2020 Financial Goals – December Update

2020 Financial Goals – December Update

When it comes to goals, I once read the following:

“Set goals that both excite you and scare you at the same time.”

The reasoning behind that is simple: goals should motivating and somewhat daunting. 

Today’s post recaps our 2020 financial goals to see where we landed.

The investing future remains unknown and unpredictable

After a couple of decades of investing, in my 40s now, I’ve certainly learned a thing or two about investing.

One thing I’ve learned is this: the investing future is both unknown and unpredictable.

Nobody accurately predicted the pandemic coming.

So, it’s financial lessons from the pandemic that continue to reinforce what I/we need to do when it comes to our financial plan. Here are some major takeaways for me from the past year:

1. It sucks to see your portfolio value crumble – but you need to stay invested

When the pandemic hit hard in March and the stock markets crumbled, it was tough to see the portfolio value down considerably. Yet I reminded myself when it comes to the stock markets “this too shall pass”.

2. Dividends are never guaranteed – ever

With dividend cuts to my portfolio this year, such as Inter Pipeline (cutting their dividend by 72% (not a typo)) and Suncor (SU) in particular, this year was yet another reminder that while dividends are good and an important part of my journey – they are never guaranteed. Seemingly “good stocks” can and will cut dividends to survive. 

Thankfully, I had many stocks (about 25 I recall?) increase their dividends across the portfolio this year. 

3. Even if you have an emergency fund – have a little bit more

I’ve highlighted the reasons why I continue to have an emergency fund – we realized our goal many years ago and maintain this balance (and a bit more) today. 

This fund helps us sleep at night knowing we have some monies available to us on demand if and when needed.

4. Diversification helps

Further to point #1, in a year when markets crashed only to rebound later this year (see evidence below), I’m reminded it’s often a collection of stocks (dividend payers or not) that are an enabler to investment returns. 

Our multi-year financial priorities were embedded in 2020

With one of our long-term, aspirational financial goals largely realized in 2020 (hint – look at the carefully worded language at the top of this page), the only major barrier to realizing full-on financial independence now is our mortgage debt.

So, knowing one of our major life financial goals could occur this year, our 2020 financial goals were carefully constructed 12 months ago with another key priority in mind, along with future investing plans and some fun:

1. Kill debt more aggressively.
2. Maximize contributions to next year’s TFSAs (2021).
3. Increase our travel fund.

Our mortgage is the only debt remaining on the financial books.

Since January 2020, we sustained the $100 increase made to our bi-weekly mortgage payments. This small change has accelerated our debt payment.

In October, we renewed what we believe is our final mortgage term at 1.69% for the next four (4) years. With less than four years to go on our mortgage, semi-retirement or any sort of full-time work that we wish to continue (work on own terms) seems very much in sight. #FIWOOT

I prefer Financial Independence Work On Own Terms (FIWOOT) versus FIRE

2. Maximize contributions to next year’s Tax Free Savings Accounts (TFSAs).

I hope you already know that the TFSA is far more than a “savings account” by name.

Since Day 1, we’ve used this account as a retirement account and will do so, for the foreseeable future.

With our TFSAs out of contribution room since January 2020, and money invested throughout the year including during the pandemic, our focus naturally turned to funding 2021 contribution room after January 2020.

We assumed 12 months ago that the annual contribution limit will remain the same for 2021 – so that’s $6,000 to fund per account, or $12,000 total for us.

We were correct.

Since inception, here are the annual and cumulative limits assuming no withdrawals over that period were made:

Year	TFSA Annual Limit	TFSA Cumulative Limit
2009	$5,000	$5,000
2010	$5,000	$10,000
2011	$5,000	$15,000
2012	$5,000	$20,000
2013	$5,500	$25,500
2014	$5,500	$31,000
2015	$10,000	$41,000
2016	$5,500	$46,500
2017	$5,500	$52,000
2018	$5,500	$57,500
2019	$6,000	$63,500
2020	$6,000	$69,500
2021	$6,000	$75,500

In that TFSA link above, I mentioned a few years ago that some couples might be well over $200,000 in combined invested tax-free assets in the coming years if they invested wisely inside just their TFSAs (forget RRSPs, other accounts) since inception.

Well, I know some couples that have this accumulated value and more thanks to the benefits of this account…

Again, I can’t emphasize enough you strive to max out contributions to your TFSA before investing in your RRSP, if you can.

At the time of this post we have our TFSA money ready to go again. I will be investing that money in a few short weeks.

3. Increase our travel fund. HA!

All work and no fun makes for a boring life! But we still can’t go anywhere?!

Thanks a bunch COVID-19….

The view from our villa in Belize, from February.

The pandemic absolutely threw a wrench into any travel plans this year (maybe some for you too) but we have so much to be thankful for – I don’t take anything for granted.

So, when we can travel again including going back to Belize or other international lands we’ll have money to do so thanks to this year’s goal. 

We realized our short-term savings goal to have >$5,000 ready to pay for travel, when restrictions lift. We realized that goal by automating our savings throughout the year – something I suggest you consider as well if not already done for 2021. 

What might 2021 bring?

It’s hard to fathom what 2021 might bring after such a year. Life can be and will always be I believe, unpredictable.

Regardless of what you save, how you invest, or what your personal financial goals might be for the upcoming New Year it is my hope such updates provide some inspiration for your own financial path. Personal finance is personal. Once you wrap your head around your plan, good things can happen. 

Thanks for following along with these updates this year.

Mark