2022 Financial Goals – June Update
Welcome to my latest update about my 2022 financial goals, this is my update for June.
A countdown to semi-retirement if you will…
2022 Financial Goals
For any non-subscribers (yet!) to my site, here is a screenshot from our actual written plan below:
Sticking to many of the bullets above as I/we work towards semi-retirement are a bit of a given:
- We’ll continue to live within our means/keeping spending inline.
- We’ll assume our future, long-term investment returns remain aligned to long-term historical returns (or even lower to be extra conservative!)
- We’ll continue to invest in a number of stocks and low-cost ETFs for diversification.
Other objectives still, we need to work on. This is where our 2022 goals come in:
- Max out contributions to our Tax Free Savings Accounts (TFSAs) this year.
- 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.
2022 Financial Goals – June 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. Since January, we moved some cash into our TFSAs and maxed both out.
Although the stock market is much lower in price now, what’s done is done, TFSAs are contributed to and assets have been purchased:
- I bought some XAW to own 9,000+ stocks within a single ETF.
- AQN was just one of the 5 stocks I wanted to buy more of in 2022 – so I did.
Goal completed, folks.
2. Max out our RRSPs
After our TFSAs were maxed out in January, we started saving for RRSP contributions. We tend to max out our TFSAs over RRSPs for these two key reasons – you might want to consider the same:
- Regardless of how much money you make, every adult Canadian has the chance to max out contributions to this account for investment purposes and earn tax-free growing income.
- The RRSP account essentially has an expiry date: you must consider converting your RRSP to a RRIF in the year you turn age 71. There is no such age expiry date for the TFSA!
I purchased some Fortis (FTS) and other existing dividend income stocks we hold inside our RRSPs. We now need to save money for future investing. More in a bit on that.
Goal #2 completed, folks.
3. Continue to pay off our mortgage
Ya, a given.
Thank goodness, given interest rates are going higher.
I mean, this is scary:
We’ve been good with debt – meaning, we don’t have very much debt on the books.
We intend to enter semi-retirement without any debt. That’s always been our plan. That will be liberating.
Without any debt, regardless of interest rates or inflationary pressures, we feel we’ll be in a great position to work on our own terms via part-time work. I hope our employer will consider it!
As we stay the course, at our current fixed rate of just 1.69%, our mortgage debt will be dead in just over two years.
Goal in progress.
4. Increase our cash wedge for semi-retirement
Some readers will recall I made the decision to incorporate in late-2020.
I’ve written about my thoughts on whether I would take a salary or dividends from my corporation eventually.
In the near-term however, I will do neither.
Instead, I will keep some some cash inside our corporation and consider that money as our cash wedge for semi-retirement…even though some bloggers couldn’t care less about cash.
(Early Retirement Now thinks an emergency fund is still useless!)
Keeping cash is hardly useless…
I have my reasons to keep upwards of 1-years’ worth of living expenses in cash:
- For years, we’ve kept our emergency fund at this steady amount. It’s our sleep-at-night factor.
- As we age, $hit will happen. I just don’t know when. I know the last thing I want to do, as I get older, is go back into more debt when a small financial emergency hits.
- Lastly, a reminder to all readers we are 100% equity investors. No bonds. No fixed income. No GICs. Nada. This means if the stock market goes down, a lot, as in now, our portfolio value will go down with it. My portfolio, like yours maybe, is down tens of thousands of dollars in this stock market cycle. My dividend income however, is up, at an all-time high. With a cash wedge, if we had to, we can “live off dividends” and distributions and draw on some cash savings for a year or so in a terrible stock market climate without ever touching the capital from our portfolio.
So, as 100% equity stock investors, I feel with our semi-retirement cash wedge our money will remain invested, dividends will get paid out, and it will allow us to spend the dividends and distributions earned without selling any equities at the worst possible time (when markets could be delivering lengthy, poor total returns).
Goal in progress.
Read on – How much cash should you keep?
Learn how and why to own your own cash wedge to manage any market volatility here.
2022 Financial Goals – June Update
Since we’ve been very fortunate to realize most of our financial goals, already in 2022, we’ll likely spend more money on fun this summer while saving up for 2023 TFSA contribution room.
Our new sub-goal for the next six months is to have $12,000 saved up and ready to roll for January 2023 TFSA contributions. I’m not sure what I’ll buy yet but I do know it will be Canadian dividend paying stocks or more low-cost XAW or potentially a bit of both.
Our financial plan is rather boring: save, invest, and prosper by staying the course.
Simple is not always easy, but it can be.
Thanks for reading and let me know what comments or questions you might have about our goals this year or our financial independence plan. I’m happy to answer those questions from you.
For some frequently asked questions (and my answers), check out my dedicated FAQs page.
You can also visit my standing Retirement page where I’ve interviewed many successful retirees and learned from them to tailor my own investment path.
Stay well, hang in with the markets folks, and remember to buy more when stocks go on sale.
Other Related Reading:
This is how you can Beat the TSX by owning the best income and dividend growth stocks.
This is how I’m investing to fight higher inflation.
I keep my holdings and how and why I invest the way I do always posted here.
Enjoyed the reading. I was never one to have a big emergency fund, I don’t own a home, so I figured, I can just use some of my savings if need be. Well, something funny happens when one retires, blame it on the “stars are aligned differently”, I don’t know… but almost the moment I retired, things started happening. And by things I mean unexpected expenses. It started with the car, for which _I had_ put money aside, but clearly not enough. Then, it was my health. Yes, medical health is free in Canada, but sometimes not *fast* enough. When you want an answer fast, you will pay, and it adds up!. So if for no other reason, I would add “health” on the emergency fund list. Incidentally, the money I had received for my accumulated vacation pay and had planned to use for other reasons went towards those 2 unexpected expenses. It was an eye opener. My attitude towards money now is that it brings you peace of mind because it buys you comfort but it also buys you time. I don’t know if that will have any great impact but it’s something to ponder.
Also wanted to say that I bought XAW awhile back because of one of your articles. Glad I did, and will continue.
Lastly, as I was looking at the stocks that you want to continue to add to your portfolio (and I like the choices), I was thinking of something I read once in a comment section on Youtube. This fellow was talking about a co-worker who only ever bought “1” stock for something like 30 years, and that stock was “Royal Bank”. That cracked me up. Guess he’s doing quite well. I think he also worked at RY. I’m not saying this to prove a point or anything. I just thought it was interesting and was it really a bad strategy? I guess he couldn’t really go wrong if he was in it for the long term. Anyhoo, I always learn something from your articles. Thanks.
Very kind Christine – thanks, and I appreciate your comment!
Yes, things break and usually cost money at the worst time…hence, very *very* smart to have a healthy emergency fund in semi-retirement or retirement.
“Enough money” offers more time – that is what I have been always striving for myself.
Yes, Royal Bank has been good but I wouldn’t bet the farm on any 1 stock myself! I like many Canadian stocks and some now cheaper XAW for diversification beyond Canada. XAW has fallen in price and likely a good time to buy more! 🙂
What are your thoughts on pre-paying about 30k (15%) of a variable mortgage?
Current balance is about 195k, interest rate of 2.58% – variable so subject to another 50-100bps or more increase in coming weeks.
Not sure how long the equity, REIT, Gold ETF markets are to remain volatile or would bottom out. Bonds seem to be in the trash (except some short term ones). Considering currency (cash) is loosing value, I see prepaying debt may be right? Or should I hold off cash for potential market upside when time is right?
Humm, well, I used to have a variable mortgage and depending on my sleep-at-night factor, I’ve paid down my mortgage more aggressively.
Historically speaking, another rate hike or hikes of 100-200 bps is nothing but I can appreciate based on the debt load and income coming in, it could be an issue for many.
I see debt management as really risk management. Debt isn’t all bad, but lots of debt that is not manageable is.
Based on my own experiences, unless I had confidence that I could earn higher > return with RRSPs, TFSAs, taxable, etc. vs. mortgage, then I paid down the mortgage a bit while investing.
Thoughts on that? 🙂
I expect the TFSA limit next year to go up to $6500.
I think you might be right Karl, with inflation factored in!
Thanks for the update Mark.
The Early Retirement Now post that you linked to, about how an emergency fund is useless, had me intrigued, because right now, having cash available is carrying us comfortably through that sequence of return risk for real. Anyway, once you get three quarters of the way into the post you find out that the premise of the post’s title only applies to the accumulation phase. So, having cash (and other fixed income assets) is not always useless!
“The Early Retirement Now post that you linked to, about how an emergency fund is useless, had me intrigued, because right now, having cash available is carrying us comfortably through that sequence of return risk for real.”
This is exactly why in semi-retirement, I hope to have some part-time income coupled with my cash wedge to ride out any calamity or worse than this for at least 1-year without every touching my portfolio.
Cashflow is king, cash is a pretty good runner-up!
Bob, absolutely right on the ’emergency fund’ carrying investors needing money/income through a rough patch.
Ha, I read that article and had the identical observation. Why did I need to read all that to get to the accumulation phase statement and the conclude cash is definitely not always useless. (Retired here and holding plenty of cash)
Hard to argue with smarts!!
Thanks Mark. You too!
They’re nearly at peak now. May take another few pics soon.
1-2-3-4 yes. I’ll be ready for 2023 TFSA with 13K. Pretty positive inflation will push us well past the CPI $500 increase threshold by Jan.
On sale and being sad. LOL. Reverse seems true when things are most expensive investors are often happiest.
Have a good one.
Ha, yes, people only like it when stocks go up 🙂
Thanks for your comment. Your house/grounds are looking great via those pics on Twitter.