2018Q3 Update

Categories The Numbers
Assets 2018Q3 2018Q2 Change % Change
RE 1- Home

3,030,000

3,030,000

0

0.0%

RE 2

852,450

852,450

0

0.0%

RE 3- Office

448000

448000

0

0.0%

Corporate Accounts

3889848

3757713

132135

3.5%

RRSP

523849

520305

3544

0.7%

TFSA

120758

120101

657

0.5%

Personal Accounts

316079

306177

9902

3.2%

Commodities

41404

44289

-2885

-6.5%

Networth

9,222,388

9,079,035

143,353

1.6%

Asset Allocation % AUM %
Equities

11.7

Fixed Income/ Cash

79.1

RE 3- Office

8.4

Commodities

0.8

100.0

Investable AUM

5,339,938

Investable AUM Ticker Portfolio % Totals
Corporate- Cdn 60/ 40
Vanguard All Cap Index VCN

18

65032

iShares All World ex Canada XAW

42

152637

Bonds ZDB

20

79007

Fixed Inc- GIC/ Cash

20

Corporate- US
Amgen AMGN

101,053

Berkshire BRK-B

254,255

RRSP
Laddered 5 year GICs

100

TFSA
Vanguard Growth Portfolio VGRO

100

66124

I just read my prior 2018Q2 update. These updates tend to very instructive for me. I have streamlined my investments even more the past quarter.

Not much has changed in my overall financial picture. We are now both working and plugging away regularly into the accounts. We sat down with our accountant recently and he set up the future strategy for our Corporate account.

In terms of equity investments, I have decided to streamline even further. I still own two of my prior stocks from 1999. If not for the corporate small business deduction in 2018, I would sell them both to simplify my portfolio. I will certainly sell them when we slow down and do not require the preferable small business tax rate.

The biggest change is to make all the investments in January each year.

Thus each January, I will make the following purchases.

  1. TFSA– invest full amount in VGRO
  2. RRSP– Use 20% of the portfolio to buy a 5 year GIC.
  3. Corporate Account– Buy VCN, XAW and ZDB in January. Balance the ETF’s with my incoming cash.

When I started investing in ETF’s earlier this year, I truly thought that I would dollar cost average each month. Then I was convinced that I would dollar cost average every quarter. Now I am thinking of only buying in January. I am beginning to see the pattern.

I bought three batches of ETF’s for the corporate account within the past four months. It has become very apparent that it really does not matter when I buy them. The prices are completely random. The only part that makes any sense to me is when I balance with my incoming cash flows.

Thus buying in January will work for me. I will keep some cash on hand to buy more during any large dips. A 60/ 40 portfolio should serve us well for a good long time.

I am relieved that ETF investing can be this simple. The whole game is so random that there is zero need to waste any bandwidth on it.

So that is a bonus of the past quarter. I think I have gone and made my finances even simpler.

There are many things in your financial life that you want to spend time and effort thinking about. The stock market is not one of them. Buy a broad market, low fee index and be done with it.

If you are Canadian, follow Dan Bortolotti at The Canadian Couch Potato Portfolio and Justin Bender at The Canadian Portfolio Manager. Stay up to date on happenings with your ETF’s by using their sites. You will NOT know more than these two who are portfolio managers.

If you do not want to DIY and you have room in your registered accounts, I would use Vanguard’s asset allocation ETF’s such as VGRO. The name of the game is be good enough. No need for amazing here.

For most of us, it is the financial plan and savings rate that will make the difference. Investing is vastly simpler than what we had back in the 90’s in Canada. I would be immensely grateful to achieve the market average. I KNOW that I am an average investor or even below average. And this is another big ticket item where “less is more” applies. I am recognizing that less is more applies in multiple areas in my life.

I often say, if you can not control it, why bother worrying about it. The stock market is such a beast. Make sure you have made a proper asset allocation that you can stomach. If you need to go beyond 80% equities, you are either a gambler, do not have enough money saved or you are 20 years old or younger.

For everyone else, you probably could work and save some more. Most people think they can handle risk until life comes along and forces your hand.

There is a reason people are worrying about market risk and whether or not they dialed in the right number for their safe withdrawal rate. I recently read William Bernstein’s book “The Investor’s Manifesto”. He states a 2% safe withdrawal rate. Interesting that this is the rate many of us would use as well.

Market risk is a real thing. I am glad some FIRE people can use the standard 4% SWR. But for the majority of people, get a back up plan ready. Always have a back up plan.

My back up plan when I was 36 years old was to get my butt back to work if I needed to. And I would have had zero issue doing that. I would never have wanted to burn my bridges so that I would not have that option. There is zero need to live your life so close to the red line. Always have multiple backup plans in fact.

The past quarter has been great. Summer was absolutely wonderful. My husband bought a two person kayak. It is loads of fun. That’s what I want nowadays. To get back to trips where I enjoy more active pursuits. That’s the number one reason to get all this financial stuff organized and simplified. I prefer to enjoy my time without concerns that I have somehow missed the boat with my finances. And keeping things simple accomplishes that.

The past two decades were filled with time famine while we were raising our family and starting our careers. The next two decades will be about maintaining our fitness and health from the ravages of aging.

Money is simply the backdrop. Let us not forget that.

12 thoughts on “2018Q3 Update

  1. Hi Dr. MB!

    Solid net worth and solid portfolio you are building!

    In the end, I always find the net worth # to be the most important. As long as that is increasing at a decent rate, then that is what ultimately matters.

    Btw, where do you go kayaking with your hubby? Sounds like a lot of fun!

    1. He went and bought an inflatable kayak. It is super fun. It has three sections to inflate. We can even stand up on it. It is very stable. He fishes off it.

      We have been taking it out all over the place. Any lake will do. It is very peaceful on the water. We have even visited friends who ocean kayaked and we could keep up. 👍

      This blog has really forced me to be ruthless with simplifying my finances. Writing this stuff out makes me clean it up effortlessly. The blogging has shone a light on what areas I needed to work on.

  2. Wow. You are spitting distance of an 8 figure portfolio. Congratulations. That’s something I doubt I have a fighting chance to even think of unless I put in more time beyond my planned transition.

    Keep up the great work

    1. Haha XRV,

      You have so much energy!! I have no doubt you will be productive even if you retire early.

      You also make so much income XRV! You are the poster child of what is possible with a high enough income. Bank it and be done in a decade or less.

      You really must take your story on the road. Many colleagues would be inspired when they see your quick turn around after stumbling a number of times.

      I saw on MD’s site that you got your FinCon 2019 pass. Do NOT miss it next year. I agree with DocG that you should attend these things now.

      Your energy as I always say about you, is incredibly contagious.

  3. Congrats on the solid net worth. Its kind of amazing how once you reach a certain threshold, it takes a life of it’s own. 143K in one quarter. That’s one net worth snowball. I’m in time famine part of my life with young children. Having more time seems luxurious.

    1. Hey MD!

      My husband did his residency while our kids were young. Plus I worked full time. It was loads of fun. Just kidding.

      Most of our funds are just from working and saving. Nothing amazing at all.

      Your household sounds awesome when you describe it MD! Busy but great. You will miss the chaos and busyness before you know it.

      I will know my children as adults for a lot longer than when they were young. The young years go by too quickly. They really are precious MD.

      As busy as it is and a tad crazy at times, it was pretty awesome.

  4. Good on ya! I always just put all my money in the market according to my asset allocation ASAP. You are buying property and risk. That is what you will own. You have to divorce yourself from the notion that somehow your property is a cash equivalent. It is not. It’s a compounding vehicle. It is property that compounds and risk that controls the amount of compounding. The AA of the portfolio, if on the efficient frontier controls for not paying for your compounding with too much risk. Cash pays you nothing. So if your goal is to acquire say 8% return and 10% risk, by not investing and “dollar cost averaging” a pile of cash, you are diluting your goal. You will have lower return because you were not adequately risked. So just stick the money in the market and go paddle your kayak. Dollar cost averaging is good for people that don’t have a pile of money sitting around but instead acquire money periodically like in a paycheck. That person maximizes his return by acquiring his/her property and risk as soon as possible and not waiting around to acquire a pile. Waiting around dilutes your return. Your goal is compounding. You can’t compound unless you are invested.

    1. Hi Gasem,

      You are a star investor whilst I am certainly NOT. We are taking our 100% pot and going to do a throw down in January. Because it will just be simpler for me. (We have a lot of cash around!) Please do not laugh too hard at me. That’s what happens when we started out planning to buy apartments and then figure out maybe not.

      But yeah, I agree, I’d rather go kayaking instead.

  5. Hey Dr. MB! You have a great portfolio. Thank you for being so open. It is reassuring to me to see that we have a similar organization and plan. Although, I am still earlier on the path and my only real estate is my home.

    I also have some BRK.B. My only non-ETF holding. I am using it in my corp as a broad value-based US holding that reinvests rather than give dividends (minimizing the corp passive income problem that I already have!). There is some risk because it is “one holding” even though it represents many companies, but I can live with that. I am using it to balance out the growth oriented QQQ that I hold there which also has low dividend yield. I am down to 8 holdings total across my accounts and will likely get that down to 5 or 6. I am using the same ETFs as you also except the VGRO. My aim is to have XAW in my TFSAs while accumulating and then switch it to fixed income income or VBAL when I am getting closer to my clinical career end.

    I am just saying all this because I also feel that I am not a “super-investor”. I am just hoping to not totally suck at it like I did when first starting out (first due to fees and then due to behavioural mistakes). Making money and saving money are what have built my financial health. Doing less and aiming to be an “average” investor has also helped. These details aren’t usually openly shared about investing in our type of situation. So, it is good to know that I am not “way out there” and someone else is thinking similar thoughts.
    -LD

    1. Hey LD!

      The equities side is much simpler with Vanguard coming into the Canadian space. I am using VGRO since my TFSAs are being invested as if they are for my children in the end. Thus I am using AA appropriate for someone in their late teens and early twenties.

      If Vanguard could come up with an asset allocation fund that I could use simply in my CCPC, I would use that. But apparently the premium bonds do not work well for our non registered accounts. I do believe it will be a matter of time before they come up with a good solution for that.

      I have another couple of millions to shove into the market. It will be nice to buy something on sale!

      1. Your TFSA thinking is clever. I may follow suit. My wife and I have just started thinking about inter generational wealth transfer. So, I am following your thoughts on that with great interest.

      2. Haha. I am a simplistic thinker. We have two kids, we have two TFSAs. Easy.

        Make sure you have named your successor (wife) and beneficiaries (the kids) in all the accounts.

        I almost always begin with the end in mind for my investments. 🙂

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