Couch potato investing for the last 20 years - tracking my progress

Janus2faced wrote: ↑ you like to play with future forecasts, income from what source, which pots you draw from, tax rates, the value of your wealth current year then future income from all sources, the net after tax expenses now & for future years, so my question is ....

since your current expenses are ~$????k/yr, in retirement you can maximize what you want in income to minimize tax & at some point in your life decide when you'll draw QPP/OAS.

in 2026 what do you expect the net % after tax cash flow will be?

in 2046 empty nesters, adult children have a couple children of their own, what do you expect the two of you net % after tax cash flow will be?

could you ever, ever see your combined cash flow net after tax would be one of (select & post back) it would be 50%, 60%, 70%, 80%, 90%, 99%, if so when would that be & how would you achieve this?

Yes, I definitely like to do forecasts and test various strategies.

Expenses for 2025 will likely be around 60k. 10k property taxes/insurance, 8k home repairs/upgrades, 2k utilities, 15k food, 10k vacation, 4k transportation, 4k sports/activities, 7k entertainment/personal
Expenses for 2026 similar to 2025, but transportation should be reduced by ~2.5k since no more commuting to work.
Expenses in 2046: That's very far away. If the financial situation allows it maybe 100k with lots of travel.

Can you clarify what you mean by % after tax cash flow?
Cash flow will be "bad" in 2026. ~11k in dividends and the remaining will be generated by selling non-registered stocks/RRSP and/or cash reserves.
Cash flow in 2027 will be better: ~11k in dividends + 20k in government benefits +Canada dental insurance and the remaining will be generated by selling non-registered stocks/RRSP and/or cash reserves.

will888 wrote: ↑ Haven't you heard of the three levels of wealth.


Level 1) Cutting your own grass

Level 2) Paying someone else to cut your grass

Level 3) Cutting your own grass

My different levels of wealth:

1. Set alarm to 6:30am, Mon-Fri
2. Set alarm to 7:00am, Mon-Fri
2. Set alarm to 7:30am, Mon-Fri
3. Set alarm to 8:00am, Mon-Fri
4. No need for alarm clock

NCR-Manchester wrote: ↑ That's exactly the dilemma, what to meaningfully do for the next 40-60 years to keep sharp and engaged? Play golf? Lawn bowling? Read books? All of that will get boring very quickly. Watching Netflix and the like would just be a road to quick deterioration.

The issue is people tie financial freedom to retire early. I don’t necessarily agree. I think we should focus on financial freedom so we can better use our time and knowledge to make this world better. It could mean start doing something completely different, but it also could mean continue to do what you are doing.

Think about it, our parents, our teachers, the community, the county spent ton of resources to make us successful, they expect we pay back to continue to make next generation even better than us. Not just quit, stop the knowledge spreading and next generation has to reinvent the wheel

@Germack have you considered tapping into HELOC to invest in equities? At our net worth we are eligible for below market rates for HELOC (Prime+0).

serious10 wrote: ↑ @Germack have you considered tapping into HELOC to invest in equities? At our net worth we are eligible for below market rates for HELOC (Prime+0).

What net worth do you have to be to be eligible for those rates? Which lenders?

serious10 wrote: ↑ @Germack have you considered tapping into HELOC to invest in equities? At our net worth we are eligible for below market rates for HELOC (Prime+0).

No, I am not a fan of leverage. Leveraging is getting more and more popular thanks to the great stock market performance over the last 17 years. One day things will change and some of these leveraged portfolios will just blow up.

serious10 wrote: ↑ @Germack have you considered tapping into HELOC to invest in equities? At our net worth we are eligible for below market rates for HELOC (Prime+0).

with your wealth is it necessary for you personally to do leverage investing, if so, why?

Germack wrote: ↑ No, I am not a fan of leverage.

One day things will change and some of these leveraged portfolios will just blow up.

for you that's your position, your opinion, for others that do it, lets wish them success.

you've posted your last 20 years non-leverage average investing return is ~8%, for that consider if you'd have started leverage investing 17 years ago how much more wealth you may have.

as for leverage portfolio's blowing up, I don't think so & say this based on personal knowledge & experience including RFD poster @MrMikeDD who has been leverage investing since June 2020 & who survived a few market turmoil's, ending up with a decent leverage portfolio growth vs if he hadn't leveraged..

smartie wrote: ↑ The issue is people tie financial freedom to retire early. I don’t necessarily agree. I think we should focus on financial freedom so we can better use our time and knowledge to make this world better. It could mean start doing something completely different, but it also could mean continue to do what you are doing.

Think about it, our parents, our teachers, the community, the county spent ton of resources to make us successful, they expect we pay back to continue to make next generation even better than us. Not just quit, stop the knowledge spreading and next generation has to reinvent the wheel

have you been reading the two books?

Financial Independence, Retire Early...Vicky Robin, 1992
Fire: Financial Independence...David Jacobs, 2020

Janus2faced wrote: ↑ for you that's your position, your opinion, for others that do it, lets wish them success.

you've posted your last 20 years non-leverage average investing return is ~8%, for that consider if you'd have started leverage investing 17 years ago how much more wealth you may have.

as for leverage portfolio's blowing up, I don't think so & say this based on personal knowledge & experience including RFD poster @MrMikeDD who has been leverage investing since June 2020 & who survived a few market turmoil's, ending up with a decent leverage portfolio growth vs if he hadn't leveraged..

Yes, this is my personal opinion and I wish people who use leverage such as MrMikeDD the best of luck on their journey. I always love reading his updates.

I do not know. Maybe more maybe less. The stock market crash in 2008 was tough. I likely would not have made it through it if I had used leverage and I may have abandoned stock market investing for a long time as did some of my friends/colleagues. It was so stressful it even caused me an ulcer.

Stock market investing has been easy peasy lemon squeezy for the last 17 years as my daughter would say. The short pull backs we had over the last few years were nothing compared to the stock market crashes we had in 2000 and 2008.

Germack wrote: ↑ No, I am not a fan of leverage. Leveraging is getting more and more popular thanks to the great stock market performance over the last 17 years. One day things will change and some of these leveraged portfolios will just blow up.

Our tax code encourages us to take risk by using leverage by writing off the interest. Our portfolio size is currently at 2.6 million. I started to look into using HELOC to reinvest that equity into index funds while writing off all the interest. The heloc portion will be a small percentage compared to total portfolio value.

The big banks offer great incentives for cheap HELOC rates at our portfolio sizes.

Janus2faced wrote: ↑ with your wealth is it necessary for you personally to do leverage investing, if so, why?

I pay a lot of taxes. The Canadian tax code provides an avenue for Canadians to write off the taxes and receive refund. The Canadian big banks offer incentives for this through private banking offerings.

Janus2faced wrote: ↑ have you been reading the two books?

Financial Independence, Retire Early...Vicky Robin, 1992
Fire: Financial Independence...David Jacobs, 2020

I haven’t read. I usually don’t read personal finance books.

But I understand why they promote retire early because most people don’t like what they do, so talking about retire early can get people buying your book because it’s “inspirational”. Actually success usually means you enjoy what you do ,so you actually don’t want to “retire”. Look at Buffet, already 90+ and still working. Trump,80+ and still working lol

But imagine you publish a book “financial independence and continue your current job”, you probably will only sell two copies

serious10 wrote: ↑ Our tax code encourages us to take risk by using leverage by writing off the interest. Our portfolio size is currently at 2.6 million. I started to look into using HELOC to reinvest that equity into index funds while writing off all the interest. The heloc portion will be a small percentage compared to total portfolio value.

The big banks offer great incentives for cheap HELOC rates at our portfolio sizes.

There are many that endorse leveraged investing, take a look at the real estate forum which by definition involves 5x leverage or greater. In this forum, there are many of us that are do not believe the stock market owes us a 9% average annual return decade after decade after decade. Another thing to consider is why we invest and the associate goals. If the goals can be met without leverage, then what is the point of taking unnecessary risks?

serious10 wrote: ↑ Our tax code encourages us to take risk by using leverage by writing off the interest. Our portfolio size is currently at 2.6 million. I started to look into using HELOC to reinvest that equity into index funds while writing off all the interest. The heloc portion will be a small percentage compared to total portfolio value.

The big banks offer great incentives for cheap HELOC rates at our portfolio sizes.

I do not know your age, but if you have already 2.6 million dollars what is the need of using leverage? You are already rich. Why risk it?

Germack wrote: ↑ I do not know your age, but if you have already 2.6 million dollars what is the need of using leverage? You are already rich. Why risk it?

Perhaps doing a little flexing.

serious10 wrote: ↑ Our tax code encourages us to take risk by using leverage by writing off the interest.

Our portfolio size is currently at 2.6 million. I started to look into using HELOC to reinvest that equity into index funds while writing off all the interest. The heloc portion will be a small percentage compared to total portfolio value.

The big banks offer great incentives for cheap HELOC rates at our portfolio sizes.

time of life & why you'd want to leverage.

$2.6 million doesn't mean anything, it has zero value.

lets get personal, I'm interested in total wealth-net assets, your age, are you retired - still working, kids?

then lets discuss more your looking at leverage investing.

I'm retired age 78 & have done a fair amount of leverage investing during my life.

.

Germack wrote: ↑ I do not know your age, but if you have already 2.6 million dollars what is the need of using leverage? You are already rich. Why risk it?

Age is just below mid 30s.

Leverage was about using the tax code to save on taxes. We get a credit from CRA if we take loan to invest with the intention of earning income. It makes sense to do this. Either we pay our taxes to CRA or get a refund and invest in global equities.

I don’t see how there is a big risk as long as the heloc portfolio remains a small portion of overall portfolio which is why I asked if you considered this as your portfolio is similarly sized.

I would not consider doing this if there was no tax incentive to do it.

Previously I did not consider doing this when portfolio was smaller. But at large portfolio size, we have ability to take advantage of low cost lending from Canadian banks which further sweetens the deal. My bank offered prime +0 as an example for line of credit whereas most people are offered much higher rate.


In summary, this is a tax incentive. One option is to pay all taxes to CRA which is guaranteed loss of funds. Other option is to take a refund and invest in global equities.

serious10 wrote: ↑ Our tax code encourages us to take risk by using leverage by writing off the interest. Our portfolio size is currently at 2.6 million. I started to look into using HELOC to reinvest that equity into index funds while writing off all the interest. The heloc portion will be a small percentage compared to total portfolio value.

The big banks offer great incentives for cheap HELOC rates at our portfolio sizes.

I was wondering how net worth and portfolio size matters.

We've had a HELOC at Prime + 0% since 2020 when we decided to start borrowing to invest. But this was an employee rate since my husband works for the bank.

Although I wonder if this rate will magically disappear if he stopped working there.

smartie wrote: ↑ I haven’t read. I usually don’t read personal finance books.

But I understand why they promote retire early because most people don’t like what they do, so talking about retire early can get people buying your book because it’s “inspirational”. Actually success usually means you enjoy what you do ,so you actually don’t want to “retire”. Look at Buffet, already 90+ and still working. Trump,80+ and still working lol

But imagine you publish a book “financial independence and continue your current job”, you probably will only sell two copies

In a way I have shifted form that retire early (sort of) and into the RICH LIFE mentality through Ramit Sethi which helps people who can afford to; live better and "richer" now and to change my money psychology.