2022 Financial Goals – December Update
Welcome to my latest and final update on our 2022 financial goals.
Source: The Behavior Gap
2022 Financial Goals
For any non-subscribers (yet!) to my site, here is a screenshot from our actual written financial plan documented a few years ago:
We developed and documented our financial plan to keep us honest over time. While this blog chronicles so much, behind the scenes we also keep a short list of key financial milestones (like these) we want to realize as semi-retirement draws near. Fingers crossed, we’re about 18-24 months away from part-time work becoming a legitimate reality for us.
Before I highlight what we accomplished this year and how, these were our 2022 financial goals as simple as they may be:
- Max out contributions to our Tax Free Savings Accounts (TFSAs) in 2022.
- Max out contributions to our Registered Retirement Savings Plans (RRSPs) this year.
- Continue to pay off our mortgage.
- Initiate a larger emergency fund to start semi-retirement with.
Here is our update.
2022 Financial Goals – December Update
1. Max out our TFSAs
Using your TFSA as an investment account is one of the best things you can do with your TFSA, although other ideas exist as well. Early in January 2022, we moved cash savings into our TFSAs: $12,000 contributed.
In January, we purchased mostly low-cost ETF XAW and some shares in Algonquin Power (AQN). XAW was an easy decision in retrospect: owning this low-cost fund provides ownership in 9,000+ stocks beyond Canada’s borders within a single ETF.
AQN at the time was a hedge for higher energy needs moving ahead. For now, AQN only represents a very small portion of my overall portfolio so I’m willing to hold this stock for a bit.
You read about other companies I purchased in 2022 here.
My buying for 2022 is done. I’m saving where I can now for 2023 TFSA contribution room in a few weeks.
Generally speaking, I try and keep any individual stock to <5% of overall portfolio value.
I call that my “5% investing rule”.
This way, should any one stock suffer like AQN has, that one stock doesn’t sink my portfolio.
You can read more about some of my personal investing rules and FAQs on this page here.
Goal completed for 2022.
2. Max out our RRSPs
Passionate readers of this site will know for years, I’ve touted the merits of investing inside your TFSA before your RRSP. I remain my conviction in this approach because of these two key reasons:
- The TFSA “wins” over the RRSP regardless of your earned income. Meaning, regardless of how much money you make, every adult Canadian has the chance to max out contributions to this account for investment purposes.
- While the RRSP is great, for multi-decade retirement saving and investing, it does need to be shut down eventually in the year you turn age 71. This means the RRSP account essentially has an expiry date. There is no such expiry date for the TFSA!
I eat my own cooking…
So, after maxing out contributions to our TFSAs again in 2022, we saved diligently in 2022 to max out contributions to each RRSP account. We added more TD Bank and Canadian Natural Resources to our RRSPs many months back.
Goal completed.
3. Continue to pay off our mortgage
Enough said.
Without any debt entering semi-retirement we feel we’ll be in a great position to work on our own terms.
Goal in progress for another 18 months or so….
4. Increase our cash wedge for semi-retirement
Some readers will recall I made the decision to incorporate a couple of years ago.
Any small income from this blog and from my partnership with Joe at Cashflows & Portfolios is saved within the corporation. I/we also keep our emergency fund at this amount outside our corporation.
Aligned to our financial independence plan above, we have a goal of keeping about $50,000 in cash to enter semi-retirement with. That money will essentially cover a year of spending for all essentials (food, shelter, transportation) just in case without touching any of the portfolio capital at all.
We sleep better at night knowing we have some savings set aside and we continue to believe cash savings is a great way to manage market volatility too!
Goal in progress and by the end of 2023, this cash wedge should be filled up. More to save next year.
2022 Financial Goals – December Update Summary
We’ve been very fortunate to accomplish these goals in 2022. It’s been a tough investing year.
I do feel that our plan is simple, robust and easy for others to replicate accordingly – should they wish (!) – since it offers a blend of wealth-building components (via investing) but also some risk mitigation tactics (keeping cash on hand and getting out of debt).
As I publish this update, my wife and I are enjoying some vacation time in Florida. Saving money is good but living what you save is much better.
I look forward to sharing more goals in 2023 with you including more travel aspirations that I’ll publish here too!
Source: The Behavior Gap
Mark
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've surpassed my goal and now investing beyond the 7-figure portfolio to start semi-retirement with. 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.
Mark, congrats on hitting all of those goals. Being disciplined pays dividends!
Regarding the cash wedge, with interest rates now at relatively high levels (5% for 1-year GICs), where do you intended to locate your cash: TFSA, RRSP, or non-registered where the interest is fully taxed?
My cash wedge is currently split 50/50 between an RRSP and non-registered saving account/GICs. I’m wondering if moving some of my Canadian stock from the TFSA to my non-registered account, and moving the cash/GICs into the TFSA, would be beneficial.
Great question, still working through that. 🙂
I think I’ll keep some cash/dry purchasing powder handy inside my RRSP for 2023; about $2k per account in cash. We tend to do that anyhow.
I will max out my TFSA/both of our TFSAs in Jan. 2023, so no cash there. Maybe a few hundred bucks at best. I like using the TFSA for dividend and capital gains tax-free growth.
I will likely keep some cash available (still) as my emergency fund of about $10k in my bank account. So, some interest but not much.
More and more over time, I will use my corporation for my cash wedge. By the end of 2023, I should have close to $50k saved in cash inside my corporation so that will be the start of my cash wedge as I consider semi-retirement in 2024.
I see cash savings as a very risk-based decision. I don’t mind the TFSA as a home for some cash, especially a 1-year GIC making 4-5% now, since you can re-fill it without penalty the following calendar year. 🙂
What about you?
Mark
AQN because you like green ideas? One thing to have ideals, but too much heart over head investing can ruin a retirement.
Very fair comment Milo. I think AQN surprised me quite a bit – I didn’t see the lower forecasts like that coming. We’ll see how this plays out long-term!
Mark
Enjoy your time in Florida, Mark.
Thanks very much, will do. Off to Happy Hour soon!
Mark
Hi Mark: Have a cool one on me. We used to go to Florida but recently, before the pandemic we would go to Cuba. The girls would hit the beach or pool in the morning while we guys would go golfing. We found the people friendly and at noon when we had lunch, we would order a beer. Before the beer was finished the waiter was around with another one. As mentioned, before I don’t believe in RRSP’s, but I started one late and it has grown but is still small compared to my portfolio. I can’t live off of my pension, so it just drips into my high interest savings account. The same goes for the CPP. I get the OAS because everyone does, but they claw it all back, so it is mainly dividends that I live off of and they are increasing each year. In November Emera and Fortis raised their dividends and in the new year it will be NA, TD, ENB, and T. We will have to wait to hear from BCE, BAM.A and its affiliates, TRP, plus any other one that may raise their dividend or distribution. As mentioned, before I still find the market high so have not been buying. This has led to excess dry power in my cash account. Money is meant to be managed and it doesn’t hurt to splurge and enjoy yourself.
Thanks, Ronald!
Yes, last month was good for EMA and FTS. Got some raises from NA, TD, ENB, RY, CM and BMO very recently as well.
The BAM.A and its affiliate spinoff will be interesting!
South Florida is very nice this time of year. Windy still but expected, and much warmer than home!
Mark
Dale Rathgeber here. Keep up your outstanding work!!!!!
Have a great time in Florida. We should have a good vacation too but somehow didn’t get it booked this year. I am planning to have two big vacations next year.
You are achieving your goal in a very steady pace, well done.
Right now I am very hesitating if we should continue to contribute to our RRSP. As we have delayed the retirement time, looks like even we stop contributing now (other than the part we will get match from the company), our RRSPs + CPP + OAS will be enough for our retirement. But in the other hand, it’s not likely our MTR in retirement will be higher than our current MTR even we have to withdraw much more than we need from RRSP before 70. Still three months for us to decide on this.
Awesome on the vacations next year for you 🙂
You are achieving your goal in a very steady pace, well done.
Ya, likely 2024 will be our final year to contribute to the RRSPs. Then just non-registered after that while we work part-time.
Very unlikely the MTR in our retirement will be higher for us, which is just fine and by design!
All my best,
Mark
Hope you’re enjoying the time in Florida.
Well done with staying on pace with your ’22 goals. Yes, its been a little more challenging year for most of us. Way overdue though and more to come.
Thanks Deane. Looking forward to some part-time work in a few years. Will be happy for that 🙂
Mark