What are your investing goals?

Our investing goals are rather simple:  to use dividend income generated from our portfolio to cover most of life’s basic expenses.

With that statement you might be wondering what I consider basic expenses…

Here’s a list of expenses that our dividend income should cover within another 10 years:

  • Property taxes (currently $4,200 per year)
  • Home maintenance (around $4,800 per year)
  • Home utilities (heat, hydro, water, internet) (around $4,000 per year)
  • Home insurance (currently $1,500 per year)
  • Food and household supplies (up to $12,000 per year)
  • Healthcare needs ($3,000-$4,000 per year).

That’s the list and this is where we believe this goal of $30,000 per year in dividend income will help us.

The basics do not include any contingency money, new clothing money, funds to cover car expenses, travel or entertainment – so I believe we’ll need more than $30,000 per year to live from.

How are we going to fund the basics and beyond?

We’ve done some math.  We’re working on the following:

  1. A paid off home. We wish to avoid entering retirement or semi-retirement with any debt. We believe servicing debt reduces our financial flexibility because we are forced to pay other people first.
  2. A $1 million dollar investment portfolio. Lofty goal?  Hell yes.  This includes all non-registered and registered investments.
  1. Modest workplace pensions. The values of our pensions are growing slowly but there are no guarantees with our long-term employment situation (or any employment situation).  This is why we save on our own. We’re optimistic if we can keep our jobs for another few years we’ll have decent pensions/fixed-income for the rest of our lives after age 55.
  2. Government programs.  Based on Service Canada information the average Canada Pension Plan (CPP) payment is just over $600 per month for new beneficiaries at age 65.  We’ll also have Old Age Security (OAS) income at age 65 as well.  We believe these payments will help our healthcare costs as we get older.
  3. Part-time income. I can’t sit still for long so I expect to have some form of work for the rest of my life.  Our part-time income goal is to net between $10,000 and $20,000 per year for as long as we live from various jobs.  That might be this blog if it increases in popularity, it could be seasonal work, it could be another home-based business venture.  It could be all of these things or different things.  We are optimistic this income will cover our travel and entertainment wish list.

How are we accomplishing these goals?

Having a paid off home while reaching a $1 million portfolio are huge long-term big audacious goals.  So, we tend to break down some of our big goals into smaller, shorter-term, bite-sized chunks.  Financial freedom doesn’t happen overnight  At least not to us.

Here are some examples of our smaller goals:

  1. If we are able to maximize our TFSAs first, every year, that’s $11,000 more saved per year for future spending. $11,000 invested in Canadian blue-chip stocks should yield about 4% or so.  That’s $440 per year (tax-free) we can spend without ever touching the capital – until we want to.  Our short-term plan is to max out our TFSAs in early 2017.
  2. If we can continue to make mortgage prepayments every two weeks, that’s more money against the mortgage principle.  Sure, our mortgage rate is cheap but I have no idea what the future holds.  A paid off home will not only drop our monthly budget expenditures significantly it should also provide alternatives if we decide to sell our house, downsize, or simply rent for a few years.  Our short-term plan is to continue putting cash on our mortgage when we can.

You can read more about our short-term goals here.  I’ll be updating this post soon.

  1. My wife and I are starting to consider some part-time work opportunities outside our day jobs. This is not because we don’t like our current work, rather, we are looking for opportunities to further our learning, follow some passions, and get paid a small amount of income for doing so if we can.  This search (now) will hopefully translate into the aforementioned part-time jobs (to net between $10,000 and $20,000 per year) later on in life.

The summary?

We have big financial goals.  These goals seem so damn far away most days.  Maybe you feel the same.

To help us on our path we break down our long-term goals into shorter-term goals.  Those seem easier to achieve.

We monitor those goals and when we hit the mark – we celebrate.  Every little bit of positive reinforcement helps.

This process will be rinsed and repeated for the foreseeable future. This blog is a way to chronicle our journey and keep us motivated.  I hope you find some inspiration for your path.

Goals

How are your investing goals coming along?  What comments do you have for me?

<Image courtesy of Carl Richards, Behavior Gap>

Mark Seed is the founder, editor and owner of My Own Advisor - one of Canada's leading personal finance and investing blogs. As my own financial advisor, I've grown our portfolio from $100,000 to well over $500,000. Our next big goal is to own a $1 million investment portfolio for an early retirement. Come follow my saving and investing journey by subscribing to my site.

13 Responses to "What are your investing goals?"

  1. Looks good Mark.

    Being retired our total expenses including Income Taxes are about $50k. Less ccp\oas we need $20k, max $30k if we splurge. The balance of our investment income gets reinvested to generate higher income next year, without ever touching our capital.

    Total Return? Who cares as it doesn’t come into the picture!

    Reply
  2. We never really had it as a plan but your outline is pretty well exactly what we did without knowing what we were doing. It works.

    Well done. I’d wish you good luck but I don’t think you need it, you’re on your way.

    Reply
    1. Ha. Thanks Lloyd. There’s always a bit of luck involved and I’m sure we’ll need some. If I can be half as financially stress free as many of you folks I will be very pleased.

      Reply
  3. Thank you for writing those goals down Mark. You seem to have given a lot of thought to it.

    My goals are somewhat similar to yours. I do try to check them annually, but with life changes along the way, I may have to adjust accordingly.

    I have been debating whether I would want to own my home, or whether I want to be a renter for the foreseeable future. The other problem I need to work on – would we retire in the US or abroad? With more options, decision making is tougher.

    The other difference is that we are not eligible for pensions, other than Social Security for something like 30 or so years. Though part-time income may help.

    I personally think that a $1M portfolio would be enough to live off in perpetuity for us, though I do like to have income coming in from various independent streams ( dividends, pension, pt work, interest, etc)

    Reply
    1. Thanks for the comment.

      More and more, my wife is looking at renting as an option for us. We hope to pay off our house in 5 years. We are optimistic it will be worth about $550-600k by then, although no guarantees. We could invest this money and live off the capital – for rent.

      We are not eligible for any government pensions for almost 20 years. We will need something to live from in the meantime. We figure our investments and part-time jobs will do the trick. Maybe the blog will take off??

      I have a high level of confidence in addition to our pensions, and a paid off home, that a $1 M portfolio is enough for us. As you say that’s also good diversification.

      Reply
  4. Nice analysis Mark. Good job on thinking this all through and for setting priorities & goals for you and your wife.

    Our avg annual expenses for what you have listed is about $26K. Overall we are spending about 80K annually including taxes. About 40% of this is discretionary spending on travel.

    I think you’re right, with pensions, savings, no debt you’ll be in awesome financial shape after leaving your full time jobs even without generating PT employment/business income. Not owning a home could generate some additional cash flow.

    You’re doing great towards your plan. Best wishes.

    Reply
    1. Thanks RBull. It will be interesting to see where we end up with the house. Houses aren’t selling at all in our neighbourhood, so either they are overpriced (possible) or there is no market. Having a part-time job we enjoy and look forward to will be very important for us I suspect.

      Reply
      1. It’s funny but when I read the house comment I thought to myself: you work hard and plow a lot of money into your mortgage then when you win the race (pay it off) you move into a rental. In any case it could be a good move if home ownership is a lower priority, and you can likely net a little more cash flow. We certainly could however houses are at a standstill here too. We may have to give it away in 15-20 years when we are more likely to want to sell. Renting it out weekly for the summer might be another alternative but lots of headaches involved with that which we likely won’t want in years to come.

        I thought for a while I would be the same as what you’re planning: P/T business or possibly job to generate enough for additional discretionary spending…but I just never had the right idea and enough interest. Finding something you two enjoy would be very rewarding. When you are retired small accomplishments are equally satisfying to the larger ones you might have had in FT work.

        Reply
        1. Well, I prefer to live in a paid off home but if my wife would rather rent, well, that’s what we’ll likely do. We’ll see. That is many years away, well, a few – 5-10 anyhow. She is not ruling out downsizing and owning a smaller place but the challenge will be privacy and prices in the city; we have a beautiful 0.5 acre lot now which is very enjoyable.

          I suspect the PT job will be enjoyable – whatever that might be. The blog remains fun, so maybe it if takes off it will make money. I won’t count on it though…Mr. Money Mustache makes >$400,000 USD per year on his blog. Must be nice.

          Reply
          1. “Happy wife…….” Ditto.
            I understand on the privacy since we are out of the city too and on 3 acres.

            MMM is certainly doing well. Good luck on your blog.

  5. “MMM is doing VERY well on his site but I remain thankful for what I have. Happy wife…. ? ”

    I hold those exact same thoughts, and am also thankful for MANY other things in my life.

    Reply

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