Simplify Financial Accounts

Categories Simplicity

This blogging has paid off handsomely. It has literally forced me to review my financial setup. I have become ruthless in streamlining my finances. I have been closing bank and investment accounts. I began 2018 with 23 accounts for credit cards, bank and investment accounts. I currently stand at 14 accounts. It has been a busy number of months.

Accounts To Close In 2018

  1. Close a Real Estate Holdco which I opened to hold our office unit. This will be absorbed into our original Holdco.
  2. Bank Accounts Closed x 4
    1. Tangerine Holdco Account
    2. Tangerine Personal Account (Mine)
    3. Tangerine Personal Account (Hubby)
    4. Credit Union Office Unit Account
  3. Investment Accounts Closed x 5

    1. Credit Union TFSA (Mine)
    2. Credit Union TFSA (Hubby)
    3. Tangerine TFSA (MIne)
    4. Tangerine TFSA (Hubby)
    5. Credit Union RRSP (Mine)

Current Entities & Accounts

Entities (3)

  1. Medical Professional Corporation
  2. Holdco (Holding Company)
  3. Trust

Bank Accounts (4)

  1. Medical Professional Corporation
  2. Holdco
  3. Trust
  4. Personal

Investment Accounts (7)- Can get away with 5 accounts if no USD accounts

  1. USD (Will cancel when I sell Berkshire & Amgen)
    1. Holdco- Holds Berkshire
    2. Medical Professional Corporation- Holds Berkshire & Amgen
  2. Holdco Cdn
  3. RRSP
    1. Mine
    2. Hubby
  4. TFSA
    1. Mine
    2. Hubby

Credit Cards (3)

  1. Corporate- TD Aeroplan Visa
  2. Personal- CIBC Dividend Visa
  3. Costco- Mastercard (Will cancel if Costco accepts Visa)

Current Investment Plan

Where Why What Ticker
Holdco Account Retirement 60/40 Equities/ Bonds VCN, XAW, ZDB
RRSP Retirement Laddered GICs
TFSA Estate Planning 80/ 20 Equities/ Bonds VGRO

Current Plan

  • Front load each account in January.
  • Re-balance portfolio with incoming cash.
  • Contribute more if the market moves beyond my 5% bands.
  • Otherwise, ignore the portfolio.

I have been very careful with our finances over the years. I still ended up accumulating a veritable junk drawer of bank accounts, investment accounts, credit cards and investments. That is why some of us are opening up the books so to speak. Simply writing about this has helped me. Hopefully some of this may help other docs who are thinking about similar topics.

If one is not careful, you spend more time moving funds between accounts rather than actually doing anything worthwhile with the savings. That has certainly happened with me.

There are significant barriers to simplifying. For many of us, closing accounts and reformatting takes a lot of effort. Those accounts did not start themselves and they will not close themselves. It is too easy to allow daily life to get busy and divert you from taking care of these annoying but important tasks.

The biggest motivator was when I realized that my poor husband does not even know what accounts we have. And if something happened to me, he would not even know how to access them. Thus my deliberate push to simplify it all.

If I can not make him understand the need for an account or an investment, then it was going to be cancelled. I recently reviewed Dr. Networth’s burgeoning real estate empire. I realize that I only require the simplest structure for the investments that I plan to hold.

I am amazed at how ruthlessly efficient I have become. Simply detailing my finances for this blog has made me want to declutter the mess of accounts I had accumulated.

Financial Decluttering

Since this blog started, I have:

  • Decluttered my investment plan. It is either a 3 fund portfolio in my Corporate account or a one fund portfolio in the TFSA.
  • Decluttered all my accounts- banks and investment accounts, investments and credit cards. This one feels awesome.
  • Decided against credit card travel hacking. I can barely keep track of the accounts I had, need I say more.
  • Formulated a coherent retirement plan for hubby and I.

Nowadays when I read any financial information, I can easily gloss or skip over any stock picking suggestions, dividend stock suggestions, market pundits, credit card suggestions, well all of it actually. That is the beauty of making a plan my family is happy with. It truly tunes out the noise.

I am at the stage where I know myself much better. Even if an investment strategy could outperform my plan, it would not matter. I would be grateful to get the market average. I do not delude myself that I have superior investment know how. I know that if something is remotely complicated, I would not follow it for long. Whatever I achieve as a DIY investor, I will be fine with it.

I simply can not continue with financial complexity after this process. Thank goodness for that.

19 thoughts on “Simplify Financial Accounts

  1. That’s awesome that blogging where you have helped others in turn has helped you. I try to keep everything simplified as well because it is easy to lose track of things.

    I bought the in case of emergency binder that I really need to sit down and fill out soon. That would help ease the transition if something did happen to me

    1. Hey XRV!

      You must get that organized! My 52 year old husband has a hard time following what I have done with the accounts. You have a child!!! She might be more organized than my hubby- Bahahaha!

      My husband has physically even lost investment bonds! It can happen I am afraid.

      1. Just buy some BTC. You’ll spend all your time worrying about the BTC and never even think of the bonds.

  2. Good post. I have tons of accounts scattered across 3 brokerages but slowly I am consolidating as well. I have a Vanguard IRA as does my wife for our bond holdings since they have the best mutual bond products. I have a trading account which dates all the way back to my commodities trading days. I also had an IRA at this brokerage which is now consolidated at Fidelity. I have IRA and SEP IRA for both me and my wife at Fido. I’ve been investing a long time and my accounts are virtually a yearbook history of tax law changes as new taxed advantaged vehicles came into view on the horizon. I have my main brokerage and a couple minor brokerage accounts. One I use as a money storage vault with funds available for taxes and living expense while I Roth convert, and I do have 2 Roth accounts to be funded by all of these other tax advantaged accounts. Eventually my goal is 2 Roth accounts containing all of my IRA and 401k money, no IRA accounts, no 401K accounts, one Brokerage account, a big pile of tax loss to pair with the capital gains from my brokerage, and a minuscule tax bill going forward. Eventually I will take SS and my wife will take SS once I have all of the Roth conversion done. By letting SS ride it grows at a guaranteed 8% till age 70. By Roth converting I am eliminating ongoing RMD taxes.

    I do have a HSA which will pay for a couple decades of medicare for me and my wife, much of my medicare will be paid therefore tax free and about half of that will be accrued interest in that account. I also have a bank account to write checks and prepay and autopay bills against. I have 2 credit cards in case one gets frozen for fraud, but I use one primarily and charge virtually everything. This card pays me 2% cash on all purchases. I track this card and the bank acct in Mint and have a to the penny accounting of my cash flow. I track the portfolio in Personal Capital and use the portfolio management tools to control risk and asset allocation. I use a monthly download from Mint to my own spread sheet which allows me to perform specific analysis to my cash flow and that is how I judge my portfolio’s sustainability. By doing specific analysis, all the BS about 4% x25 becomes not relevant. I get a monthly readout of my actual spending against my budgeted spending, and thus far in my retirement I come in under budget on the average, some months are more expensive, some months less, but as long as I’m at or under budget for the year, I’ll never run out of money, so the data is real and not projected. Because of a real understanding specific to my financial life, I sleep well at night. I spend less than half an hour a month on this, but then I’m retired so I have plenty of time.

    1. Oh. My. God.

      Scarily I could follow all your accounts and thinking. The final plan sounds simply divine. Gasem, I rarely see anyone think this deeply about retirement finances.

      I have been keeping track of my expenses since I was 17 years old when I moved away for university. I also use Mint now. But aside from some larger capital costs for the home and saving to buy cars, our expenses barely budge.

      Your tax planning with tax loss and Roth accounts is like some well oiled machine. I have to use my corporate accounts so it will not be as tax advantageous as yours.

      The problem with many of the early FIRE folks is that many of them have young children. It is hard to completely plan out the future when the kids are so young.

  3. Jack Bogle preaches the “Majesty of simplicity.” You are living the reality. Thinking about the disinterested partner inheriting the headache is often motivation enough to rouse us to action.

    Thanks for showing us what that looks like.

    1. Hey CD!

      I think many of us financial nerds have partners who simply “eye roll” if they had to listen to what we blog about!

      My husband literally ignored what I did for decades with the finances. Now I am simplifying it so I can teach him how to maintain it.

      1. I know my husband has a limited attention span for finances. He has (somewhat involuntarily) picked up a lot of finance information from me just from osmosis as he can’t shut me up all the time! I heard him teaching one of his friends about the 4% SWR the other day and he even told the friend we were going with 3% SWR to be on the safe side. I was so proud that he had actually been listening to me! I like all the finance blogs. It is great talking to fellow money nerds who actually enjoy these discussions!

      2. Bahahahahaha RocDoc!!!

        That is beyond hilarious. Our husbands have no shame indeed. And being the smart wives we are- we simply let them think they dreamt it all up!!

        I feel we might have way more in common…..

  4. Using personal capital has been a huge time saver and simplicity amplifier. Seeing it all laid out so neatly is nice.

    I like the idea of consolidating our retirement accounts into as few 403bs as possible. I’ve been unable to bring it down to one each because we each have retiremt plans that can’t build a decent 3 fund portfolio. So my s&p is in one white international is in another.

    You also mentioned the simplicity of investing. So much of the hurdle for people to start is the perceived high bar of entry. The indexing couldn’t be any easier and more straight forward. One good book can give you the knowledge you need to get started!

    1. Hey Kpeds!

      I do not have Personal Capital in Canada. I would certainly use it if it was available.

      I wanted to use Vanguard index funds when I graduated 25 years ago. But we didn’t get them until 6 years ago. You learn many bad habits in 20 years without reliable index funds. 😊

  5. Hey Dr. MB!

    Thanks for sharing your financial streamlining process. Great job!

    No matter how little one’s partner interest for finance is, it is really important to help them understand their family’s finances. You are doing a huge favour to your husband and your children but simplifying things for them to understand.

    Keeping things simple is what almost prevented me from pursuing RE investing. I was happily chugging along with my passive index investments and had pretty much streamlined everything so that my wife could take over if anything should happen to me. Then along came RE investing, which kind of fell into my lap. It piqued my interest but I must say I was a bit reluctant to dive in b/c it would make our financial life complicated.

    As you know, I’ve decided to give RE investing a shot, and see where things go in the next few years or so. Worse case scenario I figure is that if things get too complicated, then I will simply fall back to passive index investing.

    Having dipped into RE, I’ve tried to streamline it as simple as possible to help my wife and also to help anybody else who is interested in RE. It’s an ongoing learning process! 🙂

    1. Hey DN!

      I find what you are doing quite inspirational. You are pursuing it the way I would have if I was much younger. Something happened to me as I approach 50. I just want to simplify everything!!

      Plus we were looking at buying super expensive apartments which would have leveraged us up to 9M+. Forget about that at this stage in my life.

      If I buy more RE now, it would be helping my kids buy multiplexes. I am at the point that I need to seriously plan for the next generation.

  6. As part of your decluttering did you (or advisor) consider using the Horizon Swap investment products to avoid distributions that contributes to complexity (paper work and taxes). This may be important in your corp which may begin to suffer after the implementation of the new tax laws in Canada for corp’s receiving greater $50,000 in distributions. I am seriously considering these options for myself. Thank you.

    1. Hello Pat!!

      I bought HBB for literally one day and then sold it. It didn’t sit right with me. I didn’t want to sell HBB just because the government moves the bar again. And I would be forced to take some cap gains potentially when I didn’t want to. Thus I decided to buy ZDB as my bond and plan to use GICs and maybe even some more life insurance for my fixed income portion.

      I have an MD Management advisor but I rarely see him. I think I last saw him was in 2007. Hee hee.

  7. Hey Dr. MB,

    What I think is really impressive, and telling, is that you are able to simplify and manage such a large portfolio with multiple entities and make it straightforward. Evidence that for those using advisors, after a certain point the management fees should not justifiably get larger just because the numbers are bigger.

    -LD

    1. Hey LD!

      I double checked my MD Management Account and I don’t pay advisor or management fees in that either.

      Thank goodness for Couch Potato and Canadian Portfolio Manager. Those guys rock!!

      I am trying to tax loss sell tomorrow. Woohoo.

  8. Hey Dr. MB, nice work simplifying your investment portfolio. Mine situation was getting more and more complex. I felt like I needed to implement a clear plan for my investments moving forward. So I recently created an investor policy statement. In the process, I did simplify and pare down some investments. I consolidated some redundant funds in my tax advantaged accounts. I couldn’t really do it in my taxable accounts because I think I would be hit with a large tax bill if I sold shares for the purpose of consolidation. For now, I have two taxable brokerage accounts, one with Vanguard and the other with Wealthfront, a roboadvisor. I’ll keep both for now. As an investor newbie a few years ago, I thought that having multiple accounts would help with diversification and further optimization. But some times (or many times) too much diversity adds more complexity which is often less optimal.

    I’m not planning to open any more bank accounts or brokerage accounts. Credit cards on the other hand, are a different story…

    1. Bahahaha Dr. McF!

      I thought about you when I wrote about the credit card hacking. I am definitely not as organized as you are. Thus I take a weed whacker to it all!!

      Plus I am getting older and just don’t have the patience for any of that any longer. I am probably more into preservation than trying to knock it outta the park nowadays.

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