# Being Aggressive - $2M saved by 37



## Janus

*Being Aggressive at 26: My 10 Year Goal*

Hi everyone,

First time post here. I’ve always been somewhat frugal and savings-minded, but after reading Rich Dad Poor Dad recently I’ve become particularly motivated to shovel more of my income into assets. I feel like this forum is a great way to motivate oneself and each other. Certainly lots of inspiring stories!

Here’s where I sit so far.

*Age*: 26

*Income*: About $6500 after tax monthly - assuming 5% growth per year, which in reality will occur in uneven spurts.

*Job*: I work as a stock analyst.

*Assets*: $79,804 in registered and unregistered accounts

*Holdings*:
The above accounts are about 80% invested into stocks/etfs, and 20% in cash. Given the current market environment I don’t touch bonds, but I’m definitely willing to look at real estate over the next couple of years. In the short term I’ll be allocating new savings towards REITs.

*Liabilities*: none - I paid off my grad school debt last year and will use the empty line of credit to throw into markets when certain special opportunities (i.e. major corrections) arise.

I feel that I’m in a good situation, but nevertheless am very impressed by all the people here younger than me who’ve already made it to the $100k point. 

*Goals*: 
1. $500k saved by age 30 - $25,000 passive income (5% yield assumed)
2. $2m saved in by age 37 - $100,000 passive income (5% yield assumed)

*Questions*:
1. I know many people on this forum are very real-estate focused, and I’m not against RE, but I’d rather have my $100k doing what I want in the security markets than put it all into a house and have no active money in the market. I’m considering putting 50k towards an investment property at this level but that’s the limit for now, and even still it feels excessive to have that much in RE as a % of what I have (do I sense some bristling? :tongue-new. Am I wildly different in my lack of focus on income properties? I’m expecting some very interesting answers here.

2. I've been thinking about the pros and cons of saving money on rent - and hear me out. While I feel that paying $100 more per month on rent feels and sounds expensive, I think that there's a point at which having a nicer place makes a person less likely to go out for dinners & drinks (why not host)? I'm not advocating spending *too* much on rent, rather questioning the virtue of spending too little and ending up with a place where you wouldn't enjoy spending a friday night. Curious as to what others think - $100/month goes pretty quickly at a bar or restaurant.

3. Very curious to hear everyone's opinions on Rich Dad Poor Dad. Love it or hate it, I'm eager for some discussion/debate!

Cheers,

Janus


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## MoreMiles

It is good to dream but there are too many variables at your stage of life.

You may meet someone you love and have twins before you reach 30's. Then there is no way you can save $500k once you have a family to support.

You may encounter another stock correction, wiping 1/3 of net worth away... And where are you going to get your 5% yield assumed? I know you work as stock analyst but with our interest rate and bond paying only 1-2% these days, any yield higher than that comes with a risk. So with a 5% yield that REITs delivered, did you see what happened just a few months ago? They lost like 10% within a few weeks.

In my opinion, the biggest problem in your plan is 5% assumption and no planning for possible change in your life obligations.


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## Janus

Thanks for the reply, some fair points there.

1. I definitely won't be having kids until I'm at least 30, but you're right - who knows what could happen between then and age 37. All the more reason to be aggressive now with saving, I suppose.

2. I completely disagree about stock corrections. If you held an S&P 500 ETF in the crisis and just left it alone, where would your assets be right now? You'd be up roughly 14% since the peak in 2007. Stock corrections will create variability in the plan, but even in the most recent extreme case if you just held on to a diversified PF there wasn't any permanent destruction of wealth. If anything they're also opportunities to invest at bargain prices and ridiculously high yields.

3. My 5% yield is indeed a bit high, but only slightly so. Given current interest rates I don't foresee myself touching bonds for quite a while, so I'm not relying on them for yield. I see 4% as fairly easy to obtain - BMO at 4%, Dundee REIT at 7.5%, BCE over 5%, AT&T at 5%, McDonald's at high 3%, Husky Energy at 4%... though I've got no idea what to expect from actual real estate in Toronto yield wise.

Overall I think your points about life planning are spot on - I haven't built them in and there are a bunch of things that will change. But is that a reason *not* to make the plan as-is today? I can't build a family into the model if it doesn't yet exist.


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## MoreMiles

There is a difference of opinion here. I do not agree that our markets simply return to normal as you wait. The stock markets have been artificially inflated by money printing this time. This type of thing, at least to this scale, has never been done before. The Feds are sailing in an uncharted territory. Is this the "norm" that everyone should expect? You have to decide. If there is another stock correction, what is the Fed going do this time? They have already used their medicine. It is like getting a drug-resistant bug. Once you have overused your antibiotics, you end up with more serious problems that do not respond to intervention any more.

About the high yields in Canada, the most well known ones are Bank and Telecom stocks. They were good because of low-rate RE boom and 3G data extra revenue. My opinion is that banks will face future problems when increasing rate and unaffordable housing. Telecom will face future problem once they max out all the data / smart phone upgrades. There were able to move the ARPU from $30 to $60 due to data in the last few years. Going forward, how many people do you think will be willing to pay $75/m for their cell phone plan or $100/m for cable TV? So there will be a slow down soon. When that happens, the dividends will be at risk.


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## the-royal-mail

Simply being aggressive, assuming 5% stock returns and assuming everything in your life will remain equal for the next 11 years are not sufficient factors to save $2 million. But I suppose we could all live in a cardboard box and eat out of dumspters. Becomes a question about the quality of life you want to have for yourself.

But it sounds like your mind is made up, no matter what anyone tells you. Is that right?


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## Janus

@MoreMiles: Your opinion is valid and I agree about some of your points on QE. But consider this - if the banks didn't cut the dividend in during the worst financial crisis since the great depression, do you really think slowing loan growth is going to do it?

@royalmail: Wow - this much hostility directed at me for outlining my goals and backing up my points? 

How am I ignoring what people tell me? I acknowledged moremiles' point, as it's valid. And this doesn't involve living a crappy quality of life, but rather increasing my quality of life slower than my income. I think you misinterpreted my usage of "aggressive".

5% stock returns (after inflation) is completely reasonable, as it's shown to be the norm over a hundred years. You have to start somewhere with assumptions, and it's a completely reasonable one.


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## Four Pillars

Janus - You are on a great track and I think the main thing is to just keep going the way you are going, regardless of what turns you encounter in life. Yes, if you have triplets, the savings rate will go down, but so what? I'm sure it will still be there and you can keep improving your financial situation as you go.

My point is that setting an arbitrary future dollar figure is somewhat pointless - just keep being financially responsible and see where that takes you.

Tip - just ignore Royal Mail - he's a troll.


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## the-royal-mail

No hostility intended, but you are not listening to dissenting views. You seem to have a rebuttal for everything and your mind seems made up. It's not a good approach to take if you're really here to learn something vs. just talking.

Tip - just ignore Four Pillars - he's a troll.


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## Janus

Four Pillars - thanks for the post.

What you've said is very much along my lines of thinking. If I get to $2m by 37, great... if I'm only at $1m by 37, fine, but at least I'll have been working towards something and having a goal.

I agree arbitrary numbers are meaningless - I've picked a yield assumption in order to help think about the kind of passive income the goal would give me, because that actually translates into quality of life. $2M is just a number; $100,000 a year means something that we all understand in terms of quality of life. But why 100 and not 90 - it's just a round number and something to aspire to. 

And the point is *not* to retire, but rather to have options. Options to start your own business and not worry about paying the bills, options to take a long sabbatical, etc.

Royal Mail - I'm listening to dissenting posts, admitting where they're true and stating facts to support points where I disagree - I'll yield in the face of a better argument than mine, as I did when MoreMiles said I didn't account for kids. I think you'll find I'm a very reasonable debater.


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## Four Pillars

Janus said:


> And the point is *not* to retire, but rather to have options. Options to start your own business and not worry about paying the bills, options to take a long sabbatical, etc.


Exactly - more options is what it's all about in my opinion. 

In my case (I'm quite a bit older than you), one of the big things in the last couple of years was paying off my mortgage. I can't tell you how much of a difference it has made. Truthfully, I haven't been as financial responsible after paying off the mortgage, mainly because I don't have to be. I still save quite a bit in RRSP, RESP and TFSA (occasionally) and with no debts, I feel pretty damn good.

Whether it's paying off debts, or saving a certain amount of money or having a successful side business - hitting a certain goal or milestone can really take the financial pressure out of your life.


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## Janus

Congrats on paying the mortgage off, that must feel fantastic. 

I've outlined some mini-milestones along the way, things to look forward to. For instance, once passive income reaches the point where it can cover my monthly rent (say $1700/month), that feels big conceptually - the ability to no longer need to put your salary towards rent. It's all just mental accounting, but I feel like that will be the first big moment where the power of replacement income is felt.


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## Janus

(sorry, double posted.)


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## SpendLessEarnMore

just wanted to wish you tonnes of success. Hopefully you can update us on your path to $2 mil each month. Oh and stay away from Toronto real estate as an investment for now.


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## Charlie

congrats Janus.

You're 26 at the start of a career in a potentially lucrative field. By 37 you may be earning $2m or more annually!

I think what you're doing financially is great. You've set some savings and investment goals and are perusing them now. Keep your spending in check and manage your risk and you'll be in great shape going forward. Impossible to say where you'll be at 37....but if you continue with an investment accumulation mindset you'll be just fine.


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## skiwest

Janus said:


> 5% stock returns (after inflation) is completely reasonable, as it's shown to be the norm over a hundred years. You have to start somewhere with assumptions, and it's a completely reasonable one.


I use 5% for my retirement calc so pretty reasonable. Those bank stocks have pretty low PEs so div or 3-5% is really an overall return of 10% plus growth. I look at my long term holdings like BAM and its up 700% not including div. Now I've held it a long time.

Early on just tried to do right thing- pay of mortgage. Was paid off at 40. When big windfalls came way put into RRSP then used tax refund to pay down mortgage. If company offered and extra 1/2% if I put in 1% I did it. If company said I can buy stock before going public I borrowed as much as I could.

I only started really calculating net worth and projecting into future since 2009. That is when I could see if this and that happened I could retire early.


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## underemployedactor

Yes, congrats by all means. But don't spend the extra dough on rent. Hive off the extra C note and have some fun! You're 26, and living in HK!
No offense but good luck finding a girl to have kids with if you're too cheap to go to restaurants at your age.
Live a little. The only thing that spends faster than money is time.


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## marina628

When I set a goal to save my x dollars I figured out what I had to save per month and did it .When things messed the plan up I tried to get back on target but things like Cancer in the family and kids college can mess it up big time.Most people do set them up to fail by making unrealistic goals .


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## Woz

I'm curious how you plan to save up $500k in 4 years. Assuming a 5% return, with $80k currently saved, you'd need to save $7800 per month. That's higher than your current income. 

I guess it doesn't matter too much as even if you come up short you'll still have a lot saved :smile:.


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## MoreMiles

Woz said:


> I'm curious how you plan to save up $500k in 4 years. Assuming a 5% return, with $80k currently saved, you'd need to save $7800 per month. That's higher than your current income.
> 
> I guess it doesn't matter too much as even if you come up short you'll still have a lot saved :smile:.


No... he is not assuming only 5% return. He is assuming a massive capital gain PLUS the 5% yield, like what we have seen here with dividend stocks in 2013. The stocks were growing like 30%. With that rate for 10 years, at the age of 37, you would reach $2M.

Hmm... No offense... but I really hope that you are not my stock analyst. Even in the best case scenario, your math does not add up. It will only work if you can make what happened in 2013 every year, for the next 10 years. Do you really count on that? :hopelessness:

With your rate, you will have $200M saved by the time you retire in 65... good for you if you make it. You will probably need to gamble on options and futures.


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## donald

Your 3rd question,rich dad poor dad,i honestly did get something from the book and it did help(even though this ''rich dad'' is very likely a mythical character which i guess is obvious)I think robert kiyosaki is somewhat of a fraud though with his seminars ects-I'm sure royal mail is a big advocate of his teachings lol.
Like almost all of these authors the book is basically like the original-richest man in babylon.For young people starting off it is prob worth a read(learning assets/liabilities,frugality and money management in a fairy tale way.
I think your obvious path to 2 million is through earned income,maybe you make partner at your firm?Sounds like you work for a international financial corp(maybe a move to new-york wall street?)if your only 26 and in big finance i'm sure 2 million is not out of the question by 37(hong kong s financial district is multiple times larger than toronto no?way more lucrative ops)


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## Janus

SpendLessEarnMore: thanks. I know toronto is pricey, so maybe I'll wait until things cool off (or better yet lead to a correction).
Charlie: thanks!



underemployedactor said:


> Yes, congrats by all means. But don't spend the extra dough on rent. Hive off the extra C note and have some fun! You're 26, and living in HK!
> No offense but good luck finding a girl to have kids with if you're too cheap to go to restaurants at your age.
> Live a little. The only thing that spends faster than money is time.


Who said I don't go out to restaurants or bars? I didn't mean to imply that I'm living like an ascetic here. I'm merely trying to avoid the "4 nights out per week" with a more balanced Canadian "one big night out per weekend" approach. After-work beers are never out of the question, but I try to be smart about it. There are smart ways to spend in Hong Kong - this weekend I'm paying $50 for a boat trip to some island beaches for a nice day on the water/sand with 25 friends, food included. That $50 is the cost of a few beers and dinner in this city.



MoreMiles said:


> No... he is not assuming only 5% return. He is assuming a massive capital gain PLUS the 5% yield, like what we have seen here with dividend stocks in 2013. The stocks were growing like 30%. With that rate for 10 years, at the age of 37, you would reach $2M.
> 
> Hmm... No offense... but I really hope that you are not my stock analyst. Even in the best case scenario, your math does not add up. It will only work if you can make what happened in 2013 every year, for the next 10 years. Do you really count on that? :hopelessness:


I'm not building in capital gains at all - just 5% per year real total return. I also have yearly bonuses starting around $40,000 that are less volatile than you'd think, and which will grow. Sorry to break it to you, but a bull market has nothing to do with my strategy, it's simply costs versus income and an assumed growth rate for both.



donald said:


> Your 3rd question,rich dad poor dad,i honestly did get something from the book and it did help(even though this ''rich dad'' is very likely a mythical character which i guess is obvious)I think robert kiyosaki is somewhat of a fraud though with his seminars ects-I'm sure royal mail is a big advocate of his teachings lol.
> Like almost all of these authors the book is basically like the original-richest man in babylon.For young people starting off it is prob worth a read(learning assets/liabilities,frugality and money management in a fairy tale way.
> I think your obvious path to 2 million is through earned income,maybe you make partner at your firm?Sounds like you work for a international financial corp(maybe a move to new-york wall street?)if your only 26 and in big finance i'm sure 2 million is not out of the question by 37(hong kong s financial district is multiple times larger than toronto no?way more lucrative ops)


Agreed on Kiyosaki - he's clearly milking this for all it's worth. But I do love the book in isolation. There's no revolutionary information in there, but the basic approach to money and the way of structuring goals (income vs. a random net worth number) seemed really novel to me. With regards to my income, it's more about becoming a portfolio manager which is the natural progression from my current role (assuming hard work and good performance of course). But yes the financial industry in HK is many times larger than in Toronto! Not to mention, income taxes are 15% here.


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## peterk

How does your 2m happen? I'm also 26, make and have about the same money as you, and I project having about 1m at age 36 with aggressive savings and optimistic investments. Let's see the math please!

I'd like to throw in my support though for your great success and ambitions to be FI. I'm all for a bit of sacrifice when young for a nice cushy future. While the "live a little while you're young" advice I'm sure is well intentioned, I'm quite sure there's a heck of a lot more broke 40 years olds wishings they hadn't blown all their money in their 20s than there are millionaire 40 years olds who regret being mature and reasonable instead of carefree and spontateous in their 20s. I intend to be in the latter group.

Welcome to the forum Janus.


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## Janus

Hi Peter,

Thanks for the welcome. Good luck to you on your goals! Haha, I think we're going to be very similar 40 year olds.

A large part of it has to do with living in Hong Kong. 15% income tax and much more competitive salaries on the higher end.

It's a financial model based on assumptions, such as:
- staying in Hong Kong
- no wife or kids
- 5% real returns
- income growing at 5% per year, bonus growing more than that
- costs growing with inflation

Some if not most of these will change, and frankly I'll be happy if some of them do. I'll probably have kids by 37, but if they don't exist right now I don't think there's a realistic way to include them in a financial model. Returns will be different, but 7% annually and 2% inflation are the best estimates out there. Income growth may be lower, but it will *likely *be much higher - if my income hasn't at least doubled in 5 years I'm doing something very wrong, and my model doesn't even reach the doubled point in 10 years. But this is the nature of a 10-year projection: it's an estimate, a moving target that of course will not be exactly correct. I'm happy to have something to work towards, and if kids throw off the end goal, who cares? They're obviously more important than that nice round number.


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## donald

another plausable way would be to scrap a balanced portfolio and lay down 1,2 or maybe 3 concentrated positions(few I would argue have the risk aptitude)however,being a analyst and being in the industry would give a advantage.
I look at my portfolio and have it evenly spread at about 6-7% each individual stock holding and I am comfortable with this but realize because I am more defensive my upside will always be limited.
also trading with a portion of the portfolio would help.
Almost no one recommends going about it this way,however......if one is seeking out sized gains this in fact may be a way,not saying Janus would go about it this way but maybe one in a similar position(age/capital)and I guess young enough to rebound from early loss.


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## underemployedactor

Well young Janus, anyone who uses the word "ascetic" in a forum post is okay in my books. Your ambition is laudable, your goals unattainable enough to make you strive, all good things I think. Just don't forget that the two faced Roman Janus looked to the past as well as the future. Just don't mortgage too much of your spring years to ensure a golden autumn. 
And you're right Peterk this is all well intentioned advice, and for every broke 40 year old who wishes s/he had lived life more as an "ascetic" if you will, there is at least another looking at the accumulated dross that signifies success and quietly hums "is that all there is?" to themselves before embarking on excursions to the emotional killing fields of extra marital affairs and various other dead end thrill seekings in order to to try to capture what they feel they might have missed out on. Don't wind up homesick for a place you've never visited is what I'm trying to say. 
And sincerely, best of luck to you both.


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## peterk

Sounds good. So a large portion of your income is going to come in the way of bonuses as you become more senior? We're talking like 50-100k+ / year? Not too shabby at all!

What is the work hours/stress situation like in your industry? Not trying to knock you down... just genuinely curious. I always wondered if I should've become a doctor, lawyer, or analyst. But it just seemed REALLY difficult in all aspects (schooling and career) compared to engineering...

You're right underemployedactor, and I'm not particularly advocating complete miserness, but in your example I'd much rather do my living and thrill seeking full time from age 40 until death, than half *** it on a tight budget from age 20 until my hopefully sufficient retirement at 65...

I do think it's a bit odd that if someone makes $6500 a month and only spends $2500 they can be called out for wasting their youth and needing to loosen up the purse strings.

What about the (far greater number of) 26 year olds clearing $2500 and spending it all? Are they more properly living life to the fullest and spending their youth as they should be? It seems like the advice to them is always "get your act together and start making some money or you'll be broke when you're an old man". So...which is it?! :biggrin:

I think there's far too much YOLOing and "money isn't that important"ing going on in the world today. 

Yes, you DO only live once, which is why I intend to spend 10 years working extra hard to make the rest of my life extra easy. And yes, money IS that important, like top 2 important, not top 5.

Sorry, actor, these comments and questions aren't directed specifically at you. I just like to ramble on about existential things now and then 

Back to you, Janus.


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## underemployedactor

No offense taken, and certainly none intended. Chacun a son gout and all that. I'm just throwing in a gentle reminder to maintain a little balance in one's life. Your predilection "to ramble on about existential things now and then" is certainly to your credit, not detriment. My point wasn't that you only live once, but that you are only young once - a subtle but significant difference.


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## Four Pillars

peterk said:


> I do think it's a bit odd that if someone makes $6500 a month and only spends $2500 they can be called out for wasting their youth and needing to loosen up the purse strings.


Great point - if you are making a good salary (like Janus & PeterK), then you can have a great life and still save a lot. Besides, it's likely that not all their friends are doing as well, so it might work out better socially to slum it a bit (ie cheap holidays/cheap dinner options etc).


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## Janus

Donald: I do intend to focus my beliefs on some specific calls of mine and avoid over-diversification, but I doubt my PF will ever be less than 12-15 stocks.



underemployedactor said:


> Just don't forget that the two faced Roman Janus looked to the past as well as the future. Just don't mortgage too much of your spring years to ensure a golden autumn.
> 
> And you're right Peterk this is all well intentioned advice, and for every broke 40 year old who wishes s/he had lived life more as an "ascetic" if you will, there is at least another looking at the accumulated dross that signifies success and quietly hums "is that all there is?" to themselves before embarking on excursions to the emotional killing fields of extra marital affairs and various other dead end thrill seekings in order to to try to capture what they feel they might have missed out on. Don't wind up homesick for a place you've never visited is what I'm trying to say.
> And sincerely, best of luck to you both.


Almost *too* on point with all of this. To be honest I don't have much to say on it right now, I'm going to have to reflect a bit and write something proper. Maybe send a PM your way.



peterk said:


> Sounds good. So a large portion of your income is going to come in the way of bonuses as you become more senior? We're talking like 50-100k+ / year? Not too shabby at all!
> 
> What is the work hours/stress situation like in your industry? Not trying to knock you down... just genuinely curious. I always wondered if I should've become a doctor, lawyer, or analyst. But it just seemed REALLY difficult in all aspects (schooling and career) compared to engineering...


Absolutely, the bonus often grows to 100+% of salary depending on the markets and seniority. In asset management in particular, it's a really manageable lifestyle - no evenings and weekends on the "buy side". In hong kong the work hours are longer in general (I work 10 hour days), but it's a slower pace filled with mental problem-solving, team discussion and analysis - not stressful break-neck project work. Not quite as lucrative as investment banking, but I get to maintain my social life (and a soul). 

I know quite a few engineers and I feel like they get a pretty cr*p deal in Canada given their talent and value to society. Most of my engineer friends my age are making roughly two thirds of my salary with no bonus.


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## MoMoney

You mentioned investing 50K into an "investment property". If you're talking about investing in HK, forget about it. You don't have the money nor will you have the money even if you reach your goal at 37, and nobody wants to live in New Territories (especially if you work on the island). If you're talking about investing internationally while being in HK, also forget about it. You don't have the time or money for it. 

Focus on your career first and foremost, your ceiling for compensation in that city and industry has no limits. Do everything in your power to be a rising star, and in a city like HK, that means networking every free second you have, frankly you should never be at home. If you succeed, you'll be so flush with cash you won't even need a detailed investment strategy and many opportunities will come to you. As you alluded to, if you're not fast tracked for loftier positions/income by your early 30s chances are you're not going anywhere.

You're on a good path, and it's great that you're taking the time to outline your plans. Remember though that HK is probably the most cut throat and expensive city on earth. If you plan to stay there long term, remember that there's no way you'll feel like you're "safe" or "have options" even at 2M networth. I'd suggest always keeping one eye on exit opportunities.


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## Cdnwife

peterk said:


> You're right underemployedactor, and I'm not particularly advocating complete miserness, but in your example I'd much rather do my living and thrill seeking full time from age 40 until death, than half *** it on a tight budget from age 20 until my hopefully sufficient retirement at 65...


That is all well and good but I think you are also making an assumption that you will have a long time to trot the globe. Not to be full of doom and gloom, but a schoolmate of mine just passed this summer at 42 after battling cancer. Had he subscribed to your philosophy, he would have had fewer than two years of 'fun'. I think it is all a balance. You can not neglect being responsible and saving for the future, but saving exclusively and compromising enjoyment of life in the here and now may have you reflecting in the final hours if that was the best use of your time. Just be careful you don't get caught having invested all of your time gathering your coins and then not being able to enjoy them. You can't take it with you.


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## donald

Why is it that people filter being or building wealth in such extremes(either one or the other).It seems there is a notion that if one is saving a high amt/earning a high amt or very ''goal'' specific that one automatically is ''wasting'' some sort of nirvana that the ''other's"(below 40/35 or whatever age)achieved?that didn't pursue wealth.
Are the spend every penny yolo crowd that much a head in the happiness/fullfillment dept?
I might save 50% a year of all my earned income and the remaining 50% is @ par to a average canadians income.(and i ain't that rich,somewhere around 100k with bonus/dividend,yearly)How fun is it really to be a goal less/free spirited ''adventurer?why is it people think ''poorer'' or even ''average'' people have soo much more enjoyment?I believe this is completely false.
Nobody can control the day your called.The reverse the guy that lives to a 100,steeped in poverty because he lived it up.
*there are actually people that enjoy there work/business/making money ect and that in itself produces happiness*Seems like the forum is against the op and his objectives,for reasons that are unclear-if your going to think may as well think big and do both,live good and build wealth.


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## My Own Advisor

@Janus, pretty late to the comment party here, but I agree with some other comments....you are on the right/great track. 

I would suggest to focus on what you can save, and much as you while having a little bit of fun. If that's a 10%, 20% or 50% savings rate, so be it.

This way, you'll get to where you want to go, have some fun in the process, being open to the joys that life can bring.


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## Dmoney

Hey Janus, first off, best of luck getting to your goals, and congrats on actually making these goals and putting in an effort to stick with them.

To all the haters/doubters/skeptics... One thing that seems to be understated in most of the comments is the MASSIVE upside potential when it comes to total compensation. I started working in equity research at 22, at 24 my base salary has already increased by 42%. My next raise (ideally within the next 2-4 years) will be another 47%, and my final raise will be another 20%.
Now, onto the real money. Now and for the foreseeable future, like Janus, I receive a bonus of ~$40-50K annually. This is likely to be static until I max out my promotions, but down the line, can rise as high as 7 figures. While all-in comp of $100K might make it difficult to reach $2M at 36 if comp were to look more like this:

26 $90K + $40K
27 $90K + $45K
28 $125K + $40K
29 $125K + $60K
30 $125K + $60K
31 $150K + $80K
32 $150K + $80K
33 $150K + $100K
34 $150K + $100K
35 $150K + $100K
36 $150K + $3,000,000!!!!!!!!!!!!!!!!!!!!!:tongue-new:

Making $2M wouldn't be so tough.
We have a decent number of analysts at my firm making $500K+
While most are 40+ when topping out career-wise, a good number make $250K+ in their early 30s

Long story short, I'd say it's doable, but relies on salary increases rather than investment performance.


----------



## peterk

donald said:


> Are the spend every penny yolo crowd that much a head in the happiness/fullfillment dept?
> I might save 50% a year of all my earned income and the remaining 50% is @ par to a average canadians income.(and i ain't that rich,somewhere around 100k with bonus/dividend,yearly)How fun is it really to be a goal less/free spirited ''adventurer?why is it people think ''poorer'' or even ''average'' people have soo much more enjoyment?I believe this is completely false.


I would whole heartedly agree, as I have above. I think the key is that these free spirited people only _seem_ that way. How the hell can you be free spirited and enjoy life with (likely) large student loans crushing your cash flow, and the rest eaten up by daily expenses you can barely afford?

Hopefully that adventurous spirit is strong enough to overcome the spirit of getting older 1 year at a time and each year having not improved your lot in life. That goal less mindset able to look at the student loan, car loan, credit card bill and see that you still have 7yrs 8mths to pay off. That must be a very carefree feeling...


But I think we're going to extremes here to justify our points. Both the saving side and the spending side (what if you die at 42).

I guess just because I bank 70% of my after tax income doesn't mean that someone saving 15-30%, and in exchange has a nicer house, car and children to feed is necessarily making poor decisions or no progress.


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## MoneyGal

There are an awful lot of false dichotomies in this thread! Which does make it kind of hilarious to read. 

$2M at 37 given the parameters that Janus has outlined (and upon which others have elaborated) is hardly even an "aggressive" goal. In fact, it's what he's on track to do unless his plans and habits are derailed by something (and others have provided lots of examples of the "somethings" that could derail it).

I think that 1. there are some people that genuinely can't fathom what it's like to be earning $100K+ from an early age and 2. apparently it can be hard to understand that making an aggressive plan and fulfilling on it can be a source of enjoyment, all by itself, totally separate from "smelling the flowers" etc.


----------



## Canadian

MoneyGal said:


> I think that 1. there are some people that genuinely can't fathom what it's like to be earning $100K+ from an early age and 2. apparently it can be hard to understand that making an aggressive plan and fulfilling on it can be a source of enjoyment, all by itself, totally separate from "smelling the flowers" etc.


+1!

I am younger than Janus and Dmoney and will soon start my professional adventure in a different area of business. However, my industry also allows for rapid compensation increases and promotions - one can have comfortable income at a young age. I get enjoyment from the challenge of my profession and the prospect of getting higher in the ranks with performance/experience/designations etc. I also enjoy watching my savings and net worth grow and finding ways to fuel this to meet my financial goals. Of course, I don't sit around oggling my investment accounts and calculating future net worth scenarios with dollar signs in my eyes, repeating "my precious" all day - I enjoy traveling, socializing, dining out as much as the next guy. The big thing is a lot of people are superlating a utility tradeoff between "living" and saving, which I don't think is realistic (at least not with me).


----------



## Janus

This is what I was hoping for in the thread - lots of discussion of what matters at this point in life in terms of saving vs. quality of life. Cdnwife, that's a very real-life example that helps put things in perspective. I'm actually closer to the middle than donald and peterk are on the aggressive saving spectrum, but agree that a complete spending mindset in the 20s doesn't make you happier. My good friend here is in massive credit card debt due to blowing $200-300USD per night on weekends at the bars. The important thing to note, however, is that we often go out together - he goes out more often than me, but on a night out together I'm having the same amount of fun and somehow manage to do it for $60. So there's definitely a balance to be found even for the people who want a more "vibrant" social life I suppose.



Dmoney said:


> Hey Janus, first off, best of luck getting to your goals, and congrats on actually making these goals and putting in an effort to stick with them.
> 
> ....
> 
> Making $2M wouldn't be so tough.
> We have a decent number of analysts at my firm making $500K+
> While most are 40+ when topping out career-wise, a good number make $250K+ in their early 30s
> 
> Long story short, I'd say it's doable, but relies on salary increases rather than investment performance.


Thanks for the encouragement. You're absolutely right, really what matters is the future compensation and not the way I distribute savings at 26. And I'll agree as well about investment performance - this is a short timeframe in which compound returns are less important than decisions on the fiscal side - i.e. what i do with the money that comes my way, most of which is back-loaded (it comes closer to 36 than 26). Given this I'm sometimes less motivated to save right now and just focus on earnings, but I think that can lead to bad habits. Despite all this I'm trying to keep my eye on the prize and stay disciplined, maybe in a more balanced way.



MoneyGal said:


> There are an awful lot of false dichotomies in this thread! Which does make it kind of hilarious to read.
> 
> $2M at 37 given the parameters that Janus has outlined (and upon which others have elaborated) is hardly even an "aggressive" goal. In fact, it's what he's on track to do unless his plans and habits are derailed by something (and others have provided lots of examples of the "somethings" that could derail it).
> 
> I think that 1. there are some people that genuinely can't fathom what it's like to be earning $100K+ from an early age and 2. apparently it can be hard to understand that making an aggressive plan and fulfilling on it can be a source of enjoyment, all by itself, totally separate from "smelling the flowers" etc.


It is indeed a source of fulfillment. But of course as a young optimist I'm going to try and have it both ways - save enough to be putting myself further ahead, while living life as it was meant to be lived. I'm starting to notice places where money (even money not going towards assets) is well spent. For instance, an extra $200 on rent can increase my quality of life; $200 spent on booze at the bar is (almost by design) forgettable.


----------



## Janus

del


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## MoreMiles

Dmoney said:


> Hey Janus, first off, best of luck getting to your goals, and congrats on actually making these goals and putting in an effort to stick with them.
> 
> To all the haters/doubters/skeptics... One thing that seems to be understated in most of the comments is the MASSIVE upside potential when it comes to total compensation. I started working in equity research at 22, at 24 my base salary has already increased by 42%. My next raise (ideally within the next 2-4 years) will be another 47%, and my final raise will be another 20%.
> Now, onto the real money. Now and for the foreseeable future, like Janus, I receive a bonus of ~$40-50K annually. This is likely to be static until I max out my promotions, but down the line, can rise as high as 7 figures. While all-in comp of $100K might make it difficult to reach $2M at 36 if comp were to look more like this:
> 
> 26 $90K + $40K
> 27 $90K + $45K
> 28 $125K + $40K
> 29 $125K + $60K
> 30 $125K + $60K
> 31 $150K + $80K
> 32 $150K + $80K
> 33 $150K + $100K
> 34 $150K + $100K
> 35 $150K + $100K
> 36 $150K + $3,000,000!!!!!!!!!!!!!!!!!!!!!:tongue-new:
> 
> Making $2M wouldn't be so tough.
> We have a decent number of analysts at my firm making $500K+
> While most are 40+ when topping out career-wise, a good number make $250K+ in their early 30s
> 
> Long story short, I'd say it's doable, but relies on salary increases rather than investment performance.


Hmm.. now I understand why these markets are operated with HFT and why my mutual fund MER is 2.75%... I was just wondering where those equity management fees went. Thank you for your clarification. :neglected:


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## Janus

MoreMiles said:


> Hmm.. now I understand why these markets are operated with HFT and why my mutual fund MER is 2.75%... I was just wondering where those equity management fees went. Thank you for your clarification. :neglected:


For the portfolio manager of a $1B fund (for instance), making $2M per year (let's assume all in) is 0.2% of total assets per year. Seems fair since he's responsible for the entirety of it. There are all kinds of other costs related to the basic day to day of a fund, but it's not always as exorbitant as you think.

That being said the fees in Canada are simply far too high. You should never *ever *pay 2.75% for a product. Be aggressive with costs. I own a couple of funds, but only because I know they're bloody amazing (long-term consistent outperformance over 3, 5, 10 year intervals) and I buy the low-fee versions, paying 1.2% tops. 2.75% is just criminal though.


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## Dmoney

MoreMiles said:


> Hmm.. now I understand why these markets are operated with HFT and why my mutual fund MER is 2.75%... I was just wondering where those equity management fees went. Thank you for your clarification. :neglected:


Don't hate the player, hate the game  
Why be a doctor or an engineer when you can make 7 figures in finance


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## SkyFall

That was a good read  thanks guys it was entertaining and full of info


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## SpendLessEarnMore

Hey Janus we have 2 extreme financial goals but 1 common end result.

I need just 50k and going to live in Vietnam 2 months from now to achieve the quality of life I desire. Just a different perspective. Whether it's 50k or 2 mil as long the end result is you're happy and content with your quality of life. That's all that really matters. 



Janus said:


> This is what I was hoping for in the thread - lots of discussion of what matters at this point in life in terms of saving vs. quality of life. Cdnwife, that's a very real-life example that helps put things in perspective. I'm actually closer to the middle than donald and peterk are on the aggressive saving spectrum, but agree that a complete spending mindset in the 20s doesn't make you happier. My good friend here is in massive credit card debt due to blowing $200-300USD per night on weekends at the bars. The important thing to note, however, is that we often go out together - he goes out more often than me, but on a night out together I'm having the same amount of fun and somehow manage to do it for $60. So there's definitely a balance to be found even for the people who want a more "vibrant" social life I suppose.
> 
> 
> 
> Thanks for the encouragement. You're absolutely right, really what matters is the future compensation and not the way I distribute savings at 26. And I'll agree as well about investment performance - this is a short timeframe in which compound returns are less important than decisions on the fiscal side - i.e. what i do with the money that comes my way, most of which is back-loaded (it comes closer to 36 than 26). Given this I'm sometimes less motivated to save right now and just focus on earnings, but I think that can lead to bad habits. Despite all this I'm trying to keep my eye on the prize and stay disciplined, maybe in a more balanced way.
> 
> 
> 
> It is indeed a source of fulfillment. But of course as a young optimist I'm going to try and have it both ways - save enough to be putting myself further ahead, while living life as it was meant to be lived. I'm starting to notice places where money (even money not going towards assets) is well spent. For instance, an extra $200 on rent can increase my quality of life; $200 spent on booze at the bar is (almost by design) forgettable.


----------



## KrissyFair

This has been quite the entertaining thread. As to the having fun bit, here's what I know:

When you're young, scrimp on the living quarters - because even a crummy apartment is a palace compared to the dorm room you just moved out of right?! - and spend your fun money late at night with friends.
When you have kids, late nights are no longer something to be celebrated, so you'll find your fun money is best spend on a comfortable place to live, a really big couch and a good cable package.
Take it like this and you'll always have fun, without ruining your retirement options 

As to this:



Canadian said:


> Of course, I don't sit around oggling my investment accounts and calculating future net worth scenarios with dollar signs in my eyes, repeating "my precious" all day


Wait, we're not supposed to do that??!! Oops. :redface:


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## Rusty O'Toole

Rich dad poor dad is a good cheerleader. If he motivates you to save and invest that is great BUT don't take his advice or you will get hurt badly. It is the kind of malarkey someone pulls out of his butt when he doesn't know what he is talking about. Some of his later books are a little better, once he made some dough off the first book he learned a little about investing. But I would say you know more than he does.

I also agree with not investing in real estate. I did, for many years, but I wouldn't today if I had a choice. You have opportunities I never did.

You should continue to rent, and you should have a nice home. There is more to life than being a Scrooge and squeezing every dime.

You should also save and invest. Having a goal and a plan puts you way ahead of the pack. No doubt over time you will refine it.

You are off to a good start and I am sure you will wind up OK. Don't get impatient, this is a marathon not a sprint. When you cast up your accounts every 6 months or a year you will see your progress.


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## Janus

KrissyFair said:


> When you're young, scrimp on the living quarters - because even a crummy apartment is a palace compared to the dorm room you just moved out of right?! - and spend your fun money late at night with friends.
> When you have kids, late nights are no longer something to be celebrated, so you'll find your fun money is best spend on a comfortable place to live, a really big couch and a good cable package.
> Take it like this and you'll always have fun, without ruining your retirement options


Somehow I'm on the fence about this... scrimping $100 on rent makes me want to go out one more night per month, the cost of which can be more than $100. As with anything I'm trying to find a balance that works 



Rusty O'Toole said:


> Rich dad poor dad is a good cheerleader. If he motivates you to save and invest that is great BUT don't take his advice or you will get hurt badly. It is the kind of malarkey someone pulls out of his butt when he doesn't know what he is talking about. Some of his later books are a little better, once he made some dough off the first book he learned a little about investing. But I would say you know more than he does.
> 
> I also agree with not investing in real estate. I did, for many years, but I wouldn't today if I had a choice. You have opportunities I never did.
> 
> You should continue to rent, and you should have a nice home. There is more to life than being a Scrooge and squeezing every dime.
> 
> You should also save and invest. Having a goal and a plan puts you way ahead of the pack. No doubt over time you will refine it.
> 
> You are off to a good start and I am sure you will wind up OK. Don't get impatient, this is a marathon not a sprint. When you cast up your accounts every 6 months or a year you will see your progress.


Yeah I largely ignored the specific investment advice in the book, I just really liked the *discipline system* of measuring wealth via passive income. All of a sudden many things make sense that still didn't have answers when I was working towards just a lump sum of savings:

- When can I actually afford luxury goods? (when your assets buy them for you)
- When am I actually wealthy? (When passive income is enough to live the life you want WITHOUT ever needing to liquidate)
- How should I feel about saving? (Shelling money away into income-producing assets can become rewarding in itself)
etc.

I'm definitely going to continue to rent... when I picture throwing $200k of my hard-earned money just to sit idly in an asset I'll never liquidate (except for ANOTHER house of course), I weep for the $10,000/year that could have covered all kinds of expenses, or compounded into more asset purchases.


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## Pigzfly

This has been fun to read. I like hearing about others who are beating us on the income front. It gets pretty easy to think you're sitting pretty when you're in the 5% in your 20s, Janus and Peterk make more than us (individually) *gasp* You're keeping me on my toes.

Rich Dad Poor Dad - meh. It was okay, as others have said. Some of it made me comment out loud at its ridiculousness. Your 3 points above are good ones.
My spouse is rather against direct real estate investing, I'm kind of on the fence (right now, we're ridiculously overexposed to it due to our net worth being in large part our house). REITs have been rocking it lately and do a much better job of diversifying risk... but you have the risk profile comparison. That said, to get the massive upside on real property takes a lot more time; don't underestimate the value of time in your analysis. Even if you have it fully managed, you have to research. I bet you could buy a REIT in the next half hour given your pre-existing knowledge, but you can't even get the paperwork to pull the trigger on a property purchase, assuming you had one lined up.

I know costs in HK are rather different than over here (alas, I was supposed to go in Oct but had to cancel), but you're living on (very, very roughly) half the take home of an average Canadian household, and you're one person. That's tossed in there for those concerned about you not spending enough on living. You also have the benefit of some extremely cheap tourist destinations in relatively close proximity, should you choose.

Keep it up


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## Janus

del


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## Andrew

Interesting thread. Janus sounds like you have a plan and goals and that is the important part. While this is all good, just realize that unexpected things can and will likely happen to derail the plan. I wouldn't get to hung up on whether you are going to hit $X million by age Y. As long as you are going in the right direction, while having some fun in the process is all that matters at the end of the day.


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## Pluto

In your situation it makes sense to rent and invest in stocks. That's because of your expertise in finance, and your job, and your income. (I'd think differently if you lived in Canada with our tax system, and knew next to nothing about stocks. In that case I'd say buy a big house with a rental unit.) But with your saving rate, and stock knowledge, I think you *can* do way better in stocks. I'm not too excited about Canadian REITS right now. If you wouldn't buy long bonds right now, then don't buy REITS. I recently got rid of all my xre that I bought in 2009, and I wouldn't dream of buying again until the yield was at least 7%. Even though my yield was 10% on the original investment, I'd rather have the capital gain available for something else that may or may not come along before the next crash. 

My personal perspective is to buy fairly conservative dividend payers in a bear market. Then to give it a little more kick off the bottom, buy a whack on margin. Then as the market develops into a bull market, start to lighten up. One sign of this time is when ones associates start talking about how much their stocks went up, often about 2 years after the last major market bottom. The idea is to be mostly out of stocks by the end, then repeat the process. It's way better to be out too early, than too late. 

Apparently the Rich Dad Poor Dad guy never made any money to speak of on investing or business. He made his money on teaching and book sales. I recall around 2005 - 6 he was on TV talking about how his wife was buying rental properties. He really talked it up as a way to wealth, and to get people to sign up for his seminars. Then the us real estate bust came. Then I saw ads for his seminars in which he would show you why your house is not an asset, but a liability. I'm assuming he learnt that from his wife's experience. Although his stuff is motivational, I'd really scrutinize any advice he gives. some if it is a no brainer: Buy assets that produce income. The questions are when, and at what price? Apparently his wife didn't come up with the right answer for the last two questions. One person who consistently had a right answer to those questions was Sir John Templeton who consistently managed 20% annual compound gains in his flagship growth fund. His answer to those questions was buy at the time of maximum pessimism. Any one who gets into fund management really ought to study his style, (not to mention, Buffet, and Lynch). Of course the time of maximum pessimism, is a time of abundant value; fearful sellers, heading for the hills, throw stock at you at ridiculously low prices. I've long suspected that these sellers bought near the top, because the economy was doing great, stocks had done well for years so it really looks safe, and they guy down the street just bought a Cadillac, a boat, and a fur coat for his wife with his market winnings. Very seductive, to those who come late, but its a set up for despair. 

Don't save on rent. Spend the extra 100 or so for a nicer place. At your income level, you are going to do fine. Invite friends over. Feed them, but tell them to bring the booze. Maybe you can take turns hosting.


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## Janus

Pluto: very thoughtful reply there.

I'm definitely sticking to stocks. Aside from the evidence of the long-term benefits of the asset class, equities are what I know and enjoy investing in. With time on my side I don't feel any second thoughts about my approach. With most of my $~80,000 in the stock market I still welcome a bull market and any opportunity to jump in at lower prices.

I'll hold off on REITS, but my god those yields look amazing. 10% for Dundee International... shame I can't even buy stocks right now. XRE certainly doesn't look cheap compared to the Dundees.

My strategy isn't much different from yours. I'm not sure exactly what you consider a conservative dividend payer - for me it's something like a Canadian bank (not much interested in utilities and things that don't have much capacity to grow). I also (in the past before my restrictions) have bought stocks that didn't pay dividends but that had a great growth profile, a strong balance sheet, and the possibility for dividends in the future. Stocks I'm *not* willing to go in on are the momentum plays of the world - the Teslas and Netflixes. I want to buy when others are scared, not when others are greedy, and that's why SNC turned out so well for me. However in general, selling I've found to be much more difficult.

I believe you about RDPD. I think many people who write about money follow that formula - they get rich after writing the book, which is particularly disingenuous for those who write about the "get rich slow" technique of saving 10% of your money until you become a rich 65 year old. There's nothing wrong with that strategy if you're happy with it, but people writing about a path to wealth should at least have USED that path to get to their position of advice-giver.

I just locked down a roomy apartment that I can afford to live in on my own but may convert to a 2-bedroom to make it a bargain. Updates to come.


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## Janus

*End-November Update*

A few big developments this month.
- managed to get my hands on an unused bed for free, saving myself ~$1000

*Assets*: $87,077
- took some profits in my TFSA by selling some mutual fund holdings

*Liabilities*: $5,275
- dipped into my line of credit in order to make the massive deposit on my apartment without liquidating investments (in HK the landlords take 2 months as a deposit, and THEN ask for first month's rent)

*Net Assets*: $81,801

I'm finally at the point at which there aren't any forseeable lump-sum costs in order to get set up here in Hong Kong, meaning I can finally let the paycheques flow into savings and investments. Still trying to figure out a good vehicle to invest in here when restricted on stocks, as fund trailer fees are quite high out here. ETFs are likely the answer.


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## Janus

*December Update*

This month I recovered from all the up-front costs of moving into an apartment in Hong Kong, with some help from the year-end bonus.

*Assets*: 105,000 (rounded down for some christmas expenses) 
- 36,000 in cash
- 58,000 in online brokerage investments
- 12,000 in employer contributions 
- the rest in a few debts to me (deposit on the apartment, etc)

*Liabilities*: 0

*Net Assets*: 105,000

I'm very happy to have reached the 6-figure mark. That being said, the next 100,000 won't be tremendously easier than the first even though I have a decent pool of assets on my side to help get there. With the 7-figure mark far far in the distance, I'll need to set some shorter-term goals to stay disciplined. Aside from that, with a new pool of cash sitting around it's time to start putting it to work and reassess my overall portfolio - I'll do some readjustment over the christmas break.


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## SkyFall

gratz for hitting the 6 figures! keep going buddy!


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## MoreMiles

Janus said:


> *Net Assets*: 105,000
> 
> I'm very happy to have reached the 6-figure mark. That being said, the next 100,000 won't be tremendously easier than the first even though I have a decent pool of assets on my side to help get there. With the 7-figure mark far far in the distance, I'll need to set some shorter-term goals to stay disciplined. Aside from that, with a new pool of cash sitting around it's time to start putting it to work and reassess my overall portfolio - I'll do some readjustment over the christmas break.


Sorry to burst your bubbles. Hmm.. your first post says you gave yourself 3 more years to accumulate $500,000. In other words, you have to 5x your asset in just 3 years... so you should try to bring in $200,000 after taxes per year. 

So you don't really have much time left to reach your goal. You can't say "far far in distance"... you have only a few years left.


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## Janus

MoreMiles said:


> Sorry to burst your bubbles. Hmm.. your first post says you gave yourself 3 more years to accumulate $500,000. In other words, you have to 5x your asset in just 3 years... so you should try to bring in $200,000 after taxes per year.
> 
> So you don't really have much time left to reach your goal. You can't say "far far in distance"... you have only a few years left.


I've got 3 years, during which I do realistically expect my after-tax earnings to double. My conservative downside case gets me to $370,000.

You're taking my goals very much in the wrong way. They're something to aspire to based on rough estimates of my income growth. Do you think I'll have *failed* if I've saved up only $400,000 by 30? (It's rhetorical, I don't expect much to be gained by arguing with you over this. You seem a bit overly eager to shoot me down.)

@Skyfall: thanks! Now to put the cash to work. Not exactly the best timing for it though.


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## SkyFall

Yeah trust me I am strugglying myself to find good investment, even tho I have to scale that down compare to you hahahhahah


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## Janus

Mid-January Update:

A nice little windfall in my investment portfolio. One of my holdings has had 2 takeover offers in the last month, taking me from a 50% loss to a 40% gain. It was the first stock I'd ever bought (with a very small sum of money - $1200) and I haven't invested in anything as risky since. Still, it feels good to be vindicated.


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## Fain

Janus said:


> I've got 3 years, during which I do realistically expect my after-tax earnings to double. My conservative downside case gets me to $370,000.
> 
> You're taking my goals very much in the wrong way. They're something to aspire to based on rough estimates of my income growth. Do you think I'll have *failed* if I've saved up only $400,000 by 30? (It's rhetorical, I don't expect much to be gained by arguing with you over this. You seem a bit overly eager to shoot me down.)
> 
> @Skyfall: thanks! Now to put the cash to work. Not exactly the best timing for it though.


Great job, i think you are a bit conservative in your equity growth figures. Have you considered using a wee bit of leverage to add some juice to your portfolio. I currently borrow at 1.6% USD for my portfolio. Pretty easy to beat that and use a small bit so margin calls are out of the question.


----------



## Janus

Fain said:


> Great job, i think you are a bit conservative in your equity growth figures. Have you considered using a wee bit of leverage to add some juice to your portfolio. I currently borrow at 1.6% USD for my portfolio. Pretty easy to beat that and use a small bit so margin calls are out of the question.


That's the point - I don't want to assume anything too optimistic in the asset growth section. If I manage to grow assets at a better compound rate, all the better! Unfortunately in my current job I can't buy any additional stocks (just ETFs and mutual funds) which is why I'm likely to get a much more average rate of return over the next few years while I work there. I haven't checked out the rates available to me for leverage, I should have a look. Then again last year would have been the time to do it...

Having my first ever stock get bought out (and then have a competing offer jump the price even more) makes it all the more painful to not be able to buy equities.


----------



## Janus

*January-End Update:*

*Assets:* 112,600

*Liabilities:* 0


This month saw some costs involving setting up my place, as I needed to buy a couch and a bed (I'm a connoisseur of sitting and lying on things). Ikea fit the bill nicely for my purposes. A friend also came into town so the "fun" bill went up a bit. I'm hoping to live a bit more like a hermit these next few weeks to compensate.

My status at the end of this month has a lot to do with the plummeting CAD - I've been moving my assets into USD over the last 2 years, and it finally paid off. Luckily I'm paid in USD, so it feels like I've had a raise (for the purposes of buying Canadian assets).

On the investment front, some recent volatility has taken about $1500 off of my investments. They'er long term holdings so I'm not concerned.

Speaking of which, it looks like I'll be able to trade North American stocks soon. If anything I'm hoping my holdings fall further so I can commit more funds to my favourite companies.


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## richard

Nice progress! Even though you may not be planning for compounding in your goals, you're at a point now where your contributions aren't the only thing growing your portfolio. It's nice to see that.

Speaking of your goal it is a great one to work towards. There was a comment earlier about how accumulating "worthless junk" isn't the way to happiness - so if you don't accumulate worthless junk you'll do great  It's one thing to work hard so you can buy bigger houses and shinier cars (which isn't true wealth since many people who do that have a low net worth). It's completely different to work so you can buy yourself time. After all if time is valuable and allows you to do the really important things, who is happier - the normal person who works a week to get something they want, the investor who works a day so they don't have to work a week later, or the spender who works two weeks to pay for all the interest on it?


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## Janus

richard said:


> Nice progress! Even though you may not be planning for compounding in your goals, you're at a point now where your contributions aren't the only thing growing your portfolio. It's nice to see that.


Thanks  Yes, it feels good to know that at this level, a good year in the market can result in a significant increase in assets - scary, too, when you think about how much money would be lost in a really bad year. Still, it's better to have a pool of capital to work with in the first place.



richard said:


> Speaking of your goal it is a great one to work towards. There was a comment earlier about how accumulating "worthless junk" isn't the way to happiness - so if you don't accumulate worthless junk you'll do great It's one thing to work hard so you can buy bigger houses and shinier cars (which isn't true wealth since many people who do that have a low net worth). It's completely different to work so you can buy yourself time. After all if time is valuable and allows you to do the really important things, who is happier - the normal person who works a week to get something they want, the investor who works a day so they don't have to work a week later, or the spender who works two weeks to pay for all the interest on it?


I'm definitely not an accumulator of things, much less junky things. When my money's wasted it's usually on alcohol, food, or something experiential. 

Specifically, though, *for the next 5 years* I can make a few predictions about major expenses:

- *I'm not going to buy a car.* I currently live in Hong Kong - it would be absolutely pointless, with such great public transit, small distances, and cheap cabs. I took a 1-hour cab to the beach yesterday that cost about CAD $50. And even if I return to Toronto or head elsewhere (e.g. NYC or Melbourne), it's very important to me not to have to commute. I'll re-assess this one day when I have kids or when I cave and get a dog, but overall I value time over space. 

- *I'm not going to pay interest (for a while). * No consumer or student debt or mortgage, and if I decide to buy a house (at least 3 years away) it's going to be with more than 25% down. The lifetime effect of that downpayment is quite large as you all know.

- *Stuff will not play a major role in my life.* The next 5 years are going to be somewhat transitory for me. I'm not sure if I'll be staying in Hong Kong or moving somewhere else in the world. As a result, I've got no interest in paying top dollar for furniture or large electronics. Simplicity and mobility are the name of the game for me right now - I'll be happy to have a "fire sale" of all my stuff at the drop of a hat and move to the next opportunity somewhere else. In that sense it feels more like I'm renting my furniture, with the rental cost defined as the difference between my buying and selling price. It's mostly ikea stuff. 

Overall I think these will serve me well in getting to my goal of financial independence. Without "stuff" crowding the way, I feel like the path is much straighter and the ascent less steep.


----------



## Janus

*AirBNB*

*Minor update: AirBNB*

My expenses have been somewhat high in February, but to some extent these costs are an investment. Allow me to explain.

I have listed my apartment on AirBNB, a website that allows me to rent out my place while I'm away. With 4 weeks' vacation and a similar amount of time spent out of the country for work trips, I think it makes sense. Based on the area I live in and my place, I can charge $80 USD a night or more.

With that in mind (and with a vacation coming up), I took a look at my apartment from a guest's perspective and became rather critical of the place's appearances. While it's enormous for Hong Kong, it's very basic and in an old building. 

Hence a trip to Ikea. I'd say altogether I spent $400 on new curtains, new bedding, cushions, and a bunch of other things that made the place go from "bare" to "nice and a little bit stylish". I even picked up some art from a friend's gallery.

Although I don't own the place, these "nice to haves" that I wouldn't have normally bought increase my ability to fill the apartment when I'm gone and also help me charge a better nightly rate (more the former than the latter). As an added bonus they make the place a heck of a lot nicer to look at and live in, so that helps too.  

Has anyone else here used AirBNB?


----------



## Janus

*February-End Update:*

Assets: $120,000 CAD

Liabilities: 0

February was an expensive month with a vacation to Australia and lots of social outings. This was partially offset from $300 in AirBNB revenue and some significant investment gains - I've got a decent sized position in a uranium producer ETF (ticker: URA) that jumped about 13% in the last couple of days due to Japan turning its reactors back on.

Now that I'm heading into crunch time with my CFA exams, I'm hoping the pressure results in less expenditure on social things until June. No vacations or weekend trips until then! I'll also see another $500 or so in March from AirBNB which always helps.

With access to stocks on the near term horizon I'm putting more thought into what I want my investment portfolio to look like going forward. I'm looking to take concentrated stock positions, each one about 10% of my portfolio. This will take some time to put together, especially in light of current market conditions.


----------



## Time4earlyretirement

OP, kind of off topic, but it seems that front office finance jobs in Asia pay relatively well compared to T.O; higher wages, bonuses are less capped, lower taxes etc...

Myself being CBC, have been to HK once and really enjoyed it. I'm 25 and currently do what seems to be middle office work in a very large global money manager. (Investment performance analysis, attribution, risk, compliance etc) and earning about mid 50k's. What kind of pay can I expect if I move to a similar level/type of job in HK, as working/traveling there for 2 years seem like it could be a win/win. Note... can speak but can't write Chinese.


----------



## Cal

Sorrry for the delayed response to your airbnb questions, but my sister in law us3es it all of the time when she travels, has never had a bad experience with it.

Some people throw some pop, bottled water, and few yogurt cups in the fridge for her, to help them get a better review, which in turn helps them generate a few more $$$.


----------



## Janus

Time4earlyretirement said:


> OP, kind of off topic, but it seems that front office finance jobs in Asia pay relatively well compared to T.O; higher wages, bonuses are less capped, lower taxes etc...
> 
> Myself being CBC, have been to HK once and really enjoyed it. I'm 25 and currently do what seems to be middle office work in a very large global money manager. (Investment performance analysis, attribution, risk, compliance etc) and earning about mid 50k's. What kind of pay can I expect if I move to a similar level/type of job in HK, as working/traveling there for 2 years seem like it could be a win/win. Note... can speak but can't write Chinese.


I'm not sure what to expect for middle-office to be honest. So I can't speak to what kind of pay bump you might see. But overall wages here are higher, the work is more interesting, there is no dividend or capital gains tax, and overall it helps a *lot* to have some international experience on your resume. Do you want to stay in a middle office role? 



Cal said:


> Sorrry for the delayed response to your airbnb questions, but my sister in law us3es it all of the time when she travels, has never had a bad experience with it.
> 
> Some people throw some pop, bottled water, and few yogurt cups in the fridge for her, to help them get a better review, which in turn helps them generate a few more $$$.


Interesting. Even as the host I've had guests leave beers for me. 3 visitors now and not a single bad experience.


----------



## ashin1

Great post OP you've have definitely fired up my motivation even more to have money saved up and have a good chunk of assets by the time i am in my mid thirties. I feel as though we are in similar situations.

I am 23, I have a pretty good job that I'm still climbing to the top of the totem pole (health care provider), nevertheless it yields me about a gross of 130k a year.
I started investing back in November 2013, after reading the book "the lazy investor" by Derek Foster. I too believe in renting instead of buying a house. Where I live I am able to rent with a roommate for around 400$ a month(including hydro). I have no debt, and no children, no plans on having kids until later in life. I try to save aprox. 4k a month (and still having a good quality of life)

And begun my Journey as I began to max out my accounts one by one. starting with my TFSA, RRSP, and finally start a cash account.

using these accounts ill set up a self directed investing account. With that being said i'll buy companies which I can enroll in the DRIP plan, however with my broker I can not buy fractional shares, so I buy enough shares of a company so I can reinvest in one whole share per dividend payment date, and then I move on to the next company i would like to purchase.

right now:

TFSA: 27k 
RRSP: 7K
SAVINGs: 1.5K
CASH:1.5k

total assets: 37k
Dividends being reinvested per year (only in the TFSA because im in the process of moving my RRSP into a self direct broker account and taking out of mutal funds): $1,171.34

This year I hope to have my RRSP maxed out but i dont know if that will be possible i have lots of catching up to do!
I hope to hit the 100k mark in 3 years!

what are your thoughts OP?

SUBBED


----------



## peterk

ashin1 said:


> gross of 130k a year.
> 
> 
> right now:
> Total assets: 37k
> 
> 
> I hope to hit the 100k mark in 3 years!


Isn't that a bit low? How much are you spending? Give us a breakdown.


----------



## ashin1

peterk said:


> Isn't that a bit low? How much are you spending? Give us a breakdown.



how is that low for someone who got out of debt 6 month ago.
I suppose the reason i was in debt the first place was because I purchased a 35k truck back in august 2013 which is now paid off.

so I guess if you want to add my truck to my assets I would be sitting around 72k in assets however i know i will never get my money back for my truck.

i only started making 130k last year,
before i was making around 70k a year in my previous job from 2010-2012, however during those years i paid off my student loans.

i have only been taking saving a investing seriously for the past 6 months


----------



## Janus

ashin1 said:


> Great post OP you've have definitely fired up my motivation even more to have money saved up and have a good chunk of assets by the time i am in my mid thirties. I feel as though we are in similar situations.
> 
> I am 23, I have a pretty good job that I'm still climbing to the top of the totem pole (health care provider), nevertheless it yields me about a gross of 130k a year.
> I started investing back in November 2013, after reading the book "the lazy investor" by Derek Foster. I too believe in renting instead of buying a house. Where I live I am able to rent with a roommate for around 400$ a month(including hydro). I have no debt, and no children, no plans on having kids until later in life. I try to save aprox. 4k a month (and still having a good quality of life)
> 
> And begun my Journey as I began to max out my accounts one by one. starting with my TFSA, RRSP, and finally start a cash account.
> 
> using these accounts ill set up a self directed investing account. With that being said i'll buy companies which I can enroll in the DRIP plan, however with my broker I can not buy fractional shares, so I buy enough shares of a company so I can reinvest in one whole share per dividend payment date, and then I move on to the next company i would like to purchase.
> 
> right now:
> 
> TFSA: 27k
> RRSP: 7K
> SAVINGs: 1.5K
> CASH:1.5k
> 
> total assets: 37k
> Dividends being reinvested per year (only in the TFSA because im in the process of moving my RRSP into a self direct broker account and taking out of mutal funds): $1,171.34
> 
> This year I hope to have my RRSP maxed out but i dont know if that will be possible i have lots of catching up to do!
> I hope to hit the 100k mark in 3 years!
> 
> what are your thoughts OP?
> 
> SUBBED


130k at 23? That's pretty incredible. Great job. What exactly do you do in health care? 

I think your goals are far too low - you spend next to nothing on rent. I saved 100k in 2 years making less than you while paying $1400/month in rent in downtown Toronto. So be aggressive and set a stretch goal! Not by skimping on coffee and beer, but by being smart with larger sums (not a fan of that 35k truck purchase). In any case you're in an enviable position.

My main advice would be this: if you're making 130k now, you're going to be wealthy. So do yourself a favour and read into investing beyond the couch potato, wealthy barber etc. You've got a long life ahead of you so you might as well know what to do with your money. ETFs are fine, but you should know about stocks properly. Better you put in the time than some financial advisor takes you for a ride years down the line.

My top recommendations:
The Intelligent Investor
Margin of Safety
Dhandho Investor
The Little Book that Beats the Market (start with this one, a quick fun read)


----------



## ashin1

Janus said:


> 130k at 23? That's pretty incredible. Great job. What exactly do you do in health care?
> 
> I think your goals are far too low - you spend next to nothing on rent. I saved 100k in 2 years making less than you while paying $1400/month in rent in downtown Toronto. So be aggressive and set a stretch goal! Not by skimping on coffee and beer, but by being smart with larger sums (not a fan of that 35k truck purchase). In any case you're in an enviable position.
> 
> My main advice would be this: if you're making 130k now, you're going to be wealthy. So do yourself a favour and read into investing beyond the couch potato, wealthy barber etc. You've got a long life ahead of you so you might as well know what to do with your money. ETFs are fine, but you should know about stocks properly. Better you put in the time than some financial advisor takes you for a ride years down the line.
> 
> My top recommendations:
> The Intelligent Investor
> Margin of Safety
> Dhandho Investor
> The Little Book that Beats the Market (start with this one, a quick fun read)


Thanks Janus,
To answer your question, I am a lab and x-ray tech, I work in northern Alberta I make 36$ an hour, however I do lots of "on call" work, so when i get called in they pay me 5.5 hrs per call(198$) regardless of how long it takes me to do it a call,
for example I've been called 4 times in 1 hour to x-rays fingers and wrists which only take me 5 minutes to do. so my profession can be lucrative depending on how hard you want to work. i get a dollar raise per year up to i think 43$ so im still working my way to the top. plus i get northern premiums, and stand by wages. not bad for a 2 year program at tech school eh? lol.

Thats admirable that you hit 100k in less than 2 years with aggressive investing with a income less than mine while also paying 1400 monthly for rent. (did this have anything to do with the 2007-09 crisis?) I will learn how to be more aggressive, i will admit I'm just dipping my toes in the market right now, so until i am further knowledge, and the Canadian dollar reaches par with Americans I will continue to buy companies like BMO, HR.UN, RCI.B, NA, IPL and so on....I just don't want my money to sit idle while I learn how to fully utilize my money. So aware me as to what would be considered "aggressive" investing, i am very curious! and as for financial advisers go, i will never use one! cut out the middle man for maximum gains! lol
Also that truck purchase was not smart but i bought that back when i wasn't interested in investing and making my money work for me, nevertheless its paid off and i no longer need to worry about it. I know 130k is pretty good, but I refuse to settle and will continue to invest and increase that annual income!

So tell me, do you invest to make money off the capital gain or off the dividends compounding? 
i will read those books you mentioned, lately i find myself reading lots of investing articles on the net, and my motivation is very high right now! not many people out there that have an opportunity like this, so i'll make the most of it!

Also, if 100k in 3 years is a low goal, what would be a more reasonable goal? i've never actually made any sort of financial planning in my life before and to think about having 100k in the bank still makes my knees weak. haha


----------



## Janus

ashin1 said:


> Thanks Janus,
> Thats admirable that you hit 100k in less than 2 years with aggressive investing with a income less than mine while also paying 1400 monthly for rent. (did this have anything to do with the 2007-09 crisis?)
> 
> So aware me as to what would be considered "aggressive" investing, i am very curious! and as for financial advisers go, i will never use one! cut out the middle man for maximum gains! lol
> 
> Also that truck purchase was not smart but i bought that back when i wasn't interested in investing and making my money work for me, nevertheless its paid off and i no longer need to worry about it. I know 130k is pretty good, but I refuse to settle and will continue to invest and increase that annual income!
> 
> So tell me, do you invest to make money off the capital gain or off the dividends compounding?
> i will read those books you mentioned, lately i find myself reading lots of investing articles on the net, and my motivation is very high right now! not many people out there that have an opportunity like this, so i'll make the most of it!
> 
> Also, if 100k in 3 years is a low goal, what would be a more reasonable goal? i've never actually made any sort of financial planning in my life before and to think about having 100k in the bank still makes my knees weak. haha


By aggressive investing I actually should have said aggressive saving. I do believe in aggressive investing at certain times, but now isn't one of them. 

My intent is mainly to benefit from capital gains. I invest mainly in deep value stocks, so they often come with a dividend as well, but in terms of total return I expect most of it to come from price movement.

I'm not sure what a reasonable goal would be, but take your after tax income, subtract monthly rent food and fun budget, and see what the remainder is - i imagine it's a lot more than 100k in 3 years! It'll feel good to get to the 6-figure mark, but it's striking how far the 7-figure mark remains from one's grasp.


----------



## ashin1

Janus said:


> My money didn't have anything to do with the crisis, I started my MBA in 2009 (had zero money before that and emerged with some debt but not too much) and started work in 2011. I made about $100k a year for 2 years before going to Hong Kong.
> 
> By aggressive investing I actually should have said aggressive saving. I do believe in aggressive investing at certain times, but now isn't one of them.
> 
> My intent is mainly to benefit from capital gains. I invest mainly in deep value stocks, so they often come with a dividend as well, but in terms of total return I expect most of it to come from price movement.
> 
> I'm not sure what a reasonable goal would be, but take your after tax income, subtract monthly rent food and fun budget, and see what the remainder is - i imagine it's a lot more than 100k in 3 years! It'll feel good to get to the 6-figure mark, but it's striking how far the 7-figure mark remains from one's grasp.


Ah I hear yeah, well for example last year i made 130k, i was put in the tax bracket where I am taxed at 26% leaving me to net 96k
my truck insurance is 2.2k
Rent 5k
phone/internet 1.8k
gas for my truck 3.5k
food 4k
misc 10k
professional fees 1.2k
Leaving me with 68 k left over.

Holy smokes i didn't even realize this could be possible....feelsgoodman however are there any other expense that i am forgetting that we all pay?
maybe i am too optimistic haha

well looking back when i was 20 i thought making 6 figures was completely out of reach, and now that i am here making it, im sure 7 will be difficult but possible!


----------



## Janus

ashin1 said:


> Ah I hear yeah, well for example last year i made 130k, i was put in the tax bracket where I am taxed at 26% leaving me to net 96k
> my truck insurance is 2.2k
> Rent 5k
> phone/internet 1.8k
> gas for my truck 3.5k
> food 4k
> misc 10k
> professional fees 1.2k
> Leaving me with 68 k left over.
> 
> Holy smokes i didn't even realize this could be possible....feelsgoodman however are there any other expense that i am forgetting that we all pay?
> maybe i am too optimistic haha
> 
> well looking back when i was 20 i thought making 6 figures was completely out of reach, and now that i am here making it, im sure 7 will be difficult but possible!


Looks about right. See? Give yourself 1 year, not 3, to reach 100k.


----------



## ashin1

Janus said:


> Looks about right. See? Give yourself 1 year, not 3, to reach 100k.


woah thats awesome! im temtped to start my own diary now lol
thanks for the insight op!


----------



## SkyFall

wow I can wait to start making real money, I guess gonna keep eating kraft dinner while in school at least I have a decent job for a student  keep going guys you are keeping me motivated!


----------



## ashin1

dont eat kraft dinner man! try and eat something healthier like oatmeal, yams, veggies, and lean meats! no point on building wealth for the future if your health is crap!!! haha keephusltlincuz!!!!


----------



## SkyFall

Oh I said kraft dinner but I don't actually eat that, I try to eat healthy while trying to cut on cost. I am trying to enjoy life while building some wealth 

p.s. I am so jealous of your taxation bracket, I mean $130k @ 26% wow....here in quebec that's approx the same taxation rate as me if I work full time for about $37.5k/year


----------



## ashin1

woah thats hefty, time to move to alberta haha

well i stand correct i forgot to include provincal tax...bringing me to 36%


----------



## peterk

peterk said:


> Isn't that a bit low? How much are you spending? Give us a breakdown.





ashin1 said:


> how is that low


Glad you figured it out from Janus 

Are you up in Fort Mac or Edmonton ashin or somewhere more rural?


----------



## ashin1

peterk said:


> Glad you figured it out from Janus
> 
> Are you up in Fort Mac or Edmonton ashin or somewhere more rural?


haha thanks, i obviously was reading your post too fast haha. Im further north than fort mac! i live about 2 hour below the territories lol


----------



## Janus

ashin1 said:


> woah thats hefty, time to move to alberta haha
> 
> well i stand correct i forgot to include provincal tax...bringing me to 36%


sorry to one-up you, buy you guys should all move to Hong Kong - top income tax rate is 15%, no capital gains tax, no dividend/interest income tax! That being said you don't want to know what I spend on rent.


----------



## peterk

I will pit my Fort McMurray rent against your Hong Kong rent! :hopelessness:


----------



## ashin1

Janus said:


> sorry to one-up you, buy you guys should all move to Hong Kong - top income tax rate is 15%, no capital gains tax, no dividend/interest income tax! That being said you don't want to know what I spend on rent.




So what's the chach? I want to believe haha


----------



## ashin1

peterk said:


> I will pit my Fort McMurray rent against your Hong Kong rent! :hopelessness:


Fort Mac? You on that oil time buddy?


----------



## Jon_Snow

I would rather gouge my own eyeballs out than live in either Hong Kong or Fort Mac. :biggrin:


----------



## peterk

We can't all live on private rainforest islands with the soft cries of Orcas waking us up at 10am on a Tuesday Jon_Snow :tongue-new:

Been here for bit more than a year ashin! Certainly not my favourite place in the world, but it's good for the bank account at the moment.


----------



## Janus

Jon_Snow said:


> I would rather gouge my own eyeballs out than live in either Hong Kong or Fort Mac. :biggrin:


Jon, I live downtown and am a 20 minute ($14 CAD) cab or $1.20 bus ride from white sand beaches. I also play rugby every week on a nice green field surrounded by lush green mountains. Hong kong's nicer than you think!

http://blog.bt-store.com/wp-content/uploads/2012/05/Shek-O1.jpg
http://www.hongkonghustle.com/wp-content/photos/Tai_Lo_Wan_Shek_O_beach.jpg



ashin1 said:


> So what's the chach? I want to believe haha


That catch is the rent! But over the long term the low income tax and no capital gains tax is a massive long-term wealth building tool.

That being said, most people in their 20's come here and leave poorer than when they arrived, due to how unbelievably easy it is to spend money here. Bars are open until 6am, not 2am.


----------



## ashin1

Janus said:


> Jon, I live downtown and am a 20 minute ($14 CAD) cab or $1.20 bus ride from white sand beaches. Hong kong's nicer than you think!
> 
> http://blog.bt-store.com/wp-content/uploads/2012/05/Shek-O1.jpg
> http://www.hongkonghustle.com/wp-content/photos/Tai_Lo_Wan_Shek_O_beach.jpg


brb moving to hong kong thx op


----------



## Jon_Snow

peterk said:


> We can't all live on private rainforest islands with the soft cries of Orcas waking us up at 10am on a Tuesday Jon_Snow :tongue-new:


Actually, you cannot hear orca vocalizations above the water, but I digress. :tongue-new:

As nice as those beaches look Janus, the overall population density of Hong Kong is not at all appealing. But I can see how it could be appealing to a young go-getter like yourself.


----------



## Janus

Jon_Snow said:


> Actually, you cannot hear orca vocalizations above the water, but I digress. :tongue-new:
> 
> As nice as those beaches look Janus, the overall population density of Hong Kong is not at all appealing. But I can see how it could be appealing to a young go-getter like yourself.


To each his own.  There are also beautiful fishing villages that some of the laid-back expats choose to live in, they commute about 45 mins to work but essentially live by jungle and surf. Almost no density other than small fishing boats and the odd family restaurant. To be honest 90% of hong kong land is unpopulated and covered in forest. There's something for everyone here, including a very hardcore hiking culture. That said, I don't plan to stay here forever. It's likely Australia next for me, they seem to have quality of life figured out (something Ontarians in particular do not - and I'm one of them).


----------



## donald

Hong kong:No nothing about the place but would love to check it out.
Couple weeks ago I was flipping through tv and caught-Anthony bourdain parts unknown hong kong:The night life and entertainment their made new York/vegas look like a prairie town.
Seems pretty eccentric where he was,super trippy night clubs with megatron dancer,everbody looked wasted,weird girly boys and fetishes(not my idea)but anyhow that episode stuck with me because the hong kong(I might be confusing it with Tokyo maybe!?)looked like everybody was on a acid trip or something.


----------



## peterk

How much _is_ your rent in HK if you don't mind saying? And what do you get for that?


----------



## Janus

peterk said:


> How much _is_ your rent in HK if you don't mind saying? And what do you get for that?


I pay $2100 US ($2300 CAD but I get paid essentially in USD) for 600 sqft with a rooftop. I'm in essentially the best location in the city for someone my age, I walk to work on the world's longest outdoor escalator (http://en.wikipedia.org/wiki/Central–Mid-Levels_escalator_and_walkway_system) and am about a 5 minute walk from just about everything. My morning commute is about 12 minutes by foot.

It's definitely more than I'd like to be paying, but living on my own here I'd likely not be able to live in something reasonable by Canadian standards for less than $2000. The offsetting factors to the high rent here are:

- low income tax
- no cap. gains tax
- extremely cheap transportation (I'll never need a car, cabs are stupendously cheap)
- generally much higher wages at the middle and senior levels compared to Canada


----------



## Cal

Looking at the original post, the goal of 2M is obtainable, however getting 100k in dividends out of it may not materialize. Yes I know that 2M at 5% would give you that, however the equities would have been purchased at lower prices, and if/when they increase in value, it does not necessarily mean that the yield will exactly follow.

Just some food for thought.


----------



## Janus

Cal said:


> Looking at the original post, the goal of 2M is obtainable, however getting 100k in dividends out of it may not materialize. Yes I know that 2M at 5% would give you that, however the equities would have been purchased at lower prices, and if/when they increase in value, it does not necessarily mean that the yield will exactly follow.
> 
> Just some food for thought.


Yeah it's just a *very* rough idea of the purchasing power that $2m affords. I highly doubt I'll be pursuing a yield strategy with my money at any point in the next 15 years.


----------



## peterk

I see you're doing an excellent job of following Arnold Schwarzenegger's 4th rule.

One might get the impression around this thread that if you only end up with 1.5m that generates only 50k in dividends at age 37 that your life has been a failure... :rolleyes2:


----------



## Janus

peterk said:


> I see you're doing an excellent job of following Arnold Schwarzenegger's 4th rule.
> 
> One might get the impression around this thread that if you only end up with 1.5m that generates only 50k in dividends at age 37 that your life has been a failure... :rolleyes2:


Had to look that up. Glad you get the point of the thread.

My costs may easily be understated - but my future income is also likely to be understated. It's not outlandish to make over $1m a year in my side of the industry once you've been working the right job for 5+ years.

*Update*: Cleared to trade equities (finally)!


----------



## jserrg

Janus,

Very inspiring story.

My gross income in Canada is only slightly less than yours in HK. Thought I have family/kids/car/house/etc.
And I spend it all. If I save something - I put it against my mortgage. Some may consider it saving. I don't.
House is just a necessary expense, not an investment.

My point is that family/kids do change everything. Enjoy it while you are free.  
You will adjust your plan once you will find THE one.

But your story is definitely inspiring.
Planning is the key to happy life - You improve where you track.


----------



## Janus

jserrg said:


> Janus,
> 
> Very inspiring story.
> 
> My gross income in Canada is only slightly less than yours in HK. Thought I have family/kids/car/house/etc.
> And I spend it all. If I save something - I put it against my mortgage. Some may consider it saving. I don't.
> House is just a necessary expense, not an investment.
> 
> My point is that family/kids do change everything. Enjoy it while you are free.
> You will adjust your plan once you will find THE one.
> 
> But your story is definitely inspiring.
> Planning is the key to happy life - You improve where you track.


Thanks jsserg. I know it can all change at a moment's notice - I'm just trying to get a head start so that things are easier once I've got less financial freedom. The larger the down payment on that house and the more I have sitting around to compound while my kids grow up, the easier it will all be on me in the future. Might as well be aggressive now.


----------



## Janus

*June Update*

*Liquid Assets*: $132,000

Feeling very motivated these days to keep saving, but also to make aggressive investments when I have conviction. I'm willing to be punished when I'm wrong in order to be properly rewarded when I'm right, so I'm following a fairly concentrated approach. Happy with the results so far.


----------



## ashin1

great progress thus far. how has no one bumped this thread!


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## LLLynnWoW

I'm too stupid to understand this. :biggrin:
------------------------------
Oh no


----------



## Janus

*August Update*

*Liquid Assets:* $142,000

Despite one of my stocks doing quite poorly lately, relentlessly shovelling away as much as possible into my brokerage account continues to work as a means of building wealth (who knew?). 

One method I've found that helps with limiting spending is that after my pay cheque comes in and bills are paid, I convert the rest immediately to USD. This moves it into a currency that i cannot use for purchases, but which I can use for investments. Generally I've moved 80% of my assets into USD over the years due to my negative outlook on the Canadian dollar. It's turned out pretty well so far and I expect USD strength to continue as interest rates rise.

Recent stock purchases include McDonald's and Urban Outfitters. I'm also in the process of making a $10,000 investment in a friend's tech startup which is in the second round of VC funding.

Looking forward, however, I feel that I want real estate to start becoming a part of my overall wealth picture.


----------



## peterk

You are my carrot, Janus.

What does your typical work week look like? If you don't mind sharing...


----------



## Janus

peterk said:


> You are my carrot, Janus.
> 
> What does your typical work week look like? If you don't mind sharing...


Haha! No problem, happy to share.

*7:00 AM:* wake up, get ready for work
*7:40 AM:* leave the apartment, and fast-walk the escalator to work (http://en.wikipedia.org/wiki/Central–Mid-Levels_escalator_and_walkway_system)
*8:00 AM:* arrive at my desk
*8:00 AM to 7:00 PM:* analyse stocks, with a 1 hour gym break in there at some point in the day. This involves reading annual reports, meeting analysts, meeting CEOs when they come through town, and team meetings. But the bread and butter is sitting at my desk with the thinking cap on.
*7:00 PM:* leave work and fast-walk the escalator back home
*7:15 PM:* arrive home

These are pretty standard hong kong hours. I don't take my work home and I don't do anything on weekends. To be honest, the hours don't feel gruelling at all. When you're working in asset management, there's no point making rushed decisions - so I'm able to take my time when looking at a stock to make sure I get it right.

Now previously, I was also studying for the CFA exam after the 11-hour work days and on the weekends. Let me tell you, that was hellish. But I'm happy to say I found out last week I passed level 3 of the CFA exam, so I'll never need to study outside of work again! I'm free!


----------



## My Own Advisor

_"But I'm happy to say I found out last week I passed level 3 of the CFA exam, so I'll never need to study outside of work again! I'm free!"_

Congrats!!!


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## Janus

My Own Advisor said:


> _"But I'm happy to say I found out last week I passed level 3 of the CFA exam, so I'll never need to study outside of work again! I'm free!"_
> 
> Congrats!!!


Thanks! I still can't believe what a relief it is to never have to devote that much out-of-work time to studying again. 

I remember doing 11 hour days at work, getting home at 7pm, napping for an hour, getting up and making a pot of coffee at 8pm, and then studying until midnight or 1am. Rinse and repeat. That's what the last 3 months of studying are like before the exam (the first 3 months aren't so bad... but it's 6 months total).


----------



## SkyFall

Congratulation for your CFA


----------



## My Own Advisor

Janus said:


> ~35% of people get to pass the first exam, ~40% of people get to pass the second, and ~50% get to pass the third - so only 7% get to pass on their first attempts.


Geez, I had no idea. Well done!!

What's next? Any big investment or career moves ahead?


----------



## Janus

My Own Advisor said:


> Geez, I had no idea. Well done!!
> 
> What's next? Any big investment or career moves ahead?


Luckily I've been able to make the investment career move prior to finishing the CFA, which is what brought me to Hong Kong. But it's a position in which I'm expected to get my CFA, so it's certainly a load off my back!


----------



## Ethan

Do you work for Janus Capital?


----------



## Janus

No, they stole the name of my future hedge fund.


----------



## Janus

del


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## james4beach

Janus, did you use leverage on the 10k, or is that a straight-up cash investment from you?

By the way... the next skill you must master is the art of using "other peoples money" (OPM). You aren't really on the path to riches until you remove yourself from the risk loop and make other people take the risks, while _you_ reap the rewards.


----------



## Janus

james4beach said:


> Janus, did you use leverage on the 10k, or is that a straight-up cash investment from you?
> 
> By the way... the next skill you must master is the art of using "other peoples money" (OPM). You aren't really on the path to riches until you remove yourself from the risk loop and make other people take the risks, while _you_ reap the rewards.


Used cash money. 

Good points. I know leverage is the next step, and in a few years I'll be looking to get into real estate in a big way.


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## Janus

*Update*

I've got an opportunity to switch jobs to a hedge fund that involves taking a moderate short-term pay cut to learn from the best in the industry. Investing is an apprenticeship business, and I see enormous value in learning from a truly great investor, someone who has actually generated long term returns well in excess of investment benchmarks. I'm leaning towards taking the plunge.


----------



## SkyFall

Wow! Congratulation Janus! You know sometime in life we take a step back to be able to take 3 steps forward after! I encourage you in it! I wish I get a chance to work for a hedge fund... lets finish University first hahhahah


----------



## Janus

SkyFall said:


> Wow! Congratulation Janus! You know sometime in life we take a step back to be able to take 3 steps forward after! I encourage you in it! I wish I get a chance to work for a hedge fund... lets finish University first hahhahah


Thanks - though I should say the pay cut is substantial, and the end goal is by no means guaranteed. 

Curious whether anyone here has ever taken an intentional paycut.


----------



## donald

Just curious Janus,how come the pay cut is going to be substantial?
Don't small successful hedge funds generally compensate more than the larger investment banks?
I understand you will be apprenticing but surely you will be adding value to the company just as much as your previous employer.
Note:I don't know the first thing about your industry,just find the discussion interesting.


----------



## Janus

donald said:


> Just curious Janus,how come the pay cut is going to be substantial?
> Don't small successful hedge funds generally compensate more than the larger investment banks?
> I understand you will be apprenticing but surely you will be adding value to the company just as much as your previous employer.
> Note:I don't know the first thing about your industry,just find the discussion interesting.


No problem at all. Indeed some hedge funds pay very well, particularly in the US. But basically this place is one where the base pay never really gets that high, but bonuses grow over time.


----------



## jcgd

Janus said:


> Thanks - though I should say the pay cut is substantial, and the end goal is by no means guaranteed.
> 
> Curious whether anyone here has ever taken an intentional paycut.



I just switched jobs and took a pay cut. I want the experience so I think it's worth it. I think more doors will open down the road due to my experience. 

I took a haircut of about 8%. That's a substantial amount of money to me. It pretty much wiped out my monthly savings.


----------



## Underworld

No point having savings if you aren't enjoying life. Investing in your knowledge and character is always a good move.


----------



## Jorob199r

Janus said:


> Thanks - though I should say the pay cut is substantial, and the end goal is by no means guaranteed.
> 
> Curious whether anyone here has ever taken an intentional paycut.


I went from 250k in private practice to 110k in govt at age 30. I was living in an isolated northern town and was bored. I moved to the rockies where the outdoors lifestyle makes me feel like I'm alive. I will eventually max out at about 180k. I didn't move for the money, I moved for the vacation and the outdoors lifestyle.

I also moved with my spouse who makes the same as me, in the same job with a different government. So it's not like we're poor. I saved enough for a house in my early 30s. We have no bills outside of paying rent. Even with getting 2 months off a year, we will eventually take long sabbaticals to travel the world for extended times.

Basically, making all that money was kind of fun, but got boring when the rest of life wasn't so fulfilling. I don't care about nice cars or big houses.


----------



## Janus

Thanks for all the comments on this. 

Full disclosure, the pay cut is substantial. 

Long term the pay is much better, but there's no guarantee I'll stick around that long. If I do that's fantastic, but I want this to be worth it from a 2-3 year stint perspective. So I'm really looking at it from the learning benefits, which seem substantial. 

If I ask myself whether I can become the investor I want to be through my current job, I'd say I'm doubtful. 
If I ask myself whether I'm currently learning enough, I'd say no.
If I ask myself whether I'll have another chance to learn as much as I would in the new job, I'd say not likely.


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## peterk

Is no similar learning opportunity and long term pay increases to be had in the whole of Hong Kong???


----------



## Janus

peterk said:


> Is no similar learning opportunity and long term pay increases to be had in the whole of Hong Kong???


Plenty of opportunity for long term pay increases here, no doubt about that.


----------



## peterk

I have not been to HK, but I imagine it to be leagues better than TO in practically every way, including careers in finance. Waiting a while longer for the right opportunity in Asia would seem like the move I would make if I wanted a career in Asian finance (isn't it a big deal to flipflop a career between continents several times?)

That said I think you should be chasing the big money, with whatever 5+ year plan it takes for you to make it happen. Focusing on losing 40k this year is trivial if it means having 3 million saved by 37 instead of 2 million and a 500k larger annual bonus...


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## SkyFall

With the asian market growing bigger and bigger every year, maybe in 2-3 years from now you will have more offers coming to you (better) no?


----------



## Janus

SkyFall said:


> With the asian market growing bigger and bigger every year, maybe in 2-3 years from now you will have more offers coming to you (better) no?


People in North America regularly overestimate Asia as a market. Take a look at the shanghai composite over the last 5 years and you'll see why I have no qualms leaving asian equities. In particular, China is one of the worst, most value-destroying equity markets in the world. People get excited by big IPOs but forget how China's state giants fair to generate returns on capital. MSCI China has been flat since 2010. 



peterk said:


> I have not been to HK, but I imagine it to be leagues better than TO in practically every way, including careers in finance. Waiting a while longer for the right opportunity in Asia would seem like the move I would make if I wanted a career in Asian finance (isn't it a big deal to flipflop a career between continents several times?)
> 
> That said I think you should be chasing the big money, with whatever 5+ year plan it takes for you to make it happen. Focusing on losing 40k this year is trivial if it means having 3 million saved by 37 instead of 2 million and a 500k larger annual bonus...


The big money is less certain but potentially much bigger 10 years down the road if I do the Canada route, simply due to the learning and the community I'd be a part of. I'm more likely to end up in a hedge fund or running money personally.


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## james4beach

> In particular, China is one of the worst, most value-destroying equity markets in the world


Well said. I also don't understand the big interest in Chinese stocks. The Shanghai Composite performed terribly from 2000-2006 and even more terribly since 2008. The only time that Shanghai performed well was the *two year* period of 2006-2008 (maybe 2.5 years tops), and that's it! So it was brief -- but it was such a spectacular rise that it sucked in a lot of people... like my parents, who joined the emerging markets bandwagon.

Looking back to 2000, of the last 15 years, here's the % of time each market has been in a bull market (_rising steadily for at least 1 continuous year_)

USA: 67%
Canada: 67%
Gold: 67%
Europe: 57%
Japan: 47%
China: 30%

US, Canada, and gold have been the place to be. In comparison, China and Japan have spent less than half their time in bull-mode. China being the worst of the list! Look at it probability-wise. As an investor, if you wandered into one of the above markets at an arbitrary time, you had a 67% chance of making money in US/Canada/gold. With China, you had only a 30% chance of making money.

(Note for Europe I used the FTSE)


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## Janus

One thing I've learned is that the people who truly know what they're talking about regarding China are also the most negative. I'm no expert but I know enough to be negative. 

As for working with Asian equities in general, you have to deal with poor disclosure and frequent scandals/frauds. I wouldn't mind working with US equities for a change, though that's not likely to happen.

James, any views on the pay cut decision?


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## Janus

*Year-End Update*

*Total Net Worth: CAD $192,219*

I'm short of the $200,000 I wanted to reach by the end of this year due to some disappointing equity investments. But, luckily all of my failures have come with some slap-in-the-face learning that won't soon be forgotten. In one instance in particular, I've paid $2000 for a life lesson that will help me in future much larger investments, as well as my job.

One thing's certain - I'm glad I'm making these mistakes at age 27 instead of age 37, losing 4-figure amounts and not 6-figure ones. But I need to do better in the future.

Irrespective of being $8k short, I consider this to be a significant pile of capital, a real nest-egg that can serve as the basis of my future wealth. I plan on investing it responsibly, but aggressively, to reach my long-term goals. Right now that means keeping a lot in cash and being opportunistic. In the future it will likely involve some serious stock concentration when the timing's right.


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## DmDave

Nicely done Janus, to have increased your net worth by $110,000 in a bit over a year. Lots of hard work in saving as well as investing to get you this far. I was still a poor student at your age.


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## peterk

Janus said:


> [
> Irrespective of being $8k short, I consider this to be a significant pile of capital, a real nest-egg that can serve as the basis of my future wealth.


Indeed it is! Lately I've been looking at my savings with the perspective of "how long would this money last me if SHTF and I lost my job?" Currently that answer is 5 years. I find it very reassuring when making life and career decisions that even if some god-awful disaster is bestowed upon myself or my career that I will be able to weather the storm for a number of years without blinking. It really takes the pressure off.


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## Pluto

Don't know what you decided with your Canadian job offer. I think you need to follow your heart and let the money take care of itself. In other words, do what you enjoy the most, don't just chase money. A niche learning opportunity will make you more valuable to employers in the future.


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## Janus

peterk said:


> Indeed it is! Lately I've been looking at my savings with the perspective of "how long would this money last me if SHTF and I lost my job?" Currently that answer is 5 years. I find it very reassuring when making life and career decisions that even if some god-awful disaster is bestowed upon myself or my career that I will be able to weather the storm for a number of years without blinking. It really takes the pressure off.


Interesting way to look at it - real armageddon scenario. Ammunition and zombie bunker aside, I suppose in my "stuff hits the fan" scenario I could live off $25,000 a year. 

The way I like to look at benchmarks is to say "if I decided to harvest off these assets and live off a 5% yield, what would my income be and what would that cover?". It's not entirely realistic but does give me a sense of scale. $200k at 5% is $10k a year, which (at least in Canada) starts getting close to covering most of the year's rent. I like knowing that.



Pluto said:


> Don't know what you decided with your Canadian job offer. I think you need to follow your heart and let the money take care of itself. In other words, do what you enjoy the most, don't just chase money. A niche learning opportunity will make you more valuable to employers in the future.


Thanks for the advice, I think you're right. 

I'll know what I'm doing in about a week or so - I'll be sure to update this when I decide.


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## james4beach

Janus said:


> James, any views on the pay cut decision?


I think it can be OK to take a pay cut. You have to look at the whole 'package' of what you get out of a job. Here's my actual list for my own job hunting:
salary, cost of living, location (and lifestyle it offers), experience I can gain, ability to exercise specific skills, hours and overtime, vacation days, stress, workplace diversity, opportunity for diversity and travel

In my last job hunt (about a year ago), I listed these, weighted their importance to me, and then scored my job choices. After thanking the deity for providing me with _options_, I chose the one with the higher score... perhaps overly mechanical, but it helped me choose.

So I see the salary as just one factor. The rest can easily compensate, or maybe not. The risk of taking a pay cut is that the pay is like your "insurance" that the job turns out to suck. For instance, I may go into a job thinking that the location/workplace is great, then find it's kind of crummy. "Well who cares I'm making 20K more", I might then say.

I think you can comfortably take a pay cut if you're certain that you'll get other goodies -- experience, etc -- out of the job.

By the way. In the last year, I've increased my net worth by 32k and I consider myself a very aggressive saver. You've done amazingly in one year. My only hard criteria for a job is that it WILL increase my net worth (i.e. I make more net money than my cost of living). But would I give up my current job and move to northern Alberta? No way... pay is higher, but it fails many things of my checklist (location and lifestyle being the big ones).

Counter-example: I had an offer from RBCCM in Toronto. I really like downtown Toronto and the lifestyle. All my friends are there, etc. Those are positives. But the salary was low, the recruiter was a dick and used dishonest negotiation tactics, their team had high turnover, and appeared to have a cultural problems. I thought, am I really going to accept a pay cut for this? No... that's the kind of scenario where I need insurance-via-high-pay. They offered me around 60k, I said I need at least 100k, they said dream on. Makes me wonder how RBC CM is able to attract talent.


----------



## Janus

*Big Update* - *I decided to take the plunge and return to Canada.* 

*An Early Inheritance*

I received $25,000 from a relative as sort of an early inheritance from a grandparent - I never thought I'd get one at all. It helps to swallow the pill of earning less in Canada.

*Assets: *CAD $216,355
*Liabilities:* $0

(note the collapsing Canadian dollar has helped my USD-based assets appear to grow.)


----------



## MasterCard

You'll love the weather in the GTA. It's absolutely positively....horrible.


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## Janus

MasterCard said:


> You'll love the weather in the GTA. It's absolutely positively....horrible.


Trust me I'm not coming back for the weather.


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## humble_pie

occasionally some of us old phartz in cmf forum wonder out loud about how to teach financial & investment knowledge to young people. Ages something like 13 to 30.

it's almost never taught in schools, so often youths - unless they had parents who mentored them - arrive at their first jobs wondering what is a TFSA, or what is the difference between an index fund & an ETF, or what to do about their debt level, or what is a dividend.

the provincial securities authorities are trying to fill the vacuum but their education budgets are limited. Here in quebec, the AMF says its priority is young people & its goal is to spread enough knowledge to help vaccinate citizens against financial fraud.

me i often wonder about the possible role of youth ambassadors. No one could speak better to ages 13 to 30 than the youthful persons in cmf forum who have achieved absolutely stunning accomplishments, such as the one realized by Janus in this thread.

there are several financial young achievers in the forum, i think the first might have been m3s, back in the day when he posted here under another name. Barwelle & peterk & jcgd & dmoney joined ... soon there were others ... an ever-growing number. It continues to amaze me how responsible & how smart & how strategic they are, how much plucky iniative & common sense they have.

i'm wondering whether the provincial securities authorities could not startup a local high school lecture program? enough funds to send a youth ambassador, perhaps once a year, to a high school finance fair or finance event?

the key thing would be an under-30 to talk to the under-30s, imho.


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## donald

You know what the problem is about the issue of teaching personal finance in high schools is:
Ultimately it would 'fall' on math teachers and what i have read from some reports are school districts would need to Certify them.
here are some quotes from the article"teachers feel unqualified to teach financial literacy''says julie heath director of the economics center and economics prof of university of cincinnati"82%(teachers and i suppose specifically math teachers)say they are not prepared to teach these concepts,even as over 90% of them think they need to be taught in schools"-that's telling because that's coming straight from teachers in the study!
"schools shouldn't place any teachers in a position to teach subject matter he or she feels unqualified to teach"
''shrinking budgets mean teachers do not get the professional development that would make them more confident to teach financial literacy''
''To be a teacher or a leader,you must lead and teach by example,we can not expect someone who is in disarray with their own finances to be placed in a position of teaching someone"

Take away:The ultimate root of the problem regarding financial literacy is:among the teachers.


Maybe Humble it starts with the university( teaching degree,subject matter or it's OWN stand alone course!)but than of course that doesn't solve the problem of maybe the teacher not being effective(ie:example a 250 lb gym teacher who smokes teaching kids basketball lol)
The federal government has to overhaul the past and initiate going forward obviously,which is likely a snowball lasting in hell chance(they just don't care enough)It is a interesting subject

srry Janus,not trying to hijack!


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## steve41

I wish I had kept my Mother's grade 11 HomeEc text book! (Circa 1935) In it were various tables (PV, FV, annuity) which when applied properly would allow the student to answer such questions as " how much should I save each year in order to secure a $x per year annual income until death" or similar problems. This was 80 years ago ferchrisakes. They didn't even have computers then!!!! AARRGGHH.


----------



## Janus

@humblepie: that's high praise. I'm certainly blown away by all the people younger than me in Alberta & elsewhere who are doing even better, and even moreso by the middle-aged people who've already reached their goals of independence like Jon Snow and I'm sure many others.

@donald: My first job in this industry was in a short marketing position at a big bank where I actually had to research how financial literacy affects self-directed investing. After reading everything I could find in academic literature, I was shocked at how low financial literacy is overall.

So I can understand why math teachers would feel unprepared to teach true financial literacy, since so few adults have it themselves. But I don't think you would ever have to teach the finer points in high school. Given what I've seen of other people in my 20s, I think high schools would simply need to cover the concept of *the personal balance sheet*, which only involves addition and subtraction. Forget stocks and investments, just focusing on income and costs and the virtue of saving and having a buffer. 

Here's the curriculum in my head:

Personal Balance Sheet
- what's an asset, and why is it good? what things count as assets?
- what's a liability, and why is it bad? what things count as liabilities, especially things that you thought were assets?
- what is equity, and why should someone bother to build it over time? 90% of people out there still don't even know about the concept of passive income. It's powerful. Imagine telling a kid that if they save enough they can do whatever they want. What an incentive.
- stories of personal balance sheet successes and disasters - case studies

Financial Products
- savings accounts and interest
- what is a mortgage
- why credit cards are dangerous
- intro to the different account types (RRSP, TFSA, etc.)

Taxes
- how to file a tax return yourself

I was going to get into investing a little bit, but honestly having an intro to all of the things above (especially the personal balance sheet) would put a class of highschool kids past the average 27 year old.


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## Janus

steve41 said:


> I wish I had kept my Mother's grade 11 HomeEc text book! (Circa 1935) In it were various tables (PV, FV, annuity) which when applied properly would allow the student to answer such questions as " how much should I save each year in order to secure a $x per year annual income until death" or similar problems. This was 80 years ago ferchrisakes. They didn't even have computers then!!!! AARRGGHH.


That's incredible! I had the wrong impression of home ec.


----------



## donald

I was thinking about this further Janus.
I was thinking in theory a personal balance sheet would be excellent(easy to understand and apply)
But i was thinking why would that be hard to teach?and than i thought about my own self and why i have a easier time with money than almost all of my peers and friends(i have always been strong with money-saving rates and thrift) and though learning -not strong in mathematics.(friends of mine always ask me about money because they know i am good with it)
What makes me strong in money/personal finance is almost entirely all related to delayed gratification.
In order for personal finance to work,one must possess delayed gratification(marshmallow experiment-walter mischel)
I am not sure this can be taught....studies are mixed on this
If it can't be taught than maybe it would be a waste,more than half of intro personal finance in school would have to have a component of physcology but than how do you teach emotional characteristics and behaviors?esp to 'young' people
rambling and might be going of course but so much of it comes down to that.


----------



## humble_pie

i wasn't thinking of any curricula or any organized courses taught by professional teachers.

was thinking more of single visits to high schools & junior colleges by young persons who are still close in age, language, music & thoughts to the teens ... but who are themselves stars & high achievers. Role models, if you will.

they wouldn't be expected to "teach" per se but rather to stimulate, to innoculate, to toss open doors & windows for the teens.

if nothing else, to get across the idea that financial management is doable, is as much a part of natural life as putting on one's coat in winter.

probably all MBA schools harbour one or more Argonauts, i don't see why with a little encouragement from gummint bodies, bright young argos who are MBA candidates could not be given some academic credit for volunteering to speak at a high school finance fair or event.

financial employers too, like all employers everywhere, encourage community volunteer activities among their personnel. I don't see why these couldn't include supporting the best & the brightest who reach out to tell young teens in high schools how they themselves started out, what was their best move, what are the easiest & most important FinFacts that high schoolers can build into their new lives as graduates.

maybe something as simple as How I Started my TFSA with Savings from Summer Jobs.

or maybe (teasing m3s a bit here) (sorry) How to Never Buy a New Car: finding your dream Wheels 2ndhand. Leads on, of course, to a talk about finding value in everything a teen prepares to buy.


----------



## Janus

donald said:


> I was thinking about this further Janus.
> I was thinking in theory a personal balance sheet would be excellent(easy to understand and apply)
> But i was thinking why would that be hard to teach?and than i thought about my own self and why i have a easier time with money than almost all of my peers and friends(i have always been strong with money-saving rates and thrift) and though learning -not strong in mathematics.(friends of mine always ask me about money because they know i am good with it)
> What makes me strong in money/personal finance is almost entirely all related to delayed gratification.
> In order for personal finance to work,one must possess delayed gratification(marshmallow experiment-walter mischel)
> I am not sure this can be taught....studies are mixed on this
> If it can't be taught than maybe it would be a waste,more than half of intro personal finance in school would have to have a component of physcology but than how do you teach emotional characteristics and behaviors?esp to 'young' people
> rambling and might be going of course but so much of it comes down to that.


I do think this is 90% of it. Even in professional investing, I think past a certain IQ it's just about your temperament and ability to resist the urge to participate in market euphoria.

That said, I've been shocked every once in a while how low the financial literacy bar is. Some people really do want to hear in a safe environment about what the point of investing is, how interest works, etc. So for some people, I think it is a matter of finding out why saving is even worthwhile - as crazy as that sounds to us.



humble_pie said:


> or maybe (teasing m3s a bit here) (sorry) How to Never Buy a New Car: finding your dream Wheels 2ndhand. Leads on, of course, to a talk about finding value in everything a teen prepares to buy.


How about *How to Never Buy A Car Until You're 35*? A bit more extreme but a record I'm shooting for.


----------



## steve41

Janus said:


> That's incredible! I had the wrong impression of home ec.


It was part of the Home EC curriculum......using annuity, PV and FV tables as well. Students came out of high school with more personal finance moxy than they currently do. Also..... remember when drug/grocery/convenience stores stocked small books of mortgage/annuity tables at the checkout? Sigh.


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## Janus

steve41 said:


> It was part of the Home EC curriculum......using annuity, PV and FV tables as well. Students came out of high school with more personal finance moxy than they currently do. Also..... remember when drug/grocery/convenience stores stocked small books of mortgage/annuity tables at the checkout? Sigh.


Sounds like these home ec curriculums covered most of a semester of MBA intro to finance. I lament being a late starter...


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## HaroldCrump

donald said:


> You know what the problem is about the issue of teaching personal finance in high schools is:
> Ultimately it would 'fall' on math teachers and what i have read from some reports are school districts would need to Certify them.


"Math" teachers in public schools are not qualified in any way to teach personal finance at all.
Personal finance is not math.
Sure, you need to know approx. Grade 7 math at the very least to be able to calculate %s, compound interest, etc. but that is barely the beginning.

And this is something that cannot be "learned" by the teachers by taking an online course during their "PA" days (funded by the taxpayers, of course).

What is likely to happen is that the school board will set up partnerships with some of the financial institutions to send representatives to the school for "teaching" personal finance.
So it will be a marketing suit from BMO, TD, etc. coming to the schools and teaching high-school students how to "invest" $100 a week (in bank mutual funds, of course - no prizes for guessing that).

Next spring, the teachers will strike because of their excessive "workload" and always being asked "to do more".
To placate them, govt. will give in to 10% raises (again).
And the saga will continue...


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## humble_pie

wondering what teachers & bank mutual fund salesmen have to do with Janus' personal success?

there are plenty of small, local, client-driven startups that succeed these days. It's a far cry from sending strong youthful talent as ambassadors to local high schools, to province-wide strikes carried out by union teachers.

instead of teachers, kids would probably get a bigger bang if steve41 could show up with his Ma's 1935 home economics textbook in hand. Not to teach actuarial tables, but to show how learning/gaining financial independence has challenged every generation


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## steve41

I kick myself that I threw out most of my parent's stuff once they passed on. I had an old T1 circa 1947 which my mother had created. Believe it or not.... at a certain level of income the T1 contained 12 tax brackets. No personal computers nor Turbotax in 1947.... everything was done by hand. There is a lesson there, but I haven't figured out what it is yet.


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## Beaver101

steve41 said:


> I kick myself that I threw out most of my parent's stuff once they passed on. I had an old T1 circa 1947 which my mother had created. Believe it or not.... at a certain level of income the T1 contained 12 tax brackets. No personal computers nor Turbotax in 1947.... everything was done by hand. *There is a lesson there, but I haven't figured out what it is yet*.


 .. how much income tax has risen? :frown:

Re the HomeEC course (circa 1930) that your mom took ... I don't recall of any annuity, PV and FV tables... was it just an Economics course? All I remember about HomeEC was fashion, sewing, cooking, etc., nothing with finances ... or maybe that it was cheaper to sew your own clothes.... didn't like that course one bit.


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## steve41

I am convinced it was part of a Home Ec textbook. Keeping the household finances in order was considered an important part of the homemaker's skill set.


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## Beaver101

steve41 said:


> I am convinced it was part of a Home Ec textbook. *Keeping the household finances in order was considered an important part of the homemaker's skill set.*


....makes sense. And it is still as important or more than ever. Interesting ... how old concepts still apply. Cheers,


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## steve41

It was called Home "Economics" after all.


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## peterk

Humble Pie called me young . I am in my LATE 20s now, if you'll all remember! :hopelessness:

I feel I must have lucked out with teachers or schools... Grade 7 we did some finance stuff, I remember going over what it would cost to buy and run a car. Grade 8 we did a stock picking contest. Grade 9 history we did stock picking again and the great depression. Grade 10 math went over compounding interest, PV, FV, annuities, retirement savings.

I also had "jobs" at a young age. Selling pumpkins and berries from our garden at 7-9, shoveling snow and mowing lawns 10-18, and a real actual summer job at my dad's work from 15-18. I had a bit over $10,000 saved from my childhood jobs when entering university at 18.

If I had to guess I'd have say that my financial "aptitude" and interest comes 70% from working for money at an early age and parental encouragement, 20% education in math and finance, and 10% external inspiration.

I'm not sure how much good a once or twice a year lecture or workshop from a youth ambassador would do. I imagine that the only young people who would get anything out of it would be kids like me, who didn't need it in the first place...

That being said, it couldn't hurt, and perhaps is a modern bandaid solution for the modern world that is the best we can do. Since it seems increasingly unlikely that kids will be told to put down the ipad by their parent (singular, there should be two) and go do something productive for the family like mow the lawn or help a neighbor or get a job.


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## Janus

@peterk, sounds like you lucked out education-wise with all that early exposure.


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## humble_pie

i don't believe anyone was ever thinking one isolated presentation a year from one youthful mentor could make a particle of difference to high school teens. It would have to be part of a bigger program.

a financial lit program for youth in high school & junior college should be developed, is what cmf members have talked about in the past.


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## Janus

Coming back to Canada, I've been putting some thought into housing. With $200k+ in assets, all of them liquid and most of them accessible, housing obviously comes to mind. 

There's no chance I'll buy in this market, but I am looking forward to coming back to Canada at a time when things are getting a bit more interesting economically. Oil is at $45, Calgary is starting to show some interesting housing numbers as a result (unsold listings way up), the CAD is collapsing as we speak, and I'm hopeful that there might be some opportunity for people of my generation to actually buy property. 

If there's blood in the water, I'll be looking to convert my USD to CAD and start taking on some risk. Until then I'm going to be patient, invest in equities opportunistically, and keep building that pool of assets for the opportunity I know will one day come.


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## james4beach

peterk said:


> I also had "jobs" at a young age. Selling pumpkins and berries from our garden at 7-9, shoveling snow and mowing lawns 10-18, and a real actual summer job at my dad's work from 15-18. I had a bit over $10,000 saved from my childhood jobs when entering university at 18.


I had a similar job at 8-ish... selling some flowers that grew in our garden. Around that time I started writing my total saved $ (net worth) on a sheet, and updated it annually. It's a habit I continued ever since!


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## Janus

*Update: Frugal Living*

Now that I'm back in town I'm really getting back into the groove of being frugal, and trying to game the system to save large amounts of $ wherever possible. It wasn't easy at first, as when you're getting set up from scratch you start to realize that life is expensive and that by paying more you can save yourself a lot of headache. In any case I fought the urge to splurge on everything at once for convenience's sake, and have saved quite a bit as a result. 

A few recent victories:

• Resisted the urge to buy a beautiful $1000 dining table, instead buying a heavily marked down floor model (different table) for $200, down from $700. I'm going to make it into a project and will be sanding and re-finishing the wood. By switching from one table to the other I *saved $800*, and my work on the cheaper table will make it aesthetically similar to the expensive one.

• Saved more than 60% off Allan edmond shoes which will last me 5+ years. From $450 to $150. *Saved $600 on 2 pairs*. Can't believe I didn't know this existed before.(http://www.shoebank.com/)

• I'm using my work phone for personal usage, *saving me $70 a month* (no effort here but still a nice win.)

• I was appalled at how expensive internet is now, so I signed up with Teksavvy and am now paying $40 a month instead of $70-80 with Rogers/Bell. *Saving $30+ a month.*

• Will not be buying a car, will not be ordering television service. Frugal living.

I'm not someone who values money more than time. But I can see the value of how a *bit* more time spent hunting can yield big results. And it's becoming kind of fun.


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## Ihatetaxes

Janus said:


> *Update: Frugal Living in Toronto*
> 
> • Resisted the urge to buy a beautiful $1000 dining table, instead buying a heavily marked down floor model (different table) for $200, down from $700. I'm going to make it into a project and will be sanding and re-finishing the wood. By switching from one table to the other I *saved $800*, and my work on the cheaper table will make it aesthetically similar to the expensive one.
> 
> • Saved more than 60% off Allan edmond shoes which will last me 5+ years. From $450 to $150. *Saved $600 on 2 pairs*. Can't believe I didn't know this existed before.(http://www.shoebank.com/)
> 
> • I'm using my work phone for personal usage, *saving me $70 a month* (no effort here but still a nice win.)
> 
> • I was appalled at how expensive internet is now, so I signed up with Teksavvy and am now paying $40 a month instead of $70-80 with Rogers/Bell. *Saving $30+ a month.*
> 
> • Will not be buying a car, will not be ordering television service. Frugal living.
> 
> I'm not someone who values money more than time. But I can see the value of how a *bit* more time spent hunting can yield big results. And it's becoming kind of fun.


Good job on the table. Sounds like a smart buy. Shoes still sound expensive but I am frugal on apparel. My average dress shoe purchase costs me about $90 at The Shoe Company and I get a few years of abuse out of them (have a few pairs older than 10 years but without using shoe trees and avoiding winter wear most don't last nearly that long).

No car is huge. Will save you a ton and in the city (downtown core at least) why the hell does anyone need a car?


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## Janus

Ihatetaxes said:


> Good job on the table. Sounds like a smart buy. Shoes still sound expensive but I am frugal on apparel. My average dress shoe purchase costs me about $90 at The Shoe Company and I get a few years of abuse out of them (have a few pairs older than 10 years but without using shoe trees and avoiding winter wear most don't last nearly that long).
> 
> No car is huge. Will save you a ton and in the city (downtown core at least) why the hell does anyone need a car?


Yeah I know most people won't see the shoes as "frugal". But The quality of these shoes is so good that if you treat them right you get 7-10+ years out of them, so the cost per year is miniscule. And I've never been able to get a $100 pair of shoes to last more than 2 years, by the end of which they look just horrible.


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## humble_pie

even in the GTA i imagine that one can still find beautiful vintage or antique furniture pieces at low prices. The serendipity is that people these days seem to want the new polycarbonate frames with the neofiber upholstery. Cabinets & armoires manufactured today are veneered particle board, can't possibly last.

well-designed solid wood pieces from 1890-1960 (there's a complete spectrum of styles in that time span, everything from ornate victorian to art déco to scandinavian modern) are classics that will last forever. They're not in style right now, so sometimes their low prices go begging.

one would avoid the fancy antique shops, look for estate sales, craigslist, kijiji. Finding the right furnishings would take time, but one would likely end up with some handsome pieces that will become heirlooms for one's children. 

meanwhile one can buy good-looking kitchen items in dollar stores, garage sales & church basement fund-raisers. Maybe splurge on a new espresso machine, a food processor if one likes to cook.

speaking of splurging, i love expensive shoes. I'd have totally loved yours even if you'd paid $900 a pair. Do they dress up all investment-banker-giorgio-armani-elegant-silk-tie at the new office? if so, you should follow (sorry) suit ...


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## Janus

humble_pie said:


> even in the GTA i imagine that one can still find beautiful vintage or antique furniture pieces at low prices. The serendipity is that people these days seem to want the new polycarbonate frames with the neofiber upholstery. Cabinets & armoires manufactured today are veneered particle board, can't possibly last.
> 
> well-designed solid wood pieces from 1890-1960 (there's a complete spectrum of styles in that time span, everything from ornate victorian to art déco to scandinavian modern) are classics that will last forever. They're not in style right now, so sometimes their low prices go begging.
> 
> one would avoid the fancy antique shops, look for estate sales, craigslist, kijiji. Finding the right furnishings would take time, but one would likely end up with some handsome pieces that will become heirlooms for one's children.
> 
> meanwhile one can buy good-looking kitchen items in dollar stores, garage sales & church basement fund-raisers. Maybe splurge on a new espresso machine, a food processor if one likes to cook.
> 
> speaking of splurging, i love expensive shoes. I'd have totally loved yours even if you'd paid $900 a pair. Do they dress up all investment-banker-giorgio-armani-elegant-silk-tie at the new office? if so, you should follow (sorry) suit ...


Yeah I'm going to take a patient approach to furniture acquisition, it's just that chairs and a couch are needed ASAP. 

As for the shoes... There's not a ton of pressure to look amazing in my office. We're not traders or investment bankers (sell side), who wear all the nice clothes to impress clients. We're the patient studious investors (buy side) who put their noses down and do the analysis in order to buy the right stocks. No flash required.


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## peterk

Janus said:


> I'm not someone who values money more than time. But I can see the value of how a *bit* more time spent hunting can yield big results. And it's becoming kind of fun.


I think the successful mindset needed when dealing with frugality that consumes your time is "am I learning something, enjoying something, or is this just a distraction" And whether or not something is a distraction is directly related to how much effort you are putting into your career (division of labour) vs. how self reliant you want to be. These two things are always at odds, competing for your time. 

Being self reliant is, I think, the natural way humans want to act. Strictly speaking focusing hard on your career and expertise is probably the mathematically correct thing to do almost all the time, but may not lead to a feeling of happiness like balancing your ambitions with personal "work" and hobbies that teach you a somewhat useful skill, will.

My girlfriend likes to recycle our cartons and bottles to the recycle depot which I think is insane. We essentially clean and store garbage in our small apartment for months on end, cluttering up a closet, then have to deliver this garbage to a disgusting building in a shady neighbourhood, do manual labour for 10 minutes loading and sorting the bottles, to finally receive 10 dollars.
Then of course the $10 is used to order some stupid candle or whatever from Beyond the Rack...


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## Janus

peterk said:


> My girlfriend likes to recycle our cartons and bottles to the recycle depot which I think is insane. We essentially clean and store garbage in our small apartment for months on end, cluttering up a closet, then have to deliver this garbage to a disgusting building in a shady neighbourhood, do manual labour for 10 minutes loading and sorting the bottles, to finally receive 10 dollars.
> Then of course the $10 is used to order some stupid candle or whatever from Beyond the Rack...


Oh man that is a beautiful (and cringe-inducingly painful) example of where frugality and valuing $ over time just makes no sense.


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## scorpion_ca

I was wondering why you need to wear a pair of shoes for 7-10 years when the design changes on a yearly/seasonal basis.


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## james4beach

I lived many years in Toronto downtown core, with no car. It was wonderful!

When I occasionally needed one I just rented at Enterprise/etc, which is actually very low cost (make sure your credit card has built-in rental car insurance). I still made many trips out of the city, went to parks, hiking, visiting friends throughout Ontario, etc.

The total cost of downtown living + occasional car rental was far cheaper than owning a car yourself. In fact I've completely turned around my opinion on downtown living. Living in downtown Toronto is not particularly expensive, unless you insist on having a car.


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## humble_pie

peterk said:


> My girlfriend likes to recycle our cartons and bottles to the recycle depot which I think is insane. We essentially [long list of painstaking recycling activities] ... to finally receive 10 dollars



we don't recycle for the $10, though. It's for the environment. To keep the items out of landfill. A high value activity.

what a burn to have to truck the stuff to the depot. Join a committee badgering city hall for household pickup or at least building pickup? also, is some packaging re-usable right there in the home? laundry detergent or window wash, often one can keep the bottle & just buy a refill in a small plastic bag?


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## janus10

peterk said:


> My girlfriend likes to recycle our cartons and bottles to the recycle depot which I think is insane. We essentially clean and store garbage in our small apartment for months on end, cluttering up a closet, then have to deliver this garbage to a disgusting building in a shady neighbourhood, do manual labour for 10 minutes loading and sorting the bottles, to finally receive 10 dollars.
> Then of course the $10 is used to order some stupid candle or whatever from Beyond the Rack...


Was your girlfriend a writer on the Seinfeld show?

Kramer and Newman hatch a scheme to arbitrage bottles from NY, where the deposit is 5 cents, to Michigan, where the deposit is 10 cents. They can't figure out how to make the costs work; gas is too expensive (variable costs), and there's too much overhead (fixed costs of tolls, permits, etc.) with using a semi to haul the bottles in volume. Finally, they hatch a scheme to use a mail truck, which lowers their variable and fixed costs to zero.


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## My Own Advisor

How's the progress Janus? I was too lazy to scroll back


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## ashin1

peterk said:


> Then of course the $10 is used to order some stupid candle or whatever from Beyond the Rack...



i bet that candle isn't so stupid when she light it up to set the mood  hahahahaha


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## humble_pie

definitely a No.10 gf

neat, tidy, thrifty, conscientious, strong sense of environmental responsibility, madcap sense of humour _plus_ the essential hahaha


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## Janus

My Own Advisor said:


> How's the progress Janus? I was too lazy to scroll back


Well, progress has slowed due to taking a pay cut! For the next year my net worth won't meaningfully increase due to income (I'll manage to save $2k a month... I guess a 10% increase isn't bad) or stock market gains (I'm slowly reducing my exposure to the market). Realistically speaking I'll need to be patient with wealth gains until I'm 30 when the earnings power of my current job should really take off.

I recently had a $2000 win through my investment in Urban Outfitters, which feels good. It was a classic example of buying a good company with a strong balance sheet and a history of consistently high ROEs that the market absolutely hated due to short term earnings disappointments.



scorpion_ca said:


> I was wondering why you need to wear a pair of shoes for 7-10 years when the design changes on a yearly/seasonal basis.


That's fair. I'm getting very classic styles though. 

*Update: Maple Table*

I stumbled upon a beautiful piece of solid maple tabletop for cheap and decided to make a huge improvement to the floor model dinner table I just got. Very much in line with my current theme of "paying up a bit for significantly higher quality". Goodbye hardwood veneer over plywood, hello inch-thick maple. Since the table legs are very high quality I'm just replacing the wood in what should be a process of:

1) Fill a couple of drill holes with wood filler
2) Sand down the table
3) Stain and lacquer
4) Screw tabletop to the metal table legs

It'll be a few weekends' worth of work (work which I consider hobby-type fun), but the end result will be something that would have cost me $1500+ in-store for an all-in cost of $500 ($200 for the original table with legs, $300 for the wood). I'll post up pictures if I get the chance.


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## Janus

*July Update*

As expected, the new financial reality of being back in Canada has hit hard. I try not to look at the taxes on my pay stubs! With the up-front costs of getting my life started here again, wealth accumulation has been slow to say the least.

Assets: CAD $221,100
Liabilities: $0

I'm having to get back into the habit of frugality which I'm realizing is harder than I remembered. And life in Canada is more expensive than I'd remembered as well, almost as high as Hong Kong (despite incomes being half of what they are there). It's a grim financial reality.

Nonetheless I'm trying to focus on the long term. I can triple my income over the next few years, and that's what I'll be working towards. While frugality will be important over the next year, paying more attention to growing my earnings will have a much larger impact.


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## peterk

Welcome back to Canada!

Easy and "automatic" frugality is definitely a winner. (sensible car, phone bill, rent, not drinking/eating out too much, limiting extravagance, fees, etc.)

Just make sure you aren't sacrificing long term wealth for short term savings. (eg. Living too far from work because it's cheaper, not putting enough money/time into eating healthy and being fit, being cheap in front of people who can bring you more money in the future, spending several hours per week thinking about "frugality" instead of career building, having shitty clothes/appearance, etc.)


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## Janus

Thanks peter, I've been enjoying the summer here. Good to be back in many ways.

I do have some "automatic" frugality built into my lifestyle here - work pays for my cel phone, rent is reasonable, and instead of a reasonable car I have NO car.  So I'm saving maybe 1.5k to 2k a month. Certainly not enough to get ahead quickly, so it becomes more about my bonuses.

I'm definitely not doing anything that's sacrificing long term wealth - in fact I came back to Canada in order to boost it. I walk to work every day, go to the gym a few times a week, and have a healthy social life here. Appearance never suffers either. But you're right to point these things out.


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## My Own Advisor

Welcome back 

No liabilities and savings $1.5k to 2k a month is VERY good.

Most people would envy such a great financial position.


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## Janus

*End-July Update*

The collapsing CAD has made my USD look more valuable, plus year-end comp was better than expected.

Assets: CAD $248,000
Liabilities: $0


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## Janus

My Own Advisor said:


> Welcome back
> 
> No liabilities and savings $1.5k to 2k a month is VERY good.
> 
> Most people would envy such a great financial position.


Thanks! Good to be sniffing around CMF again. 

It doesn't feel like enough when the goal is to be independently wealthy. But I know it's all I can expect of myself. No point slumming it in the name of a far-away goal. 

*The keys to my savings will continue to be based on 3 key things:

1. Not owning a car.
2. Saving 90% of my bonuses.
3. Being frugal when it comes to consumer spending.*

With rent, food, health, and fun (booze etc.), I simply won't skimp. The whole system seems to work ok.


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## tygrus

Janus, welcome back and I don't mean to rain on your parade but something I have learned up to my 46 years is you cannot save yourself rich, at least not in Canada. Two reasons, first is the income tax on earned income is so brutal you need to make so much more money to put a little away and secondly, you are saving a depreciating asset (i.e cash). It loses 3% in value every year due to inflation. 

If you want $2 million in assets you have to own something that has a continuous return (pays you to own it) and rises with inflation. Cash doesn't qualify. And you are avoiding debt like the plague when it can be used to create return when money is so cheap. You are actually losing ground.


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## rl1983

tygrus said:


> If you want $2 million in assets you have to own something that has a continuous return (pays you to own it) and rises with inflation. Cash doesn't qualify. And you are avoiding debt like the plague when it can be used to create return when money is so cheap. You are actually losing ground.



Invest in Dividend paying stocks?


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## Janus

tygrus said:


> Janus, welcome back and I don't mean to rain on your parade but something I have learned up to my 46 years is you cannot save yourself rich, at least not in Canada. Two reasons, first is the income tax on earned income is so brutal you need to make so much more money to put a little away and secondly, you are saving a depreciating asset (i.e cash). It loses 3% in value every year due to inflation.
> 
> If you want $2 million in assets you have to own something that has a continuous return (pays you to own it) and rises with inflation. Cash doesn't qualify. And you are avoiding debt like the plague when it can be used to create return when money is so cheap. You are actually losing ground.


I'm going to be investing aggressively throughout this entire period. Not afraid of inflation!


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## My Own Advisor

Janus said:


> I'm going to be investing aggressively throughout this entire period. Not afraid of inflation!


Same, save, invest then spend the rest. This is our plan and it's working. You still gotta live life.


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## janus10

tygrus said:


> Janus, welcome back and I don't mean to rain on your parade but something I have learned up to my 46 years is you cannot save yourself rich, at least not in Canada.
> 
> If you want $2 million in assets you have to own something that has a continuous return (pays you to own it) and rises with inflation.


This is Janus to the power of 10 (it always feels weird to post in this thread started by the one and the only, Janus).

What do you mean by these sweeping statements? It seems as though they are as wrong as "If you want to get ahead, you can't do it working for someone else."


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## GPM

I'm late to this post. Congratulations on all your success. But seriously, what's the rush? You have a great education, and a CFA which is a licence to print money (not being judgemental - great job in achieving). You are set. So what are your plans after your 2 million at 37? Important to think about. I see you working 11 hours a day - at least your working out. Frankly, you are only young once. I read stupid dad, stupider dad (his series is useless and he is being sued by his original partner) and went on the saving/investing spree. Pretty much same goal and was well on my way. Cut down by a disability, and guess what? I already had enough money for a great retirement. I look back and the best thing I did mid career was quit that course, cut to a four day week, world travel, and have kids. Said goodbye to the greedy, superficial friends and lived life at my speed. Lucky and thankful I did. Decided I liked world travelling far more than work, which is saying something because I absolutely loved my job (I would have worked until I died likely). Therefore, I further cut down to about 160 days a year. Point is, there's more to life than money. As Chrétien said " a balanced approach" (I'm apolitical). A proper financial plan shows me that I have a problem of never out living my money and handing off far more money to my kids than they should get, and I was nowhere near 2 million at 37, but with friends that were (I'm on disability until 65 with 1/2 the wage I was making after I cut back). Yeah, I have kids in private school, and I'm low man on the totum pole, but the people I see at the top don't strike me as particularly happy with their actual 7 day a week jobs, keeping up with the Joneses, trophy wives, and superficial lifestyles. Just a different point of view for you from someone who's been on the semi fast track. 

As far as financial education, successful alumni are a great way to go. My daughters school brings in former female alumni for inspiration (all girls school). They also play monopoly and and are taught finances starting in middle school.

By the way, I always find it ironic that the Kiosaki shoots down teachers, while Chilton's dad was a principle. Who has more financial knowledge, and is a better role model?

Best wishes in achieving your goals, and I hope they make you happy, but keep life fun while you're young, especially since you've achieved a high paying job at a young age. Take advantage of it.
GPM


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## james4beach

^ I nominate GPM for Post of the Month award. Great post. There's so much more than money.

I'm starting to make some of these mistakes... I'm in my 30s but I'm working too much, have a six figure income, and high expenses. Right now I want to go surfing *but I can't*. I want to go surfing. I'm just a 2 hour flight from one of my favourite surfing spots in the world (just a $300 round trip flight), but I can't escape from work obligations for even a WEEK. I have a business trip, then some client visits, then it's critical I work on X (they say). People pat me on the back -- _literally_ today at work people patted me on the back for a success -- and I'm told I'm doing all the great things.

But I just want to go surfing and summer is slipping away from me


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## GPM

janus10 said:


> This is Janus to the power of 10 (it always feels weird to post in this thread started by the one and the only, Janus).
> 
> What do you mean by these sweeping statements? It seems as though they are as wrong as "If you want to get ahead, you can't do it working for someone else."



Unfortunately, your statement is true. You can have a good life working for other people, and some work their way up to VERY high salaries, but almost every rich person I've met is self employed, owns their own place of work, and doesn't work for "the man."


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## james4beach

GPM said:


> but almost every rich person I've met is self employed, owns their own place of work, and doesn't work for "the man."


True, and same among the rich people I know. But I think cause & effect is muddied here.

When we hear about this, it sounds as if we're saying: stop working for others -> run your own business -> become rich ... and this is how it's commonly interpreted.

But perhaps the causation is the other way around. Perhaps by working diligently (for others) you can accumulate capital and experience. Now you're well off, or rich. Then you break free and become self-employed, because you'd have to be crazy to keep working under a boss when you have enough capital to be independent. So now you're a rich person who owns your own business, but it didn't happen because you stopped working for others.


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## GPM

Too true James. There is no better teacher than experience and there are some extremely well paying jobs. Although not rich, I worked for others until competent enough to run a business myself. Pay increased, but not that much. Just the satisfaction of building something, not having to answer to others, and control of my time.


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## peterk

GPM said:


> *Frankly, you are only young once.* I read stupid dad, stupider dad (his series is useless and he is being sued by his original partner) and went on the saving/investing spree. Pretty much same goal and was well on my way. Cut down by a disability, and guess what? I already had enough money for a great retirement. I look back and the best thing I did mid career was quit that course, *cut to a four day week, world travel, and have kids.* Said goodbye to the *greedy, superficial friends and lived life at my speed.* Lucky and thankful I did. Decided I liked world travelling far more than work, which is saying something because I absolutely loved my job (I would have worked until I died likely). Therefore, *I further cut down to about 160 days a year.* Point is, there's more to life than money.
> GPM


GPM, James, I like your advice in general, for a 35+year old, or someone without a good career anyways, but not at all in a lot of these money diaries, and certainly not in Janus's.

I like your argument that working very hard and spending money to keep up with the Joneses is not worth it, and that working less, (4 days a week, 160 days a year, for examples) is better. That is _obviously true_, but that is not what Janus, myself, Ashin, etc. on CMF are doing. We are working hard, making lots of money, and *Saving* lots of money. Over 50% in our above three member's cases, and there is little evidence in any of these threads that we are overworking/over saving to the detriment of our health or youth.

Working hard for no reward and losing your best years is horrible, I agree. So many young people are doing just that these days. Perhaps the above advice is best suited towards them. 

On the flip side of you-are-only-young-once, I have no idea how much energy or talent or opportunity I am going to have when I'm older. I am working hard and lots in my 20s _because I can_, and I have no idea what the future brings.

How can you advise young men in their 20s who are fortunate enough to have amazing jobs to cut back and not work so hard, relax and have kids? Jesus, there's plenty of time for us to have kids in our 30s and relax once we've already got 1M (2M for Janus :biggrin in the bank.

Again, I think the advice is wonderful for someone with a mediocre 40-50k/year job that doesn't have too much ambition. Obviously in that situation you don't want to throw your life away for a few grand in overtime, or work 60 hours a week unpaid for the faint hope of some pittance of a promotion.


----------



## peterk

james4beach said:


> ^ I nominate GPM for Post of the Month award. Great post. There's so much more than money.
> 
> I'm starting to make some of these mistakes... I'm in my 30s but I'm working too much, have a six figure income, and *high expenses.* Right now I want to go surfing *but I can't*. I want to go surfing. I'm just a 2 hour flight from one of my favourite surfing spots in the world (just a $300 round trip flight), but I can't escape from work obligations for even a WEEK. I have a business trip, then some client visits, then it's critical I work on X (they say). People pat me on the back -- _literally_ today at work people patted me on the back for a success -- and I'm told I'm doing all the great things.
> 
> But I just want to go surfing and summer is slipping away from me


Maybe the only mistake is the high expenses part James. We'd all like to go surfing whenever we want, and i think the right way to get there is to make/save a lot of money and always be trying to mold your career to keep yourself a high earner while gradually developing more freedom to do what you want in your career/with your time. Best case scenario is you have the perfect career where you make lots of money and can spend your time exactly how you want. Worst case scenario is you don't get there with your career, but still have enough FU money in the bank to say FU in your 40s and retire.

I just came back from a trip to Europe. Met lots of young people (and stayed with some young relatives in a slavic country) who are all too happy to have horrible jobs working at a mall, shoe store, etc.. Sure I'd love to study music in Salzburg and give bicycle tours around the mountains to make the bit of money I need to survive. It all sounds romantic and wonderful (working 20 hours/week in Europe with no stress). Talk to these people a little bit longer though and it become painfully obvious that 99% of them would change places with you in a heartbeat. The grass is always greener.

Advising young guys in their 20s in Canada with stellar jobs that they should be focusing more on work-life balance and thinking about having a family is the wrong advice, IMHO. I can admit though that I am standing squarely in the middle of the forest, and may possibly only be looking at trees. But the above example of my recent experiences in Europe only reaffirms my current thoughts and course of action that I should be working hard now while I can, for great reward.


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## janus10

GPM said:


> Unfortunately, your statement is true. You can have a good life working for other people, and some work their way up to VERY high salaries, but almost every rich person I've met is self employed, owns their own place of work, and doesn't work for "the man."


I think you can get ahead while not being rich (whatever that means). I've met a few sales people who bring in > $300k per year which, because I've only exceeded $250k once, is pretty impressive to me. If you're a 1%er, I'd say you're doing well, but perhaps I have more modest criteria for being "well off" than the average CMFer.

Obviously C level executives at any decent size company are doing extremely well.


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## james4beach

Well now I can see the opposite sides of the argument too. And yes the grass is always greener.

Meanwhile, I've been obsessed with the idea of surfing and ... I just booked the trip last night. I'll be heading down to southern California for a few days of surfing


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## none

james4beach said:


> Well now I can see the opposite sides of the argument too. And yes the grass is always greener.
> 
> Meanwhile, I've been obsessed with the idea of surfing and ... I just booked the trip last night. I'll be heading down to southern California for a few days of surfing


San Diego?


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## peterk

james4beach said:


> Well now I can see the opposite sides of the argument too. And yes the grass is always greener.
> 
> Meanwhile, I've been obsessed with the idea of surfing and ... I just booked the trip last night. I'll be heading down to southern California for a few days of surfing


Sounds awesome! I've never done it, despite being in a few situations where I could have easily tried on an ideal beach with small waves. I guess it's cause I'm not a very strong swimmer that I always chicken out. :hopelessness:


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## james4beach

Yes, San Diego... I really like it there! Small waves are fine, it's all you need for practice and it's usually enough for me too. What I like about San Diego is the water temperature... in Aug/Sep the ocean is around 21 C (last year it was ridiculously warmer). At those temperatures, you don't need a wetsuit and can just surf or swim in regular shorts.


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## GPM

Good Job James! Yeh, where? Always wanted to try but can't swim!!! 

PeterK. Your young enough to learn! That's the stuff I'm talking about. 

For all the other fellas:
I didn't mean to come come across as unsupportive, because long term your money will grow like crazy. I did the the same thing for a while. Live frugal while you are still used to it (just out of school etc). Kinda saved me in my disability.
Also, sorry, I didn't get the idea from the threads that you fellows were holidaying. Just work work work. I think I was clocking more hours than you guys, and my wife for sure (necessity of her job - she had to quit to get away from a 60-80 hour week). I was making 2/3 of the money and we were just living off my wifes, so similar idea.
Glad you made it to the second world. Worth seeing and gives perspective. 
My views on wealth etc:
I grew up broke as many of us have. No sob story, just life. I thought minimum wage to $18,000/ year was good
and $30,000 was fantastic. Boy was I wrong even then. So my views on wealth may be quite similar.
Heavily influenced by trip into real Africa and Russia in late 20's
Had a good friend suffer his first heart attack at 40. I was 30.
$75,000+/year well off - actually this is the wage of peak happiness according to a study I read. You are not living pay
check to pay check. Anything purchased after this is just more expensive - house, car, etc.
$360,000+ is wealthy
$500,000+ or $10,000 million assets is rich
I just tired of the other rat race - chasing the dollar. It just wasn't worth it any more. 
Just thought I would give some elderly advice. However, kids definitely wasn't one of them! Unfortunately it came across that way! Heyzeus, that is not for 20 year olds as you said. My recommendation is 30-36 yo or none at all (many will disagree and that's your spouses age-medical reasons). Too much fun to be had before then.

You are likely aware, but if not $2 million at 37 will be around $10 million by 65. More than I needed. That's why I quit pushing around 32. Just didn't need that kind of money. I owned a substantial house outright (5 year mortgage but not recommending now), and already purchased all the toys I wanted. I was already insured by then (food shelter etc).
My peak earning years are 30-45 in my profession and it takes a heavy toll on the body. So I was also trying to lengthen an enjoyable career. Just lost the fear of the future as well I guess.

Anyhow, my post was more out of concern from watching my colleagues go down the wrong path - greed, gambling, divorce, alcoholism, addiction, etc. Everyone has a time to slow down, just know when it is. Mine was 32, others are 60's. Oh oh. Sounding like a lecturing parent - blah blah blah.

Seems like you boys have a handle on things. Will be watching your progress with interest as I'm here to learn as well.
Good Luck,
GPM


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## Kakon

That good ways i think


----------



## Janus

*December Update - What a Difference the CAD Makes*

Lots of change in life since the return to Canada. It is exceedingly hard to save money with the lower salaries and higher taxes. The CAD has collapsed since I left HK, so I try not to think of the economic means I left behind. Though to be fair, I'm learning a lot in my new role, a hell of a lot more than I was before. 

*Total Assets: CAD $265,000*
*Total Liabilities: $0*

I've managed to save $1500-$2,000 a month this year due to a few things - mainly not owning a car and being fairly frugal. But with more than half of my assets in CAD, my assets' appreciation has come mainly from our worthless currency's collapse. I feel richer as a Canadian but poorer as an international citizen.

It's been somewhat of an expensive few months. Realizing I'd been under-investing in my own life, I finally decided to properly furnish my apartment and get some new clothes. This fall I scoured the city for great deals on furniture which were very fruitful - in fact I found some stylish items 80% off at the warehouse sale of a big queen street design store. It feels good to finally love my living space, which makes me wonder why I didn't do this sooner.

One more pay check to go in 2015.

Looking ahead to 2016:

In 2015 I didn't regret having most of my money in cash, with the S&P 500 down 0.3% and the TSX down 11% this year. In a year like this I was very happy to be flat. As for my investments, my private investment turned out well, and I picked up a few stocks at good prices - I made 25% on McDonald's, and picked up some Exxon Mobil at roughly its current price, which makes for roughly a 4% dividend yield. I also made roughly 7% by buying the S&P 500 SPDR when everyone else was crapping their pants this August/September. This was a bizarre year in which cash (USD) outperformed stocks, bonds, and gold by a wide margin.

For 2016, things don't look fantastic. The professionals I respect have a lot of trouble finding good investments right now, with valuations high and fundamentals not looking great in the US. I'm happy to go all-in stocks in a more normal valuation environment, in fact I look forward to it. But I see a lot of market-top-like signals:


Record M&A (Source: http://www.wsj.com/articles/2015-becomes-the-biggest-m-a-year-ever-1449187101)
Record or near-record stock buybacks (Source: http://money.cnn.com/2015/10/27/investing/stocks-dividends-buybacks-high-2016/)
Serious signals in high yield markets that the equity market seems to be ignoring
Very high median valuations (Source: http://www.bloomberg.com/news/artic...dends-all-that-s-left-in-s-p-500-goldman-says)

I can't pretend to know what will happen in this crazy monetary experiment of a market, but these are all negative signs that make me feel happy about being only marginally in the equity market at this time. 

As always I'll continue to look for the right stocks and the right time to buy them.


----------



## Eclectic12

james4beach said:


> True, and same among the rich people I know. But I think cause & effect is muddied here.
> 
> When we hear about this, it sounds as if we're saying: stop working for others -> run your own business -> become rich ... and this is how it's commonly interpreted.
> 
> But perhaps the causation is the other way around. Perhaps by working diligently (for others) you can accumulate capital and experience ...


The entrepreneur who couldn't stand working for others for any length of time is going to build from scratch. The experience types are going to leverage what they've learned.

IMO ... it's two different paths where the key ingredient is being willing to risk.


Cheers


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## peterk

I too am keeping a lot of cash and am not willing to go all-in. When I was I in school a few years ago without any actual real money I just assumed I would have no problem being 100% equities. All the advice I read said "young people can afford to be 100% equities". Then when I actually started accumulating money I realized that wasn't the case and I wasn't comfortable with that allocation.

That said, if I'd been 100% equities for the past 3 years like they advised I would have a good ~60-70k more than I do now....


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## Moneytoo

Janus said:


> In 2015 I didn't regret having most of my money in cash, with the S&P 500 down 0.3% and the TSX down 11% this year. In a year like this I was very happy to be flat.


Well apparently 'flat is the new up': http://www.usatoday.com/story/money...h-flat-2016-says-goldman-sachs-guru/76886196/


----------



## Janus

peterk said:


> I too am keeping a lot of cash and am not willing to go all-in. When I was I in school a few years ago without any actual real money I just assumed I would have no problem being 100% equities. All the advice I read said "young people can afford to be 100% equities". Then when I actually started accumulating money I realized that wasn't the case and I wasn't comfortable with that allocation.
> 
> That said, if I'd been 100% equities for the past 3 years like they advised I would have a good ~60-70k more than I do now....


Same here. Though to be fair, I made a good portion of my wealth in 2014 via my salary. By the time my money was coming in, things already looked stretched.

At this point though, no point jumping in with both feet. Conditions look horrible, for the reasons I posted above.


----------



## My Own Advisor

I think as oil goes, so will the economy. If oil goes lower, markets will go lower. If oil starts creeping back up to $50 or $60 in the spring of next year (which I think it will) then meager returns shall the market bring.

(Looking forward to Star Wars coming out!)


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## peterk

GPM said:


> Good Job James! Yeh, where? Always wanted to try but can't swim!!!
> 
> PeterK. Your young enough to learn! That's the stuff I'm talking about.
> 
> For all the other fellas:
> I didn't mean to come come across as unsupportive, because long term your money will grow like crazy. I did the the same thing for a while. Live frugal while you are still used to it (just out of school etc). Kinda saved me in my disability.
> Also, sorry, I didn't get the idea from the threads that you fellows were holidaying. Just work work work. I think I was clocking more hours than you guys, and my wife for sure (necessity of her job - she had to quit to get away from a 60-80 hour week). I was making 2/3 of the money and we were just living off my wifes, so similar idea.
> Glad you made it to the second world. Worth seeing and gives perspective.
> My views on wealth etc:
> I grew up broke as many of us have. No sob story, just life. I thought minimum wage to $18,000/ year was good
> and $30,000 was fantastic. Boy was I wrong even then. So my views on wealth may be quite similar.
> Heavily influenced by trip into real Africa and Russia in late 20's
> Had a good friend suffer his first heart attack at 40. I was 30.
> $75,000+/year well off - actually this is the wage of peak happiness according to a study I read. You are not living pay
> check to pay check. Anything purchased after this is just more expensive - house, car, etc.
> $360,000+ is wealthy
> $500,000+ or $10,000 million assets is rich
> I just tired of the other rat race - chasing the dollar. It just wasn't worth it any more.
> Just thought I would give some elderly advice. However, kids definitely wasn't one of them! Unfortunately it came across that way! Heyzeus, that is not for 20 year olds as you said. My recommendation is 30-36 yo or none at all (many will disagree and that's your spouses age-medical reasons). Too much fun to be had before then.
> 
> You are likely aware, but if not $2 million at 37 will be around $10 million by 65. More than I needed. That's why I quit pushing around 32. Just didn't need that kind of money. I owned a substantial house outright (5 year mortgage but not recommending now), and already purchased all the toys I wanted. I was already insured by then (food shelter etc).
> My peak earning years are 30-45 in my profession and it takes a heavy toll on the body. So I was also trying to lengthen an enjoyable career. Just lost the fear of the future as well I guess.
> 
> Anyhow, my post was more out of concern from watching my colleagues go down the wrong path - greed, gambling, divorce, alcoholism, addiction, etc. Everyone has a time to slow down, just know when it is. Mine was 32, others are 60's. Oh oh. Sounding like a lecturing parent - blah blah blah.
> 
> Seems like you boys have a handle on things. Will be watching your progress with interest as I'm here to learn as well.
> Good Luck,
> GPM



I imagine the older you get the more compensation you generally need to get your *** out the door to grind out another day of working.

I think it's excellent advice to cut back on your dedication to working so hard _ONCE_ you've gotten over "the hump". The hump is of course different for everyone as their circumstances are always different. Maybe the hump for you is a paid off house, for someone else when their kids are out of the nest, maybe for Janus it's $2M and maybe he'll decide somewhere along his journey that he was wrong and it's actually $1M, or 3M.

For me, "the hump" is, I think, going to be something about $500k in investable assets in my early-mid 30s. Past this point, I hope to have something figured out with my career where I only have to work a few hours/day for a few days/week in an inexpensive and pleasant location to live. I can then focus on starting a family.

Until then, I grind it out and suffer a bit for the high salary and high savings that will make this life possible after another 5+ years of hard work.

The problem with this kind of advice is that also ensnares those it isn't meant for. The desire among millennials to pursue a "work-life-balance" comes too strong and too young; _before_ they get over _their_ hump. They are the ones who ultimately suffer and don't lead great and happy lives. They'll only realize much too late, in the late 30s of 40s, that they are going to be stuck grinding it out for 40 or more hours/week in the working world until retirement in their 60s.


----------



## kork

peterk said:


> I imagine the older you get the more compensation you generally need to get your *** out the door to grind out another day of working.
> 
> I think it's excellent advice to cut back on your dedication to working so hard _ONCE_ you've gotten over "the hump". The hump is of course different for everyone as their circumstances are always different. Maybe the hump for you is a paid off house, for someone else when their kids are out of the nest, maybe for Janus it's $2M and maybe he'll decide somewhere along his journey that he was wrong and it's actually $1M, or 3M.
> 
> For me, "the hump" is, I think, going to be something about $500k in investable assets in my early-mid 30s. Past this point, I hope to have something figured out with my career where I only have to work a few hours/day for a few days/week in an inexpensive and pleasant location to live. I can then focus on starting a family.
> 
> Until then, I grind it out and suffer a bit for the high salary and high savings that will make this life possible after another 5+ years of hard work.
> 
> The problem with this kind of advice is that also ensnares those it isn't meant for. The desire among millennials to pursue a "work-life-balance" comes too strong and too young; _before_ they get over _their_ hump. They are the ones who ultimately suffer and don't lead great and happy lives. They'll only realize much too late, in the late 30s of 40s, that they are going to be stuck grinding it out for 40 or more hours/week in the working world until retirement in their 60s.


That's my take on it as well, but worded better than I could! I just celebrated by 37th birthday and my wife and I have about $420k in investible assets. Going to try to pay off the house over the next 5 years while maxing out RRSP's, TFSA's (which just got easier) and then unregistered investments. Not as aggressive as your early/mid thirties, but I've also got two children, 9 and 6 and my wife is a stay at home mom. Fortunately, I've grossed 6 figures for nearly the last decade and have been relatively frugal. We purchase quality, but our vehicles are older and not elegant. We enjoy "staycations" with the kids more than epic travels to Hawaii (though, it would be nice)...

Over the next 5 years I see us slowing down and investing more in experiences as the girls get older, but I'll be grinding just as hard. But since we've already been working hard to build a reasonable nest egg, we'll be able to do so. I mean, spending $10k on "experience" a year won't slow us down much... Quitting my job will!


----------



## peterk

kork said:


> Not as aggressive as your early/mid thirties, but I've also got two children, 9 and 6 and my wife is a stay at home mom.


I have no problem waiting until my mid to late 30s to have kids. In general that's my plan. I want to have that 500K to 1M base in place before I take such a plunge, and hopefully have my career transitioned to something more flexible so I don't have to spend a great many hours of my time away from home. Something like what Mr. Money Mustache has pulled off for himself.

With 30-40k in investment income and 30-40k in income from whatever venture I find myself up to that still leaves most of my time for family, I think the finances would be fairly solid.


----------



## kork

peterk said:


> I have no problem waiting until my mid to late 30s to have kids. In general that's my plan. I want to have that 500K to 1M base in place before I take such a plunge, and hopefully have my career transitioned to something more flexible so I don't have to spend a great many hours of my time away from home. Something like what Mr. Money Mustache has pulled off for himself.
> 
> With 30-40k in investment income and 30-40k in income from whatever venture I find myself up to that still leaves most of my time for family, I think the finances would be fairly solid.


Fortunately, my career is somewhat flexible in that I get to work from home 3 days of the week and find I spend a significant amount of time with the family. Kids go to school 5 mins away, and 5 days of the week, we sit down as a family and have a dinner together. So pretty fortunate. However, if I had a career where my earning potential was based on me travelling all the time or being away often, I'd struggle greatly. 

But you've got a good plan. May hay while the sun shines and then let time/compound interest be your friend. I've feared being a 50 year old man and just starting to think about retirement... I'd rather invest in things when it makes more sense... RRSP's/TFSA's etc when I'm young and once that's taken care of, if in my 50's I really want that nice car, I can afford it without sacrificing.


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## My Own Advisor

peterk said:


> With 30-40k in investment income and 30-40k in income from whatever venture I find myself up to that still leaves most of my time for family, I think the finances would be fairly solid.


That sounds great. I think you'd need about a $1 M portfolio value to churn out $30-40k per year in investment income; that's however exactly what we are striving for.


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## Janus

My Own Advisor said:


> That sounds great. I think you'd need about a $1 M portfolio value to churn out $30-40k per year in investment income; that's however exactly what we are striving for.


Yup, that's the plan for me too.


----------



## peterk

Every time I read the options threads I get confused, but I'm pretty sure that is something I'm going to consider perusing in a couple years as my savings grow to a size where it makes it worthwhile to learn about generating options cashflow from my portfolio.

I'm hoping to have my 500-1000k future portfolio generate about 6% in cashflow. ~3% from dividends and ~3% from options, and another 30-40k/year in some consulting/writing/photography/whatever side income scheme I can come up with.

Obviously I am being optimistic, and the nay-sayers may think this kind of plan is too aggressive and might fail... But as has been pointed out in Janus's money diary several times before, even if things don't work out so great, it just means the plan will get pushed back 5 years from 37 to 42 (or whatever). It's not as though we are making aggressive plans to retire at 65 and if it doesn't work out we'll be up **** creek working until 75 because of our financial failings...

There is a great big factor of safety built into mine and Janus' and Ashin's and MOA's financial aspirations, namely, being young.

What's your family plans Janus? How you finding the ladies scene back in Toronto compared to Hong Kong? A step in the wrong direction I would venture to guess? Not that I'm living in paradise by any means, but I am pleasantly surprised by the number of good looking and got-their-act-together ladies there are in Fort Mac.


----------



## Janus

peterk said:


> What's your family plans Janus? How you finding the ladies scene back in Toronto compared to Hong Kong? A step in the wrong direction I would venture to guess? Not that I'm living in paradise by any means, but I am pleasantly surprised by the number of good looking and got-their-act-together ladies there are in Fort Mac.


No family plans so far. I won't have kids before 32, that's more or less guaranteed. I actually find Toronto to be a better place to meet people compared to HK - everyone in HK is from somewhere else and has different timelines for their life in Asia, so it's hard to plan a future.

I'll hope to have a million in the bank by then, but that'll depend somewhat upon the equity markets and my bonuses over the next few years.


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## ashin1

is it just me or is there some sort of similarities between young money savers and pushing back parent hood until the 30s? lol


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## Janus

ashin1 said:


> is it just me or is there some sort of similarities between young money savers and pushing back parent hood until the 30s? lol


It's just a coincidence. 

For me it's about the geographical flexibility.


----------



## kork

ashin1 said:


> is it just me or is there some sort of similarities between young money savers and pushing back parent hood until the 30s? lol


I think it's just choice. I was 28 when I started my family AND started saving (as I'd just paid off student loans). The time was right for both. Net worth at 28 was about $80k which was mainly equity in our home.


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## james4beach

Janus, congrats on the 265 K. Focus on the milestones! 300 K is just around the corner.



Janus said:


> I actually find Toronto to be a better place to meet people compared to HK


I _really_ miss Toronto for the women. It was a great place to meet educated, interesting women with careers. I like the cultural and ethnic diversity in the city too and the huge variety of events happening all the time.

I'm in my early 30s, no immediate family plans. No wife or girlfriend though I'd be happy to settle down if I find a sane woman who isn't broke.

I have definitely been discouraged from marriage by lots of men who I work with. I have constantly heard horror stories of divorces and my colleagues' experiences are devastating. Women can... and routinely do... absolutely ruin men in divorce and the family law system heavily favours women. One of my coworkers has been divorced twice. I'm worried he might commit suicide over Christmas. Between them, the two women are draining him of all his money. The guy makes 150K a year but after paying the women, barely has anything left. If he loses his job, his life will be ruined.


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## My Own Advisor

"If he loses his job, his life will be ruined." I've seen that in action. It's very sad what divorce can do, on both sides.


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## Janus

james4beach said:


> Janus, congrats on the 265 K. Focus on the milestones! 300 K is just around the corner.
> 
> I _really_ miss Toronto for the women. It was a great place to meet educated, interesting women with careers. I like the cultural and ethnic diversity in the city too and the huge variety of events happening all the time.
> 
> I'm in my early 30s, no immediate family plans. No wife or girlfriend though I'd be happy to settle down if I find a sane woman who isn't broke.


Thanks for the encouragement! It actually starts to become more difficult once the pile of capital feels somewhat big, with my reduced income adding seemingly small contributions to it on a monthly basis. It makes saving less motivational - when I was going for 100k, saving $2k a month felt great. Whereas at this point, it seems like so much less of a contribution to my future (even though it's not). I know I need a kick in the pants to get re-motivated. You're right though, it's easier to stay motivated when you're close to a milestone like that. Next stop, 300k. Then a third of a million. Then the long slog to 500k. The obvious solution is meaningfully increasing my income, which is my focus going forward.

I'm curious, what does Toronto have that the Pacific Northwest doesn't? I figured Portland/Seattle/wherever you are would be pretty similar to Toronto in terms of educated people and diversity.

The idea of getting divorced and losing so much money scares the hell out of me.


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## james4beach

Janus said:


> I'm curious, what does Toronto have that the Pacific Northwest doesn't? I figured Portland/Seattle/wherever you are would be pretty similar to Toronto in terms of educated people and diversity.


There's no ethnic diversity here. Seattle and Portland are the whitest cities I've ever seen in my life and you can check the stats, they are the whitest in America. If you like pale white people and lots of red heads, this is the place for you. The people _are_ educated, liberal, and kind so that's not an issue. The people are actually very nice. But imagine what it's like, coming from Toronto to here. My circle in Toronto was all ethnicities, my girlfriend was African, even my office was very diverse. Here my office is 99% white except for one guy who is half-Asian, half-white. We had one European-Muslim but he recently left (possibly due to America's growing paranoia)

As a result of this Portland and Seattle emphasize "things white people like to do", like obsession with locally-sourced, non-GMO, organic vegetables and ton of other hipster things. Sometimes -- this is not a joke -- I take my Walmart branded reusable bag to Whole Foods just to get a rise out of people. People have _yelled at me_ because of my Walmart bag.

The other thing that bothers me with US in general is that it's absolutely true that there is an undertone of racism, everywhere. It's pervasive. Canada has achieved a kind of harmony that the US has not... I only saw it when I moved here.

Additionally, there's a kind of sleepiness here in pacific northwest. I'm sure it has to do with the constant rain and constant pot smoking. People are very laid back, almost to a fault. This is a region where young people come to retire.

Toronto has more _oomph_. More energy! Same with Montreal. People are livelier, more vibrant.


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## My Own Advisor

"The other thing that bothers me with US in general is that it's absolutely true that there is an undertone of racism, everywhere. It's pervasive. Canada has achieved a kind of harmony that the US has not... I only saw it when I moved here."

Totally agree. Parts of the U.S. psyche remained trapped in the Civil War. It's sad.


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## peterk

My Own Advisor said:


> "The other thing that bothers me with US in general is that it's absolutely true that there is an undertone of racism, everywhere. It's pervasive. Canada has achieved a kind of harmony that the US has not... I only saw it when I moved here."
> 
> Totally agree. Parts of the U.S. psyche remained trapped in the Civil War. It's sad.


I worked in Mississippi/Louisiana for a month when I was twenty. It was really strange seeing no interaction between blacks and whites. Entire restaurants filled with customers self-segregating to a high degree. 

We had a breakdown and the white towtruck driver was throwing N-words out every second word.

We had to stop for fuel at an extremely old, rural gas station and there were 3 loitering black guys who started making menacing yelps and gestures towards us. When we had to walk past them to pay for gas they started talking to us in a very refined, fake "white accent", I'll call it, mocking us. I thought we were goners. Thank goodness my co-worker was a dead ringer for Jason Statham...


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## Janus

*Year-End Update*

*Assets*: $277,000
*Liabilities*: $0

Hoping for more opportunities to put my assets to work in 2016, which depends really on how asset prices move. Another leg down in energy will see me double down on that part of my portfolio, and I'm thinking it might be time to start looking at Brazilian companies (ones with little debt for starters). I'll continue to shun overpriced Toronto real estate.

More than anything else, I'm working on improving my income, which has lots of room for improvement over the next 5 years. 

Good luck to everyone in 2016. Personally I'm hoping it's a better year than 2015, one of rough transition.


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## My Own Advisor

"I'll continue to shun overpriced Toronto real estate."

Smart.

Janus, you're doing very well for your age. I wish I has my act together like you do ten years ago. Alas, live and learn!

The biggest thing going for you is you're not servicing debt. Well done. If you can keep doing that and stay invested in the market, you'll be set. 

I hope to max out at least one TFSA in another week or so, and work on maxing out the other TFSA later this year. Those contributions and investing in dividend paying stocks will go a long ways to passive income for financial freedom. 

What are your investing plans for each account in 2016? RRSP, TFSA, non-registered?


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## Janus

My Own Advisor said:


> What are your investing plans for each account in 2016? RRSP, TFSA, non-registered?


Hmm. Honestly, I don't know. I'll max out contributions, but as for what to do with the money I'm somewhat at a loss. When your entire professional life is spent looking for undervalued stocks, and you find so few of them (and the ones that looks cheap have so much hair on them...), you eventually find that cash doesn't feel so bad right now. I'll likely put a bit more into energy (all I've got is $8,000 in Exxon Mobil so that can be added to), and there will be some dollar cost averaging into the S&P 500, but I'm still more than half in cash and not feeling bad about it. I know that goes against all couch potato logic, and I know dollar cost averaging every last cent is a fine long-term strategy. I'm just following my own quirky approach based on the fact that the "pros" can't find many bargains. It certainly wasn't too bad an approach in 2015.

So really, the investing plan is essentially holding the course until something interesting comes along. I'm not afraid to go 100% all-in, or 110% (with leverage) if things change. and if the market comes off somewhat meaningfully, I'll resume what I did in August and start buying the S&P 500 more aggressively.

It's not much of a plan, but there it is. Thanks for the encouragement!


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## WTTran07

New to CMF here, been reading around the forums ever since the start of 2015.

This is such an exciting and engaging thread, thanks for starting it Janus!
I have always been interested in the whole "let money make money for you" idea, and finally pulled the trigger earlier this summer on purchasing a few stocks.

Every since starting my investments, the momentum and motivation has just grown and it's exciting to see that there are several others on CMF that share ambitious goals like myself! My situations a little different but I hope to start my own money Diary one day as well.

A little about me:
Currently in my first year of professional school in health care (studying in USA)
I project to have 350k CAD debt coming out of school.
I currently have roughly 17k in assets and hope to keep growing that slowly throughout school (4 years total) 

Hopefully I can learn from you guys and pick up stuff along the way, excited to see you reach your goals Janus!

Thanks!


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## WTTran07

Any update in light of recent market activities and where you are with your goals? Looking forward to your progress


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## Janus

WTTran07 said:


> Any update in light of recent market activities and where you are with your goals? Looking forward to your progress


To be honest, so little of my money is in the market that the my net worth has been unaffected - market losses have been largely offset by the falling CAD, so my USD assets have offset decreases in other things.

That said I've been dipping my toe in and committing more of my assets to the market in the last week, buying some funds and the russell 2000 etf.

Not losing any sleep at night.... Frankly I wish it would drop much more!


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## peterk

Janus said:


> *Year-End Update*
> 
> *Assets*: $277,000
> ...
> *More than anything else, *I'm working on improving my income,





WTTran07 said:


> New to CMF here, been reading around the forums ever since the start of 2015.
> 
> This is such an exciting and engaging thread, thanks for starting it Janus!
> *I have always been interested in the whole "let money make money for you" idea*, and finally pulled the trigger earlier this summer on purchasing a few stocks.
> 
> Every since starting my investments, the momentum and motivation has just grown and it's exciting to see that there are several others on CMF that share ambitious goals like myself! My situations a little different but I hope to start my own money Diary one day as well.
> 
> A little about me:
> Currently in my first year of professional school in health care (studying in USA)
> I project to have 350k CAD debt coming out of school.
> *I currently have roughly 17k in assets and hope to keep growing that slowly throughout school (4 years total) *
> 
> Hopefully I can learn from you guys and pick up stuff along the way, excited to see you reach your goals Janus!
> 
> Thanks!


Amazing that you are still keeping things in perspective Janus. Growing your income is all important - Priority #1. And even more impressive coming from someone who's career is in stocks, and who already has a reasonably sized net worth to his name.

It always riles a few people up on here when I say it, but I really think that young people with little or no money learning about investing is, generally, a waste of time. Not that it is a bad endeavor by any means, there are certainly much worse things one could be doing... but overall not much value is gained, and possibly your focus can critically be taken away from the most important thing: working more hours in your career, education, and increasing your hourly rate.

Of course some may argue (none) that all you need is a couch potato portfolio anyways, and it doesn't take any time at all! Minutes/month at most. While this is correct and certainly true, how many times does one begin investing with a wham bam couch potato plan, only to start reading books and blogs, reading financial news and forums for many hours/week? Maybe I'm biased, because that's exactly what happened to me, but it is a big risk for young people that can suck their focus away from much more important things.

WTT - You seem like a prime candidate to be reminded of this advice. Without a bit of condescension meant, your paltry 17k does not matter in the slightest to your financial future. Killing it in school, and starting out hot for the first few years of your career, are all that matters. Whatever it takes to make the big bucks, kill that debt fast, and start stacking bills for a number of years. Everything else is secondary and a potential distraction.

When one has several hundred thousand saved, worked hard to maximize their career/income for several years, then perhaps at that point it make sense to start putting serious focus on your investing.


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## WTTran07

peterk said:


> WTT - You seem like a prime candidate to be reminded of this advice. Without a bit of condescension meant, your paltry 17k does not matter in the slightest to your financial future. Killing it in school, and starting out hot for the first few years of your career, are all that matters. Whatever it takes to make the big bucks, kill that debt fast, and start stacking bills for a number of years. Everything else is secondary and a potential distraction.
> 
> When one has several hundred thousand saved, worked hard to maximize their career/income for several years, then perhaps at that point it make sense to start putting serious focus on your investing.


Thanks for the advice peterk. My main focus is definitely in school, building relationships, and understanding where the best opportunities are when I graduate. I always had the vision of an aggressive repayment plan as soon as I start work, but have also wanted to have a small percentage of my income funneled into an investment account. That way I don't have to invest large lump sums when I'm older.

I figured that I've started investing already, all of which is in CAD that I've saved up from a summer job, I might as well keep going with it on the side. I keep these funds completely separate from my day to day accounting from school. Besides, keeping up with market news, doing research on companies keeps me sane from the health-care world/studies.

Janus - I too am hoping that markets drop another 10-20%, it would be nice to see 9000-9500 points again. I've got some cash on the side if it does come to that.


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## peterk

WTTran07 said:


> Besides, keeping up with market news, doing research on companies keeps me sane from the health-care world/studies.


For sure. In other words, it's a hobby. It's hard to fault someone for having hobbies and following their passions, sometime I wonder why I do so so adamantly. Yet, the man with too many hobbies, often suffers from a lack of focus and dedication to their career.

I am the worst for this. This is very much "do as I say, not as I do" and "learn from my mistakes" type advice. Not sure if that makes it better or worse to listen to...


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## donald

I think it is a mistake to pick a large number(2 mil)
Think it is way better to forecast a yearly goal(or monthly actually-this is what i have always done,starting from nill 15 yrs ago at age 20)
You really believe Peter that one shouldn't invest seriously till they have a couple hundred thousand?
I think instead of young guys picking 1 million or 2(this is large change in liquid in any measure!the stats bare this-i highly doubt the elder members of cmf had liquid like that in there late 30's-unless gifted)
Id take the 'munger' approach-he was quoted in the early 90's as saying the first 100k is close to the tipping point(maybe in todays dollars that is close to 175k or so)
I think there is value beyond money here in this approach(which Charlie alluded to-from scratch)
I would way rather spend 1 hr a day on following markets than spending it on facebook/netflix or reality tv(like the masses)
Non fiction reading for 1 or 2 hr a day alone is worth something also
I don't agree Peter to 'wait' till one is 'ready' always best to start small/don't quit and keep trucking
Ps:no doubt it is harder when the markets are in a rout and clearing gains one has had if your buy and hold but that's the way it is
If janus makes his goal by 37 he might have that 2 million invested for another 50 yrs(long freaking time)not like the game is all of a sudden 'over'


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## donald

Ps:canadian real estate(TO/van)is skewing money for us younger folks
Lets be real real Toronto and Van are easily 30% over market
It is killing the psyche(it's depressing as **** a **** box on a small plot of land is over a mil)
But that is what happens when Canadian real estate is the 'new' macau!
Our country is getting gutted imo


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## peterk

donald said:


> Id take the 'munger' approach-he was quoted in the early 90's as saying the first 100k is close to the tipping point(maybe in todays dollars that is close to 175k or so)
> .
> .
> .
> I don't agree Peter to 'wait' till one is 'ready' always best to start small/don't quit and keep trucking


Hmm? Sounds like Munger and I are in perfect agreement... There is indeed a tipping point, and I would say it is somewhere around $200k...

If you only have 50k to work with, the difference between the 2% savings account non-investor and the 6% investor (a generous 4% premium for "investing knowledge") is only $160/month. At 20 hours/month that's $8/hour. If a young person seeking to make it big in this world values their most precious "personal thinking time" at $8/hour, they aren't going to get very far... at 200k invested, that's $32/hour, perhaps something worth looking into...

I'm not saying it's bad thing to pursue, there are certainly worse hobbies, as you mentioned (Netflix). I'm just trying to warn of the potentials hazards of devoting too much mental energy to investing with not enough money to make it worth your while. To look at WTT's first post above, it is apparent to me that his mental energy and time would be very poorly spent thinking about anything to do with that $17k other than putting it in a savings account and forgetting it exists.

I'd much rather be the high income guy like from the _"Why are top income categories not maxing out TFSAs?" _thread, who perhaps doesn't know or care about TFSAs and investing and taxes because he's too busy focused on progressing his career and goals; than the guy who makes $50k/year and devotes significant time and energy to making sure every penny of that $50k is used as efficiently as possible.


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## peterk

donald said:


> Ps:canadian real estate(TO/van)is skewing money for us younger folks
> Lets be real real Toronto and Van are easily 30% over market
> It is killing the psyche(it's depressing as **** a **** box on a small plot of land is over a mil)
> But that is what happens when Canadian real estate is the 'new' macau!
> Our country is getting gutted imo


Couldn't agree more. Should I survive relatively unscathed through this oil crisis I hope the fantasy of buying a nice house at a fair price becomes a reality for myself and other young Canadians.

Essentially what is happening now is the boomer generation is cashing out their overpriced property, selling their family homes to foreign ghosts (and some irresponsible Canadians that don't understand the risks of real estate) and leaving an entire generation of responsible young adults high and dry.


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## Janus

donald said:


> I think it is a mistake to pick a large number(2 mil)
> Think it is way better to forecast a yearly goal(or monthly actually-this is what i have always done,starting from nill 15 yrs ago at age 20)
> ...
> If janus makes his goal by 37 he might have that 2 million invested for another 50 yrs(long freaking time)not like the game is all of a sudden 'over'


donald, I largely agree. I tried to change the thread title more than a year ago and it wouldn't let me. 

Compared to when I started the thread, my earnings look decidedly more volatile. I'm likely to be gainfully employed over the long term, but in Canada I'll be saving less. That said, it's possible to make $1m a year in my industry (and much more) if you play your cards right. I don't ever assume I'll get there, even though it's a possibility. But a whole whack of things could occur to make this $2m goal happen.

And partially BECAUSE of that unknowable volatility, you're right in that I should always just be focused on saving the next $50k-$100k. That's basically what I do now.

Is there any way to change a thread title?


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## donald

I am really not directing my 2 cents(if it is worth that)towards you Janus(or Peter)
This thread has nearly 60k views prob a lot of young guys staring out(the thread title is eye catching because it is a lofty goal)
I think it is good to encourage is all
Life throws all sorts of loops as we go(this is a guarantee)
I am just advocating not to 'wait'-start with what one has and go from there(it is not a competition with other's,it's a competition with one's self)

I don't think a typical young guy in his 20's with 20k is thinking of fore-fitting his job(or neglecting it)because he thinks ahaa i can compound this seed money to make millions in the next.....??years
I just really believe there is a wrong myth out there that people need 6 figures or over to get started is all
Keep in mind the likely audience that may google 'canadian money forum' chances are high it could be a young guy who is statistically the 'mean' in earnings/professions/net worth

It is a good thing that young people are motivated enough to even be thinking about investing
That is all
Most i doubt want to be worth 10m + or the top 2/3 or 4% of society i would think.


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## WTTran07

peterk said:


> Hmm? Sounds like Munger and I are in perfect agreement... There is indeed a tipping point, and I would say it is somewhere around $200k...
> 
> If you only have 50k to work with, the difference between the 2% savings account non-investor and the 6% investor (a generous 4% premium for "investing knowledge") is only $160/month. At 20 hours/month that's $8/hour. If a young person seeking to make it big in this world values their most precious "personal thinking time" at $8/hour, they aren't going to get very far... at 200k invested, that's $32/hour, perhaps something worth looking into...
> 
> I'm not saying it's bad thing to pursue, there are certainly worse hobbies, as you mentioned (Netflix). I'm just trying to warn of the potentials hazards of devoting too much mental energy to investing with not enough money to make it worth your while. To look at WTT's first post above, it is apparent to me that his mental energy and time would be very poorly spent thinking about anything to do with that $17k other than putting it in a savings account and forgetting it exists.
> 
> I'd much rather be the high income guy like from the _"Why are top income categories not maxing out TFSAs?" _thread, who perhaps doesn't know or care about TFSAs and investing and taxes because he's too busy focused on progressing his career and goals; than the guy who makes $50k/year and devotes significant time and energy to making sure every penny of that $50k is used as efficiently as possible.


I am in agreement with you peterk, in that I'd rather be the high guy as well. Don't get me wrong, my top priority is to come out of school and land a high income paying position - that is the only way I'm ever going to fuel a successful investment/financial future. Without starting a debate of what's right and what's wrong, what is the harm in enjoying the educational process of investing as a hobby during school - as long as I am doing well in school, which I am. Like you said, there are definitely worse hobbies that I see going around here with my classmates. How I see it is that I've got a sum in my savings account, and the 17k that I've put into a few stocks in my TFSA, and over the next few years I would like to keep funneling money from my savings to my TFSA when the market dips. I don't expect to make a living off my TFSA, not anytime soon at least, but at least over the next 5-10 years I would've gained some knowledge in how the market works, have established a small portfolio, and have had made some mistakes that I would rather make now, then later on with larger sums of money.


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## peterk

donald said:


> I don't think a typical young guy in his 20's with 20k is *thinking of fore-fitting his job(or neglecting it)because he thinks ahaa i can compound this seed money to make millions* in the next.....??years
> 
> I just really believe there is a wrong myth out there that people need 6 figures or over to get started is all
> 
> It is a good thing that young people are motivated enough to even be thinking about investing
> That is all


Certainly donald, however the number of people who think along the lines of the above bolded is not insignificant. Going to a particularly nerdy engineering school, I saw it regularly. Early 20s students constantly talking about trading, economics related to markets, becoming obsessed with playing with their little OSAP loans in a brokerage account and reading investing blogs late into the night...
If I were smarter, less lazy, and didn't care for beer and girls, I could have seen myself easily falling into the same obsession back in school as well. Perhaps that is why I so readily like to caution young people with no money that show up here. What can start off as a innocent inquiry can quickly become an obsession and addiction to some.

I joined CMF in 2010, but didn't finish school and have hardly any money to invest until 2013. What I was doing for those 3 years here, I'm not sure... Learning about portfolios and stocks and investment taxes (even though all I ever had was a TFSA) etc. I mean it wasn't worthless, but I certainly could've spent the time better elsewhere. 

WTT - you clearly aren't who I'm referring to though. You sound like you have a good head on your shoulders, and I'm sure you'll have great success in your career. As donald said, it's a good thing that young people like yourself are motivated enough to even be thinking about investing. 

Janus - Sorry for always rambling in your money diary. I might have a problem. :stupid:


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## donald

Gotcha
def a stupid *** idea if we are talking about 20 yr old virgins day trading in their parents basement lol
I thought you were maybe implying it wasn't worth it to have a mid 5 figure sum or whatever(buy and hold/diversified/large cap/low beta long tern stuff to get the train out of the depot early.


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## Janus

peterk said:


> Janus - Sorry for always rambling in your money diary. I might have a problem. :stupid:


Hijacker!

I just did some analysis on my assets:

Cash: 62%
Investments: 38%

CAD: 38%
USD (in CAD): 62%

The percentages being the same are just a coincidence.

I did this so I'd have a better view of what my currency exposure is like during this CAD-annihilation. My income seems worthless, but at least my assets seem allocated in the right currency mix... that said, in retrospect I wish I had zero CAD.

I'm resisting the urge to convert more from USD to CAD. I think it's going to get worse. And what's more, there are so few CAD-denominated assets I want to buy.


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## peterk

Janus said:


> Hijacker!
> 
> I just did some analysis on my assets:
> 
> Cash: 62%
> Investments: 38%
> 
> CAD: 38%
> USD (in CAD): 62%
> 
> The percentages being the same are just a coincidence.
> 
> I did this so I'd have a better view of what my currency exposure is like during this CAD-annihilation. *My income seems worthless*, but at least my assets seem allocated in the right currency mix... that said, in retrospect I wish I had zero CAD.
> 
> I'm resisting the urge to convert more from USD to CAD. I think it's going to get worse. And what's more, there are so few CAD-denominated assets I want to buy.


Oh yeah... You were getting paid in USD when working in HK weren't you? Ouch! Ah well at least you kept most that savings in USD it looks like.

I did a quick calc and only 11% of my net worth is in USD, the rest is CAD.  I'm thinking about buying more USD in my RRSP. Was going to do it last week but got busy/lazy and didn't. My timing is terrible...


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## nobleea

peterk said:


> Certainly donald, however the number of people who think along the lines of the above bolded is not insignificant. Going to a particularly nerdy engineering school, I saw it regularly. Early 20s students constantly talking about trading, economics related to markets, becoming obsessed with playing with their little OSAP loans in a brokerage account and reading investing blogs late into the night...


I also went to a nerdy engineering school and also witnessed this. The interesting thing is, that almost all of the guys (girls didn't do this) that did this are now the most successful ones. Highest paying jobs, own companies, etc. I'm sure most of them lost money when 'investing' in college, but it was a learning experience. Was it because they have an aggressive ambitious nature? Always looking for the next big thing? For sure it didn't make them any wealthier (which is your thesis), but perhaps it showed other things. I guess it's not something you can 'force', you either have it or you don't.


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## Janus

*The Oil Gambit*

I had a bit of an epiphany yesterday.

It started with a quick calculation - bear with me: 

1. The average Canadian investor is say 60% in equities and 40% in bonds.
2. If we're being generous to the average Canadian's diversification efforts, let's say they have 70% of their equities in Canadian stocks (so 42% of total assets)
3. Canadian stocks are down roughly 25% from their highs, mainly due to energy.
4. 25% losses on 42% of your assets mean *the average Canadian investor has lost roughly 10% of their net worth just from the oil rout.* Probably just paper losses, but you see what I mean.

I think these are fair assumptions. And for more enterprising investors like the good folks here on CMF, I think the losses could be worse due to people having jumped in too early (there was no way to know when too early was).

My epiphany started with the realisation that this energy rout has been carnage for most Canadians, and that simply due to good luck, I haven't lost a dime. I've thrown some money into XOM (currently flat), but that's it. I even intended to jump into energy a *year* ago, but for various reasons never got around to it. Nothing about this has to do with any amount of foresight.

So here I am, sitting on a mostly cash portfolio and there is blood in the water in energy stocks. This is one of those events in markets that only happens once in a blue moon - financial crises, commodity collapses, what have you. In other words, *it's a rare opportunity* to see a sector/country/market killed this much with stock prices down 30-90%.

I've been sitting in cash waiting for a stock market crash, when the "investor capitulation, blood in the water" opportunity was *already* unfolding and staring me in the face - oil stocks. It's something I've ignored because of a lack of knowledge on the oil industry, but I don't think I can ignore it any longer when investors are so unbelievably scared and panicked in this space.

Next I pulled up a 10-year chart for oil and watched it go from $100 to $30, the lowest point in that decade-long chart. And I ask myself, "do you want to be buying oil stocks or selling oil stocks at that point?" And to add onto that, "do you think you'll regret it in 5 years if you invest a lot in oil stocks today?" The answer is likely no. Almost definitely no.

So I came up with a plan - a gambit, if you will:

*Gambit Part 1 - Back Up the Truck in Quality Oil Stocks*

At this point I think it makes no sense to not make oil a reasonably large part of my total assets - say 10-15%, maybe even 20%. It's currently 3.5%. For anything involving that much of my portfolio, it will have to go into things that have a zero risk of long term capital loss - Exxon Mobil is a good example. However, because everyone knows this about Exxon, it's only down 30%. But there are reasonably good quality oil companies that are down 70%, like the equipment and services firms, which have good balance sheets (i.e. won't go bust even if this is prolonged) but have still been punished by the market. Your Halliburtons and Schlumbergers.

So I'm going to back up the truck with maybe 4 or 5 of these companies. Oil-related stocks that are down 30-70%, and which will be around in 50 years.

Buying at current prices, I expect almost no risk of significant loss over 3-5 years, and in fact some of these could be doubles (not XOM, but the equipment companies might be).

*Gambit Part 2 - Roll the Dice on some Ten-Baggers*

Here's the fun part, and it starts with a bit of logical gymnastics:

1. The average Canadian investor is down 10% on their entire portfolio because of this oil mess. For someone with $1 million that's $100,000. For someone with $500k, that's $50,000. I've lost $0 (so far).
2. If oil prices stay this low for a long time, it's going to be a real disaster for Canada. People who lost money on energy stocks might not make those losses back. The CAD will fall further, unemployment will go up, and Canadian equity portfolios will see much more damage. In other words, if it's like this for a few years, people will look back on 2015-2017 and say "man, remember the great oil crash in Canada? How much did you lose?". 
3. If I'm looking back, and oil did in fact stay low for years and gut the Canadian oil sands, I'm ok saying "I lost only a few thousand". Especially when those few thousand had a possibility of making me a lot of money.

In other words, I'm willing to get speculative with a tiny proportion of my portfolio, say $4,000. 

The idea is to buy 4 different stocks that are down more than 90%, meaning they have the potential to be ten-baggers from here if they recover.

Now, which companies are down 90%? Small ones with debt. So candidates for bankruptcy if oil doesn't recover.

My downside is losing the entire $4,000. My upside is anywhere from doubling my money to much more than that, 2x-10x returns.

It sounds weird to say, but the fact that I haven't lost a cent in energy (and don't expect any long term losses from the investments in Part 1) makes me willing to lose a few thousand in an energy rout that's slapped most investors around quite a bit.

In any case, that's the plan. 

Part 1: buy good-quality long-term energy stocks that will be around in 10 years - 10-20% of my portfolio.
Part 2: put $4,000 into 4 different potential 10-baggers.

Such is my oil gambit. I see great potential for upside over the long term - first, in exposing myself to the oil industry at such a point of (seemingly) peak pessimism and pain with my Part 1 investments. Second, in the obvious upside potential of the Part 2 stocks if things recover in the next year.

And what's the downside? Will I lose money in XOM, Schlumberger and Halliburton if I buy now and hold for 5 years? I think the chance is extremely slim. Will I lose money in the Part 2 investments? It's entirely possible I lose the $4,000 outright. My total dollar downside seems quite small in a worst case scenario.

But at the end of the day the risk-reward seems so weighted to the upside that I can't ignore it.


----------



## peterk

The US majors are tempting, but where is the appreciation potential in CAD? XOM is down 25% since mid 2014. CAD/USD is down 25% since mid 2014... If oil is back up to $100 in 2018 will XOM be back up 25% and the CAD be back up 25%? 

Obviously there are a million reasons for the stock market or the currency exchange to go every which way, but just looking in a vacuum of: price of oil and the CAD/USD exchange reacting to the price of oil, I don't see very compelling upsides in CAD dollars for buying US oil companies. Of course the opposite is true too. If oil gets worse and worse you are protected by being in USD oil companies vs Canadian ones...


----------



## Janus

peterk said:


> The US majors are tempting, but where is the appreciation potential in CAD? XOM is down 25% since mid 2014. CAD/USD is down 25% since mid 2014... If oil is back up to $100 in 2018 will XOM be back up 25% and the CAD be back up 25%?
> 
> Obviously there are a million reasons for the stock market or the currency exchange to go every which way, but just looking in a vacuum of: price of oil and the CAD/USD exchange reacting to the price of oil, I don't see very compelling upsides in CAD dollars for buying US oil companies. Of course the opposite is true too. If oil gets worse and worse you are protected by being in USD oil companies vs Canadian ones...


Great point... I should focus more on names listed in Canada. Hadn't thought too much about the currency side of things.


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## peterk

Of course, the poor exchange rate is the only thing keeping many Canadian oil companies somewhat close to breaking even at these levels, instead of deep deep into the red, and their stock up... Also, US producers should be seeing more cost deflation (parts, equipment, labour) in USD, vs the cost deflation that Canadian producers are seeing in CAD, due to the appreciating USD.

Perhaps my original point was incorrect...hmm.


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## james4beach

Janus said:


> *The Oil Gambit*


I've read your post a couple of times. I'm certainly leaning towards the same direction as you, that is, going from zero energy exposure today (I have literally none, as I don't even hold the TSX) to some modest % exposure.

My first observation is that there's something broader than an energy crash happening. It's a broad commodities crash. If it were possible to do so, I'd actually rather buy into general commodities right now. The $CRB index is off-the-charts low, as in, CRB is now the lowest since 1973. *This is a 43 year low*. Unfortunately there is no way to good way get exposure to CRB except for being a real commodities futures trader. Having exposure to energy stocks + resource stocks is probably a good approximation.

I'll present a couple mild criticisms to the idea as you've laid it out. I suspect that I'm more bearish than you, as my underlying belief is that we've been in a depression since 2008 (which has been suppressed by central bank intervention) but that there is, fundamentally, a global depression underway. Commodities were one of the early "tells" that told me this story.

1. I see something different in the long term oil chart. In a slowing global economy that's possibly entering a global depression, oil could be heading to $20 (*easily*) or even $10 (that seems unlikely).

2. If oil heads towards $20 as I think, there's another 35% decline possibility and in terms of energy stock prices, once you include the added downside effect of truly pushing companies into bankruptcy, I could see that causing more than -35% on something like XEG. Perhaps -40% to -50%

3. "Best of breed" has proved to not give better returns during broad market crashes. Yes, they don't go bankrupt, but they do decline as bad as the sector. For proof of this look at (surviving) tech stocks during the tech crash and (surviving) banks during the financial crash. You don't gain anything by picking individual stocks versus the sector, which is why XEG is my vehicle of choice

In other words, on the way down (which could still last many years), even the best stocks you pick will decline in lock-step with the index. So why take risk on individual names?


On the idea of gambling on highly beaten up stocks for a turnaround, that is a popular idea during market crashes but from what I've observed when I traded both the tech crash and financial crash, it doesn't often work out for people. It really is a long shot. Of the traders and personal friends I've compared notes with over the years, I don't know ANYONE who has made big money trying to bottom fish using individual stocks. Instead, I know lots of people who have suffered big losses that they never recovered.

So empirically... from my circle of knowledge... I don't know anyone who has done it successfully.

That kind of speculation doesn't fit my own profile, so I'm probably not the best person to give any advice on that. Personally if I wanted to bottom fish in commodities, I would use solid ETFs that have long term track records and which are free from derivatives and counterparty risk. The obvious tool for me is XEG and, for commodity exposure in general, gold bullion. Since again we're really talking about a commodities crash here.


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## james4beach

By the way, some previously major stocks you may be interested in if you're bottom fishing

PRE, down -98% in 5 years
BNK, down -91% in 5 years
POU, down -86% in 5 years

Personally I would not buy any of them, as I think they might go bankrupt and it's too much work to thoroughly analyze their values.


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## james4beach

Also, why buy on the way down? *Why not wait for stabilization and technical signs* that prices may be strengthening and building a new base? Trends as bad as this (in commodities) take a while to play out. The only time, historically, I've ever seen a crashing sector turn around on a dime was the 2009 recovery in banks, and that's purely because the Federal Reserve pumped trillions of dollars into the sector.

It always takes years for a bearish theme to play out, and it takes years for new bull markets to form. There is plenty of time to keep watching, analyzing, and looking at the price action. I just don't see the hurry to buy.

A benefit of waiting is that you don't suffer the pain and psychological harm of large losses. Look at some of fatcat's posts for instance. Poor fatcat got his *** handed to him in energy stocks and you can tell he's (very justifiably!) bitter towards them.

By sitting out and waiting in cash, you gain the psychological advantage of a fresh mind, no baggage from pain, and you can deploy money once you detect that a new bull market is taking hold. In contrast if you get burned by getting in too early, that pain will prevent you from deploying money at a time that good risk/reward scenarios present themselves.

I think that's a huge advantage. Cash is king.

_(By the way all of this is the reason I'm sitting out stocks since 2008. I think the depression and bear market will manifest itself again, I positioned myself to *not get burned*, and once everyone has panic-sold everything and walked away in frustration from Canadian Money Forum, I'll be happily buying everything in the next bull market... and I'll be able to do that because I didn't get destroyed in stocks during the 2009-2017 Fed bubble)_


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## Janus

James, thanks for the detailed response(s). Lots to address, i'll come to the main points where I have more to add or disagree.

*Why oil and not other commodities:*
The great thing about oil is that supply can rapidly change, and is sensitive to price. It hasn't happened yet due to the game of chicken OPEC is playing, and because US shale players had commodity hedges and access to debt in 2015. But with US shale producers' hedges expiring this year and their high yield debt being priced at pennies on the dollar already, we should see a shift in supply that adjusts the price somewhat.

Commodity companies aren't great, in general I don't want to own a company that doesn't control the price of what it sells. But oil companies are better than mining companies, flat out. The long-term nature of a mine makes it more costly to shut down production, meaning supply doesn't shift as quickly as in oil in reaction to low prices. And more importantly, oil is one of the few global industries that isn't affected by Chinese overcapacity. Steel, iron ore, coal... these commodities have all collapsed, but one reason they keep going down is because China will keep loss-making mines alive just to employ people. Economic irrationality. So you don't see supply responses in China-related industries even when they're underwater.
*
A lowest-possible oil price (aka when to jump in): *
It could very well go lower. But the price of oil at the end of the day will be related to the price of producing oil. It's coming down, yes. But at $10 a barrel global production would come to a complete standstill (Saudi aside). There will be a supply response to these low prices, Saudi doesn't want oil at $30 forever. If you adjust oil prices in the 1990s for inflation we do not look expensive today.

*Being too early:*
I expect this to be the case in this and every ballsy value investment that I make. There's no getting around it in my view. But I do see your point - this will be so much less enjoyable if I go in now and have to double down when things go down another 50% - which is exactly where I'd be if I had bought oil stocks a year ago as intended. I've only been saved due to luck.

One thing that gives me confidence here is valuations. When I'm buying a company (quality basket, not the bankruptcy candidates) down 70%, I know the book value of their assets and see the company valued at a significant discount to book. Can it decline? Yes. But low valuations are a form of protection in a ballsy trade.

*Individual stocks:*
Just my personal style. I want confidence around balance sheets and term structures of debt, and clearly the assumption here is that I *think* I can find things that have gone down more than XEG and which will rise more than XEG. We'll see if i'm wrong eventually. In all honesty though I'm sure XEG will be a part of this for me just to save time.

*Bottom fishing:*
You're probably right, but it's only $5,000 and I can't help myself. I'm being picky with their debt term structures so that I know I have a 2-year recovery window, so it's more than just being down 90%.

*General market overvaluation & the "Fed Bubble":*
I'm largely in agreement hence my mostly-cash position.


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## mordko

Out of stocks since 2008? Isn't that an equivalent of losing like 7 pc a year vs staying invested?


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## Janus

mordko said:


> Out of stocks since 2008? Isn't that an equivalent of losing like 7 pc a year vs staying invested?


You're a bit late to the game on this one... James, you should have a website explaining everything so that you don't keep having to have the same discussion.


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## Janus

I'll add this to my argument:

Let's say my $5000 gambit doesn't work out, because oil fall to $20 and stays there for 2 years. My spivvy 10-bagger candidates all undoubtedly go to zero or are bought out by oil majors for next to nothing.

In this scenario with oil lower for longer, what else has occurred?

- Canada is undoubtedly in a recession, and maybe a housing crisis.
- Alberta has been cleared out, and the enormous inventory of empty office space in Calgary (already a huge problem) drives many companies out of business.
- The CAD has completely collapsed and is below 60 cents US.
- Canadian banks are taking huge credit losses on their loan books, having lent a lot of money to oil companies. Their capital markets revenues decline meaningfully.
- the US high yield market is in a full blown crisis due to essentially all of the energy section of HY going to zero (this is already in progress).

Anyone who thinks oil is going to $20 and staying there must also acknowledge that the above things will likely happen in that scenario.

So, in other words, if I lose my $5000... there will be some very serious new opportunities available to my $150,000 in cash.


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## james4beach

mordko said:


> Out of stocks since 2008? Isn't that an equivalent of losing like 7 pc a year vs staying invested?


Not at all. I _made money_ by sitting it out. In fact my fixed income outperformed the TSX. Here's the chart showing the two:

http://stockcharts.com/h-sc/ui?s=XIU.TO&p=D&st=2008-01-01&en=(today)&id=p91679288601

Same result if you move the starting point to 2007. My trade was absolutely the correct one -- proof is in the numbers, see above.


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## james4beach

Janus: great thoughts as usual, thanks.

It seems like you're weighing the risks pretty well. I guess my primary worry is about being early, but we all know that nobody can pick the exact bottom. Your two options are to lean towards possibly being early (i.e. buy now) or being late (i.e. wait until technicals show a base)


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## Janus

*Oil Gambit Update*

I'm up to about $22,000 in oil exposure. Will take a bit of a breather before doubling my exposure over the next couple of months.

Current names:

Exxon Mobil (XOM)
Helmerich & Payne (HP)
Franks International (FI)
Meg Energy (MEG) - very small position under $1,000
Baytex (BTE) - very small position under $1,000


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## My Own Advisor

Impressive Janus. I'm still down on my O&G stocks. I was buying in 2012 and 2013. I've been holding my positions since, although DRIPping.


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## Janus

My Own Advisor said:


> Impressive Janus. I'm still down on my O&G stocks. I was buying in 2012 and 2013. I've been holding my positions since, although DRIPping.


Hang in there! As Howard Marks recently said, "all we can say about oil is that it has less downside at $30 than it did at $100."


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## Janus

*Oil Gambit Update*

No point counting paper gains, but it sure is fun. As of today I'm up about $5,000 CAD so far due to the recent rally. 

BTE: +85%
MEG: +38%
HP: +36%
FI: +16%
XOM: +8% (more like 10% when dividend are included)

From the looks of it so far I should have allocated more to the spivvy bankruptcy candidates, but hindsight is 20/20, and this isn't over yet, not by a long shot.

I'm comfortable with my gains reversing back to zero or below, and I'll be doubling positions or adding new ones if that occurs.

*Yellow Pages Update*

Everyone's least favourite stock has been going well for me recently. The recent 20% jump has added about $2k to my portfolio, bringing me around my average cost base - I entered too early on this one, but am ok with that in the long term. Value investors will seldom get timing right.

*Net Worth:* $285,000 CAD

Employer matched my RRSP contributions with a lump sum, bringing in another several thousand. 

The rise in the CAD has hurt my largely USD-denominated assets, but this has been made up for with stock market gains. 

Eager to hit the $300,000 mark for the first time!


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## Janus

*May 6th, 2016*

*Net Worth: $280,000 CAD*

it's been a frustrating few months, with the collapsing USD more than offsetting my solid gains in the oil gambit stocks.

*New Investments*

I've been thinking of investments in terms of themes lately. The general idea is that I want to be digging for investments where there are serious long-term ("structural" rather than "cyclical") tailwinds. I've identified a couple of these in which I've developed some expertise: 

1) Aging populations and rising spend on healthcare
2) Automation and robots

I've made a few investments in this space over the last month, and will be continuing to do so. I have essentially developed a strong understanding of each space and which companies in the space I'd like to own. So far I've put $20,000 into theme 1 and $5,000 into theme 2, but this will likely triple over the next few months. Only 2-3 companies per theme.


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## Pluto

Agin populations: Chartwell REIT maybe. probably currently over priced, but on a pullback could be a buy.


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## Janus

*Oil Gambit Update*

*XOM*: Sold for ~$1,000 USD profit (+10%)
*HP*: Sold for $2,000 USD profit (+50%)
*BTE*: Still holding, up 170%
*MEG*: Still holding, up 50%
*FI*: Still holding, up 13%

*Lesson Learned:* These investments only acted as a hedge against the falling USD of the past few months. Still, I can't feel bad about the HP or BTE returns.

Upcoming net worth updates in a few days.


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## My Own Advisor

Pluto said:


> Agin populations: Chartwell REIT maybe. probably currently over priced, but on a pullback could be a buy.


+1

Buying now, it will seem cheap in a few years when it's $30.


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## Janus

Travel on a Budget

I recently booked a 10-day trip to Europe, hitting Amsterdam, Prague, and Berlin. I've managed to keep the budget under $1,600 which I think is pretty decent.

*Transportation: $950*
Flight, Toronto to Amsterdam: $750 all-in
Other transport within Europe: $200

*Accommodation: $400*
Amsterdam: free! (crashing with a family member)
Prague: $70 per night
Berlin: $60 per night

*Food & Drink: $440*
$20 on food, $20 on drink
(these are incremental costs over my normal eating & drinking budget)

*Total cost: $1,555*

While $1,555 isn't dirt cheap, when I look at each component individually I think it's a pretty affordable trip.


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## peterk

Damn, that _is_ dirt cheap... Sounds optimistic to me. No budget for admissions to museums, shows, bars, restaurants, taxis etc?

How are you figuring Berlin will be cheaper than Prague?



Janus said:


> Travel on a Budget
> *Food & Drink: $440*
> $20 on food
> (these are incremental costs over my normal eating & drinking budget)


I always consider the whole costs as part of the "vacation budget", not just the incremental over a hypothetical spending amount at home, I guess that's just semantics though... But $20/day extra? Geez that's just a breakfast or a lunch! Will you eat nothing but groceries in Europe? I usually go out for 2 meals/day on vacation, sometimes 1, sometimes 3, never 0. Aren't you missing out on a lot of good food and experiences by spending so little money during your brief time in Europe?


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## Janus

Berlin is cheaper because I'm sharing a flat with friends there.

You know what, you're right it's too optimistic. It should say $20 on food and $20 on drink, but that's likely too low. I was just so blown away by the low cost of a recent trip to spain.


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## peterk

Janus said:


> I was just so blown away by the low cost of a recent trip to spain.


Tell us more about that! I've heard Spain has become amazingly cheap and quite excellent, as a tourist. Sounds like a great place to retire early. I've been working on my Spanish.


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## Janus

peterk said:


> Tell us more about that! I've heard Spain has become amazingly cheap and quite excellent, as a tourist. Sounds like a great place to retire early. I've been working on my Spanish.


What can I say? A fantastic glass of wine is 2 euros... that's $3 CAD, tip and tax included. I struggled to spend more than $30 on meals, and most were under 20! Great weather, lots of cheap activities, beautiful architecture. 

Got to love low cost of living. Sounds like Prague might fall in that camp too.


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## My Own Advisor

Spain is great. Loved it. Visited there about 10 years ago. Great food; great, cheap wine. What's not to love?


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## Janus

*July Update*

*Net Worth*: $330,000 CAD

I've been horrible with spending lately, but this has been offset by employment income gains. It looks like I should get to $333,333.33 by my 30th birthday, which is a goal I've set for myself. Though with the stock market where it is (i.e. scarily high), I imagine the journey to $500,000 will take longer than one might expect!

In other news, my income has gone up about 20% in salary terms and more than 20% in non-salary comp. More wiggle room to save on a monthly basis, which I hope to do aggressively over the next year.

All this being said I'm overdue for buying some "unavoidables" - work clothes mainly.


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## Janus

*New Income, Updating Short-Term Goals*

Over the next year I'm expecting all-in income to be about $250,000. I feel like this is a good time to re-outline my goals for the next year:

*Expenses:*
Rent: $1830/month (minus $150/month for selling my parking space) =$1680/month
Gym: $60/month
Internet: $55/month
Haircut: $30/month
Electricity: $50/month
Food: $700/month
"Fun": $500/month
Total: $3,075/month, or $36,900/year

*Income After Tax*: $160,000
*Net Savings*: $125,000

*Current Net Worth:* $330,000
*1-Year Target Net Worth:* $450,000

In order to hit this goal I need to be more disciplined with recreational spending, and invest wisely. My portfolio will be undergoing some significant changes soon, so an update will be incoming on that.


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## My Own Advisor

Janus said:


> *Income After Tax*: $160,000
> *Net Savings*: $125,000


Whoa. Nice savings.


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## NorthKC

Have you thought about donating to a couple of causes close to your heart? Some of the charities could benefit from your income and you can get a bit of a nice tax break as well.


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## Janus

NorthKC said:


> Have you thought about donating to a couple of causes close to your heart? Some of the charities could benefit from your income and you can get a bit of a nice tax break as well.


I'm currently thinking about that. In addition to this, I'm looking to do some kind of pro-bono work for these causes, or work for them for free in some capacity. Toronto Humane Society is high on the list.



My Own Advisor said:


> Whoa. Nice savings.


It's a target... we'll see how well I'm able to meet it! But without buying a car/house or having a kid, I should definitely be in the ballpark. Unfortunately most of the income will come once a year, all at once.


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## Steve Divi

Wow. Congratulations on saving 10g a month. That is no small feat!

Keep up the good work


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## Janus

Steve Divi said:


> Wow. Congratulations on saving 10g a month. That is no small feat!
> 
> Keep up the good work


Well, I can't count my chickens before they hatch. More than half of this annual compensation comes once a year and is dependent upon my performance at my job. These are reasonable estimates for what I can achieve over the next year, but I could be wrong. Plus I have no job security, so if disaster strikes my situation could change a lot rather quickly.

That said I hadn't thought of it as $10,000 a month.

It's occurred to me that the way I'm compensated ($100k salary, with everything else paid once a year) is a great way to instil savings discipline. Because even if I wanted to, I couldn't really live the lifestyle of someone who makes $200k+. It forces me to have costs like someone who makes $100k (or ideally less) and the rest just comes as savings at the end. While I'd prefer to have all my income spread out across the year I can tell it's good for discipline.


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## Janus

*July Update (for real this time)*

I miscalculated the taxes on some year-end income, so it turns out my net take-home pay was higher than expected by about $5,000.

*Net Worth:* $335,000 CAD

With all my transportation expenses and accommodation pre-paid for the upcoming Europe trip, this means the bulk of my travel expenses are already built into my net worth (whew!).

Although it's somewhat of a useless theoretical exercise, every once in a while I like to calculate how much of a monthly income could be provided by my asset base. Using a 5% yield (totally unrealistic for today's environment...), my net worth would produce $1,400 a month before taxes. Excited to get to the point where my rent is covered entirely!


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## Janus

*Prague, a Frugal Traveller's Dreamland*

I'm pretty blown away with how affordable this city is. A few reference items:

*Great local beer on tap at a bar:* $1.25 a pint
*Airbnb apartment with a stunningly beautiful balcony:* $70 a night
*Gourmet food at an award winning local restaurant:* $10

Prague seems to have a tourist-local divide more pronounced than any city I've been to before. In certain areas, it's only tourists. And in others, only locals. It's somewhat strange, actually. At least I know where *not* to eat my meals!


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## Canadian

I was in Prague three months ago and loved it - very affordable, beautiful architecture, and fun nightlife! Area around the Charles Bridge is a bit over-crowded with tourists but very nice city overall!

Recommend checking out the restaurant "U tri prasatek", which translates to "three little pigs". Food there was reasonably priced and was delicious - ended up going back a second time!


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## Janus

*10-day Euro Trip, the Damage*

*Transportation, including the flight to europe plus all travel within Europe (3 countries)*: $1,076
*Accommodation:* a few free nights with family plus Airbnbs in 2 countries: $406
*Food, Drink, and other Spending*: $619

Total Cost: ~$2100

Overall a great time across Amsterdam, Prague, and Berlin. Good food and amazing beer. I went over budget, but for a 10-day trip to Europe I think the costs were pretty reasonable - I've seen people blow more on a bachelor party weekend.


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## peterk

Janus said:


> I went over budget, but for a 10-day trip to Europe I think the costs were pretty reasonable - *I've seen people blow more on a bachelor party weekend*.


Ha! J4B will be fuming :biggrin:. Keep an eye out for my bachelor/wedding holiday update in a few days :eek2:. My flights alone to Europe last summer cost $2,200... :hopelessness:

And sorry for doubting your thrifty budget for Europe. Even though you went over, that's still much cheaper than I expected you'd be able to do it for...


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## My Own Advisor

Janus said:


> *10-day Euro Trip, the Damage*
> 
> *Transportation, including the flight to europe plus all travel within Europe (3 countries)*: $1,076
> *Accommodation:* a few free nights with family plus Airbnbs in 2 countries: $406
> *Food, Drink, and other Spending*: $619
> 
> Total Cost: ~$2100
> 
> Overall a great time across Amsterdam, Prague, and Berlin. Good food and amazing beer. I went over budget, but for a 10-day trip to Europe I think the costs were pretty reasonable - I've seen people blow more on a bachelor party weekend.


That is super cheap. Well done.

We spent about $5k last summer for two people, for the same time period in Scotland (10 days) but we also rented a car, bought scotch, wife bought clothes, etc.


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## Janus

*September Update*

*Net Worth*: $340,000 CAD

It has been an expensive month with some splurging - 2 new pairs of boots (25% off), a new table (half off), and a new book shelf (half off). The discounts don't excuse the purchasing, but it's all good stuff that I expect to last a good decade. 

On the investment front:
- one of my larger holdings in new zealand has pulled back, which I'll likely add to. 
- one of my larger canadian holdings, yellow pages, has appreciated nicely and is sitting near 52 week highs. still undervalued based on my analysis, but I could always be wrong on this one.
- continuing to invest in japanese stocks that are undervalued via my interactive brokers account.

On Canadian housing, I'm watching the latest developments with interest. Vancouver appears to have cracked quite significantly with prices down quite a bit, while toronto looks like it'll be affected by the newest rules on stress testing - most people push so hard on that first house purchase that there's no way they can afford a theoretical 4.9% mortgage rate. As with any overpriced asset, I choose to stay on the sidelines of Toronto real estate.


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## 1980z28

Well,staying on your feet

nice

when you get my age ,,,your offspring will thankyou

good job

enjoy


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## peterk

Did I recall you saying while you were still in Asia that you made a ~10k investment into a private enterprise, perhaps with a friend or colleague? How did that go / is going?


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## james4beach

peterk said:


> Ha! J4B will be fuming :biggrin:.


You're right ... my bachelor party/wedding attendance costs were traumatic.

P.S. In 2013, I spent $14,000 for two months in Australia and Cook Islands in the South Pacific. I called it "Operation: Perpetual Summer" and it was worth every penny.


----------



## Janus

peterk said:


> Did I recall you saying while you were still in Asia that you made a ~10k investment into a private enterprise, perhaps with a friend or colleague? How did that go / is going?


Still ongoing! it's a bit of a story and has left a bad taste in my mouth with regards to investing with friends (I'll never do it again), but the asset is not "impaired" - only the friendship is, which is a damn shame.

To be honest I'm much more excited about my public stock investments in Canada/Japan. I've been building up a portfolio of companies I see as hugely undervalued and am happy to own for the next few years at least.


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## My Own Advisor

james4beach said:


> You're right ... my bachelor party/wedding attendance costs were traumatic.
> 
> P.S. In 2013, I spent $14,000 for two months in Australia and Cook Islands in the South Pacific. I called it "Operation: Perpetual Summer" and it was worth every penny.


+1


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## Janus

james4beach said:


> You're right ... my bachelor party/wedding attendance costs were traumatic.
> 
> P.S. In 2013, I spent $14,000 for two months in Australia and Cook Islands in the South Pacific. I called it "Operation: Perpetual Summer" and it was worth every penny.


Two months... that sounds almost life-changing, like a memorable stop-off between periods of work in your life. A mini-sabbatical. Sounds incredible.


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## Janus

*Question: How the hell do I track my finances?*

I clearly need to track things better and separate my investments from my savings in terms of calculating net worth. My net worth moves around in weird ways, with savings sometimes being shaded by investment losses or with investment gains making up for a lack of saving. I use Mint, but through work I have a lot of large expenses that I am paid back for months later... and as a result anything that tracks my checking account thinks I'm an egregious spender (with the reimbursement mis-classified as income). Are there any alternatives to Mint, or do I just need to do some laborious end-of-month adjustments in excel?


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## james4beach

Janus here's the approach I currently use. I have one big balance sheet for everything. This includes _receivables_, like when work owes me reimbursements. Those become assets on my balance sheet. Credit cards are amounts I owe, so they're liabilities. This should solve the problem of large reimbursements throwing off the numbers.

I calculate two totals from my balance sheet. One is the overall net worth total. The second is a *nonvolatile* total: this excludes investment accounts. It includes amounts receivable, and I've found that this does a good job reflecting my actual saving/spending over a period.

I don't use Mint, just a spreadsheet. I also think Mint is a security hazard, and sharing your passwords through systems like that may invalidate your bank's protection guarantees against fraud. I would never automate logins to my online banking, personally.


----------



## Lost in Space 2

Janus said:


> *Question: How the hell do I track my finances?*
> 
> I clearly need to track things better and separate my investments from my savings in terms of calculating net worth. My net worth moves around in weird ways, with savings sometimes being shaded by investment losses or with investment gains making up for a lack of saving. I use Mint, but through work I have a lot of large expenses that I am paid back for months later... and as a result anything that tracks my checking account thinks I'm an egregious spender (with the reimbursement mis-classified as income). Are there any alternatives to Mint, or do I just need to do some laborious end-of-month adjustments in excel?


YNAB


----------



## Lost in Space 2

Can't post links yet (had to create a new account after the hack)

Google YNAN how-to-budget-temporary-expenses
Go for the classic rather than the new version


----------



## Janus

Thanks for all the advice!

James: I've deleted my Mint account, my data has been expunged from their system.

re: YNAB, looks very interesting. I'll give it a go!


----------



## brajington

I use a modified version of this, works well for the past few months I've been using it. 

I've added an Expense Data tab and a Graph for NW that shows Expenses, NW, and Investements all in one graph.

http://www.madfientist.com/financial-independence-spreadsheet/

I use an app to track all my expenses that can send the data in excel format which is useful. There are probably tons out there for Android & iOS.


----------



## motl

Janus said:


> *10-day Euro Trip, the Damage*
> 
> *Transportation, including the flight to europe plus all travel within Europe (3 countries)*: $1,076
> *Accommodation:* a few free nights with family plus Airbnbs in 2 countries: $406
> *Food, Drink, and other Spending*: $619
> 
> Total Cost: ~$2100
> 
> Overall a great time across Amsterdam, Prague, and Berlin. Good food and amazing beer. I went over budget, but for a 10-day trip to Europe I think the costs were pretty reasonable - I've seen people blow more on a bachelor party weekend.


Late reply here, but I did this exact trip in 2013. Same three cities, but in 11 days. My route was A -> B -> P. I felt like I got something different out of every city and, like you, enjoyed the frugal feeling of Prague to end the trip. Interestingly, my total spending was very close to what you spent. Very fun trip.

Girlfriend and I are planning Europe again next year, but likely the Balkan area. Slovenia for sure, and a few others. Traveling with a budget doesn't have to suck.


----------



## Lost in Space 2

> Transportation, including the flight to europe plus all travel within Europe (3 countries): $1,076


How in god's name did you get flights so cheap??

I don't think I've ever seen flights under $1200 Canadian


----------



## My Own Advisor

That seems super cheap. $406 for accommodations? Hostels?


----------



## Janus

Lost in Space 2 said:


> How in god's name did you get flights so cheap??
> 
> I don't think I've ever seen flights under $1200 Canadian


It was a steal. The airlie was Jet Airways, it's Indian and does flights from Toronto to India, stopping over in Amsterdam. I guess when they can't fill all the seats for the long haul, they try and fill them cheaply. And you know what, I liked it better than Air Canada!



My Own Advisor said:


> That seems super cheap. $406 for accommodations? Hostels?


Much of the trip was spent for free at my family member's place, 2 nights in berlin were shared with 2 friends in a tiny flat on airbnb, and Prague was a beautiful room in someone's apartment. But the price comes down a lot when the host is actually staying there with you.


----------



## atrp2biz

Janus said:


> It was a steal. The airlie was Jet Airways, it's Indian and does flights from Toronto to India, stopping over in Amsterdam. I guess when they can't fill all the seats for the long haul, they try and fill them cheaply. And you know what, I liked it better than Air Canada!


Interesting. How many days before the trip did you book the flight? 

We do vacations like we grocery shop. We look at the flyer to figure out what groceries to buy and we try to take our vacations in a similar way.


----------



## Lost in Space 2

Ahhh that makes sense did you go off season? 

Staying with family is one of the best ways to save on costs, our family does it all the time coming over here.


----------



## Janus

*July 2017 Update*

*Assets*: $420,000 (versus $335,000 a year ago)
*Liabilities*: $0

It's been a good year for income and a bad year for spending. I recently read Your Money Or Your Life and it shocked me to find that there were ideas in there I still hadn't stumbled upon. It got me into the habit of tracking every penny I spend, and after a month of tracking, I wasn't impressed. All things considered it looks like I spend $50,000 a year - not really in the zone for FI living. All this said, there are areas where I can cut a lot without losing happiness, especially my social life budget - what can I say, I've had too much fun over the last year. But I don't need to spend so much on "having fun" to be happy. So the exercise of tracking has been eye opening and something I'm going to continue.

Based on my expectations for income next year, I'm expecting to be able to save $150,000 a year, bringing me 4 years away from $1 million. Of course, there's a lot that could get in the way of this, especially a market correction. I'm not expecting it to be a smooth ride by any means.

As for the longer term, getting to $2 million seems quite difficult. If my career continues in the right direction I may just barely make it by 37, but frankly I'm not concerned about that. Much more important is that I'm already experiencing elements of burnout in my job. Can I make it to $1 million? Almost definitely. But something will have to change for me to make it to $2 million - there's nothing wrong with my job in itself, but I want to work around more spiritually fulfilled people than I currently do. For now I'm not in a rush, and I'm more focused on being an agent of positive change in my work environment to make it a more sustainable place to work.


----------



## james4beach

Congrats on the progress! +85K net worth increase in one year is great.



Janus said:


> I recently read Your Money Or Your Life and it shocked me to find that there were ideas in there I still hadn't stumbled upon. It got me into the habit of tracking every penny I spend, and after a month of tracking, I wasn't impressed. All things considered it looks like I spend $50,000 a year


I also track every dollar, and it really helps me. I think it provides a feedback loop to the brain that changes behaviours in many ways.



> Much more important is that I'm already experiencing elements of burnout in my job.


That's definitely something to be watchful of. Life is a marathon, not a sprint, and the energy of the 20s simply does not last into the 30s and beyond.


----------



## Janus

Thanks James. It would have been more if I hadn't made some stupid investments in my personal account that set me back about $15k. Yes, it should have been +$100k! Oh well though, I've learned lessons that will help me personally and professionally that I'll never make again with the larger sums of money that will be invested 5, 10, and 20 years from now in my accounts.

As for the startup investment, supposedly it's gone from $10,000 to $30,000 in value, but I'll believe it when they sell the business and I receive a check. I keep it on my balance sheet at cost.

James, what's your annual spending like? The $25k I see all over the place online doesn't seem very realistic to me, but that being said I'm sure I can get below $40k and I also don't live with anybody which cuts one of the biggest expenses in half.

*Toronto Housing*

I'm watching this extremely closely right now. While I'm not desperate to own a place, I'd consider buying if conditions continue to get worse. Prices are now down 17% in the GTA, and supply continues to build. So many people have bought places as speculations that are cash flow negative (even with renters), I just don't see how there won't be a rush to the exits. If there's blood in the streets, I'm stepping in.


----------



## james4beach

Janus said:


> James, what's your annual spending like? The $25k I see all over the place online doesn't seem very realistic to me, but that being said I'm sure I can get below $40k and I also don't live with anybody which cuts one of the biggest expenses in half.


I'm in my mid 30s, single, rent an apartment, and travel a lot for fun.

See this post in my spending diary. I spend about 36k - 38k and it was very similar when I lived in Toronto.

I went back to my Toronto spending numbers from 5 years ago, and inflation adjusted to today, that would also land at about 35k to 36k a year.


----------



## redsgomarching

Janus said:


> Thanks James. It would have been more if I hadn't made some stupid investments in my personal account that set me back about $15k. Yes, it should have been +$100k! Oh well though, I've learned lessons that will help me personally and professionally that I'll never make again with the larger sums of money that will be invested 5, 10, and 20 years from now in my accounts.
> 
> As for the startup investment, supposedly it's gone from $10,000 to $30,000 in value, but I'll believe it when they sell the business and I receive a check. I keep it on my balance sheet at cost.
> 
> James, what's your annual spending like? The $25k I see all over the place online doesn't seem very realistic to me, but that being said I'm sure I can get below $40k and I also don't live with anybody which cuts one of the biggest expenses in half.
> 
> *Toronto Housing*
> 
> I'm watching this extremely closely right now. While I'm not desperate to own a place, I'd consider buying if conditions continue to get worse. Prices are now down 17% in the GTA, and supply continues to build. So many people have bought places as speculations that are cash flow negative (even with renters), I just don't see how there won't be a rush to the exits. If there's blood in the streets, I'm stepping in.


I am waiting for this as well. There are some areas in the GTA that are attractive location wise and honestly we as Canadians have it pretty good in comparison to places like London, New York, etc. (even though their population size is insanely higher).

Janus I am curious to your current working arrangement - it seems like you had a very good plan of what you wanted to do, however, you mentioned burning out- are their viable exit opps for you to take a role that is more balanced at the sacrifice of extending your goal? I think many on here also agree that reaching that goal but at the cost of health + sanity is not so appealing.


----------



## Janus

james4beach said:


> I'm in my mid 30s, single, rent an apartment, and travel a lot for fun.
> 
> See this post in my spending diary. I spend about 36k - 38k and it was very similar when I lived in Toronto.
> 
> I went back to my Toronto spending numbers from 5 years ago, and inflation adjusted to today, that would also land at about 35k to 36k a year.


Very cool. I clearly have some work to do in order to get there!



redsgomarching said:


> Janus I am curious to your current working arrangement - it seems like you had a very good plan of what you wanted to do, however, you mentioned burning out- are their viable exit opps for you to take a role that is more balanced at the sacrifice of extending your goal? I think many on here also agree that reaching that goal but at the cost of health + sanity is not so appealing.


I can't complain too much... my income is high and my hours are decent enough that I have the ability to have a very strong social life out of work filled with friends, lots of sports, and dating. The burnout is more in the sense of my individual firm's culture, which is common for privately owned firms in my industry. To be frank I could probably join another company at some point down the line and reduce the soul-crushing element significantly.

To be honest I think it also has something to do wth Toronto work culture. People here in their 20s and 30s seem mostly in a rush to buy a house and settle into a 2-hour daily commute. And if you make lots of money, add private schools and a big house in oakville to that. More than anything, I find myself surrounded by largely unhappy and spiritually lacking people, and it's painful. So really, the way I'll be able to address the issue of spiritual burnout would probably involve either a huge promotion where I am (giving me more autonomy) or leaving for a healthier work culture.

Exit opportunities for me are strong, but more so in financial centers like london, NYC, Tokyo, and Hong Kong. Hence my current situation, if I choose to change it, carries the additional inertia of possibly having to move... though perhaps I need to reframe that as "getting to" move! I'm certainly not enamored with the Toronto lifestyle, even though I love the city.


----------



## Dmoney

Janus said:


> All things considered it looks like I spend $50,000 a year - not really in the zone for FI living. All this said, there are areas where I can cut a lot without losing happiness, especially my social life budget - what can I say, I've had too much fun over the last year.


No such thing as too much fun! 
One thing I have not done is track my spending (I'm much too scared to run the numbers!)
I try to focus on savings targets (ie. 100% of my after tax bonus, XX$ monthly from base pay etc.) rather than spending targets.
My biggest expense is housing (own a place that runs ~$2,000/mo on financing +~$1,000/mo on utilities etc.), but that will hopefully end next week assuming the sale closes without a hitch.
Beyond that I spend quite a bit on socializing, and travel, but that's what keeps me sane! Much like you I work in a stressful environment with long hours and need to unwind. I refuse to compromise on this.



Janus said:


> As for the longer term, getting to $2 million seems quite difficult. If my career continues in the right direction I may just barely make it by 37, but frankly I'm not concerned about that. Much more important is that I'm already experiencing elements of burnout in my job. Can I make it to $1 million? Almost definitely. But something will have to change for me to make it to $2 million - there's nothing wrong with my job in itself, but I want to work around more spiritually fulfilled people than I currently do. For now I'm not in a rush, and I'm more focused on being an agent of positive change in my work environment to make it a more sustainable place to work.


[/QUOTE]

I'm at a similar crossroads now. My compensation is on a solid upward trajectory, but with lucky timing on my house sale, I've jumped forward financially 5+ years. I like the job/work I do, the people I work with, but the hours and lack of predictable scheduling make it a struggle. I would definitely say I'm starting to feel some of the burnout, like you. Lucrative work though, and hard to find anything similar with more work/life balance.


----------



## Dmoney

Janus said:


> To be honest I think it also has something to do wth Toronto work culture. People here in their 20s and 30s seem mostly in a rush to buy a house and settle into a 2-hour daily commute. And if you make lots of money, add private schools and a big house in oakville to that. More than anything, I find myself surrounded by largely unhappy and spiritually lacking people, and it's painful. So really, the way I'll be able to address the issue of spiritual burnout would probably involve either a huge promotion where I am (giving me more autonomy) or leaving for a healthier work culture.


I find the same. My colleagues are all on the hamster wheel, but none of them actually seem to be getting anywhere. They make big money, but then buy big houses, flashy cars, private school educations, racquet club, golf club, ski club and at the end of the day have all the same money struggles that the middle class have.


----------



## Janus

Dmoney said:


> I'm at a similar crossroads now. My compensation is on a solid upward trajectory, but with lucky timing on my house sale, I've jumped forward financially 5+ years. I like the job/work I do, the people I work with, but the hours and lack of predictable scheduling make it a struggle. I would definitely say I'm starting to feel some of the burnout, like you. Lucrative work though, and hard to find anything similar with more work/life balance.


What do you do for work and how far are you in your career? I poked around your money diary but didn't find many details.


----------



## peterk

Janus, James, I find it interesting that you are both "doubling down" so to speak, on frugality, right at a point in your lives where you are on the cusp of exploding into the upper reaches of your professions. _This_ is the critical time to stay focused.

Doubling your savings through a 100k raise is the accomplishment...not chopping your expenses by 10k.

There is only so much time in the day, and energy in each of us. Brain power spent on frugality comes with a real risk of limiting career accomplishments and comes with diminishing returns the harder you try. Brain power spent on enhancing your status in your profession comes with exponential returns. 

I hope you are keeping things in perspective, and not letting "counting every penny" distract you from your missions.


----------



## nobleea

peterk said:


> JDoubling your savings through a 100k raise is the accomplishment...not chopping your expenses by 10k.
> 
> There is only so much time in the day, and energy in each of us. Brain power spent on frugality comes with a real risk of limiting career accomplishments and comes with diminishing returns the harder you try. Brain power spent on enhancing your status in your profession comes with exponential returns.


100% agree. For smart, driven people it is far easier to increase your after tax income by 10K than spend hours every week trying to chop expenses by 10K. Not to mention that chopping the expenses, or at least the effort of trying to do so may impact your quality of life or perceived quality of life. If you absolutely despise working and can't wait to retire even if it's at a lower quality of life, then sure, see how much you can pare down as your costs will dictate how early you can retire.


----------



## Janus

These are fair points. With a top-1% income you're right that I shouldn't be focusing too much on cost control if it makes my day to day more stressful. I think there are really 2 parts to this:

1) I really do want to get to FI as quickly as possible, and

2) I know that some of my spending isn't bringing me a lot of happiness because it's not aligned with my values. Frankly a lot of it is buying drinks/dinner on dating, which I do a lot of. I can see that in my next relationship so many of these expenses will come way down.


----------



## Dmoney

Janus said:


> What do you do for work and how far are you in your career? I poked around your money diary but didn't find many details.


I'm about 6 years deep into sell-side equity research.
How about yourself?


----------



## Janus

Dmoney said:


> I'm about 6 years deep into sell-side equity research.
> How about yourself?


4 years on the buy side and some other random experience prior to that, with very humble beginnings in our industry. Unlike many of my colleagues, getting here wasn't a predetermined thing since high school (which isn't a slight against their competence, just an observation on life paths). 

Having gone through your thread, I'm amazed at your progress. I thought I was tracking along with you reasonably well until I saw the windfall gain on your house! It reminds me how much harder it is to get to a million with just saving alone. And that's the discouraging part of my story - very little of my progress has been through market appreciation because I've been overly risk averse and waiting for a correction.

What's your approach to investing today, assuming your accumulation phase is somewhat finished? In today's environment I'm curious how you'd build a portfolio, will you continue to use options?


----------



## Dmoney

The house was a real stroke of luck to be honest. And more importantly, the only reason I'm selling is because I plan to leave Toronto. If I were staying here, there would be no point in selling as I have to live somewhere, so it would just be a million dollar asset tied up and unproductive.

I've also got quite an elevated risk tolerance, which has served me well since starting my career. I've plowed my savings into 100% equities, gone on margin on occasion, and bought the house with $0 down.

Today, with a good chunk of coin accumulated, and a career shift seemingly on the horizon, I don't actually plan to do anything drastically different. I've still got good earning power, and at worst I'll take a hit to pay but still be in the low 6 figures (hopefully), or close to it. If/when I buy another place, unless rates are dramatically higher, I'd still most likely take on a sizeable mortgage and keep fully invested. 

I still plan to use options to enhance monthly portfolio income, and as an entry/exit strategy for stock positions. As a % of my portfolio, I don't expect margin will ever creep up as high as it has in the past, but in absolute $ terms, I'm comfortable with a bigger margin balance given the increased size of my portfolio.


----------



## My Own Advisor

"Exit opportunities for me are strong, but more so in financial centers like london, NYC, Tokyo, and Hong Kong. Hence my current situation, if I choose to change it, carries the additional inertia of possibly having to move... though perhaps I need to reframe that as "getting to" move! I'm certainly not enamored with the Toronto lifestyle, even though I love the city."

Toronto is fun. Lots to do. I used to live there in my early 20s. In Ottawa for the last 16 years.

Janus - what are you leaning towards then? re: moving out of Toronto? Different country all together?


----------



## Janus

My Own Advisor said:


> Toronto is fun. Lots to do. I used to live there in my early 20s. In Ottawa for the last 16 years.
> 
> Janus - what are you leaning towards then? re: moving out of Toronto? Different country all together?


Yes, I think the answer might be an eventual escape from Toronto. And that would mean a different country for sure. I think my pay for what I do would be considerably higher in the U.S., but that said it seems really hard for anyone to get a job there.

At 30, I do finally feel a bit of inertia in my life - family lives near me, lots of friends in Toronto. But it doesn't feel quite like the place I want to settle, at least not right now.


----------



## Janus

*August 2017 Update*

*Assets*: $430,000 
*Liabilities*: $0

A good month for investments. Looking at my model, I'm hoping to reach $450,000 by year-end and $550,000 a year from now.

As of today my asset allocation is:

Cash: 25%
Equities: 75%

I've got plenty of dry powder waiting for a market correction that will seemingly never come. Alternatively I can use some of this cash to buy a property if the Toronto market continues to drop rapidly, though I'm not assuming it will.

It's a weird time to be an investor. Practically every asset class is expensive (bonds, stocks, real estate), with very few pockets of value to be seen. As a result I feel good holding on to some cash for later deployment.


----------



## peterk

Janus said:


> I've got plenty of dry powder waiting for a market correction that will seemingly never come.... As a result I feel good holding on to some cash for later deployment.


Yeap, that's what I've been saying for 5 years. :rolleyes2:


----------



## Janus

peterk said:


> Yeap, that's what I've been saying for 5 years. :rolleyes2:


Sam here! haha. I should have known markets never go down any more...


----------



## Dmoney

Janus said:


> Sam here! haha. I should have known markets never go down any more...


Kind of like Toronto housing...


----------



## GreedIsGood

Janus said:


> 4 years on the buy side and some other random experience prior to that, with very humble beginnings in our industry. Unlike many of my colleagues, getting here wasn't a predetermined thing since high school (which isn't a slight against their competence, just an observation on life paths).


Do you mind if I ask what the random experience prior was? And also, how did you get into ER? Networking? I completed my CFA last year but I screwed myself over at school when I didn't get any ER internships (mainly because I didn't really know what I wanted) and, now at 26, my chances are slim to none.


----------



## Janus

*October 2017 Update*

*Assets*: $442,000 
*Liabilities*: $0

I need to get better at tracking my spending... I should have actually saved more during this period of time. Because i'm only comparing my asset levels each month and not separating out spending from asset appreciation/depreciation, clearly i'm not getting the full picture here. With only myself to blame!

Major purchases in the last 2 months included a chest of drawers ($750 all-in when paid in cash) and a trip to NYC. But it still doesn't account for the lack of savings.

Like everyone else I'm watching Toronto housing closely. It's amazing how things have changed since April. Houses remain extremely expensive, but the environment seems a lot more negative now in the SFH category (still strong in condos). What I'm most keen to see is how the B-20 guidelines affect things. Peoples' ability to take on debt just seems like it's going to be cut sharply - how that doesn't affect prices I have no idea. But we live in a world of amazing things happening - stocks only go up, houses only go up, central banks buy all assets. As a security analyst it's all a bit insane to watch unfold.

I remain 25% in cash and 75% in equities.

Edit: I like every once in a while to take a 5% yield and see what my passive income would be (in a fake world with no taxes). As of my current asset level, I can finally say that I could pay my rent with passive income - a small but meaningful milestone.


----------



## milhouse

Janus said:


> I remain 25% in cash and 75% in equities.
> 
> Edit: I like every once in a while to take a 5% yield and see what my passive income would be (in a fake world with no taxes). As of my current asset level, I can finally say that I could pay my rent with passive income - a small but meaningful milestone.


I wish I had the discipline like you to hold that much cash. I'm constantly tempted to spend my cash on something that I find interesting to continue building the dividend growth side of my portfolio and end up occasionally making dumb purchases. However, FWIW, I feel we're ready for at least a correction and there'll be buying opportunities so I'm sure you'll have your day soon. 

I also occasionally do a daydreaming type exercise calculating how much muscle my current portfolio and forecasted portfolio has in terms of different aspects of our spend.


----------



## My Own Advisor

milhouse said:


> I also occasionally do a daydreaming type exercise calculating how much muscle my current portfolio and forecasted portfolio has in terms of different aspects of our spend.


Same, nearly every other day...as in..."are we getting there yet?"


----------



## Janus

milhouse said:


> I wish I had the discipline like you to hold that much cash. I'm constantly tempted to spend my cash on something that I find interesting to continue building the dividend growth side of my portfolio and end up occasionally making dumb purchases. However, FWIW, I feel we're ready for at least a correction and there'll be buying opportunities so I'm sure you'll have your day soon.
> 
> I also occasionally do a daydreaming type exercise calculating how much muscle my current portfolio and forecasted portfolio has in terms of different aspects of our spend.


Trust me the "discipline" is painful and it's been just plain wrong basically during this cycle. Hopefully it will redeem itself at some point. 

I hate clicking on this thread and seeing the optimistic smiling face in the title... i so wish I could change it. The journey to $1m is frustrating, stressful, and slow... I should get there by 35. But $2m will not be hit by 37!


----------



## Janus

December Update

Assets: 456,000
Liabilities: 0
Equity: $456,000

December was an incredible month for my small personal investment portfolio. I made about a 25% gain on the entire portfolio, which brought the account from 40kUSD to 50kUSD. It's basically a 5-stock portfolio. One of my holdings doubled, and another went from a double to a triple. I'm now trimming the triple and reinvesting the gains in a cheaper holding. 

I'm curious how all of you treat stocks that double - whether you like to ride them up, or whether you take the Cundill route and sell half to enjoy the remaining "free position". Obviously it depends on the valuation of the stock that's doubled as well.

Half a million is now within my sights. I should be there in 6 months, assuming the market doesn't seriously correct (*knock on wood*).


----------



## redsgomarching

wow janus back in 2013 you started and now in 2018 you have amassed 500k nearly! 

pretty much at your goal!

i know investing is a huge part of increasing your capital but has your wage/salary increased over the years as well to help you sock away some more?

do you also have any other asset class or just equities for now?


----------



## Janus

redsgomarching said:


> wow janus back in 2013 you started and now in 2018 you have amassed 500k nearly!
> 
> pretty much at your goal!
> 
> i know investing is a huge part of increasing your capital but has your wage/salary increased over the years as well to help you sock away some more?
> 
> do you also have any other asset class or just equities for now?


It's been 90% through savings... to be honest I've been chronically under-invested in this massive bull market due to my own stupidity. I'm now much more fully invested. But I don't even want to run the numbers on what my net worth would have been had I not been so stupid... at least 100k higher.

My wage started pretty high in that I was earning just about 100k right out of grad school. Over time that went up a decent amount, with a short dip in the middle. I earn a lot more than that now, but if there was a big market correction my income would be affected a lot by it.

The plan from here is basically to save close to $150k per year. It may be way too ambitious but looks possible.


----------



## peterk

Janus said:


> I'm now much more fully invested. But I don't even want to run the numbers on what my net worth would have been had I not been so stupid... at least 100k higher.


Oh don't feel too bad, mine's worse. :hopelessness: My total $$$ value return of gains+dividends in the last 5 years is only about 50k...and I've sat on 50%+ cash the whole time...and I don't have much in market indexes and most of my stock picks sucked.

If only I had saved 6 months spending for emergency fund and invested the rest in XIU and SPY, as per standard advice.


----------



## Steve Divi

Janus said:


> The plan from here is basically to save close to $150k per year.


Man, that is epic!

Keep it up Janus


----------



## My Own Advisor

Save $150k per year???? Wow. You're set within 10 years for sure....maybe 5 with good markets.

Hammer down 😁


----------



## Janus

peterk said:


> Oh don't feel too bad, mine's worse. :hopelessness: My total $$$ value return of gains+dividends in the last 5 years is only about 50k...and I've sat on 50%+ cash the whole time...and I don't have much in market indexes and most of my stock picks sucked.
> 
> If only I had saved 6 months spending for emergency fund and invested the rest in XIU and SPY, as per standard advice.


That's funny. I'm sure my number is about the same. What's funnier is that in my first post in this thread I said something about keeping a good amount of cash on the side to prepare for an inevitable correction (-20%)... that was 2013, and the correction never happened! We should start a club called "people who missed the bull market anonymous". My stock picks have only recently been good, as i'm finally investing in what I know.

Still, I refuse to be overextended... ever. No leverage, no sexy momentum stocks.



My Own Advisor said:


> Save $150k per year???? Wow. You're set within 10 years for sure....maybe 5 with good markets.
> 
> Hammer down &#55357;&#56833;


150 will be hard to pull off (at least in the next 12 months) but it's doable given the rough numbers, especially with future raises. The funny thing is, $1 million still feels far away. I work in an industry that creates (fairly) young millionaires, and I work in a part of that industry full of people who are mostly pretty frugal! This is as opposed to investment bankers, who make more money than me but have a HUGE spending culture. It's fascinating to see the differences within the same industry.

An important new point is that I'm starting to enjoy my job a lot more. Just as my earnings are starting to accelerate, this is actually becoming a much more sustainable stream of cash flows. Which means I can picture sticking around where I am to cross that $1m point.


----------



## Janus

*January Update*

*Equity*: $463,000 (+7,000 MoM)

January gains were a combination of savings and more good returns in my investment portfolio. I've trimmed some winners and reallocated to losers, which will mean incurring some capital gains taxes at the end of the year... but i still see it as the right decision.

At this point in the cycle I'm much more worried about capital loss than making any more money on my investments. Of course, I've been thinking this for a few years now- shows what I know! While I'm a decent stock picker, my ability to time markets is (predictably) absolutely horrible.

The weakening USD is eating away at my CAD-denominated returns right now. I'm fine with that for now, for if it continues I'll start selling CAD for USD.


----------



## milhouse

Janus said:


> The weakening USD is eating away at my CAD-denominated returns right now. I'm fine with that for now, for if it continues I'll start selling CAD for USD.


I haven't tallied up my month end yet but I suspect similar issues for me.


----------



## Janus

*The recent correction*

I spent the last couple of weeks snowboarding. On some of the longer gondola rides I was watching the market sh*t the bed, and itching to get home to buy some stocks on sale. At the same time, my small company portfolio was down enormously - some stocks down 15% in a day despite their businesses having almost no capacity for fluctuation, and despite their multiples being extremely low. I'm learning that while cheap multiples can increase your upside, they don't protect your downside as much as I'd thought. In any case, I was prepared to buy more of what I already own on sale.

Amazingly, looking at my portfolio I'm in exactly the same place I was in 2 weeks ago. So much for the buying opportunities!


----------



## Janus

*February Update*

*Equity*: $476,000 (+13,000 MoM)

A good month for wealth building. A few things happened:

1) RRSP matching from my employer accounted for more than half of the gain (I get this once a year).
2) The CAD has been weakening quite rapidly, which made the value of my foreign holdings go up. It went from 1.23 to 1.27 over the course of the month.
3) A bit of appreciation in my personal investments.

These offset a small snowboarding vacation that I took which was more expensive than I'd expected.

A quick note on the stock market chaos in february: somehow my non-registered stocks fully recovered, despite some being down 15% in one day!


----------



## Janus

*March Update*

*Equity*: $487,000 (+11,000 MoM)

A very minor inheritance came in this month. My salary was mostly spent by buying an expensive piece of new furniture and booking a flight across the ocean. Investment accounts declined a bit, and I sold some stocks increasing the amount of tax I have to pay.


----------



## Janus

*April Update*

*Equity*: $495,000 (+8,000 MoM)

The gains here were almost entirely due to my tax owing coming in far under what I'd expected (long story), which I'd been carrying as a liability on my balance sheet. Expenses were higher than expected, I traveled, and my personal portfolio lost rather than made money this month.


----------



## Janus

*May Update*

*Equity*: $498,000 (+3,000 MoM)

Not much to report - my investments were a wash, and the increase in net worth was from my pay cheques.


----------



## james4beach

Congrats again Janus. Remember when a couple years ago you said that the journey to 500K might take longer than you expect?

Your money diary is interesting to me because we're similar ages/lifestyles and my own net worth has been closely tracking yours for the last two years. One thing I've been reflecting on lately is, with this growing net worth, the investment performance is really starting to become significant. This wasn't the case back at 200K net worth, where salary net of expenses really dominated the year-on-year growth. Therefore it's becoming very important to be on top of investment allocations, avoiding cash drag, and managing the portfolio with an eye on meeting/exceeding benchmarks.

I don't know about you, but I'm under-performing my benchmarks mainly due to cash drag and deviation from my allocation targets.


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## peterk

By Equity do you just mean net worth? Is that all in stock investments? No liabilities? What's the allocation?


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## peterk

Sounds like James wants to join our "people who missed the bull market anonymous" club! :excitement: Membership dues are 1 share of any overpriced tech growth or weed stock. :stupid:


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## james4beach

peterk said:


> Sounds like James wants to join our "people who missed the bull market anonymous" club! :excitement: Membership dues are 1 share of any overpriced tech growth or weed stock. :stupid:


I missed most of this bull market, but I also missed the past *two* bear markets, so I'm not as far behind as you might think. During good times like these it's easy to get the idea that stock investors always do fabulously well, but in fact, fixed income outperformed the TSX index from about 2007 - 2016, so I did quite well with my bonds and GICs. It's only in the last couple of years that Canadian stock performance has finally pulled ahead.

In any case, I've settled on an asset allocation (stocks/bonds/gold) which should be minimally sensitive to stock market cycles. I no longer have to worry about being late to the party, or getting in at peak prices.


----------



## hboy54

james4beach said:


> I missed most of this bull market, but I also missed the past *two* bear markets, so I'm not as far behind as you might think. During good times like these it's easy to get the idea that stock investors always do fabulously well, but in fact, fixed income outperformed the TSX index from about 2007 - 2016, so I did quite well with my bonds and GICs. It's only in the last couple of years that Canadian stock performance has finally pulled ahead.


I did not miss the bear market, thank goodness. It was a wild ride for a while, but the truth is for the right individual, a bear market is as useful for buying as a bull market is for selling.

hboy54


----------



## Pluto

^
that's the way to think: buy when prices are falling/fallen, and if you are going to sell, sell when prices are rising.


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## Janus

james4beach said:


> Congrats again Janus. Remember when a couple years ago you said that the journey to 500K might take longer than you expect?
> 
> Your money diary is interesting to me because we're similar ages/lifestyles and my own net worth has been closely tracking yours for the last two years. One thing I've been reflecting on lately is, with this growing net worth, the investment performance is really starting to become significant. This wasn't the case back at 200K net worth, where salary net of expenses really dominated the year-on-year growth. Therefore it's becoming very important to be on top of investment allocations, avoiding cash drag, and managing the portfolio with an eye on meeting/exceeding benchmarks.
> 
> I don't know about you, but I'm under-performing my benchmarks mainly due to cash drag and deviation from my allocation targets.


It is crazy to think that a 10% return is (almost) $50,000 now. Investing well has the potential to really get things moving at this point, which is exciting. While I've been grossly under-invested in this bull market, I'm not going to capitulate entirely and go all equities. I think at this point I'm going for a 70/30 equity/bonds allocation, maybe a bit of gold, and then if sh*t truly hits the fan one day moving to 100% equities. I'm not *that* concerned with benchmarks though... absolute return and getting richer every year matters to me the most. 

That said, in the next couple of years I can foresee acceleration rather than deceleration in job-based income. So saving 150k or 200k a year might not be a crazy goal... I may actually be able to get to $1m in less than 3 years.



peterk said:


> By Equity do you just mean net worth? Is that all in stock investments? No liabilities? What's the allocation?


Hey Peter, it's basically 70/30 stocks/cash. Zero debt, all assets.



peterk said:


> Sounds like James wants to join our "people who missed the bull market anonymous" club! :excitement: Membership dues are 1 share of any overpriced tech growth or weed stock. :stupid:


Honestly, this bull market has been my education in investing in growth companies. Back in 2013 I actually thought that the only way to make money in the long term was to buy cheap value. But really I've learned - from my job primarily, but also this market cycle - the importance of owning long term growth compounders. As long as they are extremely profitable and the valuation isn't insane. Look at google right now - it's really quite a reasonable valuation. Of course, the cycle isn't over... but I don't think it will be GOOG or MSFT that will be the companies that get trashed in the next downturn.

For the record, going forward I'm not really looking to be able to avoid bear markets - the long term opportunity cost is too great, and clearly I can't time the market.


----------



## Janus

*June Update*

*Equity*: $509,000 (+11,000 MoM)

June was a good month for savings. As for my portfolio, much of this gain has to do with the CAD getting absolutely demolished, as my holdings didn't seem to do all that well.

So that's my first time across the half a million line, and hopefully the last as I have some end of year bonus compensation coming in August that should put me well over the line. It might be a better time to do a fulsome update "taking stock" at that point, so that I can look at the new math and show how the journey to $1m should hopefully go. I'm expecting it to be much quicker than the first $500k... perhaps 3 years or so, assuming no huge market disruptions (which will likely happen but who can say for sure).


----------



## lonewolf :)

Janus said:


> 5% stock returns (after inflation) is completely reasonable, as it's shown to be the norm over a hundred years. You have to start somewhere with assumptions, and it's a completely reasonable one.


 The return rate has to be in the negative few companies last 100 years. A stock goes to zero after 100 years is probably the norm. The loss in the stock is 100% which no where close to 5% gain after inflation.


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## lonewolf :)

The common thinking the longer a stock is held the greater the chance to make money which is the opposite of that which is true the longer a stock is held the greater the chance of loss as no company lasts forever


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## james4beach

Janus said:


> *June Update*
> 
> *Equity*: $509,000 (+11,000 MoM)


Curious, do you anticipate there is a correlation between your income and the stock market? This would be the case if you work in finance, investment banking, or a related leveraged industry. Earlier you posted that you're a stock analyst, so I would suspect that you *are* correlated.

If that's the case you might want to consider that your true stock exposure may be higher than the 70% allocation and therefore you may be over-exposed to stocks.

Then there's drawdown. With your current allocation, a 50% stock drop would take your net worth down to ~ 330 K. Since you work in investment banking, your ability to earn income might simultaneously be impeded, so I wouldn't assume you will just quickly earn that back under the conditions that cause such steep losses in financial assets.

Given the sector you work in, you might consider a more cautious allocation (more cash/bonds/gold) for the same reason an energy sector worker shouldn't hold too much energy stocks.


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## Janus

James, it's definitely correlated. If the market were to crash my bonus would be decimated as well. My exposure is higher as you say. That said, much of this is unavoidable as I'm invested in shares of my company (adding concentration risk to the pile). The 30% allocation to cash is essentially as high as it can go, unfortunately.

Lonewolf, I'm not exactly sure what you're on about...


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## james4beach

With that much equity concentration, maybe you should short the market! (Or own some puts on XFN). As a hedge against income loss.

I've thought of something similar with tech being so crazy lately. My salary has gone up along with the tech bubble #2.


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## lonewolf :)

Janus said:


> Lonewolf, I'm not exactly sure what you're on about...


 Janus in the last 100 years a 5 percent average return after inflation for stocks I just do not see it.

The percentage of stocks that are traded on the exchange for 100 years is very small. If a stock is purchased & not sold for 100 years the odds are high the stock could not be sold because it would be worthless the company would be dead & gone. The money invested in the stock would be worth zip no where close to 5% annual increase.

Not only that if your basing your return data on a stock index such as the DJI when the Dow divisor is something like .145 so $1.00 move in a stock is something like $6 move in the index. 100 years ago the Dow divisor was a lot higher. If memory correct it has been as high as 16. Does not matter which stock index is used after 100 years most stocks will be dead & gone & replaced with new stocks. The return for holding individual stocks that eventually go to zero is no where close to 5% after inflation. Also $1 rise in a stock of the Dow increases the trading value of the Dow over 100 times higher then when the Dow first traded.


----------



## Janus

lonewolf :) said:


> Janus in the last 100 years a 5 percent average return after inflation for stocks I just do not see it.
> 
> The percentage of stocks that are traded on the exchange for 100 years is very small. If a stock is purchased & not sold for 100 years the odds are high the stock could not be sold because it would be worthless the company would be dead & gone. The money invested in the stock would be worth zip no where close to 5% annual increase.
> 
> Not only that if your basing your return data on a stock index such as the DJI when the Dow divisor is something like .145 so $1.00 move in a stock is something like $6 move in the index. 100 years ago the Dow divisor was a lot higher. If memory correct it has been as high as 16. Does not matter which stock index is used after 100 years most stocks will be dead & gone & replaced with new stocks. The return for holding individual stocks that eventually go to zero is no where close to 5% after inflation. Also $1 rise in a stock of the Dow increases the trading value of the Dow over 100 times higher then when the Dow first traded.


You don't think this is achievable by buying and holding SPY?


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## lonewolf :)

spy is probably one of the best ETFs though there are now more ETFs then stocks. I think @ some point ETFs will be like investment trusts which were popular in late 20s then after the 1929 -1932 bear market no one would touch them had to change thier name to mutual funds. The ETF is like a poker table the money flows to the strong hand/hands everyone else losses. No more money then is put on the table can be won so no way is everyone going to make 5%


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## Janus

*August Update*

*Equity*: $623,000

It's been a big few months. Some strong investment performance, and a large one-off payment at work (essentially a commission).

A few things on my mind lately:


 I'm getting close to achieving lift-off, that point when I can worry a bit less about "growing the pile" via a massive savings rate. Not that I intend to stop, but I can sense that at $1m I'll be a bit less frantic about it. Which isn't to say that this savings journey is painful or preventing me from living life - I'm traveling a lot and enjoying my time on this earth, and the savings are mostly automatic as my lifestyle is fairly simple. But it will be a big mental milestone to reach $1m in a few years, and it may be a good time for a brief sabbatical. Now, let's just see whether or not there's a market crash before I get there!
 I'm in desperate need of new clothes, both for work and personally, so I've earmarked over a grand for that. Things were getting a bit ragged there, so it's time.
 I'm looking forward to fall as a time when work picks up, as it's been almost unbearably slow lately.
 Still waiting out the Toronto real estate market. Rates rising, houses down, volumes low... we're finally seeing some cracks. At the end of the day I'm just not willing to trade that much of my labour for housing.


----------



## milhouse

Janus said:


> I'm in desperate need of new clothes, both for work and personally, so I've earmarked over a grand for that. Things were getting a bit ragged there, so it's time.


Over a grand is a nice budget to work with. Any consideration around timing of your clothing purchases? 
I just picked up some shoes during the back to school/end of season sales. I'm guessing the next big events for some deals will be Black Friday and then Boxing Day.


----------



## Janus

milhouse said:


> Over a grand is a nice budget to work with. Any consideration around timing of your clothing purchases?
> I just picked up some shoes during the back to school/end of season sales. I'm guessing the next big events for some deals will be Black Friday and then Boxing Day.


Good question, and I have a fairly new answer to it. For most of my life I've sought to buy things on sale, and at the end of the day ended up hating more than half of it because I'd made compromises. "Oh, it doesn't fit PERFECTLY, but it's $20 off". And it all goes into donation bins. So i'm starting to do things differently and just buy things at full price when I do find something I like. At the end of the day I shop so little that it doesn't end up as a spending problem.

I do look to buy things on sale when possible (underwear & t-shirts, online and always 50% for example), but nowadays if I see something I really like, I just go for it (because it's a rare occurrence!).


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## milhouse

I can't argue against buying stuff you're going to truly like and wear as I can't say I'm innocent of buying a shirt and only wearing it a handful of times. 
While it would be nice to get a few pieces on discount, I know what you mean about finding something you really like and just buying it!


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## Janus

milhouse said:


> I can't argue against buying stuff you're going to truly like and wear as I can't say I'm innocent of buying a shirt and only wearing it a handful of times.
> While it would be nice to get a few pieces on discount, I know what you mean about finding something you really like and just buying it!


At this point it's going to be 3 things that make or break me on the journey to $1m:

1) Continuing to have a high income
2) Not making stupid investment decisions
3) Having a low-cost enough lifestyle (say under $60,000 per year) to let #1 add up. No car, low enough rent, etc. An extra few hundred dollars on clothes per year won't really throw this out of whack.

Kids will of course affect #3, but those are not in my near term future so I'll likely hit $1m well before that happens.


----------



## peterk

Janus said:


> *Equity*: $623,000


Holy - nice. So something like 50k net bonus and 50k of gains in the last 2 months??

Agreed, you should be getting some dope clothes and paying full price the perfect stuff, not wasting your time shopping around for the best deals/compromise.


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## Janus

peterk said:


> Holy - nice. So something like 50k net bonus and 50k of gains in the last 2 months??
> 
> Agreed, you should be getting some dope clothes and paying full price the perfect stuff, not wasting your time shopping around for the best deals/compromise.


Yes something like that! 

If shopping for deals hadn't burned me so many times I'd still be doing it. it's not about the current level of wealth, just about how many bad pieces of clothing and imperfect wooden furniture i've owned. It's humbling.


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## james4beach

GPM said:


> I'm late to this post. Congratulations on all your success. But seriously, what's the rush? You have a great education, and a CFA which is a licence to print money (not being judgemental - great job in achieving). You are set. So what are your plans after your 2 million at 37? Important to think about. I see you working 11 hours a day - at least your working out. Frankly, you are only young once. I read stupid dad, stupider dad (his series is useless and he is being sued by his original partner) and went on the saving/investing spree. Pretty much same goal and was well on my way. Cut down by a disability, and guess what? I already had enough money for a great retirement. I look back and the best thing I did mid career was quit that course, cut to a four day week, world travel, and have kids. Said goodbye to the greedy, superficial friends and lived life at my speed. Lucky and thankful I did. Decided I liked world travelling far more than work, which is saying something because I absolutely loved my job (I would have worked until I died likely). Therefore, I further cut down to about 160 days a year. Point is, there's more to life than money. As Chrétien said " a balanced approach" (I'm apolitical). A proper financial plan shows me that I have a problem of never out living my money and handing off far more money to my kids than they should get, and I was nowhere near 2 million at 37, but with friends that were (I'm on disability until 65 with 1/2 the wage I was making after I cut back). Yeah, I have kids in private school, and I'm low man on the totum pole, but the people I see at the top don't strike me as particularly happy with their actual 7 day a week jobs, keeping up with the Joneses, trophy wives, and superficial lifestyles. Just a different point of view for you from someone who's been on the semi fast track.
> 
> As far as financial education, successful alumni are a great way to go. My daughters school brings in former female alumni for inspiration (all girls school). They also play monopoly and and are taught finances starting in middle school.
> 
> By the way, I always find it ironic that the Kiosaki shoots down teachers, while Chilton's dad was a principle. Who has more financial knowledge, and is a better role model?
> 
> Best wishes in achieving your goals, and I hope they make you happy, but keep life fun while you're young, especially since you've achieved a high paying job at a young age. Take advantage of it.
> GPM


I'm bringing back this old post from GPM because I think it's worth re-reading. Your 20s and 30s are some of the best years you will have in your life. Certainly you're the healthiest and most resilient you'll ever be (and most attractive, if that matters to you). There's nothing wrong with making money and accumulating capital, but there's also _no hurry_ in the big scheme of things. Personally I am starting to take it slower, to enjoy life more.


----------



## Janus

james4beach said:


> I'm bringing back this old post from GPM because I think it's worth re-reading. Your 20s and 30s are some of the best years you will have in your life. Certainly you're the healthiest and most resilient you'll ever be (and most attractive, if that matters to you). There's nothing wrong with making money and accumulating capital, but there's also _no hurry_ in the big scheme of things. Personally I am starting to take it slower, to enjoy life more.


At this point I'm not sacrificing anything in my life in order to save this much - it's coming from higher income rather than lower costs. My lifestyle involves eating out when I want, travel all around the world, and living in a nice apartment. I suppose the only thing I'm not spending on that I'd enjoy would be some kind of lavish living situation like a big loft. But really, I don't feel like I'm scrimping or sacrificing anything, so at the end of the day my lifestyle is not being sacrificed in the name of money. My needs are just relatively small.


----------



## james4beach

Is the work stressful? Long hours?


----------



## Janus

james4beach said:


> Is the work stressful? Long hours?


Stressful sometimes, long hours not really. 45-55 hour weeks for the most part, and when you have no commute that's not bad at all. It's inherently interesting work so a few extra hours spent at the office isn't a burden. The more senior you get the more responsibility you have, so stress will go up in the sense that although you don't have to take work home, you're thinking about it a lot. It will take some mental discipline to keep that under control.


----------



## Janus

*October Update*

*Equity*: $642,000

Some lumpy compensation has contributed to a nice little whack of savings over the last month. 

This market turmoil is getting really interesting, particularly outside of North America. I still have about 20% of assets in cash which I should probably start allocating to the most beat up markets... China in particular is getting destroyed.


----------



## Janus

So I just allocated about $40,000 of cash into equities last week. The correction we've seen has been small in north america, but much larger in emerging markets and Asia so I decided to jump in. At the end of the day my cash hoarding tendencies have held me back from probably $100,000 to $200,000 worth of gains since I started this blog (I don't want to do the actual calculation as it's too depressing!), so I need to get more invested and just stick it out. At the end of the day I'll always be somewhat defensively invested... Companies I own have rock solid balance sheets and market leading positions that have stood the test of time, and 5-10% cash will be there to invest if markets ever do correct more severely. Hopefully that should make downturns more survivable.


----------



## Janus

*November Update*

*Equity*: $647,000

Not much happened in my investment portfolios, as the gains were mainly from savings. I've put more into the market and am pretty close to being fully invested now, which is a bit nerve wracking but at least takes some of the pressure off in terms of trying to get market timing right (which I clearly can't do).

Watching the destruction in the vancouver housing market right now makes me think winter is coming in Toronto. Still, it would take quite a drop (or a big raise) to get me into the property market here.

I'm practically itching to get to the $1m mark, which should hopefully be less than 2 years away at this rate - barring a big market correction or losing my job. I seem to have an assumption that some kind of relief will be felt when that happens... "well at least I have this". It would be an achievement to be sure. I guess there's no point focusing on it too much, just need to live life in the meantime. For the record i'm not trying to save my way there - some very expensive vacations coming up in 2019.


----------



## Janus

*August Update*

*Equity*: $830,000 (+210,000 y/y)

I've mostly stopped posting here because I find that tracking my wealth obsessively doesn't help much - my spending habits are more or less on cruise control, and this isn't really the place to talk about increasing the revenue side of things. So really it's all on autopilot. But still, I want to document the journey maybe once a year.

As of today I'm saving about $200,000 a year, and if things stay constant it looks like I'm on target to reach my goal of $2,000,000 by 37 without any compounding of wealth to contribute to that. Of course this assumes I maintain my high income (which will fall a lot in a recession), that my wealth doesn't contract hugely in a market crash, etc. More than the goal by 37, I'm excited to potentially hit the $1m mark (fingers crossed) in a year or so.

The name of the game for me has been and will continue to be revenue growth, not cost compression. I've roughly estimated that I spend about $65,000 a year which includes nice vacations to europe and asia. I still don't have a car and live in a modest but nice apartment. This expenses picture will change one day when I'm married with kids, but for now I'm enjoying life while socking away as much as I can.

I'm fairly certain that one day I'll be in a much lower income job and that these high income years won't last forever. But I'm trying to make hay while the sun shines!


----------



## peterk

Janus said:


> *August Update*
> 
> *Equity*: $830,000 (+210,000 y/y)
> 
> I've mostly stopped posting here because I find that tracking my wealth obsessively doesn't help much - my spending habits are more or less on cruise control, and this isn't really the place to talk about increasing the revenue side of things. So really it's all on autopilot. But still, I want to document the journey maybe once a year.
> 
> As of today I'm saving about $200,000 a year, and if things stay constant it looks like I'm on target to reach my goal of $2,000,000 by 37 without any compounding of wealth to contribute to that. Of course this assumes I maintain my high income (which will fall a lot in a recession), that my wealth doesn't contract hugely in a market crash, etc. More than the goal by 37, I'm excited to potentially hit the $1m mark (fingers crossed) in a year or so.
> 
> The name of the game for me has been and will continue to be revenue growth, not cost compression. I've roughly estimated that I spend about $65,000 a year which includes nice vacations to europe and asia. I still don't have a car and live in a modest but nice apartment. This expenses picture will change *one day when I'm married with kids*, but for now I'm enjoying life while socking away as much as I can.
> 
> I'm fairly certain that one day I'll be in a much lower income job and that these high income years won't last forever. But I'm trying to make hay while the sun shines!


Awesome! but, you're 32, rich, and want to have a family? What are you waiting for?

Don't buy into the hype that says "men can wait until later to have kids and it's not a big deal". It's all a lie.


----------



## AltaRed

I agree. Spend the necessary time to develop social relationships and meet women. Time can pass by too quickly.


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## Janus

I have a girlfriend and put lots of time into my friends and relationships. I'm not an investment banker working 80 hours a week with a coke habit, nor am I an introverted financial independence miser socking away every dollar and avoiding going out to meet women (when I was single). 

All that said, I'm in no rush at all to have kids.


----------



## peterk

Janus said:


> I have a girlfriend and put lots of time into my friends and relationships. I'm not an investment banker working 80 hours a week with a coke habit, nor am I an introverted financial independence miser socking away every dollar and avoiding going out to meet women (when I was single).
> 
> All that said, I'm in no rush at all to have kids.


Sorry I didn't mean to imply that you struggled to find suitable women (maybe Altared did :excitement: ) , just the opposite - Don't be a player forever, if you want a family don't put it off. There's no good reason. Why do you say you're in no rush, just curious - or put another way - _what do you think will improve by waiting?_

Standard internet advice for millennial males is: Play the field, make money, go to the gym, don't worry about having a family till you're late 30s with a woman 10+ years younger. And that this is the "optimal" life for a man.

It's not. It leads (so I've gathered - same age as you BTW) to you being an old dad, a more stressful marriage, constant regret of your youth spent meaninglessly, and someday if you're lucky, being a decrepit grandad who can't help out his children to raise his grandchildren. 


Sorry to veer way off topic, possibly unwelcomely - But like you said, your money life is on cruise control, and you don't need this diary much anymore for that. :biggrin:


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## Janus

peterk said:


> Sorry I didn't mean to imply that you struggled to find suitable women (maybe Altared did :excitement: ) , just the opposite - Don't be a player forever, if you want a family don't put it off. There's no good reason. Why do you say you're in no rush, just curious - or put another way - _what do you think will improve by waiting?_
> 
> Standard internet advice for millennial males is: Play the field, make money, go to the gym, don't worry about having a family till you're late 30s with a woman 10+ years younger. And that this is the "optimal" life for a man.
> 
> It's not. It leads (so I've gathered - same age as you BTW) to you being an old dad, a more stressful marriage, constant regret of your youth spent meaninglessly, and someday if you're lucky, being a decrepit grandad who can't help out his children to raise his grandchildren.
> 
> Sorry to veer way off topic, possibly unwelcomely - But like you said, your money life is on cruise control, and you don't need this diary much anymore for that. :biggrin:


Sorry, didn't mean to come off prickly but i was surprised to get any comments on my social life at all given that I haven't disclosed much about it!

"What do I think will improve by waiting" is the key question indeed, and it's outside the scope of this forum but I do have an answer to it that makes me think waiting is the right choice for now. I know it's an important question to ask. 

I'd argue that there are ways to spend your youth or 30s that aren't "meaningless" in the absence of kids - it's not all gym sessions, protein shakes and night clubs . It's funny though, I've had a pretty good impression overall of older dads. You're not as spry when the kids are young, but you are older and wiser and perhaps have more to offer in some ways. Why would the marriage be more stressful? Not living to see your grandkids grow up and get married would indeed be a shame.

Fair enough on your last point - once your money is on cruise control, it really is more about these large life questions - who to settle down with, when to do that, where to do it, and what to spend your hard earned savings on that actually matters to you.


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## AltaRed

Nor was I implying anything derogatory, or mean spirited. What I was reading was someone seemingly obsessed with work and an arbitrary monetary goal......and no play. Reaching the money goal most likely won't be the rush that you think it will be while missing out on the best years of your 'play' life will more likely be a regret.

P.S. I never had arbitrary money goals in my '30s with the exception of paying off my mortgage by age 40 (which I did despite two upgrades in that time period). That said, I had kids throughout my '30s and we always had a good vacation once a year.


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## Janus

My job is demanding for sure, but i work 40-50 hours a week. No evenings and weekends. So it's a great quality of life, and it leaves tons of time for sports, seeing friends, and travel. I take off to interesting places several times a year without paying much attention to cost. I don't know, I just don't feel obsessed with my job nor that it takes a lot from my life. I'm grateful for what it's given me so far.

What gives you the impression that I have no "play" in my life? You'll have to take my word for it that I have a vibrant social life and several hobbies that I love. It's just not all that expensive at the end of the day, hence my reasonable spending. Maybe i'm painting a picture poorly but you've really got the wrong impression. 

My money goal is certainly arbitrary... what can I say, I like round numbers. After a million I'm going to start spending more for sure though... probably buy a nice place.


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## AltaRed

No offense intended.


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## Janus

AltaRed said:


> No offense intended.


Eh it's fine. I do ask myself sometimes whether I should be spending more... is there really something I could spend on to increase my quality of life and have more fun? I spend pretty freely on hobbies and dinners with my girlfriend... I think the only thing that comes to mind is upgrading my apartment. At my age it does annoy me that I can't host a group of say 6 people for dinner inside my apartment (it's 720sqft, but like most Toronto apartments it's not conducive to a large dining area), which I'd love to do as I enjoy cooking and hosting. So I think I'd actually get the bang for my buck out of spending more in this area. 

Unfortunately rents have gone bananas in Toronto, I'm almost better off waiting a year or two and then buying a whole house! It's strange, nice 2-bedroom condos in good areas of Toronto often cost $1 million, and yet semi-detached homes are maybe only $200,000 more than that for a much larger place. Condos have kept rising in price while houses have really come down. Perhaps renting a bigger place for 2 years while continuing to save for a house is the answer.


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## james4beach

I think his life sounds pretty good. The one warning I'll give is about expense creep. I think this can easily sneak up on someone over time and I've seen this with coworkers who earn very high incomes. I do understand rents in Toronto have gotten ridiculous, but I'm talking about the various discretionary items and extras (for me it's travel). For others, it's homes, or toys/electronics, cars, clothes, expensive nights out.

Janus mentioned a spending level of 65K as a single person. One should think not only of the immediate lifestyle but also the effect of developing habits and routines that you can't shake off = permanent spending patterns. And the fact expenses tend to keep creeping higher when left unchecked. As a single city dweller, my own started at 30K a few years ago but is creeping towards 40K and that's despite some serious budgeting effort.

The danger I see is that it only goes higher. Leaving inflation out of the picture (let's lock it in today's $) say you're at 65K now but it keeps creeping higher, gets to 80K. Then you get older and need some more conveniences in life for health and age reasons, as people naturally do. Having tons of money you would naturally spend a bit more $ on better flights, additional services. Now maybe it brings up your annual expenses to 100K, single.

100K of annual spending implies 2.9 M needed in today's dollars (using 3.5%, my preferred conservative model) before even considering taxes

I know none of this is groundbreaking info, but I'm suggesting thinking about the long-term effects of expense creep and high spending. The Bay Street and Silicon Valley world encourages this line of reasoning. Those are the worlds I know; maybe oil & gas is the same:


 I make tons of money now
 I'm reasonably young
 there's no reason I shouldn't have fun... I have excess $
 I can afford to pay for all conveniences and fun

Whereas I try to think like this:


 I make tons of money now
 I'm reasonably young
 *spending patterns become life-long habits*
 I might not *want* to always earn tons of money
 I'm going to have to live off my capital at some point

The expense level you develop a habit for will dictate how much total savings/capital you need to accumulate. You should also factor in that the number could go up due to age/health issues.

Quick example from my life. When I've told coworkers that I've spent a weekend cleaning my apartment, they say, why don't you have a housecleaner... hire staff, because "your time is more valuable". And for going out, they get on my case for only ordering a beer and appetizer when everyone else is indulging in expensive drinks and dinners. I frequently hear: "I know how much you make!"

I'm so sick of hearing that one in particular, "I know how much you make!". My coworkers say it among themselves, but it's simultaneously bragging. It's really saying "I make a ton of money!" -- something you cheer as you engage in conspicuous consumption.

But I deliberately make sure I still know how to clean my home. If I got used to paying others to do it, that would become a lifelong habit. _Do you think people who've had professional cleaners for years go back to cleaning toilets themselves?_ And do you think people who are used to indulging in fantastic wines and steak dinners every week can deprive themselves of it?


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## peterk

^ Reasonable warning... but Janus will have 2.9M by the time he's 40, maybe 45. So what's the problem?

Income growth and asset appreciation defeats expense creep, easily. 

I also don't buy that "spending patterns become life-long habits" argument. That attitude can also be defeated, and people can adapt. Many also just go through a phase of un-necessary spending, and then snap out of it later, not seeing the life-long bad habit ingraining you refer to. I personally know 3 guys who bought luxury German cars in their 20s, shortly after getting good jobs, and now in their 30s are back to driving regular American cars.


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## AltaRed

peterk said:


> ^ Reasonable warning... but Janus will have 2.9M by the time he's 40, maybe 45. So what's the problem?
> 
> Income growth and asset appreciation defeats expense creep, easily.
> 
> I also don't buy that "spending patterns become life-long habits" argument. That attitude can also be defeated, and people can adapt. Many also just go through a phase of un-necessary spending, and then snap out of it later, not seeing the life-long bad habit ingraining you refer to. I personally know 3 guys who bought luxury German cars in their 20s, shortly after getting good jobs, and now in their 30s are back to driving regular American cars.


Well, spending creep CAN become a problem but I don't see that in Janus' case. I was unaware that his spend was in the $65k range (if James has quoted that correctly) as I have not read this long thread. IF Janus' financial goals are obtainable with that level of spend, and it appears he is being quite prudent about it, he is doing something a lot of the right things. When I jumped into this thread above, I was not aware of the 'balance'. He is far ahead of most people his age in terms of wealth accumulation.


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## james4beach

peterk said:


> ^ Reasonable warning... but Janus will have 2.9M by the time he's 40, maybe 45. So what's the problem?


It could be we were interepreting the goals differently, but based on his talk of passive income, I thought Janus was aiming to save up enough capital that he can be totally self sufficient on it, without having to work another job.

His goal was to have $2M capital in 2024. If we assume he stops working, this can sustain ~ 70K annual spending in 2024 dollars, ignoring taxes.

It should be noted that his current spending of 65K in today's dollars = 72K in 2024 using 2% inflation. Toronto is a pretty hot area with higher than national inflation (housing etc), so his current lifestyle might even cost more like 79K by that point.

So at the point he aims to have $2M, his lifestyle is *already* more expensive than what his capital can sustain... even assuming no expense creep. His current, but inflation-adjusted 79K living expenses would require $2.3M capital in 2024, not $2M. I don't mean to be negative and he certainly is on a great path, but I think it's worth thinking about the potential for "never quite getting there" due to inflation & expense creep.


_Edit: he will obviously get to $2M. I'm talking about getting to the point where his capital can easily sustain his living expenses for life. I'm assuming 3.5% SWR and optimistically ignoring taxes. This might still be an overly optimistic model as SWR only is for 30 year retirement. A young person with very long horizon (60 years!!) probably needs an even more conservative assumption. Running a Monte Carlo sim for 60 years at his 79K expense level, looks like he'd need $2.7M to give 95% success for not running out of capital_


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## Janus

james4beach said:


> Whereas I try to think like this:
> 
> 
> I make tons of money now
> I'm reasonably young
> *spending patterns become life-long habits*
> I might not *want* to always earn tons of money
> I'm going to have to live off my capital at some point
> 
> The expense level you develop a habit for will dictate how much total savings/capital you need to accumulate. You should also factor in that the number could go up due to age/health issues.


"I might not *want* to always earn tons of money" is certainly a concern here. Despite my good hours, finance is stressful and I wonder in 10 years if I'll still want to do this job - perhaps it's a 50/50 tossup. In which case I do need to save a lot now, and my spending rate may indeed need to come down in the future. I could easily end up in some other job making 80-100k a year, or on the opposite end might want to start my own hedge fund or something someday. It's tough to know, but would be nice to know that the former is an option.


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## james4beach

I agree with you there and it's great to have options. Our situations are different but at my own level of capital & spending, I now only need about 40K employment income to live the lifestyle I want. This gives me a lot of comfort; I don't need a high income any more. I can work for a bit, not work for a bit, take risks with new ventures which may earn me nothing... whatever.

It will be the same with you as 2M is a healthy amount, almost enough to sustain your lifestyle on its own. You could take chances and try starting your own hedge fund. I know a guy who has, and it can mean a very lean lifestyle as there is virtually no income unless it catches on. But how wonderful to be in a position where you don't need a full time salary job


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## Janus

*October Update*

*Equity*: $851,000 (+$209k since last year, +$20k since last update in August)

Some investment gains helped out the net worth calculation recently, which helped offset some higher than normal spending. Nothing too crazy, just more dinners out than normal and refurbishing the wardrobe for fall. 

I'm starting to plan some vacations for this winter to escape the horrifying cold - maybe south america or somewhere in the carribean, as well as a big ski trip somewhere. Surviving winter here takes some planning!


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## james4beach

Congrats Janus and that's a huge single year increase. Would you say that +209K is largely attributable to high income, or investment performance?

Trailing 1 year asset returns have been pretty amazing after all. Even my very conservative asset allocation is up 13% from a year ago. It's one reason I recently quit my job & now doing a sabbatical.

I've probably said this before, and this is just one opinion of a conservative guy, but (a) you have so much money and (b) have the ability to earn such high income that there appears to be little danger in you not amassing an significant fortune. I'm not sure how much investment risk you're taking... I think you talked about 70% equities... but in my non-professional opinion, you probably don't have to take much risk.

I would be concerned of a different kind of risk for someone like you. Depending on your experience with past bear markets, you may be in danger of suffering a sharp drawdown if you are heavily exposed to equities, and having a behavioural response that leads to sub-optimal future performance. Imagine for example with 851K at 70% equities you could potentially get a drawdown of 300K in a bear market -- this would be pretty normal. But very painful.

I know people who, in a situation like that, sold near the bottom or got scared away from investing or permanently de-risked, meaning they missed out on more returns later on. So in other words the investment risk you face is more than just % drawdown on paper. There is risk of behavioural reaction to bear markets that leads to CAGR harm.

Perhaps even with a rather conservative 50/50 allocation, you could both reach your goals and also insulate yourself from that drawdown (and behavioural / psychological) risk?


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## james4beach

An idea... and I've done this exercise myself. You could make a spreadsheet that links asset allocation with maximum drawdown in dollar terms. Use some worst case assumptions like 60% drawdown in stocks. You can also use the portfolio visualizer and grab the historical max drawdown number from there.

Then you could play with the numbers based on how much of your Net Worth you think you could tolerate saying bye-bye to. In my case, I have certain expectations and demands such as: under no circumstances do I want to see my investments shrink below 500K. I feel strongly about this, but that's just me.


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## Janus

Hey James, 

The gain is mainly due to high income more so than investment gains, so unless the market tanks I can assume a roughly similar net worth gains next year - if I didn't leave my job I think it would be safe to say I can save 200k a year, until my lifestyle changes (kids, buying a house, etc) or until I'm not in this kind of job any more (which I don't take for granted). So probably at least a couple of years more of saving like this.

As for drawdowns, I'm an equity investor for my job so I hope I have the guts to stick through a big market drawdown - it's my job! I'm not going to lock in a loss due to a general market collapse. So yes, a 50% drawdown could happen, but if you hold in and don't own crap companies you should be in a better position a year later. There are shockingly few periods in the last hundred years in which a 10-year holding period in the S&P 500 was negative. In any case, I do think I'm quite heavily exposed to equities (both in my job and in my portfolio) and so I'm taking a lot of risk right now. Luckily I'd say the equity portfolios I'm invested in are more conservative than the market as a whole, but really that's not much protection at the end of the day.

I could get totally smashed by a crisis right now, I guess i'm just willing to take that risk for now.


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## scorpion_ca

Would you care to share your yearly gross income since you are saving around $200k yearly? Just curious....


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## Janus

*November Update*

*Equity*: $856,000 (+4,500 m/m, +209,000 y/y)

A pretty normal month in terms of spending. Due to good fortune an old investment in a startup may turn out to be worth something, but I don't want to count my eggs before they hatch. I've been holding it at cost on my balance sheet at basically nothing, and it seems to be worth a lot more, but private businesses are fickle things and who knows if I can ever actually sell my shares at a profit. But if I can, there may be a windfall gain to be had which would be pretty significant, maybe a whole year's worth of savings. I may get a chance to sell some shares over the next year, so we'll see how valuable they really are!

I've recently had some reminders of how fickle my industry can be - people can be doing well one year and poorly the next, and before you know it you're out the door. It can take a long time to find a similarly good situation in my field. It's a reminder of why I don't assume I'll have this kind of income forever... I very well may, but it can be taken away from me in an instant. So I'm happy to live a fun life that's still well below my means for now.


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## james4beach

Congrats Janus, you're making great progress.


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## Janus

*December Update*

*Equity*: $863,000 (+7,000 m/m, +221,000 y/y)

The equity markets were really strong headed into the end of the year, and it was amazing to watch my portfolio go up every time i logged in! Of course I can't expect that to continue forever. I did some minor rebalancing towards bonds, but really my exposure is still very much weighted towards equities.

If nothing goes hugely awry 2020 should be the year I hit a million. Frankly I can't wait. There's not a whole lot I want to change about the game plan this year - just going to keep working hard, enjoying life and seeing where life takes me.

Maybe the most relevant update is that my landlord of 5 years has talked to me about the fact that my apartment/condo is now $500/month below market rent, and wants me to meet them in the middle by agreeing to a raise of my rental payments well above 2%. I live in Ontario. Has anyone else run into this? I'm assuming they're implying a veiled threat of moving in a parent (they don't have kids) to kick me out legally. Anybody who's got some good advice it would be much appreciated!


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## Janus

*January Update*

*Equity*: $879,000 (+16,000 m/m, +229,000 y/y)

Some investment gains occurred this month, while I had some outlays for vacations that I'm planning this year... one in the mediterranean, and one in Asia. Luckily I'm using a lot of built-up points for some of the flights and hotels, which really helps keep costs down.

I still haven't had the conversation with my landlord, but I'm definitely expecting their "parents" to be moving in any day now...


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## Janus

*February Update*

*Equity*: $863,000 (-$16,000 m/m, +$198,000 y/y)

A bit of a kick in the teeth from the markets due to the coronavirus correction. This loss in NW was despite receiving some employer matching for my RRSP contributions, so it's a bigger decline than it looks. Also some of my investments are in private businesses, so the loss of net worth is much greater than this in reality, there's just no price adjustment made yet.

This is the first market volatility I've seen in a while that comes from something that could actually cause a recession. It's quite interesting. I'll probably be buying the dip a little bit but not backing up the truck - I have enough equity exposure as it is...


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## Janus

*March Update

Equity*: $779,000 (-$83,000 m/m, +$105,000 y/y)

So my estimates of my net worth are starting to be somewhat fuzzy due to ownership in un-listed companies. I've done a haircut to their values for now which will likely continue lower, and I'm probably worth less than this. It's not going to be a fun year for the finances!

Luckily my RRSP has been somewhat resilient due to owning some bonds, and due to owning extremely little (almost zero) Canadian equities. I've always been averse to owning commodity companies, and I consider the Canadian economy to be a bit of a joke... financials, oil & gas, flipping houses to each other. So my RRSP has been helped out due to owning better markets, and owning currencies that have appreciated versus the Canadian dollar. At some point it will be time to own CAD and Canadian assets, but I'm going to wait to see how this recession plays out in our extremely leveraged economy. 

I expect the first to go will be the Airbnb hosts in Toronto condos, I'm watching that closely. The only way to make positive cash flow on a new condo in toronto seems to be Airbnb, and now that's out the window, i expect to see some forced sales. Look out below... maybe in a year there will be opportunities to get a house at a reasonable price, or at least a 2 bedroom condo somewhere nice.


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## milhouse

Janus said:


> I expect the first to go will be the Airbnb hosts in Toronto condos, I'm watching that closely. The only way to make positive cash flow on a new condo in toronto seems to be Airbnb, and now that's out the window, i expect to see some forced sales. Look out below... maybe in a year there will be opportunities to get a house at a reasonable price, or at least a 2 bedroom condo somewhere nice.


That's an interesting situation I'm curious to see play out, not just in Toronto but Vancouver. I wonder how that will impact local housing supply overall like if it also forces some hosts to consider taking long term local rentals to locals.


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## james4beach

milhouse said:


> That's an interesting situation I'm curious to see play out, not just in Toronto but Vancouver. I wonder how that will impact local housing supply overall like if it also forces some hosts to consider taking long term local rentals to locals.


Rent to local residents? What a bizarre concept! (I hope AirBnB people are ruined by the way)


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## Janus

> Rent to local residents? What a bizarre concept! (I hope AirBnB people are ruined by the way)


Don't worry, many of them will be. I think this is going to be a true reset. Houses will likely hang in there better, but I expect condos to get demolished.


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## Janus

So I know market timing is a bad idea, and I should be a buyer rather than a seller of stocks as they fall, but in the last week I've been selling some stocks. This is for a few reasons:

Given my private investments, I'm almost all in equities and high risk ones at that. And i've realized in this downturn that I'd like a bit more ballast from now on. And somehow, probably thanks to central banks, the market is allowing me to rebalance at the same level it was a year ago. (note I don't really have investments in canada so no comment on the TSX). 

We are now about flat with 1 year ago in the S&P 500. And that seems really quite insane. Think back to early 2019... was unemployment headed to 20%? At the end of the day I'm still heavily into equities now, but I see the risk/reward at this price level to be strangely bad. The first wave of job losses is happening, and people don't seem to be paying attention to the second-order effects that should cause (consumption; ability to pay debt; etc). 

Once again I'm so happy to not own the Canadian economy in my portfolio. Oil and gas; banks that lent to O&G, real estate (mortgages & construction)... Maybe I should be buying Canada on weakness but I think we have a debt reckoning still to come.


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## Janus

*April Update

Equity*: $795,000 (+$15,000 m/m, +$108,000 y/y)

It's been amazing watching this market rally. In spite of economic armageddon in the real economy, the market has recovered to being flat y/y in the S&P 500 when dividends are taken into account. The amount of stimulus being thrown around is really something to behold. I've taken the opportunity to take some risk off the table and sell stock at the margin over the last week or 2, as I'm more worried about the downside right now. I'm still heavily into equities when the big picture is taken into account, though.

I can't believe these bailouts. The worst kind of economic behaviour and risk-taking is being bailed out again for the second time in a decade. It shows you how the world really works...

Edit: for the record I'm selling more stocks tomorrow...


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## peterk

Janus said:


> I can't believe these bailouts. The worst kind of economic behaviour and risk-taking is being bailed out again for the second time in a decade. It shows you how the world really works...
> 
> Edit: for the record I'm selling more stocks tomorrow...


Yup - It sure is how it works. Course most people think it's the government being brave and smart by defying what silly "conservatives" would do, such as not lock down the whole world for a minor health crisis or letting rickety businesses fail.

Did you see the articles about how the small businesses support loans program is being administered by the big banks, who get to determine loan qualification for small business for government funds? I'm sure that will go well...

I would really like to know what percentage of this $100B stimulus is going 1) directly to citizens, 2) to small businesses, 3) to buying government and corporate bonds. All we hear about is 1 and 2 in the news But I think most of the money is going to 3.

Regarding markets - I took 15K off the table, and have bought a few puts in SPY and XIU, but other than that I'm staying invested. This is a battle between fundamentals of profits and jobs, vs. QE and driving expected future inflation. There is no way that this will be anything but a blood bath for Q2 and Q3 earnings that _should_ collapse stocks. The only thing that could hold it up is expected future inflation being high. But I don't see how future wage growth will occur with no profits, and people are already maxed out on spending all their money on essentials at current wages, so I don't see where the inflation is going to come from...


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## Janus

peterk said:


> This is a battle between fundamentals of profits and jobs, vs. QE and driving expected future inflation. There is no way that this will be anything but a blood bath for Q2 and Q3 earnings that _should_ collapse stocks. The only thing that could hold it up is expected future inflation being high. But I don't see how future wage growth will occur with no profits, and people are already maxed out on spending all their money on essentials at current wages, so I don't see where the inflation is going to come from...


Yeah that's a nice way of putting it I think. The biggest stimulus ever (this makes 2008 look tame and it happened much more quickly) versus unprecedentedly rapid economic collapse. The thing is, I take the unemployment numbers really seriously... you can send out checks to people, but if millions of people are no longer producing in the economy I just don't see that stimulus having the kind of multiplier effect you're normally see where people get the money and then spend it. And the problem is, you can't get a lot of those jobs back as quickly as they were lost.

The one thing we have left is some kind of quick return to normalcy. But if it's extended, then the effect of all the debt in the system will be fully felt and it won't be pretty. A good example is the current real estate game where mortgages and rents are being deferred in the residential and commercial spaces... you can maybe do this for a couple of months, but eventually somebody takes the loss.


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## james4beach

Janus said:


> It's been amazing watching this market rally. In spite of economic armageddon in the real economy, the market has recovered to being flat y/y in the S&P 500 when dividends are taken into account. The amount of stimulus being thrown around is really something to behold.
> . . .
> I can't believe these bailouts. The worst kind of economic behaviour and risk-taking is being bailed out again for the second time in a decade. It shows you how the world really works...


How about when the central banks started buying junk bonds? And the Federal Reserve is now in the business of buying ETFs. These are horrible precedents. What's next, the Federal Reserve buys SPY? QQQ? I'm sure they will do it.

Perhaps the stock rally is driven by insider knowledge (on Wall Street) that the Federal Reserve will support the stock index.

I find the stimulus amounts disturbing, especially the trillions pumped by the central banks into asset markets. The government amounts are also distressing, because it's more corporate welfare without really benefiting people.

I think we're getting set up for a very strange Depression. Huge amounts of unemployment, while at the same time, corporations continue being OK. By laying off everyone and cutting expenses, using more automation, while getting cheap loans and free money from government, they might even remain (nearly) profitable. On top of that, central bank stimulus will prop up the stock prices and let companies issue equity, with the central banks buying.

We might end up in a scenario where everyone is unemployed, while equities continue to do well. Top executives of public corporations will keep paying themselves. The wealth gap will reach new, unprecedented levels. On one side, you'll have the wealthy asset hoarders, executives of public companies, and top management.

And then there is everyone else, who won't have jobs, _who aren't even needed by companies_, and aren't asset hoarders. They don't get to benefit from the stimulus, which is all directed at propping up the assets that rich people own.

That's a set up for the public coming back -- angrily -- to take wealth back from asset hoarders. And it would be justified.


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## Janus

james4beach said:


> How about when the central banks started buying junk bonds? And the Federal Reserve is now in the business of buying ETFs. These are horrible precedents. What's next, the Federal Reserve buys SPY? QQQ? I'm sure they will do it.
> 
> Perhaps the stock rally is driven by insider knowledge (on Wall Street) that the Federal Reserve will support the stock index.
> 
> I find the stimulus amounts disturbing, especially the trillions pumped by the central banks into asset markets. The government amounts are also distressing, because it's more corporate welfare without really benefiting people.
> 
> I think we're getting set up for a very strange Depression. Huge amounts of unemployment, while at the same time, corporations continue being OK. By laying off everyone and cutting expenses, using more automation, while getting cheap loans and free money from government, they might even remain (nearly) profitable. On top of that, central bank stimulus will prop up the stock prices and let companies issue equity, with the central banks buying.
> 
> We might end up in a scenario where everyone is unemployed, while equities continue to do well. Top executives of public corporations will keep paying themselves. The wealth gap will reach new, unprecedented levels. On one side, you'll have the wealthy asset hoarders, executives of public companies, and top management.
> 
> And then there is everyone else, who won't have jobs, _who aren't even needed by companies_, and aren't asset hoarders. They don't get to benefit from the stimulus, which is all directed at propping up the assets that rich people own.
> 
> That's a set up for the public coming back -- angrily -- to take wealth back from asset hoarders. And it would be justified.


I think you're pretty spot on about this. All of it. In the absence of a "we're holding out until the vaccine is here" scenario, it feels like the start of universal basic income. Either way it's unprecedented money printing and higher taxes that are inevitable. I think the CAD is going to get destroyed. So what do you want in this scenario? Land, gold, and equities that can grow even in this scenario I suppose...

I really wonder what happens in 6 months (I guess 5 now) when all the delayed mortgage payments come due...

Every week I sell more stocks. In my RRSP and TFSA which are about $250k, I'm now half in cash and bonds versus 80/20 prior to all this. I'm fine to be proven wrong and see the market rise further a I'm still heavily net long, but I wanted to offset some of the risk that I can't really take off the table in my non-registered investments.

For now, I'm just saving a lump of money every month. Not a whole lot to do!


----------



## james4beach

I appreciate the thoughts about my post Janus. There's just so much uncertainty. I don't see any obvious / correct path, so I am sticking with my [mostly] passive asset allocation which is 50% fixed income, 30% stocks, 20% gold. It reacted well during the sharp crash.


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## scorpion_ca

james4beach said:


> so I am sticking with my [mostly] passive asset allocation which is 50% fixed income, 30% stocks, 20% gold. It reacted well during the sharp crash.


What ETF or stock did you buy for your gold allocation? I was checking MNT and XGD but later remember Buffett's quotes about the gold...still debating myself about the gold as a separate assets allocation.









Exactly A Year Ago, Warren Buffett Made A Spot-On Call About Gold That Would Have Made You A Lot Of Money







www.businessinsider.com


----------



## james4beach

scorpion_ca said:


> What ETF or stock did you buy for your gold allocation? I was checking MNT and XGD but later remember Buffett's quotes about the gold...still debating myself about the gold as a separate assets allocation.


I hold MNT and CGL.C (bullion funds in Canada) as well as IAU (in the US).

XGD are gold miners, which is a very different thing, though certainly related.

Buffett does not like gold.


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## Janus

james4beach said:


> I hold MNT and CGL.C (bullion funds in Canada) as well as IAU (in the US).
> 
> XGD are gold miners, which is a very different thing, though certainly related.
> 
> Buffett does not like gold.


Do these ETFs hold real physical? So as AUM increases, they are buying more physical gold?

And how do you choose between these options you've outlined? (whether to buy in the US or Canada, etc.)


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## james4beach

Janus said:


> Do these ETFs hold real physical? So as AUM increases, they are buying more physical gold?


They all hold real physical, but in different ways. CGL.C and IAU : when there are new purchases and new money flows in (share creation), more physical bars are held in the fund. This is done through a custodian intermediary who is a large bullion dealer (an example being Scotia for CGL.C). It's not like they have to go get a truck and stack physical bars, because they are all in the dealer's vaults, so ownership is mostly paper record-keeping. We have to trust that they do the paper record-keeping properly and we have to trust they don't over-allocate the gold.

MNT is a bit different in that the Royal Canadian Mint has allocated some number of bars for their fund, within their vaults, and said that each share represents a ratio of it. Therefore, each unit is a claim on a certain # ounces of gold in the Mint's vaults. There is no intermediate custodian. For example, today, one MNT share is a claim on 0.0105822 ounces of gold as shown on their public web site. This ratio is reduced daily by the expense ratio of the fund.

There is a gold redemption mechanism for people to cash out gold, which normally keeps the MNT share price in check, but lately ... for whatever reason (possibly the Mint's own shutdown) this isn't working and now the share price is above NAV. This isn't great, because MNT has started acting like a closed end fund and has a big premium. As new money floods into MNT, the Mint_ is not allocating more physical gold_, so people are over-paying for the existing gold stash. I don't know why this is happening, and I think people are making a mistake buying it at a premium.

These mechanisms are a bit weird, and different than traditional ETFs, so I don't fully trust them. That's why I diversified into 3 different funds.



> And how do you choose between these options you've outlined? (whether to buy in the US or Canada, etc.)


Really I just don't trust any single bullion fund enough to use it on its own. I mostly trade CAD, so I use CGL.C and MNT for those.

In the US, the main choices are GLD and IAU and IAU has the lower MER, so that's why I use it. The only reason I hold IAU is to diversify beyond the Canadian ones.

Once life is back to normal, I also plan on converting some gold ETFs into physical gold by selling units and buying the corresponding amount of gold coins & bars. For example if I sold MNT today, I would be selling at a premium and could roll that cash into physical coins & bars.


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## Janus

This is great, thanks for the explanation! I might throw $15k or so into gold for now. "closed end fund" was certainly what came to mind when you were describing MNT... I might go with IAU.

I can totally see the appeal of holding some physical (we wants the precious!) but the stress of it being stolen would probably get to me, haha.


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## james4beach

Glad I could help. I added more MNT thoughts to a separate thread:
MNT: Royal Can. Mint Gold ETR


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## Janus

*May Update

Equity*: $805,000 (+10,000 m/m, +122,000 y/y)

This market rally is incredible. I've been trimming stocks on the way up because it feels so unsustainable, but I'm sure the market can defy expectations for much longer - in other words I know I'm probably wrong to trim, but oh well.

The Toronto real estate market is showing more cracks. Rents have started falling quite sharply for larger units, and Airbnbs appear to be flooding the rental market now. With mortgage deferrals coming due in a few months it'll be interesting to see how much of the banks' mortgage books are in default. I suspect it will be significant. Basically this is the perfect storm for Toronto RE:


Demand: DOWN (unemployment up, incomes lower, less inbound immigration, fewer inbound foreign students)
Supply: UP (new condos being completed and coming online, Airbnbs being sold or put on as rentals)
Plus with rents going down, that makes condos EVEN MORE cash-flow negative than before.

I think the bank of Canada or the government will step in to bail out homeowners, so I expect the real damage here will be to the Canadian dollar. I don't normally have a view on currencies but it looks bad for Canada.


----------



## james4beach

Janus said:


> Plus with rents going down, that makes condos EVEN MORE cash-flow negative than before.
> 
> I think the bank of Canada or the government will step in to bail out homeowners, so I expect the real damage here will be to the Canadian dollar. I don't normally have a view on currencies but it looks bad for Canada.


Real estate is a huge part of the Canadian economy, especially if you look at the broader effects into the financial and insurance sectors. We are a country that is mainly involved in flipping properties, renovating kitchens and bathrooms, taking out loans, and then riding the wealth effect of the increased asset prices. And it's all fuelled by credit.

I also find this RE obsession in Canada, with all the renos and pretentiousness, to be very American and tacky. Like we're stuck in 2006 (before the American RE collapse). Personally I would like to see a total wipe-out and deleveraging in real estate, especially among the highly leveraged property investors and temporary owners.

What these "property investors" have done to the RE markets in cities is horrendous, including destroying Toronto's skyline and previously beautiful neighbourhoods, making housing unaffordable everywhere in Canada.


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## Money172375

I think there will be few principal residences lost, but the chances of defaults on rentals Is much greater. I think landlords who have made some capital gains will be quick to exit the market and the snowball will begin. immigrants drove real estate in the large cities.......and I too think immigration will slow down while covid is around.


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## Janus

james4beach said:


> Real estate is a huge part of the Canadian economy, especially if you look at the broader effects into the financial and insurance sectors. We are a country that is mainly involved in flipping properties, renovating kitchens and bathrooms, taking out loans, and then riding the wealth effect of the increased asset prices. And it's all fuelled by credit.
> 
> I also find this RE obsession in Canada, with all the renos and pretentiousness, to be very American and tacky. Like we're stuck in 2006 (before the American RE collapse). Personally I would like to see a total wipe-out and deleveraging in real estate, especially among the highly leveraged property investors and temporary owners.
> 
> What these "property investors" have done to the RE markets in cities is horrendous, including destroying Toronto's skyline and previously beautiful neighbourhoods, making housing unaffordable everywhere in Canada.


I agree with all this, which is why they can't let it fail and will let the CAD go to hell while defending it - print and spend, forgive loans, etc. I still think we'll get a nice dip but anything more than that will be economic armageddon for Canada. Realtor fees alone are 2% of GDP. https://www.cbc.ca/news/business/real-estate-fees-home-sales-1.4226630



Money172375 said:


> I think there will be few principal residences lost, but the chances of defaults on rentals Is much greater. I think landlords who have made some capital gains will be quick to exit the market and the snowball will begin. immigrants drove real estate in the large cities.......and I too think immigration will slow down while covid is around.


Exactly. If I'd made a bunch of money in condos I'd sell right now before there's a rush to the exits.


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## james4beach

Janus said:


> Realtor fees alone are 2% of GDP. https://www.cbc.ca/news/business/real-estate-fees-home-sales-1.4226630


This is unbelievable, I had no idea!


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## Janus

james4beach said:


> This is unbelievable, I had no idea!


Yeah... our economy is sort of a joke, hence why I don't invest in our equity market.


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## Money172375

james4beach said:


> This is unbelievable, I had no idea!


The industry is ripe for change. Real estate commissions made “some” sense when homes were 150,000 or 200,000. 4 and 5% commissions on $million+ homes is ridiculous. Think of all the homes sold in days (or hours) after being listed. 

the amount of fees I‘ve paid over the years could send a bunch of kids to university,


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## mattw

That is absurd realtor fees is 2% of GDP. Guess we are moving more and more towards being a service economy.
I've always avoided real estate due to not understanding the ridiculous pricing not that the stock market has been much better but least can diversify. Depending where you live in Canada house prices have only depreciated over the last 10 years.


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## Janus

mattw said:


> That is absurd realtor fees is 2% of GDP. Guess we are moving more and more towards being a service economy.
> I've always avoided real estate due to not understanding the ridiculous pricing not that the stock market has been much better but least can diversify. Depending where you live in Canada house prices have only depreciated over the last 10 years.


To me, a good service economy is businesses like Google, Netflix, and Nintendo generating revenue from the innovative creative things they do. Not just layering fees on people who flip assets.

Yeah I don't understand pricing in housing. Stocks make more sense, but in some cases it's hard to understand - many companies today are priced on revenues not profits (because they don't have any), but unlike the tech bubble I think this technique is here to stay for certain types of companies. At the end of the day when interest rates are zero, it's hard to properly price things.


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## mattw

Janus said:


> To me, a good service economy is businesses like Google, Netflix, and Nintendo generating revenue from the innovative creative things they do. Not just layering fees on people who flip assets.
> 
> Yeah I don't understand pricing in housing. Stocks make more sense, but in some cases it's hard to understand - many companies today are priced on revenues not profits (because they don't have any), but unlike the tech bubble I think this technique is here to stay for certain types of companies. At the end of the day when interest rates are zero, it's hard to properly price things.


Definitely, providing an actual value to the end consumer. 
Wonder what the end result would be charging 5% to consumers to buy and sell stocks.
With all the fees to buy and sell homes you need a decent return just break-even. Apart from Vancouver/Toronto you are basically hoping the land value appreciates greater over the depreciation of the home.


----------



## Janus

*September Update

Net Worth*: $1,020,000 (+$190,000 y/y)

I finally crossed the 7 figure mark for the first time in my life. A combination of great work commissions and not-so-hot investment performance led to me squeaking past the goal post.

Looking back at some rough numbers, I really got here the "hard way". And by that I mean that very little of my wealth growth over the last 8 years or so has been from market gains, because I thought I was smarter than it and was usually too conservatively invested. Most of this amount was after-tax savings socked away. There's no excuse to continue this going forward with this amount of capital. So I'm reflecting on asset allocation going forward, which is a fun exercise!

While the first 1 million was a bit of a race, I don't care exactly when I get to 2 as long as I'm doing a job I love and my assets are deployed responsibly. The main feeling I have right now is a sense of relief at having made it here. I wish I could change the thread title! If things continue at work, I can keep saving roughly 200k a year before investment gains, so I can probably reach $2m at 37... but frankly I don't mind if I don't. It's a totally arbitrary goal that was set quite a few years ago!

One thing I'm hoping to get into more to diversify is commercial real estate (i.e. small 4-5 unit apartment buildings). Feels silly not to take advantage of almost-free debt... However that's not a world I've been exposed to much, so there will be a lengthy learning process ahead I'm sure.

An example of the allocation I'm thinking about going forward is:

80% securities (80/20 stocks/bonds, with half of the stock portion in SPY and half invested overseas. Bond ETFs for the bond portion. Essentially no Canadian equities.)
20% real estate ($200,000 as a 20% downpayment on a $1,000,000 building, let's say.)


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## scorpion_ca

What would you do differently if you were to start again?


----------



## Janus

scorpion_ca said:


> What would you do differently if you were to start again?


In terms of my career and how I work or spend my money, absolutely nothing.  I'd just have more money in SPY the entire time instead of trying to do stupid market timing!


----------



## scorpion_ca

Janus said:


> In terms of my career and how I work or spend my money, absolutely nothing.  I'd just have more money in SPY the entire time instead of trying to do stupid market timing!


Thanks. What would be your suggestions if anyone wants to pursue the similar career (Investment banking?) like you?


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## Eder

The second million is easier ...great work. Btw people are not paying rent these days and have more rights than landlords, careful on apartments.


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## Janus

scorpion_ca said:


> Thanks. What would be your suggestions if anyone wants to pursue the similar career (Investment banking?) like you?


Hmmm. Well I don't work in investment banking but I know a lot of investment bankers. For investment banking, the only route is going right out of university with amazing grades from the right school (Queens/Ivey/ a few others), or doing an MBA and being top of your class. Much easier to do it from undergrad. For the rest of the investments industry, it tends to follow a similar pattern but there's more room to network your way into a good role at a hedge fund just with networking, coffees, and gumption.

So if you're young, get good grades and go to Queens/Ivey.
If you're in your 20s/30s, get a damn good MBA and hope for the best.

If you're older than that, there's no options for you. But there are many other interesting options like becoming a financial advisor... I swear, if you're good with people you don't need to know much about finance or be an A student at all. And these guys have better lifestyles than any of the people that went the "high pedigree" route as the bankers do. Running your own book of business is a beautiful thing, and I know many people in my industry that make millions but have much less independence and control over their lives than joe shmoe financial advisor. 

Finally the advice I have for people that've made it into the industry is don't spend all your money, because I've seen so many people fired for reasons that weren't their fault or under their control. Turnover happens in this industry and you can't assume the big paycheck job will be yours forever. It's a relief to know I've saved a million, because the axe may come for me one day too.



Eder said:


> The second million is easier ...great work. Btw people are not paying rent these days and have more rights than landlords, careful on apartments.


I certainly hope so! I mean at 7% returns per year it'll double in 10 years, without adding to the pile. Good point about real estate, I can't imagine the occasional headaches that must occur. But the tax flexibility of commercial real estate and the ability to use debt seems quite powerful.


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## Janus

I just played some games with an online tax calculator that are pretty cool. In ontario, if you have no job income and you're making $40,000 to $50,000 from dividends, capital gains, or some combination of the two, then it looks like you basically pay no tax. I see an average tax rate of 1% or so in the calculator. So if you can get a 4-5% yield, you can basically enjoy all of that money without having to think much about taxes. Given that my lifestyle costs about $50,000 a year, it's comforting to know that my basic needs are taken care of. I'm not going to stop there of course, but it's very good to know. I had assumed you still had to forfeit quite a bit of dividend income to the government in that scenario.

The real goal here is to maintain strong employment and compound the pile. But as a backup scenario in the case of something happening to my career it's comforting to know.


----------



## scorpion_ca

Janus said:


> Hmmm. Well I don't work in investment banking but I know a lot of investment bankers.
> 
> If you're older than that, there's no options for you. Running your own book of business is a beautiful thing, and I know many people in my industry that make millions but have much less independence and control over their lives than joe shmoe financial advisor.


Would you mind to share what industry you work for and what is your role? I am thinking to switch my career. My job is related to O&G industry that is not going to get better any time soon. You make a lot of money... and I am interested if I can switch to that industry. I am close to 37 years old. My life would be set if I can work 5 to 10 years....


----------



## milhouse

Janus said:


> I just played some games with an online tax calculator that are pretty cool. In ontario, if you have no job income and you're making $40,000 to $50,000 from dividends, capital gains, or some combination of the two, then it looks like you basically pay no tax. I see an average tax rate of 1% or so in the calculator. So if you can get a 4-5% yield, you can basically enjoy all of that money without having to think much about taxes.


I'm surprised this isn't more broadly known. I mentioned this to my BIL and two of my friends, each of whom are pretty financially savvy, over the last couple of years and none of them had heard of this scenario. It's kind of a sweet spot if one can get into that position of about $1.25M or so of 4%'ish dividend payers without other income sources. There is the dividend gross up that brings up your taxable income total but at ~$50k of dividends ~ $69k grossed up, it's still below OAS clawback levels. Combined with a spouse/partner, a couple could earn about $100k in dividends with no tax. Then top that off with some taxfree TFSA withdrawals.


----------



## Janus

milhouse said:


> I'm surprised this isn't more broadly known. I mentioned this to my BIL and two of my friends, each of whom are pretty financially savvy, over the last couple of years and none of them had heard of this scenario. It's kind of a sweet spot if one can get into that position of about $1.25M or so of 4%'ish dividend payers without other income sources. There is the dividend gross up that brings up your taxable income total but at ~$50k of dividends ~ $69k grossed up, it's still below OAS clawback levels. Combined with a spouse/partner, a couple could earn about $100k in dividends with no tax. Then top that off with some taxfree TFSA withdrawals.


Honestly it's kind of mind blowing. For sure you'd want more than just a million and 4% is a much better withdrawal rate than 5%... but this is the ballpark of net worth where relatively frugal living becomes sustainable forever. As a single person, $50k a year of spending isn't even that frugal. Of course with kids it's a whole other story. But hey, you just keep working and socking away and letting it compound. And once you're at $2m, even your unemployment scenario is sustainable with a family. As long as you're not sending the kids to private school. 



scorpion_ca said:


> Would you mind to share what industry you work for and what is your role?


I'll PM you


----------



## afulldeck

milhouse said:


> I'm surprised this isn't more broadly known. I mentioned this to my BIL and two of my friends, each of whom are pretty financially savvy, over the last couple of years and none of them had heard of this scenario. It's kind of a sweet spot if one can get into that position of about $1.25M or so of 4%'ish dividend payers without other income sources. There is the dividend gross up that brings up your taxable income total but at ~$50k of dividends ~ $69k grossed up, it's still below OAS clawback levels. Combined with a spouse/partner, a couple could earn about $100k in dividends with no tax. Then top that off with some taxfree TFSA withdrawals.


I was under the impression that its not just dividends, but Canadian dividends to make that work. Did I miss understand?


----------



## peterk

afulldeck said:


> I was under the impression that its not just dividends, but Canadian dividends to make that work. Did I miss understand?


That is the catch - Non diversified.

Plus - If the average succussful youngish person is to find himself at age 35 with 1M net worth and wanting to retire early on low income - it is highly unlikely that all his assets are in unregistered canadian stocks. Probably 200k is stuck in an RRSP, 100k in a TFSA with witholding tax on foreign dividends, 200k in home equity, 100k in a DB or DC pension, and 400k in unregistered, 100k of which is emergency fund cash, earning interest. Where exactly this 40k/yr tax free withdrawal would come from, I'm not sure.


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## milhouse

afulldeck said:


> I was under the impression that its not just dividends, but Canadian dividends to make that work. Did I miss understand?


Sorry, yes. It has to be dividends from a Canadian company, not foreign like a US dividends with also has to contend with US withholding taxes. And the dividends have to be from a eligible public company, not a private controlled company which are taxed differently. 

I agree with peterk that this isn't going to be a common situation and part of the portfolio is likely not going to be very diversitfied. But, I'm going to hopefully to take advantage of it to some degree at age 50. 
My BIL built up his non-registered account via company stock options and company stock purchase plan. One of my friends built his non-registered account via his own consulting business so he doesn't have much of an RRSP. They didn't get there by 35 but got there in their 40's.


----------



## Janus

milhouse said:


> Sorry, yes. It has to be dividends from a Canadian company, not foreign like a US dividends with also has to contend with US withholding taxes. And the dividends have to be from a eligible public company, not a private controlled company which are taxed differently.
> 
> I agree with peterk that this isn't going to be a common situation and part of the portfolio is likely not going to be very diversitfied. But, I'm going to hopefully to take advantage of it to some degree at age 50.
> My BIL built up his non-registered account via company stock options and company stock purchase plan. One of my friends built his non-registered account via his own consulting business so he doesn't have much of an RRSP. They didn't get there by 35 but got there in their 40's.


Milhouse - so with the tax treaty between Canada and the US, dividends from US stocks would have the flat 15% witholding tax in addition to however they're taxed in Canada, is that right? 

Hard to imagine having the whole portfolio in Canadian equities...


----------



## milhouse

This is where I'm more shakey with the net effects and open to anyone to correct anything I state wrong...
Yes, US dividends get hit with a 15% withholding tax and are taxed as foreign income in Canada. However, the withholding tax gets credited as so you don't get taxed twice. I'm just not sure what the net effect of the credit is at different amounts of US/foreign dividends (since most of my international exposure is via Canadian ETF's apart from a couple of tiny "desert island" stocks).


----------



## Janus

Good to know, definitely something I should look at closer. 15% tax is still better than 50% or 25%!


----------



## fireseeker

Janus said:


> Good to know, definitely something I should look at closer. 15% tax is still better than 50% or 25%!


To be clear, the 15% is the withholding tax. It's not the final tax owing, which could be higher or lower depending on your taxable income.
Ultimately, the determinant will be your average tax rate.


----------



## Janus

fireseeker said:


> To be clear, the 15% is the withholding tax. It's not the final tax owing, which could be higher or lower depending on your taxable income.
> Ultimately, the determinant will be your average tax rate.


For sure, there would then be the local canadian taxes. But if you're barely taxed below the $50k mark in Canada I suspect the additional Canadian taxes after the 15% witholding tax would be negligible?


----------



## fireseeker

Janus said:


> For sure, there would then be the local canadian taxes. But if you're barely taxed below the $50k mark in Canada I suspect the additional Canadian taxes after the 15% witholding tax would be negligible?


Yes, in the scenario you describe ($50K in dividends and no employment income) you would pay virtually no Canadian taxes.
But even then, you'd get a credit on your Canadian taxes for the tax withheld by Uncle Sam. 
The point is, the withholding tax is a temporary calculation, subject to a final reconciling with your annual tax filing.


----------



## Janus

I can't believe how well this works at even a $2 million portfolio. $100k of dividend income with no job income barely pays any taxes at all. All the more reason to compound this pile as quickly as I can (without taking too much risk).


----------



## peterk

Toss in 2-3 kids at some point and your 50-60k of tax-free dividends will also have $10-15k/yr in child benefit money thrown in from the government. By the time I'm 40 this might be situation I'm in _knocks on wood_, and the case for full time employment making $200k/yr in a demanding career really starts to dwindle...


----------



## Janus

*November Update

Net Worth*: $1,107,000 

Some gains in my personal investments gave me a nice bump over the previous couple of months. More than offsetting the little splurge items I spent to mark the two comma club (I spent 3 grand on myself for a personal item, which isn't something I normally do!). 

Now that I'm over a million in liquid assets I'm doing lots of thinking about how to structure my portfolio going forwards. What a strange time to be investing one's money, with the stock market rocketing ahead during what's technically a recession. I think for stocks I'm going to do 50% SPY and 50% international equities (self managed), with maybe some RY for my canadian exposure. On top of that I think maybe 5% gold is in order and maybe 15% bonds. 

If anyone has any good recommendations for bond etfs I'd be all ears!


----------



## Pluto

Congratulations on your recent achievement. 
Stock markets typically rocket forward during a recession. Nothing unusual there. High unemployment is a sign of a market bottom, while low unemployment is a sign of a market top. If investors wait for the economy to get good before they invest in stocks, the easy money is already made. 

I have zero interest in bonds for income. The bond bull market must be pretty much over given low interest rates. All my investment income comes from dividends of common stocks. Anyway I don't think bonds will get you anywhere.


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## Janus

Pluto said:


> Congratulations on your recent achievement.
> Stock markets typically rocket forward during a recession. Nothing unusual there. High unemployment is a sign of a market bottom, while low unemployment is a sign of a market top. If investors wait for the economy to get good before they invest in stocks, the easy money is already made.
> 
> I have zero interest in bonds for income. The bond bull market must be pretty much over given low interest rates. All my investment income comes from dividends of common stocks. Anyway I don't think bonds will get you anywhere.


Fair enough, my expectations for returns aren't high on the bonds. I do think that low interest beget lower interest rates, you could have said rates can't keep dropping 3 or 5 years ago. But yeah I certainly hope we don't go negative interest rates in Canada. In any case it's just some low return ballast. Maybe it should be a lower weight to your point, with a long term time horizon the argument is always in favour of stocks at this point.

I have a feeling my saving rate will go down going forwards. If my returns on this pile of savings is ok I'll be more than fine saving 100k a year instead of 200k.


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## scorpion_ca

Janus said:


> *November Update*
> 
> If anyone has any good recommendations for bond etfs I'd be all ears!


Although I have around 30k worth of ZAG, I am planning to sell it and buy utilities ETF such as ZUT. Nowadays I am keeping cash on HISA such as EQ bank instead of investing in bond ETFs.





__





Owning Today’s Long-Term Bonds is Crazy


A blog about personal finance, investing, and money.




www.michaeljamesonmoney.com









__





Bond Quiz


A blog about personal finance, investing, and money.




www.michaeljamesonmoney.com


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## Janus

scorpion_ca said:


> Although I have around 30k worth of ZAG, I am planning to sell it and buy utilities ETF such as ZUT. Nowadays I am keeping cash on HISA such as EQ bank instead of investing in bond ETFs.


I've done exactly this so far, at 1.5% in EQ bank and no risk to my capital if rates increase (highly unlikely) it seems like a decent option.

I'll check out those links, thanks.


----------



## Janus

*December Update

Net Worth*: $1,125,000

This bull market is something to behold.

I've been dead wrong about the CAD lately which has been rising due to (I assume) expectations of commodity strength as the economy heats up. Luckily I have more CAD than I'd like right now, so I guess it gives me an opportunity to sell some more for USD and other foreign currencies.

I've read speculation of a "roaring twenties" re-do. Frankly, I can see the logic - I'm dying to do things, eat out, spend money and travel again and I know most people feel the same way. Perhaps the post-pandemic economy will be a heated one, especially with rates this low and stimulus money sloshing around in the system.


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## james4beach

Janus said:


> I've been dead wrong about the CAD lately which has been rising due to (I assume) expectations of commodity strength as the economy heats up.


Quick observation, I don't think it's really about the CAD specifically. The whole $USD index has been tanking ever since June, with big rallies in the EUR/USD, JPY/USD, etc

So my take on this is that the CAD/USD exchange rate has more to do with the American story than the Canadian story


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## Janus

james4beach said:


> Quick observation, I don't think it's really about the CAD specifically. The whole $USD index has been tanking ever since June, with big rallies in the EUR/USD, JPY/USD, etc
> 
> So my take on this is that the CAD/USD exchange rate has more to do with the American story than the Canadian story


You're totally right about that, good point.


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## Janus

Does anybody recommend any good bond ETFs? And why do you like them versus say a 1.5% yielding EQ bank account?

I've got $100k in an EQ bank account and am looking at XBB. It looks like I'd get a 2.5% yield, so 90bps better than the savings account after taking into account the MER, but would also be taking on interest rate risk. The number of years of income any bond fund would lose if interest rates rose is something that freaks me out.


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## john.cray

Janus said:


> Does anybody recommend any good bond ETFs? And why do you like them versus say a 1.5% yielding EQ bank account?
> 
> I've got $100k in an EQ bank account and am looking at XBB. It looks like I'd get a 2.5% yield, so 90bps better than the savings account after taking into account the MER, but would also be taking on interest rate risk. The number of years of income any bond fund would lose if interest rates rose is something that freaks me out.


Looking at the yield alone is not going to give you the full picture of the expected total return. Take a look at:

Weighted Avg YTM as of Jan 25, 2021 - 1.26%. So it's not better than the 1.5% EQ bank.


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## peterk

john.cray said:


> Looking at the yield alone is not going to give you the full picture of the expected total return. Take a look at:
> 
> Weighted Avg YTM as of Jan 25, 2021 - 1.26%. So it's not better than the 1.5% EQ bank.


Was just going to say - Plus the MER is 0.1%. So 1.16%


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## Janus

Man what was my CFA even good for, haha. Haven't thought about bonds in about 10 years. 

In that case it's a clear win for EQ Bank cash. It's earning less than inflation, but the optionality is valuable in my mind.

I feel like there's no case to be made for bonds today. Capital loss downside if rates decline (unlikely), no income. Better off owning a utility or just straight cash.


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## peterk

We won't tell your boss. 

I just bounce my ~100k cash around between EQ, Tangerine, or EQ GICs, depending on the promos at the time.


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## Janus

peterk said:


> We won't tell your boss.
> 
> I just bounce my ~100k cash around between EQ, Tangerine, or EQ GICs, depending on the promos at the time.


It's ok, he hasn't looked at bonds for even longer than me! Haha

The EQ bank 1.5% checking account is hard to ignore. If only I could put more than 100k there... they lend to marginal borrowers in housing which isn't exactly reassuring.


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## scorpion_ca

Janus said:


> The EQ bank 1.5% checking account is hard to ignore. If only I could put more than 100k there... they lend to marginal borrowers in housing which isn't exactly reassuring.


If you have more than $100k cash, open another account with Motive Financial. Motive Savvy Savings offers 1.55%. I think they try to beat EQ's rate. 





Motive rates | Motive Financial


Compare Motive’s competitive interest rates on savings accounts, chequing accounts, registered accounts, GICs and term deposits.




www.motivefinancial.com


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## Janus

Thank you sir I will!


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## Janus

*January Update

Net Worth*: $1,145,000 

This was good month for me in the markets, however a good portion of it was also due to currency devaluation as the canadian dollar started falling. It feels good to make more off investments than you do off you after-tax salary, but let's see if these gains actually stick around. What an absolutely wild market this has been.


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## Janus

Janus said:


> Does anybody recommend any good bond ETFs? And why do you like them versus say a 1.5% yielding EQ bank account?
> 
> I've got $100k in an EQ bank account and am looking at XBB. It looks like I'd get a 2.5% yield, so 90bps better than the savings account after taking into account the MER, but would also be taking on interest rate risk. The number of years of income any bond fund would lose if interest rates rose is something that freaks me out.


Just as a follow up to this, XBB is down 4% in the last month - or about 2 years of income. EQ Bank all the way. No loss of capital and my savings rate will adjust up if rates continue to rise.


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## Janus

*February Update

Net Worth*: $1,195,000 (+$50k m/m)

My investments did well this month, but on top of that I found some old pension money lying around that I'm commuting to an RRSP, and my tax liability for 2020 appears smaller than what I was expecting. My next goal is $1 million USD (another $75k CAD from here based on current exchange rates) and then I suppose $1.5 million and $2 million CAD. At this rate, my return on investment should have just as much impact on growing my net worth as savings does. Especially since I expect to make quite a bit less this year than last year.

I was happy to see that my portfolio didn't get totally whacked in this tech sell-off. The stuff I'm invested in is not crowded with the YOLO-types. There is so much insanity going on in this market.


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## Janus

*March Update

Net Worth*: $1,236,000

My net worth gains in the past few months have been entirely from market gains rather than net savings. It's crazy to think that you can make $100k in 3-4 months from the market when the pile invested is big enough. I've built up one concentrated position at about 7% of the portfolio that's doing well, but otherwise it's pretty diversified.

It's interesting watching the hottest tech stocks sell off while the market does just fine. The S&P and FAMG practically look like value investing in comparison to some of the stuff that's popular out there (SPACs, SAAS companies trading at 120x forward sales, ARKK...). Nature is healing perhaps!

$20k USD to go until a million in a real currency!


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## Ponderling

I know that bonds are like getting on a ferry leaking water these days, but a least will get the the far shore with wet feet. Are the premium rate deals at these little banks over the CIDC insurable amounts?

Not bragging but at about 4 or less years to retire where else do I park the 900Kish I allocate in my portfolio to bonds?


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## scorpion_ca

Ponderling said:


> Not bragging but at about 4 or less years to retire where else do I park the 900Kish I allocate in my portfolio to bonds?


I would go with multiple HISA and GICs with different banks. Check out the HISA chart for highest interest rates. If you want to open EQ accounts, I can send you a friend referral and both of us would get $20.








Comparison chart


Last updated: December 20, 2022 This chart summarizes Canadian high interest savings account rates and is for informational purposes only. The rates are subject to change and there are more features to an account than its rate. Always be sure to check the specific banks' / financial...




www.highinterestsavings.ca





Here is the latest article written by Ray Dalio about bond.









Why in the World Would You Own Bonds When…


…Bond markets offer ridiculously low yields. Real yields of reserve currency sovereign bonds are negative and the lowest ever.




www.linkedin.com


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## Janus

*April Update

Net Worth*: $1,240,000

This month was a mixed bag, with decent performance in my investments being offset by the big appreciation in the Canadian dollar. I also added some accrued capital gains taxes to the liabilities column that I should have been tracking all year, so that appeared all at once.

Returns this year have been great so far (+10% YTD in CAD or +14% YTD in USD with quite a conservative asset weighting to cash), so I have nothing to complain about. Only about 18% of my assets are in CAD, so watching the dollar skyrocket is a bit painful! I assume this is mostly related to commodity prices picking up (oil, lumber) and I'm tempted to get rid of the rest of my CAD at this price, but maybe I should hang onto it since as a Canadian I do want some minimum local exposure. And you never know with currencies, maybe we're headed back to parity for a while.

I'm increasing my exposure to US big tech. It's quite amazing that they're this big and still growing rapidly, and at decent P/E ratios. Just incredible businesses. I scour the world for better investments in the small cap world, and better options rarely seem to come up.

Edit: oh - and I hit $1 million USD!


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## milhouse

Janus said:


> I'm increasing my exposure to US big tech. It's quite amazing that they're this big and still growing rapidly, and at decent P/E ratios. Just incredible businesses. I scour the world for better investments in the small cap world, and better options rarely seem to come up.


I've been agonizing for a while if I should start a desert island position on US big tech (versus staying broad index) as I'm in agreement with Mark Yamada's comment in the last few Moneysense's ETF allstars articles that “Technology will be a key driver for the next 20 years".


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## Janus

milhouse said:


> I've been agonizing for a while if I should start a desert island position on US big tech (versus staying broad index) as I'm in agreement with Mark Yamada's comment in the last few Moneysense's ETF allstars articles that “Technology will be a key driver for the next 20 years".


I mean the great thing about SPY is it's now 25% big tech. And I know it's easy to think the market is overpriced, but... once again these businesses are rock solid with amazing balance sheets. But yeah high tech allocation has been the key behind outperforming for the last decade and more in investment management and I think it'll continue to be the case. TBH certain stocks like FB feel like value investing...


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## Janus

*May Update

Net Worth*: $1,210,000

Some pain in my investment account over the last month. Oh well. In USD terms (which is more relevant for me since my investments are in the US or overseas) my wealth only fell a few thousand dollars, while in CAD terms it was a clobbering as our currency appreciated massively. I wonder where it will peak? At a time of commodity inflation I'm a bit reluctant to sell the last of my CAD.

I'm a bit conservatively positioned right now with about 25% in cash and bonds. I'm going to start increasing my equity exposure and bring bonds/cash down to 15%. Yes it's a late bull market, but the core elements of the S&P 500 look just fine to me (Tesla excepted). I've realized I need to take more risk to reach my financial goals, and bonds/cash sure as heck won't help me get there. 

With $1.2m, looking out 15 years, assuming I'm adding $50k a year in savings to the pile, 8% returns result in $5.2 million versus $6.6 million for 10% returns. Obviously sequence of returns is a risk here - it's hard to picture smooth sailing from where we are today, that's not how the market works - but I need to be in the market to make those kinds of returns.


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## Johnny199r

8% rate of a return is a bit high?


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## Janus

Johnny199r said:


> 8% rate of a return is a bit high?


Quite possibly! But the point is that the more I put into the market the better chance I have of reaching that kind of return longer term.


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## Janus

*June Update

Net Worth:* $1,242,000

I pre-paid ahead for an expensive vacation (flights are expensive but I'm getting the hell out of Canada for a while!), and some of my investments recovered. The CAD falling boosted by numbers as well.

My income is going to be going through some serious fluctuations over the next few years, it will be a feast-or-famine type situation. So I'm no longer guaranteed to be saving 6 figures a year now. This has been a specific choice where I'm taking more career risk and following my own path in spite of lower potential earnings. But clearly I've reached the kind of asset base where I don't need to necessarily plough away huge sums every year to keep growing my wealth.

Edit: I've been adding to my equity position, with now about 80% invested in the market and 20% EQ bank cash (1.25%) or bonds.


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## mattw

Nice work! Feel like we must be in a similar spot with almost exact same net worth, booking flights out of Canada, and equities/cash/bond mix. And assume close in age.
I'd imagine the career path will be a success if that is your interest. How long have been thinking of switching it up?


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## peterk

Janus said:


> Edit: I've been adding to my equity position, with now about 80% invested in the market and 20% EQ bank cash (1.25%) or bonds.


I've been buying the 3-month GIC's at EQ bank when the rates are higher than the standard account (most often). Usually gets an extra 0.05 to 0.2%, and lets you keep >$100k at EQ with CDIC as long as you keep rolling a portion forward into new GICs. The GIC purchase process is ultra quick and easy, and you don't have to remember anything. When it matures it just auto deposits back into the main savings account.


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## Janus

mattw said:


> Nice work! Feel like we must be in a similar spot with almost exact same net worth, booking flights out of Canada, and equities/cash/bond mix. And assume close in age.
> I'd imagine the career path will be a success if that is your interest. How long have been thinking of switching it up?


I've been thinking of switching things up for a few years and it's been quite a bit of planning. Saving most of my income in order to have the buffer to make the jump has been an important part of that. Just checked out your journal, we definitely seem similar - although you're a bit younger than me! What do you do for work?



peterk said:


> I've been buying the 3-month GIC's at EQ bank when the rates are higher than the standard account (most often). Usually gets an extra 0.05 to 0.2%, and lets you keep >$100k at EQ with CDIC as long as you keep rolling a portion forward into new GICs. The GIC purchase process is ultra quick and easy, and you don't have to remember anything. When it matures it just auto deposits back into the main savings account.


Good to know! That's a solid idea, thank you. Looks like 3 months is 1.3% versus 1.25% for a normal account. But to your point the main reason is to have over $100k at EQ, even if the rate is the same that's fine.


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## jargey3000

Janus said:


> The EQ bank 1.5% checking account is hard to ignore. If only I could put more than 100k there... they lend to marginal borrowers in housing which isn't exactly reassuring.


do you mean you're NOT ALLOWED to have more than $100k in the acct.?
or, you only put in up to the $100k cdic coverage?


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## Janus

jargey3000 said:


> do you mean you're NOT ALLOWED to have more than $100k in the acct.?
> or, you only put in up to the $100k cdic coverage?


Yeah I'm just talking about having all of the funds covered by CDIC.


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## mattw

Janus said:


> I've been thinking of switching things up for a few years and it's been quite a bit of planning. Saving most of my income in order to have the buffer to make the jump has been an important part of that. Just checked out your journal, we definitely seem similar - although you're a bit younger than me! What do you do for work?
> 
> I'm beginning to think about something different but the income is high. Or a new challenge but sure won't be for awhile.
> 
> I'm in wealth management doing business development. Wanted to go the IB route but was impossible finding work being in Calgary during the oil crash plus no job security.


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## Janus

*August Update

Net Worth*: $1,300,000

Over $50,000 of gains in the market feels pretty darn good - even if it can easily evaporate over the next week if that's what the market decides to do. 

My current weighting is:

75% equities, 25% bonds & cash (including emergency fund)

Among the equity weighting, I have (roughly):

$400k in US equities
$300k in european equities
$250k in Asian equities
The rest in canadian & other
Most incremental adds are going into US equities, mainly SPY and QQQ. I feel like we're not late innings with FAAMG dominance.


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## scorpion_ca

Do you buy ETF or individual stocks for European and Asian Equities?


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## Janus

scorpion_ca said:


> Do you buy ETF or individual stocks for European and Asian Equities?


Mostly individual stocks and the odd fund, as these are more inefficient markets whose indexes are junk. For US equities I go passive all the way, in my career I've met many smart people who have been totally humbled by SPY. And for good reason - it's an amazing index made of the world's best businesses (and also Tesla).


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## Janus

*September Update

Net Worth*: $1,272,000

Bit of a bumpy ride this month. If the market continues to dip I'll consider moving my 20% cash/bonds allocation to 15%.


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## peterk

Janus said:


> Mostly individual stocks and the odd fund, *as these are more inefficient markets whose indexes are junk. For US equities I go passive all the way,* in my career I've met many smart people who have been totally humbled by SPY. And for good reason - it's an amazing index made of the world's best businesses (and also Tesla).


I don't disbelieve it, but I don't understand this concept that I always hear - That the US markets are "more efficient" and higher quality, and that you should just buy the US index but individual Canadian, European etc. stocks.

Is this just a fancy way of saying "I don't believe in indexing, I do stock picking". Are we just saying that the US market has the best companies in the best political scene, so it's OK to index there because they're "mostly good companies" but elsewhere this is not the case due to the political/business/innovation environments in those countries, and thus they have "mostly bad companies".

But this is ignoring the concept of accurate company pricing models and efficient market hypothesis, right? If EU companies are worse on average, their P/Es will be lower, and their expected future stock returns should balance out like every other regions.


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## Janus

Yeah I'd say it means that I don't believe the low multiples in certain markets like Japan make up for the low growth and poorly run companies. It's hard to overstate how bad the average Japanese company is compared to an American-managed one, and this is true for many markets around the world. And you can see this in the relative performance of these indexes. The TOPIX index in Japan has grown 78% in total since 2005 to now, a 3.5% CAGR. The S&P 500 has risen 265%, an 8% CAGR. This is despite the US having started with higher valuations. I could go into why some of these foreign businesses are run poorly but really historical returns support my thesis, and so does my anecdotal observation that in my field of asset management, people in non-US markets have a much, much easier time beating their index. I'm not guaranteeing I'm right, but it's just what I believe based on the information I've collected and experiences working with people who manage capital in different markets around the world.


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