2018 Financial Goals
Another year, another set of goals…and why not?
In years past we’ve accomplished a lot by documenting our financial goals and trying to maintain some accountability to work towards them. Here are some of the great milestones we’ve achieved since running this blog; keeping tabs on our money for today and for our financial future.
Starting in 2011:
- We increased our mortgage payments by $200 per month.
- We maximized contributions to our Tax Free Savings Accounts (TFSAs).
- We also continued to DRIP Canadian dividend paying stocks such as Bank of Nova Scotia and Fortis. (I later moved these stocks from the stock transfer agent to my discount brokerage.) You can consider the same average retirement plan to generating wealth here.
Throughout 2012 we focused on:
- Paying off a small line of credit (and accomplished that).
- Maximizing contributions to our TFSAs (and accomplished that).
- Saving money for our winter vacation in early 2013 (and enjoyed beautiful and sunny Costa Rica because of that).
Santa Teresa, Costa Rica
In 2013 we:
- Put lump sum payments on our mortgage.
- Maximized contributions to our TFSAs (you see a theme already?)
- Saved money for another great trip, with friends to Puerto Rico.
During 2014 we:
- Put lump sum payments on our mortgage.
- Maximized contributions to our TFSAs.
- Increased Registered Retirement Savings Plan (RRSP) contributions.
In 2015 we:
- Put lump sum payments on our mortgage.
- Maximized contributions to our TFSAs.
- Paid off our line of credit incurred to make some home improvements.
- Took an international trip for two weeks, to Scotland.
2016 was more of the same, we:
- Doubled-up our mortgage payments.
- Maximized contributions to our TFSAs.
- Paid off our line of credit incurred to make some home improvements, and topped up our emergency fund.
- Took a trip to British Columbia, including wine touring in Kelowna. We tend to save up for vacations in advance so we can sometimes splurge during them..
Last year (2017) was more of the same:
- Maximized contributions to our TFSAs.
- Doubled-up our mortgage payments (but did so for only part of the year in this summary report here).
- Sustained our emergency fund at this amount.
- Saved money and took two great vacations (one back to Costa Rica and the other to Portugal for two weeks).
Porto, Portugal.
What are the game plans for 2018?
Well, with little surprise we’ll work on maximizing contributions to our TFSAs again in 2018.
After that, it’s all about debt management. Why?
We decided to go ahead a buy a condo back in the city. Our move-in date is spring/early summer 2019. This decision was not taken lightly. It will be tough to move for many reasons. That said, change happens and opportunities lie ahead. These opportunities include being closer to amenities (the ability to walk to groceries and shops); we can walk to work (15 minutes); we can go down to one car in the city (we own two now); we’ll be within walking distance of restaurants; my REDBLACKS football games; movie theatres and just mere minutes from our beautiful Rideau Canal and more. The housing dilemma will take more twists and turns in 2018 and I’ll provide more updates in future posts no doubt.
So, for 2018 – it’s two simple goals:
- maximizing contributions to our TFSAs, and
- killing debt.
If we do well on the debt management side of things maybe we can squeeze in a vacation later this year. If we do, we’ll have to rely on existing travel points help us out. In the meantime, we’ll focus on maxing out our TFSAs and killing debt as big priorities.
Plans can always change but at least we have some to work on throughout 2018:
Wish us luck in 2018 and we’ll keep you updated.
Mark
Readers, what goals might you (or did you) set in 2018? What are your thoughts on our two big priorities this year? Share and comment away.
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
Financial planning advice: do you have a financial planner or how do you balance the DIY approach with getting advice when you need it or think you might benefit from this, along with estate planning etc.
Thanks for your comment Sue. I’m DIY all the way. The site chronicles my journey/our journey with investing, largely, without any help from any financial planner. Sure, I lean on experts from time to time, and happy to do so to learn from them, but I don’t have anyone managing our finances.
Eventually, I will probably look at an expert to help with estate planning but I hope I don’t have to do that for many decades to come.
Nice goals mark! Oh man went to portugal 2 years ago. Loved it. Congrats on the condo. It would be nice just walking to work/groceries etc. We moved to the country which i love but keeps ya busy cutting grass etc and the 20min commute each way to work gets to ya. Sounds like some solid goals for 2018. Best of luck! Where you planning on going next?
Cheers
Great to see that you have finally made your decision Mark! Yea, having one car will for sure save lots of money, which is what I am doing right now living in downtown Toronto. Being close to work, subway, and all the amenities will really make a huge difference in your life (saves lots of time for one). This is why location is so important.
We are still trying to move away from downtown into a house further away, as we have like our current location but need a bigger space among other reasons. Hopefully, housing becomes more affordable here in T.O. in the near future.
Good luck with your 2018 goals. My goal would be the same, trying to maximize my TFSA.
Cheers!
Ya, it wasn’t an easy one Peter. I like the idea of being closer to work; walking to work; one car, etc. I think it will save time and money eventually.
Good luck with the TFSA goal. That’s a big milestone for those that can max it out.
Cheers,
Mark
Nope, not easy at all. Lots of money to be spent as well!!!
You are thinking what I am thinking – we just might go EV for next car since it will have 5,000-10,000 km per year on it. A good problem to have – not driving a car often. We’ll see!
Mark – have you evaluated holding your mortgage inside self-directed RRSP?
My financee is dead set against it, I’m leaning towards it. Stock markets don’t go up forever & yes, div paying stocks are less volatile than non-div stocks…but I have experienced several ‘black swan” events in markets in my life.
There are a number of reasons I wouldn’t hold my mortgage inside our RRSP:
1. fees – the fees are high and if anything, smart investors keep their investment fees as low as possible for as long as possible.
2. diversification – you are forgoing the opportunity costs to diversify your portfolio away from real estate. Why not take advantage of that?
3. rate of return – I’ve obtained 10% return in my RRSP in recent years and I’ve trailed the U.S. index! I would think by no means most mortgages would never have as attractive returns as the investments available to you inside your RRSP. Why on earth would you want to trade an equity return of 7% or 9% or in the case of U.S. markets last year of 20%! against a mortgage return of 4-5%? That makes no sense to me 🙂
Those are just a few of the reasons why I wouldn’t do it. Listen to your fiancee!
1. Fees – depends how large the mortgage is as to what % the fees are
2. Um…diversification away from real estate ? Are you planning on selling all your CDN banks to get away from real estate risk? Look at that sack sack of real estate liars loan Laurentian Bank. How the freak can a CDN bank raise their div one week and then decide they need to do a Placement of $125,000,000 the next week….at $2 under market? that CEO should be doing the Perp Walk to CEO jail.
With a $1,000,000 RRSP, a $300K mort is only 33% leaving 66% to diversify elsewhere + your bi-weekly payments can go into whatever investment thesis that seems cheap. Maybe buying Laurentian bank at $25 paying a 10% div
3. Returns – I’ve turned $27,000 into $250,000 in a single jr resource stock…sadly I was young and inexperienced to the extent I mistook brains for a bull market. When I read about people predicting $100,000 bitcoin, DOW 50,000, $10,000 gold or 20% a year from markets…. Don’t overlook something called compound interest either when calculating real returns
4. Fiancee…I had a 4 bagger return in a month, Merck $55 Calls ( thank you Keytruda). She wants me spend it on taking her to Grenada or St Lucia…far enough south that it will be hot! I’d rather divide in 4, find 4 more 4 – 8 baggers……
Mark
At least the value of a mortgage inside a RRSP won’t drop 5%+ in a week…stocks can and do.
Look at Bitcoin’s value off a cliff of late as well.
I wouldn’t touch Bitcoin 🙂
Good for you Mark. It sounded like that’s where your hearts were- in the city. I’m thinking it will be relief for you now having made a decision and being to able to focus towards this new goal.
Good luck and best wishes with killing debt, TFSA savings and the stretch vacation goal.
We’ll keep plugging away on our simple goals in retirement.
Search for new experiences and fun places to travel
Enjoy our home and other actvities
Stay fit, healthy and happy -maybe run a half marathon if hamstrings will allow
Track expenses and spend appropriately, monitor investments/rebalance/adjust as needed
Be ready for a rainy day
Yeah, it is, but it will be hard to leave this place. Thanks for the wishes in 2018. Sounds like you have a fun-filled agenda for 2018 yourself. All the best. Mark
Thanks.
I get it on leaving your nice place. I have found there are always pluses and minuses with every home / location, just like with most decisions.
Just one short trip planned so far since we’re coming off a long one now, and believe it or not having trouble returning due to bad weather!
No doubt you’re not overly thrilled to be home. That just means you need to take another trip soon!!
Lol,still away. I meant where we are is having bad weather – 2 days of flight cancellations. Our next trip is weeks away….
oh….sorry to hear. Yes, you are. Sorry, I thought your exotic travels were already complete.
thanks for your message, this is very helpful. I do find myself struggling with #3- the ample income stream coming from the portfolio and assets and how to strategically draw on this in the retirement years. I can’t wait to see your upcoming posts on the topic and admire your progress with working on your financial goals….my plan is to incorporate more fun in our life and yes Portugal is on my list of countries to visit !!
No problem Sue. Overall, it sounds like you’re a great position. You’re not sure if you can pull the plug but you suspect you are close. No doubt others in their early 50s would love to be in your position. Well done and stay tuned, I’ll write about our financial assumptions for an early retirement at some point!
Portugal is lovely BTW.
Hi Mark,
I had a few questions. As you work towards your goal of a 1M investment portfolio, when you get there is this when you intend on considering an early retirement (or atleast working less)? I think this doesn’t factor in the pension income your family may get. How does one decide when they are retirement ready? Are financial assets (not including home) the best way to determine this? I ask because I am 50 with no debt (house paid off at 40) , we passed the 1M mark in investments this month (RRSP, RESP, TFSA, Corp savings) and I have such longevity on my side of the family, I could easily see myself living until well into my 90’s. We have no workplace pensions so we keep on working and put money away (ETF’s, Canadian dividend stocks, oh and not forgetting Apple) . Despite working with a financial advisor its still not so clear to me when I can stop or at least slow down. I had a discussion with my husband this weekend about the fact that sometimes it would be nice to save for experiences now (like you have done with saving for trips) and spend some of this as I think too much focus on savings can mean you short change your life in other ways i.e. at the expense of having fun and travelling when your health allows one to do this more easily.
Hi Sue,
Thanks for your detailed comment and questions. It almost deserves another post (that I might write)!
If/when we cross the $1 M portfolio goal, there is absolutely an intent to work less. I could see ourselves working part-time as long as our debts are paid off. We have some distance to go on that. We have taken a balanced approach to investing and living to date. Meaning, we save and invest a bit, we have some debt but we also have some vacations and fun. I feel all saving and all investing would make Mark a dull and boring boy.
You are correct the pension is not factored into the $1 M goal. My wife has a small pension as well and combined, we are optimistic by our mid-50s those pensions (with some penalties to take one early) will cover basic living necessities.
How does one decide when they are retirement ready? I have a post planned for that this winter, about where I think we are at. It will be a follow-up to these posts:
https://www.myownadvisor.ca/revisiting-financial-freedom-assumptions/
https://www.myownadvisor.ca/income-sources-needs-wants-retirement/
To your question, I think many people are financially retirement ready (forget mentally, physically, other) if the following are in place:
1. There is no debt.
2. There is no intention to take on/service any future debt.
3. There is an ample income stream from the portfolio/assets (not including your primary residence) to cover all retirement expenses.
Arguably #3 might be hardest to determine. I exclude the home because you have to live somewhere!
With longevity on your side, then living into your 90s is a great possibility, which makes #3 very important to calculate.
Even without workplace pensions, depending upon your expense needs, I suspect most modest spenders would be fine with $1 M in invested assets by age 55 or so. Retirees will have CPP and OAS to look forward to. On average, most Canadians as a rule of thumb can expect about $1,000 per month inflation-protected income from both.
You can see from this post that $500,000 inside RRSPs in particular, can likely deliver close to $30,000 per year for the next 25-30 years.
https://www.myownadvisor.ca/can-you-have-too-much-income-from-dividends/
So, by playing with a few calculators and determining what income streams you can have in retirement or even semi-retirement until age 90 or 95, you should be able to determine your “enough number”.
Let me know if you have more specific questions since I’m working on our own version of answering these questions in a future blogpost.
Good luck with the planning in the meantime.
With interest rates rising and the cost of debts is a bit more expensive, I am also planning to deleverage and lower my debts if interest rates start going up again. The good thing about borrowing to invest is that you have a choice to pay it down whenever it makes sense. Other than that, my goal is to increase my net worth by another 10%. Boring goals that I set every year.
True, with borrowing to invest there are decisions to make. I just want to be debt/mortgage-free before we leave the workforce. I don’t use debt for leveraged investing in the stock market now. A mortgage is enough leverage for me thanks!
MOA –
Love the walk down memory lane and then seeing what sticks year after year etc. Thanks for posting!
-Lanny
Thanks very much!
Moving closer to the city so you can walk more is a great idea! That should cut down a lot of cost.
Certainly having one less car, I’ve estimated that should save us about $300-$400 a month. That includes factoring in replacing that car every 10 or so years.
Health-wise, we like the idea of being very close amenities – which will be great – but the comforts of our current home will be tough to leave. Pros and cons to everything but overall I think this will be a good move.