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Open Book – New Job and New Investments

This is part of our Open Book series, you can start here if you did not read our first post.

 

It is a new beginning. After months of research and over two dozen interviews, I am proud to announce that I finally found a new job.  I applied to at least a hundred positions online and received multiple offers from some of the biggest companies in Canada.

After so many interviews, I have received everything from deceptive offers to insulting offers, to plain old boring offers. I was amazed to see how many employers offer minimal salaries and try to get away with bottom-of-the-range compensation packages even in professional fields. In the end, I was getting desperate for change and I could imagine why someone would accept such low-ball offers.

Finally, I was offered a job that answered all my criteria and I negotiated a compensation package 15% higher than my previous position. I now have a nice corner office with large windows and work with a great team of enthusiastic co-workers, which is a great change from my previous environment.

The biggest advantage of this new job is that it is in my community. My office is now only a 10-minute drive from home compared to the 35-45 minutes of traffic I used to previously drive. This alone is a great reason for a change. Even without a salary raise, location alone can make a promotion worth it. In my case, my previous transportation costs added up to $9.01 per day (assuming our high gas prices in Canada of 1.195$/L or 4.523$/gal). With my new commute, my costs are four times less and these savings will add up to $1,722.5 per year, not to mention the six hours per week I have gained back in my life.

 

How to save with a new jobHow to save with a new job

Source: GasBuddy

 

New job, new investments

Now I have cashed out my pension package and stock option from my previous employer, making this a great time to clear up my portfolio. I am very proud to say that we now solely hold index funds and are fully committed to our indexing strategy.

I sold the stocks that I had accumulated through my previous employee purchase plan and sold all of my holdings in the Bank of Nova Scotia since it has been flat-lining for the past quarter and did not show many signs of future growth. I was fortunate to capture a 48.6% total gain on my investment over the year I had been holding BNS. Unfortunately, this is fully attributed to luck and not to my extraordinary stock-picking skills. Even after these amazing gains, I firmly believe that indexing will beat individual stocks over the long-term.

So many investors underperform because they try to time the market and pick the next Microsoft, Google, or Apple. Unfortunately, it is nearly impossible to only pick winners so you are better off putting all the chance on your side and invest in the total stock market to capture all future winners and to benefit from the general growth of our economy.

In our previous Open Book series, we separated RRSP (401k) and TFSA (Roth IRA) but it makes it harder to follow and less representative of our actual allocation. We use tools like Personal Capital to track all our investments in one place without the need to login into our accounts.

 

Below is a breakdown of my whole portfolio, as of March 31st, 2017:

VTI ♦ 34% of my total portfolio is invested in the Vanguard Total Market ETF. This is the total weighing from all my accounts (RRSP and TFSA) since it is now much simpler to follow once we see our allocation as a whole.

VCN ♦ 28% of my total portfolio is invested in the Vanguard FTSE Canada All Cap Index ETF. I have invested a lot more into the Canadian market since I sold my holdings of Canadian banks. After I sold both BNS and TD, I invested some in a bond ETF but mostly in the Canadian index.

VWO ♦ 16% of my total portfolio is invested in the Vanguard FTSE Emerging Markets ETF. This is only 1% more than my previous allocation shown in October.

VBR ♦ 8% of my total portfolio is invested in the Vanguard Small-Cap Value ETF. I am tilting my portfolio towards smaller caps since small-cap stocks averaged an annual return 2.20 percent higher than large-cap over the long-run.

BND ♦ 5% of my total portfolio is invested in the Vanguard Total Bond Market ETF. This is a small portion of my portfolio that helps during rebalancing. We rebalance annually or semiannually if our allocation thresholds surpass 5%. This provides sufficient risk control relative to our target asset allocation (according to many studies including this one from Vanguard).

Portfolio rebalancing: Why, when and how much

Source: Vanguard

 

VGK ♦ 4% of my total portfolio is invested in the Vanguard FTSE Europe ETF. This is a little bet to beat the US market over the long-term.

VRE ♦ 3% of my total portfolio is invested in the Vanguard FTSE Canadian Capped REIT Index ETF. I did not change my allocation in REITs but I am slowly increasing my holding up to 5% with new contributions. The American version of this ETF is symbol VNQ.

VEA ♦ 2% of my total portfolio is invested in the Vanguard FTSE Developed Markets ETF. This is an international, developed world index fund but I prefer the emerging markets since it is less correlated with our local economies.

 

The Grand Totals

Even after selling my individual stocks and reinvesting in ETFs, I still keep a strict asset allocation and rebalance every year. I always re-invest dividends and automate most of my investment contributions on each payday.

 

Current Asset Allocation Desired Asset Allocation
  • 42% ♦  US Market
  • 31% ♦  Canadian Market
  • 22% ♦  International Market
  • 5%    ♦  Bonds
  • 40% ♦  US Market
  • 30% ♦  Canadian Market
  • 25% ♦  International Market
  • 5%    ♦  Bonds

 

Mrs. Xyz

My wife has a very similar asset allocation as me and has kept it very simple. She holds only 4 index funds with Vanguard (VTI, VCN, VWO, and BND) and only invests in her TFSA (Roth IRA).

 

Mrs. Xyz Current Asset Allocation Desired Asset Allocation
  • 45% ♦  US Market (VTI)
  • 38% ♦  Canadian Market (VCN)
  • 10% ♦  International Market (VWO)
  • 7%    ♦  Bonds (BND)
  • 45% ♦  US Market
  • 40% ♦  Canadian Market
  • 10% ♦  International Market
  • 5% ♦  Bonds

 

This concludes the March update of our Open Book series. For those who had been waiting for an update on our portfolio, I know it has been (yet again!) 6 months since our past post. 😛 I only update this post when our allocation changes and I thought that being (finally) a true indexer was worth mentioning.

Stay happy, Xyz.

 

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4 Comments



  1. Congratulations to the new job and the great progress on your investments.

    With 250 working days in a year, saving 30 minutes in each direction, that´s 250 hours or….31 days! 31 days for quality time with your family & friends and writing more inspiring blog posts of course 🙂

    Keep up the good work!

    KvD

    • Xyz

      April 6, 2017 at 4:13 pm

      I haven’t calculated it that way but thank you. This means I just got an extra Month of vacation days!!! (sorta)

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