June 2014 – Investment Update

The following is an update of Tim’s plan to retire early.  Please note we are mortgage free, and 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.  I use a trailing 12 month average on spending (but excluding vacations) and a trailing 12 month average on investment results.


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

RRSP $38,100 ($100), [+$0]
LIRA $14,350 ($0), [+$220]
TFSA $45,400 ($0), [+$150]
Pension $99,090 ($1100), [+$690]
Wife’s RRSP $61,420($3000), [+$0]
Wife’s TFSA $40,790 ($0), [+$730]
High Interest Savings Account $1430 (-$2700),[+$0]

Investment Net Worth $300,600 ($1500), [+$1790 or +0.6%]

(YTD Contribution: $29,332), [YTD Gain: $14,798 or +5.2%]

Average Monthly Gain (12 month rolling) $2767


Last Month $5047

This month included my $3300 annual property tax bill, plus I bought a wine kit for $180.

Trailing Last 12 Month Average $2491


Number of months trailing average spending covered by trailing investment gains: 1.1 {Target 1.0 or higher}

PF Score: 23.4  {Target 32}

Net Worth ~$700,600


Ya, we passed the $300K milestone for investments! Also I’m so close to crossing the $100K mark for my work pension as well, oh well, that should occur next month.

You might also notice our spending is way up this month.  This is a normal event for us as several large bills come due during the summer (house insurance and property tax).  But overall the trailing 12 month spending is stable, so I’m not worried.

Now onto the somewhat major shift in our results, the fact we were financially independent for the last 12 months.  Yes, my investment gains exceeded our spending and ironically we have likely been in this state for a while as I found an error in my formula that calculated our 12 month rolling investment gains.  I had only picked 11 months instead of 12, so this has likely been the case for like six months or more.  I haven’t back calculated to confirm when this occurred yet.

So does this mean I’m quitting work? NO WAY IN HELL!  Just because the one metric looks good doesn’t mean this is sustainable, it just means we have had a low spending year and a high investment gains.  Which is why I also introduced the PF score to help keep the longer tend in mind.  Regardless it is a good feeling to know we are on the right path.

Any questions?

(click to make bigger)

Investment Net Worth June 2014

Expensive Vices

Dave is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.

I try not to waste money. I over-think most things I purchase to the point of exasperating my wife with my many visits to stores and websites and constant discussion before I usually don’t purchase anything. There are two things that I don’t really hesitate in spending money on – golf, and beer.

I’ve golfed for almost 25 years now – some years more than others, but it has been one constant in my life through every summer. I really enjoy walking a course, the strategy of playing shots and the feeling of hitting the ball exactly the way you wanted to. As I’m finishing one round of golf, I’m figuring out when I can play the next one, for the entire summer.

In the same manner, but hopefully not in a destructive way, I enjoy drinking beer. I like trying out small breweries offerings, and comparing what’s been made. This past weekend, I shared a couple of 2 litre growlers with a friend in the sun and had a really good time.

I figure golf costs me somewhere between $750 and $1000 per year. I try to keep it as cheap as possible. I’ve found that used balls that I buy off the Internet for about $40 for 10 dozen balls work just as well for me as any of the balls that cost 10 times that much. I’ve owned the exact same clubs for the past 5 years and reject fancy upgrades as there would be almost zero impact to my score for the cost of the equipment. Most of my cost is green-fees, and I try to keep this as cheap as possible by playing at twilight, when there are steep discounts.

For beer, most of what I drink, I make on my stove. One of my favourite recipes (especially for summer, because it’s nice and light) takes $8 in malted barley, $4 in yeast, and $2 in hops, which makes approximately 20 litres of beer, for $0.70 per litre. More expensive beers cost a little bit more for more specialized barley, but are still reasonable. 20 litres of beer lasts me about 2 or 3 months, unless I share a lot of it.

These are my two major personal expenses. I realize that I could quit both of my vices and save 100% of the money I’m currently spending, which would leave more money to invest and eventually retire on. I’d probably be healthier without beer, and definitely richer without golf. My problem with this solution is that I like to do both things. If I were to use a 4% withdrawal rate, I would need somewhere around $25,000 saved to finance these activities (in today’s dollars). For me, I think this is worth it, even though it is expensive.

What would you classify as your major vices? Did you get rid of them to retire, or never really have any to start with?

Old is New Again: Buy It For Life

There is a forum over at Reddit called Buy It For Life, which focuses on products that are durable, high quality and practical.  In summary they tend to think planned obsolesce sucks and should be avoided where possible.  Ironically while looking into some of the items discussed you can’t help but notice that some very old technology is suddenly ‘new’ to people again.

For example, I bought a fountain pen a few months back and while I’m still getting used to it, I can understand why people like the 16th century idea.  You actually get used to using a specific pen and it flows way nicer than most disposal pens on a page.  Yes, you do have to fill it up periodically, but overall I think the hassle is worth it.  Or another classic idea is using a cast iron fry pan, while I personally love them for some cooking, while wife finds them too heavy for everyday use.  Yet in that case we were given a couple by a friend who was moving so it didn’t cost me a cent.

The general idea of buy it for life items is to consider your costs over the long haul.  Paying a higher price upfront can be more affordable in the the long run.  For example, do you buy really good quality sandals that will last you a decade or buy a cheap pair every year or two?  People may flinch from paying$100 for sandals, but if your average cost per year is only $10, it might be cheaper than paying $15 a year for cheap ones that fall apart.  Not to mention the more ‘expensive’ ones are likely much more comfortable.

Yet there is a downside I can see on the whole idea of buying it for life, it is becomes a bit of a floodgate of spending if you aren’t careful.  After all when you start justifying spending several hundred dollars on high quality goods, you might end up buying more stuff than you really need.  Just because something lasts doesn’t mean you should buy it.  After all you need to use an item frequently in order to justify the higher initial cost.  So while I’m enjoying researching products and buying some I’m also asking myself: how often will I use this?

So far to date I don’t think I’ve gone that overboard with my shopping.  I’ve bought the following so far:

  • Saddleback leather wallet and notebook cover
  • Fountain pen
  • Birkenstock sandals (my second pair, both were gifts)
  • Cast Iron frypan (gift)
  • French Press for coffee

My latest research project is looking at getting a manual coffee mill grinder. Which is another downside to buy it for life, you tend to do a lot more research on what to buy.  Yet the upside of this is you tend to be very sure on what you want before spending the money.

So do you ever invest in high quality items or do you tend to buy the cheap stuff?  What would you consider buying for life?