2022 Financial Goals – September Update
Welcome to my latest update about our 2022 financial goals, this is my update for September.
2022 Financial Goals
For any non-subscribers (yet!) to my site, here is a screenshot from our actual written financial plan from a few years ago below:
For this month’s update, I figured I’d unpack each bullet above and highlight where we are. I’ll share how we’re doing with our 2022 financial goals at the end of this post.
1. Maintain spending inline with the estimates in my/our financial independence plan.
Well, we have a few international vacations coming up (most of them booked and already paid for) so largely true!
2. Consider a reduction in retirement spending.
Nope. Not gonna do it!
It’s been almost a year since my last financial independence update, so I will be updating that post in a few months.
Our target, Year 1 spend in semi-retirement is about $75,000 or so.
So, to meet that spending need, either about $6,000 per month will need to come from our investment portfolio and/or we’ll still need to work, part-time. We’re planning for the latter in a few short years.
3. Create an emergency fund with a goal of ~ $45,000 or so (prior to semi-retirement).
We’ll start tackling that more next year, in 2023, beyond any corporation assets.
Until then, we’ll keep our emergency fund intact and remain pretty much 100% invested.
Besides, everyone has a different comfort-level about how much cash they should really keep.
4. Pay off the mortgage in the next few years.
Work in progress, people.
We are essentially 2 years out from clearing our mortgage. Steady as it goes…
5. Save for infrequent expenses using various cash buckets.
We’ll consider that in the coming years. Right now, we feel we’re in a good financial spot.
6. Maximize RRSP contributions (each year).
Both our RRSP accounts are fully maxed out of contribution room and we hope to invest inside our RRSP, for just two more years, in 2023 and 2024. That’s it.
7. Maximize TFSA contributions (each year).
Absolutely once again.
Each TFSA account we own is maxed out of contribution room. In fact, we’re close to having money ready to roll for January 1, 2023. I would think with inflation running hotter, you should expect new annual TFSA contribution room to be $6,500 per adult, as of 2023. Remember you heard that here, first 🙂
2023 and 2024 are likely the final years for us to invest inside this account. That’s because we’ll begin our portfolio drawdown plan in a few years – leaving TFSAs to compound away “until the end”.
8. Generate investment returns that are aligned/within some historical results.
In fact, I believe future returns might be a bit lower than historical – and our financial independence plan banks on that. Anything above our forecasted returns below is a bonus!
For our financial future, we are hoping for returns in the range of 5.5%-6% from an all-equity portfolio + cash wedge earning 1-2%.
We are also forecasting inflation to be 3% sustained for the next 30-40 years (after the current bout of inflation is tamed a bit more into 2023 and 2024).
I like being a bit conservative for money management – your mileage may vary.
I’ve run countless projections for myself to be sure of this and I can help you run the math too.
Subscribe for free and hit me up for a low-cost service offering!
9. Keep investment fees low over time.
Why would I want to make other people including a financial advisor wealthy?
I’ve been a low-cost investor for the better part of 15 years now and I intend to keep it that way. You should consider the same! Nobody cares more about your money than you do.
10. Ensure our portfolio is well diversified.
That’s the plan.
I coined the term “hybrid investor” on my site back in 2012 and probably somewhere even before that.
That ensures I invest in a manner that works for us: solving for both income and growth needs in semi-retirement. That approach can work for you too.
11. Ensure our asset allocation is inline with our risk tolerance.
Yes, to a point.
As I enter semi-retirement, part-time work, I figure keeping ~ 1-years’ worth of cash is a good hedge against any all-equity portfolio. As I consider full retirement many years down the line, maybe more fixed income might be needed. Then again, CPP and OAS is inflation-protected fixed income and two good sources at that. I will tell you what I consider and why when I get there! 🙂
12. Consider a switch to an investment portfolio that is easier to manage.
I like my hybrid approach to investing.
I like getting income for doing nothing, rising income at that.
I like the upside I’ve earned from some of my growth ETFs too, although this year has been tough!
So, no, despite what one financial advisor in particular cautioned me on years ago, I’m not going to change my investment portfolio. Don’t fix what it’s broken.
2022 Financial Goals – September Update Summary
Based on defining and sticking to our plan, part-time work possibilities are right around the corner. We’re not there yet, but getting there…
Our financial goals are largely met for the year….
- Max out contributions to our Tax Free Savings Accounts (TFSAs) this year. (Done!)
- Max out contributions to our Registered Retirement Savings Plans (RRSPs) this year (Done!)
- Continue to pay off our mortgage. (Work in progress!)
- Initiate a larger emergency fund to start semi-retirement with. (Work in progress via corporation assets.)
….and it’s just September.
We’ve been very fortunate to realize most of our financial goals, already in 2022. So, this fall, we’ll spend some money, have some fun, and see where the next few months takes us.
Thanks for reading.
Source: The Behavior Gap
Should you take a salary or a dividend from your corporation? What’s the difference?
A cash wedge is one very smart way to manage market volatility Don’t just take my word for it:
The Psychology of Money says this about keeping some cash while focused on investing:
“We do it because cash is the oxygen of independence, and – more importantly – we never want to be forced to sell the stocks we own.”