# Me, Where I am at....



## hfp75 (Mar 15, 2018)

Well I have read a few of these personal diary's and find them quite interesting. I'll throw out my profile and see what the feedback is.

A little about myself:

Married for 5 years now and have 2 kids and the last one otw (December). I'm 43 this year and my wife is 39, our kids are 3 & 1 and at the end of this year we will have our 3rd (and final) baby.

I work in the public service and my wife is an accountant at a medium size oil & gas co. I make about 100-120K/Yr and her base salary is 140K + bonuses (bonuses are usually about 35K/Yr).

As a point of reference, our net worth:
Pre-marrage we had very similar net worths

2013 - $1,283,877 (yr we were married)
2014 - $1,440,393
2015 - $1,657,773
2016 - $1,801,933
2017 - $1,967,800
2018 - $2,000,000 + (at the 1/2 way mark)

(these numbers include growth and contributions)

I have included my house in the net worth (house is valued at $775,000). We have a $70,000 mortgage that I will add $10K to this year to bring it down to $60K. I hate debt and would like this gone in the next 2-3 years, or sooner.

Since we are older parents the RESP is an important part of our plan, for us and our 3 kids. We add about $2,100 / yr into each RESP. This will fall a bit short of max but we can add a top up after the mortgage is done.

Currently I have a DB pension at work that I am estimating will give us $30-35K / Yr once I hit 57/58 yrs old. Right now I like the idea of retiring ASAP and looking for another part-time job to fill some time. My pension value only tracks my contributions - not growth or the employers contributions - yes its weird - so the number I get is not complete (it is included in the numbers above). Just for your reference most DB pensions operate on age and years of service.

My wife has a DC pension that has served her well. Her pension is part of the numbers above. She also has a matching savings plan that we max for their max contribution.

I do not consider vehicles assets, so they are not included. The same goes for lots of other things that have value that we own.

I have been very equity driven up until now and am starting to think that pulling back a bit from equities might be in order - Bonds, GIC, HISA... jurry is still out.

* My wifes company might be considering layoffs which would be both good and bad.... not that we have any say over such an event, but the severance would really pop up the numbers and she can just enjoy being at home with kids for a bit..... unless she decides she wants to work, then we will figure something out. We have been fortunate in that my work is good about giving me leaves to be at home and be dad. So far we have been leapfrogging child care and one of us has always been here. This December she'll take the 18 month leave and when that is over I will consider a 1 year leave. This will take us to the summer of 2021. At this point I have <15 years and I am done.


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## Pluto (Sep 12, 2013)

Just a thought about your mortgage. You might want to check the % of each payment that is interest. At this stage it might be very low in which case, paying off your mortgage faster than necessary could be a losing proposition. Mortgages are front end loaded with interest payments so advance payments on principle are most effective during the first 5 years of your amatorization. Also, your mortgage debt is devaluing at the rate of inflation; this is particularily relevant if you get COLA increases in your income. You might be better off throwing the 10,000 at the kids education fund or other investments.


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## lonewolf :) (Sep 13, 2016)

hfp75 said:


> * My wifes company might be considering layoffs which would be both good and bad.... not that we have any say over such an event, but the severance would really pop up the numbers and she can just enjoy being at home with kids for a bit..... unless she decides she wants to work, then we will figure something out. We have been fortunate in that my work is good about giving me leaves to be at home and be dad. So far we have been leapfrogging child care and one of us has always been here. This December she'll take the 18 month leave and when that is over I will consider a 1 year leave. This will take us to the summer of 2021. At this point I have <15 years and I am done.


 Your net worth is growing slower then your wage which means if your wife stops working your net worth will go backwards. The last year you worked your net worth only grew by 32,000 if the 175,000 your wife makes stops coming in your net worth will be going down by 142,000 a year plus with new bills adding a new member to family.

A less expensive life style will be needed if your wife stops working. It is possible though as there are families that make less then 110,000 & find it easy to save money


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## hfp75 (Mar 15, 2018)

When we were married we got a 100k 25 yr mortgage for our house. So we are 4’ish yrs into it.

If I look at the mortgage at 3.15% that 10k (if dropped on the balance) will allow an additional $315 per yr (of payments) to go vs the principal. This has no tax implication for me. Say I leave it in my hisa @ 2.1%, I have to pay taxes on that income. So, my view is, $310 no tax implications, working for me, or $210 requiring taxation, at say 40%, leaving me $126 to save or put on the mortgage. The difference is $189 in functional money. It’s small potatoes in reality, but it seems to make sense to pay off the debt vs just leaving it in a hisa.

If I invest the 10k I could hopefully get more than the hisa but I don’t want this money invested as it’s out of the FI part of finances..... swapping cash from hisa onto the mortgage seems to show a small fiscal advantage. Technically if I need the cash back I can draw it from the heloc at 3.95%. This would be a small loss but I’m not anticipating needing the cash that’s going vs the mortgage.

It’s weird, I see debt as opposition to our FI (interest income) portion of investments.


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## fireseeker (Jul 24, 2017)

Pluto's suggestion about the RESP vs. the mortgage is worth more consideration. Once you have three kids, putting $7,500 a year into the RESP should trigger $1,500 in government grants. That's an immediate return of 20%. And all future gains are sheltered until they are finally taxed (if any) in the hands of your children.
This may be a better use of your surplus funds than attacking the modest mortgage.


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## hfp75 (Mar 15, 2018)

You can add 2500 / yr in the resp for a 500 grant. We do 2100 / yr & along the way grandparents have added some in. I don’t think there is much room for grant money left on the table here....


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## Spudd (Oct 11, 2011)

hfp75 said:


> You can add 2500 / yr in the resp for a 500 grant. We do 2100 / yr & along the way grandparents have added some in. I don’t think there is much room for grant money left on the table here....


Per child....


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## Thal81 (Sep 5, 2017)

Your plan for early retirement is very similar to mine... use your investments to bridge the gap to your DB pension, and find some part-time work mostly for the social aspect. 

I think it would be worth breaking down that networth number so it shows the invested liquid assets you can use to fill that gap (so remove house and pensions), and then compare that to your yearly household expenses (which I don't see in your initial post).

cheers


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## hfp75 (Mar 15, 2018)

Spudd said:


> Per child....


Correct, so we are putting $4,200 / yr in now with 2 kids and grandparents are adding in a bit here and there - I bet we are really close to full....


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## hfp75 (Mar 15, 2018)

Well I will add an update for 2018. 

*Our Current Status:*

At the end of 2018 neither my wife nor I was actively working. I have been on a leave since August and she worked from July to December. Not working is an obvious hit to our income. Required if we are gonna build our family though.

The days of us being ‘DINKs’ are over. She has taken an 18 month Mat Leave to support our new child (December 2018). In the summer of 2020 she will return to work and I will take a 1 Yr leave to keep one of us at home. During that time I can work casual to fill in and generate some income. That will mean that the summer of 2021 we need a solution – parent at home or nanny. We can work on our decision later… lots can happen in 2.5 yrs.

Our Pensions are really not impacted with not working – which is great. Each month my wife’s employer takes her pension and savings money from our checking acct and matches it and then redeposits it into the appropriate accounts. In the spring I will need to buy back my missing pension; I would have paid for it if I was at work anyways… I will transfer money from an RSP to cover the gap.

*2018 Highlights:*

I traded in my 2012 F150 for a 2016 – costed me $20K last year. It’s nice to have a newer vehicle. Might not have been the best place for the cash but my 2012 was gonna start to devalue – it was on a sliding scale of loss. As well last year we spent $15,000 on a bathroom and $5,000 on a new front door. So we did have a few costs to cover. 

In August of 2018 I felt that markets were at all-time highs and we were sitting 90/10 growth (equities/bond) and I sold about 30% of our equities with the goal of moving to a balanced portfolio (60/40). It kinda worked to my favor, I held the 30% in a HISA as I was really busy and not committed to the idea of a bond fund. I did slowly get it all adjusted and we are now 40/20/40 and 60/40. For accounts that I manage we are (Equities/Gold/Bond) and for accounts with limited options (pensions, ect) for investing its (Eq/Bnd). Either way I have reduced our equity exposure. I am not comfortable right now being 90/10. We will see if in the future I am back to it or just happy where I am at. For decisions like this I discuss my thoughts with my wife ahead of making large money changes. She really doesn’t care much – but when I give her my rational she hasn’t disagreed.

*Financial Stuff:*

We have 3 kids now and donate $2,000 into each kids RESP each Yr. This leaves a little surplus unused but inevitably grandparents are giving us some cash too and that acts as our top up…. We are close to max each year at $2,500 - for each kid.

We owe about 47,000 on our house right now and I want nothing more than to get rid of that. I have $26,000 in our cash reserve (HISA), our mortgage renews this fall and I might just dump that onto the mortgage and carry the 20K on the HELOC. This will drive me bonkers and force me to pay it off ASAP.

Lets look at the money….

Our 2018 (end of Yr) Net worth is *$2,043,932.03*

Breakdown:
Pensions/RSP $821,997
Cash $432,348 
TFSA $72,385 (I am an American and thus only my wife has one)
Totals $1,326,732 in cash and investments.
Our house equity is $717,200

I wanted to hit $2,100,000 by the end of last year (2018) but markets were not going to let that happen. 


*Goals for 2019:*

As I write this we are over the goal of $2,100,000 and rising. So, for the end of the year I will be modest and say I want us to be at 2,150,000 but if we can be at $2,200,000 I would be really pleased.

We will take a paper loss of $25,000 in 2019 because I devalued our house to stay appropriate to the market.

Right now for 2019, we have no anticipated large costs and intend to save what we can. I might do a quick and dirty update in July/Aug. 


Here is a summary over the last few years.

2013 - $1,283,877 (yr we were married)
2014 - $1,440,393
2015 - $1,657,773
2016 - $1,801,933
2017 - $1,967,800
2018 - $2,043,932
2019 - *$2,107,449* (as of March 8/19)

* - The 2019 number could be $25,000 higher but as stated above I devalued our house. Just for reference.


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## scorpion_ca (Nov 3, 2014)

I have been tracking my NW since 2013 like you but my NW was 12x less than yours in 2013. What is the ROI you have been getting since 2013?


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## Gruff403 (Jan 30, 2019)

You are doing fantastic. If the mortgage is only 47K and you have over 432K in cash, why have you not killed the mortgage? You have commented several times how that debt bothers you. The prepayment penalty wouldn't be that much more.
Another thought would be to consider killing the mortgage and borrowing back that money back against your HELOC, invest it in some solid dividend payers. Do that within your unregistered account and the interest on the HELOC would be tax deductible at same percentage as if you were making an RRSP contribution. Continue making mortgage style payments against your HELOC. In the end you have borrowed against the value of your home (leveraged), collected some dividend payments and hopefully your stock picks have grown in value. Just don't overextend.


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## hfp75 (Mar 15, 2018)

Scorpion,
I have some growth information but I stopped tracking it during 2017. I will update 2017 and do 2018 and post as soon as I get it done.


Gruff,
This August our mortgage renews and I am planning to just pay it out..... I think our numbers will be better then I initially was thinking... I might owe just 10K and its dead. I'll know better as I get closer.

I have thought about using the Heloc for an 'Eligible Canadian Dividend' play... I would need to research all the ETF options that pay a steady worthwhile Dividend that it would pay for the Interest on the HELOC (or most of it). It would make the most sense if luck hits and markets take another hit in the latter part of the year with poor growth numbers to buy in then.... would really depend on the return on investment via dividends.

I would probably use an ETF for this and would need to research and probably seek advise from the forum, for some good ETF ideas for the "Eligible Canadian Dividends" since they are the most favorably taxed. It seems that with individual stocks I have always been stung at some point so an ETF seems like my best idea (comfort point)..... Maybe something like HAL ? Active management - dont know if a massive index would be good. If interest rates rise Dividends can get cut.... an index will take a hit, where hopefully with active management the dying wood gets spotted before it rots. At least you would like to think.....

I would need to build a spread sheet (Excel) and run the numbers - Interest paid and tax rebate vs dividends, less taxes and see if that is net positive or negative. Hopefully it is net positive, then you would also get the growth on the units held too.


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## Gruff403 (Jan 30, 2019)

Congrats on killing the mortgage this summer. I'm a stock guy. Buy quality and hold forever. Found that my ETF's price might not fluctuate as much but the dividends would never grow. Held BCE and CM for 20 years and glad I did. Also got burned on a few stock speculations but that's how you learn. I am also waiting for market to take a major hit before I take the plunge. Used the Heloc to top up my final RRSP contribution before retiring and dropping a tax bracket. Just paid it off from last year. Strategy works as long as you are cash flow strong and don't overextend. I just count it as another bill payment. You also get some inflation protection since a dollar invested today is worth more that a dollar invested a year from now due to inflation creep. Go Stamps.


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## peterk (May 16, 2010)

hfp75 said:


> Scorpion,
> I have some growth information but I stopped tracking it during 2017. I will update 2017 and do 2018 and post as soon as I get it done.
> 
> 
> ...


Just wondering where the "play" will be coming from with these dividends? You said your individual incomes each are somewhere in the range of 100k-170k. So regardless of how you arrange the heloc, you'll be paying about the same investment taxes on dividends or capital gains, about 20-25%. It's possible your tax rate will even be slightly more for dividends if your total incomes (including salary, interest, dividends and capital gains) are at the upper range...

In your situation I would just be looking for the best investments that pay _some_ dividend, maybe 2%-4% and go with that, not search out specific dividend investments that are getting up into the 4-6% range, as there is no tax benefit to you. I understand that you want to "cover the interest" on your HELOC, but you shouldn't be choosing the wrong investments just so you get sufficient dividend cashflow for that, as the dividend tax credit doesn't help you out enough at your income level to make it worthwhile. 

Here's the rates:
https://www.taxtips.ca/taxrates/ab.htm


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## hfp75 (Mar 15, 2018)

scorpion_ca said:


> I have been tracking my NW since 2013 like you but my NW was 12x less than yours in 2013. What is the ROI you have been getting since 2013?


K, 

I did a bunch of work and got my numbers - I think they are close - no guarantees....

This is the 'growth' across all my accounts at the end of each year. My rate of return at Dec 31.

2019 - 5.23% (up until today Mar 23)
2018 - -1.3%
2017 - 6.6%
2016 - 5.8%
2015 - 3.5%
2014 - 24.2%

If I bring the numbers together here are my average returns....combining the most recent 1,2,3 yrs ect ect - I think I did this right.

1Yr - 5.23% ( know this is a partial Yr - Y2D)
2Yr - 1.97%
3Yr - 3.51%
4Yr - 4.08%
5Yr - 3.97%
6Yr - 7.34%

So, since I have started tracking stuff and paying attention we have made 7.34% / Yr on average. Last year really hurt, I should be doing better. The returns should look a bit better but we have a piece of land that just sits on the paper and doesn't show any appreciation - Thus, holding down the returns. One day when we sell it, the returns will jump up though... so it will all work out in the end. The multi Year average is definitely interesting.... it makes me realise that we contribute a lot into our accounts. 

Contributions

2019 - 27,654.00 Y2D
2018 - 57,781.00
2017 - 83,274.00
2016 - 42,620.68
2015 - 61,314.25
2014 - 52,714.10

- I need to make an adjustment to 2017 & 2018 as the taxed money I took out for a mortgage principal payment is screwing it up.... just need the time to figure it out.

* The above numbers (growth/average/contributions) do NOT include my DB pension..... I contribute on average $12,000 / Yr.... my formulations leave it out its a weird pension.... so I just leave it out... I dont know how much it grows and I cant see my employers contributions....

** Last year I invested money at bad times and thus paid a price... luck was not with me.... despite a strategic sell in August. I am scared to see what the numbers would have been if I didnt sell 30% of equities in Aug.


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## hfp75 (Mar 15, 2018)

Well over the next 2 weeks I am really busy so my time will be short so I will add my 1/2 way update now....

Family update - I'm working and my wife is on a Mat leave still (for another year). No large unexpected costs so far this year - which is good.

Housing - we are still mortgaged and just waiting for another month for it to open so I can make some adjustments to it.... want it gone.

Points of Interest - I am a civil servant - as such, here in Ab there is a new govt and there is always the possibility of changes given the circumstances. Nothing has been announced as of yet. My wife's company has laid quite a few people off. So, if she were to be laid off upon her return (next year), her package would be nice to get, but being jobless might be frustrating. If we are both working we will need a nanny or something similar to bridge us over the next few years. Our kids are to young and we will need some help.

Given the above information, steady as she goes.

Our net worth as it sits today is $2,174,028

Over the next 6 months we will contribute $28,862 ('ish)

I am anticipating a 2019 year end balance of around $2,202,890 

(that is with no gains/losses over the next 6 months)


It would be nice to break that 2.2 million boundary by the end of the year.

Y2D we have contributed 2.45% and have growth of 7.98% for a total of 10.43% over last year.


My wife and I had a talk and she doesnt want the house equity listed in my summaries anymore as she says its not cash we can use .... I said, you cant really use the RRSPs and surely not the Pensions but they are listed. As it sits right now, I will be leaving it as is..... and hope to break the 2.2 million barrier by December 31.


Risks as I see them are Trumps trade wars, the 'coming recession / economic slow down', and Central Banks trying to keep the ship from sinking... None of which I have any influence on...


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## hfp75 (Mar 15, 2018)

Well,

2019 was an interesting year; it started with a lot of fear rolling through markets that quickly turned into optimistic exuberance. This winter with the new government, Alberta announced changes that will impact me, but no details have been released – and so I don’t know if this is change, or bad change. Nothing one can do but just wait. My wife’s Maternity leave ends officially May 8 but I think she will ask about an extension for a few weeks longer. We are still hoping they lay her off. Once again we just wait. This life requires patience.

Housing – despite wanting to pay off the last bit of the mortgage (25k) I renewed for 5 yrs @ 2.69, it will be paid off by the end of the 5 yrs. I felt with job stuff changing and the low rate, having the 25k accessible might have value. So, at least its small and if we need/want to we can just pay it off still.

Family is all healthy – we are so blessed ! We definitely need someone at home with our kids and we are planning for a nanny, but we will see if there is a job loss. Its just tough to know what to do here… we are discussing and hoping the solution becomes clear.

Financial Summary:
Investments $ 1,521,163
House Equity $ 726,454 (I put value at $ 750,000)
Total Net Worth $ 2,247,617

From last year that is a total increase of $ 194,431 (14.65%), Growth was $ 136,426 (10.28%) and contributions were $ 58,004 (4.37%). These numbers are all inclusive. Overall I am happy. 

For 2020 I see the following risks…

-Trump – Impeached, war, not being reelected. I feel despite Trumps flaws he is good for the markets.
-Markets – I don’t think that market fundamentals are healthy and there could be a correction. If this happens the exuberance will immediately fade and we may be in a snap recession.
-Central Banks – I think there is just way too much manipulation going on and thus Inflation / Prime rate / QE4 / ect ect are all slowly degrading our economy and currency. Sad really. 

I predict that markets will have a slight bit of growth but will be basically flat. Lets see if I am right or not. 

Lets see where 2020 takes us !!!



I expect with contributions to hit 2.3 and if there is some growth 2.35, if growth is good or something good happens to us 2.4 (+)


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## Eclectic12 (Oct 20, 2010)

hfp75 said:


> ... I have thought about using the Heloc for an 'Eligible Canadian Dividend' play... I would need to research all the ETF options that pay a steady worthwhile Dividend that it would pay for the Interest on the HELOC (or most of it). It would make the most sense if luck hits and markets take another hit in the latter part of the year with poor growth numbers to buy in then.... would really depend on the return on investment via dividends ...
> I would need to build a spread sheet (Excel) and run the numbers - Interest paid and tax rebate vs dividends, less taxes and see if that is net positive or negative. Hopefully it is net positive, then you would also get the growth on the units held too.


It's more likely to be more complicated than that. Most ETFs I've looked into have paid at least some of their distribution as return of capital (RoC). Technically the RoC portion needs to be repaid against the loan but some say re-investing the RoC is the same thing.

https://milliondollarjourney.com/key-tax-considerations-on-an-investment-loan.htm


Then if it's a Canadian domiciled ETF, it may pay an annual capital distribution that is re-invested, aka a phantom distribution. One doesn't receive cash and does not receive more units but has to pay capital gains taxes plus increase the ETF's cost base.

https://www.adjustedcostbase.ca/blog/phantom-distributions-and-their-effect-on-adjusted-cost-base/
https://www.theglobeandmail.com/glo...by-phantom-etf-distributions/article18225076/




peterk said:


> ... Just wondering where the "play" will be coming from with these dividends?
> 
> You said your individual incomes each are somewhere in the range of 100k-170k. So regardless of how you arrange the heloc, you'll be paying about the same investment taxes on dividends or capital gains, about 20-25%. It's possible your tax rate will even be slightly more for dividends if your total incomes (including salary, interest, dividends and capital gains) are at the upper range ...


Without the HELOC, it's the taxes while with it, the interest is deducted against income, reducing the taxes. 
Of the course the bigger benefit is the deferred capital gains likely being larger than the income paid.

Either way, eligible dividends and capital gains are the cheap tax rate versus working overtime or similar.


With being in a long bull market and the update that the job has unknown changes, skipping it for now or keeping it small enough to easily pay the HELOC if things go badly is probably important.


Cheers


In your situation I would just be looking for the best investments that pay _some_ dividend, maybe 2%-4% and go with that, not search out specific dividend investments that are getting up into the 4-6% range, as there is no tax benefit to you. I understand that you want to "cover the interest" on your HELOC, but you shouldn't be choosing the wrong investments just so you get sufficient dividend cashflow for that, as the dividend tax credit doesn't help you out enough at your income level to make it worthwhile. 

Here's the rates:
https://www.taxtips.ca/taxrates/ab.htm[/QUOTE]


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## hfp75 (Mar 15, 2018)

Well,

I will post a quick 1/2 yr update, I entered the year with a pretty neutral outlook for stocks and did not foresee a Pandemic. I would guess this was pretty unexpected by many of us.

Either way our portfolio was 40% (bonds) / 20% (gold) / 40% (equities) for the beginning of January. I actually still like that allotment but have deviated to more conservative. I rode the Corona market drop down and then back up. About a month ago I felt a real change of heart towards my portfolio allocations. Let me explain, long bonds did not perform as well as I was anticipating and I feel gold should have also preformed better. I realize that margin calls caused frantic selling and thus the impacts that I just mentioned - I should have anticipated this. The equity ride was fascinating, I did actually enjoy being a part of it and am happy that I have recovered almost all my losses (paper). I have come to believe that there is a real possibility of risk in the CLO market, debts that are close to 2x what the CDO market was comprised of in '07. I guess today is different, however I am content to take a more passive approach as this Corona virus impacts us and the recession that was approaching drops on our laps. I have decided that I will make Harry Browne's PP proud and follow that for a while. So, I have gone to 25/25/25/25 respectively, but I have exited almost all the equity markets. I know that is market timing and it is virtually impossible to do. I want to introduce the idea that 'capital preservation is a higher priority than capital appreciation'. I will reenter the market once I feel that the risks have abated. This right now has two factors, Does Corona reemerge this fall ? and does the CLO / Corporate Debt market actually fracture ? There are major stresses due to both and while central banks are trying hard I feel that we are at a cross road in our economy as we sit at 0% interest rate and unfathomable debt ratios, with little actual income to support things.

So I started at 40/20/40 and have moved to 25/25/25/25 with the 25% for equities being mostly undeployed. YTD I am up 4.9% overall and 6.22% on assets that I can dynamically manage. That means that my static investments (real estate & a DB Pen) are dragging down my return by 1.32%. Not bad I guess since I am positive for the year and there are a bunch of people that are still negative. I will redeploy cash into equities once I feel better about the market & see a good opportunity.

I will be sitting on a 15% reduction in equities given our current situations once I do reinvest. As things stabilize I will need to look at the portfolio and see if 40/20/40 or 25/25/25/25 is my plan....

EIther way at the 1/2 mark I am positive on the year.


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## like_to_retire (Oct 9, 2016)

hfp75 said:


> ......... have moved to 25/25/25/25 with the 25% for equities being mostly undeployed.


No idea what this means.

ltr


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## james4beach (Nov 15, 2012)

hfp75 said:


> So, I have gone to 25/25/25/25 respectively, but I have exited almost all the equity markets. I know that is market timing and it is virtually impossible to do. I want to introduce the idea that 'capital preservation is a higher priority than capital appreciation'. I will reenter the market once I feel that the risks have abated.


From what I understood, you are mostly out of equities at the moment and waiting until it looks safer to get back in. Does that mean the amount that's normally in stocks is in cash instead?

I understand your goal is "capital preservation", as mine is. I think some weight in equities is necessary for preserving capital. One possibility is that the tsunami of newly printed money floods into the stock market. Inflation could actually remain low, which means gold would not perform, but equities might.

One danger of trying to wait until stocks looks better is that the world always looks uncertain. If it's not COVID-19, it will be the US elections. It may never look like an OK time to be in stocks, and once it _does_ look safe, the market might already be much higher.

Example: I got out of stocks in 2006-2007 due to banking system deterioration. Looked great at first. The bottom was in 2009, but it was more like 2015 by the time I got back in. Even though I initially got the timing right, I actually hurt my returns by doing this.



hfp75 said:


> So I started at 40/20/40 and have moved to 25/25/25/25 with the 25% for equities being mostly undeployed.


I like both of those allocations, and mine is similar. Except I've kept equities intact, currently 28%.


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## like_to_retire (Oct 9, 2016)

hfp75 said:


> So I started at 40/20/40 and have moved to 25/25/25/25 with the 25% for equities being mostly undeployed.





> james4beach said:
> 
> 
> > I like both of those allocations, and mine is similar. Except I've kept equities intact, currently 28%.


If you guys intend to educate new investors on this site, maybe you could translate what these percentages mean, because no one else has a clue. 

I've only been investing for about 40 years, and I don't know what you're talking about. Can you imagine a new investor?

ltr


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## Mukhang pera (Feb 26, 2016)

like_to_retire said:


> If you guys intend to educate new investors on this site, maybe you could translate what these percentages mean, because no one else has a clue.
> 
> I've only been investing for about 40 years, and I don't know what you're talking about. Can you imagine a new investor?
> 
> ltr


I think they are talking about lawn fertilizer. The percentages are for nitrogen, phosphorus and potassium where 3 numbers appear. Where 4 numbers are shown, the fourth is for sulphur. Hope this helps.


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## james4beach (Nov 15, 2012)

@hfp75 said they're using the Permanent Portfolio, which means
25% stocks
25% gold
25% bonds
25% cash

But then added a comment that they "exited almost all the equity markets" which I interpreted as meaning they are closer to 0% stocks currently and presumably much higher in cash as a result.

I then mentioned my weight in stocks. My complete allocations are:
28% stocks (target: 30%)
21% gold (target: 20%)
51% bonds (target: 50%)


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## scorpion_ca (Nov 3, 2014)

What is your total net worth now?


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## hfp75 (Mar 15, 2018)

1,611,000 investments
732,000 house
2,342,000 total (+/-)

My wife gets her ‘package‘ next month, so I’m kinda thinking more like just under 2,500,000 total family net worth.

J4B is correct 25/25/25/25 is my % split between asset classes. I used to be 40/20/40 (no cash/ladder) but the 4x25% is a bit more conservative. I think I qualified this already.... 

If we were in a normal recession I would be all in, and boosting equities, I just see this as different and have a strange feeling on markets right now. I can wait to see what happens this summer/fall....


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## james4beach (Nov 15, 2012)

hfp75 said:


> 1,611,000 investments
> 732,000 house
> 2,342,000 total (+/-)
> 
> My wife gets her ‘package‘ next month, so I’m kinda thinking more like just under 2,500,000 total family net worth.


With such a strong financial position, if I was in your place, I would also be making very conservative investments.

At this point you really just need to make sure your return keeps up with inflation (you need a positive real return). I don't see the point in taking much risk such as higher equities. If you preserve what you already have (after inflation) you are probably good


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## hfp75 (Mar 15, 2018)

Well, Ill start by saying that I would have never imagined 2020 as it relates to our society with COVID and its impact on the economy and as well markets. Central Bank activity was also unprecedented and still continues to be. Forward guidance pushes that fiscal support for at least another year. With QE and 0% interest rates, how can you lose on anything ?

Good question eh ? We will reread this and see Bit coin at <$50,000 and the SP500 at <4,000 and the NASDAQ at 14,000 in a year, or two years and be able to say, can you believe that ? or wow that was the beginning of the run… either way, the numbers are secured there for future reference.

My 2020 fiscal picture started with a banner year coming out of 2019. I had been running a heavy equity portfolio in 2019 and late ’19 or early ’20 I cut my allocations to be in line with a Risk Parity/Permanent Portfolio (modified) approach. 4 equal splits (long bonds/short bonds(cash)/equities/commodities (gold)) represented my holdings. Covid Hit, and I like all of us, rode everything down and then back up. After riding up to a neutral point, we (wife and I) felt this recession was not gonna be just another recession. We had no insite but felt it could be different. In doing so, we exited equities and parked this $ in cash (short bonds). In hind site this approach was wrong. We missed the equity rally of the second half of the year. Not the end of the world, we placed a higher value on capital preservation vs capital appreciation. We knew there could be consequences & there were. We were fortunate to have sold off some gold at beneficial times and our bonds were the anchor they were supposed to be.

My wife got a layoff in the summer and she got a decent package. We dumped that into accounts appropriately. Due to this creating a large income for her in the 2020 year she did not work for the remainder of the year. I worked the entire year and our family survived just fine on my income.

I will say, in 2020 my family was very fortunate !!! My work/income was not interrupted. So many other people faced job loss and hardship that I felt guilty going to work. My wife got a sizable payout and didn’t need to work for the rest of the year and we were blessed as none of us got COVID (that we know of). We were very careful and continue to be. We don’t have any co-morbidities here but there is no reason to test the outcomes….

For finances….
We started the year :
Assets $1,521,163
House Equity $726,454 (House Value $750,000)
Mortgage $23,546
Net Worth $2,247,617

-Our only debt was the mortgage and as I have stated before I hate owing money.

Over the year:
Contributions $158,787 (10.44%)
Growth $77,110 (5.07%)
Change $235,897 (15.5%)

-We were also able to wipe out the mortgage with the severance/buyout. I am 45 and my wife is 41 and we owe no one anything…. It’s a great feeling. We will probably upgrade our house in the next few years though and so that might see us drop another 200-250k into housing. We will see how that goes at a later time.

Mortgage Payout $23,546
Total change $259,444 (to net worth)

We closed the year :
Assets $1,757,061
House Equity $750,000
Net Worth $2,507,061

I am happy with where we are at.

By the end of December I had reinvested just over half of my equity portion 15% and still have 10% in cash.

Up until 2020 my 6 year average growth (return) was 8.18% and the 5.07% from 2020 lowered my average to a 7 year 7.74% rolling return. Still not bad.

I hope to maintain this growth in 2021 and hence why I have put some of the equity portion back in. I know this can be viewed as market timing and I should just buy in with the last 10% but.....


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## scorpion_ca (Nov 3, 2014)

Would you mind to share how long your wife worked in that company and how much the severance amount she received? Just curious and trying to get an idea about the severance amount?

Do you have any amount in mind that you would retire once you reach there or keep working until 65?


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## hfp75 (Mar 15, 2018)

Her severance was based on 15+ yrs, the formula was interesting because there was a cap built in. Lesson here, dont work forever somewhere... its not worth it. She was there 15+ yrs, so we were impacted by the cap. I can PM you more detail if you want... not like a person can decide when to get a severance ....

About retirement, I'm mid 40's so retiring now would draw on savings too early IMHO and with a young family I think working is on the horizon for at least 5 years. At that point we can re-examine it. My wife just started working again and the wage is better than mine so I have just applied for another LOA - Mr.mom. I will probably work PT/Casual hours - no word on my LOA - approved/denied.

I would love to retire. Its on my radar more than my wife's. I think there are a lot of variables over the next few years that could impact a decision about work. Here is the reality, with 1.75m if we can get 5% growth for another 5 years well have 2.3 or 2.4m (factoring in a low 20,000 contribution / yr). So, in 5 years with 2.4 million spread across accounts is that enough to support me at 50, my wife at 46 and kids 11,9 & 7 ???? until we check out ? With a 'base' at the 2-2.5m mark, growth really starts adding up fast, a few years more growth can really matter here.... as I said we will examine it when I hit 50 and I'm 46 this year (still 45). Plus, our house is a 3 bdrm and we need a 4 bdrm for better growth/space and I think working until we can hammer that impact off (? mortgage) is the right way to look at it, but we could take a 5-10 yr mortgage and hit it hard.

We also have a unique investment opportunity on the horizon.... I can again expand if your interested..... 5 years of work would let a lot of this all stabilize / shake out.

thoughts ?


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## scorpion_ca (Nov 3, 2014)

hfp75 said:


> I can PM you more detail if you want...
> 
> So, in 5 years with 2.4 million spread across accounts is that enough to support me at 50, my wife at 46 and kids 11,9 & 7 ???? until we check out ?
> 
> ...


I would really appreciate if you PM me the severance info. The reason I am interested is that our company laid off around 20 staff last year and one of the staff worked more than 16 years in that company. I couldn't ask him about the severance amount. I have been working around 10 years in that company. I am not sure what would be the severance amount if I get lay off. It's a small private company and I am not expecting a significant amount but it's good to have data to compare it. 

I agree that you need to check it out in 5-10 years since you have three children. I hope you are maxing out RESP for your children.

I am always interested to learn about the new investment opportunity. Thanks.


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## peterk (May 16, 2010)

Certainly it's tough to know retiring early is the right move when you have kids. So much depends on your thoughts about their futures and their independence, and the economy.

One may regret pulling the plug at 50 and living middle-class, only to discover too late at age 60 that all your kids are mid-twenties and there aren't any good jobs anymore (except for a few, fortunate, special people), and your whole family is stuck spinning its wheels on a low budget, kids collecting their UBI, and you have nothing extra to help with...

Or perhaps the economy roars and all your kids become very successful and your investments do better than expected and retiring early was the best decision you ever made!

Luckily I am way behind you (mid 30s), and won't have to make this decision myself for at least 15 more years.


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## hfp75 (Mar 15, 2018)

Well my CMF friends,

I forgot to do a Canada Day update but I will finally get one out, timing looks better today vs then.

As we close July, this year has been fascinating, markets are gyrating and economists have very contrasting beliefs. Since there is no clear path to a win I am comforted with being in a Permanent Portfolio (All Weather) adaptation that should maintain in all likely scenarios. I have said this before and I will say it again, capital preservation is a higher priority than capital appreciation!!! Just think about that for a minute. Higher priority, not the only priority, which means strike a balance between them but favour preservation and be safe given our current Fed induced euphoria. Enough on a philosophical view.

I am still working – my primary FT job is worse now with the reopening of our world, but with a temporary promotion it’s not as bad. My cash flow has really not changed and I can work OT whenever I want (I do not work OT as I don’t want to be there). I Gross 100,000 – 115,000. My Casual side hustle is doing just fine and is a steady-eddie thing, I Gross 10-20,000 there. So, my income is about 110,000-125,000 all depending on how much I want to work. The pandemic did not dent my income and in reality increased my income potential, which I did not want.

My wife is working a contract job with O&G and she is making 200,000 / Yr. It’s a 10 month contract that will probably be extended. 

We are very fortunate to have our cash flow given the stress in our world, we are very blessed! 

All 5 of us (3x kids) are healthy and working on getting back to normal. This includes swim lessons, planning school in the fall and the complex part, so far on my wife's work contract she has been working from home and we have been using a nanny to help with child care. This fall she will be phased into the office 3x days / week and this will require us to get more help than we currently have! This is going to cost us 25,000 minimum and possibly up to 35,000 / Yr. With 3 little kids going every direction we cant find another option if we are both working. We will conquer as lots of people have the same struggle in this life.

Onto the money….. as of today….

Assets $1,827,720
House $750,000
------------------------------------
Net Worth $ 2,577,720


So far this year:

Contributions $81,787
Losses $-11,130
Change to Assets $70,657

The way our house runs, we face all our annual costs in the first half of the year and thus we have been banging off these bills. Now that we are looking at the second half of the year, I am hoping to be able to live on my salary and just save my wife's. That should see us save another 40-50,000 by the end of the year. If markets hold then I am content. Not every year is a banner year.

You may ask, how do you have an -11,000 loss ? Well in Jan or Feb we bought $100,000 of bitcoin. Its been a roller coaster ride of turbulence ! Long and short, its down and I am too. I’m holding and ironically I see it as part of my Gold/Silver position. I have set a 2.5% allocation, a few of my accounts are over that but my long term plan is 2.5%. I do see it as worthless BUT with GEN-Z I think crypto is here to stay. It is a _new_ asset class.
*Gold (MNT) @ 20%, Silver (MNS) @ 2.5% & BTC (BTCX.B) @ 2.5%.

I am fully invested currently (very little cash on hand) and have been since early this year. I did an experiment, before my wife started working this year I took +/- $70,000 and figured I would create a portfolio that would just generate revenue. Its what I call a 'Cash Flow portfolio'. Interest and Div income using ETFs. Its interesting, and I will elaborate at the end of the year for my impressions and review. I will get it to $100,000 in the next 2 months to get a few months at that nice even operating number. Now that she is working we dont need this and in reality it would be better served invested with my regular allocations and not segregated like this. Like I said, its an experiment and likely wont cost us too much.

Things on the radar. 
We have a $200,000 investment in a piece of property (we own 20%, initially purchased @ 1m). It is for sale @ 1.8m and it has almost sold twice this year. If it sells we will take proceeds of +/- $360,000 which is a +/- $160,000 gain.

I have 2 sisters and my wife has a twin sister. My sisters and sister-in-law all want a rec/vac home in Kelowna. So, we are having talks about purchasing a house there 4-ways and sharing costs and splitting time there. This has just dropped onto the radar and I am not opposed to it, generally speaking; BUT I don’t know if strategically this is a good time to buy. Interest rates are Zero, meaning that home prices are super high - central banks are jacking the housing market to give people a source of wealth and credit so they can push the economy. Why buy now ? These things always correct…. We have seen this before.

A new house (primary residence) is also on the radar. Probably 2 years out, my wife is showing me houses online for price references. We do need another bedroom at some point, 2 kids are sharing a room. It works and if needed we could make it work for a long while but if opportunity strikes then it might be sooner. I hate the idea of moving.


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## hfp75 (Mar 15, 2018)

Well here is the update for closing 2021.

In brief since my last few updates have been long winded. I got myself up to speed on 'My Diary' Ive been reading it and wow, sometimes I over elaborate.

I am still working - no changes. My wife's contract work has been extended now until September, and possibly longer. We are using a nanny - pros and cons here, but its life and theres no way around it.

We had COVID-19.omicron a few weeks back, no big deal, our (non-covid) colds over the winter were worse. Glad we all had it and that we beat it. We are 2x immunized and I guess also have some natural immunity too now. Kids are not immunized and at the current time its not on our radar.

We opened 2021 with:
-------------------------------------------
Pension/LIRA $560,650.73
RRSP $485,275.63
Cash $625,064.40
TFSA $106,014.22
--------------------------------------------
Total * $1,777,004.98

We closed 2021 with:
--------------------------------------------
Pension/LIRA $572,477.23
RRSP $489,233.66
Cash $764,510.73
TFSA $112,225.37
--------------------------------------------
Total * $1,938,447.00

* Plus our house @ $700,000-$800,000 - No Mortgage

So in all, a change of $161,442.02

That is broken down:
Contributions $123,487.00
Growth $37,955.02

The growth rate is 2.14% while this is not great, lets be optimistic, its not a loss. I usually look at the Balanced Funds of some of the major banks/institutions to see how I did vs the bulk of Canadians.

RBF460 was 10.14%
RBF1350 was 11.54%
MAW104 was 9.3%
VBAL was 10.21%

So theoretically, if I had just used the commercial investing options I would have done WAY better. For a single year I'll eat it, if over a few years I'm always losing then I will need to consider some changes. One comparative factor is that my deviations are also not as large as the funds above due to my allocations. The largest impact here was that for part of the year I was not fully invested either.... So, that did hurt. Lesson learnt about being 'out' of the market.

* Since those Balanced Funds do not hold Gold I should technically compaire apples to apples. If I remove gold / real estate / ect from my asset pool its not 1.94m its 1.31m If we look at those 4 funds, their average return was 10.3%, on the 1.31m I should have made $135,000 and I made $38,000 so I lost $97,000 by not just buying 'the balanced fund'.....


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## milhouse (Nov 16, 2016)

hfp75 said:


> In brief since my last few updates have been long winded.


I enjoy your longer updates. Adds a lot of color.


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## hfp75 (Mar 15, 2018)

This will be a short update.

This year for everyone has been tumultuous. I'll call this my 1/2 way mark, so I will use todays info for my synopsis. We are down, as are most people -9.91% which is -$192,112.71. We have deployed +2.51% which is $48,670 of new money into our investments. This puts us at -7.4% or -$143,442.71, this sucks but is part of this life. We will hopefully deploy another 30-50K this year and bring down our losses again. Advantage here is buying depressed items and a good re-balance.

I did buy some BTC in the past and its down like 50%'ish and Its just gonna sit. Seeing crude surge and my 'no oil producers' for my Canada allocation (still using Enbridge) has cost me, yet I still am content as oil is a political game more than anything right now - yes still a commodity.

My wifes contract position is now permanent so shes taking in some new learning with the new job. Shes kinda grumpy right now... part of life, she feels some stress, it will go away over the next few weeks/months. My job is stable no changes, kids are all enjoying the summer and school starts in 2 months. Our nanny has a residency issue, paperwork BS with the govt. This apparently is normal for immigrants. Sad since we are a first world country and its 2022. Life goes on.

I have had my eye on buying a late 80's IROC Camaro for fun to drive around. My wife thinks I am crazy. I'm just reliving my teens apparently. HAHA

We are starting to talk more about another home purchase - to get more space, another bedroom and a 3rd garage for my IROC (HAHA). I keep pushing back saying its not the right time, but next year might be the year - we will see. It is for sure within the next 3 years.

As my kids get older (3/5/7 Yrs) I am finding that my spare time is less and less.

Sayonara


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