A new year is here and there’s no better time than the present to start some new, good habits the kick the old habits goodbye.
We’ve set a few financial goals for 2016 but we don’t have any hope of realizing these goals unless we stop these three bad investing habits.
- Stop focusing on portfolio return
Nobody can predict the future with any accuracy, so the joke is on people who think they can. In 2016 I’m going to try and stop focusing on portfolio return. Instead we’re going to focus on maintaining a good savings rate – that’s pretty much it. Pay ourselves, invest that money, pay our bills including mortgage debt then spend the money that is leftover to live our lives, have some fun. I know a good savings rate over the next 10 years will take care of our early retirement plans.
- Stop obsessing about the non-registered account
I don’t like paying taxes any more than you do. I have a non-registered portfolio of dividend paying stocks. Although Canadian dividend paying stocks are tax efficient I’m paying taxes on dividends earned every year. While not ideal I don’t wish to incur capital gains either by selling of any those assets. I will continue to hold these assets but instead of focusing on growing the non-registered passive income stream I will strive to continue maximizing all registered accounts (both TFSAs, both RRSPs) first.
- Stop thinking about how other people invest
It’s taken me some time to figure this one out but I need to stop worrying about how other people invest their money. Our retirement plan is tailored for us and it’s getting us to where we want to be (month after month) thanks to reinvested dividends and distributions our income for retirement is on the rise. The passive income we make from our investments will fuel a sizable portion of our fixed living expenses. The more we can live off dividends and distributions the less concerns (and risks) we have about needing to spend our capital in early retirement.
In 2016 I hope to stop focusing on things I cannot control, such as portfolio returns and how other people deal with their financial matters, and focus on what I should be controlling, simplifying our finances and some of the tax issues related to it. Less worry, more fun and let stocks and ETFs invested in the market do their thing.
Sometimes the easiest things to say (or write) are the hardest things to do. I will keep you posted on my improvement plan.
What habits are you kicking the curb in 2016?