1% under target, and International equity is 4.8% under target so close but not quite there yet. Hopefully 2016 puts everything back into line.


    Anyways, for the numbers... (Anticipating to new years as I won't have time to update this weekend.)


    Assets
    TFSA 1: $41,400 ($100 monthly contribution)
    TFSA 2: $9,500 (no contributions)
    RRSP: $62,000 (no contributions)
    Non-Registered (CAD): $ 46,300 (no contribution)
    Non-Registered (USD): U$350 (no contributions)
    Savings Account 1: $2,600
    Savings Account 2: $60

    Corporate Current Account: $43,400 (need to get a chunk of this invested ASAP)
    Corporate Investment Account: $31,200 ($5,000 temporary withdrawal for current expenses).

    Liabilities
    Margin Loan: $10,500 (no payments)
    MasterCard: $1,600 (revolving balance, paid monthly -- a bit high this month)
    Visa: $0
    Line of Credit: $0
    Corporate MasterCard: $2,300 (revolving balance, paid monthly -- very high due to Christmas related expenses, and annual fees/dues coming due -- still hurts though)

    Estimated net worth is now $222,600 (+$31,600). Annually, I increased my net worth by 128,700 which is frankly startling. However, again, this is subject to some tax liabilities to be determined (Q4 GST of a few thousand due in January, and corporate income tax in one lump sum coming up).


    Rates of return (as of December 30, 2015) are:
    Non-registered CAD, (heavily Canadian financials) at +4.76% YTD return; TFSA 1 (balanced in its own right) is at +5.82%; TFSA 2 (global small cap) is +7.98% YTD; RRSP (foreign / USA) is +21.75% YTD (the obvious winner for the year thanks to our depressed dollar more than anything else!), and corporate investment account (global small cap, and still a lot of cash) is at 7.98% YTD, which gives an overall investment return of +11.20% YTD (annualized is practically identical).

    As for yearly benchmarks, even with the small internal loan out of the investment account, I contributed just over $70,000 to investments in 2015 (happy with that as my target contribution is only $50,000) and received a double digit return on a flat economy (pure luck!).

    2016 snuck up on me so I've not really put too much thought into the goals for the upcoming year. With that said, what comes to mind currently is the obvious ones of staying the course:
    1) Make a 2016 TFSA contribution ($5,500), and use it to re-balance;
    2) Make a 2016 RRSP contribution (whatever the 2016 maximum is), and use it to re-balance;
    3) Make a total retirement contribution (TFSA, RRSP, retained earnings, savings, etc. put aside specifically for retirement and not other purposes) of another $50,000;
    4) Continue to try to get each asset category within 3% of their target allocation.

    Additionally, I'd like to aim for the following (not sure how realistic they are):
    5) Obtain a total net worth of $300,000 by December 31, 2016 (seems FAR too ambitious but let's give it a shot);
    6) Start some kind of 'hobby' side business and have it break even; and
    7) reduce general living expenses so the credit card ends up under $1,000 a month on average.

    Anyways, onward to 2016.
    Last edited by Sm5; 2015-12-31 at 08:50 AM.

  7. #26
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    Interesting diary. Congrats on a steady, and fairly rapid NW increase. Well done!

    Question - have you considered calculating a rough tax liability number to reflect a more accurate Net Worth through the year? That way you won't have to take a major write-down of your NW come tax time.

  8. #27
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    Thumbs down Feb 1, 2016

    Sorry mind_business, didn't see your response. I sort of do keep an internal "tax ledger" of a liability of 10pc of gross revenue as the tax exposure. Personal taxes should be about par, and 10pc should overestimate corporate tax expose for a variety of reasons -- this is why I'm keeping the $20,000 cash 'kicking around'.

    Anyhow... January 2016 was rough, a drop in the market, timed perfectly with annual accounts, car registration renewal, etc. to create a perfect storm. Down significantly. Hopefully February is better.

    With that said, as of February 1, 2016 (rent anticipated)

    Assets
    TFSA 1: $39,500 ($100 monthly contribution)
    TFSA 2: $13,300 ($4,300 contribution, so with the $100 a month to the other TSFA this is full with the new lower limit)
    RRSP: $58,000 (no contributions)
    Non-Registered (CAD): $ 44,600 ($2000 contribution)
    Non-Registered (USD): U$320 (no contributions)
    Savings Account 1: $3,400
    Savings Account 2: $60

    Corporate Current Account: $12,600
    Corporate Investment Account: $50,300 ($5,000 temporary withdrawal for current expenses last month has been returned, also dropped another $15,000 into the account).

    Liabilities
    Margin Loan: $8,300 (payments of the $2,000 contributed)
    MasterCard: $1,400 (revolving balance, paid monthly -- a bit high this month again, sigh, need to work on that)
    Visa: $0
    Line of Credit: $0
    Corporate MasterCard: $1,600 (revolving balance, paid monthly)

    Estimated net worth is now $212,100 (-$10,500, ouch). Not calculating rate of return for the month, I don't want to look. Hopefully things turn around soon.

  9. #28
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    Post May 2016 update

    Been less than diligent in keeping the diary up to date. So last 2 months will be missing. with that said, have no paid corporate taxes which ended up being entirely offset (and then some) with my tax refund as, because of start up, etc. grossly over-contributed when it was all said and done.

    Also, I re-jigged my banking to remove the monthly fee on my personal accounts ($120 per year savings) and am in the process of opening up a credit facility for the corporation to smooth income if/when necessary without dipping into the investment account. The added upside is it will have over $100,000 of available credit shortly and it looks like the bank is signing off on 4.7% unsecured -- might be usable for investment purposes as well if we get a nice market crash(!). I was hoping for a bit lower for that purpose but I guess this isn't bad as this is comparable to the margin rates at the banks and avoids under margin calls if I do use it. No holding costs to seemed worthwhile just as standby.

    Being exposed to international/US equities predominately, the current markets have not been kind so I won't run rate of returns this month (mildly negative currently):

    Assets
    TFSA 1: $40,000 ($100 monthly contribution in March and April)
    TFSA 2: $13,000 (no contributions, maxed out once the $100 per month goes to the other TFSA)
    RRSP: $70,100 ($13,000 contributed in April)
    Non-Registered (CAD): $ 48, 600 ($100 contribution in March, don't really recall why I did that)
    Non-Registered (USD): U$350 (no contributions)
    Savings Account 1: $5,700
    Savings Account 2: $7,300 (another $7000 going to RRSP as soon as funds off hold period)

    Corporate Current Account: $7,900
    Corporate Investment Account: $49,100 (net $1,000 withdrawal - withdrew $10,000 in March to cover taxes and contributed $9,000 in April).

    Liabilities
    Margin Loan: $8,200
    MasterCard: $1,400 (revolving balance, paid monthly -- a bit high this month again, sigh, need to work on that)
    Visa: $0
    Line of Credit: $0
    Corporate MasterCard: $300 (revolving balance, paid monthly)

    Estimated net worth is now $232,200 (change of $20,100 since last update so average over the 2 months of +$10,050).

    2016 Goals

    After quarter 1:
    1) Make a 2016 TFSA contribution ($5,500), and use it to re-balance; I Consider this done, the automatic $100 per month will max this out in December
    2) Make a 2016 RRSP contribution (whatever the 2016 maximum is), and use it to re-balance; Waiting on a cheque to clear to transfer to RRSP, then just a case of deploying to balance. 50% done
    3) Make a total retirement contribution (TFSA, RRSP, retained earnings, savings, etc. put aside specifically for retirement and not other purposes) of another $50,000; Net contributions are $18,950 year to date. Not done.
    4) Continue to try to get each asset category within 3% of their target allocation. Not done.

    Additionally, I'd like to aim for the following (not sure how realistic they are):
    5) Obtain a total net worth of $300,000 by December 31, 2016 (seems FAR too ambitious but let's give it a shot); Not done, but this is the 'pie in the sky'
    6) Start some kind of 'hobby' side business and have it break even; and Not done, not started.
    7) reduce general living expenses so the credit card ends up under $1,000 a month on average. Very much not done :-(

  10. #29
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    June 1 (effective)

    Anticipating two days as I know this week will be hectic and I won't get an update in otherwise. Corporate line of credit is set up now and I think I am done tweaking banking things for the next little while. Which is good. Hopefully, an opportunity presents itself so we can get some of that capital deployed. Markets have been a bit kinder to me lately, so that's nice. Spending has been a bit high (that isn't). With the movement of cash into the RRSP and where it was deployed, that will now start to drip another security. Also looks like I may be remitting a bit too much in monthly installments, might drop that back a bit for the second half of the year which would help with liquidity.

    As at June 1, 2016 (rent and tax remittance anticipated)
    Assets
    TFSA 1: $41,500 ($100 monthly contribution)
    TFSA 2: $13,600 (no contributions, maxed out once the $100 per month goes to the other TFSA)
    RRSP: $80,300 ($7,000 contributed, now full for the year)
    Non-Registered (CAD): $ 50,500 ($300 contribution - had some cash I didn't have any use for)
    Non-Registered (USD): U$350 (no contributions)
    Savings Account 1: $6,100
    Savings Account 2: $100

    Corporate Current Account: $8,800
    Corporate Investment Account: $50,400.

    Liabilities
    Margin Loan: $7,600
    MasterCard: $1,000 (revolving balance, paid monthly -- a bit high this month again, sigh, need to work on that)
    Visa: $0
    Lines of Credit: $0
    Corporate MasterCard: $1,400 (revolving balance, paid monthly, bought some equipment)
    Corporate Line of Credit $0


    Estimated net worth is now $240,000 (change of +$7,800 since last month.


    Rate of Return
    Rates of return (as of May 30, 2016) are:
    Non-registered CAD, (heavily Canadian financials) at +13.052% YTD return (34.79% annualized); TFSA 1 (balanced in its own right) is at -0.391% YTD (-0.95% annualized); TFSA 2 (global small cap) is -1.758% YTD (-4.22% annualized); RRSP (foreign / USA) is -2.141% YTD (-5.13% annualized), and corporate investment account (global small cap / cash equivalents) is at 0.414% YTD (1.01% annualized), which gives an overall investment return of +1.579% YTD (3.88% annualized).

    My benchmark, made of a mix of index ETFs (35%VFV, 35%XEF, 25%XIU, 3%VBB, 2%cash), is returning -0.97% so I'm beating it so far this year (for now). Hopefully, it stays that way!

    Goal Tracking for 2016

    1) Make a 2016 TFSA contribution ($5,500), and use it to re-balance; Considered done. On autopilot now.
    2) Make a 2016 RRSP contribution (whatever the 2016 maximum is), and use it to re-balance; Done
    3) Make a total retirement contribution (TFSA, RRSP, retained earnings, savings, etc. put aside specifically for retirement and not other purposes) of another $50,000; Net contributions are $26,357 year to date. Not done.
    4) Continue to try to get each asset category within 3% of their target allocation. Done, barely. Furthest deviation is 2.9% This will drift again with new contributions for sure though.
    5) Obtain a total net worth of $300,000 by December 31, 2016; Not done, seems unlikely
    6) Start some kind of 'hobby' side business and have it break even; Not done, not started. Need to come up with a viable idea
    7) reduce general living expenses so the credit card ends up under $1,000 a month on average. Still very much not done

  11. #30
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    July 1, 2016

    Post-Brexit update. Made a small ($20,000) play on the drop post-Brexit by buying into XEF the Friday directly after. Didn't time the bottom but came close. Unfortunately, wanted to go more on this but could not as one broker, TD, wouldn't load that day -- good reason to keep multiple brokers 'on the go'. Ideally, I wanted to go $50,000 into XEF that day but couldn't. The hypothesis is that I don't anticipate Brexit will affect the large cap stocks in that index very much at all once the paranoid wears off. So far, the market appears to agree with me but we shall see. I have a sell threshold on this for 1 month out -- if the market rebounds enough, I'll reduce my international exposure back into line with where it should be and take a quick profit. If they do not, I have no issue holding XEF and being slightly overweight international for a few months and then will bring asset allocation back into line with new money.

    Also had to cover a family members large expense for a few days on the credit card, however, already have been re-imbursed so I'll make 1% credit card cash back as interest for fronting some money for approximately 3 days. I guess that's not bad considering. Also, increased my BCE exposure a bit using margin near the middle of the month.


    Anyways,

    As at July 1, 2016
    Assets
    TFSA 1: $40,800 ($100 monthly contribution)
    TFSA 2: $13,500 (no contributions)
    RRSP: $78,900 (no contributions)
    Non-Registered (CAD): $ 56,000 ($200 contribution -- getting rid of some cash on hand)
    Non-Registered (USD): U$355 (no contributions)
    Savings Account 1: $10,400
    Savings Account 2: $10

    Corporate Current Account: $8,600
    Corporate Investment Account: $51,000. ($1,000 contribution)

    Liabilities
    Margin Loan: $13,500
    MasterCard: $7,000 (revolving balance, paid monthly -- this has that one off expense that I am fronting included)
    Visa: $0
    Lines of Credit: $0
    Corporate MasterCard: $500 (revolving balance, paid monthly)
    Corporate Line of Credit $0

    Estimated net worth is now $240,000 (nil change).


    Rate of Return
    Rates of return (as of June 30, 2016) are:
    Non-registered CAD, (heavily Canadian financials) at +11.587% YTD return (24.74% annualized); TFSA 1 (balanced in its own right) is at -2.136% YTD (-4.26% annualized); TFSA 2 (global small cap) is -2.401% YTD (-4.78% annualized); RRSP (foreign / USA) is -4.062% YTD (-8.02% annualized), and corporate investment account (global small cap and large cap) is at 0.266% YTD (0.44% annualized), which gives an overall investment return of +0.216% YTD (0.44% annualized).

    My benchmark, made of a mix of index ETFs (35%VFV, 35%XEF, 25%XIU, 3%VBB, 2%cash), is returning -3.72% YTD according to google's portfolio summary so I'm still beating it so far this year. Also, ran XIRR since January 2014, when my records begin, and see I have an annualized XIRR rate of return of 8.62% which is 'in the ball park' of what I would like to maintain for the next 40 years!

    Goal Tracking for 2016

    1) Make a 2016 TFSA contribution ($5,500), and use it to re-balance; Considered done. On autopilot now.
    2) Make a 2016 RRSP contribution (whatever the 2016 maximum is), and use it to re-balance; Done
    3) Make a total retirement contribution (TFSA, RRSP, retained earnings, savings, etc. put aside specifically for retirement and not other purposes) of another $50,000; Net contributions are $27,657 year to date. Not done.
    4) Continue to try to get each asset category within 3% of their target allocation. Not done, given the XEF play.
    5) Obtain a total net worth of $300,000 by December 31, 2016; Not done, seems unlikely.
    6) Start some kind of 'hobby' side business and have it break even; Not done.
    7) reduce general living expenses so the credit card ends up under $1,000 a month on average. Still very much not done. This is something I really need to work on!

    Anyways, onwards to next month, hopefully it will be better!


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