2017 Financial Goals
In previous updates I told you my wife and I focus on some financial goals…so we have a hope of realizing them. This blog is an enabler for that.
Our 2017 money goals are rather simple but also aggressive. Stretch targets are good to have. They push you. As part of our long-term goals we’re inching closer towards covering basic living expenses from dividend income eventually.
(Sorry indexers, I know some of you aren’t a fan of my dividend investing approach but this is part of our broader financial plan. I’ve gotten more emails and comments on my site recently (and on other sites) about this – why invest this way at all – it seems “ridiculously stupid” to quote one reader on my friend’s site here. No doubt your money habits and investing journey has been different. I might want to remind you that no two indexers probably have the same portfolios, in the same products, in the same amounts, let alone have the same long-term financial goals. I think that’s great. Why? That doesn’t make your investing journey “ridiculously perfect” – it just makes it different. Anyhow, just a point I wanted to get across. Small rant over).
In today’s dollars, here’s a list of expenses we hope income from our portfolio can cover within 10 years, by age 50 if possible:
• *Property taxes ($4,200 per year)
• *Home utilities (heat, hydro, water, internet, cable; up to $7,800 per year)
• Home maintenance ($4,800 per year)
• Home insurance (at least $1,500 per year)
• Food and household supplies (up to $11,000 per year)
• Healthcare needs (various).
*Can already be used if we really needed it to.
When we do the math that’s about $30,000 per year to cover basic living expenses. Not trivial…
Image courtesy of Carl Richards, Behavior Gap.
Since March we’ve made some small progress:
1. Do not to incur any new debt. Check!
2. Maximize our Tax Free Savings Accounts (TFSAs). These accounts are used to help us with our dividend income goal so they remain a big priority to maximize contributions every year. Check – goal accomplished.
3. Make double-up mortgage payments. Even with our mortgage borrowing costs as low as they are today (less than 2%), we believe having no debt in our financial future will give us options. Goal in progress.
4. Save $5,000 for a vacation. We’ve purchased our tickets for our next big international trip. Portugal should be fun. Tickets are bought and paid for. We need to save another $2,500 to cover accommodations, our rental car expense and food. Another saving goal in progress.
5. Save $5,000 towards a new car. This hot rod is now 17-years-old. It is rusting out but it does the job. We’ll try and keep it on the road until 2018. This way we have time to save up for a newer car in advance.
6. Top up our emergency fund. Check – goal accomplished. We keep our emergency fund at a decent amount. We’ll probably increase it by $1,000 next year to cover inflation but that’s next year…
Lastly, you might notice we don’t have any RRSP-contribution goal. My RRSP is out of contribution room. My wife has some RRSP room left but not very much. We believe maxing out our RRSPs and TFSAs is a healthy financial thing to do before really ramping up the non-registered investing.
So that’s our update. Two goals accomplished. One goal well underway (saving for vacation) and a few more in progress. I’m optimistic things can keep going forward. Stay tuned for more updates and thanks for being a fan, even the indexers.
Got comments on our savings goals and general approach? Happy to hear it.
I forgot if you answered this question already- do you continue to DRIP any dividend stocks in any of your accounts or just take the cash and build this up to buy more of another stock when that amount seems high enough to make the commission cost worth it?
rooting for the Sens’s here…hope they come through this weekend 🙂
Hi again Sue,
I DRIP as many stocks as I can. The only account I don’t DRIP any stocks, any longer, is the taxable one:
When enough cash builds up I buy more of the companies I feel are fairly valued and/or to get back into balance for assets in line with the TSX Index = 35% financials, = ~ 15% of energy, telcos, utilities.
Great goals and I love your website. You’ve helped my journey.
Great to hear Ryan 🙂
Mark, It’s encouraging to see you continue to progress, surpass step goals and stay true to your chosen path. Your 6 listed goals are A1 with me and the way I’d approach it given the same situation. Nice work.
You know what you’re doing and it is working, and it will work in the future. There isn’t only one way to reach a persons goals, and comments that suggest otherwise are simply wrong.
I don’t mind the different perspectives. I think that is healthy and welcome it. What I don’t like is the condescending tone that comes with it. I could certainly poke back because nobody is perfect but I don’t have the energy to fight with people – they likely would’t see the flaws in their behaviour anyhow. I learned a long time ago that people who like to believe they are right all the time likely have an insecurity issue that’s never been dealt with.
We’re doing OK in life and I’m thankful for my health and many other things. Money and investing, although interesting, certainly isn’t everything.
Good points I concur with… also one of the drawbacks with anonymous internet boards/blogs etc.
Your last paragraph is the one I agree with most.
Yes, if I’m willing to share my journey I have to accept the criticism that goes along with it – but I would expect it is respectful. 🙂
A great set of goals and you are well on your way Mark…I like that you check in and keep tabs on how things are going. Subtle changes sometimes make all the difference. I love being debt free and I am slowly working and growing our portfolios so that we will be in a FIRE situation. Love seeing those dividend coming in and growing from top companies. Keep it up…the end is in sight!
Thanks Louf. We’re inching along here. No doubt being debt-free is an awesome place to be in and well done!
Hi Mark, have you read Benjamin Graham’s works and follow his value investment advise? If not how do you pick your stock holdings?
I don’t really consider myself a value investor per se. I do look for stocks that I feel are reasonably priced, modest payout ratio, established and rising dividend histories, good cash flow, rising EPS, etc. Worse case, I don’t find what I’m looking for I do pour some money into some low-cost ETFs a few times per year. It’s an excellent default position.
How are you investing these days Don?
Hey! We’re headed to Portugal too! Its our first big trip with children. Not sure how that will go but we’ve been wanting to travel ever since our first was born so now’s the time. Good luck with your goals Mark.
Wow, great stuff. We’ve travelled to Europe a few times but our first trip to Portugal. Looking forward to it!
Very interesting, some very nice goals and good to see your progress is tracking along nicely too.
Thanks very much!
Thanks for your responses Mark. I had a question about Reits. What is the optimal # to own in your opinion and how do you determine the best ones to buy? Has your strategy changed over time about which ones to get?
Hey again Sue. I don’t know if there is an optimal # to own. Is 3 enough? 5? 10? FWIW I’ve decided for me that owning the top-8 or so in ETF XRE and/or VRE is enough. My strategy has not changed over time, consider owning what the biggest funds own in Canada and continue my research from there. Otherwise, using VRE or ZRE or ZRE is a great alternative to individual REITs.
thanks for your message. If one was going to start to add in a Reit, what amount of money ideally should one start with? i.e. a few thousand per stock purchase? What if anything do you do if interest rates rise because Reits are interest sensitive. It may not matter about a capital loss because you are still collecting dividends while you wait for the price to improve. Would this be your thinking too ?
Well, I can’t offer investing advice Sue – for many reasons on this site. Have you considered starting off with either VRE or ZRE or XRE as you get your “feet wet” with REITs?
Personally, I don’t care/worry about interest rates. I cannot control them. I try and treat most things in my life this way – if I cannot control or influence it – why worry?
I buy and hold and I collect dividends. My approach is very boring 🙂
Excellent progress on your goals. Enjoy Portugal.
Thanks very much!
I’m aware of the investment changes you’ve made and you’ve got my support. Each person must look at their goals and decide which course will help reach their goal. There is no one best or incorrect path, there is just the one you best with.
Thanks cannew. I think at the end of the day as long as you are making positive financial changes (i.e., saving, growing your assets, reducing debts, etc.) that’s the bigger picture. I grow tired of people in-person or online who always believe they are right.
what are your thoughts on owning insurance companies for the long term? Manulife and Sunlife come to mind but what about Power Corp to be able to take advantage of holding some GWL
I have no problem with it. I think insurance is always needed in some form (i.e., a hedge against a loss). Power Corporation has a very elaborate structure with GWL as you say.
One of my go-to sites for return data:
GWO since Jan. 2 2000 = 7.9%
POW same period = only 4.8%
XIC (Canada ETF) = 6.6%
I have no idea what the future holds though 🙂
are you investing through a corp. when you say you have no RSP room left, is it because you are not taking a salary to generate more room?
are most of your dividends you receive in a taxable or non taxable account. Is your plan to draw on them in whichever account you have them when you need to or would you be strategic and just draw from the RSP first or your non taxable account since some of this dividend income may impact on your government (OAS) benefits?
I have considered that actually. Half of about dividends in are in a taxable account and I have some sizeable capital gains if I sell assets. My plan is to draw down RRSP assets first, along with taxable account assets; then take pension, then take pension + CPP and OAS government benefits. I will leave TFSA capital intact until near “the end”. We hope to start that process (of RRSP withdrawals) in about 10 years or so. We’ll see. We need our mortgage paid off first and need to continue to build our TFSA and RRSP assets along the way. That’s the plan anyhow 🙂
I look at your goals Mark and realize that was me 20 years ago (except for the vacation stuff). IMO, it’s all good. I know some will dispute maxing out the RRSP, paying down the mortgage at such a low interest rate and dividend investing v. indexing but I can see the value in each of them. Being debt free can do wonders for a person’s state of mind. Having a fully invested RRSP just gives me a warm and fuzzy feeling. And owning shares directly and seeing dividends come in all the time, never mind increasing from time to time, is kinda neat.
I have no problem disputing the RRSP vs. mortgage paydown vs. TFSA vs. RESPs vs. anything else. I think all constructive money discussions are helpful and we can all appreciate each others’ perspectives on such issues – at least we should. I do get annoyed with people who act like they know it all. I guess I get annoyed because I wouldn’t treat other people that way.
Kudos on your journey to date Lloyd. There must be some satisfaction that you have realized many of your financial goals.