# What should I do and where can I improve?



## Time4earlyretirement (Feb 21, 2014)

*Time4earlyretirement - Diary of an unfrugal yuppie*

Hi, I am a 25 year old who currently makes about 55,000$ gross. I am completely debt free. Fortunately for the foreseeable future, I will have no expenses regarding a place to live, as my parents will be inheriting a town house in downtown Toronto, close to where I work and have expressed to me that they do not plan on selling the second property. I am currently living/taking care of my grandparent in that home, and do not pay any of the living expenses, but will have to in the future. I also own a completely paid off car which I only use on the weekend. Other than that, I am completely self sufficient. 

I have spent too much time in terms of individual investments, but haven't spent enough time at looking at the whole picture in my personal financial planning. I have averaged 20% over my 2 years as an individual investor, although I don't take too much credit as we all experienced a strong bull market. 

I have approximately 8000 in unused RRSP carry over. I have not started an RRSP account yet but intend to for the 2014 year. My current employer (and all future employers) expect to have a 4% matching RRSP plan. I intend to max this out every year, followed by TSFA.

My financial goal is to have $1 million worth (inflation adjusted) by time I'm 55 years old. I believe that with a 5% annual return in low risk, higher yielding investments, an investment income of 50,000$ (again, inflation adjusted at 55 y.o) + retirement income is suffice for me.

----------------------------------------------------
*My current situation (annually):*

Gross:	55,000
*Net (Accord to E&Y website):	44,750*

*Expenses:* 
Transportation 
TTC	1320
Vehicle	3600
Food	
Daily	2510
Leisure (Food)	2000

Internet	540
Gym	858
Cell	540

*Sub-Total* 33,382
Leisure (Misc)	8382

*Total	25,000*
----------------------------------------------------
*Networth (excluding depreciating assets):*

TSFA: 33,000
Non Reg: 8,200, locked in investments
Chequing 7000

*Total: 48,200*
----------------------------------------------------


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## peterk (May 16, 2010)

Awesome work! Sounds like you're saving a lot. 

Do you really need the car, living in downtown Toronto and taking the TTC? It only costs $100/weekend to rent a brand new car that you don't have to worry about or maintain. You could do that for 3 weekends/month and still break even.

What are the two leisure categories all about?


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## Time4earlyretirement (Feb 21, 2014)

peterk said:


> Awesome work! Sounds like you're saving a lot.
> 
> Do you really need the car, living in downtown Toronto and taking the TTC? It only costs $100/weekend to rent a brand new car that you don't have to worry about or maintain. You could do that for 3 weekends/month and still break even.
> 
> What are the two leisure categories all about?



I've clarified the 2 'leisures'; basically leisure (food) are meals outside of the needed breakfast/lunch/dinner. My budget food is a rough guestimation of money I spend daily for work; leisure are meals with friends and girl friend.

'Leisure' (Misc) is generalized as spending on anything not categorized. More realistically this should be a bit more as I should set aside a few thousand on annual vacations.


As for the car, I can't really give it up because... as a guy.. we have to drive people (gf and elderly) people around.


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## mind_business (Sep 24, 2011)

You're doing amazingly well for your age. Well done! 

The next steps at your age might be investing in your human capital. Not sure what your current employment is, however most people benefit from further education/training. Look for opportunities that stretch your current comfort level ... inside out outside of work.


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## DividendLuvr (Mar 5, 2014)

Looking great! Your savings rate is fantastic. You are very fortunate to not have to cover the cost of housing at this time, as this will enable you to maximize opportunities for growing your net worth.

One thing you might want to consider is developing a budget and tracking your expenditures down to the cent. I realize this can seem daunting at first, but it really becomes a valuable part of your financial planning and you will see benefit. When I did it, I found I was underestimating all of my small, daily expenditures, like lunches and coffees. It opened my eyes to where my $ was going, and allowed me to re-calibrate my behaviours to "cut the fat" and maximize saving. It allows one to make informed choices about where one spends (or doesn't).


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## Time4earlyretirement (Feb 21, 2014)

Thanks for the input everyone!



mind_business said:


> You're doing amazingly well for your age. Well done!
> 
> The next steps at your age might be investing in your human capital. Not sure what your current employment is, however most people benefit from further education/training. Look for opportunities that stretch your current comfort level ... inside out outside of work.


I'm currently an analyst at a large money manager in their middle office (investment performance/attribution analysis), and am actively pursuing the CFA designation as well as completing the CIPM. Seems a little overkill to go for both, but its paid for by my employer so why not.



DividendLuvr said:


> Looking great! Your savings rate is fantastic. You are very fortunate to not have to cover the cost of housing at this time, as this will enable you to maximize opportunities for growing your net worth.
> 
> One thing you might want to consider is developing a budget and tracking your expenditures down to the cent. I realize this can seem daunting at first, but it really becomes a valuable part of your financial planning and you will see benefit. When I did it, I found I was underestimating all of my small, daily expenditures, like lunches and coffees. It opened my eyes to where my $ was going, and allowed me to re-calibrate my behaviours to "cut the fat" and maximize saving. It allows one to make informed choices about where one spends (or doesn't).


Thanks for the suggestion, I have been considering setting up a spreadsheet. If only there were good apps for things like these. I have to agree I think my savings can be a lot better; when I look at how much I made since graduation to my current networth which includes investment income, I think I'm averaging a save/spend of 50/50. I remember for the first year out of graduation when I was still really frugal, it was closer to save/spend 35/65.


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## Spudd (Oct 11, 2011)

Try mint.com.


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## heyjude (May 16, 2009)

No need to apologize for keeping the car when you are supporting your grandparent. This setup sounds like a win for both of you. 

I second the budget idea. It can be a Eureka exercise! Personally, I would not use mint.com because of the risk of uploading personal financial data to the web. I use a spreadsheet which I customized from an Excel template. As a financial analyst, this should be like falling off a log for you.


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## DividendLuvr (Mar 5, 2014)

Agree re: mint.com - I would not use it as you need to hand over all your financial information, including account numbers and passwords, to them. If it is ever compromised...

The thing with an app or online interface is it's easy to file away and not think about it. A spreadsheet forces you to update and type everything out on a regular basis.


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## james4beach (Nov 15, 2012)

I don't recommend Mint either, it's a security risk and probably violates your online banking agreement. Which means that if you ever have a loss due to intrusion into your account, the bank may refuse to make you whole because you violated their rules by handing your passwords over to someone else. Remember: banks will make you whole on fraud/theft, provided that you followed all the rules: don't write your password down where it can be seen, never share your PIN or password with anyone else.

I suggest having two different spreadsheets. This is what I have.

Spreadsheet #1 is your personal balance sheet. It lists all your accounts, their values, and your loans. It also lists all your credit cards and (here's the key) as you spend, you update the credit card entries with the current negative value. I update mine every week. This eliminates the perception that credit cards are free money... you'll see the impact right away in your net worth. And when you pay the CC bill, you simply subtract from bank balance and add to CC balance. *No surprises*.

Spreadsheet #2 is your daily spending. I update mine daily, I'm adding the $8 I spent on lunch today for example. Everything you spend should go on here: day to day expenses and special one-off expenses. Do this accurately and you'll know *exactly* what you're spending each year. It's been a very useful exercise for me.

In its simplest form, the spending/expenses spreadsheet just has 4 columns:
date, dollar amount, code, and description

I use a one letter code to help identify the general category for major groups:

H = housing & shelter esentials, like rent, electricity, water, heating
F = food
T = transport, car, gas, monorail
S = monthly services (phone, internet, TV) that's non-housing
E = entertainment, if that's a significant part of your spending

For example, looking at my spreadsheet I decided I'm spending too much on category S and now I'm taking steps to cut costs... I'm killing TV and the phone carrier and setting up voip using callcentric and a $50 ATA adapter


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## Time4earlyretirement (Feb 21, 2014)

Update:

Last month:

Networth (excluding depreciating assets):

TSFA: 33,000
Non Reg: 8,200, locked in investments
Chequing 7000

Total: 48,200
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
______________________________________________________________________________________________________

*This month:

1.) Decent realized capital gains on investments
2.) Opened a self-directed RRSP with TD, but can't decide what asset class of ETFs to dump it into

Networth (excluding depreciating assets):

TSFA: 34,000
Non Reg: 8,000
Chequing: 6200
RRSP: 1870 

Total: 50,020
----------------------------------------------------*


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## My Own Advisor (Sep 24, 2012)

Well done, keep it up!

I certainly didn't have 34k in my TFSA when I was 25, even though there was no TFSA then


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## Time4earlyretirement (Feb 21, 2014)

Update:

Last month:

Networth (excluding depreciating assets):

TSFA: 34,000
Non Reg: 8,000
Chequing: 6200
RRSP: 1870 

Total: 50,020
---------------------------------------------------- 

*This Month: god dam YOLO lifestyle this month, don't know what happend. Spent about 500 for stay on a short trip to Boston including lavish meals + upped my work attire. Got my tax return of -950. Pretty much went no where this whole month. Very dissapointed.

TSFA: 34,500
Non Reg: 7,800
Chequing: 5,600
RRSP: 3,250
Tax payable: -950

Total: 50,200*


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## Mortgage u/w (Feb 6, 2014)

You are doing very well. Don't get upset if you splurge once in a while. After-all, you need to enjoy yourself in life especially now that you are young - I don't recommend depriving yourself until 55 years old. Life is too short and money is always secondary. As long as you stay on track with your planned budget, you'll be fine.
One thing you mentioned which is very worthy is the employer matching contribution. If employer is matching dollar for dollar, for sure take full advantage of that. No investment out there exists with that kind of return!


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## Barwelle (Feb 23, 2011)

If you're still looking for a way to budget, I recommend YNAB - You Need A Budget (and give credit to brad here on CMF for bringing it to my attention). Not a security risk like mint is, it's all manual entry - but very easy to maintain and adjust once it's set up. Check it out.


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## JordoR (Aug 20, 2013)

Yeah don't be too disappointed if you have one bad month out of the year kind of thing. You are doing extremely well for your age!

I realized I had way too big of a focus on saving every single penny a couple years ago. I had a bit of a lifestyle change, and while I still save a large part of my salary and am set up well financially, I don't fret over a few indulgences here or there.


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## Time4earlyretirement (Feb 21, 2014)

Last month:

Networth (excluding depreciating assets):

TSFA: 34,000
Non Reg: 8,000
Chequing: 6200
RRSP: 1870 

Total: 50,020
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
__________________________________________________ __________________________________________________ __

*Most recent:

Networth (excluding depreciating assets):

TSFA: 34,500
Non Reg: 8,300
Chequing: 6450
RRSP: 3850 
Credit Card: 1400 (Registration for professional exam...will not be reinbursted by employer till my 1 year working anniversary)

Total: 51,700*

Notes: Eating out too much. Lots of summer BBQs. Gas is expensive...Lots of summerlicious coming up.


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## heyjude (May 16, 2009)

Your recent purchase of new work clothes and the exam fee are both helping to advance your career (which has great potential). Think of them as investments in your human capital. 

At your age I was making many such investments (without the prospect of reimbursement) and it paid off big time in the long run.


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## Time4earlyretirement (Feb 21, 2014)

Last:

Networth (excluding depreciating assets):

TSFA: 34,500
Non Reg: 8,300
Chequing: 6450
RRSP: 3850 
Credit Card: 1400 (Registration for professional exam...will not be reinbursted by employer till my 1 year working anniversary)

Total: 51,700

--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
__________________________________________________ __________________________________________________ __

*Most recent:

Networth (excluding depreciating assets):

TSFA: 35,000
Non Reg: 8,650
Chequing: 5550
RRSP Self-direct: 4505 
Credit Card: 1900 
DC plan: 1050

Total: 56,665.

Note: 
- big Europe trip that put me back about 4000 but was very fun 
- started my employee DC plan with this allocation:
- 30% Global, half growth half value
- 30% International, half growth half value
- 15% US, half core half growth
- 15% Universe bond
- 10% Money market

I sort of outlined my financial goal to myself lately, not sure how realistic:
- Current age: 25
- To achieve, equivalent in the future at 50, 30,000 in investment income per year, at an assume yield rate of 5%.
- 600,000 x (1+ 0.022)^25 = 1,040,000 --- 2.2% inflation
- FV = 1,040,000 ~~ N = 25 x 12 = 300 ~~ I = 0.48674; 6% annual assumption ~~ PV = 56,600 ~~~ PMT=CMT= 1900 per month.
*


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## Time4earlyretirement (Feb 21, 2014)

Last

Networth (excluding depreciating assets):

TSFA: 35,000
Non Reg: 8,650
Chequing: 5550
RRSP Self-direct: 4505
Credit Card: 1900
DC plan: 1050

Total: 56,665.

I sort of outlined my financial goal to myself lately, not sure how realistic:
- Current age: 25
- To achieve, equivalent in the future at 50, 30,000 in investment income per year, at an assume yield rate of 5%.
- 600,000 x (1+ 0.022)^25 = 1,040,000 --- 2.2% inflation
- FV = 1,040,000 ~~ N = 25 x 12 = 300 ~~ I = 0.48674; 6% annual assumption ~~ PV = 56,600 ~~~ PMT=CMT= 1900 per month.
___________________________________________________________________________________________________________________________

*Current:

Networth (excluding depreciating assets):

TSFA: 23,000
Non Reg: 7200
Chequing: 5700
RRSP Self-direct: 5200
Credit Card: 1200
DC plan: 2200

Total: 44,500.

RIP my TFSA. Gone from massive gains to way below starting due to oil - will re-evaluate these 6 months from now. I still think the companies I hold are good.

Roughly 25% in cash; thinking of growing this for the foreseeable future for any major/minor corrections or possibly joint property investment with a friend for a townhouse in downtown Toronto.

*


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## Time4earlyretirement (Feb 21, 2014)

Prior:

Networth (excluding depreciating assets):

TSFA: 23,000
Non Reg: 7200
Chequing: 5700
RRSP Self-direct: 5200
Credit Card: 1200
DC plan: 2200

Total: 44,500.

---------------------------------------------------------------------------------------------------------------------------------------------------

*Current:

Networth (excluding depreciating assets):

TSFA: 34,000
Non Reg: 2,800
Chequing: 7,115
RRSP Self-direct: 5200
Credit Card: 2,845
DC plan: 3200

Total: 49,470.

*


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## Time4earlyretirement (Feb 21, 2014)

Prior

Networth (excluding depreciating assets):

TSFA: 34,000
Non Reg: 2,800
Chequing: 7,115
RRSP Self-direct: 5200
Credit Card: 2,845
DC plan: 3200

Total: 49,470.

------------------------------------------------------------

*Current:

Networth (excluding depreciating assets):

TSFA: 32,700
Non Reg: 4,550
Chequing: 5,750
RRSP Self-direct: 9200 in cash
Credit Card: 845
DC plan: 4000

Total: 57,045

Not exactly where I wanted to be at 26 years old. Granted a lot of my long term holds have wiped out a lot of my investment gains during 2014, I think I should be closer to 62k. I wanted to aim for 100k at 27 but that doesn't look like it will be happening.

Only real plan in motion right now is saving 2k out of 3k net each money semi successfully.

With 9.2k in cash in my RRSP, its so hard to buy in these days as I want this aspect of my portfolio to be passive, but my play is that I will initiate an index position when the index drops by 500 or more within a 21 business day timeframe.
*


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## CalgaryPotato (Mar 7, 2015)

Maybe it's just me, but putting that much thought into when to put the $9200 into the index, could bring as much opportunity risk, as risk you're avoiding. If you were making a single one time lump of tens or hundreds of thousands of dollars I could see this level of risk aversion, but over time, if you do this every time you decide to add to your portfolio, you will probably lose out in the end. Just my two cents worth.

Also don't get down on yourself... it's like someone being on a diet, and getting down on themselves that they only lost 1 pound that week instead of 3. Your savings are constantly growing, that's the idea! Celebrate your success and keep it going.


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## OnlyMyOpinion (Sep 1, 2013)

I agree with CP. Start your long term portfolio and don't second guess your timing. Get the money working for you. If you are continually saving and investing through the years you will always have 'new' cash to put to use.


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## Time4earlyretirement (Feb 21, 2014)

CalgaryPotato said:


> Maybe it's just me, but putting that much thought into when to put the $9200 into the index, could bring as much opportunity risk, as risk you're avoiding. If you were making a single one time lump of tens or hundreds of thousands of dollars I could see this level of risk aversion, but over time, if you do this every time you decide to add to your portfolio, you will probably lose out in the end. Just my two cents worth.
> 
> Also don't get down on yourself... it's like someone being on a diet, and getting down on themselves that they only lost 1 pound that week instead of 3. Your savings are constantly growing, that's the idea! Celebrate your success and keep it going.





OnlyMyOpinion said:


> I agree with CP. Start your long term portfolio and don't second guess your timing. Get the money working for you. If you are continually saving and investing through the years you will always have 'new' cash to put to use.


Thank you both.

I have decided (and acted on) started with 5k in Mawer Canadian Equity. I may actually change my RSP to a tilt strategy (passive + partial active). Since TD requires 25k before I can get annual fees waived on a fully tradable self directed account, I may start by building my portfolio with Mawer.


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## OnlyMyOpinion (Sep 1, 2013)

Good point on the TD fees. I was surprised to look up MAW106 and see a 1.21% MER. You will be advised by most to eventully go with something lower cost, but its not a big deal at this early stage. The fund has sustantially outpaced the S&P TSX index throughout 1,3,5 and 10yrs, so its hard to argue with that. The usual caveat that 'past performance does not predict future performance'. We have significant MAW104 (some bought recently) because it provides a complete cdn/us/int/fi 'hands-off' portfolio. It's MER is only .91% though. Not sure why the difference.


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## Time4earlyretirement (Feb 21, 2014)

Prior

Networth (excluding depreciating assets):

TSFA: 32,700
Non Reg: 4,550
Chequing: 5,750
RRSP Self-direct: 9200 in cash
Credit Card: 845
DC plan: 4000

Total: 57,045

----------------------------------

*Current:

Networth (excluding depreciating assets):

TSFA: 35,800
Non Reg: 4,575
Chequing: 10,300
RRSP Self-direct: 9300
Credit Card: 950
DC plan: 4315

Total: 63,340*

Tax return and slight oil recovery this month. Still sitting on about 20k Cash, not knowing what to do with it. Since the pullback in October, I'm really leaning towards focusing on a value, long term investment strategy (while adding covered calls to the mix) to supplement a passive retirement investment strategy. At this point I feel most blue chips are fairly priced.

Monthly adds: 

100 TRP.TO @ 54.5 
(1) TRP.TO X=56 May 15 @ 0.80$

Eyeing AT&T to hit 32


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## 1980z28 (Mar 4, 2010)

Time4earlyretirement said:


> Still sitting on about 20k Cash, not knowing what to do with it.


Short term BCE

LONG term RY

IMHO


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## Time4earlyretirement (Feb 21, 2014)

Back from a long hiatus 

Turning 28 next year. Going to try to get a regular update going; was drawn too deep into my CFA studies earlier this year. Glad to say, I started a new job in 2016 with good benefits. Base salary is now 65k, bonus of 10-12k. Employer match RRSP will eventually get to 15% after a few years of employment. This will probably be a longer term position I will stay in. I've also decided to lease a sports car for 3 years at about 500 a month.

Sitting on more than 50% in cash. After working in the institutional investing world, I've come to acknowledge both the insignificance of stock and fund picking, and will be slowly transition into a "passive-tilt" style, where I will index most non-domestic exposure and overlay only a very small handful of active holdings. Made very wise choices this year, only building foundation of said portfolio during the oil/China low in Q1-16 and on the immediate days following Brexit and Trump (active holdings).

_Prior Networth (excluding depreciating assets):

TSFA: 35,800
Non Reg: 4,575
Chequing: 10,300
RRSP Self-direct: 9300
Credit Card: 950
DC plan: 4315

Total: 63,340_

----------------------------------

*Current:

Networth (excluding depreciating assets):

TSFA: 47,700
Non Reg: 11,790
Chequing: 12,390
RRSP Self-direct: 15,251
DC plan: 9,350

Total: 96,483*


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## redsgomarching (Mar 6, 2016)

congrats on the job, can you share what your position is?/what you do and your education?


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## Time4earlyretirement (Feb 21, 2014)

redsgomarching said:


> congrats on the job, can you share what your position is?/what you do and your education?


Thanks redsgomatching, I'm currently an associate at a global asset manager, where I work with investment teams in understanding what and why (investment decisions) to support the rest of the company i.e institutional consultants, client relations, sales. I have an undergrad in finance and am close to completing the CFA.


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## Time4earlyretirement (Feb 21, 2014)

Time4earlyretirement said:


> _Prior Networth (excluding depreciating assets):
> 
> Networth (excluding depreciating assets):
> 
> ...


----------------------------

*Very ecstatic to say that Christmas came early with about 11k pre-tax bonus. Also have been awarded phantom shares that will pay about 8.5k a year for 2018, 2019, and 2020 if I am still an employee.*

*Current:

Networth (excluding depreciating assets):

TSFA: 49,115
Non Reg: 12,320
Chequing: 21,210
RRSP Self-direct: 15,251
DC plan: 9,845

Total: 107,740*


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