Tag: open book

Our Investment Portfolio Example and Spending

Post author By Daniel
Post date February 26, 2018
No Comments on Our Investment Portfolio Example and Spending

A lot has changed over the past 12-months. Mainly; Mrs. got pregnant, we started investing in cryptocurrencies, and planned for a long-term leave from work that will start really soon. In this update, we will share our latest portfolio strategies and our spending for the previous year.

We built our own investment portfolio but if you are looking for a more hands-off approach, we suggest Wealthsimple.

Given everything that is coming up soon and the slight changes in income that will follow, we beefed up our emergency fund and are holding most of our investments in non-restricted accounts to be able to withdraw if needed.

By holding most of our investible assets into TFSAs (Roth IRAs) we benefit from tax-free growth and do not have to pay any taxes on the dividends we receive. The best thing is that we can withdraw any amount at any time, tax- and penalty-free.

What does our investment portfolio look like?

Currently, we are each holding our targeted asset allocation and do not plan to withdraw anytime soon but still like to have the option.

For Mr., we try to keep a portfolio holding in 40% American stock market, 30% in the Canadian stock market, 25% in international equities, and 5% in bonds.

For Mrs., we try to keep a portfolio holding in 40% American stock market, 30% in the Canadian stock market, 25% in international equities, and 5% in bonds. Within these, we include small play money investments such as cryptocurrencies in our American allocation and more recently, a cannabis index fund in our Canadian allocation.

Below is a breakdown of my whole portfolio, as of February 25th, 2018:

VTI ♦ 28% of my total portfolio is invested in the Vanguard Total Market ETF. I did not contribute any more money to the U.S. Total Market since our last installment in the series so my allocation actually dropped from 31% to 28%. In addition, the American market has also dropped considerably this month so I am not surprised my allocation is lesser now.

VCN ♦ 22% of my total portfolio is invested in the Vanguard FTSE Canada All Cap Index ETF. This fund also dropped considerably since the beginning of the year. Both sides of the border got hit pretty bad lately but we are not worried about our long-term prospects. We are investing for decades to come and daily movements are the last of our worries.

VWO ♦ 13% of my total portfolio is invested in the Vanguard FTSE Emerging Markets ETF. This fund performed well in the past few months, keeping our allocation steady since our last installment.

ETH ♦ 6% of my total portfolio is invested in cryptocurrencies and tokens such as Litecoins and Etherium. I started investing in cryptocurrencies with only 3% of my portfolio but this quickly grew to 8% of my total asset allocation. Even after the large swings we saw in January, my crypto portfolio is up almost 200% since last November. It now constitutes 6% of my asset allocation.

&&& ♦ 6% of my total portfolio is invested in my Employee stock option. Since this is my current employer, I will not share the ticker symbol or name of this holding. I have set up an automatic investment plan with my employer and they offer a 50% match so I went for the maximum contribution allowed.

VBR ♦ 6% of my total portfolio is invested in the Vanguard Small-Cap Value ETF. This is a purchase I have made a bit more than a year ago to tilt my portfolio towards small-caps. It worked out great so far and even if it does fluctuate more than the S&P 500, for example, it does grow over the long-term. I have not made any new contributions to this fund since it has risen beyond my expectations and kept up with my desired asset allocation.

HMMJ ♦ 5% of my total portfolio is invested in the Horizons Marijuana Life Sciences Index ETF. This fund seeks to replicate the performance of the North American Marijuana Index and provides exposure to the exciting marijuana industry starting in Canada. This fund goes against all our requirements for a good ETF; it holds very few stocks (only 28), it is sector-centric, it is speculative, and it has a high MER of 0.75%. However, it is the first exchange-traded fund in Canada to focus on the cannabis industry and seemed like a fun play to make. I do not recommend this as an investment and that is why I only invested 3% of my total portfolio in this gamble. It grew to 5% of my allocation within the past months but it stays a gamble.

BND ♦ 4% of my total portfolio is invested in the Vanguard Total Bond Market ETF. My views on bonds have not changed much and I am keeping this low allocation for the foreseeable future.

VGK ♦ 3% of my total portfolio is invested in the Vanguard FTSE Europe ETF. This fund has been performing great since I bought it and have no plans to sell anytime soon.

VEA ♦ 3% of my total portfolio is invested in the Vanguard FTSE Developed Markets ETF. This is an international, developed world index fund very similar to VGK since so much of it (54%) is invested in European companies.

VRE ♦ 2% of my total portfolio is invested in the Vanguard FTSE Canadian Capped REIT Index ETF. I did not invest any more into this fund yet simply because of our current exposure to the residential real estate market but plan on increasing this allocation gradually. The American version of this ETF is symbol VNQ.

Our final asset allocation

I try to keep a strict asset allocation and rebalance my portfolio about once year. I always re-invest dividends and automate most of my investment contributions on each payday but any contributions I do manually gets invested in sort to rebalance my allocation.

Current Asset Allocation	Desired Asset Allocation
42% ♦ US Market 35% ♦ Canadian Market 19% ♦ International Market 4% ♦ Bonds	40% ♦ US Market 30% ♦ Canadian Market 25% ♦ International Market 5% ♦ Bonds

In my current situation, I should either sell some of my Canadian holdings to reinvest into the International market or I should make a new contribution and put it all into the International market to stay in line with my desired asset allocation.

Mrs. Xyz investment portfolio

My wife has a very similar asset allocation as me and has kept it fairly simple. Ever since she started her investing journey, she has held four index funds with Vanguard (VTI, VCN, VWO, and BND).

34% ♦ Vanguard Total Market ETF (VTI)
32% ♦ Vanguard FTSE Canada All Cap Index ETF (VCN)
11% ♦ Vanguard FTSE Emerging Markets ETF (VWO)
4% ♦ Vanguard Total Bond Market ETF (BND)

These still represent the majority of her holdings. However, she recently made a few plays which literally exploded and now represent a huge portion of her portfolio.

Instead of focusing only on the main cryptocurrencies like me, she explored many smaller, lesser-known, coins and token. She took a bigger gamble for, hopefully, bigger returns. In a few months, her small initial investment grew to a whopping 16% of her total asset allocation. She is still following it closely and thinking of rebalancing soon.

In addition, 3% of her portfolio is now invested in the Horizons Marijuana Life Sciences Index ETF.

Mrs. Xyz Current Asset Allocation	Desired Asset Allocation
50% ♦ US Market 35% ♦ Canadian Market 11% ♦ International Market 4% ♦ Bonds	45% ♦ US Market 40% ♦ Canadian Market 10% ♦ International Market 5% ♦ Bonds

If all of this sounds too complicated, we suggest Wealthsimple.

Start your automatic investment account today!

How much are we spending?

With today’s online tools such as Mint or Personal Capital, it is super simple to track our spending and tracking is the first step to a good financial plan. How can you improve if you do not know how you are doing?

Looking at our Big 3 categories, we are still spending most of our income on Housing, Food, and Transport. Controlling these is the key to financial freedom. Once you understand that cars are much more expensive than they seem to be, restaurants are a luxury and housing costs can make or break your savings, you are golden!

What our spending looks like for the past 12 months (in Canadian $)

Home	$21,758
Food & Dining	$8,285
Auto & Transport	$5,014
Shopping	$3,297
Taxes	$3,102
Bills & Utilities	$2,590
Uncategorized	$1,134
Health & Fitness	$1,591
Pets	$1,401
Travel	$1,174
Business Services	$558
Personal Care	$450

Total	$50,354

Let us go through these expenses one by one. To begin with, our total House spending includes the $21,758 (mortgage, renovations, and maintenance) and the annual property Taxes of $3,102. This brings our total housing costs to $24,860. Almost $2,000 less than the previous 12 months.

In our Food and Dining category, we roughly spent five thousand dollars on groceries and the rest on restaurants. We cook most of our meals at home and eat out roughly once per week.

To continue, our Auto and Transport category includes the maintenance, gas, and repairs of our two cars and the subway tickets we sometimes purchase to skip traffic. Each car costs us about $2,500 per year, which is amazing considering that similar cars would end up costing us over $10,000 per year in payments alone if we bought them brand new!

Our spending on Shopping is pretty high, however, this also includes all store purchases we did as gifts. We bought a few things for the Baby off Amazon and bought a new laptop this year which bumped that figure a bit. Unfortunately, my new employer does not pay for my work clothes so I had to buy a few suits this year.

On the Bills side, we include our two cell phones, home internet, and electricity. Our heating is all electric so the utilities go up considerably in the winter. Last month, we switched Mrs. cell phone plan and saved $30 per month opting for a lower data plan and my contract ends this summer so both our plans should be much cheaper for the year to come.

The Uncategorized category includes all the smaller categories not represented here. (Entertainment, Education, ATM withdrawals, or any purchase that was not automatically categorized.) The good thing is that our entertainment expenses are pretty low; we pay $10 per month for Netflix and rarely go out for expensive activities. Most other expenses in this category were very small amounts.

The Health and Fitness category represents Mrs. yoga, pharmacy purchases, and Mrs. massages. That one is pretty straightforward.

Furthermore, Pets represents cat food and one large veterinary expense incurred this year.

For the Travel category, it gets really interesting. Not too long ago, we were spending almost $10,000 per year on travel but now that we started using travel rewards for flights and hotels, we were able to drop this ten-folds! The thousand dollars we spend this year represents taxes on rewards flights and a few hotels we could not find for free.

Under Business Services, only products and services purchased to run this blog are included. Finally, in the Personal Care category, we included hairdressers, salons, and spas for Mrs.

Even after all of this, we still had a good chunk of change leftover. We invested most of it following our desired asset allocation mentioned above and kept the rest to beef up our emergency fund. Our future income might slightly drop and we want to have enough saved up to cover that gap.

How about you? What is your Big 3 spending categories?

Tags how to budget, how to invest, open book, Portfolio Strategies, track your spending

Investing

Our Crypto Investment and ETF Portfolio

Post author By Daniel
Post date November 12, 2017
8 Comments on Our Crypto Investment and ETF Portfolio

Winter is coming and it has been a while since our last Open Book series. We try to be as accurate and transparent as possible to give you a proper idea of our finances. We attribute most of our success to our high savings rate and constant tracking of our progression with tools such as Mint or Personal Capital. By sharing our investment strategies and diversification strategy with you, we hope you will be inspired to save and invest even more and attain your goals quicker!

Saving more of your hard earn dollars makes (almost) any goal attainable. For example, becoming a millionaire is pretty attainable if you start early. If you wanted to reach the million by age 50 and started saving right out of college at 22 years old, you would only need to save $1,152 per month, that is not even the maximum 401k contribution! At 25, this jumps to $1,443 and by 35, you would need to be saving $3,439 per month. This assumes you would invest, and stay invested, over the whole period and average a 6% return, which is very attainable with an index fund portfolio like ours.

Source: Nerdwallet

In our case, our goal is to retire 9 years from now, roughly 11 years after we first discovered financial independence was even possible. We are currently on track with over 29% of our objective saved up and invested as of today. We are mainly invested in broadly-diversified index funds and mainly using tax-advantaged accounts.

Below is a breakdown of our portfolio as of November 2017. We will do His and Hers so let’s start with my whole portfolio:

VTI ♦ 31% of my total portfolio is invested in the Vanguard Total Market ETF. I hold this exchange-traded fund, like all our other ETFs, in both my RRSP (401k) and TFSA (Roth IRA) with Questrade so I do not pay any capital gains tax nor do I get taxed on my dividends. Another great advantage of Questrade is that they do not charge any commission to purchase ETFs. For our American readers, we suggest Ally or Vanguard for easy, low-fee investing.

VCN ♦ 27% of my total portfolio is invested in the Vanguard FTSE Canada All Cap Index ETF. This is my little home bias. We are planning to retire in Canada and spend Canadian dollars in retirement so having this portion of my portfolio in Canada is a way to hedge against currency risk. Although the Canadian equity market is not nearly as large as some other markets around the world, I still allocate a good portion of my portfolio in it.

VWO ♦ 14% of my total portfolio is invested in the Vanguard FTSE Emerging Markets ETF. To balance out home bias and benefit from the ever-changing global economy, I invest a significant portion in emerging markets.

VBR ♦ 6% of my total portfolio is invested in the Vanguard Small-Cap Value ETF. I am slightly 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. My biggest holding, VTI, holds all market capitalizations, from small to large, but I like to hold a bit more small-cap than the market’s weighting to (hopefully) increase returns over the long-term.

BND ♦ 5% of my total portfolio is invested in the Vanguard Total Bond Market ETF. We both chose to hold bonds to smooth out our returns while holding a certain security in case of emergency or opportunity. The reason we hold some bonds, although a very little percentage of our total portfolio, is to have flexibility. The flexibility to buy the dip if we feel like it. The flexibility to use it as an emergency fund if we go through our current savings. It will not save us from the next crash but again, what would?

&&& ♦ 4.5% of my total portfolio is invested in my Employee stock option. Since this is my current employer, I will not be sharing the exact name of this holding. Every week, I automatically invest in this Canadian bank stock and get a 50% match from my employer. I currently contribute to get the maximum match and sell whenever my position becomes too large.

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.

ETH ♦ 3% of my total portfolio is invested in different cryptocurrencies and tokens such as Litecoins and Etherium. I decided to play a bit in the cryptocurrency world with a few dollars to (maybe) strike the new Bitcoin. If this investment doubles, I will be happy. If it goes to zero, I will still be happy.

I might be crazy but this kind of play money will not affect me much but it is fun to have some skin in the game. I have been looking into a few different coins and tokens but with the recent Bitcoin raise (up almost 70% in the October alone), I have been paying extra attention to find the next big thing.

No one can guess the next Bitcoin or even know if Bitcoin will be up another 70% in a month from now but you cannot win if you are not playing. New coins now offer faster transaction time, new technologies, and a brighter future than Bitcoin so it’s dominance might come to an end. This is why I invested a tiny part of my portfolio into a few cryptocurrencies this month. This is a long-term play that could be very profitable if cryptos become broadly accepted over time. I will keep you informed of any developments over the next few months.

VEA ♦ 3% of my total portfolio is invested in the Vanguard FTSE Developed Markets ETF. This is an international, developed world index fund but I prefer focusing on the emerging markets since it is less correlated with my main holdings. I never sold this ETF but stopped contributing new funds to it at the moment.

VRE ♦ 2.5% of my total portfolio is invested in the Vanguard FTSE Canadian Capped REIT Index ETF. The American version of this ETF is symbol VNQ. Again, I never sold this ETF but stopped contributing new funds to it at the moment.

If all of this sounds too complicated, we suggest Wealthsimple.

Start your automatic investment account today!

Diversification strategy

I always re-invest dividends and have automated most of my investment contributions at each payday. However, even with my new investment in cryptocurrencies, I still keep a strict asset allocation via ETFs and rebalance every year. In terms of asset allocation, I considered cryptos as part of the US Market since they are priced in American dollars.

Current Asset Allocation	Desired Asset Allocation
40% ♦ US Market 34% ♦ Canadian Market 21% ♦ International Market 5% ♦ Bonds	40% ♦ US Market 30% ♦ Canadian Market 25% ♦ International Market 5% ♦ Bonds

Using my desired asset allocation, we are looking at an average historical average real return (after inflation) of 8.8% since 1970 with a standard deviation (the risk factor) of 17.3%.

Source: Portfolio Charts

If we use the US Total Market as a benchmark (orange), my portfolio (purple) slightly over-performed over the past half-century. Past performance does not indicate future returns but I am optimistic about my chosen allocation.

Source: Portfolio Charts

Mrs. investment portfolio

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
41.5% ♦ US Market (VTI) 41% ♦ Canadian Market (VCN) 12% ♦ International Market (VWO) 5.5% ♦ Bonds (BND)	40% ♦ US Market 40% ♦ Canadian Market 15% ♦ International Market 5% ♦ Bonds

For the past few months, the American market has been on a nice raise and our portfolio grew over 5% since we last shared this summer. This is some nice gains but we are not looking at it over the short-term. This is the main reason why we do not post monthly portfolio updates, we simply do not want to look at it too often!

Stay happy, invest plenty. Mr. and Mrs. Xyz.

Tags how do I invest, how to invest in stocks, open book

Financial Independence Saving

Our Personal Expenses Spreadsheet and Savings Rate

Post author By Daniel
Post date June 14, 2017
16 Comments on Our Personal Expenses Spreadsheet and Savings Rate

We are in June and it is time for the mid-year assessment of our household budget. Our last Open Book series article was published a few months ago so we thought it would be time for an update.

We have been tracking our income and spending for years. Since we discovered the whole concept of financial independence, we also started to track our savings rate. The amazing thing is; the more we can increase our savings rate, the faster we can claim our financial freedom.

Source, Four Pillar Freedom

Our friend Zach who writes over at Four Pillar Freedom shared with us this great early retirement grid. It is an easy way to visualize how many years you will need to reach financial freedom. Simply match your annual spending from the vertical column with your annual net income (take-home pay) from the horizontal row. The number where they meet is the number of years it will take you before reaching FI. This assumes a conservative 5% annual return on investments and a 4% safe withdrawal rate (see Trinity Study).

So far, we held an average 61.5% savings rate for these first 6 months of the year!

If we can keep this up, we can retire 9 years from now. Roughly 11 years after we first discovered financial independence was even possible. These rough estimates came from our assumption that we can be living off 4% of our portfolio once we retire and we assume 7% annual returns on investments given the historical averages of an equity portfolio (10%) minus the average inflation during the last century (3%).

This is a new record for us. We are super proud to cross the 60% bar for this considerable amount of time. We will calculate it again at the end of 2017 and, hopefully, we will have stayed above this mark.

Your personal savings rate =

Annual savings including any employer match (or any debt repayments) x 100

Total income less taxes, plus any employer match

The income side of our equation is slightly higher since I started my new job now with a 15% higher salary than my past position and we did earn a few dollars from sharing our home with travelers.

I still benefit from a generous employee stock ownership plan. They match part of my stock purchases so we included the match in too.

Our spending actually decreased from last year so our savings rate jumped quite a bit. To put numbers to the equation, increasing our savings rate from 50% where we were last year to the 60% we are now aiming to decreases our working years a whopping 4.2 years!

That is 4 more years to enjoy doing whatever you want to do. 4 more years not waking up to an alarm clock.

4 more years of freedom!

We did a lot this year, we traveled to British Columbia, New York City, and we booked a trip to LA and San Francisco in August. All of these were very cheap since we now get free hotel stays and free airfare through reward points but we are running out of vacation days!

All-in-all, we spent about $1,000 for those three trips and most of that was restaurants. In our last spending post, traveling was our second biggest expense at a staggering $9,582 for the year but we were able to cut this so much that it is not even in our top spending categories anymore. Keeping this up for the whole year should decrease our annual spending by almost 14%.

Unsurprisingly, our biggest expense is our house. We spent $9,846.38 in the last 6 months on our mortgage payments, home insurance, home maintenance, and property taxes. This does not concern us too much since we greatly enjoy our house. Lately, we started maximizing its utility by renting out our spare bedrooms on Airbnb. In the last 6 months alone, we made over $2,000 just for hosting a few guests.

In our Food and Dining category, we spent $3,730 in the past 6 months. This brings our average monthly spending down to $621 compared to the $723 per month we averaged last year. We did not change anything to really cut our grocery bill except for an organic, locally grown, vegetable basket subscription we now enjoy. This small change not only decreases our monthly spending on fresh produce but also helps our local farmers thrive. We believe in sustainable, local, farming and it also tastes better. The $100 cut in this category mostly came from less dining out.

For the last 6 months, we spent a total of $2,102 on Bills and Utilities. This includes our two cell phones ($60/month plans), home internet ($45/month for unlimited high speed), and electricity (winter just ended so we had $200/month bills but we pay roughly $50/month during the summer). Our heating is all electric and we do not pay for water or cable TV.

For Transportation, we spent $2,553 or $425 per month. This includes car maintenance, gas, and repairs of our two cars plus any transportation we use during our travels. We do not have any car payments and do not advice you get one either.

Our last considerable expense was Shopping which includes some household goods we bought off Amazon, clothing, gifts, and a few little trinkets. This adds up to $1,508 in the past 6 months.

Including all the smaller categories that we are not budgeting for, we spent roughly 30% less from January to June than we did from July to December of last year. This is mainly due to the huge cut in our travel spending since we started getting free hotel stays and free flights through reward points.

We were spending thousands of dollars on travel and we are able to cut this down with a few credit card applications. The welcome bonuses these companies give to attract customers are more than worth our while and we can help you find your own way through travel hacking if you need a little help.

We wish you great savings and a wonderful summer, Mr. and Mrs. Xyz.

Tags Household Budget, open book, open book series

Investing

Finding the Perfect Job and Investments

Post author By Daniel
Post date April 2, 2017
4 Comments on Finding the Perfect Job and Investments

It is a new beginning. After months of research trying to find the perfect job 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. Finding the perfect job as definitively not easy.

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.

Finding the perfect job

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.

Source: GasBuddy

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. Fortunately, I was able 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).

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 previous 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.

Save

Tags Finding the perfect job, investing in index funds, open book, open book series

Budgeting

Keeping a Monthly Budget as a Couple

Post author By Daniel
Post date November 28, 2016
8 Comments on Keeping a Monthly Budget as a Couple

With today’s online tools such as Mint or Personal Capital, it is super simple to track a budget and hopefully, to follow it. We have been keeping a monthly budget for a few years now and our most recent focus is our savings rate. By cutting out and not spending on stuff that does not bring us happiness, we are able to live off half our salaries while living a lavish life (to our standards anyway). We aim to retire very early and we gear our lifestyle towards this goal to be able to save enough to sustain our us in the future.

So many people are simply living their life according to marketing or are influenced by peers. You need to think about the core reasoning behind a purchase; Will this make you happy. 🙂

The principal wealth killers in America are houses and cars. Most people over-spend on their home, buying too much house, thinking it is an investment. With a clear budget, you can see if you can actually afford your home. Preferably, you should not spend more than 25% of your salary on your housing costs.

Buying a brand new car every few years will also greatly limit your savings abilities. With the average new car price at a whopping $33,560 (according to data from auto researcher Kelley Blue Book), no wonder it can put a strain on your budget! Putting this in perspective, a $33,560 car could be resold after 5 years for an estimated $12,488 (according to Edmonds) giving you an actual cost of ownership of $21,072 every 5 years or $4,214 per year to get a brand new car every half a decade. If you were to buy a 5-year-old instead and sell it in its 10th year for half the price you would effectively only spend $1,248 per year. Assuming a $12,488 purchase and $6,244 resell. By driving a 5-years-old car, you are effectively losing 4 times less to depreciation!

Most people fall for the brand-new car trap, even money bloggers, but if you restrict yourself to a cash diet it suddenly becomes much harder to fall for. Try to pay for cars out-of-pocket and skip the financing. You should also skip the first few years and buy used cars. Unless cars are your true passion and a new car will truly make you happier, they are not worth it.

By cutting down both for our housing and transportation needs, we were able to save. Those two categories alone minimized our expenses and increase our savings drastically. We spent a total of $23,411 on our house in the past 12 months (including mortgage, renovations, and maintenance) and still own two cars from 2007.

If you are not already tracking your income and expenses, you can start for free with Personal Capital or Mint and really know where it is all going. Since we have been tracking our spending for a while now, we are openly sharing it with you today 🙂

What our spending looks like for the past 12 months (in Canadian $)

Home	$23,411
Travel	$9,582
Food & Dining	$8,681
Auto & Transport	$6,167
Shopping	$3,313
Bills & Utilities	$3,269
Health & Fitness	$3,217
Taxes	$2,595
Uncategorized	$1,096
Fees & Charges	$611
Education	$669
Entertainment	$649
Personal Care	$641
Pets	$463
Gifts & Donations	$374
Business Services	$237
Misc Expenses	$174

Total	$65,157

Going over these one-by-one will give you a great idea of how we plan our spending and live our life. To begin with, our total house spending should include the $23,411 (mortgage, renovations, and maintenance) and the taxes of $2,595 since those are our annual property taxes. This brings our total housing costs to $26,006. We started renting out our spare bedrooms on Airbnb last month so we are now generating a slight income from our property.

Our second largest expense, and the one we enjoy the most is travel. We do spend a considerable portion of our income on traveling the world but it is our passion and obsession. There is no reason to save every single penny you earn to retire early if it makes the journey miserable.

Becoming financially independent takes time. You need to enjoy the journey as much as you will enjoy your final destination. Money is just like a river, it flows and you cannot keep it stalls, otherwise, it stinks! Out of this $9,582, we got refunded roughly four thousand dollars for business travels.

Whenever we need to assist a conference, we stay a week or two extra at our own cost, but the flights are still covered. We are also drastically cutting down on flight expenses for our next trip with the help of generous credit card rewards. The next 12-months should be much better on that front.

Find your card today and start earning those SWEET miles!

In our Food and Dining category, we roughly spent seven thousand dollars on groceries and the rest on restaurants. We home-cook most of our meals to save a ton on restaurants. In addition, we recently started cutting down on meats to lower our total grocery bill to about $400/month.

If these numbers seem high to you, note that we live in Canada and food costs are considerably higher than in the United States. Using a grocery list sample, food is roughly 29% more expensive in Canada so our current spending is comparable to a $425/month American grocery.

To continue, our Auto and Transport category includes the maintenance, gas, and repairs of our two cars. It also includes the subway tickets we sometimes purchase to skip traffic. We roughly spend two thousand dollars per car. There are no monthly payments or interest on them since we paid for them in cash.

We also minimize depreciation by keeping our old cars. Both models are 2007 and still run perfectly so we really do not feel the need to change them.

Our shopping spending is pretty high, however, this includes all store purchases we did as gifts. We also get some work clothes purchases reimbursed so we got back about half of this amount.

On the bill side, we include our two cell phones, home internet, and electricity. Our heating is all electric and we do not pay for water or cable TV.

In the Health and Fitness category, we have spent about two thousand dollars on ski lift tickets. Since we both really enjoy the outdoors, it is worth it. The rest was spent by Mrs. at yoga studios.

Furthermore, the Uncategorized and Misc spending are mostly ATM withdrawals for small purchases like coffee and the few shops that do not accept credit cards.

Our Fees and Charges are mostly credit card annual fees. However, they mostly get reimbursed since we take advantage of promotions to get free premium cards. We also used our line of credits (we each have separate ones) for short-term cash-flow management but we mostly stay debt-free (other than the mortgage).

The spending on Education is more of an investment than anything else. Furthermore, our Entertainment expenses are mostly Netflix and video games.

In the Personal Care and Pets categories, we cannot really cut anything. We do not go to $100+ hairdressers or visit the nail salon every week. These expenses are for our basic personal care and pet food.

For the Gifts and Donations category only includes the cash or transfers directly sent. The items we purchased as gifts would be under shopping. Finally, the Business Services section includes all the expenses for this blog and my other projects.

After all of this, our biggest category is still Savings! It is not included in our spending but we do save the majority of our income and invest mostly in index funds for our future selves. 🙂

The government is smart, they deduct our income taxes right out of every paycheck. That way, they benefit from having our money now, rather than later. You should do the exact same with your savings! We deduct a set amount, every paycheck, and automatically invest it to maximize our returns over the long-run.

We hope you enjoyed and please comment away.

Mrs. and Mr. Xyz.

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Tags budget tips, open book, open book series

Investing

Our Asset Allocation as a Couple

Post author By Daniel
Post date October 17, 2016
2 Comments on Our Asset Allocation as a Couple

A few things changed since we got married last month. I will now be including my lovely wife on the journey and we will start writing some posts together. Mrs. Xyz was always on board with financial freedom but she will now start to contribute to the blog. 🙂 Money and marriage can sometimes get tricky but we make it work.

Finance-wise, I covered our basic banking structure in my wedding announcement post so I will not repeat myself but a few of my investments changed since my last Open Book post. We have a lot of different accounts at a lot of different institutions:

Vacation Savings Account
Emergency Fund
Retirement Account (401k) with Broker A
Retirement Account (401k) with Broker B
Tax-Free Savings Account (Roth IRA) with Broker A
Tax-Free Savings Account (Roth IRA) with Broker B
Non-Registered Account with Broker A
Employee Stock Option Plan RRSP
Employee Stock Option Plan Non-Registered
Checking Account at Bank A
Checking Account at Bank B

You can imagine how hard it can get to track all of this one by one! Thankfully, we have some amazing free platforms like Mint or Personal Capital to track all our accounts and stay on top of our finances. Having everything all on the same platform is a life saver and allows us to use the best products even if those are not necessarily offered by our main bank.

Shopping around for the best financial products allowed us to eliminate all bank fees, save on trading commissions, and increase the interest rate in our savings accounts! If you have not taken the time to optimize your finances yet, head over to our suggestion page to find what works best for you.

Now let’s dive right in, starting with my accounts.

**RRSP (401k) Investments**

My registered retirement account is my largest account thus far. Contrary to the United States, the Canadian retirement plan is much more flexible and you do not need to do any back-door conversion to access your funds early. As long as your income in retirement is less than the first federal tax bracket of $45,282, you can withdraw from your RRSP at a 15% tax rate.

It is wise to draw on your registered accounts first if you retire before the age of 65 since you will need to bridge your income needs before Old Age Security and other benefits kick in. Doing this will avoid claw-backs and higher taxes later.

Since I plan to retire about 30 years before I turn 65, I have plenty of time to empty my registered retirement account to avoid any government claws back or high taxes. I mainly invest through exchange-traded funds and hold a tiny amount of my portfolio in individual stocks. I highly suggest you invest through Vanguard given there super low costs and diversification.

Below is a breakdown of my RRSP (401k) portfolio, as of October 17th, 2016:

VTI ♦ 36% of this account is still invested in the Vanguard Total Market ETF since it offers great diversification at a super low cost. VTI is up since my last post and is still my main investment.

VCN ♦ 21% of this account is invested in the Vanguard FTSE Canada All Cap Index ETF since I live in Canada and I do expect to retire in Canada. The Canadian market recovered since the lows caused partly by the oil prices but it is still experiencing downward pressures.

VEA ♦ 11% of this account is invested in the Vanguard FTSE Developed Markets ETF. This was slightly down given the current tensions in Europe but I only see it as a buying opportunity.

BND ♦ 4% of this account is invested in the Vanguard Total Bond Market ETF. This holding has not moved much, as one would expect from a bond fund.

BNS ♦ 28% of this account is invested in the Bank of Nova Scotia even if that might seem like a large portion of my portfolio. This stock rose since it released earnings and has been treating me great this year. I am starting to look for an exit point and will probably invest the proceeds into VTI once I sell it.

**TFSA (Roth IRA) Investments**

In Canada, we have the Tax-Free Savings Account which is similar to the Roth IRA. I went on a little shopping spree and bought some new ETF to tilt my portfolio towards European holdings and Emerging markets. The rationale behind this purchase was simply the slump Europe makes it a great buying opportunity and my past international holdings were only focused on the developed markets rather than the smaller cap Emerging markets.

Historically, small-cap stocks have outperformed large-cap stocks, but they also have been more volatile. From 1926 through 2012, small-cap stocks averaged an annual return of 12.28 percent, compared to 10.08 percent for large-cap. – Morningstar Ibbotson

I contributed a lot into my TFSA (Roth IRA) since my last post so the ratios have greatly changed. Furthermore, since I did not have any small-cap holdings in international markets, I contributed a small portion of my this account to Vanguard FTSE Emerging Markets ETF.

VTI ♦ 50% of this account is invested in the Vanguard Total Market ETF. This used to be a very large portion of my TFSA but my new contributions lowered the total ratio of this holding.

VCN ♦ 1% of this account is invested in the Vanguard FTSE Canada All Cap Index ETF. I have not invested any new funds into the Canadian market given my already-too-large holdings in Canadian banks. This holds a far from a perfect correlation but it keeps my asset allocation in line. The optimal solution would be to sell all of my individual stocks and invest solely in index funds but I still like to play around a bit. 🙂

VEA ♦ 13% of this account is invested in the Vanguard FTSE Developed Markets ETF. This invests internationally, in the developed world and although it does invest in all capitalization, it does not have any exposure in the Emerging Markets.

VGK ♦ 10% of this account is invested in the Vanguard FTSE Europe ETF. I know this complicates my portfolio and tilts it towards Europe but I count this as my little gamble to beat the US market over the long-term.

VWO ♦ 15% of this account is invested in the Vanguard FTSE Emerging Markets ETF. I am trying to tilt my portfolio towards smaller caps and invest in countries such as China, Brazil, and Taiwan that might offer more growth than the US over the long-term.

VRE ♦ 8% of this account is invested in the Vanguard FTSE Canadian Capped REIT Index ETF. I previously did not hold any REIT funds since our house is a large portion of our net worth. However, holding this highly diversified real estate fund does extend my reach into shopping malls, retirement homes, apartment complexes and office towers. Again, this might not be necessary but it is another little tweak I made to (hopefully) increase my returns. The American version of this ETF is symbol VNQ.

TD ♦ 3% of this account is invested in the TD Bank. I did not purchase any new shares but it did show good growth. I do not suggest you buy individual stocks, you should stick to indexing.

Non-Registered Accounts

Currently, I maxed out my registered retirement account and still have some room in my TFSA (Roth IRA). I invest all my new contributions into it and have my automatic investment plans directly investing in it. However, my Employee stock option only offers RRSP (401k) or non-registered accounts so I had to invest these new shares into a non-registered account. I try to sell off these shares every 3 or 4 months and invest in ETF to minimize my exposure. Currently, these shares represent only about $1000.

The Grand Totals

Even with my little shopping spree and my individual shares, I try to keep a strict asset allocation and rebalance yearly back to that allocation. I always re-invest dividends and automated most of my investments at each pay. (In the totals below, I did include my bank shares in the Canadian Market ratio.)

Current Asset Allocation	Desired Asset Allocation
42% ♦ US Market 37% ♦ Canadian Market 19% ♦ International Market 2% ♦ Bonds	40% ♦ US Market 40% ♦ Canadian Market 15% ♦ International Market 5% ♦ Bonds

My wife’s investments

My wife has a very similar asset allocation than me and has kept is very simple. She holds only 4 index funds and only invests in her TFSA (Roth IRA).

Mrs. Xyz Current Asset Allocation	Desired Asset Allocation
39% ♦ US Market 41% ♦ Canadian Market 11% ♦ International Market 9% ♦ Bonds	40% ♦ US Market 40% ♦ Canadian Market 10% ♦ International Market 10% ♦ Bonds

This concludes the October update of my Open Book series, I know it has been 6 months since my past post 😛 I will try to post more often than bi-yearly! Xyz.

Tags marriage finance, money and marriage, open book, wedding finance

Investing

Investment Portfolio of a 25 Years Old

Post author By Daniel
Post date April 22, 2016
6 Comments on Investment Portfolio of a 25 Years Old

Part of the motivation to become financially independent is seeing the success of others and learning from them. This is my first Open Book post and explaining my investments to you will be a good way for me to stay on course and for you to see what I am doing. I will share with you how I invest and why. For simplicity, I have combined some accounts that were of the same structure such as my employee plans and personal plan. I hope this will help.

Background

I am now 25 years old. I have been working full-time for a few years and about 3 years ago, I started saving and investing aggressively. In the beginning, I started off investing in individual stocks and options but I quickly realized that it took a lot of my time and the returns were not as good as long-term investing. I actively traded all my savings for about one year and after that one year, I was able to pay for a down payment on our first home. After the home purchase, I decided to change my investing strategy to a long-term approach and started reading a lot about financial independence. Starting in 2014, I focused on keeping my savings rate above 50% (getting it to 70% hopefully) and I am now planning for an early retirement in 10 years or less.

Real Estate

Before we bought our house, we used to live in a small condo in the downtown core and I would bike to work every day. This was a great way to stay active and live car-free. When choosing the house, we moved to the suburbs for a few reasons;

Lifestyle
Cost
Nature

I grew up in a single-family, detached, house and always preferred that lifestyle to downtown living. After staying in a 100-unit condo complex for a few years during my university years, I had my share of urban living. Buying a detached house in town was simply out of the question, price wise, and I did not mind the drive from the suburbs.

After contemplating renting or owning for a long time, I came to the conclusion that owning a well-priced house is more advantageous than renting. The first step to financial freedom is to live below your means and buy a house well under what the banks are ready to loan you. Using this great tool from The New York Times, I came to the conclusion that the house we purchased would be better than any rent above $703 per month.

Source: The New York Times

After getting this number, I compared it to listings in the city. At only $703/month, we could get an OK one-bedroom apartment out of the downtown core but nothing fancy. To be downtown we would need to pay around $1100 to $1500 for a small 500 sqft. one-bedroom apartment. If we were to rent around $703 it would mean we would have to live in another neighborhood than my work which means that I would either have to drive or take public transit. Of course, living in the suburbs also means that I would need a car but I think the costs are still justified.

Contrary to what many personal finance blogs say, I do not think a car is a huge burden on your finances. If you can ignore all the ads and forgo the brand new models, you can actually find great prices on used cars on Craigslist. All-in-all, I spent about $1500 a year on gas to drive 40 miles a day from the suburbs, $1000 a year on repairs, and only $300 a year on insurance. In addition, I paid $5000 for the car and knowing that I will drive it for the next 10 years, this comes out to a depreciation of $500 a year if my car is completely worthless after 10 years (which I doubt).

Adding all this up, it costs me $3300 a year or $275 a month to own a new-looking, reliable, fuel-efficient, old car.

To come back to real estate, I do not think it is worth it to live downtown to save money being car-free. Adding $275 to $703, this gives a monthly cost of $978 to live in the suburbs, which is still much cheaper than the downtown rents. In addition, this is not even taking into consideration the lifestyle benefits of a home or size of living space.

Comparing same age and style of construction (newer, clean, luxurious) you can expect to pay between $1100 to $1500 a month for a one-bedroom apartment downtown and around $300,000 to $400,000 for a nice 3 to 4 bedroom detached house in the suburbs, 20 miles away. The difference in lifestyle is astonishing for roughly the same cost. By shopping around and buying instead of renting, you can have much more space for the same, or cheaper, price.

Another big, big, thing for me was the simple equation that City ≠ Nature. We like hiking, biking, going on boat rides, and all these just cannot be done as easily when living downtown without a car. We can now bike 2 minutes to get into the forest or drive 5 minutes to get to a nice local hill for hikes. This, for me, is priceless. Having access to the hobbies you like is key. If you are into parties and bars every night or museums and art galleries, city living is your calling. For me, I preferred being close to nature. We discuss the real cost of housing more in detail here.

For those reasons, we chose to put a considerable portion of our net worth towards our home but if you do decide to rent, I suggest you invest a portion of your portfolio into a REIT such as VNQ. The Vanguard REIT ETF (VNQ) will diversify your portfolio and give you the opportunity to participate in real estate at very low costs.

**RRSP (401k) Investments**

Since I am Canadian, we have Registered Retirement Saving Plans but the concept is similar to the 401k where you can invest pre-tax monies, grow it tax-free, and only pay income tax once you withdraw. My investment style is now long-term; mainly indexing with a small portion in dividend-growth investments. I automatically fund this account every paycheck and invest in a set asset allocation.

To save on commissions every time, you could use a commission-free broker like Questrade or Vanguard. If you are not sure about investments, you can read my post about indexing here.

VTI ♦ 27% of this account is invested in the Vanguard Total Market ETF since it offers great diversity at a super low cost. With large-, mid-, and small-cap equity diversified across growth and value styles and an expense ratio of only 0.05%, it is hard to beat VTI for indexing. If you live in the US, I suggest you look for the Admiral Shares (VTSAX) given the low fees.

VCN ♦ 25% of this account is invested in the Vanguard FTSE Canada All Cap Index ETF since I live in Canada and do expect to retire in Canada, I invest in Canadian currency. The logic behind this is to have access to your home currency once retired. I still keep a globally diverse portfolio to avoid home bias.

VEA ♦ 19% of this account is invested in the Vanguard FTSE Developed Markets ETF to diversify into the international markets with super low management fees of 0.09%.

BND ♦ 5% of this account is invested in the Vanguard Total Bond Market ETF to have smoother downfalls without compromising total returns too much. I was debating whether bonds still have their place in portfolios but an article by Paul Merriman got me thinking. A table in the article compares the performance and risk of portfolios with various stock-bond mixes using historical data dating back to 1970 shows how having the majority of your holdings invested in the markets yields better returns. If you look at the standard deviation column, you can see how bonds will smooth out the ride but might affect your annualized return.

	Annualized return	Standard deviation	Worst 12 months	Worst 60 months
100% fixed income	6.9%	4.6%	-4.8%	14.1%
10% equities	7.5%	4.6%	-5.3%	14.3%
20% equities	8.2%	5.1%	-11.6%	10.1%
30% equities	8.8%	5.9%	-17.5%	5.9%
40% equities	9.4%	6.9%	-23.1%	1.6%
50–50	9.9%	8.2%	-28.5%	-2.7%
60% equities	10.5%	9.5%	-33.5%	-7.0%
70% equities	11.0%	10.8%	-38.3%	-11.3%
80% equities	11.5%	12.2%	-42.8%	-15.5%
90% equities	11.9%	13.7%	-47.1%	-19.7%
100% equities	12.4%	15.1%	-51.1%	-23.9%

Source: Paul Merriman

BNS ♦ 24% of this account is invested in the Bank of Nova Scotia given their strong fundamentals and high dividend. I also chose BNS because of their strong presence globally with their subsidiaries and recent acquisitions of online banks (which, I believe, is the future of banking). I need to admit that this is a big position in my portfolio and this goes against my dedication to diversification, but this individual stock is still a small portion of my overall portfolio once all accounts considered. With a dividend yield of 4.41% at the time of posting and a steady history of dividend increase, Scotia Bank is a great dividend growth play. On the fundamentals side, they have a very healthy profit margin at 29.74% on a $20.7B revenue. I accumulated this position by selling my employee stock option (from another bank) and buying BNS after the stock had taken a big hit but I am not suggesting you buy individual stocks.

**TFSA (Roth IRA) Investments**

Again, in Canada, we have the Tax Free Savings Account which is similar to the Roth IRA where you can invest after-tax monies, grow it tax-free, and take it out without any tax consequences. In my TFSA (Roth IRA) I have similar investments to my RRSP (401k) and again, I take a long-term approach. The amounts invested in this account are much lower than in my RRSP (401k) simply because of the tax implications. I prefer maxing out my RRSP (401k) to get the tax break on today’s income since I know I will have a smaller income once I am retired and therefore, I will pay fewer taxes in the end. In addition, investing pre-tax monies gives you a huge advantage in the long run. If you have $1000 to invest today, it will grow much more than if you were to invest only $700 of after-tax monies. Below is a breakdown of my TFSA (Roth IRA) portfolio but I won’t repeat the reasons for investing in each securities as it is almost all the same holdings.

VTI ♦ 73% of this account is invested in the Vanguard Total Market ETF.

VCN ♦ 5% of this account is invested in the Vanguard FTSE Canada All Cap Index ETF.

VEA ♦ 16% of this account is invested in the Vanguard FTSE Developed Markets ETF.

TD ♦ 6% of this account is invested in the TD Bank given their strength and US market presence. Being the second biggest bank in Canada, with a market cap of $104.4B, TD has the strength and history I am looking for before investing. Canadian banks are great dividend payers and I like to play around with a small portion of my portfolio. I purchased it in a downturn when the P/E ratio was under 12 but again, I do not suggest you buy individual stocks. Stick to indexing with low-cost funds.

Non-Registered Accounts

I used to use margin a lot to trade but I completely stopped since switching to a long-term approach. Margin (borrowing to invest) can greatly increase your gains but it also puts you at risk in any downturn. It allows you to borrow against your securities and increases your purchasing power but when your portfolio drops, you will then need to cover for those borrowed funds or sell your positions immediately.

I currently invest solely in registered accounts since I still have a bit of room for the year. Once I do max out both accounts above, I will invest all overflow in a non-registered account without using margin.

The Grand Totals

All in all, I keep a strict asset allocation that I rebalance yearly and always re-invest my dividends. Most of my investments are done automatically, at each pay, into my various accounts (Employee stock option, Employer match accounts, Self-Directed accounts). I keep the breakdown fairly simple and easy to rebalance:

40% ♦ US Market
40% ♦ Canadian Market and Canadian shares
15% ♦ International Market
5% ♦ Bonds

To tie this up with the beginning of my post, I have a good chunk of my net worth in real estate but I think the lifestyle is worth the expense. On the investment side, I try to keep a clear asset allocation divided between my home country, US, international, and bonds. I hope this enlightens you a bit and you should also look into my investment suggestions if you are just starting out. Be Happy, Xyz.

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Tags buy or rent, how i invest and why, open book, portfolio allocation