Ask the Advisor – Dealing with and getting through financial emergencies
To quote Mr. Mike Tyson once again on my site:
“Everybody has a plan until they get punched in the mouth.”
-Mike Tyson, former heavyweight boxing champion.
I’ve been doing a lot of reflecting and thinking during this financial crisis – given we all got punched in the mouth to some degree. In working towards our personal goals we’ll have deal with and get through some financial emergencies from time to time.
Recently, I’ve written about the following as I ponder what insane market and economic calamity has occurred over the last couple of months:
How might I prepare for an upcoming global recession?
How should I invest to get through any major stock market crash and eventually benefit from it?
How to get through a stock market crash – and benefit from it
Although I save, invest and try to do other things well in my life – I’m far from perfect. I continue to remind myself there is no perfect personal finance plan.
With my inbox overflowing in recent weeks with questions, emails and more financial perspectives from readers, I thought it would be interesting for today’s post to bounce a few questions, a few theories off an advice-only, Certified Financial Planner® with Money Coaches Canada.
Enter in, Mr. Steve Bridge!
Steve, let’s dive right in…
I recently got a question in my inbox about saving versus investing. I see savings as money to be spent or needed short-term (say, within a year or so). That should be in cash. I see investing as money to be grown long-term (not needed for another 5+ years). With many people dealing with a variety of financial changes and challenges right now do the same way and why or why not?
I agree with your definition, Mark. And one is not necessarily more important than the other. We hear about investing all the time, probably because it is more exciting, but saving is just as important to financial success. In fact, you could argue that saving is more important, because if you can’t save, you won’t have money to invest. Saving has to come first! Not having savings could be a sign that you are spending more than you are making (living above your means) which, as we’ll touch on below, is a serious problem. This leads us around to cash flow, the most important piece of financial security and success (which we’ll also discuss below).
This COVID-19 crisis has many people rethinking the value of any emergency fund. I’ve received a number of emails on this subject. Although I can’t speak for what others need or want, I know we keep our emergency fund rather constant at this minimum level. What are your suggestions to help people establish a fund after they deal with this crisis?
First of all, I love that you have an emergency fund, and the reasons you state in your article are spot on. When an unforeseen event happens, the emergency itself is stressful enough; adding financial worry on top of it makes it even worse. The emergency fund takes one stressor (the financial implication of the event) away.
In my opinion, a reasonable target for an emergency fund should be a minimum of three months’ necessary expenses. Some people say six and I have even heard of having an entire year (this seems excessive to me), but to me three seems like a reasonable number to aim for. Retirees or near retirees may already have significant amounts of cash on hand for lifestyle spending or guaranteed retirement income from a pension, so this guideline doesn’t necessarily apply to them.
With regard to how to establish an emergency fund, the first step is to determine how much your fixed monthly expenses are. These are things like mortgage/rent, hydro, cell phone, car/life/property/disability insurance, internet, condo/strata fees, prescriptions, etc. Anything that is paid every month on the same day for the same amount needs to be accounted for.
The next step is to figure out how much you would need for variable monthly expenses like groceries, personal care, gas, pet food, etc. These are things you buy every month, but for which the amount varies. Go through your bank and credit card statements (or check your app if you use one for tracking) and do your best to come up with an average for the past two or three months. Consider that during an ‘emergency’ situation, you will likely spend less than normal.
A third category are items that are paid annually, like property taxes, professional or accounting fees, car insurance (if not paid monthly), etc. and that will be coming due no matter whether you are working or not. For example, if property taxes were $5,000 for the year, I would add $417 ($5,000 divided by 12) into this category.
So, an emergency fund calculation might lead you to the following value:
- Step 1 = fixed necessary monthly expenses (mortgage, insurance, cell phones, hydro, condo fees, internet) = $4,000
- Step 2 = variable monthly expenses (groceries, personal care, gas, pet food) = $1,800
- Step 3 = fixed annual expenses (property taxes, car insurance, accounting fees) = $650 (calculated by adding up the annual cost of these things and dividing by 12)
Total = $6,450 x 3 months = $19,350 in cash.
This amount may take a while to build up, so don’t feel you need to have that money all at once. Keep it liquid in a high-interest savings account and not locked in, so that you can access it quickly should the need ever arise. I like the idea of keeping it at a separate financial institution, like an online bank because it’s apart from your ‘regular’ money (it’s not visible so less temptation to use it for non-emergency purposes) and you will likely get a higher interest rate.
As a follow-up Steve, I believe this COVID-19 crisis has many people questioning the use of their Home Equity Line of Credit (HELOC). What is your advice to folks using any HELOC?
Generally, I am debt-averse, but these are really tough times for many people and a HELOC might be the best option when it comes to getting through the current circumstances. Interest rates on a HELOC are lower than other types of loans, and while you need to pay back at least the interest owing each month, you have flexibility with regard to the timeline and how much you pay on top of the interest.
I would say the two most important things when it comes to using your HELOC as an emergency fund during these times is to a) borrow the minimum possible and b) have a plan to pay it back once things return to normal. A cash flow plan/budget will help with both of these because you can see exactly what you need to take out from the HELOC now (i.e. borrow the minimum, thus reducing the amount of interest you have to pay) and also with being able to know how much you can afford to pay back each month once life returns to normal.
One problem I see with consumer debt repayment is that often people will try to pay back too much too soon. They just want to get rid of it, which is understandable, but this can get them into trouble. For example, let’s say you really want to pay off your credit card bill, so you pay $2,000 of it off. You can’t really afford it, but you just want it gone. The following month a car repair or other unexpected expense comes along and because all the money was spent on the credit card payment last month, there’s no money saved for the car repair. The credit card gets used again, and the cycle repeats. We call this the ‘Never Ever’ plan because the debt never ever gets paid off.
I shared my thoughts about how I intend to get through any stock market crash above – and benefit from it long-term. As an advisor who helps people every day with their financial plans, what are you telling clients right now to get through this time?
Mark, I love your advice on getting through a stock market crash. It’s in line with one of my favourite financial sayings:
“You make most of your money in a bear market, you just don’t realize it at the time.”
-Shelby Cullom Davis
The hard part about investing is that humans are hardwired to be very bad at it. It’s not our fault, its biology. Everyone knows they should buy low and sell high, but our feeling brains (the one that is actually in control) get us to do exactly the opposite of what would be best for us (the field of behavioural finance has done fascinating work on this).
What I told my clients in an email in early January was that when the inevitable correction comes your two choices will be: 1. Do nothing and 2. Buy more.
I have one client who happens to have a large amount of cash (from before we started working together) that she had been sitting on for over a year, unsure of what to do with it. I made a financial plan for her and her husband, and we are now moving money slowly into the market over the coming months (using a robo-advisor and globally diversified index funds).
I like that quote Steve!
Like eating well, “living below your means” sounds so easy to do yet it’s very difficult for most people to put into constant practice. Why? Is this an income problem, a savings problem, or both for most? What are you seeing with clients?
Mark, you hit the nail on the head with this observation! Living below your means does sound easy but is possibly the #1 challenge for people when it comes to setting themselves up for financial success.
In my opinion, living below your means is not an income problem (once you are making enough to pay for basic living expenses). What happens with most people is that as they make more money, they start to ‘need’ newer or more expensive houses, cars, vacations, phones, toys, gadgets, etc. This is called lifestyle inflation or lifestyle creep and has nothing to do with how much we make. I had clients who made $500,000 annually but were spending $600,000. They saw no way they could cut back on expenses and that the only way to get ahead was to make more money. They saw it as an income problem, but it was very much a spending problem.
Flipping the script a little bit, I would say living below your means can be seen as a spending problem instead of a saving problem (this may be just semantics, but I hope your readers see what I’m getting at).
As far as why it is so difficult, that is a good question. What I see is that people are pretty good at tracking their spending using apps or spreadsheets, but most of these are only good for looking backwards. Knowing how much you spent on groceries, clothes and car repairs last month is great, but it doesn’t necessarily help you prepare for next month. This is where I come in by developing a money management system that looks forwards. Once we get it in place, it’s pretty much automated and ensures there will be money for groceries, rent/mortgage, next year’s property taxes, gifts for Christmastime, car repairs (whenever they come up) and all other expenses, both expected and unexpected.
We all have to make choices when it comes to spending – none of us has unlimited funds. As I joke with my clients, even Warren Buffett can only buy one super yacht a day. His choices are different than our choices, but he still has to make choices (side note – Mr. Buffett is renowned for being a modest spender. He still lives in the same house he bought in 1958 and buys a new car very infrequently. His cell phone was a flip phone until this year and gets an $18 haircut. One of my favourite personal finance books of all time is The Millionaire Next Door, which talks about similar habits amongst the wealthy).
Don’t get me wrong, I think it’s great to treat yourself when you get a bonus or a raise but getting carried away and raising your ‘necessary’ standard of living is where people start to get into trouble. Living on your pre-raise salary will help you live below your means and treating your extra income as ‘free money’ that goes to retirement savings, kids’ education or paying down debt will help you achieve financial independence. Future you will thank present you!
Lastly, this COVID-19 crisis will cause many people to delay their retirement plans. I believe there are huge merits to postponing full-on retirement actually. Thoughts? What do you advise clients on when it comes to this subject?
This is a really interesting question with a LOT of facets. We should first define what ‘retirement’ means. For me, I prefer to talk to clients about ‘the age at which you would like to be able to choose to work or not’. A little long-winded, I know, but I just like to define that retirement doesn’t have to mean stopping work or sitting in a rocking chair. It’s about being financially independent and having control over your time. Want to keep working because you like it? Great! Want to stop working and volunteer or garden or travel? Great! There’s nothing written in stone about what retirement has to look like or even whether you retire in the traditional sense of the word. The smart thing though, is to be financially prepared to retire at a reasonable age (say, 60 to 65), because life happens. For more people than you would think, the decision to retire is made for them, usually due to downsizing, health reasons, or having to take care of a family member (normally an elderly parent or ill spouse).
This crisis may cause some people to delay retirement, and the advice that I’m going to give may sound like closing the gate after the horse has already bolted, and for that I apologize, but hopefully this will help the many people who are not at the point of retirement right now.
Ideally, if someone knows they want to retire in two or three years, they will have a plan so that they know how much they want to spend (a very important exercise) and where that money will come from (your income sources). I would recommend adjusting their investment strategy to include a cash or near-cash portion, so that something comes along (like COVID-19) and wrecks the world’s stock markets for a little while, they can still retire knowing they have enough cash to see out the storm. You’ve talked about sequence of returns risk, Mark, and you’ve also talked about how markets bounce back. Having a cash wedge mitigates or eliminates retirement plans being derailed by a major market correction and allows time for the inevitable bounce-back. Keep in mind that pensions, government programs, rental income, or other guaranteed sources of income reduce the amount of cash required.
To address folks who were planning on retiring now but are now not sure if they can or not, I would say that a personalized plan prepared by an advice-only CERTIFIED FINANCIAL PLANNER® (CFP) (like me) would be a really good idea. Getting unbiased advice without getting sold anything means recommendations that are in their best interests and a plan specific to their circumstances. Failing that, continuing to work is an option as well as figuring some of the aspects of their retirement out themselves.
Here are some important questions I help clients talk through and get answers to:
- What is your desired spending level in retirement?
- What will be your sources of income?
- When should you take CPP and OAS?
- Which investments will you take first?
- What should your asset allocation be?
- How is your health?
Here’s a simple but interesting example. If you have a defined benefit pension (I know there are a lot of those out your way in Ottawa, Mark!) that will pay you $60,000 per year for life and you determine that you want to spend $50,000 per year, you’re off to the races and have no worries at all. Your retirement plans are intact, and you may proceed with retiring (interestingly, someone can have a net worth of $0 and still be quite financially secure).
On the other hand, someone who is 61, ready to retire, had all of their money in weed stocks and has no pension is going to have to come up with a solid Plan B when something like COVID-19 and the accompanying correction hits.
At the end of the day, as you say, personal finance is personal. Some folks can invest and plan alone and others prefer some help to ensure they meet their goals.
What advice-only planners can provide is unbiased help to sift through all the needs and wants to arrive at a sound financial plan that covers those needs and wants today, a game plan for the future, safeguards against the next market emergency or anything in between.
I hope these answer your questions Mark! Your readers are welcome to ask me any questions in the comments section below. Happy to answer them.
It’s clear to me that Steve’s client-focused energy makes him a good fit for the CFP role and framework. I’ve worked with Steve on a few articles on this site before and I hope to have him back again soon. In the meantime, if you want to reach out to Steve for anything you can find him here.
For further reading, you check out these posts Steve made reference to above including his previous work with me on the 4% safe withdrawal rate:
Does the 4% rule still make any sense???
Like Steve, I also enjoyed these time-tested truths in The Millionaire Next Door.
Time-tested advice in (and not in) The Millionaire Next Door
Thanks for reading.
There’s nothing like kicking off an article with a line from The Quotable Mike Tyson. It’s in times like these (when we’ve all been punched in the mouth) that the value of having a high caliber strategy already in place is so important. It takes away the need to be second-guessing as the news comes at us in a torrent.
As for how to find the money to put aside for savings (and then potentially to be invested once the emergency fund is in place), I like to quote “The Richest Man in Babylon”: A part of everything I earn is mine to keep.
I was having exactly this discussion yesterday with a friend and mentioned to her the importance of putting the payment-to-self at the front-end of the process. When you get paid, take a portion off for yourself, even if it’s an incredibly tiny amount at first, just to build the habit. You need the first snowflake to get the snowball rolling.
Indeed…I have long felt this the best way to budget for my wife and I:
“Essentially, we forego detailed budgeting because we’ve purposely put as many “pay yourself first expenses” up front as possible to enjoy anything leftover for fun.”
Good investing habits can be hard to break 🙂
Enjoyed this article very much, thanks Steve and Mark. I have been FIWOOT two years now and learning lots on how to navigate the financial side. This site is a great resource for ideas. We use our HELOC all the time since I am one of those who can have little to no assets and still have solid income. I think it boils down to how secure your income truly is as this current situation shows. My income is more secure now then when I had a job. To us the house is an asset. Many wait until older to sell home and use the money to support themselves when aged. We know our income is secure so we have decided to “spend” the house equity as we go along instead of waiting. Worse case, sell the house, pay off all debt, rent and we are still income secure with a positive net worth.
Agree that if you have to rely on building your own retirement income, having a stash of cash is a good idea. Understanding your cash flow and having a plan is critical. So many people don’t have a plan. Best wishes to all.
FIWOOT is the place to be. Looking forward to those days. Hopefully 5 years our in my early 50s by then…
“This site is a great resource for ideas.”
HELOCs for investing are just fine for those with very little debt, good assets, and good income still to cover the callable loan that is a HELOC should the banks tighten belts. It could happen.
As think as long as you are prepared to go down the worse case road, then you’re good!
I probably won’t tap my HELOC for more investing until the condo is 100% owned. The mortgage should be dead in another 5 years but we have to continue to max out x2 TFSAs and x2 RRSPs for the next 3-5 years while working full time too so it’s a balancing act.
All the best and stay well,
Thanks for reading Gruff.
Very cool that your income is more solid now than when you had a job. I’d be interested in hearing more if you were open to sharing.
Sounds like a very different retirement plan than we often see!
Hi Steve: I did reply to your question earlier but it didn’t post.
I’m a retired Alberta teacher with a DB pension. I consider my pension income more secure than my working income. Teachers can still be laid off but their income is more secure then most workers. Tenured teachers can still be fired for extreme unprofessional misconduct.
AB teachers have had a single 2% raise in 8 years. My pension has partial inflation adjustment so I am not losing purchasing power as quickly as my working colleagues. I get a small raise each January.
AB teachers pension is 95% fully funded which is better then many pensions. The underhanded way this UCP Gov moved our pension to AIMCO angered teachers.
Our income comes from Teachers Pension, small CPP, RRIF, dividends, occasional HELOC withdraw and some work. That replaced 85%+ of my net teaching income. Our plan is to leave the kids a small inheritance and die broke. Right or wrong that’s our plan and it’s not for everyone.
Thanks for sharing. That’s great that you have the DB pension – I understand what you mean by your income is more secure now.
I’m interested in your HELOC strategy- are you taking a bit every month to use for buying into the markets? I’m having a lot of conversations around this these days. I don’t have a crystal ball so am interested in what people are doing.
Did you consider delaying your CPP to 70? Or put another way, is there a reason you decided to take it early?
Re:CPP – It’s my wifes. She’s a few years older and stopped working when kids came along so her CPP is small.
I will likely take mine early (before 65) because we want the money to spend while we still can. In my situation I don’t believe in taking CPP at 70. I understand why people consider delaying.
Re: HELOC – my whole attitude on debt has changed over the last decade. My house is an asset that has value (equity) just like any other asset. In this low interest rate environment I don’t believe you should rush to kill your mortgage. If I had a 200K mortgage and won a 200K lotto or inheritance, I would not pay off the mortgage. I would put it into the market, especially now. Ok maybe some to mortgage as that would increase my equity. I am actually trying to get my HELOC increased to do just that. Debt is just a tool. If I had no assets to work with I would still be fine financially because of the pension(s). I am trying to intelligently lever the assets to grow our wealth and income. I have two strategies I use occasionally:
#1 Borrow from HELOC to add to cash flow during retirement. Think of it as a reverse mortgage using HELOC. Many wait until they need to go into long term care to sell house and use the asset to pay expenses. I am drawing down the asset early instead. Look at these numbers:
400K in house market value but still have 100K mortgage gives me 300K in equity to work with.
Take 1K every month into cash flow at 4.5% = $12K per year at 4.5% =$540/12 month = $45 I pay $45 monthly to service 12K of debt. My only legal obligation is to pay the monthly interest.
If I do this for 10 years I take $120K out of house and that now costs me $450 per month to service. I can easily handle that as I know that in retirement my pension income will grow. During those ten years I finally pay off the mortgage. I now have a home probably worth more now than ten years, no mortgage, 120K in debt and I can still sell the asset and walk away with $280K. I know there are lots of variables in this scenario such as interest rates go up, house value goes down, etc… To me the risk is small. If you cannot handle risk don’t go into the market.
#2 Borrow from HELOC to invest. HELOC interest is simple interest. Buying stocks that pay a solid dividend (Canadian Banks) and turning on DRIP creates a form of compounding. Figure out what you would can handle as a payment each month, say $500 or $6K. Cost to borrow $6k at HELOC of 5% is $25/month. Buy a solid dividend paying asset. Canadian Banks are paying minimum 5.23% dividend as I write this. What are advantages?
Banks tend to raise dividends 1-2 times per year so income is growing.
Chance for stock to rise in price – especially now.
Cost of borrowing actually decreases as I make each $500 + interest monthly payment.
Risk is very small. If my house has an asset value of $400K I am only “risking” $6K/400K=1.5% of the asset.
$1 dollar invested today is worth more than a dollar invested in a year due to inflation.
Pay the interest from cash flow and not from dividend generated so you can DRIP and compound.
Do this inside non registered account and interest rate can be lowered by your marginal tax rate (25%+) so the interest rate actually becomes 5-1.25 = 3.75%.
Rinse and repeat. I have actually done this with smaller amounts ($3000). I couldn’t claim the interest as I did this in an RRSP while I was still in a higher tax bracket. Best to do in a TFSA.
Sorry this is so long. Income security and having assets creates opportunity.
Thanks for the thorough explanation, Gruff – really interesting! So many ways to skin the proverbial cat, eh? If you have no RRSP/LIRA assets or potential health issues, I can see why taking CPP early would be preferred.
Your HELOC plan makes a lot of sense, especially as you say, in this low-interest-rate environment. Plus, you are in the nice position of having a DB plan, something most of us can only dream of.
There wasn’t a ‘Reply’ option to your latest post, so this may not show up beneath it (Mark may be able to adjust that).
Thanks Steve. I think it might because the comment only has so many replies “nested” under the original comment. All good and it will show up all the same.
I like reading these posts and comments, especially from people already retired. There are always some nuggets of wisdom. I retired two years ago with a small pension that would cover 30% of our expenses. The rest of our income is dividends. We plan to wait to apply to CPP & OAS until 70 if all goes well. This could be done sooner if all dividends were cut and we could probable get by on that. But to have cash sitting around idle has never been for us. When you look at all the years that you could have earned 4 – 5% in dividends it adds up quickly. We’ve had a line of credit ever since we had equity in a house and now it’s just there as our emergency fund. And if we should need it the dividends would be more than enough to pay the interest until we can pay it of.
And as you put it, rightly or wrongly, that’s our plan.
Divinvestor, that sounds like a really interesting plan for retirement income!
Is there a reason you are not drawing down your capital? Do you have a plan to avoid a large tax bill down the track (I only ask because a lot of money left in a RRIF/LIF at passing is all taxable as income)?
Yes, I have a plan. We want to leave as much as possible to our son when the time comes. So we are drawing more than we need out of our RIFF’s now and paying more taxes. We use this money then to replenish our TFSA’s at the beginning of each year and creating more dividend income there. (we take dividends out during the year, then put the RRIF money back in. Usually we move shares in kind) The hope is that we can draw the RRIF’s down in the next 10 – 12 years. I realize that this will mean we pay a lot more in taxes now, but the estate will be better off and leave our son in a better position later.
I really like this! So many people are hesitant to draw down RRIFs earlier and faster, but in the long run, it will result in less tax payable.
When I run retirement projections for people, I like to smooth out taxes payable (and thus reduce the total payable) not just for this year or next year, but for your projected lifetime. A strategic drawdown strategy saves a LOT of money. Well done!
Thanks for the comments Steve.
Smart stuff on the strategic drawdown. Exactly my plan to withdraw from our RRSPs in 50s and 60s for living expenses before CPP, OAS and any workplace pensions kick in ages 60+.
“The hope is that we can draw the RRIF’s down in the next 10 – 12 years. I realize that this will mean we pay a lot more in taxes now, but the estate will be better off and leave our son in a better position later.”
Nothing wrong with that plan. I think smoothing out taxes over multiple years is ideal. Are you going to exhaust all RRSP assets before age 65 or even 72?
when we retired we started drawing dividends immediately. Since there is no withholding tax from a RRIF when you draw the minimum amount, we decided to transfer all RRSP’s to the RRIF’s right away. We use these monthly payments for our income, and then withdraw the additional amount at the end of the year in a lump sum and pay the 30% tax on that amount. Since there will be taxes to pay anyway, this amount can then be deducted. These lump sums or shares in kind then get deposited in the TFSA’s. Additionally we draw dividends from our TFSA’s and non-registered accounts as well.
Love the lead graphic – “The End” – literally and figuratively 🙂
Good post with lots of solid information.
Could I humbly suggest in calculating an emergency fund that one track one’s actual expenses?
I use a simple 8×10 piece of paper with about 20 categories to capture outgoing expenses and transfer the number to a spreadsheet monthly – takes about 1-2 minutes daily (in ‘normal’ times; a lot less currently) and 10-15 (max) minutes monthly to transfer. Once it becomes a habit it seems to be no effort at all and has the benefit of accuracy and giving you a good idea where the money went. ps. I do not like budgeting :), but this could also be used to set up a budget.
Also the time to setup the HELOC is before you need it ie. not in the middle of a crisis.
Personally I think a minimum 6 months of funds is a good idea as this current crisis shows 3 months will probably not be enough.
FB, thanks for your feedback. I think you are spot on with your suggestion to track actual expenses! It’s a really valuable exercise and I use that information to create a money management/cash flow system (I don’t love the word ‘budget’). Knowing how much you need then allows you to decide how much to put toward retirement savings, emergency fund, travel, or other goals.
And good call on the HELOC too! Getting this before you need it is very smart.
I do the same fbgcai.
I have a spreadsheet where I know pretty much to the dollar what we need for food, condo fees, property taxes, insurance, etc. I know where our money goes every single day and week and month. Some of those costs are fixed without any flexibility: our EF would cover those for a few short months.
I think Steve put in the post about ~ $17,400 in cash would cover most families (just one example I know) for about 3 months.
If we really had to, we’d cut back on saving for retirement first (no TFSA nor RRSP contributions) as a first step.
Next step would be cutting subscriptions we like (e.g., Amazon Prime) and save about $100 per month there.
Next would be stop driving, sell car, etc. in a crisis.
Lastly, cut back on groceries, buy the basics, etc.
All told those efforts would save us a few thousand per month.
I don’t like detailed budgets myself but I prefer to make forecasts on where our money goes after we pay ourselves first. We set aside about 15-25% net income for retirement (max out x2 TFSAs, and x2 RRSPs) and largely enjoy the rest.
That seems to work for us.
I think 6 months in cash is a great idea and I would go as far to say most retirees, even if they have a great pension or pension-like retirement income, could definitely feel good about having ~ 1 year in cash expenses maintained in a savings account.
Rightly or wrongly, that’s our plan!
Thank you for the great information Steve and Mark. Your comments give a person a lot to think about. We’ve been retired for almost 14 years with no defined pension and when the poop hits the fan I always can’t help but panic a little! ((: It’s not the end of the world: I hope?
Thanks Gary. Sounds like you’ve been doing pretty well for 14 years! I wonder if you keep a ‘cash wedge’ or some kind of GIC ladder so that you don’t have to sell equities during corrections?
We keep a small cash wedge just in case of an unforeseen expense. ( $10K). It’s in a high interest savings account which is not very high. Our CPP, OAS and dividends cover our fixed and day to day expenses. I suppose if all our dividends where suspended We would move in with Mark!?. Life is too short to worry about a market we have no control over. Thanks again for your post. It was down to earth and easy to understand.
Thanks Gary. I think if you have invested in utility stocks (e.g., AQN just increased dividends by 10%!) and Canadian bank stocks and you have diversified out of Canada into U.S. S&P 500; some stocks there, have some bonds, etc. there is really not much else you can invest in for income or growth at times like these.
Other than U.S. tech stocks that are defying gravity right now and $SHOP here in Canada that’s pretty much the best you can do for the long-haul I think!
I hope it’s not the end of the world either Gary!