I read an article on Investment Executive recently that summarized Bank of Nova Scotia’s global financial literacy strategy. The strategy is broken down into investment life stages to encourage lifelong financial learning. I found this article interesting because I’ve been doing some thinking on this very subject, looking at my life stages and where I’m at on this investing continuum.
As an investor who really took charge of his portfolio a few years ago, I get nostalgic on the stages I’ve passed (and struggled through) but also feel optimistic about the one I’m currently in – my asset accumulation years. Using Scotiabank’s language, I passed the “starter” stage and now into the “building” stage. What does that mean to me?
Rather than relying on the Canada Pension Plan (CPP) or Old Age Security (OAS) for retirement income, because who knows what the future holds, I’m doing what I can to save now, look after myself and pay myself first, building assets today to provide a modest income stream in the years to come. My assets are constructed with broad market ETFs that should provide predominantly capital appreciation and some yield and dividend paying stocks from Canada and the US that should provide the opposite. By leveraging both strategies, I don’t need to pick one strategy over the other to grow my retirement portfolio – they both work because they keep me on a plan I don’t deviate from.
My goal is to earn close to $30,000 per year in tax-efficient and tax-free (thanks TFSA) dividend income. It’s a lofty goal but you know what…I’m slowly getting there. At the end of last month, after most of my dividends were reinvested to buy more shares in the companies I already own, I calculated the dividend income for this year should be about $6,220 at the end of December. This is a healthy increase over this time last year. I’ve got a great distance to go to reach my passive income goal but each month demonstrates progress.
In my 20s, I was just starting to learn about the world of investing and what it took to achieve financial independence. In my 30s, I’ve learned much more about myself and solidified my financial plan to get there. I’ve learned in the end, its total investment returns that matter and more importantly, its real returns that matter (returns earned after inflation). By leveraging both indexing and dividend investing strategies, I’m taking advantage of both to build my investment portfolio during these asset accumulation years. I look forward to sharing my November dividend income update in a few more weeks.
What are your retirement goals and dreams? How is your plan coming along to make it happen? What do you think of my plan?