Talk Personal Finance – March 2015
Welcome to the start of March!
According from what I have read in the Thackray’s Investor’s Guide, March just happens to be a solid month for stocks.
Unfortunately, that just doesn’t seem to be the case so far! The Canadian Banks is continuing to struggle and it has taken quite a beating. I will be looking to buy more shares should they continue to decline.
As for the Energy sector, well it has been flipping and flopping a lot lately. Although I have mentioned that my portfolio is already quite heavily weighted in this sector, I just couldn’t help but invest further into it. I will go into further details of my acquisitions later on in the month when I do my quarterly portfolio update.
In any case, these are the things that have been on my mind lately:
An Update on my Financial Goals
To start off, I would first like to give a quick update on my financial goals.
Now that my TFSA is not far from being maxed out, I will be making regular contributions to my RRSP. I estimate that this year, I will be in quite a high tax bracket and that makes it the perfect opportunity for investing in it.
I plan to have my RRSP maxed out near the middle of the year. At that point, I will use the Home Buyer’s Plan to invest in my first property. Whether I choose to live in that property or rent it out for cash flow is still undecided right now. In the meantime, I will try to apply for mortgage pre-approval for when that time comes.
Obsession with Net Worth
After a 37% increase in net worth last month, I have been trying my best to post a somewhat comparable change in my next upcoming update. This will require that cut down on my spending. However, in an attempt to do this, I have been called out by my sister for being too cheap.
Most of my expenses come from eating out and I have been trying to minimalize that. Knowing my salary, my sister has become puzzled in this. I guess there’s a fine line between being cheap and frugal eh? After all, increasing net worth does not necessarily make you a happier person.
With that being said, I also believe that one of the key perspectives to have in the journey to wealth is having an abundance mindset. This way of thinking will help me train my risk tolerance level when it comes to making wise investment decisions in the future. This is why I have been trying not to quibble over two or even three digit expenses.
Portfolio Strategy: Dividend vs. Index
One of the financial dilemmas that I am still struggling with is the portfolio strategy mainly for my TFSA. I am still unsure of whether to prioritize dividend growth or capital gain growth.
I know that I have been flip flopping a lot lately between the two but I can’t seem to make up my mind. One thing I know for sure is that my hybrid strategy right now isn’t really practical. I should just pick one and stick to it.
One concern I have for a dividend growth strategy is that the TFSA only has a maximum contribution room of $36,500. It would be really hard to see any notable dividend earnings from that amount. I suppose there is always the option of making my RRSP a dividend portfolio as well and add up the dividends from both.
At the same time, I believe index investing may be a more practical strategy. Not only will it out earn my dividend portfolio with my current investing knowledge but it will require less management. Unfortunately, I have some sentimental values attached to the stocks I currently own and have a reluctance to liquidate them. I will post my decision when I can actually make up my mind.
Interesting Reads
Here are the interesting reads for this month:
- 20 Things the Rich Do Every Day
- How to Start Dividend Investing Today
- The Dogs of the TXS 2015
- 3 Basic Fundamental Analysis To Look Out For in a Company
- Top 5 Reasons to Retire Early
- Grocery Shopping on a Budget of $600: 6 Lessons Learned
Hi Jeff
First of all, thank you for the link mention 🙂
Its good to see your updates time to time. Index investing is a good idea because it returns well over time and it doesnt require major research and work. Sentimental values can hurt but unfortunately we just need to.be objective in buying and selling our shares.
Indeed B. Having sentimental values for my stocks is preventing me from selling. I’ve also been thinking that I can have multiple portfolios and ill make one of them focus on index investing!
High Five on the “37% increase in net worth last month”, eyes on the target! That’s great!! Keep it up!
US Banks took on a beating last months due to their exposure to lending to oil company like citibank and wellsfargo …
Canadian banks took a beating is due to currency devaluation
March is a different story because most banks will pass the STRESS test – JPM and WFC are good at passing – quick short if you want
Conclusion for pull back of banks – buy! you can see Tawcan and Divhut and other PF are buying on bank’s weakness right now. Volatile is where you find values.
Thanks for the encouragement Vivianne! The banks still are still under tons of pressure. I’ll pick up more shares should it fall further.
The question is… What bankroll does it take to actually make a good yield with the Dividend Portfolio Strategy? 50k? 100k? 500k? Even if you add RRSP to your TFSA Limit, will it actually add up to the viable bankroll sum?
Frugality serves its function as a Defensive component in the Financial Game. But it is my opinion that while games are not lost by good defense, games are not necessarily won by that either. Let us play to win, rather than play not to lose.
Hello KingAce, I would like to think that a 100k bankroll would create a good yield. There are however high dividend paying companies that have a strong record of maintaining their dividends that I am currently looking into. Will share more info on my strategy later on.
Thanks for the link!
I had to laugh about your sister. I wouldn’t worry about the frugal/cheap distinction, I’d just focus on your goals and go get them! (I call myself cheap though, so I may not be the best judge)
Yup. My sister isn’t exactly frugal or the saving type. She likes to spend all her money. I’m trying to teach her some stuff on investing. Not much luck in that area though. 🙂
Jeff,
If you really can’t make up your mind, why not try both? Maybe that’s the best strategy for you anyway.
Keep up building your net worth!
Cheers,
NMW