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.

 

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

 

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

 

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

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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

 

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.

.

 

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.

 

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.

 

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 ?

 

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.

 

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.

 

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)

 

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.

... 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.

 

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.

 

please don't write any more fp.

Suggestion noted.

Thanks for the feedback.

 

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.

 

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!

 

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.

 

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?

 

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.

 

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)

 

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.

 

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