I will review what I do each month to manage our finances. I review my accounts monthly.
- Review credit cards
- Visa- Corporate
- Visa- Personal
- Update networth on Google sheets
- Review all bank and investment accounts
- Bill payments if no automatic payment set up
- Move extra cash to high interest savings accounts
- Banks- buy or re-invest excess cash into term deposits
- Buy 1/60th of total as a 5 year GIC ladder
- Buy VGRO- DCA ie dollar cost average
- Corporate Account
- Buy VCN & XAW- DCA
Review Credit Cards
I only review the corporate Visa in detail each month. I simply glance at the other two credit card quickly.
Update Networth on Excel
This allows me to review each account. Medical billings are auto deposited twice a month. I make sure to move extra funds to a high interest savings account at this time. I usually keep a minimum balance of 30-40K per month in the main corporate account. I limit auto payments to two accounts- a personal and a corporate account. Since we have so many accounts it can get a bit out of control and a tad confusing.
I divided the total of each of our RRSP accounts into sixty. MD Management allows one to purchase their GICs online if the total is at least 5K per GIC. I purchase a 5 year GIC with 1/60th of the total each month. Building GIC ladders mitigate interest rate risk since I always have funds to invest into the highest rate each month.
Ofcourse I could have made this quarterly or even yearly. But now that my monthly purchases are greater than 5K, it is so easy to simply buy the GIC online. I always make sure to keep within the 100K CDIC insured amounts. This 100K includes the original invested amount plus the compounded interest.
I have started to buy VGRO from Vanguard. It could not have arrived at a better time. I opened TFSA accounts at Questrade specifically for this in January 2018. There is zero costs to purchase ETF’s. I only pay an ECN fee equal to 0.0035 per share since I mainly use market orders. I have been DCA regularly into the accounts. I suspect whenever the ETF hits its 52 week low, I will leg in the entire amount for the year. This is my version of a hybrid model of lump sum investing versus dollar cost averaging.
I have decided to only purchase Canadian ETFs. I realize the US ETFs have substantially lower MER fees but to keep things simple I will forgo that. Nowadays, if it is not simple. I am refusing to do it.
The two ETF indexes that I use will be the Vanguard Canadian (VCN) and all World ex Canada (XAW). I plan to buy 20% VCN & 80% XAW. I have set GTC orders in my MD accounts to buy when the price activates at 80% of the all time high price. I maintained liquidity in my accounts for this reason. If those prices are not triggered, I buy my DCA baseline amount each month otherwise.
It is amazing how simple it is to manage your money nowadays. I am even able to buy term deposits online at my credit union. I used to stay on lengthy holds on the telephone waiting for assistance in the past. Now I just hop online and I’m done without leaving my home. I still find it all quite amazing.
Use Alert Functions
Excellent features include the ability for credit cards to instantly notify me whenever a transaction occurs. This happens with my corporate Visa. I find this extremely useful for safety reasons. If fraud occurs I would be alerted to this immediately.
I am still waiting for this feature on my personal Visa as well as my bank accounts.
Questrade is able to text me when my GTC (good till cancel) orders get triggered. This is extremely helpful as I do not watch the equity markets closely.
Focus on FI
I make an effort to open up my accounts and review them on a monthly basis. I probably just need to start closing accounts and simplify instead if I find it too tedious. All this talk about the benefits of Personal Capital is probably because they offer a good affiliate program. Side hustles anyone? I just want people to be open rather than proclaim about a product. It is getting eerie that many of the FI blogs have the same taglines. I am starting to develop a better BS meter.
Investing is a harder gig to ensure success. You could catch a bull market in the public equities market. That is what is happening currently. Or you could catch a good real estate market as I have. But please do not pretend that means any of us have become better investors. The reason many physicians might want to become equity index investors is because it is the absolute know nothing, do nothing investment strategy around.
You can control your career, you can control your savings and your burn rate. There are mainly three areas you can use to gain FI.
Equities- zero control
Real estate bull markets- zero control
Real estate cash flow- requires skill
Business- Control but hard work. Plus most of us do NOT have these skills.
Overall as a physician, all you need to do is just work hard and get good at what you do. Control your burn rate and actually retain some savings. Of that, diversify across the equities market and real estate. At least take care of your own personal residence. You do not need a dream house but over time you might be able to afford one easily.
No one has the correct answer for you. You will need to do some heavy lifting of figuring it out for yourself.
There are many different ways to get to your financial independence destination. But none is safer than working and saving. That is the first step for everyone. There is a reason that there exist examples of people making huge earnings and still ending up broke. You can outspend almost any income/ wealth. Furthermore as a physician, you have almost ZERO leverage. You are not a big business person. Even most of the side hustles I have seen on the internet takes a lot of effort. I am sure many of these bloggers would lose a significant portion of their affiliate income if they did not show up blogging each week. It reminds me a bit of network marketing. Many of these network marketers need to work their down lines regularly. Nothing really passive about that at all.
With the recent CCPC tax changes, you probably do not want a lot of passive income. You probably want growth investments with minimal income. That can only mean growth ETFs. Or investment real estate where you receive depreciation and more tax favourable income.
Nowadays, I feel we all have to factor in the time value of our lives. Start thinking about opportunities lost. Recall all those surgeons who never talked about money but lamented about the lost time with their young children. As I get older, I need to start thinking about the time left without disability. My husband and I will likely only have another decade or so before we may be too old to enjoy the active lifestyle that we have planned. Even if we live long lives, our period with relative fitness will still be limited. We need to focus on our healthy life years.
Money although important is one of the few things that can reappear later. Your youth and lost time will not. Never forget that. I truly believe all the tax changes on all levels have been a healthy kick in the pants for many people. Start to delete parts of your practice that has been bothering you. Learn to say no. Take better care of yourself and your loved ones. It is difficult to provide care when you feel you are drowning. Part of my blogging is hopefully to help you see that there are others of us out there who hear your struggles. I don’t think the government, defined pension workers or your patients would be receptive to your plight.
You might want to work longer in medicine if you can find the optimal balance. At least give yourself the option to think about it. My motto was always- if I need more money, I can always work more later on. No shame in that. There are benefits in thinking simplistically.
Money is a medium of transformation. It is NOT the end in itself. Money does not offer security. We planned our lives based on how we wanted to live it first and foremost. However much or little accumulated does not really impact us. There are ZERO absolute guarantees with any financial strategy. Once you accept that, you tend not to worry about it all so much.
Francis Bacon said “Money makes a good servant, but a bad master.”
I could not agree more.