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Tuesday, September 2, 2014

Dec 2013 – Investment Update

Posted by Tim Stobbs on January 1, 2014

The following is an update of Tim’s plan to retire early.  Please note we are mortgage free, so net worth is no longer tracked as the house equity isn’t part of the retirement plan.

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.  My ideal tracking of this would be one full year of investment and spending data, which I just got in 2013.  I use a trailing six 12 month average on spending (but excluding vacations) and a trailing 12 month average on investment results.

Investments

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

RRSP $36,920 ($100), [+$440]
LIRA $13,510 ($0), [+$160]
TFSA $35,220 ($0), [+$820]
Pension $87,620 ($3044), [+$896]
Wife’s RRSP $49,310($3500), [+$310]
Wife’s Investment Account $0 (-$0), [$0]
Wife’s TFSA $31,900 ($0), [-$80]
My Investment Account $0 (-$0), [$0]
High Interest Savings Account $1990 (+$277),[$0]

Investment Net Worth $256,407 ($6819 ), [+$2648 or +1.0%]

(YTD Contribution: $47,067), [YTD Gain: $26,702 or +14.6%], YTD Avg Monthly Gain $2225

Spending Averages

Last Month $2273

Trailing Last 12 Months $2925

Results

Number of months trailing average spending covered by investment gains: 0.76 {Target 1.0 or higher}

Commentary:

Yes, we finally broke the quarter of a million in investments barrier!  Which is fairly amazing when you consider just five years ago we only had $50,000 in investments.  Overall this was a solid year for results, so I’m happy.

On the negative side, we missed our contribution target by just under $1000, which isn’t all that bad.  Besides our investment returns more than made up for it at 14.6% for the year.  It blows my return target of 5% + inflation out of the water.  What also freaks me out a little bit if you add the profit from our businesses to the investment gains it actually exceeds our spending for the year.  Basically I was working at my day job just to save money and pay taxes. :)   Of course, I don’t expect that level of investment return every year so I’ll be keeping my day job.  I’m happy about our results, not delusional.

Any questions?

(click for a bigger version)

Investments Dec 2013

Comments

10 Responses to “Dec 2013 – Investment Update”
  1. FrugalTrader says:

    $3k monthly spending average over the past year? Amazing! Congrats on the big gains too!

  2. Jon_snow says:

    Impressive. Most impressive.

  3. Kimball says:

    Can you show how you calculated the 14.6% return?

  4. Jacq says:

    Great progress! Just curious if you have much contribution room left in the RRSP/TFSA realm? I’m guessing not much so that this next year you’ll have to start investing in a taxable account if you continue to save ~ $4k/month?

  5. Dougie G says:

    Not sure if this has been covered before, but curious how you calculate your pension (as opposed to your RRSP), since it so far away before you will start collecting. Is it just a summation of all the contributions you have made to date. I do not count the defined-benefit pension I started collecting a year and a half ago as an asset, but instead as a steady source of income (inflation protected). It covers all our fixed expenses (home expenses, car expenses, groceries, etc.) All the income earned on our investments (well, not all – it was a good year on the markets) is used for our carefully budgeted monthly fun money and travel.

  6. Mel says:

    It gives me great excitement to be have almost the same amount of money as you and a paid off house. The only problem is our spending is much higher. I definitely need to work on reducing it. Also, I am playing the hotel/airline miles credit card game right now which is definitely clouding the finances.

    I wish us both the best of luck in the coming year. For us, there is a new patio and landscaping awaiting. Otherwise, normal.

  7. Tim Stobbs says:

    Thanks again for the kind words.

    @Kimball – I’ve goth the calculation from my tracking spreadsheet. It basically goes, take the month to month gains less contributions to calculate monthly gain. Then sum up contributions and gains (or losses) for the months to run the calculation compared back to the start of last year.

    @Jacq – I’m current with our TFSAs, but do have a chunk of RRSP contribution room left. We should finish burning through that this year. So by early 2015 we will be back to taxable accounts.

    @Dougie G – It’s a defined contribution plan, so I know exactly my total at any time. Your plan for your pension is a great way to handle it.

    @Mel – Great for you! Also keep in mind if you really want to spend more that is ok, it just keeps you working longer. Our future spending plans are doing some work in the kitchen this year.

    Tim

  8. Anthony says:

    Hi,

    I am not sure that I understand what you mean by “investment gains”. Do they include capital gains/losses (which your definition suggests they are included)? In which case investment gains could hardly be counted on to recurr reliably in the future to rationalize stopping work. Or are investment gains basically dividends?

    Very impressive though and I wish you all the best on your quest and in 2014!

  9. Tim Stobbs says:

    @Anthony – Yes I include both capital gains/losses and dividends as ‘investment gains’. I agree capital gains are not an ideal way to finance a retirement, but that isn’t a huge concern right now since I’m in the accumulation phase. Once I get closer to my retirement total I’ll restructure some of the investments to more income oriented.

  10. gcai says:

    Impressive 2013!

    Hope you 2014 is even better!

    @Tim – forgive me I going to go off topic but I couldn’t find another way of getting a question to you.
    I referencing your column from last year April 25 and was wondering
    a) which cell phone did you end up buying and
    b) can you use Evernote (greatest app ever!)offline on your device (i.e. when not connected to wifi or cell service)

    My apologies again for going off topic

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