# My Path to Freedom



## snowbird

After wasting away my earnings of the last 10 years, I have turned a new leaf and i'm determined to stop spending and get serious about securing my future and getting on the road to financial freedom. Lots to take in and sort through. I hope putting it out here will help highlight/clarify things and potentially get suggestions/advice. I've been reading these forums day and night and also read 'the wealthy barber' and currently reading 'your money or you life'. I am so ashamed that i have nothing to show for the past decade - unless i count purses, clothes and shoes:hopelessness:

Age: 35, single, no kids
Income: $106,200 (gross)
Bonus ~$17,000 (gross)

Savings account: $2,000
RRSP: $24,200 (invested in Canadian equity MF)
TFSA: $5,000 (2012 contribution in cash)
Non-reg investments: $46,000 (in Canadian equity and bonds) and US$20,000 (In cash)
Mortgage: $347,000 (April 2012...3-yr fixed at 2.79%)
Home value:$380,000
Car: $18,000 (fully paid for)
Credit line: $5,000 (to be paid down by end of Sept)

My 2012-Jan. 2013 plan is to Utilize non-reg investments as follows:
Now - Put cash in savings account - emergency fund = $10,000
Now - Transfer max contribution to RRSP = US$16,000 
Now - Convert US$4,000 to clear credit line 
Jan 2013 - Transfer $20,000 to TFSA 
Apr 2013 - Pre-pay mortgage ~$30,000 (balance of $16K plus tax refund ~$10,000 + annual bonus ~$10,000) 

I can also save about $3,000 each month (living frugally) so that will go towards paying down mortgage each year - all things being equal.

Once all of these contributions are in place, i want to start investing in ETFs. I will tackle each account separately in subsequent posts.

Short term goal - 2013/2014 - MBA. I will have to take a loan for this, and will be working full time and directing any spare cash to shave the loan quickly.

Does this make sense?


----------



## the-royal-mail

Welcome to the forum!

Your profile and plan looks pretty good. Glad to hear you've given thought to an emergency fund. I guess the part I don't understand is why you are carrying debt and wasting valuable time and TFSA contribution room when you have $46K already. Why not pay off the debts and fill up the TFSA NOW? Use the $46K for this.

Also, can't part of your $46K pay for the MBA? Makes no sense to me to rack up and service debt when you have non-registered investments, UNLESS those investments are reliably giving you far better annual returns than your interest rate? Are they?

Just my opinion anyway.


----------



## steve41

OK.... a quick cash flow just to give you an idea of your budgeting and savings regimes. If you spot anything you want to change such as wanting to retire at 40, etc.... let me know. 

I am 35's plan


----------



## snowbird

Thanks so much for taking the time to read and responding.
@TRM - I had used up the $15K saved in TFSA from 2009 for condo down payment this year (stupid....i should have used the non-reg) I will have to wait till next year to put $20K back in. Yes, my plan is to use up all non-reg investments to pay down debt and save towards the MBA (I believe the investments have returned 8.5% since 2008) but i won't have enough. I'll need probably an additional $20K i think.

@Steve - wow, thanks for that. I would assume an annual bonus (if things continue this way in the oil sands). I am hoping to see at least $15,000 before tax each year (fingers crossed), and NO, i am not going to retire at 40! I just now have to figure out how to grow the savings going forward! Also,
I will likely have more questions when i've studied this cash-flow in greater detail after work today. Hope you don't mind! Thanks very much


----------



## steve41

OK.... new plan with 17K bonus fixed and moving to Alberta. Revised plan


----------



## PharmD

Steve, sorry to hijack this thread, but I bought RRIFMETIC a while ago and when I run projections it never draws down my TFSA, but instead I end up at 95 years of age with over $8 million in my TFSA. Am I doing something wrong when I entered the TFSA or in some cases does it plan it this way on purpose? I set it up to have the same income throughout my life. Thanks.


----------



## snowbird

I've learned so much on this site and can't thank you all enough. Just posting this here to track my own progress....
Here are some steps i've taken based on the things i've learned here and advice received.

- Living frugally and loving it. Its amazing how little a person needs outside of food, shelter, etc. (Cut cable, fall in love with library, walk 20 minutes to work, take my lunch and have a bi-weekly allowance of $100 to spend on coffee and anything else)
- Sold 1.75% MER MF 
- Parked total investable cash in a HISA with brokerage (didn't know this was possible until i read it in here)
- Sold the stocks of the company i work in, as well as other non-reg investments through work and put this towards paying 10% off my mortgage principal
- Currently building 6-months emergency fund (next will be working towards establishing tier 2 savings)
- Paid off CC and LOC
- Enjoyed reading: Wealthy Barber, The Lazy Investor, and now reading the intellignet investor.

I feel so empowered and i think i'm ready to put the money to work.

At RBC Direct Investing, i have $52K cash sitting in HISA. I am thinking of doing the following:

RRSP (all US$) in a combination of individual stocks (KO, PG, JNJ, MCD) and ETF (VTI and VWO). Total is ~$40K
TFSA (all in C$) in dividend stocks (RY, BNS, IPL.UN, FTS,ENB, REI.UN). Note: Right now, i only have $5K and will buy just one, the others are on my list for when TFSA room opens up again in Jan and i have another $20K to put in.. I know this has no bonds but i have a small ($2K) bond fund at Sunlife (PH&N) which i will add to next year.

My time-horizon is long (20+years), these two buckets are for retirement funding. I will not be trading often. I'll buy and hold 

What do you guys and gals think of this plan. Is this too many stocks for the $$ i have to invest? I Know i can't time the market, but i don't actually know when to pull the trigger.


----------



## lonewolf

Hi snowbird

The banks love it when someone is holding a mortgage & puts money into an RRSP instead of paying off the mortgage. Money is made from the money invested (fees commision) as well as more interested is paid on the mortgage.

One of the biggest mistaks made is putting money into an RRSP instead of paying off the mortgage because people put to much faith into the local banker. If the mortage can be paid off within a year your 2 an RRSP makes sense other wise you must do the math your self & consider paying off mortage as fast as possible then consider maxing out RRSP.

If money is going into investments that are being defered by long term holdings such as etfs that track stock indexs then it almost always makes sense to pay off mortgage. Then max out RRSP. The best bang for your buck would be to pay off mortage then max out unused RRSP room as fast as possible while making big bucks in the oil fields. Make the money earily in life so the less interest is paid & the more time is on your side for compounding.


----------



## brad

The mortgage is at 2.79% fixed currently, and bets are good that mortgage rates will stay low for quite a while to come, so socking money into RRSP investments that are likely to earn a higher rate than that seems like a better idea than focusing on paying down the mortgage.

It's true that paying off the mortgage sooner will reduce the money you throw away in interest, but a dollar invested in your RRSP today will earn more than a dollar spent reducing the principal of your mortgage, if you assume that your RRSP will earn an average of more than 2.79% annually...or even 5% annually if you assume mortgage rates will rise to that level at some point in the next couple of decades. I don't think you said how long your mortgage is for: 15 years, 20 years, 30 years.

The mortgage vs. RRSP question also involves risks around two uncertainties: 1) whether interest rates will rise and by how much, and 2) what will happen with the market. If you defer contributing to your RRSP for 10 years while you pay off your mortgage, and stock prices reach an all-time high 10 years from now, you will have missed out on a bargain. On the other hand if the stock market tanks in 10 years you can buy an awful lot of shares for your money.

Mortgage interest rates will rise if the economy recovers, but that doesn't look like it's going to happen very quickly. Nobody can predict the future, but even if you assume your portfolio of stocks and ETFs will return an annual average of say 5% you're probably still better off investing in them than throwing everything to paying down your mortgage.

As for your portfolio, if these are retirement investments, I personally would simplify and just buy some index ETFs, no individual stocks. You'll have lower brokerage fees and a higher chance of success in the long term. I haven't seen any evidence that individual stock picks can beat a balanced portfolio of index fund ETFs (eg., one of the couch potato portfolios) over terms of 30 years, which is the term you're talking about.

I do both, by the way: I'm paying down my mortgage at an accelerated rate while also trying (without success so far) to max out my RRSP contributions. I moved to Canada 10 years ago, so my annual RRSP limit is high and I haven't yet been able to hit it. But I'll get close this year.


----------



## humble_pie

brad said:


> I personally would simplify and just buy some index ETFs, no individual stocks. You'll have lower brokerage fees and a higher chance of success in the long term. I haven't seen any evidence that individual stock picks can beat a balanced portfolio of index fund ETFs (eg., one of the couch potato portfolios) over terms of 30 years, which is the term you're talking about.



brad it's always so surprising to see platitudes like this surfacing so frequently in cmf forum. If you want evidence that's contrary to this view, look at gob's thread here in this section. He's exploded out of the starting gate, but he's probably going to paint a first year with a return above 25%.

if you want a more conservative strategy, look at Dmoney's thread. He'll definitely come close, with a return well north of 10% plus a far easier approach.

i know i know you're going to come back & say 30 years. Here's a little bet: let's come back in 30 years. My money says that gob & dmoney will be rich beyond wildest imaginings. But couch potato will still be fretting over his mortgage.

the way i see it, the couch potato devout are like the parent who raises his kids on Do Not Bother from the cradle. Don't bother with schoolwork because your IQ is going to be average, so just aim for a clerical job out of high school. Don't bother going out for sports because you'll never be a competitive athlete. In fact, don't bother trying out for anything in life, because the risk always exists that you might fail.


----------



## My Own Advisor

Great income, that will really help your plan.

Nice mortgage term and rate, well done. 

I suggest to focus on your personal debt and mortgage debt. With that income, maximize TFSA every year and contribute to RRSPs. 

You're off to a fine start I think.


----------



## brad

humble_pie said:


> i know i know you're going to come back & say 30 years. Here's a little bet: let's come back in 30 years. My money says that gob & dmoney will be rich beyond wildest imaginings. But couch potato will still be fretting over his mortgage.


You could be right, but I was thinking of evidence like this (which is comparing index funds to managed funds, but if you assume that managed funds are managed by professionals who work at this full time, how reasonable is it to expect part-time individual investors to do much better on their own?):

http://www.standardandpoors.com/ser...lobwhere=1243657598775&blobheadervalue3=UTF-8

And then there's all the Nobel laureate economists who espouse index funds:

http://www.ifa.com/12steps/step2/


----------



## lonewolf

Snowbird

I should have also mentioned that you might want to think twice about putting tax deferred investments into an RRSP 

You might want to consider the following but your the best judge as to how practical it would be for you.

With your current plan putting everything into stocks with in your RRSP when you want to buy an interest bearing investment to reduce risk in your portfolio your not going to have much or any RRSP room. So the interest bearing investment will be held outside RRSP being taxed every year.

If you buy a stock or ETF & it increases in value your not taxed on capital gains untill after it is sold if held outside RRSP account.

If held in an RRSP account you will be forced to switch it to a RIFF & have to with draw x amount when your 70 or is it 71 & having to pay tax on it. The tax rate will be higher because it wont be taxed as capital gain plus it will not be deferred as long if you were going to hold the etf or stock longer.

This is someting you might want to consider pay down mortgage & debt fast as possible, emergency money keep in TFSA or maybe consider having no energency fund & being able to borrow against the condo.

Only when mortgage is paid off put money into RRSP. Max out unused portion @ least so your income comes down from the highest tax bracket & do the math how practical it would be to go even into a lower tax bracket or save a little room for the following year or 2. Might be a gamble though if your job is lost. Put refund into TFSA unless you have enough funds to put money in sooner. 


I would not buy any taxed deferred investments into the RRSP only interest bearing.

Once the RRSP is topped up remaining investment capital use that to buy stocks.

Your taxes will be lower when you retire on the stocks cashed if held till retirement if held outside an RRSP account. 

The amount of money your making & saving you will have no problem catching up to balancing your portfolio to a higher level of stocks to fix income.


In the time between now & when your ready to put money into stocks I would spend some of it doing research on how to invest.


----------



## Lephturn

brad said:


> You could be right, but I was thinking of evidence like this (which is comparing index funds to managed funds, but if you assume that managed funds are managed by professionals who work at this full time, how reasonable is it to expect part-time individual investors to do much better on their own?)


Easy - because the professionals are crippled by restrictive rules, unable to use derivatives even for risk control, hobbled by massive size, and worst of all... they are almost all long-only. You take a study that was done scientifically and then blindly try to infer that an individual could not beat a professional when the study in question has zero to do with that. All of this conjecture without even the slightest mention of all of the massive advantages the individual investor has over the professional.



brad said:


> And then there's all the Nobel laureate economists who espouse index funds:


I remember years ago where a bunch of PHD's and a nobel laureate or two went and set up their own investment company with all of their wonderful knowledge. They named the firm "Long Term Capital Management". Care to guess how that worked out?

These are the same type of well-meaning fellows who years ago came up with efficient market theory based on the idea that markets and investors are completely rational. A brief glance at the business news should end that fantasy for you.


----------



## lonewolf

I failed in my thinking in my above post. All you would have to do to rebalance latter if stocks were bought in RRSP account would be to sell them & buy them back in a none regestered account & then buy the fixed income inside the RRSP account. What was I thinking before


----------



## kcowan

Lephturn said:


> Easy - because the professionals are crippled by restrictive rules, unable to use derivatives even for risk control, hobbled by massive size, and worst of all... they are almost all long-only. You take a study that was done scientifically and then blindly try to infer that an individual could not beat a professional when the study in question has zero to do with that. All of this conjecture without even the slightest mention of all of the massive advantages the individual investor has over the professional.


Thanks, Lephturn. The ones that want to believe in mediocrity can do so. And the whole finance industry will try to convince you that you can never outperform.


----------



## brad

kcowan said:


> Thanks, Lephturn. The ones that want to believe in mediocrity can do so. And the whole finance industry will try to convince you that you can never outperform.


I think that's an unfair characterization on many levels, but the point is not that one can never outperform; I think even the most ardent proponents of index investing acknowledge that people who buy individual stocks can and often do get triple-digit returns in any given year and tend to outperform indices over periods of 5-10 years, even longer. The point is that as the time horizon increases, the probability of beating those indices decreases, because over time the big gains are usually counterbalanced by signfiicant losses. If you're passionate about investing and are motivated to spend the time on research, learning, etc., your investment of time and education is likely to pay off. But it would be a shame if you spent all that time and in the end your returns weren't remarkably better than those of someone who spends 4 hours per year managing his or her investments. I don't think it has anything to do with settling for mediocrity; it has to do with priorities and probabilities.


----------



## GoldStone

There is nothing mediocre about indexing / couch potatoing. Only a small minority of retail investors are aware of strategy, recognize its power and have the discipline to successfully implement it.


----------



## humble_pie

GoldStone said:


> There is nothing mediocre about indexing / couch potatoing. Only a small minority of retail investors are aware of strategy, recognize its power and have the discipline to successfully implement it.



lol you're saying that the masses who are not members of the Praetorian Guard with its secret key to couch potato success are destined to fail ?

ooh là. And here we were thinking that couch potato had been invented by a financial industry desperate to capture all the masses who have been permanently turned off old-fashioned mutual funds.

capture em because guaranteed mediocrity - for the masses - sounds better than risking failure.

.


----------



## GOB

brad said:


> You could be right, but I was thinking of evidence like this (which is comparing index funds to managed funds, but if you assume that managed funds are managed by professionals who work at this full time, how reasonable is it to expect part-time individual investors to do much better on their own?):
> 
> http://www.standardandpoors.com/ser...lobwhere=1243657598775&blobheadervalue3=UTF-8
> 
> And then there's all the Nobel laureate economists who espouse index funds:
> 
> http://www.ifa.com/12steps/step2/


Brad, professionally managed funds have to be treated far differently than a retail investor's. For example, I couldn't dream of doing what I do in my thread were I managing funds and my returns would surely be lower.

I think the statistic of index investing vs. stock picking is what it is because most retail investors are uneducated and uninterested in really taking the time and effort to learn about the market. I have a strong hunch that those that do this have a far greater likelihood of outperforming the market. The number of people that fall in this category are so small, however, that they barely influence the overall statistics. 

Almost anyone who is really successful (in anything) probably had to work really hard to get there, perhaps with a little luck thrown in. If one is prepared to make the effort and enjoys learning about the topic, I wouldn't straight away recommend ETFs and steer them away from researching individual stocks.


----------



## brad

GOB said:


> Almost anyone who is really successful (in anything) probably had to work really hard to get there, perhaps with a little luck thrown in. If one is prepared to make the effort and enjoys learning about the topic, I wouldn't straight away recommend ETFs and steer them away from researching individual stocks.


Thanks, well stated. I think I underestimated snowbird's interest in learning about investing and probably projected my own general lack of interest as an assumption ;-)


----------



## Square Root

Some people really enjoy managing their own portfolio. In my case a general background in finance has made it easier but I think there are many on this forum who enjoy it. Now that I am retired I have more time to spend on this kind of thing as well. I would say my results generally beat comparable ETF's or MF's. Being a dividend type investor, I don't want to pay away any of my dividends in MER's or ETF fees.


----------



## humble_pie

brad said:


> I think I underestimated snowbird's interest in learning about investing and probably projected my own general lack of interest as an assumption ;-)


i for one have never underestimated snowbird's interests or abilities. I think she'll make an outstanding investor each:

"lack of interest" is an odd attitude to bring to a forum dedicated to finance, investing & lifetime savings strategies. I believe it would be safe to say that no one else participates here because they have a lack of interest.

quite often, overtly expressed lack of interest comes across as envy poorly masked by sneering. This is happening in your case, brad. It baffles me because i know it does not represent you in the least. It's the exact opposite of your nature.

the fact is that a lot of new DIY investors are being seriously helped in this forum. I'm sure you can see that. What i'd expect from a sweet guy with a big social conscience like yourself is something like Way To Go Guys ! Tell Us More About How You Do It !


----------



## Four Pillars

humble_pie said:


> sneering


Pot - meet kettle?



brad said:


> I think that's an unfair characterization on many levels, but the point is not that one can never outperform; I think even the most ardent proponents of index investing acknowledge that people who buy individual stocks can and often do get triple-digit returns in any given year and tend to outperform indices over periods of 5-10 years, even longer. The point is that as the time horizon increases, the probability of beating those indices decreases, because over time the big gains are usually counterbalanced by signfiicant losses. If you're passionate about investing and are motivated to spend the time on research, learning, etc., your investment of time and education is likely to pay off. But it would be a shame if you spent all that time and in the end your returns weren't remarkably better than those of someone who spends 4 hours per year managing his or her investments. I don't think it has anything to do with settling for mediocrity; it has to do with priorities and probabilities.


Very well put Brad.

Another factor is portfolio size. Assuming someone isn't just doing active investing as a hobby, I think it's worthwhile to look at your portfolio outperformance and calculate the hourly wage of your efforts.

I wrote this article a while back about this issue: http://www.moneysmartsblog.com/do-you-really-earn-your-investment-income/


----------



## humble_pie

fp as you cheerfully admit yourself, you failed desperately in stock picking & then retreated permanently into etf mediocrity.

as for your frequent ad hominem attacks on myself, they are transparently envious. Sorry about that. Some people are successful in financial markets. So sorry that you are not.


----------



## humble_pie

now that i'm reminded, for the longest time i've believed that all those low-traffic personal financial blogspots should be stopped from trailering their links as personal advertising here in cmf forum.

it's obvious that these folks put up useless & repetitive messages for the sole purpose of trailering their blogs. Even worse, fp likes to brag about his own articles in a transparent attempt to drive traffic to his portal.

Q: does it work FP ? do you get a burst of traffic after you boast here about how you've already masterfully treated a particular topic ?


----------



## brad

humble_pie said:


> quite often, overtly expressed lack of interest comes across as envy poorly masked by sneering. This is happening in your case, brad. It baffles me because i know it does not represent you in the least. It's the exact opposite of your nature.


Sorry if it came across as sneering, and there's definitely no envy involved; I genuinely was unaware of any evidence that over the long term, individual investors could outperform the market with any high probability of success. In the short term, no question, and of course there are examples of highly successful investors (not just Warren Buffet) who've remained highly successful over the long term. But it's just been pounded into my head so long from so many sources that that the vast majority of people who manage their own portfolios cannot beat the market over the long term that I guess I was just spouting received wisdom, forgetting that this forum is populated largely by a subset of the population who actually have a good chance of doing it.

It's not that I'm not interested in investing, otherwise I wouldn't be hanging out here; I'm just not interested in it to that degree: i.e., I'm not willing to put in the time and effort it would take to rise beyond "mediocrity," because the goal of riches (or even the prospect of a more comfortable retirement) has never been a strong motivator for me. I share my birthday with Somerset Maugham, who described his work as "in the very top rank of the second-rate." In the field of investing, I'm happy to shoot for that.


----------



## Square Root

FP. I make quite a lot managing my own portfolio. Say at 1% with maybe 1 hour per day, it works out to over $500/ hour. Not representative I know. Furthermore, I enjoy doing this and would probably do it for free.


----------



## MoneyGal

I thought we were keeping religion off the forum. :02.47-tranquillity:


----------



## GOB

Square Root said:


> FP. I make quite a lot managing my own portfolio. Say at 1% with maybe 1 hour per day, it works out to over $500/ hour. Not representative I know. Furthermore, *I enjoy doing this and would probably do it for free.*


This is really the most important part. People generally become good at things they love to do.


----------



## brad

GOB said:


> People generally become good at things they love to do.


And with that we can all acknowledge that snowbird is likely to become good at investing because she's highly motivated and enthusiastic. And as the person who accidentally hijacked her money diary, I move that we leave it at that so she can get a word in edgewise ;-)


----------



## humble_pie

please don't write any more fp.

you are a nondescript writer with a clerical mindset & a vocabulary of about 86 words.

pity you are so strung out on hatred as well.


----------



## Sampson

MoneyGal said:


> I thought we were keeping religion off the forum. :02.47-tranquillity:


Amen!

We should start a poll: 
Which deity do you believe in?
Index tracking or stock picking (or other strategies, options, baking etc)


----------



## Four Pillars

humble_pie said:


> please don't write any more fp.


Suggestion noted.

Thanks for the feedback.


----------



## Square Root

humble_pie said:


> please don't write any more fp.
> 
> you are a nondescript writer with a clerical mindset & a vocabulary of about 86 words.
> 
> pity you are so strung out on hatred as well.


This wasn't called for HP nor FP's latest. Come on guys let's stick to the financial stuff. There are plenty of places we can go for the negative stuff, like newspaper comment sections.


----------



## Sampson

Square Root said:


> There are plenty of places we can go for the negative stuff, like newspaper comment sections.


Or Belguy's threads. Wait, not negative, pessimistic (sorry Belguy )


----------



## humble_pie

Square Root if you're going to be judgmental i definitely feel you should have included fp's foam-at-the-mouth missive. Here it is.



Four Pillars said:


> ... As for useless posts, you seem to do a huge number of posts that are very judgemental (both positive & negative) of other posters. You feel the need to write thousands of words putting someone down or building someone up *without adding a single bit of useful information*. You even read Brad's non-sneering post and managed to insult him and the post by saying he was sneering, when he wasn't doing anything of the sort.
> 
> In my opinion, your contribution to this forum is less than zero.


----------



## GOB

Guys, let's not derail someone's journal. 

My take on the matter: humble says some things that can be misinterpreted as off-putting or mean, but he always means well. Notice what he wrote after "insulting" brad and the compliments he showered him with. 

As far as contribution to this forum, I think he contributes a great deal. Certainly this is true on a personal level - has given me some great advice and thinking points in my journal, and him and Lephturn are probably the most well versed on options in his entire forum. 

What FP seems to have done is take a snippet out of context and attack him for it. I can see both sides of the coin but I'm quite sure humble did not mean it as an insult and didn't deserve the harsh (and false) attack thrown his way. Funnily enough, brad took it better than FP though the comment addressed him. 

Just my 2 cents. Maybe we should clean up the last few posts in respect of the OP.


----------



## Square Root

humble_pie said:


> Square Root if you're going to be judgmental i definitely feel you should have included fp's foam-at-the-mouth missive. Here it is.


agree. I did mention his in fact. Both you guys came across in a poor light. It happens to the best of us. You are both better than this.


----------



## kcowan

Just in reply to brad:

My reference to mediocre was to someone accepting returns just slightly worse than average where average is the index and the drag is a small MER and tracking errors.

I did not intend to start a flame war!


----------



## GoldStone

kcowan said:


> My reference to mediocre was to someone accepting returns just slightly worse than average where average is the index and the drag is a small MER and tracking errors.


Your statement is true, of course, but it only provides a partial view of the whole picture. Therefore, it is somewhat misleading.

To paint a complete picture (for the sake of newbie investors), you should have mentioned that disciplined couch potato investors achieve above average results in the long run. Above average when compared to all retail investors as a group. *That* is not a mediocre result.

Peace.


----------



## Young&Ambitious

Maybe we should create a new thread under investing where us investors can do a self-case study and point out how long we've been investing for, what is our style, and what our total or annualized return on capital has been. This hasn't been the first time the couch potato vs. do-it-yourself has been debated and it would be interesting to see everyone's results if people would feel comfortable doing so?


----------



## humble_pie

Y & A i don't think so. Hi net worth investors are never going to publish their figs on anonymous chat boards.

furthermore, your concern has already been addressed. All you have to do is ask the previous poster, author of the quote below, where he obtained his information. Once you have verified that the study source is legitimate, peer-reviewed, published, objective, not sponsored by one faction or another of the investment industry, then you will know whether elite indexation produces better long-term results than any other approach ever before in the history of mankind.

although i wonder to myself about this disciplined index criterion, though. I mean, an index is an index. Does it matter if the folks investing in the same index derivative are elite disciplinarians or quel horreur a little bit messy.

BTW if what he produces is another one of those 30-year studies, like so many others keep citing in this forum, then i'm even more skeptical. AFAIK index investing hasn't been available to the masses for 30 years. It was developed by economist Carl Otto & others, who sold their firm to TD securities in i believe the 1980s. TD wanted to acquire Otto & partners for their pioneering & proprietary indexation modalities, which TD would subsequently popularize into funds intended for mr & mrs retail investor. So i believe that no 30-year time frame is available for proper study ... anything less would be inconclusive ...




GoldStone said:


> ... disciplined couch potato investors achieve above average results in the long run. Above average when compared to all retail investors as a group.


----------



## Sampson

I often see or feel there is too much emphasis on 'outperformance'.

Personally, I pick stocks & use index funds (my wife's portfolio whom I manage is exclusively indexed), so I sit square on the fence regarding this issue.

It's ego boosting if my stock picking portfolio beats my wife's indexing strategy, but what I know for certain, is that using either approach, or a combined one as we do, we will reach our financial goals/objectives. In the end, I don't care how we get there, as long as we eventually make it.

And just out of morbid curiosity, I'll post our annualized returns later when I get home. Take a guess whether (1) Sam's portfolio of goodness will be (2) Wife's boring slice and diced indexing strategy comes out on top.


----------



## Young&Ambitious

humble_pie said:


> Y & A i don't think so. Hi net worth investors are never going to publish their figs on anonymous chat boards.


Agreed! My apologies, I meant expressed as %'s, not $'s. 

It would be interested to compare the forum users against a index or mutual fund.


----------



## humble_pie

Young&Ambitious said:


> It would be interested to compare the forum users against a index or mutual fund.


actually i've posted figs like this. Probably a couple times. Benchmark against XIU. Can't keep posting same stuff.

i've held XIU since 2001. Sell calls continually. It underperforms. Of late the option premiums are so pathetic that i believe i'll sell the holding in 2013 (reluctant to take any more 2012 gains.)

or i might keep. I originally bought 3000 XIU as a sort of skewed or sidebar bond proxy ie it will never go bankrupt. Depending on how 2013 goes i might keep em after all. I do not keep & will never keep XIU because it might provide me with a "better" return than what i can do myself. The opposite is the case. 

XIU without selling options would be a far worse experience for an investor imho. If you would like see a simple chart to weep, look at SPY over the entire past decade. Most of those core equity index etfs have gone nowhere in 10 years. Some have lost money.


----------



## Sampson

Annualized since 2008
Sam's portfolio of goodness = 7.0%
Wife's boring slice and diced indexing = 19.6%

And as pie points out, low net worth (since I'm willing to post these details)


----------



## HaroldCrump

Sampson said:


> Wife's boring slice and diced indexing = 19.6%


Interesting...which index is this that is returning 19.6% annualized since 2007?
All the major market indices - US, Canadian, Emerging Market, Europe are below their 2007 highs, even including dividends.
Unless, perhaps, the majority of the contributions into this investment were made between 2009 and 2010.


----------



## Sampson

HaroldCrump said:


> Unless, perhaps, the majority of the contributions into this investment were made between 2009 and 2010.


This is the case.

I don't even think my results are meaningful. I am much more conservative with my wife's money, only buying into real dips, this began heavy beginning the fall of 2008, again Jan through May of 2009, again in July of 2010, October of 2011, and just this past May. I don't think it is because my timing is good, since I have been adding similar amounts into my portfolio, I'm just too eager and jump in too soon. Our incomes have been growing well over the past 5 years, so we have been more lucky than anything else.

Maybe the trick to market timing is not greed, but fear of spousal retribution.

Her portfolio is comprise of:
CND LRG CAP
CND SML CAP
US LRG
US MED
US SML
INTL LRG
INTL SML
EMERGING Markets
REITS
DOMESTIC Short Bonds
CASH

All have value tilts where possible. A little exotic, but diversification and timing have given excellent returns. I don't think this will continue, but let's hope.


----------



## humble_pie

pant!
pant!
indexes are returning 19.6% every year since 2007?
you win!
gameover!
gotta have em!
which izz they?


----------



## Sampson

But pie, this is why my case is a little meaningless in the debate.

Indexing gains were mainly driven by timing and not the fact that they are diworsified. I suppose for me also, it is much easier to dump money into the market and into one or two index funds, rather than dumping money into my massive stock portfolio.

Maybe this is a lesson for myself, I should compress my stock picking to a dozen or so holdings and focus efforts of those. Maybe a Fantastic 15 or something like that.


----------



## humble_pie

i'm wondering whether you might be counting new contributions, at least in part, as growth in portfolio return.

someone else is doing this - quite innocently - he just doesn't realize it's not the right way to track portfolio - & so he has an inflated portfolio "return."

highly exaggerated false example: 

- portf is worth 10,000.
- investor contributes 10,000.
- portf now worth 20,000.
- investor now thinks he has a "return" of 100%.


----------



## Sampson

Not at all pie. XIRR all the way.

Let me give you some examples.
XDV - purchase price $12.50 - 8% of portfolio
XRE - avg pp $11.10 - 10% of portfolio
IJJ - avg pp $39.64 - 8% of portfolio
IJR - avg pp $43.89 - 6% of portfolio
AAXJ - avg pp $29.70 - 5% of portfolio
SCZ - avg pp $23.88 - 6% of portfolio

I also calculate returns based on CAD invested - there has been some 'inflating' of the portfolio due to the strong CAD:USD. Perhaps this is a little falsification since some of the return is from FX and not equities per se.

A couple of big winners stock-wise, but I don't want to disclose too much.


----------



## humble_pie

U are not disclosing winners stock-wise ? what a pity, perhaps you could reconsider ?

my big winner this year is africa oil, which has doubled since i started buying it on march 5th.

lately though my interest has strayed to kurdistan, a remote & beautiful biblical land which ignites romantic longings. Plus it has some monster oil wells being drilled/operated by smart canadian companies.


----------



## CanadianCapitalist

humble_pie said:


> BTW if what he produces is another one of those 30-year studies, like so many others keep citing in this forum, then i'm even more skeptical. AFAIK index investing hasn't been available to the masses for 30 years ...


The Vanguard 500 Index Fund has been available since 1976. The predecessor to XIU, TIPS 35/TIPS 100 was introduced in the early nineties. Even if you assume that no index funds exist, it is simple math that investors as a group will experience average aka index returns before expenses over any time frame -- 1 year, 1.5 years, 5 years or 500 years in whichever market you look at. After expenses, investors as a group will trail indexes by exactly the frictional costs. Index investors keep the frictional costs low by investing in the lowest cost products available and keeping transaction costs low. Active investors, by definition, incur higher frictional costs. Therefore active investors (as a group) must trail index investors (as a group).

Of course, the immediate objection is that "... but by doing X, Y is able to beat the market". The arithmetic of indexing does allow for winners. It is quite possible that skilled participants are able to beat the market. But that doesn't change the logic for the group as a whole.


----------



## humble_pie

sorry, poor dumb pie is having trouble with densely packed language at this hour of the night ...

what bothers me is that, if roughly half a cohort of investors could, by learning a few skills, do better, then why should so many naysayers have a field day trying to discourage them with dour warnings that they should settle for mediocrity.


----------



## humble_pie

CanadianCapitalist said:


> The predecessor to XIU, TIPS 35/TIPS 100 was introduced in the early nineties.


nobody really bought TIPS in the early '90s. You will never be able to convince me that proper statistical surveys were carried out, comparing TIPS buyers' returns to self-chosen investment returns in large populations from the early '90s to, say, the year 2010. Even that would have represented a time span of 18 years, which is not enough to infer lifetime achievement.


----------



## Sampson

humble_pie said:


> U are not disclosing winners stock-wise ? what a pity, perhaps you could reconsider ?


We haven't bought much this year at all.

Some of our biggest winners have been SBUX, MCD, VZ, WFC, WMT, SYT, TD, CNR, HR.UN, BEI.UN. Boring I know.

But these have been offset by the equally horrendous,
OIL, RIM, WJA, WWE, UNH.

I'm a pretty boring buy pie, nothing exotic - although I've been getting into Brazil of late.


----------



## humble_pie

sampson i like your list very much. It's not boring at all. I don't think strong lists are ever boring.

actually i had OIL too. Wasn't it a while ago, though. Something about north sea operations were dependent on a scottish bank but 2008 happened & the bank went under ...


----------



## Sampson

I'm enjoying this thread. For the first time, it has really made me stop to think about why there has been such a dramatic difference in performance.

We initially revamped our portfolios in 2007, culminating in many of the fortuitous buys during 08/09/10. I am a believer of the couch potato model, CC is a stalwart when it comes to knowledge, practice and reasons why it is a decent strategy for common investors - therefore 95% subscriber in my wife's portfolio. However, I wanted to prove this wrong (hence my own stock picking in my portfolio). Looks like the small-cap, value indexing proved me wrong. However, the psychology really played a big role. For ever mistake I made in my timing or choices, I did not want to do the same for the other portfolio.

This made us buy only when things got really rough, like SBUX @ $17, MCD in the $50s, WFC in the teens as well as all those juicy index funds. And when things got rough, I even dipped into stocks for my wife's account - again screaming buys based on both trailing earnings, and projected future returns, but when things serious problems like Bear Sterns, Europe part I and II etc.

Now I feel the portfolios will stabilize now, presuming traumatic events will become rarer and rarer, so only time will tell who has more money at retirement. I'm hoping its me, but if my wife has more, I'll be happier. Perhaps I really do need to modify my own strategy and generate a Fab 15, or Terrific 20 - easier to manage and keep in check.


----------



## humble_pie

Sampson said:


> This made us buy only when things got really rough, like SBUX @ $17, MCD in the $50s, WFC in the teens as well as all those juicy index funds. And when things got rough, I even dipped into stocks for my wife's account - again screaming buys based on both trailing earnings, and projected future returns, but when things serious problems like Bear Sterns, Europe part I and II etc.



sampson i certainly don't mean to pry here, i'm more talking out loud to myself at this late hour of the evening, so no need to look here or to answer.

this is the paragraph that draws my attention. If i have followed you correctly, there was a certain degree of market timing in the index account, with contributions being made in late 08 & subsequently, which in turn have produced the fine gains that the account enjoys today.

but in this paragraph, various stocks were also being bought at 08/09 crash lows, presumably in the stock account. Their timing was the same, ie it was excellent timing. The way i see it, these fortunate stock purchases would have/should have generated the same fine gains - or even better gains - as those enjoyed in the index account.

like i say, just musing out loud, no need to answer.


----------



## Sampson

Pie, offset by the bad ones - honestly, what business did I have buying OIL or WWE - fundamentals and prospects (due to debt in OIL's case were abysmal). And hence this semi-enlightenment.

Like the indexing, I've been focused on diversification, but take it further to diversification by asset class, nation, and economic sector. I think clear too much. If I had only focused on the best and shorter list (I own far too many individual stocks) I would/could hazard to guess the individual picks could have performed as nicely.

I was beginning to consider hanging up the stock pickers hat, but I think I need to refine, then revisit in another 5 years. It is really the discipline in my wife's portfolio I must emulate, that has been the key to success, not stock picking or indexing, just recognizing TRUE opportunity.

I hate to sound preachy, just using this thread to hash out my own ideas. Poor OP, I totally hijacked this thread. Maybe the mods can move these posts into a new thread titled "Stock picking vs. indexing, a learning experience" or name it "Husband vs. Wife, Wife wins".


----------



## humble_pie

we will definitely have to find snowbird & propose a magnificent champagne toast.

we will ask her forgiveness on the grounds that it is a highly-charged issue, like the san andreas fault, which rumbles beneath the surface in cmf forum & produces an earthquake from time to time.


----------



## Young&Ambitious

Although jacked, I am sure the OP is enjoying learning from other's experience. I know I certainly am. Sampson, it will be interesting to compare your returns vs your wife's on a longer term basis. You are like the CMF guinea pig for index vs active :encouragement:


----------



## Sampson

I often mention this, but my philosophy is simple.

I don't know which is better, so I'll nestle myself nicely into the grey zone. If indexing does better, we benefit, if stock picking does better, we benefit. We essentially reduce the out-performance gap by half.

No home runs here, just a steady-eddy approach to reaching our objectives.


----------



## snowbird

Ah, I have just been back to my neglected diary today and i've enjoyed reading the debate here. So much useful information pops up everywhere in CMF so i don't mind the going-on here. Thanks to all for their contributions.

I have a keen interest in finance (also my profession) and am willing to dedicate time to research and learning more about investing. Personally, the reasons i went with stocks vs. ETF, are (1) I want to take a active role in investing to build my knowledge; and (2) I would not want to invest in all the stocks in an ETF, so i'd rather pick a few of stocks that i am interested in and that i understand their fundamentals. I am starting with a relatively 'small amount' and so far i invested in a handful of stocks: MCD, CVX, BCE, AGU, KO. (all in registered accounts). This is ~75%of my portfolio, the balance is held in cash & the PH&N Bond fund. (all investing is long term unless fundamentals of company changes). I am certainly going to be reviewing this approach as time goes on and as investable cash grows.

I have come a long way since i first joined this forum, and started to pay more attention to my finances and realign my priorities. 

2013 - the story so far:
- RRSP & TFSA Maxed
- Mortgage prepayment of $40,000 from bonus and savings
- Saving close to $4,000 a month, currently holding in savings account. Target is to accumulate another $40,000 to dump in mortgage next year. (not all months are created equal and some months i only save $1,000)
- However, expenses are climbing for this year - travel+entertainment are main culprits (But, i am having an eventful year so far and have a trip to Italy planned for September that will totally blow the budget
- Looking to invest this year's RRSP cash in a few more stocks on my watchlist (hoping for price drop): CNR/CSX and IPL.
- Using Mint to track networth and it is currently at $234K. This isn't growing fast enough:rolleyes2:
I will post monthly updates including networth to see what the trajectory looks like Do people include the DC pension in calculating networth?


----------



## snowbird

*2017 - Mid-year Update:*

*Assets:*
Condo Unit - $375,000
RRSP - $172,209: US and CDN equities
TFSA: $65,597: CDN equities
DC Pension: $110,522: US, CDN equities plus Fidelity Target Date fund via work investment provider
Company stock: $2,064 (not including ~$30,000 currently underwater)
Total = $725,392

*Liabilities*
Mortgage (1.85%, 2020): $160,000
Plan is to prepay by $40,000-$45,000 each year and will have this paid off by 2019

Net worth
*$565,392*

*Short Term Goals (6-12 months)* - Age 40
- Prepay mortgage - $45,000 by Dec 2017
- Earn side income - $6,000 by Dec 2017 (i.e. $1,000 per month) - i am currently renting out my parking spot in condo -$100/month, Airbnb - $500/month, planning to get into ebay selling, other side hustles

*Long Term Goals (2018-2022)*
- Mortgage is paid off
- Save $290,000 in 5 years (free cashflow generated from not having mortgage will go into RRSP, TFSA & Non Reg)
- Start own business
- Have net worth of ~$1MM

*Longer term (2022+)* - Age 45
- Quit paid employment at 45
- Have enough Nest Egg to meet retirement needs
- Semi-retired from own business by 55

The biggest threat to the 5 year goal is job security - pretty tough in Calgary these days.

Please critique and give me your opinions on if these are reasonable. Any advice is welcome.


----------



## snowbird

Q3 UPDATE:

Assets:
Condo Unit - $375,000
RRSP - $178,689: US and CDN equities
TFSA: $68,598: CDN equities
DC Pension: $112,469: US, CDN equities plus Fidelity Target Date fund via work investment provider
Non-reg savings: $19,623 
Total = $754,379

Liabilities
Mortgage (2.35%, 2020): $165,444*


Net worth - Sept 30, 2017
*$588,935*

*mistake in June update*


----------



## Thal81

Hi, nice long term update to your freedom diary Snowbird.

I can't help but raise an eyebrow at how much of your networth is tied to your condo. I guess Calgary must be really expensive, over here in the Ottawa suburbs, $375k is the price of a nice single-family house. My nice condo is worth about $180k. What I'm trying to say is you could accelerate your path to freedom by moving to a cheaper location and investing the difference. But heh, I understand it must be hard to change cities or move farther from your work. If job security is really an issue where you're at, well maybe that's a good excuse to do it.

cheers


----------



## OnlyMyOpinion

Thal, I think having a high % of your total asset value tied up in your primary residence relatively early in your journey is probably pretty normal, especially if you are aggressively paying down a mortgage?
I'd be more concerned if it was still a large % when you get close to FI or retiring.


----------



## snowbird

Yeah, Calgary RE is expensive, and my condo is located inner city which is even pricier but allows me to go without owning a car. I wish i could move to cheaper place but right now I have other personal ties to Calgary and i just survived another round of layoffs so we'll see. This job insecurity is definitely making me think seriously about other ways to further my personal goals by starting a business or RE rental/investment.


----------



## OnlyMyOpinion

Snowbird,
You may want to consider the competition these days in Calgary:
https://www.rentfaster.ca/maps/?area=51.057002009966084,-114.0350980903076,51.03444599739625,-114.09741117014158&keywords=&proximity_type=location-city&novacancy=0&city_id=1&extra=%7B%22areaUrl%22:%2251.057002009966084,-114.0350980903076,51.03444599739625,-114.09741117014158%22,%22listingId%22:null,%22mzoom%22:14,%22mcenter%22:%2251.045725376621334,-114.06625463022459%22%7D
While I see RentFaster sparsely used in some Ontario cities, it seems to be used quite a bit in Calgary. No shortage of rentals and still a lot of condos bought on spec for sale as well.


----------



## snowbird

*Sept 2019 update*

(age: 42, single income, no dependants):

Assets:
Condo Unit - $375,000
RRSP - $255,410: US and CDN equities
TFSA - $100,951: CDN equities
DC Pension - $166,321: US, CDN equities 
Total = $897,682

Liabilities
Mortgage (3.1%, 2020 renewal): $95,850

Net worth
$801,832


My plan from 2017 has been delayed a bit as I quit my well-paying but soul-destroying job in 2018 and so my FCF is lower by $20K/year on my new salary. I won't be able to pay off the mortgage by next year after all. I've been good with keeping expenses down and aggressively paying down the mortgage but the pay cut really hit my savings rate.

I will be renting a place together with my BF next year and will rent out my condo at that time or sell - the market is till too soft but we'll see what next year brings. 

I like my new job - it is super flexible and I like the culture there but I am getting restless again and now thinking of looking for something new in a year or so with better pay! (I feel grossly underpaid). Anyway, I had imagined this would be my last gig as an employee and I now have more time to work on starting my own thing so I may just stick it out.

The NEW goals are:
- NW of $1M by 45 and debt free;
- 50% of current income generated from self-employment with a path to exiting the corporate world by 50.

is this feasible? We will see...


----------



## snowbird

*Q4 2019 Update*

Age: 43. A Year older! December was eventful, splurged on my birthday celebrations, started a new job that came with an incredible pay raise - yay me. Time to fire up that Personal Savings Rate!

*Assets*
Condo Unit - $375,000
RRSP - $276,200: US and CDN equities
TFSA - $98,492: CDN equities
DC Pension - $163,544: US, CDN equities 
Checking acct - $11,600
Total = $924,857

*Liabilities*
Mortgage (3.1%, 2020 renewal): $91,700
Credit card - $3,200 (spendy December)

*Net worth
$829,957*

2020 Goals
- Target Personal savings rate of 65% ($60K), excluding any bonuses
- Max TFSA, RRSP
- $40K to prepay mortgage
- $5K vacation/trips/hobbies

Q1 2020 plan:
- Max TFSA (transfer from checking account - Jan. 2)
- Pay off CC Balance (Jan 3)
- Save $15K (Mar 31)


----------



## peterk

Awesome! So you switched to a new job again? Just ~6 months later? You were talking about liking your new, lower paying job just 3 months ago...

Have you found any cashflowing rentals in Calgary yet? What are rents doing? Up here in Fort Mac rents are still dropping I believe. The condo market is in the gutter, but when I do the math based on advertised rental prices minus $100-200, which I think is where the market is at, these things still don't cashflow. You can get a dump 1-bed for $50k that will rent for $800-900, or a nice 1-bed for $120k that rents for $1200-1300. Both only barely break-even on a 25 year mortgage, which is not good enough for an investment property.


----------



## snowbird

Thanks! I am feeling very good being back on track with my financial goals and working in a company that is growing!. Yes I was in the previous job for exactly 12 months when this new opportunity presented itself. I was approached by a recruiter in October for this new job and while I loved it at my old job, in the end, it came down to $$ as the new position came with a huge increase in pay, higher responsibility and being a much smaller company, better opportunities to get involved in different kinds of work. 

Rents are still slack in the Calgary condo space, and I'd like to stay in mine until the mortgage is paid off and then the cashflow will work if I rent it out, it should cover the condo fees plus my new shared living space with the BF. The market for selling is not great either so I'll probably keep it for a while and hope things come back at some point.


----------



## scorpion_ca

Have you completed your MBA? What industry are you working now?


----------



## snowbird

oh yeah, completed the MBA over 5 years ago. Back in Oil & Gas (after a brief stint in Financial services)...but this time in Midstream/Infrastructure


----------



## snowbird

Age: 44. Report date: March 31, 2021
2020 might just have one of the best years of my professional life; I enjoy my job and feel like I am being rewarded fairly for my skills. Got a promotion within a year at the new job and expecting similar successes in 2021 for the company and hopefully myself.

Saved up a whole lot due to Covid but decided to splurge on a few nice things for myself this past few weeks and may have gone overboard hence the huge credit card balance.

Assets
Condo Unit - $375,000 (Mindful that is is optimistic - Condo values are down significantly here)
RRSP - $350,998: US and CDN equities
TFSA - $118,600: CDN equities
DC Pension - $191,345: US, CDN equities 
Checking acct - $2,992
*Total = $1,038,935* 

Liabilities
Mortgage (1.45%): $27,836
Credit card - $6,912 (will be paid off end of April)

Net worth
*$1,004,187 *(first time hitting $1MM) 

2021 Goals

Max TFSA, RRSP : Done
Deploy $15K to fully pay off mortgage (Dec)
Put aside $15K in emergency savings (~1 year of expenses)
Personal Savings rate: ~65%

I will be glad when the mortgage is wiped out but I don't know when I will feel like I have achieved financial independence or whether I am even on track. I still like my career so might work for another 3-5 years but thinking of a business to run after that.

At what point (NW/Invested Asset level) did folks feel confident in their stash?


----------



## Saniokca

So in 9 years you went from 125k to 1M in net worth. That's amazing!


----------



## Thal81

snowbird said:


> At what point (NW/Invested Asset level) did folks feel confident in their stash?


Depends on your yearly spending, which you don't mention. My stash is much smaller than yours but I spend <$20k year (with a paid off home) and I'm pretty sure I'm calling it quits after Covid (the timing of the pandemic worked out great with my FIRE plans).
edit: at second glance, I didn't see how much of your networth came from house and pension, which I also have but don't count (DB pension), so take with a grain of salt.


----------



## snowbird

Saniokca said:


> So in 9 years you went from 125k to 1M in net worth. That's amazing!


Thank you. Really can't thank the people of this forum enough - finding it was a life-changer for me. I couldn't have imagined being in this position when I found myself divorced and alone in a new country 10 years ago. Truly, some of life's most difficult moments can be harbingers of so much growth. I feel blessed to be where I am.


----------



## snowbird

Thal81 said:


> Depends on your yearly spending, which you don't mention. My stash is much smaller than yours but I spend <$20k year (with a paid off home) and I'm pretty sure I'm calling it quits after Covid (the timing of the pandemic worked out great with my FIRE plans).
> edit: at second glance, I didn't see how much of your network came from house and pension, which I also have but don't count (DB pension), so take with a grain of salt.


Congrats on being so close to FIRE! That is amazing. Is your stash all in non-reg accounts then? And is the $20K going to come from dividends and the DB pension? My budget is ~$15K/year when I no longer have the mortgage.


----------



## Thal81

snowbird said:


> Congrats on being so close to FIRE! That is amazing. Is your stash all in non-reg accounts then? And is the $20K going to come from dividends and the DB pension? My budget is ~$15K/year when I no longer have the mortgage.


Nah, it's a mix of TFSA, RRSP and non-reg, but the majority is non-reg. My RRSP is very small due to the DB pension eating up most of my contribution room. In the early years, the $20k will come from withdrawing about $7-10k of RRSPs (until it runs out) and the rest from non-reg distributions and selling some for cap gains (including selling extra shares to contribute to my TFSA every year). I'm doing it in a way that it will work out to $0 taxes, which is a fun optimisation problem


----------



## snowbird

2021 Year-end Update (Age 45, single income)

Assets
*Condo Unit - $375,000 *
RRSP - $416,424: US and CDN equities
TFSA - $147,519: CDN equities
LIRA - $222,390: US, CDN equities
*Total Invested Assets: $786,333*
Checking acct - $17,810
*Total Assets = $1,179,143*

Liabilities
nil
Net worth
*$1,179,143*

Review of 2021 Goals

Max TFSA, RRSP :* Done*
Deploy $15K to fully pay off mortgage: *Done*
Put aside $15K in emergency savings: *Done*
*2022 Goals:*
1. Savings target $75K (stretch $90K) used as follows:

Max RRSP, TFSA (TFSA done Jan 4)
Down payment on house purchase house - got a HELOC to fund 20% down payment (pay off HELOC). 
2. Rent out condo - fingers crossed I can get around $20K/year conservatively.

2022 is going to a spendy year (house furnishings, etc) - so nerve wracking but I have to remind myself to enjoy life! Job still going well, hopefully bonus is good this year.

Don't really know what to do with my condo when we buy the house. I don't want to be a landlord so once HELOC is paid off, I think I will sell and put cash into equities - better returns I think. Or should I hold on to it as a way to diversify? Condos are not going to appreciate any time soon in this housing market though.

I would appreciate your opinions/advice.

Thanks


----------

