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Wednesday, March 29, 2017

Oct 2013 – Investment Update

Posted by Tim Stobbs on October 30, 2013

The following is an update of Tim’s plan to retire early.  Please note the house is paid off, so net worth is no longer tracked.

To track my progress I’ve decided to track both my expenses and my investment gains.  So once the investments gains are consistently beating my expenses I’m financially independent and can stop working.  I think my ideal tracking of this would be one full year of investment and spending data, but I don’t have that yet.  So for now I’ll do a trailing six 12 month average on spending (but excluding vacations) and investments for the calendar year to date.

Investments

Account (Contribution), [+/- Gain or Loss less contributions]

RRSP $36,000 ($100), [+$940]
LIRA $13,260 ($0), [+$400]
TFSA $35,160 ($0), [+$2060]
Pension $81,940 ($1050), [+$2210]
Wife’s RRSP $41,800($1500), [+$1190]
Wife’s Investment Account $0 (-$60), [$0]
Wife’s TFSA $32,220 ($2000), [+$1520]
My Investment Account $0 (-$45), [$0]
High Interest Savings Account $2110 (+$600),[$10]

Investment Net Worth $242,490 ($5250 ), [+$7915 or +3.3%]

(YTD Contribution: $35,998), [YTD Gain: $23,791 or +13.0%], YTD Avg Monthly Gain $2379

Spending Averages

Last Month $1412

Trailing Last 12 Months $3041

Results

Number of months trailing average spending covered by investment gains: 0.78 {Target 1.0 or higher}

Commentary:

Wow, that was one heck of a stock market surge since I technically was financially independent (just for the month).  Yet what is interesting is that is the second time that has occurred this year (the first was back in January).  Overall I’m happy, but not expecting it to last…I’m interested in the longer term result ratio (currently at 0.78) being above 1.0 for a few months prior to getting excited.

Well finally we closed our investment accounts and the paperwork wasn’t even that hard.  Yet that didn’t occur before we got nailed with more account fees, so my lesson has been learned.  Don’t put off paperwork, it will only cost you money.

I also came across an small error on my RRSP contributions in these updates,  I had put in the wrong number one month and carried it forward.  Yikes!  So I revised the totals to be correct this month.  So my contributions are down slightly, but the end result is higher gains (I always deduct contributions from these gain totals).  Total correction was minor like $400 or so.

My wife’s TFSA has now been fully funded, so that means both are now maxed out…until next year’s contribution room.  Now the focus will shift to loading up my wife’s spousal RRSP for the remainder of 2013.  We will continue to max that out in 2014 as well to finish up my excess RRSP contribution room.

Any questions?

(click for a bigger version)

Invest Update Oct 2013

Comments

4 Responses to “Oct 2013 – Investment Update”
  1. I would like to know more about the LIRA.

    Can you move it somewhere else? How much control do you have over what the LIRA is invested in?

    I guess I don’t actually know anything about LIRAs.

  2. Jon_snow says:

    This latest market surge has my investment portfolio at around 985k. When I ER next year, I am also considering withdrawing funds from my DB pension and put them into a self directed LIRA. I include the 180k commuted value of my pension in my investment net worth – though I wonder if it should be since I can’t access this money for a long time – probably 20 years. I do wonder about the best way to grow the LIRA funds – would be nice to set up some DRIPS and just sort of forget about it and be pleasantly surprised 20 years later…

  3. Jacq says:

    Jon, check the LIRA age limitations for withdrawal for your province, they vary across the country.
    Taxtips has a summary here:
    http://www.taxtips.ca/pensions/rpp/unlockingrpp.htm
    I’m not sure how old you are, but I don’t think you’ll have to wait for another 20 years if you retire.

    I’ve been playing around with a new retirement calculator and have left my RRSP and LIRA balances out of the withdrawal calculation so that I could get the withdrawal rate for only my TFSA and taxable accounts up until age 65 and then drawing the RRSP and LIRA down post 65. Not sure that’s how I’m going to do it IRL since I haven’t had to tap anything yet, but I like having a set number of years to plan for vs. trying to estimate when I’ll die. :-P I don’t like the tax effect upon death on RRSP/LIRAs that haven’t been drawn down at all either so I might do some income smoothing there too.

    Here’s the link to the calculator:
    http://www.early-retirement.org/forums/f28/vpw-best-withdrawal-calculator-ive-seen-to-date-68770.html

  4. Tim Stobbs says:

    @Jane Savers – My LIRA (Locked In Retirement Account) came from a time when I was in a defined benefit plan. When I left the company I had the option to shift it over to a LIRA, which I did. So the money was moved over to the bank of my choice and I invested it in index mutual funds. In short a LIRA is like an RRSP, you can invest in anything, but you can’t add to it and you can’t access it until a specific age (in my case 55). I hope that helps.

    Tim

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