No plan survives contact with the enemy...
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Thread: No plan survives contact with the enemy...

  1. #1
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    No plan survives contact with the enemy...

    New member here. I have been reading the 'money diaries' for a while now and they seem like good motivation to keep saving (and avoiding 'lifestyle creep'). Nothing like public accountability in that regard.

    Therefore, it seemed prudent to 'get in on the fun' and, hopefully, maintain motivation to continue to invest and learn from the experts here.

    So far, only been investing for about 2 years now. 2013 was 'jumping in' with a small TFSA (mutual funds) and far too much consumer spending. I only really started in earnest in 2014 with the realization that 'I ain't getting any younger', have no pension, and don't want to work forever... I like what I do (at times) but would definitely like to do less and scale back as time goes on.

    Hopefully, I can continue to keep moving onward towards that loftiest of goals of financial independence and living off dividends.

    This money diary will simply be account balances and random thoughts on investing and spending. With that said, I am already seeing complexity seep into my financial life as 2015 started with me incorporating my practice. The plan is that writing about all of this may make the complexity more bearable (and additionally, more reasoned) as well as 'give back' - as the money diaries on here were great motivation to get into investing.

    With that preamble, and realizing it is the start of 2015.

    As of January 2, 2015:

    Age: 29, Renter

    Assets:
    TFSA: C$37,998
    RRSP: C$28,784
    Non-Registered (CAD): C$27,778
    Non-Registered (USD): US$ 341

    Savings Account 1: C$2,271
    Savings Account 2: C$ 49

    Corporate Current Account: $ 90.00

    Liabilities:
    Margin Loan (@4.25%): C$3,864
    Mastercard: ~C$2,000.00 *this is just the revolving balance as of January 2, it is paid in full monthly
    LOC: C$ 0
    Visa: C$0

    Net Worth: C$93,889 (converted at TD's listed rate)

    The margin loan was simply a result of market timing when the banks dropped a little while back to a point where after tax cost of margin was comparable to the annual dividend on the bank stocks I bought with the margin money this meant taking my 'cash reserve' cash as well as margin when the deal was ripe. So far, it is working out. Wish I had gone in further but hindsight is 20/20. However, the downside is this (ill-conceived market timing?) has moved my asset allocation out of balance quite substantially. Currently I am sitting at 38% Canadian equities (target is 25%), 31% International Equities (target of 35%), 31% US Equities (target of 35%), 3.7% fixed income (target 3%) and negative for cash (target of 2%).

    My goal, for 2014 was $100,000 net worth so fell slightly short of that target.

    The plan is that over 2015 I can be re-balanced through additional contributions since net worth is low enough that contributions will have, hopefully, enough of an effect (we will all see if 'letting it ride' as I re-balance is a good idea or not I guess).

    Goals for 2015 are:
    1) Get a net worth of $160,000.00 (estimated) or better on or before December 31, 2015 - for this purpose I will be including corporate holdings and adjusting downwards for unpaid corporate taxes - any idea of a good adjustment factor?
    2) Put $4,000.00 into Savings Account 1 as part of 'cash reserve';
    3) Make a 2015 TFSA contribution ($5,500), and use it to re-balance;
    4) Make a 2015 RRSP contribution (whatever the 2015 maximum is), and use it to re-balance;
    5) Put a base of $4,000.00 into corporate account to avoid bank fees;
    6) Open and fund with at least $15,000.00 (to avoid small account fee) a corporate brokerage account; and
    7) Get each asset category within 3% of their target allocation.

    Let's see what 2015 brings!


  2. #2
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    Looks good overall, though without some indication of your income it will be tough to judge whether your goals are achievable or realistic.

  3. #3
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    I guess that would be useful information for an assessment. Income is variable but will range between $100,000 and $175,000 a year.

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  5. #4
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    Ok, time for the first month's update.

    January was actually a quiet month finances wise. Didn't spend "that much" overall but a few one of expenses will be coming up in February. Also, had to make a shareholders' loan into my corporation to cover start up expenses. With that said, it was also the month I received my Q4 draw at work -- so that helped. Of course the markets didn't.

    I have not yet made my TFSA contribution but am currently moving the funds to do so -- does anyone know a good (free) non-cheque way to move money between Canadian banks? I've been using cash and it is a bit of an annoyance having to first order the cash, then get it and walk it 'across the street' to the other bank. I've been suggested to use Interac transfers but everything I read on them suggest that the system limits make then quite useless to move funds back and forth unless done over a 1 week period in smaller batches which I fear will raise red flags. Thoughts?

    Anyways, here is where we sit on February 1, 2015, I've decided to start rounding instead of going "to the dollar" as well.

    Assets
    TFSA: $39,100 ($100 monthly contribution)
    RRSP: $31,000
    Non-Registered (CAD): $ 37,400
    Non-Registered (USD): $330
    Savings Account 1: $14,700
    Savings Account 2: $2,550 (money on its way to TFSA)


    Corporate Current Account: $500

    Liabilities
    Margin Loan: $10,450 - paid 400 towards paying down this
    MasterCard: $1,000 (revolving balance, paid monthly)
    Visa: $0
    Line of Credit: $0
    Corporate MasterCard: $0 - new, for the corporation's expenses to keep them separate.

    Net Worth, converted at TD prevailing rate: $114,960

    For the next month, my plan is to draw down on Savings Account 1 for living expenses instead of investing the funds. The reason being to allow the corporation, who I will now be paid through, to accumulate enough to avoid bank fees, repay its shareholders loan (to keep things clean) and to get the base amount established in its account. Also, in February, I hope to get the 2015 TFSA contribution made after funds settle though the various accounts needed to make it. Asset allocation is still very much 'out of whack' as I haven't made any contributions except to paying back the margin loan a bit and my monthly contribution of $100 to my dollar cost averaged mutual fund TFSA.

  6. #5
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    You could open an account at Tangerine. Transfers to/from other banks are free and can be done with large amounts. Keep $1 or so in the account so it stays active, and mainly just use it as an intermediary. The disadvantage is it takes around 2 business days each direction, so you'd be waiting for 4 business days altogether.

  7. #6
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    Thanks for the idea Spudd. I am actually just in the process of doing this but having issues with them needing a cheque to open the account. Since I don't have a chequing account (anywhere), they won't take a one of credit cheque nor a counter cheque, it may be a dead end.

  8. #7
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    Monthly update time. Never did get the tangerine account to work, but given my recent restructuring, it looks like I won't have to be moving cash back and forth any more regardless. So the "do nothing" approach may have worked out in the end.

    Had a bit of 'start up' spending for the corporation and had to buy a new phone -- my old one was well past its prime.

    It was also a quite month for investing, just the one 'move' of moving my TSFA contribution into the TFSA account. Continuing to draw on unallocated personal funds to allow corporate funds to accumulate.

    So here is the numbers:

    Assets
    TFSA: $41,000 ($100 monthly contribution)
    TFSA 2: $4,400 (contribution of $4,300)
    RRSP: $32,000 (no contributions)
    Non-Registered (CAD): $ 38,500
    Non-Registered (USD): $350
    Savings Account 1: $8,800
    Savings Account 2: $50 (money on its way to TFSA)

    Corporate Current Account: $6,500 (unadjusted)

    Liabilities
    Margin Loan: $10,460
    MasterCard: $1,200 (revolving balance, paid monthly)
    Visa: $0
    Line of Credit: $0
    Corporate MasterCard: $800

    Net Worth, converted at TD prevailing rate, rounded after calculation: $119,350 (+$4390, unadjusted for taxes).

    Hopefully better next month, a bit high on the spending this month.

  9. #8
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    Quarter 1 update time!

    March was a pretty standard month. No substantive investment activity other than starting the process of opening a corporate brokerage account (they haven't completed that yet, way too much paper) and little in the way of unusual spending. The 'economic slowdown' is starting to become apparent at work as workload is becoming more and more erratic, and receivables are getting longer. Here is hoping Q2 is better in that regard. Also, I finally got a chance to complete my personal taxes and it looks like a nice size refund is forthcoming in April/May. Of course it is 'already spent' on next years RRSP contribution.

    With the quarter ending, I thought this would be a good time to also look back on my 2015 goals:
    1) Get a net worth of $160,000.00 (estimated) or better on or before December 31, 2015 -- not nearly there yet, but lots of time to go.
    2) Put $4,000.00 into Savings Account 1 as part of 'cash reserve'; - DONE!
    3) Make a 2015 TFSA contribution ($5,500), and use it to re-balance; - sort of done, I've contributed enough that the monthly $100 automatic contributions will do the rest. SO I'll preemptively say this is done.
    4) Make a 2015 RRSP contribution (whatever the 2015 maximum is), and use it to re-balance; - Not 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; - not done.
    7) Get each asset category within 3% of their target allocation. - Not done, my asset allocation is still way off (and heavy Canadian which is hurting). However, there is still lots of time for the contributions to balance this back before year end.


    Here is where we are with the numbers:
    Assets
    TFSA 1: $41,350 ($100 monthly contribution)
    TFSA 2: $4,400 (no contributions)
    RRSP: $32,100 (no contributions)
    Non-Registered (CAD): $ 38,200 (no contributions)
    Non-Registered (USD): $340 (no contributions)
    Savings Account 1: $5,500
    Savings Account 2: $20


    Corporate Current Account: $12,000

    Liabilities
    Margin Loan: $10,360 - paid $90 towards paying down this with some cheques I needed to deposit.
    MasterCard: $960 (revolving balance, paid monthly)
    Visa: $0
    Line of Credit: $0
    Corporate MasterCard: $110.

    Net Worth, converted at TD prevailing rate (as of April 2, 2015): $122,600 (+$3,250, so a pretty average month)

    I've also had the chance to look at rates of return on everything, so far my time weighted return over my investments (TFSA1, TFSA2, RRSP, and Non-Registered) is 5.78% YTD (25.595% annualized). My non-registered portfolio is the dog (-3.03% YTD) but this is my predominately Canadian holdings so somewhat to expect. My international/USA holdings (predominately in RRSP) are up 11.58% YTD and my somewhat properly balanced TFSA is an acceptable 7.99% YTD.

    Obviously, this can change a lot throughout the year and is actually worse with the 'cash drag' of funds not invested, but still nice to see a reasonable rate of return covering the margining costs regardless of the accuracy of the calculation.

  10. #9
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    A good, but not great, month.

    April was a unique month and somewhat busy. GST was due and paid, a tax refund was received (and promptly 'spent' on RRSPs) and a quarterly draw from work (down about 20% from usual quarterly revenue, the economy is hurting) and opened a brokerage account for the corporation Overall, this means a 'messy' month. Oh, and the TFSA limit was raised meaning another $4,500.00 needed to get placed in TFSA. New money is still in cash unfortunately, but is either at or making its way to the correct accounts and currencies (convert to USD in RRSP and purchase US securities for balancing purposes).


    Here is where we are with the numbers:
    Assets
    TFSA 1: $40,900 ($100 monthly contribution, down a bit with market movement)
    TFSA 2: $8,900 ($4,500.00 contribution, still in cash as I'm waiting for the 45 day holding period to expire on the e-series funds that I was previously holding here to expire so that the full amount can be used on a stock or mayer fund purchase -- the change in TFSA limit adjusted my plans a bit with this account)
    RRSP: $41,500 ($10,000 contribution from tax refund)
    Non-Registered (CAD): $ 37,700 (no contributions)
    Non-Registered (USD): $350 (no contributions)
    Savings Account 1: $3,700
    Savings Account 2: $10,300 ( waiting on $10,000 cheque to clear then this goes into RRSP)

    Corporate Current Account: $13,000
    Corporate Investment Account: $nil (just opened).

    Liabilities
    Margin Loan: $10,050 - paid approximately $260 towards paying down this with some cheques I needed to deposit, may pay another 300 or so to this in May with money I don't have any use for currently.
    MasterCard: $1750 (revolving balance, paid monthly, higher than usual as I had to book a flight across country as well as purchasing some printing supplies)
    Visa: $0
    Line of Credit: $0
    Corporate MasterCard: $450.

    Net Worth, converted at TD prevailing rate (as of May 1, 2015, close of business): $145,400 (+$22,800, so a pretty good month, but should have been about $3,000-5,000 more if it weren't for the work slowdown). Though to put things in perspective, 'tucking away' over $20,000 in a month is probably not something to complain about too much.

    For next month, the plan is to get that remaining $10,000 into the RRSP and then use the funds in various accounts to make purchases and reduce cash on hand.

    Onwards and upwards!

  11. #10
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    Looks like the big goal of $160k net worth will be achieved before the end of summer. Nicely done.


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