# I thought we were doing great. And I think we are though some of you put us to shame



## neoabraxas (Mar 4, 2013)

Here's our background. Wife and I are a pair of immigrants who have been here for about 10 years. I'm 37 and wife is 35. Because she had to go to university here in order to secure a job in Canada we are probably several years behind vs where we should be given our jobs and incomes. Our combined family income from employment is anywhere from 160k to 180k depending on bonuses. 

We own our house free and clear (paid off in Jan 2013) as we are conservative and abhor debt of any kind. Given that mortgage debt is not tax deductible in Canada we saw little reason to focus on any other investing. We pressed very hard to pay it off fast and we had a hefty down payment when we bought. 

The house is worth about $300,000 going by purchase price plus the improvements we made (287,000 purchase price of the brand new house in which we finished the basement, added a deck and landscaping). Perhaps it could sell for a bit more but I'm not counting on that given that we live in the Maritimes where the RE has been stagnant. 

Our investments are mostly in stocks and cash and here is where we need to put some more effort. 

My RRSP ~165,000
My TFSA ~25,500
My DCPP ~9,000

Her RRSP ~40,000
Her TFSA ~12,000
Her DCPP ~4,000

Non reg investments (some of which should probably be transferred to her reg accounts):

CAD ~110,000
USD ~47,000

HISA 14,000
Checking accts combined ~6,000

The reason I am not too happy with our goals is that my wife's retirement savings aren't anywhere where they should be but she feels that the RRSP may not be right for her as her income is a fair bit lower than mine so the tax deferral may not be the best idea. We will try to max out her TFSA. 

We both have DCPP accounts at work but only contribute enough to receive the full employer match. I'm also a bit hesitant with those accounts as we don't know what will happen if we choose to retire outside of Canada (and that is a real possibility for us). 

We have a 19 month old and his daycare is currently our biggest single expense running a total of about 10,000 a year. House bills come next with the property tax a whopping 4,500 a year and water and sewage another 1,000. Utility bills come in at about 2,500 a year. House insurance adds an extra 500 a year though that could drop now that the house is paid off. 
Food and chemicals run us another 12,000 a year and travel appears to work out at around 6,000 a year and may go up with the son having to pay full fare on flights once he turns 2. 
We drive two cars, both of which are paid for but still cost about 1,800 in insurance and another 4,000 in gas.
Overall we don't feel particularly extravagant but our living expenses do seem to add up to a hefty sum. It would probably make financial sense to sell our house and move to a cheaper one to save on property taxes but we like the house as we built it literally with our own hands (that's why it was paid off fast). 
Smaller recurring bills include the Internet at 1,200 a year with cellphone plans, my Audible subscription at 300 a year, charitable donations at about 1,200 a year and other miscellaneous. 

Any major advice on what we should be doing differently? Our goal is to be able to live off passive income at our current spending levels before I hit 55 so we have another 18 years or so. Is that goal attainable? 

Before you shout "hell yeah!" here is the big gotcha: Only about 30% of our liquid assets is in securities as we are conservative and don't have the stomachs for large drawdowns. This will likely hurt our returns in the long run but we have a hard time seeing our savings vaporize especially that we foolishly sold a lot of stocks in the 2008 panic. I think we just might not be emotionally cut out for stock market investing.


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## Ponderling (Mar 1, 2013)

Given you only got on your feet here 10 years ago, and you own your home mortgage free, you seem to be in a reasonable state. Certainly well ahaed many others with a much longer head start.

Consider working your way though setting up a model in RRIFmetric or other financial planning software.
See what your risk aversion to the stock market, with its traditionally higher long term returns is going to cost you.

There are others, but RRIFMetric is the most powerful tool I have run across for these purposes. One of the members here writes it. 

I have been heavily singed in market sell offs, and had other periods where holdings values sat still for a few years (late 90's early 00'). I still work on feeding my brokerage accounts. Leaving money in 'safe' accounts at the bank will leave me run out of money in old age.


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## lonewolf (Jun 12, 2012)

Maxing out RRSP might be the way to go. Although Iam not a big fan of holding stocks in an RRSP.

Laws can change. Iam not an expert on taxes. I think there is some way to cut off ties with Canada i.e., bank accounts, home, etc & remain a Canadian citizen but not A Canadian residence for something like a year & be able to take money out of the RRSP & be taxed @ a max rate of something like 25% on the money withdrawn out of the RRSP.

Iam sure there is someone on this site that is more knowledgeable about the exact details then Iam on the subject.


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## Feruk (Aug 15, 2012)

You guys have saved up $730K, that's awesome. Now the negative. Inflation is about 2-3%/year. That means if your money is not doing anything, you are LOSING 2-3% per year. Average historic maket returns are somewhere in the 8% range. You are making -3%, a 11% difference. Now I'm not saying throw it all into the stock market, but it sitting there is only devaluing it. You also miss out on compounding which is where you make a significant part of your money.


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## purple.platypus (Dec 10, 2012)

They did say part of that money is in stocks for all that this makes the OP nervous. The HISA can probably also be considered to have a real return of about zero, in the long run. God knows what the value of their house will do over the next couple of years but in the long run that's almost certainly an appreciating asset too. They may be gaining less real value than they could but I doubt they're losing much, if any.

So the best way to take Feruk's post, in particular (some other comments too) is probably as advice not to jump _out_ of stocks entirely, as it sounds like the OP is contemplating doing.


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## b_foot (Dec 16, 2010)

About investing .... I'm still in the process of invest the cash we currently have (my wife mostly). I've been doing $5K a month till late last year into ETF. Someone will say I'm crazy but I'm waiting for the next correction, which I think we're not too far off. I'm not hoping to get in at the bottom, but at least not at the top. 

We're in the same age group and about the same in net worth. Perhaps we can compare notes sometime.


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## b_foot (Dec 16, 2010)

> The reason I am not too happy with our goals is that my wife's retirement savings aren't anywhere where they should be but she feels that the RRSP may not be right for her as her income is a fair bit lower than mine so the tax deferral may not be the best idea. We will try to max out her TFSA. 

Your wife is probably right. What I did this year was to contribute into my wife's RRSP spousal plan. I get to offset against my taxable income. The current plan is, after the 3 years waiting period, she will cash in on the RRSP spousal plan. She would pay the tax at her marginal tax rate, which is a lot lower than mine. 

As I indicated earlier, our situation are pretty similar. My net worth is slightly shy of $700K. I'm 38. My wife is 35. We have 2 young children -- 3 and 1.5. Our combined gross income is about $165 + bonus. Bonus hasn't been much these few years. 

> We have a 19 month old and his daycare is currently our biggest single expense running a total of about 10,000 a year. 

Don't we all hate daycare expense. I used to complain about it all the time to all of my friends and family until my friend told me he was paying closer to $1600 a month for his (one) child in Toronto. I kept quiet since.


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## Four Pillars (Apr 5, 2009)

b_foot said:


> > Don't we all hate daycare expense. I used to complain about it all the time to all of my friends and family until my friend told me he was paying closer to $1600 a month for his (one) child in Toronto. I kept quiet since.


My wife decided to stay home and look after the kids. Trust me, that is the most expensive daycare option of all....


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## Echo (Apr 1, 2011)

Four Pillars said:


> My wife decided to stay home and look after the kids. Trust me, that is the most expensive daycare option of all....


+1


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