Author Topic: Pull the trigger? (Canada, corp, might need a kick in the rear)  (Read 1345 times)

FIREpower

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Pull the trigger? (Canada, corp, might need a kick in the rear)
« on: September 26, 2018, 12:46:10 PM »
Life Situation: married, 2 children (grade 3 & 7), a few decades ahead of conventional retirement

Gross Salary/Wages:

Corporate income: $194,747 plus $2207 dividends & $7723 interest=$204,677
Corporate expenses $26,363
Earnings from operations $178,314
Capital gain $4132
Provision for income taxes $22,433
Dividends $36,000
Net earnings for the year $160,013

I leave my earnings in the corporation and only take out $36K of dividends theoretically. My personal income this year was listed as $48,670.16

Spouse income $116,094.55

Individual amounts of Taxes 
Paid $970.42 in taxes
Spouse paid $26,840.94 in taxes

Other Ordinary Income: Side hustle is included in my personal income

Qualified Dividends & Long Term Capital Gains: last time I added up dividends, it was $15K, but this is including corporate dividends, so it may or may not be helpful

Rental Income, Actual Expenses, and Depreciation: 0

Adjusted Gross Income: $105,911.94 spouse
$47,164.16 me

Current expenses
   Total for year    
Auto-spouse    $1,630.75
Auto - parking    $40.40
Clothing-spouse    $49.06
Clothing - me    $42.38
Computer    $3,901.55
Dentist    $1,253.00
Donations    $36.54
Drugstore    $263.10
Eye care    $1,004.39
Entertainment    $1,086.26
Gifts Given    $656.98
Groceries    $8,212.42 
Home Repair    $2,894.58   
Household    $623.08
Interest    $60.34
Alcohol    $276.25
Spouse Gas    $2,491.16
Spouse Music    $162.64
Motorcycle    $1,893.50
Toys    $39.30
Meals-lunch    $37.69
Meals-Other    $929.07
Meals & Entertainment     $73.53
Cell Phone    $1,777.24
Gas Me    $214.22
Toys   for Me $226.36
Pet    $604.11
Post office    $20.22
Recreation (kids)    $173.64
Conference - Limestone    $255.17 
Travel-family    $765.59
Travel again    $1,327.48
Trees    $4,509.28
Side Hustle Expenses    $598.94
Yoga    $57.49
Skiing    $1,460.52
Train    $47.46
Property taxes 2018: $3752.17

Total spending for year on personal credit card    $44,144.28

Some items covered by corporation that will need to be covered personally after FIRE:

FOOD PAID BY CORP
921.16

CELL PHONE & COMPUTER
119

Internet
501

Part of my gas, insurance, etc. are paid by the corp also.

Sorry, this is not comprehensive, because Iím not going to tote up some of our direct withdrawals. Just not that interested. We figure we keep it under $60K.
BTW, ďtreesĒ meant reforestation of our land. Would not be a repeating expense, but this could be replaced by house repair, cleaning, etc.

Assets

So this is what interests me more.
ASSET CLASS   
   
Cash   7%
   
Fixed Income Investments   26%
Canadian Bonds   23%
Vanguard One Fund (Bond portion)   4%
   
   
Equity Investments   67%
Canadian   11%
REIT   4%
US   33%
International XEF   3%
Emerging Markets XEC   3
Global (ex Canada)   10%
One fund (VBAL/VGRO/VCNS) (equity portion)   3%
   

Iíve already been told to take cash out of my portfolio listing, but I like having all the money together because 3% of $2 million=$60,000.

Ideally, Iíd like 5 years in cash, straight up, for sequence of returns risk. 5*$60,000=$300,000.

At least 3 years of expenses would be good, and $180K is more doable. Right now itís more like $136K.
But Iím not willing to work another year for another $200K in cash. Screw that. Weíre supposed to be free.
If you take out our $15K in dividends, weíd only need $45K/year*3-5 years, which is again more doable.

Liabilities: 0
House, cars, motorcycles paid off
Would need to repair the house.

Specific Question(s): 
People I respect use the 60% equity/40% fixed income breakdown. However, bond funds have given me a negative return. Yes, even with the monthly payouts. It seems to make more sense to leave it in cash right now.

If I switch to fixed income, I donít know what investment in US and Canadian cash (I have both) that will have reasonable returns as Canadians, with a considerable portion in corporate accounts (which earn lower interest than personal accounts, and are fully taxed).

Other people suggest we need a more aggressive portfolio, say 75/25, for long term survival. Iím not averse to this, but I donít want the volatility just as weíre retiring. Thatís why I was thinking of Pfau & Kitcesís bond tent and rising equity glide path: 60/40 at retirement, live on cash/bonds for a few years, and eventually end up 75/25.

Weíre at a 3% withdrawal rate, depending how we slice our portfolio, so we should succeed. But we donít have 3% SWR plus 3-5 years in expenses in cash. Weíre not planning to straight out quit in 2019, but Iím downshifting. Spouse will probably keep on working, although here are some points on spouse:

Spouse:
-worried about FIRE
-concerned that Iíll enforce a life of beans and poverty and would rather work to avoid that
-has a pension that seems to be cashable at about $171K now, or can receive something like $32K/year starting in 10 years with a 9K bridge, or $48K/year if retires in 20 years

I donít have a good grasp of Canadian benefits and have never gotten much of anything from them.

The main question is, do you think we can retire?
What amount of cash is reasonable to keep for income vs. investing in the market?
What do you use for your fixed income, especially if youíre Canadian with a corporation and have both USD and CAD?
Is anyone interested enough to look at our accountsí asset allocation? We know we should put bonds in our RRSP and then TFSA, but both are maxed out, which means bonds in corporate and individual accounts.

Thanks in advance for your input.

Lews Therin

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Re: Pull the trigger? (Canada, corp, might need a kick in the rear)
« Reply #1 on: September 26, 2018, 01:03:50 PM »
Okay.... How face-punchey would you like people to be? Until you answer that I'll give the answer to your question.

You can FIRE tomorrow. You're done. You're excessively over accumulating.

The main question is, do you think we can retire? YES. SO MUCH YES.
What amount of cash is reasonable to keep for income vs. investing in the market? -Year of expenses, the rest can be in bonds/laddered CDs
Is anyone interested enough to look at our accountsí asset allocation? We know we should put bonds in our RRSP and then TFSA, but both are maxed out, which means bonds in corporate and individual accounts.
Don't put bonds in TFSA, you want your most performing portions in it. (Since you get the returns tax free)

About the 4k in tree expenses (I have to know, are the tree expenses annual?)

FIREpower

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Re: Pull the trigger? (Canada, corp, might need a kick in the rear)
« Reply #2 on: September 27, 2018, 07:32:32 PM »
Hi Lews,
As face-punchey as necessary.

Quote
Year of expenses, the rest can be in bonds/laddered CDs
A year in cash, eh? We must look super conservative to be wavering between 3-5 years in cash.

Quote
Don't put bonds in TFSA, you want your most performing portions in it. (Since you get the returns tax free)
I get that, wanting performance more than tax savings.

Quote
I have to know, are the tree expenses annual?
No, they shouldn't be. They did ask us if we wanted to add tree protectors, but we were too lazy, and they haven't said anything else.

Thanks for your input.

Lews Therin

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Re: Pull the trigger? (Canada, corp, might need a kick in the rear)
« Reply #3 on: September 28, 2018, 08:30:17 AM »
Alrighty then: the 3% rate is ridiculously overprotective (you over accumulated if you are that close)
Having 3-5 years above that is over-accumulating overaccumulation.

You have so much space in your budget for reduction if necessary (So even more protection vs downside)

So you've got multiple protection factors already in place, I'd simply be happy, accept that you are done, and end it.

.... Just noticed that you have a 171k cashable pension also available.... So 3 years cash there (though probably closer to 2 after taxes)

Imagine how much further your money would go if you had extra time to pick out some specials, or enjoy your time.

You could easily move your portfolio to give out more than you spend in a year IN DIVIDENDS. So capital gains would all be profit above your expenses, allowing you to give more, or spend more.

Seriously, you're done!

Lews Therin

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Re: Pull the trigger? (Canada, corp, might need a kick in the rear)
« Reply #4 on: September 28, 2018, 09:28:17 AM »
For confirmation: @Retire-Canada ; @RichMoose

Retire-Canada

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Re: Pull the trigger? (Canada, corp, might need a kick in the rear)
« Reply #5 on: September 28, 2018, 10:16:39 AM »
Your OP is complex. So let's confirm I've got the basics right...

- $60K spend in FIRE?
- how much income tax do you expect to pay on that once you retire?
- how much do you have saved invested right now?

RichMoose

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Re: Pull the trigger? (Canada, corp, might need a kick in the rear)
« Reply #6 on: September 28, 2018, 05:29:39 PM »
People I respect use the 60% equity/40% fixed income breakdown. However, bond funds have given me a negative return. Yes, even with the monthly payouts. It seems to make more sense to leave it in cash right now.

If I switch to fixed income, I don’t know what investment in US and Canadian cash (I have both) that will have reasonable returns as Canadians, with a considerable portion in corporate accounts (which earn lower interest than personal accounts, and are fully taxed).

Other people suggest we need a more aggressive portfolio, say 75/25, for long term survival. I’m not averse to this, but I don’t want the volatility just as we’re retiring. That’s why I was thinking of Pfau & Kitces’s bond tent and rising equity glide path: 60/40 at retirement, live on cash/bonds for a few years, and eventually end up 75/25.

We’re at a 3% withdrawal rate, depending how we slice our portfolio, so we should succeed. But we don’t have 3% SWR plus 3-5 years in expenses in cash. We’re not planning to straight out quit in 2019, but I’m downshifting. Spouse will probably keep on working, although here are some points on spouse:

Spouse:
-worried about FIRE
-concerned that I’ll enforce a life of beans and poverty and would rather work to avoid that
-has a pension that seems to be cashable at about $171K now, or can receive something like $32K/year starting in 10 years with a 9K bridge, or $48K/year if retires in 20 years

I don’t have a good grasp of Canadian benefits and have never gotten much of anything from them.

The main question is, do you think we can retire?
What amount of cash is reasonable to keep for income vs. investing in the market?
What do you use for your fixed income, especially if you’re Canadian with a corporation and have both USD and CAD?
Is anyone interested enough to look at our accounts’ asset allocation? We know we should put bonds in our RRSP and then TFSA, but both are maxed out, which means bonds in corporate and individual accounts.

Thanks in advance for your input.
If I'm understanding your post correctly, you have roughly $2 million in liquid invested assets across all accounts including your corporation with expenses under $60,000 a year? Yes, you can both retire and would be 100% successful across all market conditions going back to the late 1800s at a 60/35/5 split. Once you factor in CPP (you did take some salary right?), OAS, wife's pension, and any additional income you may earn over the years in small work projects, you are really quite golden.

I wouldn't keep more than 1 year's worth of money in cash (high interest savings account). Instead of lots of cash, split up your bond holding. If you want to stick with a 60/40, put about 30% in a mixed bond fund like XBB.TO, ZAG.TO or VAB.TO, 7% in a short-term fund like XSB.TO or VSB.TO, and the last 3% in your HISA.
You could also do a bond barbell. That's putting 1/2 to 2/3rds of your bond allocation in a long-term bond fund (XLB.TO/ZFL.TO) and the remainder in a short-term bond fund (XSB.TO/VSB.TO), re-balancing systematically when your allocation goes off by 5% or something like that.
Bonds are a very important component of these couch potato type portfolios. Don't be tempted to ignore them just because they haven't done well in the last year or so. If you've held them for a long time and they are not profitable, you are paying too much in management fees.

For bonds I'm holding nothing right now but I follow two market timing strategies which are divided approximately evenly across my portfolio. Both strategies are not signaled to hold bonds currently. I could potentially hold a mixed bond fund (likely XBB.TO), short-term bonds (XSB.TO), and/or long-term US treasury bonds.

Bonds are actually most tax efficient when held in your non-registered accounts if you choose HBB.TO which is a swap-based ETF product that converts bond interest to an increase in unit value (deferred capital gain) behind the scenes. Ultimately where you want to put bonds is up to you. Anywhere except TFSAs is pretty fair game in my mind, just choose the right ETF for the right account type.

To help convince your wife you are okay to retire, I think your slow step back from work is a good idea. Try promote something like living off the portfolio but using work money for extras (vacations, funding kids RESPs, etc.). Maybe if she sees things going well for a few years without beans and rice 2x a day, she will relax. It is a big step going from earning $250k a year to earning nothing.
« Last Edit: September 28, 2018, 05:32:06 PM by RichMoose »

FIREpower

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Re: Pull the trigger? (Canada, corp, might need a kick in the rear)
« Reply #7 on: October 01, 2018, 09:58:22 AM »
Thanks, Lews, for signing off on this and for bringing two more people to the table.

- $60K spend in FIRE?
Yes. Room to reduce, as already pointed out by Lews, but kids are not in university, which would be ++increased spending, although their RESP is funded.

- how much income tax do you expect to pay on that once you retire?
Don't know. I know we'd try to minimize, but we've focused on accumulation and paying income tax, not saving it.

- how much do you have saved invested right now?
About 2.077M

Thanks!

Retire-Canada

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Re: Pull the trigger? (Canada, corp, might need a kick in the rear)
« Reply #8 on: October 01, 2018, 10:06:05 AM »
Thanks, Lews, for signing off on this and for bringing two more people to the table.

- $60K spend in FIRE?
Yes. Room to reduce, as already pointed out by Lews, but kids are not in university, which would be ++increased spending, although their RESP is funded.

- how much income tax do you expect to pay on that once you retire?
Don't know. I know we'd try to minimize, but we've focused on accumulation and paying income tax, not saving it.

- how much do you have saved invested right now?
About 2.077M

Thanks!

$2.1M [with two commas no point quibbling about the 3rd decimal place!] you can take out $84K/yr at 4%WR. That leaves you $84K - $60K = $24K for taxes. So you should be good.

You'll have CPP and OAS coming to you and your wife in the future, which provides some additional safety margin in addition to any home equity you have. So I'd agree you can retire now.

Lews Therin

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Re: Pull the trigger? (Canada, corp, might need a kick in the rear)
« Reply #9 on: October 01, 2018, 12:02:59 PM »
And no way you are paying 24k in taxes with two adults as long as you use tax efficiency...

FIREpower

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Re: Pull the trigger? (Canada, corp, might need a kick in the rear)
« Reply #10 on: October 01, 2018, 03:29:46 PM »
Thanks, RichMoose.

I wouldn't keep more than 1 year's worth of money in cash (high interest savings account).
Instead of lots of cash, split up your bond holding. If you want to stick with a 60/40, put about 30% in a mixed bond fund like XBB.TO, ZAG.TO or VAB.TO, 7% in a short-term fund like XSB.TO or VSB.TO, and the last 3% in your HISA.

You could also do a bond barbell. That's putting 1/2 to 2/3rds of your bond allocation in a long-term bond fund (XLB.TO/ZFL.TO) and the remainder in a short-term bond fund (XSB.TO/VSB.TO), re-balancing systematically when your allocation goes off by 5% or something like that.

Sure. It makes sense to have a bond allocation of short term/long term and to stick with it, just like other allocations.

Bonds are a very important component of these couch potato type portfolios. Don't be tempted to ignore them just because they haven't done well in the last year or so. If you've held them for a long time and they are not profitable, you are paying too much in management fees.

For bonds I'm holding nothing right now but I follow two market timing strategies which are divided approximately evenly across my portfolio.

It seems like mixed messages when I hear "You need bonds" and "But I hold minimal/no bonds." That said, I know that every situation is different.

HBB was flat when I held it. I didn't see any increase in value.  I sold it. True, I may be impatient, but when I toted up the distributions for VAB and VSB vs. the decrease in book value, it was red. I sold some of those, too.

From what you're saying, I should just stick with a consistent bond allocation and ignore it. I've also heard that bonds used to pay much better, so heavy weighting to bonds is outmoded. Again, hard to decide.

To help convince your wife you are okay to retire, I think your slow step back from work is a good idea. Try promote something like living off the portfolio but using work money for extras (vacations, funding kids RESPs, etc.). Maybe if she sees things going well for a few years without beans and rice 2x a day, she will relax. It is a big step going from earning $250k a year to earning nothing.
True. Spouse is going to keep working for the forseeable future, and I'll work a bit in 2019, which will give us time to sort it out.

Thanks again, RichMoose. I'll figure out a bond strategy. This helps. I appreciate your time.

Lews Therin

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Re: Pull the trigger? (Canada, corp, might need a kick in the rear)
« Reply #11 on: October 01, 2018, 04:10:18 PM »
Just because we know bonds can help doesn't mean we always follow the recommendations. Guess how many times I didn't eat my broccoli growing up?
No bonds here, since my allocation is safe enough to my eyes to not need it. And willingness to work again at some point in the future in worsr case scenarios.

RichMoose

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Re: Pull the trigger? (Canada, corp, might need a kick in the rear)
« Reply #12 on: October 02, 2018, 09:05:29 AM »
Bonds are a very important component of these couch potato type portfolios. Don't be tempted to ignore them just because they haven't done well in the last year or so. If you've held them for a long time and they are not profitable, you are paying too much in management fees.

For bonds I'm holding nothing right now but I follow two market timing strategies which are divided approximately evenly across my portfolio.

It seems like mixed messages when I hear "You need bonds" and "But I hold minimal/no bonds." That said, I know that every situation is different.

HBB was flat when I held it. I didn't see any increase in value.  I sold it. True, I may be impatient, but when I toted up the distributions for VAB and VSB vs. the decrease in book value, it was red. I sold some of those, too.

From what you're saying, I should just stick with a consistent bond allocation and ignore it. I've also heard that bonds used to pay much better, so heavy weighting to bonds is outmoded. Again, hard to decide.

The important action of bonds is the temper out the stock market swings while providing a reasonable return on their own. It's one of those situations where 1+1=2.5. Treasury bonds in particular have a slight negative correlation to stocks while also being a lot less volatile. That said there is no rule that says you must hold bonds. It's just a good idea for most people.

If you diversify properly across global stock markets and have a good margin of safety, it is possible to have 100% equities in your portfolio and do very well. Just be prepared for 50% drawdowns a few times each century. It happened in 1929-1933, 1973-1974, 2000-2003, and 2007-2009. It will happen again. Some of these big drawdowns can take many years to recover. That hurts many investors, especially when they're pulling money every year for living expenses.

I used to be a 100% stocks for the long run guy myself, but the more research I did, the more I became convinced that bonds serve an important purpose. Although I don't hold bonds at the moment because they are currently trending down, I should point out that roughly 1/3rd of my portfolio is in cold hard cash. That cash earns about 1% interest for me and I do some low-risk currency trading to get an extra few percent per year. Once bonds begin trending upwards again, I will be buying bond funds.

Also, if I invested in a Couch Potato portfolio, I would hold bonds. Depending on the account (for tax efficiency) I would prefer to do a bond barbell with about 1/3rd in short-term mixed bonds and 2/3rds in long term treasuries.

Retire-Canada

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Re: Pull the trigger? (Canada, corp, might need a kick in the rear)
« Reply #13 on: October 02, 2018, 09:24:55 AM »
One thing that gets overlooked with the 100% stock portfolio 50% draw down concern is that you are likely starting at a higher value than a portfolio with significant bonds. So yes the portfolio with a significant amount of bonds may drop less as a % than the 100% stock portfolio, but the low point dollar value of each account would not be as reflective of that % drop differential as you think at first glance.

The other issue is that stocks reduce your risk of portfolio failure due to inflation. Holding enough bonds to really move the needle to mitigate a severe market crash happens to make your portfolio significantly more likely to fail once you look at time frames like 40yrs in the historical data.

This is not to say don't hold bonds. Just make sure you really look at all the angles and not just assume holding bonds is safer.
« Last Edit: October 02, 2018, 09:27:32 AM by Retire-Canada »

RichMoose

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Re: Pull the trigger? (Canada, corp, might need a kick in the rear)
« Reply #14 on: October 02, 2018, 09:54:46 AM »
One thing that gets overlooked with the 100% stock portfolio 50% draw down concern is that you are likely starting at a higher value than a portfolio with significant bonds. So yes the portfolio with a significant amount of bonds may drop less as a % than the 100% stock portfolio, but the low point dollar value of each account would not be as reflective of that % drop differential as you think at first glance.

The other issue is that stocks reduce your risk of portfolio failure due to inflation. Holding enough bonds to really move the needle to mitigate a severe market crash happens to make your portfolio significantly more likely to fail once you look at time frames like 40yrs in the historical data.

This is not to say don't hold bonds. Just make sure you really look at all the angles and not just assume holding bonds is safer.
That is partially true, but your premise would then be that you have very positive stock returns at the start of your retirement. You would need that to have a comparable margin of safety.

For example, let's look at 3 scenarios for investing $1,000,000 with an inflation adjusted 4% WR. All run through 10,000 randomized Monte Carlo simulations using actual monthly return data for each asset class going back to the mid-1970s.

1. 100% U.S. stocks
2. 60% U.S. stocks, 40% 10-year Treasury bonds (re-balanced annually)
3. 60% U.S. stocks, 30% Long-term Treasury bonds, 10% Short-term Treasury bonds (re-balanced annually)

In scenario 1, over a 40 year retirement period you would have a 81.5% success rate. The 90th percentile (best case) would have an average inflation-adjusted portfolio value of $27 million while the 10th percentile (worst case) would have an inflation-adjusted portfolio value of zero (would be broke at year 25). You would have a 75% chance of your portfolio being worth $613,000 on an inflation-adjusted basis.

In scenario 2, over a 40 year retirement period you would have a 89% success rate. The 90th percentile (best case) would have an average inflation-adjusted portfolio value of $10.5 million while the 10th percentile (worst case) would have an inflation-adjusted portfolio value of $16,000. You would have a 75% chance of your portfolio being worth $1,000,000 on an inflation-adjusted basis.

In scenario 3, over a 40 year retirement period you would have a 98.7% success rate. The 90th percentile (best case) would have an average inflation-adjusted portfolio value of $17.9 million while the 10th percentile (worst case) would have an inflation-adjusted portfolio value of $1.67 million. You would have a 75% chance of your portfolio being worth $3.5 million on an inflation-adjusted basis.

If you hold 100% stocks, you can hit it out of the park and die very rich if you retire at the 10% best retirement times. But you can die broke too. If you have a bond barbell, you are almost certain to die without having ever worried about money unless you picked the exact wrong year to retire that occurs maybe twice per century. At about the 70th percentile, the inflation-adjusted end balance for scenario 1 & 3 cross over. That means 70% of the time, you will be better off with scenario 3 in a strict numerical sense.

Given that most people are much more scared of going broke than they desire being insanely wealthy (based on Kahneman & Tversky, Ariely research), it is a good choice to add bonds.

Retire-Canada

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Re: Pull the trigger? (Canada, corp, might need a kick in the rear)
« Reply #15 on: October 02, 2018, 10:14:40 AM »
When I run cFIREsim simulations for 100% stock and 60/40 portfolios for 40 years [all other values default] using historical data I get:

- 100 Stocks success = 92% [89% for 50yr FIRE]
- 60/40 success = 82% [71% for 50yr FIRE]
« Last Edit: October 02, 2018, 10:31:12 AM by Retire-Canada »

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Re: Pull the trigger? (Canada, corp, might need a kick in the rear)
« Reply #16 on: October 02, 2018, 11:17:34 AM »
Just want to chime in and say great work FIREpower. I am younger and do not have near your level of savings but hope to be in the exact same position in a few years. When my oldest is in grade 7 my forecasts have my investments at $2.1 million and retiring in 2030. Obviously there are about a million things that can alter the forecast but great to see someone that is further along the path and is now approaching the end goal.

Congrats!

FIREpower

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Re: Pull the trigger? (Canada, corp, might need a kick in the rear)
« Reply #17 on: October 03, 2018, 09:49:24 AM »
Thanks for the input, everyone.

I've decided to invest the US cash in equities and keep the Canadian money we're still earning in bonds/cash, in case of correction.

I redid the numbers, and we did earn some money in bonds for the ones we've held for a few years. This is what I see:

18-09-11   18-09-11   Cash Dividend   VANGUARD CDN AGG BND ETF   $73.61
18-08-09   18-08-09   Cash Dividend   VANGUARD CDN AGG BND ETF   $76.19
18-07-11   18-07-11   Cash Dividend   VANGUARD CDN AGG BND ETF   $68.57
18-06-08   18-06-08   Cash Dividend   VANGUARD CDN AGG BND ETF   $76.05
18-05-08   18-05-08   Cash Dividend   VANGUARD CDN AGG BND ETF   $76.31
18-04-09   18-04-09   Cash Dividend   VANGUARD CDN AGG BND ETF   $75.40
18-03-06   18-03-06   Cash Dividend   VANGUARD CDN AGG BND ETF   $57.24
18-02-06   18-02-06   Cash Dividend   VANGUARD CDN AGG BND ETF   $91.20
18-01-08   18-01-08   Cash Dividend   VANGUARD CDN AGG BND ETF   $78.75
17-11-28   17-11-28   Cash Dividend   VANGUARD CDN AGG BND ETF   $69.32
17-10-30   17-10-30   Cash Dividend   VANGUARD CDN AGG BND ETF   $72.47
17-09-28   17-09-28   Cash Dividend   VANGUARD CDN AGG BND ETF   $65.47
17-08-31   17-08-31   Cash Dividend   VANGUARD CDN AGG BND ETF   $76.75
17-08-01   17-08-01   Cash Dividend   VANGUARD CDN AGG BND ETF   $70.78
17-06-30   17-06-30   Cash Dividend   VANGUARD CDN AGG BND ETF   $78.33
17-06-01   17-06-01   Cash Dividend   VANGUARD CDN AGG BND ETF   $70.99
17-05-02   17-05-02   Cash Dividend   VANGUARD CDN AGG BND ETF   $68.08
17-03-31   17-03-31   Cash Dividend   VANGUARD CDN AGG BND ETF   $69.58
17-03-07   17-03-07   Cash Dividend   VANGUARD CDN AGG BND ETF   $63.30
17-02-07   17-02-07   Cash Dividend   VANGUARD CDN AGG BND ETF   $86.60
17-01-09   17-01-09   Cash Dividend   VANGUARD CDN AGG BND ETF   $62.14
16-12-07   16-12-07   Cash Dividend   VANGUARD CDN AGG BND ETF   $71.79
            Total Dividends to date $1,598.92

16-11-24   16-11-29   Buy   VANGUARD CDN AGG BND ETF   $31,806.83

Current value: $30,367.27, or   -$1,449.51
   
$1,598.92-$1,449.51=$149.41

$149.41 is in the green after almost 2 years, but only barely. I understand bonds are for rebalancing at the moment, but GIC's would have a better return, although generally not for a corporate account.

HBB has been suggested to me for corporations. However, when I owned it, it was flat. And if I look at the price difference now, if I'd bought it in November 2016 (when I bought VAB), it was worth $44.05. Now it's worth $44.24, with no distributions, so I could easily lose money on it if I sold to rebalance.

So this tilts me toward GIC/cash rather than bond funds. Correct me my math is wrong.

I think it was Wade Pfau who said, "A bad day in the bond market is losing 5 percent. A bad day in the stock market is losing 30 percent." So I understand wanting to keep a percentage outside the market. Is there a way of making fixed income more effective? I've tried Millennial Revolution's Preferred Shares (also losing value), I have a few GIC's, I have some REIT, I have cash, and I have some bond funds, minimal Lending Loop investment. I have not tried real estate (no interest, no time) or MIC.

Good luck, Saskatchewstachian. 2030 is not that far away. Thanks again, Lews, RichMoose, and Retire-Canada.

Lews Therin

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Re: Pull the trigger? (Canada, corp, might need a kick in the rear)
« Reply #18 on: October 12, 2018, 11:19:03 AM »
You're not really trying to make money on bonds, they are there to do nothing, and when stocks go down, (meaning your bonds go up by the same amount in your portfolio) you switch bonds for stocks. It lowers your stock losses (not really, you still lost as much) but you also gain more stocks during a down period, which will have an effect of softening the blow.