Weekend Reading: Updated Financial Goals Edition

The future is always uncertain, but at this time last year my crystal ball was as murky as ever. We were in the middle of building a new house and still needed to sell our existing home. Stocks and bonds were down double digits, and interest rates were still on the rise. Investors were piling into high interest savings ETFs and GICs. A recession was all but certain.

So, of course global stocks soared more than 6% in the month of January and are closing in on all-time highs as of this writing. The Bank of Canada increased rates three more times, but paused at its last two meetings and is almost certainly finished hiking as inflation trends lower. And, while the economy is definitely slowing down (and we may be in a technical recession), we may have achieved the so-called soft landing after all.

Personally, we experienced four months of uncertainty as we finished the new house build and put our existing house on the market. When it comes to financial goal setting, it’s okay to take a pause until you have more information – especially for big transitions like moving houses, changing jobs, taking a year off for parental leave, etc.

That’s why our 2023 financial goals were fairly straightforward:

1. Move into our new house 
2. Sell our existing house
3. Set aside ~$50,000 from the house sale proceeds for window coverings, landscaping, and other “extras”
4. New house is completely furnished, windows covered, yard landscaped in 2023. No “someday, maybes”
5. Remaining proceeds from house sale go towards the new mortgage
6. Max out RESP contributions ($5,000)
7. Contribute $6,500 each to our TFSAs (late 2023)
8. Invest excess profits in the corporate investing account (~$36,000)
9. Maintain work-life balance – no increase in business revenue expectations
10. Use accumulated travel points towards a one-week all-inclusive holiday somewhere sunny

We moved into our new house at the end of April, and sold our previous home at the beginning of May. We had enough from the proceeds of our house sale to pay for blinds, landscaping, and some new furniture. 

We’ve been in our new house for seven months and are loving it! Best of all, no “someday, maybe” projects. We finished everything we intended to do.

Our new mortgage is larger than our previous mortgage, and at close to triple the interest rate (we took out a one-year fixed rate at 5.74%). Ouch!

We’ll max out our kids’ RESP contributions with one more monthly contribution in December. We have not contributed to our TFSAs this year.

We did, however, see a 40% increase in business revenue this year and were able to invest more in our corporate investing account ($50,000). We also gave ourselves a raise for the first time in a few years.

I’d say we were able to increase revenue without sacrificing too much work-life balance (I’ll have to ask my wife and kids about that!). I think it’s more of a function of having taken 9-10 weeks off to travel in 2022. This year we only went away for three weeks.

We did not use points to take an all-inclusive holiday this year. Instead, once we got settled into the new house and finished our landscaping, we decided last minute to go to Scotland and Amsterdam in August. I’m glad we did – it was an amazing trip!

I’m happy with how the year has gone, both financially and with our new house and lifestyle. We’re excited to see what’s in store for 2024.

With that in mind, here are my financial goals for 2024:

1. Give ourselves another pay raise for 2024. Business is going unbelievably well and shows no signs of slowing down. We plan on increasing our wages by 10%.
2. Reorganize kids’ RESPs to follow the Justin Bender RESP strategy. That means selling e-Series funds and setting up a risk appropriate ETF portfolio for each child. We’re also switching to annual contributions (January) and making one catch-up contribution for our oldest child. Total contributions of $7,500 in 2024.
3. Revenge travel part two. We plan on taking a hot holiday in February, an epic trip through Europe in July (including a Taylor Swift concert in Zurich!), and a return to Scotland later in the year.
4. Invest excess profits in the corporate investing account (targeting $90,000).
5. Renew mortgage, taking the best of either a short-term fixed rate (1-2 years) or 5-year variable rate when it comes up for renewal in May.

I know, I know. What about our TFSAs? We prioritized the travel, concert, and RESP contribution top-up this year – but our plan is to each double-up on annual contributions starting in 2025.

This Week’s Recap:

I wrote about retirement assumptions and how to think about factors such as life expectancy, inflation, investment returns, wage growth, etc. in your financial plan.

From the archives: My pension decision – deferred pension or commuted value?

I was a guest on the Money Feels podcast with Bridget Casey and Alyssa Davies talking about when you need a financial planner.

Promo of the Week:

Earlier this year I launched an investing course for those looking to make a successful transition to DIY investing using low cost ETFs.

This investing course is for long-time holders of a big bank balanced mutual fund who want to save up to 90% in fees by switching to a low cost all-in-one ETF.

It’s also for fledgling stock pickers looking to reform, or brand new investors who just want to start off on the right foot with a sensible, easy to manage investing solution.

If this sounds like you, then head over to my DIY Investing Made Easy page and let’s get started!

Weekend Reading:

We need to talk about your retirement spending. Why big inheritances can be a sign of underconsumption and suboptimal planning.

Speaking of inheritances, don’t leave your kids a white elephant.

Here’s David O’Leary on why you might not be getting the financial advice you want or need.

Ben Felix answers a common question during “these times”: Should my investment strategy change during a recession?

“People spend so much time worrying about the next downturn that they miss out on market returns, which tend to be positive in the long-run.” 

These Canadian ETFs are tickets to great balanced investment opportunities at a fraction of the cost of many similar mutual funds. 

Advice-only planner Jason Evans took a deep dive into all of the free retirement calculators online and picked the best and worst of the bunch.

Anita Bruinsma says that university campus tours are in full swing, but even parents with RESPs lack an education financial plan.

Steadyhand’s Tom Bradley says to beware of bright shiny objects to avoid falling off your investment plan.

A really interesting post from Preet Banerjee: Could investing apps that allow you to start small encourage you to stay small?

Mark McGrath shares the tax implications of buying a rental property or investment property in Canada.

Ben Carlson on the magnificent seven stocks and power laws in the stock market:

“Outsized gains are normal. It doesn’t feel right for a handful of stocks to experience the biggest returns but this is the norm in the stock market over the long run.”

Seniors with large retirement accounts face a big tax-deferred liability. Jason Heath explains which tax and estate planning strategies might help.

Finally, for the travellers, Rewards Canada’s Patrick Sojka shares how to select the right Aeroplan flight award option to maximize the value of your points.

Have a great weekend, everyone!