Tawcan https://www.tawcan.com A Canadian's quest for joyful life and financial independence. Mon, 18 Jun 2018 10:00:13 +0000 en-US hourly 1 76933718 Out sick… Financial Independence is indeed a long journey https://www.tawcan.com/out-sick-financial-independence-is-indeed-a-long-journey/ https://www.tawcan.com/out-sick-financial-independence-is-indeed-a-long-journey/#comments Mon, 18 Jun 2018 10:00:13 +0000 https://www.tawcan.com/?p=7871

After coming back from my 10 day Asia trip on June 7 I basically slept for the next 3 days. I thought I didn’t have any jet lag but perhaps I was incorrect. Then the past Monday I went on a quick 2-day business trip to Boise, Idaho. There was no direct flight to Boise from Vancouver, so I had to transfer in Seattle. It was super bumpy coming in and out of Seattle both ways and I got a bit dizzy due to the constant bumpiness. Yucks! Both Baby T1.0 and baby T2.0 have been coughing and sneezing since I got back from my Asia trip. I thought I would be good and would not catch anything from them. Unfortunately, I woke up Wednesday after my Boise trip with a terrible sore throat. Things only got worse on Thurs so I ended up staying home to recover. I slept until 3 PM on Thursday. I am feeling better now, thank you for asking, but still not quite 100%. So for today, I’ll show you some pictures and some old posts that may be interesting to read, rather a new & unique post I usually do for Monday morning.   Extremely pricey […]

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After coming back from my 10 day Asia trip on June 7 I basically slept for the next 3 days. I thought I didn’t have any jet lag but perhaps I was incorrect. Then the past Monday I went on a quick 2-day business trip to Boise, Idaho. There was no direct flight to Boise from Vancouver, so I had to transfer in Seattle. It was super bumpy coming in and out of Seattle both ways and I got a bit dizzy due to the constant bumpiness. Yucks!

Both Baby T1.0 and baby T2.0 have been coughing and sneezing since I got back from my Asia trip. I thought I would be good and would not catch anything from them. Unfortunately, I woke up Wednesday after my Boise trip with a terrible sore throat. Things only got worse on Thurs so I ended up staying home to recover. I slept until 3 PM on Thursday.

I am feeling better now, thank you for asking, but still not quite 100%. So for today, I’ll show you some pictures and some old posts that may be interesting to read, rather a new & unique post I usually do for Monday morning.

 

Extremely pricey bottle of beer at Boise. It’s a 3L bottle but still…

Instagram Photo

Me and my coworkers in front of Idaho state building in Boise

And while having dinner and drinks in a restaurant in Boise, the waitress asked for my ID! Apparently, I looked like a 21-year-old!

Here are some posts you might find interesting:

Enjoy your Monday and have a great rest of the week!

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Growing dividend income https://www.tawcan.com/growing-dividend-income/ https://www.tawcan.com/growing-dividend-income/#comments Mon, 11 Jun 2018 10:00:24 +0000 https://www.tawcan.com/?p=7829

Over the past number of years, we have been slowly building our passive income, in particular, dividend income, so that one day our annual passive income is greater than our annual expenses. When this happens, we can call ourselves financially independent. As you may know, for dividend growth investors, there are three key ways to grow your dividend income: Invest fresh capital Individual stock’s organic dividend growth Enroll in dividend reinvestment plans (DRIP) to purchase more shares of dividend-paying stocks Since we are still in the accumulating phase, we rely heavily on the first method. So every year we invest a large amount of fresh capital to purchase more dividend-paying stocks. The money invested is spread across tax-free accounts like TFSA’s, tax-deferred accounts like RRSP’s, and regular taxable accounts so we can be as tax efficient as possible.   The declining dividend growth rate If you look at our year-over-year dividend growth rates, our growth rates have been impressive. the 2012-2011 YOY growth rate was 267.94%, the 2013-2012 YOY growth rate was 119.62%, the 2014-2013 YOY growth was 53.26%, the 2015-2014 YOY growth rate was 23.39%, the 2016-2015 YOY growth rate was 21.73%, and 2017-2016 YOY growth rate was 18.11%. […]

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Over the past number of years, we have been slowly building our passive income, in particular, dividend income, so that one day our annual passive income is greater than our annual expenses. When this happens, we can call ourselves financially independent.

As you may know, for dividend growth investors, there are three key ways to grow your dividend income:

  1. Invest fresh capital
  2. Individual stock’s organic dividend growth
  3. Enroll in dividend reinvestment plans (DRIP) to purchase more shares of dividend-paying stocks

Since we are still in the accumulating phase, we rely heavily on the first method. So every year we invest a large amount of fresh capital to purchase more dividend-paying stocks. The money invested is spread across tax-free accounts like TFSA’s, tax-deferred accounts like RRSP’s, and regular taxable accounts so we can be as tax efficient as possible.

 

The declining dividend growth rate

If you look at our year-over-year dividend growth rates, our growth rates have been impressive. the 2012-2011 YOY growth rate was 267.94%, the 2013-2012 YOY growth rate was 119.62%, the 2014-2013 YOY growth was 53.26%, the 2015-2014 YOY growth rate was 23.39%, the 2016-2015 YOY growth rate was 21.73%, and 2017-2016 YOY growth rate was 18.11%. One thing you’ll notice it that the YOY growth rate has been on a steady decline. However, this is expected. As your dividend income increases, it becomes increasingly difficult to grow your dividend income.

For example, when your annual dividend income is $100, it is easy to grow the dividend income by 200% to $300. This is equivalent to increasing $200 in dividend income. At 4% yield, it only requires investing $5,000 new capital at beginning of the year. On the other hand, if your annual dividend income is $15,000, to have a 200% YOY growth rate would mean an increase of $30,000. An increase of $30,000, at 4% yield, would require investing $750,000 new capital. This is something that is not easily achievable by the general public (i.e. you’d need to earn A LOT of money to save to invest three-quarter of a million dollars). Even a 10% YOY growth, an increase of $1,500, would require investing $37,500 in new capital at 4% dividend yield.

So, it makes sense to see a steady decline of YOY growth rate as your dividend income gets higher and more substantial. This is a common occurrence among the dividend growth investing community. Many of the long-term dividend growth investors experience lower and lower dividend growth rate each year.

Therefore, as your dividend income grows, it becomes increasingly more important to grow dividend income via the other two methods – organic dividend growth and DRIP.

 

Growing our dividend income organically

The last few years when we purchase a dividend paying stock, we put more focus on stock’s dividend growth rate (DGR) over the past 10 years. This is because we want to our dividend income to grow organically as well.

Just how much of our dividend income growth is done organically? Rather than using hypothetical examples, let’s use a real-life example and look at our portfolio’s organic dividend growth throughout 2017. Below are the different dividend payout increases that we saw in 2017:

January

  • Enbridge (ENB.TO) raised dividend by 10% to $0.583 per share.
  • Canadian National Railway (CNR.TO) raised dividend by 10% to $0.4125 per share.
  • Exco Technologies (XTC.TO) raised dividend by 14% to $0.08 per share.
  • Omega Healthcare (OHI) raised dividend by 1.64% to $0.62 per share.
  • ConocoPhillips (COP) raised dividend by 6% to $0.265 per share.
  • BCE Inc. (BCE.TO) raised dividend by 5.13% to $0.7175 per share.
  • Brookfield Renewable Partners (BEP.UN) raised its dividend by 5% to $0.61 per share.

February

  • Suncor Energy Inc. (SU.TO) raised dividend by 10.34% to $0.32 per share.
  • Manulife Financial (MFC.TO) raised dividend by 10.81% to $0.205 per share.
  • TransCanada Corp (TRP.TO) raised dividend by 10.62% to $0.625 per share.
  • Coca-Cola (KO) raised dividend by 5.71% to $0.37 per share.
  • Wal-Mart (WMT) raised dividend by 2% to $0.51 per share.
  • Canadian Imperial Bank of Commerce (CM.TO) raised dividend by 2.42% to $1.27 per share.
  • Royal Bank (RY.TO) raised dividend by 4.82% to $0.87 per share.
  • Magna International Inc. (MG.TO) raised dividend by 10% to $0.275 per share.
  • Bank of Nova Scotia (BNS.TO) raised dividend by 2.7% to $0.76 per share.

March

  • Canadian Natural Resources (CNQ.TO) raised dividend by 10% to $0.275 per share.
  • TD (TD.TO) raised dividend by 9.09% to $0.60 per share.
  • Qualcomm (QCOM) raised dividend by 7.55% to $0.57 per share.
  • Magna International (MG.TO) raised dividend by 10% to $0.275 (US) per share.
  • Intel (INTC) raised dividend by 4.81% to $0.2725 per share.

April

  • Johnson & Johnson (JNJ) raised dividend by 5% to $0.84 per share
  • Omega Healthcare (OHI) raised dividend by 1.61% to $0.63 per share
  • Procter & Gamble (PG) raised dividend by 3% to $0.6896 per share
  • Unilever plc (UL) raised its dividend by 12% to €0.3585 per share

May

  • Apple (AAPL) raised its dividend by 10.53% to $0.63 per share
  • Hydro One (H.TO) raised its dividend by 4.76% to $0.22 per share
  • Enbridge (ENB.TO) raised its dividend by 4.63% to $0.583 per share
  • Telus (T.TO) raised its dividend 2.60% to $0.4925 per share
  • Bank of Montreal (BMO.TO) raised its dividend 2.27% to $0.90 per share
  • National Bank of Canada (NA.TO) raised its dividend 3.57% to $0.58 per share

June

  • Target (TGT) raised its dividend by 3.3% to $0.62 per share
  • General Mills (GIS) raised its dividend by 2.08% to $0.49 per share

July

  • Omega Healthcare (OHI) raised its dividend by 1.59% to $0.64 per share

August

  • Saputo raised its dividend by 6.7% to $0.16 per share
  • Royal Bank raised its dividend by 4.6% to $0.91 per share
  • CIBC raised its dividend by 2.36% to $1.30 per share
  • Bank of Nova Scotia raised its dividend by 3.95% to $0.79 per share

September

  • McDonald’s (MCD) raised its dividend by 7.45% to $1.01 per share
  • Emera (EMA.TO) raised its dividend by 8.13% to $0.565 per share

October

  • Fortis (FTS.TO) raised its dividend by 6.25% to $0.425 per share
  • Omega Healthcare (OHI) raised its dividend by 1.56% to $0.65 per share
  • Visa (V) raised its dividend by 18.18% to $0.195 per share
  • AbbVie (ABV) raised its dividend by 10.94% to to $0.71 per share

November

  • Telus (T.TO) raised its dividend by 2.54% to $0.505 per share
  • Inter Pipeline (IPL.TO) raised its dividend by 3.70% to $0.14 per share
  • Canadian Tire (CTC.A) raised its dividend by 38.46% to $3.60 per share
  • Enbridge (ENB.TO) raised its dividend by 10% to $0.671 per share
  • Enbridge Income Trust (ENF.TO) raised its dividend by 10% to $0.1883 per share

December

  • Bank of Montreal (BMO.TO) raised its dividend by 3.33% to $0.93 per share.
  • Ventas (VTR) raised its dividend by 1.94% to $0.79 per share.
  • Waste Management (WM) raised its dividend by 9.41% to $0.465 per share.
  • AT&T (T) raised its dividend by 2.04% to $0.50 per share.

You will notice that some stocks like Enbridge, Omega Healthcare, CIBC, Royal Bank, Bank of Nova Scotia, Telus, and Bank of Montreal had multiple payout increases in 2017. Meanwhile, a number of dividend stocks that we own did not announce dividend increase at all in 2017.

If we lump all these dividend payout increases, our annual dividend income would have increased by $802.45, or about a 6.39% increase over our 2016 dividend income. Because these payout increases were announced throughout 2017, the actual impact to our overall 2017 annual dividend income was smaller.

 

Growing our dividend income via DRIP

In addition to organic dividend growth, we also have enrolled in DRIP whenever we are eligible so dividend received can be reinvested. This has been a monthly and quarterly occurrence, depending on how frequently the individual stock pays ou the dividend.

Below are the stocks that we enrolled in DRIP in 2017 and how frequently we purchased additional shares.

  • BCE Inc (every quarter)
  • Bank of Montreal (every quarter)
  • Bank of Nova Scotia (every quarter)
  • Canadian Natural Resources (every quarter)
  • CIBC (every quarter)
  • Dream Office REIT (every month)
  • Dream Industrial REIT (every month)
  • Dream Global (every month)
  • Enbridge (every quarter)
  • Evertz Technologies (every quarter)
  • Fortis (every quarter)
  • H&R REIT (every month)
  • Intel (every quarter)
  • Coca-Cola (every quarter)
  • Manulife Financial (every quarter)
  • MCAN Mortgage Corp (every quarter)
  • National Bank (every quarter)
  • Omega Healthcare (every quarter)
  • Rogers (every quarter)
  • RioCan REIT (every month)
  • Royal Bank (every quarter)
  • Suncor (every quarter)
  • AT&T (every quarter)
  • Telus (every quarter)
  • TD (every quarter)
  • Vodafone (every year)
  • Exco Technologies (every quarter)
  • Vanguard Canadian All Cap ETF (every quarter)

This list above should have been longer but some of the stocks’ price had gone up so much that the dividend received was not sufficient to cover 1 share of the stock price. (Both Questrade and TD Waterhouse only offer synthetic DRIP where you can only buy full shares, rather than fractional shares).

Because most of the Canadian REITs that we own do not have a tendency of increasing their dividend payouts, by enrolling in DRIP, we are effectively growing these dividend stocks’ income after each dividend payout. And since most of the Canadian REITs are on a monthly dividend payout schedule, we are effectively compounding the growth rate every month.

For example, we purchased 12 new shares of Dream Industrial REIT in 2017. At $ 0.69996 of dividend per year, we had added over $8.40 in our forward-looking dividend income in 2017. At 5% dividend yield, that was like investing over $168 of fresh capital into our dividend portfolio.

Just how much has our annual dividend income had increased from enrolling in DRIP? Since we were adding new shares each month, it was difficult to calculate the exact amount. However, by my rough calculation, we added roughly around $30 to $50 in additional dividend income each month in 2017. So in a year, we had added about $360 to $600 or about 2.87% to 4.78% growth from our 2016 dividend income (we are ignoring the compounding effect).

 

Combining forces

If we were to combine the growing rate from organic dividend growth and DRIP growth in 2017, we were getting anywhere from 9.26% to 11.17%. Please note, what I have presented here is a very simplistic view. The actual growth percentage was probably lower because dividend payout raises were spread over 12 months and we were DRIPing different amount of shares each month.

If we were to stop contributing new capital completely today, I believe the dividend income growth should be able to keep up with inflation (below 5% the last few years) on organic dividend growth and DRIP growth only.

As mentioned, during the accumulation phase, adding new capital to purchase additional dividend paying stocks is the most powerful way to increase your dividend income. However, do not ignore the other two methods. It is definitely important to take advantage of all three methods.

Note: The fourth way of increasing dividend income is to sell profitable positions and purchase different dividend stocks with higher yields. This is something that I have discussed in the recent re-examine our dividend portfolio post.

 

Final Thoughts

When we first started with dividend growth stock investing, I purchased a lot of high yield dividend paying stocks. Most of these high yield dividend stocks did not provide any organic dividend growth. Furthermore, some of them did not have sustainable dividend payout.

In chasing yield, I had ignored many dividend stock fundamentals. Some of the stocks that we purchased back then ended up cutting their dividend payouts. Some of the stocks had their prices collapsing. It was a hard-learned lesson.

Rather than chasing yield, I began to focus more on organic dividend growth. As a long-term dividend growth investor, I realized it is extremely important to find a mix of higher yield low dividend growth stocks and lower yield high dividend growths stocks. What’s the right mix will depend on each individual investor and their investment timeline.

Combining organic dividend growth and DRIPing are two effective way to grow your dividend income. And all dividend growth investors should utilize these two important methods.

 

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Random thoughts – Asia travel edition https://www.tawcan.com/random-thoughts-asia-travel-edition/ https://www.tawcan.com/random-thoughts-asia-travel-edition/#comments Thu, 07 Jun 2018 10:00:32 +0000 https://www.tawcan.com/?p=7784

I have been on the road in Asia for the past 10 days and by the time this post goes live, I will be in the air, on my way back to Vancouver. For this trip, I landed in Hong Kong last Tuesday night, had meetings in Hong Kong the next day, then hopped over China to stay in Shenzhen Wednesday evening. On Thursday I had multiple meetings in Shenzhen and went back to Hong Kong Thursday evening. I then went into my company’s Hong Kong office Friday morning to give a presentation before heading to Hong Kong airport to catch a flight to Taipei. On Saturday, I had dinner with three of my cousins and their families. It was really nice to see them again and it was amazing to see how quickly their kids have grown. After dinner, I mentioned to one of my cousins that he’s famous as he has appeared on Business Insider. He laughed and told me to continue writing.  Then Monday to Thurs was jam-packed with customer meetings in Taipei. It felt like a whirlwind tour…because it was!   Collecting points and status because they are worth it. I’m currently in the middle of the […]

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I have been on the road in Asia for the past 10 days and by the time this post goes live, I will be in the air, on my way back to Vancouver. For this trip, I landed in Hong Kong last Tuesday night, had meetings in Hong Kong the next day, then hopped over China to stay in Shenzhen Wednesday evening. On Thursday I had multiple meetings in Shenzhen and went back to Hong Kong Thursday evening. I then went into my company’s Hong Kong office Friday morning to give a presentation before heading to Hong Kong airport to catch a flight to Taipei. On Saturday, I had dinner with three of my cousins and their families. It was really nice to see them again and it was amazing to see how quickly their kids have grown. After dinner, I mentioned to one of my cousins that he’s famous as he has appeared on Business Insider. He laughed and told me to continue writing.  Then Monday to Thurs was jam-packed with customer meetings in Taipei. It felt like a whirlwind tour…because it was!

 

Collecting points and status because they are worth it.

I’m currently in the middle of the Marriott Platinum Challenge, where I need to have 9 stays at different Marriott properties within 90 days to become a platinum level elite member for next year. Thanks to hopping around Hong Kong and Shenzhen, I quickly racked 3 stays in 3 nights. To increase my stay counts, I decided to switch between the two Marriott hotels in Taipei to get another 3 stays in the bag. So in 10 days, I had gotten 6 stays. This means I only need 3 more stays to complete the challenge. With some business trips lined up already, I should be able to get 3 more stays within the 90-day duration.

Crazy things one would do to get status eh?

But having the Marriott elite status is totally worth it. For examples, you get guaranteed late check out at 4 PM, lounge access (if the property has one), free breakfast, and bonus Marriott reward points. The late check out at 4 PM has been really useful for both business and personal trips.

Between credit card sign up travel hacks and collecting Marriott points through business trips, we went to Maui for 12 nights in February and saved ourselves over $10,000.

So yes, collecting points and getting elite status is worth it.

 

The price for being away from the family

While on the road, I have been having Skype video calls with Mrs. T, Baby T1.0, and Baby T2.0. The first night I was away, both kids were crying for me during bedtime, so Mrs. T asked me to call them to say good night. Both kids clearly have missed me the last 10 days, especially Baby T2.0.

As a parent, you might not realize how big your kids have grown until you are away from them for a few days. Talking to Baby T1.0 via Skype made me realized how awesome his conversation skills have become. Each time he would explain to me all the things that he did during the day with great details, like building Lego, tending our cat, and making bread at my parents’ place. He even started using words and phrases like “Yup,” “Wait a minute,” “eh,” etc. I laughed at how he said the word “yup” because that’s exactly how I say it. He definitely picked that up from me.

Like father like son right?

On the other hand, Baby T2.0 has been speaking more and more words, as well as longer sentences. Whenever I talked to her, she would keep saying “Daddy come back,” and “Daddy sleep with me.”

She’s such a daddy’s girl.

Talking to Mrs. T and the two kids over Skype during this business trip made me reflect a bit. Typically, as one goes up the corporate ladder, one is expected to travel more for business. Many of the directors and executives are often on the road for an extended period of time.

I’m nowhere close to the director and executive levels, but as I get more seniority within my company, I am being asked to travel to meet customers. Right now business travels are manageable but I do wonder if there’s a limit to how much I travel.

If you may recall, I asked a hypothetical question in the Financial Independence Retire Early is nonsense post…

Would you accept this job offer?

  • Working from home, flexible hours
  • Working with people across multiple time zones
  • 10-12 hours of work each day (50-60 hours a week)
  • 50-70% travel is required (within NAM and internationally)
  • A base salary of $200k USD per year
  • Up to 15% annual bonus
  • Health coverage + extended health benefits
  • 401(k)/RRSP contribution matching up to 3%
  • 2 weeks vacation

I think 50-70% travel is a deal breaker for me, given the two little kids at home. And I would not be able to see Mrs. T all that much. It would harm our relationship, I think.

However, what if we change the question a little bit? What if your current job will pay you 25% more of your current salary but requires you to travel 10-20% more, while all the other work benefits and conditions stay the same. Would you do it?

Don’t get me wrong, I do enjoy business travel, meet customers, and give presentations. But as both kids get older and understand what it means when their daddy goes away on a business trip, I am beginning to question how much travel is too much. A 2 or 3 day trip is usually not a big deal, but multi-day oversea international trips are getting tougher. Fortunately, I don’t do too much multi-day oversea international trips just yet.

 

The cashless society… Is this a good thing?

When I was in Shenzhen, it was very easy to differentiate me from all the locals. No, not from the clothes I wore or how I spoke Mandarin, but from the fact that I was using cash and credit card.

According to my Chinese coworkers, China is quickly becoming a cashless society. Rather than using cash or credit card to pay for things, people use their phones. When riding a taxi, people use WeChat and many different apps to pay. This is the same when you are in a restaurant or in a store.

downtown Shenzhen

downtown Shenzhen

Whenever I pay with cash or my credit card, people would look at me funny.

Even in Hong Kong, my HK coworkers were paying taxi fares directly from their phones. It’s so much more convenient than carrying cash or credit cards around, they said.

But is using your phone to pay for things a good thing?

Hong Kong

At the 2016 Canadian Personal Finance Conference, Pret Banerjee was one of the keynote speakers and he talked about behavioural finance. Basically how our everyday behaviours affect what we do with money.

One of the things that Pret explained was that we touch our phones probably hundreds of times each day. Meanwhile, we probably touch our wallets for maybe less than 10 or fewer times a day. So when you take out cash or a credit card from your wallet to pay for something, you need to actively think about the purchase, especially when you need to enter your credit card pin. Because you touch your phone hundreds of times a day, when you use your phone to pay for something, you just tap and go. There’s no longer the need to consciously think and analyze your purchases. You just tap and go and forget the rest. Pret argued that by using your phone to pay for things on a daily basis, you probably would spend more money than relying only on cash and/or credit cards.

So I do wonder, do people in China and Hong Kong spend more than say 10 years ago when phone payments were around? I think this would be a very interesting study to perform.

Personally, I think behaviour finance is a fascinating topic. This is why I really enjoyed reading The Behaviour Gap. If you haven’t read the book, I highly recommend it.

Speaking of behaviour finance, controlling human emotions is extremely important when it comes to investing. You certainly don’t want to panic and sell your investments because the market is down 10% or more in a day. As a long-term investor, it’s important to control your behaviours and emotions. Only invest with money that you don’t need to access for the next 5 years, and always ask yourself these 3 key questions before investing.

Losing 10% of your portfolio value in one day is terrible. But what’s even more terrible is taking a 10% realized loss, sit on the sideline because you are afraid of further losses, and losing the market recovery completely. This is exactly what happened to many people after the 2009 financial crisis. Even over 9 years later, there are still people afraid of investing because they believe the market will come crashing down the very next day they invest their money. So they continue to wait and miss out on all the potential gains.

Remember, in the long run, the market goes up. Invest for the long term and forget about day trading.

 

Financially Independent via geoarbitrage… a Taipei example

Back in April, I mentioned how we can be financially independent today via geoarbitrage.  While in Taipei, I have confirmed once again that the cost of living in Taipei is much cheaper than Vancouver. For example, I went for a traditional Taiwanese breakfast on the weekend and ordered two egg pancakes (Dan Bing/蛋餅), a baked wheat cake with Chinese doughnut (Shao Bing You Tiao/燒餅油條), and a cup of soy milk. This was a pretty big breakfast (I was hungry, after a good workout) and it only cost less than $100 NTD (around $4.35 CAD or $3.30 USD). Later when I went to Starbucks and ordered a medium latte, it cost me $135 NTD (for some reason Starbucks is expensive in Taiwan compared to North America). I couldn’t believe that my HUGE breakfast cost less than a cup of coffee!

Similarly, I was able to find cheap local Taiwanese dishes for less than $200 NTD (~$8.70 CAD or $6.70USD) for lunch. If you were to purchase similar dishes in Vancouver, they would cost you much more than $8.70 CAD, probably in the $15-20 CAD range.

Instagram Photo

Instagram Photo

When I went to an authentic Japanese ramen shop for lunch one day, a bowl of ramen and a plate of gyozas cost $330 NTD (~$14.30 CAD or $11 USD). To give some perspectives, a bowl of ramen typically cost around $12 CAD + taxes + tip in Vancouver. A plate of gyozas usually is around $8 CAD or so.

The prices in Taipei may not be Thailand cheap cheap, but certainly cheaper than Vancouver.

One thing to keep in mind is that Taipei is supposed to be much more expensive than the rest of Taiwan.

Another thing to keep in mind is that just like any cities, you can find really really expensive restaurants if you desire. For example, I saw a Japanese restaurant nearby my hotel with very high ratings on Google. When I looked at the restaurant website, I was quick to realize it was way out of my price range. The Japanese kaiseki costs $6,500 NTD (~$282 CAD or $218 USD).

Wow!

You won’t find me in that kind of expensive restaurant anytime soon.

However, I am convinced more than ever that financial independence through geoarbitrage is indeed possible.

When you open yourself to opportunities, you will find an endless amount of opportunities.

When you limit yourself and put restrictions, you will find that opportunities are hard to come by.

Be open and be flexible in life.

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Dividend Income – May 2018 Update https://www.tawcan.com/dividend-income-may-2018-update/ https://www.tawcan.com/dividend-income-may-2018-update/#comments Mon, 04 Jun 2018 10:00:30 +0000 https://www.tawcan.com/?p=7768

I’m currently in Taipei, Taiwan and I’m checking out many of the different Taiwanese dishes ranging from beef noodles soup, stinky tofu, egg roll pancake, minced & braised pork on rice, and many more. I’m in the hunt for Taiwanese deep fried meatballs (ba wans), not sure if I’ll be able to find them in Taipei though, as deep fried style was originated from central Taiwanese. In Taipei and northern Taiwan, ba wans are steamed rather than deep fried. In case you’re wondering what Taiwanese dishes are like, check out this guide. So far on this trip, I have stayed at 5 different hotels and managed to get upgraded to a suite 3 times. Getting upgraded to a suite is really cool, as suites are HUGE, luxurious, a bit over the top. Unfortunately, I’m travelling alone so I’m actually not utilizing the suites all that much. In fact, when I got upgraded to a suite in Hong Kong, I didn’t even get a chance to sit on the couch. Oops. Here are some pictures from the suite at Taipei Marriott: Even when I didn’t get upgraded at a Courtyard, the room was still very luxurious. Definitely one of the nicest Courtyards […]

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I’m currently in Taipei, Taiwan and I’m checking out many of the different Taiwanese dishes ranging from beef noodles soup, stinky tofu, egg roll pancake, minced & braised pork on rice, and many more. I’m in the hunt for Taiwanese deep fried meatballs (ba wans), not sure if I’ll be able to find them in Taipei though, as deep fried style was originated from central Taiwanese. In Taipei and northern Taiwan, ba wans are steamed rather than deep fried. In case you’re wondering what Taiwanese dishes are like, check out this guide.

So far on this trip, I have stayed at 5 different hotels and managed to get upgraded to a suite 3 times. Getting upgraded to a suite is really cool, as suites are HUGE, luxurious, a bit over the top. Unfortunately, I’m travelling alone so I’m actually not utilizing the suites all that much. In fact, when I got upgraded to a suite in Hong Kong, I didn’t even get a chance to sit on the couch. Oops.

Here are some pictures from the suite at Taipei Marriott:

Marriott Taipei suite

Opened my hotel room at Taipei Marriott and was greeted by this huge living room.

Marriott Taipei suite

This huge bathroom which was situated between the bedroom and the living room.

Marriott Taipei suite

The massive king size bed in the bedroom

Even when I didn’t get upgraded at a Courtyard, the room was still very luxurious. Definitely one of the nicest Courtyards I’ve stayed at.

Courtyard Taipei

A very nice and big room at a Courtyard. Please ignore the messy bed.

Hopefully, when I am travelling with Mrs. T and our two kids and staying at a Marriott property, we’ll get upgraded to a suite.

 

May Dividend Income

In May we received dividends from the following companies:

  • Apple (AAPL)
  • Pure Industrial REIT (AAR.UN)
  • AbbView (ABV)
  • Bank of Montreal (BMO.TO)
  • Costco (COST)
  • Dream Office REIT (D.UN)
  • Dream Global REIT (DRG.UN)
  • Dream Industrial REIT (DIR.UN)
  • Emera (EMA.TO)
  • Enbridge Income Trust (ENF.TO)
  • General Mills (GIS)
  • H&R REIT (HR.UN)
  • Inter Pipeline (IPL.TO)
  • KEG Income Trust (KEG.UN)
  • Laurentian Bank (LB.TO)
  • Metro (MRU.TO)
  • National Bank (NA.TO)
  • Omega Healthcare (OHI)
  • Procter & Gamble (PG)
  • Prairiesky Royalty (PSK.TO)
  • RioCan (REI.UN)
  • Royal Bank (RY.TO)
  • Starbucks (SBUX)
  • SmartCentres REIT (SRU.UN)
  • AT&T (T)
  • Verizon (VZ)

dividend income May 2018 chart

In total, we received $1,459.76 from 26 companies in May 2018. After 4 months of record-breaking levels of dividend income each and every month, we failed to break the all-time month dividend income record in May. Darn it! But at $1,459.76, this is the second highest monthly dividend income that we have ever received, only behind April 2018.

To put this into perspective, $1,400 is over half of the annual dividend income that we received in 2012.

We have come a long way since we started investing in dividend paying stocks.

So, I think we did extremely well in May. I’m ecstatic over the amount of dividend income we collected by simply owning dividend-paying stocks. I love getting paid for doing absolutely nothing.

Out of the $1,459.76 received, $334.04 was in USD and $1,125.72 was in CAD. Or about a 20-80 split. If you are a long time reader to our monthly dividend income reports, you will know that we use a 1 to 1 currency rate approach. We do not convert dividends received in USD to CAD. We are ignoring exchange rate to keep the math simple. This is our way to avoid fluctuations in dividend income over time due to changes in the exchange rate.

The top 5 dividend payouts in May 2018 were Bank of Montreal, National Bank, Emera, Royal Bank, and Omega Healthcare (not in order). Dividend payouts from these 5 companies accounted for 60% of our February dividend income, or $875.14.

 

Dividend Income Breakdown

We hold our dividend stocks in taxable accounts, RRSPs, and TFSAs. Every year, we maximize tax-advantaged accounts first before investing in taxable accounts.

For May 2018 dividend income, here’s the breakdown of the different accounts:

  • Taxable: $314.15 or 21.52%
  • RRSPs: $697.80 or 47.80%
  • TFSAs: $447.81 or 30.68%

Effectively, only 21.52% of our May dividend income was taxable. We constructed our taxable accounts so we only receive from stocks that pay out eligible dividend income. Since we plan to live off dividend income when we are financially independent, we want to construct our portfolio to be as tax efficient as possible. This way, we can minimize income tax during financial independence. 

 

Dividend Growth

Compared to May 2017, we saw a respectable YOY growth of 17.84%. This was the third highest YOY number so far in 2018. I was a little bit surprised that we have managed to stay above 15% for 4 out of 5 months in 2018. Hopefully, we will continue to stay above the 15% mark for the rest of 2018. That would be very impressive if we manage to do that, considering our 2017 dividend income of $14,834.38 was pretty sizable already. If we could manage to get 15% YOY for the entire 2018, that would mean we would end up with $17,059.537.

dividend income May 2018 YOY growth

 

Dividend Increases

There are 3 ways to increase our dividend income. The first method is by investing fresh capital to purchase more dividend stocks. The second method is to enroll in dividend reinvestment plans (DRIP), and DRIP additional shares. The third method is through companies increasing their dividend payout. As dividend growth investors, we try to take advantage of all three methods.

When companies raise their dividend payout, that’s like getting a pay raise without doing anything extra. That’s why I get so excited whenever a company announces a dividend payout increase.

In May, a few companies that we own in our dividend portfolio raised their dividend payouts.

  • Telus raised its dividend by 3.96% to $0.525 per share
  • Hydro One raised its dividend by 4.55% to $0.23 per share
  • Bank of Montreal raised its dividend by 3.22% to $0.96 per share
  • National Bank raised its dividend by 3.33% to $0.62 per share

All these announcements increased our annual dividend by $62.96. If you think the amount is very insignificant, think again. At 3% yield, you would need to invest $2,098.67 worth of new capital to receive the same amount of additional dividend income. As I said earlier, when companies raise their dividend payout, it’s like getting a pay raise without doing anything extra. I will never say no to a raise!

 

Dividend Stock Transactions

Compared to the other months in 2018, we were relatively quiet in May when it dividend stock transactions. When I re-examined our dividend portfolio recently, I pointed out that it might be worthwhile to consolidate our holdings by trimming some of the smaller positions we own. Although we didn’t manage to purchase any dividend stocks in May, we managed to close out a couple of positions.

  • Liquidated all of our Sabra Health Care REIT (SBRA) shares
  • Received cash buy out for our Pure Industrial REIT (AAR.UN) shares

The shares of Sabra Health Care REIT were received from the Care Capital Properties merger. And we originally received a few shares of Care Capital Properties from the Ventas and Care Capital Properties split.

Blackstone had recently completed their purchase of Pure Industrial REIT. As shareholders, our shares were purchased back at a specific price, resulted in very a nice capital gain. Fortunately, we didn’t have to pay any capital gain tax as we held AAR.UN shares in our TFSA.

We only had a small amount of SBRA and AAR.UN, so we only lost less than $70 worth of annual dividend income. The dividend increases from Telus, Hydro One, Bank of Montreal, and National Bank roughly made up the difference. I do plan to deploy the cash that we received from these two transactions to purchase shares of dividend stocks that we already own. This will further increase our forward-looking dividend income.

 

Conclusion

So far in 2018, we have received a total of $7,138.89 in dividend income. At $25 per hour salary ($52,000 annual), that means we have already saved us over 356 hours worth of work. This is over  44 days of work or almost 9 weeks. Given there are 52 weeks in a year, that’s an equivalent of gaining 17.3% more time.

It’s pretty awesome to know that our money is working hard for us so we don’t have to.

Gotta love dividend income!

Dear readers, how was your May dividend income?

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Another year, same old same old https://www.tawcan.com/another-year-same-old-same-old/ https://www.tawcan.com/another-year-same-old-same-old/#comments Wed, 30 May 2018 15:30:14 +0000 https://www.tawcan.com/?p=7754

Yesterday, we saw a worldwide sell-off caused by instability in the Italian political system. Somehow, investors were extremely worried that a repeat election in Italy, the Euro zone’s third-largest economy, may cause Italy to eventually withdraw from the European Union, just like Britain’s recent referendum to exit from the EU. So, almost everything that’s listed on the global stock exchanges went down. A few Canadian banks had announced their quarterly results, which were better than the analysts’ estimates. But that didn’t matter, all of the Canadian banks were down, some by as much as +3% in a day (I didn’t realize this until Mr. Tako pointed out, clearly I don’t pay a lot of attention to the market, especially when I’m travelling). It was a sea of RED!!! The market becomes extremely irrational when there’s fear. Since the financial crisis in 2008, there seems to be a couple of “big” crisis every year that would send the market tumbling. Some of them included… Italy political system worries US debt ceiling Briexit US & North Korea tensions China & US trade treats European sovereign debt crisis Interest rate hike worries – does the fed raise the interest rate or not? Oil price bubble […]

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Yesterday, we saw a worldwide sell-off caused by instability in the Italian political system. Somehow, investors were extremely worried that a repeat election in Italy, the Euro zone’s third-largest economy, may cause Italy to eventually withdraw from the European Union, just like Britain’s recent referendum to exit from the EU.

So, almost everything that’s listed on the global stock exchanges went down. A few Canadian banks had announced their quarterly results, which were better than the analysts’ estimates. But that didn’t matter, all of the Canadian banks were down, some by as much as +3% in a day (I didn’t realize this until Mr. Tako pointed out, clearly I don’t pay a lot of attention to the market, especially when I’m travelling).

It was a sea of RED!!!

The market becomes extremely irrational when there’s fear.

Since the financial crisis in 2008, there seems to be a couple of “big” crisis every year that would send the market tumbling. Some of them included…

  • Italy political system worries
  • US debt ceiling
  • Briexit
  • US & North Korea tensions
  • China & US trade treats
  • European sovereign debt crisis
  • Interest rate hike worries – does the fed raise the interest rate or not?
  • Oil price bubble
  • Iceland financial crisis
  • Irish banking crisis
  • Donald Trump tweeting something controversial

And many more.

Another year, another “major” crisis, another global sell-off.

Same old same old.

YAWN!

Why haven’t we learned anything yet?

Don’t people remember that over the long run, the stock market provides a positive return?

Why do we keep letting our emotions dictate what we do when it comes to our investments?

When the market tumbles, we feel knots in our stomachs. We are worried, we are fearful, and we can’t sleep at night.

So we sell, hide cash under our mattress, and put our heads in the sand like ostriches.

And we repeat this silly procedure a couple of times a year. Well, because it’s fun???

Or is it?

I’m sorry but that’s a completely wrong approach. Ask yourself, are you in for the long-term or the short-term?

If you are like me, you are in the market for the long-term. So take advantage of the market drops by purchasing more stocks. Take advantage of cost dollar average. Take advantage of diversification through time. 

Remember, you are in it for the long run. Stop worrying about the day-to-day price movements.

PS: I’ll keep this post short as I’m dead tired and not quite over my jet lag yet. I just thought I would write a quick post because I received multiple emails asking me whether I am going to liquidate everything in our dividend portfolio because of the Italian political crisis. Emails on this whether to sell topic seem to pop up every time a big drop in the market. Weird.

I promise that I’ll resume my regular epic LONG posts later.

 

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FI Interview #5 – Create a long term plan https://www.tawcan.com/fi-interview-5-create-a-long-term-plan/ https://www.tawcan.com/fi-interview-5-create-a-long-term-plan/#comments Mon, 28 May 2018 10:00:42 +0000 https://www.tawcan.com/?p=7662

I’m flying to Asia today for a 10-day business trip. On my last Asia trip, I managed to sit in Air Canada’s premium economy both ways. It sure was nice considering we had to do an unexpected pit stop in Tokyo. Hopefully, I won’t have the similar experience this time, espeically considering I will be sitting in ecomy this time. A 13.5-hour flight is already long enough, no need to tag on an extra 2 hours. *Knock on wood* As you may know, I have started a Financial Independence interview series where I interview fellow Canadians that have reached financial independence and some of them have also retired early. Today we feature D, a long time reader of this blog. D has some very interesting stories about his FIRE journey. Take it away D!   Q1. It is amazing to hear that you have reached financial independence retire early (FIRE) at age 55 a few years ago. Could you speak about your path on how you got to this point?  When did you become interested in personal finance and realized that FIRE is possible?  I started very similar to Warren Buffet, I learned as a paperboy that I could buy […]

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I’m flying to Asia today for a 10-day business trip. On my last Asia trip, I managed to sit in Air Canada’s premium economy both ways. It sure was nice considering we had to do an unexpected pit stop in Tokyo. Hopefully, I won’t have the similar experience this time, espeically considering I will be sitting in ecomy this time. A 13.5-hour flight is already long enough, no need to tag on an extra 2 hours. *Knock on wood*

As you may know, I have started a Financial Independence interview series where I interview fellow Canadians that have reached financial independence and some of them have also retired early. Today we feature D, a long time reader of this blog. D has some very interesting stories about his FIRE journey. Take it away D!

 

Q1. It is amazing to hear that you have reached financial independence retire early (FIRE) at age 55 a few years ago. Could you speak about your path on how you got to this point?  When did you become interested in personal finance and realized that FIRE is possible? 

I started very similar to Warren Buffet, I learned as a paperboy that I could buy a few things that others couldn’t at that age. I proudly bought a really nice “Duomatic Mustang bike” with the savings.

My mother raised 6 children and my dad was an alcoholic, which created financial struggles. When I was quite young, getting groceries with my mother, she was declined more credit at the supermarket until our balance was cleared up. We walked home together with my mom crying her heart out. This single event convinced me that I will do all I can to prevent that from happening to my family. I was taught by my grandfather, never buy what you can’t pay for. I felt I was financially independent around age 42.

 

Q2. When did you become interested in personal finance and realized that retirement before the age of 65 is possible? Was there a single event that got you started on the “early retirement” path?

The single event I answered above plus knowing that my mom worked extremely hard to get food on the table for her 6 kids. It was amazing that she raised 6 children while working night shifts for her entire working career.

When I had my first decent job, I looked at what I could save up for university and started saving aggressively. I first started investing in mutual funds when I was 18, at a small mom/pop mutual fund operation. Fortunately, my work ethic was noticed and job opportunities opened up to allow me to make more money and no longer have a need to go to university. I took a trip to Europe during a lay off period and learned that travelling was my education in life. I realized as a 23-year-old Canadian the opportunities are endless if you put your mind to it.

I believe it is even more apparent now. So many immigrants realize the great opportunities in Canada, and they build their new lives in this new country that they call home. Unfortunately, many young Canadians who come from privileged homes aren’t motivated to work hard because they have not faced adversities in life.

Shortly after coming home from Europe, I bought my first home for $6000 cash in 1977. It was 550 sq. ft, and when I drove friends to my home, they thought I was joking. It was a roof over my head, it had a dirt basement and a few mice, but I managed just fine. The learning here is that my travelling experience convinced me to get very focused on opportunities that were presented to me – buying a dump that I could afford was better than renting. I really established myself into a solid saving habit. I was also lucky enough to be able to work lots of overtime and that kept me away from the pubs and prevented me from spending money in my spare time.

Tawcan: Funny what travelling will do to you as a young adult. I lived in Germany for 8 months as a university student and managed to live and travel for less than 800 euro each month. It was one of the best times of my life.

 

Q3. How did you get your wife on the same page as you financially? Do you both get involved in making financial decisions?

Getting married forced me into a house that my wife would live in. We bought a $69,000 home in cash (in 1983) with no mortgage. My wife was renting and had around $10,000 saved with plans of moving out to western Canada. I borrowed $11,000 from my brother and that put us into the house that we purchased. We both didn’t spend foolishly and that was very crucial at a young age for a couple in marriage. A year later we had the house completely paid for.

Back then, I had a friend use one of the early computers to do some projections for me. I wanted to see the projected results based on monthly investments at different rates.

The projection showed that we would have a million at age 40 (I actually took until age 42, but we had kids and started spending more, plus I didn’t get the projected returns).

The financial plan set the tone. Although my wife was never really involved in investing, she was and still is a conservative spender. Having no debt put us on a positive path and she was convinced we were doing the right thing. We had many discussions about money in our marriage. We had a joint account and I truly believe that our success was built by working together with one another.

In marriage, having trust in each other is extremely important.

Tawcan: Completely agree. It is so important to trust each other in a marriage and have open discussions on anything and everything.

 

Q4. You mentioned that you love the investment world and started investing around 18. Can you let me know how you got started? What inspired you to start investing?

I knew I wanted to save and get ahead to reverse what I saw so wrong as a child. I read books and started buying mutual funds. At that time I had a friend who bought some stocks in oil companies and his uncle had a great tip about a small company…. to make it a short story, the “hot stocks” that friends tell you are going to the moon and small investment firms that are focused on selling will rob you blind.

The good thing that came out of all this was that in order to purchase stocks, I needed to go to a financial firm and invest through a broker. Through the brokerage firm, I went to several investment seminars and learned many things about stock investing.

 

Q5. Can you tell me some of your financial and investment mistakes and what you have learned from them?

I worked hard saving but wasted a lot of money on poor investment schemes.

In free investment courses, I learned to buy the company, not the product. So don’t buy a mutual fund, look at what they own and buy the top ten companies. Look at several big Canadian equity funds, you will see the overlap of the same names. The mutual fund industry is brutal, for many reasons. They get your invested amount, with a no load or front-end load it doesn’t matter, they run around the country with teams of highly paid people selling, eating, flying, investigating companies, and buying whatever. Ultimately, the gains and losses of doing all of these activities will cost the fund (you) money. In other words, your money isn’t netting you the returns.

Read about investing and feed the brain. The quick reads like The Wealthy Barber will show it is about saving more than investing. Anyone can do this, and the earlier you start the better because compounding interest is the secret. The turtle wins. You don’t need high-risk investments, but you need to have an aggressive style. This is a tricky word when the brokers give you an investment risk profile.

Don’t waste money on GIC’s, bonds or money market funds because of inflation. Start with the Canadian banks. Each year buy some Canadian banks and Canadian utility stocks. Spread your risk with 2 banks and 1 utility this year. Large blue chip boring successful companies pay dividends. If they have a bad year, the president or managers get replaced, and you will continue to get paid with dividends.

Buy big companies on bad news; I have really done well with this. The market is fickle and currently moves just like the gas prices at the pump. Why pay full price when you see it on sale? Be patient. And when everyone is telling you to buy stocks, I would save and stockpile cash. When the world sounds like it is going to the dump, buy. Warren Buffet calls this “buying opportunities”.

Mutual funds earn income from stocks. Rather than investing in mutual funds and pay an obscure high amount of MER, just buy stocks that the mutual funds invest in.  Better yet, buy the stocks that pay dividends and set up to reinvest the dividends.

My biggest retirement learning is that you pay tax on income. So, structure it to be the lowest taxed possible. One of the ways is through dividends.

I worked with engineers who made double and three times my income. Unfortunately for many of them, they had education loans and big egos. Since they made so much money they could travel lots, live in bigger homes, and drive fancy vehicles. To sustain this “spend freely” lifestyle, they have to continue working longer. Read the book Millionaire Next Door. Don’t wait to pay off car loans and other consumer debts until you are 65. Pay off debt early so you have time as an ally working for you. This is a mistake that many people make. You can’t buy time.

 

Q6. What is your investing style? Do you invest in dividend growth stocks? Or do you rely on mutual funds and index ETFs? What is your investment philosophy?

Buy for the long term and hold, I am very old school. I learned when you buy and sell, you have a higher risk making irrational decisions. Instead, buy and hold blue chip dividend paying companies. Reinvest the dividends when you are working. When you are retired, use dividend income as your main source of income. Keep it simple and know that quality doesn’t go out of style. ETF’s are better than mutual funds, but I have little experience with them. Similar to mutual funds, if the ETF earns money from specific stocks, own the darn stocks.

I believe with some guidance, it is possible for many people to be financially independent. A couple of very important steps are required though. First, create a long-term plan so you have a goal in mind at an early age. Such as, if you invest ‘X’ amount per month you will have ‘X’ amount at age 50. By following this plan, you will soon prioritize and focus on what grows in value versus items that depreciate like the fancy SUV. Like I have mentioned, I have learned the hard way, but by talking openly with friends, I have learned from them. Second, find a mentor and don’t be afraid to ask for advice. I talk regularly with three retired professionals who I respected to gain valuable knowledge.

It’s all about creating a goal, making a plan, and buying quality investments. Don’t let people make it sound complicated. In fact, when a broker is giving you all the lingo, get it explained so you can understand or walk away. They talk big, but often it is more of a show.

 

Q6. Are you taking advantage of tax-sheltered accounts like RRSP and TFSA? Do you plan to withdraw early from RRSP before age 71? If so, do you have any early withdrawal strategies to avoid tax penalties?

Yes, I wasn’t in private business so RRSP was our only tax-advantaged option. With the introduction of TFSA, Canadians have even more options. I think TFSA is really good, so make sure you fill them up, ALWAYS.

Getting the money in RRSP/RRIF out completely before age 90 is my goal. I am using an accountant to assist and come up with a plan. I know I am going to die, so I am planning according to the odds of the last survivor.

 

Q7. You are in the process of consolidating all assets to one firm. What is the reason behind this decision?

Consolidation reduces total fees and it makes the analysis of all the investment assets easier. We also wanted to simplify our retirement. It is important to plan around the possibility of poor health.

Over many years of trial and error, I have learned that nobody will manage my money better than me (especially with some guidance). I happen to care more about my money than anyone else. I don’t like sharing it with mutual funds.

I am currently consolidating all my investment assets with BMO. BMO has 3 tiers of investment:

  • Investorline is strictly a discount broker without advice.
  • BMO Advice Direct offers advice and the fee caps out at $3750/yr. (ideally for someone with more than 500K).
  • Advice Direct offers personalized investment advice and the fee is tax deductible outside of the RRSP. This is where I have moved to and I don’t know of other banks that have a similar service.

If I was to pass away, my wife can simply transfer our investment assets into BMO Private Wealth Management. The fees are very competitive for high net worth portfolios, but they do everything including taxes, wills and managed banking.

 

Q8. Do you keep it a secret to friends that you are retired? Do they feel uncomfortable whenever you share with them about your financial success? If so, why do you think money is such a taboo subject in society?

I have never kept it a secret from anyone that I am retired. Some people might think we’re lucky, but we followed our goals and have worked hard to get to where we are. It had nothing to do with luck. I like to share my financial learnings, but we don’t share our net worth, and I try not to ever make anyone feel uncomfortable. We do buy good quality when we need something. It is very unfortunate that money seems to be a taboo topic. People don’t want to sound like they are bragging about their wealth, and on the other hand, people are embarrassed to admit if they don’t have any financial success. If financial planning was taught in schools, maybe people would be more open about discussing money.

 

Q9. Many people do not get pensions nowadays. Do you believe it is more challenge to achieve financial independence retire early without a pension?

Just the opposite, I believe it is advantageous without a pension because it forces you to plan, seek out guidance, and make retirement goals.

While many of my coworkers think pensions are a low-risk product, I think the opposite. Many pensions are investing in low-risk products like GIC’s and bonds, so they can hardly keep up with inflation.

Now if you don’t have a pension and save up to buy large blue-chip companies that pay dividends, you will easily have quadruple returns compared to conservative investors over a long period of time.

Make sure you have a growth portfolio with some risk, rather than a low-risk portfolio with little growth. One of my later findings is that the investment engine that we built isn’t going to stop when we retire. We can live off dividends and the portfolio and dividend amount will continue to grow for many more years thanks to long-term stock market return and organic dividend growth.

I am spending more time on estate planning nowadays. The investment engine that we built can go to the estate and be passed on to the next generation. The investments don’t even need to change. My family can benefit from the machine that continues to compound.

In contrast, with pension, you have little control how the money is invested. So many pension plans have been mismanaged over the years. It is very unfortunate, and they are never set up for early retirement.

 

Q10. What kind of financial advice are you giving to your children?

Develop a plan and pay down debt. Many things have changed since I first started working. Interest rates are very low and TFSA is available as a great new investment plan for Canadians.

I have tried to instill in my children the many benefits of financial independence. I have encouraged my children to buy RRSP’s and TFSA’s. They have learned to spend responsibly and keep debt to a minimum.

I have realized that my children are different than my wife and I. They have developed their own sense of what’s important to spend money on. For example, they travel more than we did when we were young. I think this is great as travelling is educational and has made them appreciate the opportunities they have in Canada.

Tawcan: That’s great that you’re teaching your children the many benefits of financial independence. They will thank you later. I really wish that personal finance is a part of the Canadian educational system, so kids can learn how to be a financially responsible person.

 

Q11. Did you provide financial help to your children? What are your thoughts on advantages and disadvantages of providing financial help to your children? Do you believe this makes them less financially sound? 

I happened to be reading a book about Warren Buffet when my kids were early teens. In the book it talked about the best thing you can give your children is nothing financially.

However, I have offered to pay for all their education as long as they pass the courses. Earning self-respect and confidence is important and I have watched them feel proud of what they have achieved on their own. To buy them a new car or buy the first home just creates other issues. We have helped our children financially from time to time, but very little compared to most people we know.

 

Q12. Was money topics openly discussed in your household? Did you get your children involved with household financial decisions from a young age?

Yes! They knew money was the reason to be efficient in household spending. But it’s a difficult thing to teach, as they don’t pay the power bill so they don’t understand why you should turn off the lights in rooms that they aren’t in! I probably discussed it so much that I bored them to death at times. They knew that we were careful with everything we spent. Our children have strong financial confidence and I am very proud of that. When they were young, they got allowances for doing chores. I even remember arguing with my son about the cost of cutting our grass. Unfortunately, his grandpa paid too much for his work and he wanted the same rates at home.  Value for work needs to be taught early.

I matched their contributions to encourage buying stocks or mutual funds. I showed my son how his paper route income alone could turn into a million dollars. Investment time is so important, and we talked a lot about that.

 

Q13. What would you tell someone like me who is trying to achieve financial independence?

Start early, stay married, get an investment retirement projection to create a plan, analyze, and buy what you can afford within reason, save 20% of income and buy 3 blue-chip stocks per year at the minimum, read your blog, and learn from others. Ask lots of questions and don’t trust that someone will manage your money better than you can. You need to learn and understand the basics.

I learned how to save and invest, but I should have examined the tax system better. You need the foreign investments in RRSP’s otherwise it has a withholding tax. I didn’t realize getting the money out tax efficiently could be so complicated. I wish I had gotten involved with accounting tax knowledge earlier.

Tawcan: There’s no one-size-fits-all plan when it comes to financial independence but the general formula can be pretty simple. 

 

Q14. Do you have anything else you would like to share with me and my readers?

Real estate is fickle, some regions pay for their surroundings. You can live cheap and make better incomes in small communities. Also, small communities are great to raise a family in. In the end, it is about being efficient. Be like big businesses and focus on being low cost and efficiency. Talk openly about investing and learn the basics. Many of your young readers will be more than multimillionaires. To them, my advice is, to begin with the end in mind, so you know how to manage money.

 

Thank you D for sharing your story. Dear readers, are you enjoying the Canadian FI Interview Series? Are you a Canadian that is financially independent or retired early from your career? If so, I would love to have a chat with you.

 

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Financial Independence Travel Inspirations https://www.tawcan.com/financial-independence-travel-inspirations/ https://www.tawcan.com/financial-independence-travel-inspirations/#comments Mon, 21 May 2018 10:00:05 +0000 https://www.tawcan.com/?p=7678

It’s Victoria Day today (or as many Canadians call it, the May long weekend). The May long weekend typically is a sign that summer is around the corner and we will start getting lots of sunshine here in Vancouver. In case you’re wondering, Victoria Day is celebrated in Canada and Scotland and began as a celebration to honour Queen Victoria’s birthday. She is the 2nd longest reigning monarch in England as she was on the throne for 63 years and 216 days. Queen Elizabeth II became the longest-reigning British monarch on Sept 9, 2015. Who knows, maybe we will one day get an Elizabeth II statutory holiday? I’m all for more statutory holidays. One of the goals, once we are financially independent, is to travel and explore the world. Both Mrs. T and I would love to say that we’ve been to all 7 continents one day. The last few years, my parents have been on a lot of cruises and exploring the world that way. They really like cruises because they can just get on the cruise ship, leave their luggage in the room, relax, and check out the different cities. They don’t need to worry about catching flights, finding hotel […]

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It’s Victoria Day today (or as many Canadians call it, the May long weekend). The May long weekend typically is a sign that summer is around the corner and we will start getting lots of sunshine here in Vancouver. In case you’re wondering, Victoria Day is celebrated in Canada and Scotland and began as a celebration to honour Queen Victoria’s birthday. She is the 2nd longest reigning monarch in England as she was on the throne for 63 years and 216 days. Queen Elizabeth II became the longest-reigning British monarch on Sept 9, 2015. Who knows, maybe we will one day get an Elizabeth II statutory holiday? I’m all for more statutory holidays.

One of the goals, once we are financially independent, is to travel and explore the world. Both Mrs. T and I would love to say that we’ve been to all 7 continents one day. The last few years, my parents have been on a lot of cruises and exploring the world that way. They really like cruises because they can just get on the cruise ship, leave their luggage in the room, relax, and check out the different cities. They don’t need to worry about catching flights, finding hotel rooms, or finding places to eat. This past weekend they just returned from a 30-something-day cruise where they cruised from Singapore all the way back to Vancouver, stopping in places like Vietnam, Hong Kong, Taiwan, Japan, South Korea, and Alaska. I guess that’s a benefit of being early retirees and the kids (me and my brother) are completely independent.

Instagram Photo

To me, exploring the world via cruises isn’t my type of travel. I like to explore and have the flexibility to do unplanned activities. I also like the idea to immerse myself in the local culture by staying in a city for an extended period of time. Mrs. T is like that as well.

Back in 2004 when I worked and lived in Germany for 8 months, I travelled all over Europe. I loved exploring a new city without using a map and I would walk around randomly. This sure provided some good adventures… like the time I got mugged in Barcelona by a bunch teenagers and I ended up running after them to get my wallet back (I caught up to one and got my wallet back). Therefore, I enjoy reading travel stories from the likes of Jereme and Winnie from Go Curry Cracker and Kristy and Bryce from Millennial Revolution.

Mrs. T and I have travelled to many places separately but we haven’t been to as many places together, and certainly not together with Baby T1.0 and Baby T2.0. So today’s post is an inspiration on places that I have been and would love to go back with Mrs. T and the kids in the future.

Cinque Terre, Italy

Taipei, Taiwan

Yokohama, Japan

Hong Kong

Hong Kong

Vatican City

Edinburgh

WWI cemetery, Belgium.

Neuschwanstein, Germany

London

London

Miyajima, Japan

Great Wall, China

Osaka, Japan

Barcelona (do I look super young here? This was taken in 2004, 14 years ago)

Maui

Venice

And of course, many more many more places I’d love to explore and see with my family.

Dear readers, which cities would you love to see & explore one day?

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A dying person’s last words…financial independence retire early is nonsense https://www.tawcan.com/dying-last-word/ https://www.tawcan.com/dying-last-word/#comments Mon, 14 May 2018 10:00:54 +0000 https://www.tawcan.com/?p=7626

You’re probably wondering what this post is about, especially given the weird title. But first, let’s ponder over a hypothetical question… Would you accept this job offer? Working from home, flexible hours Working with people across multiple time zones 10-12 hours of work each day (50-60 hours a week) 50-70% travel is required (within NAM and internationally) A base salary of $200k USD per year Up to 15% annual bonus Health coverage + extended health benefits 401(k)/RRSP contribution matching up to 3% 2 weeks vacation At $200k USD per year, the pay is quite good, especially considering the 15% annual bonus. This means you can potentially earn up to $230K USD or $293.6k CAD a year before tax. That’s quite a bit of money! Working from home is also a great benefit too since that means no commuting at all. But working for 10-12 hours each day is more than your typical 40 hour work week. Working with people in different time zones means your work hours won’t be the regular 9-5. The 50-70% travel requirement means you will be on the road for most of the year and won’t have much time to spend with your family. In addition, […]

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You’re probably wondering what this post is about, especially given the weird title. But first, let’s ponder over a hypothetical question…

Would you accept this job offer?

  • Working from home, flexible hours
  • Working with people across multiple time zones
  • 10-12 hours of work each day (50-60 hours a week)
  • 50-70% travel is required (within NAM and internationally)
  • A base salary of $200k USD per year
  • Up to 15% annual bonus
  • Health coverage + extended health benefits
  • 401(k)/RRSP contribution matching up to 3%
  • 2 weeks vacation

At $200k USD per year, the pay is quite good, especially considering the 15% annual bonus. This means you can potentially earn up to $230K USD or $293.6k CAD a year before tax. That’s quite a bit of money! Working from home is also a great benefit too since that means no commuting at all.

But working for 10-12 hours each day is more than your typical 40 hour work week. Working with people in different time zones means your work hours won’t be the regular 9-5. The 50-70% travel requirement means you will be on the road for most of the year and won’t have much time to spend with your family. In addition, 2 weeks worth of vacation means you won’t have much time to rewind and relax during the year.

If you were given this job offer, would you accept it?

In case you are curious, no, I’m not getting this job offer. But I think it’s an interesting question.

 

The Top Five Regrets of Dying

The other day I came across J.D. Roth’s post on How to build confidence and destroy fear. It was a VERY long read but extremely insightful. I always enjoy reading philosophical posts from other bloggers (and probably why this post is somewhat philosophical).

In the post, J.D. Roth mentioned the Top Five Regrets of Dying by Bronnie Ware. Bronnie has worked in palliative care for many years. She has spent time with people near death and listened to them describe their fears, anger, and remorse. The 5 common recurring themes, hence the top five regrets are:

  • I wish I’d had the courage to live a life true to myself, not the life others expected of me.

“This was the most common regret of all. When people realize that their life is almost over and look back at it, it is easy to see how many dreams have gone unfulfilled. Most people had not honoured even half of their dreams and had to die knowing that it was due to choices they had made, or not made. Health brings a freedom very few realize until they no longer have it.”

Throughout our lives, we spend too much time wondering what people think about us. So we end up doing the things that others expect of us, or the things we think are expected of us. In the extreme case, we project a false image of ourselves. We go through our lives as others expected of us, rather than doing things that would bring true happiness to us.

  • I wish I hadn’t worked so hard.

“This came from every male patient that I nursed. They missed their children’s youth and their partner’s companionship. Women also spoke of this regret, but as most were from an older generation, many of the female patients had not been breadwinners. All of the men I nursed deeply regretted spending so much of their lives on the treadmill of a work existence.”

This regret is most likely due to the common belief that you must climb the corporate ladder and make as much money as you can in your career. Many were taught that money and status equal happiness. So you work harder and harder to bring in money and so the title on your business card can look more impressive every year. It’s a vicious endless cycle.

Are you defined by [Name], [Title] at [Company], on your business card?

I think not.

Instead, become the CEO of our own life. This is a far more noble and worthwhile position, and there is no one more qualified for the job than you.

  • I wish I’d had the courage to express my feelings.

“Many people suppressed their feelings in order to keep peace with others. As a result, they settled for a mediocre existence and never became who they were truly capable of becoming. Many developed illnesses relating to the bitterness and resentment they carried as a result.”

It is OK to be open and express yourself. You might hold a grudge against someone because something had happened between the two of you and you failed to express your feelings. But holding a grudge is like drinking poison and waiting for the other person to die. It doesn’t make any sense. Rather than bottling up your emotions, open up and express your feelings.

  • I wish I had stayed in touch with my friends.

“Often they would not truly realize the full benefits of old friends until their dying weeks and it was not always possible to track them down. Many had become so caught up in their own lives that they had let golden friendships slip by over the years. There were many deep regrets about not giving friendships the time and effort that they deserved. Everyone misses their friends when they are dying.”

It might be easier to keep up with friends through social media like Facebook, Instagram, etc nowadays. But make a conscious effort to take the time to sit down with friends that you haven’t seen in many years and just catch up on things and life. Looking at myself, I am guilty of not catching up with friends more often.

  • I wish that I had let myself be happier.

“This is a surprisingly common one. Many did not realize until the end that happiness is a choice. They had stayed stuck in old patterns and habits. The so-called ‘comfort’ of familiarity overflowed into their emotions, as well as their physical lives. Fear of change had them pretending to others, and to their selves, that they were content, when deep within, they longed to laugh properly and have silliness in their life again.”

Happiness is not a fish you can catch. Happiness, or joyfulness, is something that’s internally driven and it is very much within yourself. Calm your mind and reach in deep within you to understand what makes you content and at peace.

Mrs. T has been talking about going to a music concert for many years. But we have yet to go to a music concert together, because, well, we wanted to save money and invest that money to generate passive income, so we can be financially independent in the near future.

After reading the post by J.D Roth, Mrs. T decided that she really wanted to take the opportunity to go to a Pink’s concert in Vancouver next year. She signed up for the Ticketmaster insider mailing list and received an early bird code to purchase Pink’s concert tickets. The tickets were $82.50 each. Although we spent $165 for the two of us for a concert, I was so happy to see how giggly and excited Mrs. T was and the fact that she will finally see Pink live. I am looking forward to spending time with her, just the two of us, and enjoying the concert next year.

This is a perfect example of letting yourself be happier. What I realized from the concert ticket purchase experience is that spending a small amount of money to bring the two of us closer is worth it. So what if we have to delay our financial independence journey by a few days because we spent $165? In the grand schemed of things, it’s not a big deal at all.

As I mentioned on this blog many times already, it is about finding the right personal balance between saving money for the future and enjoying life now. It is no good to be on either end of the two extremes – only saving or only spending. It’s all about living a life that you can truly enjoy now while keeping in mind what the future might be like. Enjoy the present moment, because who knows, you might not be here tomorrow…

Money isn’t the solution to happiness. You are the solution for happiness. When you are on your deathbed, don’t you want to look back at your life and be able to say that you have lived without any regrets? Don’t you want to say without a doubt that you had found happiness every day in your life?

So go out and spend a few dollars here and there and live it up a little bit so you get to enjoy the present moment. Spend money on the things or experiences that truly make you happy. By that, I don’t mean that you should buy things to cheer you up if you are in a bad mood, because that can bring you down a whole different path. I mean that you should allow yourself to purchase something that really brings joy to you for a long time.

 

Some Things You Cannot Prepare For

The other day I was putting Baby T1.0 and Baby T2.0 to bed. Both of them asked to get carried to bed and to get lots of hugs and kisses from me, so I obliged. As I was carrying Baby T1.0, I noticed how big and heavy he had gotten. As I carried him with him sitting in one of my arms, his legs were dangling by my knees. The same thing happened with Baby T2.0 as well, except her legs were hanging by my crotch area (note to self: gotta be careful when carrying her). After I put both of them to bed, turned off the light, sang to them, and sitting in their room watching them laying on their beds slowly falling asleep, I had a smile on my face. I had a nostalgic moment.

The few days after Baby T1.0 was born, Mrs. T and I were taking turns staying up to look after Baby T1.0 if he woke up at night, so the other person could get some sleep. One night around 2 AM in the morning, Baby T1.0 woke up crying. It was my turn to tend him, so I picked him up, got out of our bedroom, and rocked him in my arms. Baby T1.0 was swaddled up. After rocking for a few minutes, he eventually settled down and fell asleep. Every time I put him back down to his crib, however, he would wake up and start to cry. Therefore, I decided that I would hold him in my arms. As a newborn, Baby T1.0 was so small I could carry him with just one arm. Swaddled up, he fitted nicely on my left forearm so I could hold him with my left hand. My right hand was free, which allowed me to sit in front of the computer browse the internet, and stay awake. I spent a few nights like that with Baby T2.0 as well.

When I sat in their bedroom, looking at both of them sleeping peacefully, I felt that my mind was blown at how quickly both of them have grown. I can no longer hold them in one arm. Picking them up and down now requires quite a bit of effort.

I may sound nostalgic but being a dad hasn’t been all fun and games for me.

The reality is, that parenthood has not been a walk in the park. It is also something you can’t fully prepare for.

When Baby T1.0 was born, he lost 14% of his birth weight in the first few days of his life. While it’s normal for babies to lose some weight after birth, it is necessary to take some action if the loss is over 10%.

When Baby T1.0 was 3 days old, our midwives told us to go BC Women’s hospital to get some blood work done and to get some donor milk to help with his weight gain (due to losing 14% of his birth weight). When we returned home and about to start making dinner, the midwives called.

I picked up the phone in the living room and was told that we had to go to the hospital for a jaundice treatment immediately. (Baby T1.0 was born at home as planned, same as Baby T2.0). Apparently, Baby T1.0’s bilirubin level was quite high and the midwives were very concerned, especially given the higher than usual weight loss.

While on the phone, I looked at Mrs. T, who was sitting in the next room trying to feed Baby T1.0 with the donor milk through a tube stuck in the bottle and at the same time trying to breastfeed him. All I could see was Mrs. T was crying uncontrollably. She was scared. She was scared that our little tiny boy would not make it.

I was scared too, but I tried to be strong and supportive. This was a completely new territory for me.

We arrived at the hospital on Halloween eve. Many of the hospital staff were wearing Halloween costumes. (A hospital worker dressed up as Bane with the mask and scared the crap out of us… not a good idea IMO). After sitting in the lobby for over 30 minutes due to some confusion whether or not we were in the right place, we were finally admitted and Baby T1.0 was immediately put in an incubator with lights to help him break down bilirubin in his body. The nurses and doctor then put us on a strict 3-hour feeding schedule to get his weight up. This meant feeding Baby T1.0 exactly at midnight, 3 AM, 6 AM, 9 AM, noon, 3 PM, 6 PM, 9 PM, then repeat the entire feeding cycle again. We were also encouraged to squeeze in one or two extra feeds in between if it was possible.

Now you might think that the 3-hour feeding schedule is easy. If you think it’s easy, let me tell you, you are absolutely wrong!

It was a lot harder than we both had imagined.

It was hell.

Because each feed consisted of feeding Baby T1.0 from the breasts, supplement with donor’s milk & expressed breast milk (and later we had to introduce formula to further help with the weight gain). After every feed, Mrs. T would then pump to get some expressed milk for the next feed. The entire process would take about 1.5 hours, which meant we really would only get 1.5 hours of sleep at most in between feeds.

We did this crazy demanding 3-hour feeding schedule for over 2 months because Baby T1.0 was very slow in gaining weight. Neither Mrs. T or I really slept during that time. Somehow we survived and somehow I managed to work full time after 2 weeks of parental leave and I managed to not fall asleep at work and I did not take a nap during lunch during the 2 months period despite lack of sleep. I also somehow managed to successfully finish a multi-million dollar work project on schedule during that time.

Just like Baby T1.0, Baby T2.0 was jaundiced and had to go to the hospital for light therapy as well. When we got the phone call from our midwives, Mrs. T and I just looked at each other and said: “OK, let’s do this.” We knew what we needed to do and were ready to do that. She had lost about 11% of birth weight but having gone through the similar ordeal with Baby T1.0, we were prepared to do whatever it took to get her to regain weight. The doctor and nurses put Baby T2.0 on the same 3-hour feeding schedule to get her to gain weight (we were doing feed on demand prior). Fortunately, Baby T2.0’s bilirubin level dropped very quickly and she started gaining weight as well. We only had to stay at the hospital for one night, or about 12 hours in total.

Baby T1.0 is 4 years old and Baby T2.0 is 2 years old now. Each day, there are amazing moments when they are playing nicely together, following directions, and sweet and loving; then there are frustrating moments when they are throwing temper tantrums, screaming and crying, hitting each other, and simply won’t listen to either Mrs. T or me.

What I have come to realize lately is that parenthood is a constant learning process. There are no how-to parenthood instruction manuals, there are no shortcuts, and there’s no one solution that will address every single problem.

It’s easy to look forward and wonder what it will be like when both kids are older, more independent, and can follow instructions better. But it is also a dangerous thing to be stuck in the looking forward loop.

I have learned that I need to cherish every moment and love my kids regardless of whether we are having good or more challenging moments. Be a parent to them first, a friend second. As a parent, my responsibility is to teach them to be responsible beings and teach them important life skills.

 

Seeing and Defining “Work” Differently

How would you feel if you quit your full-time job to work exclusively as a wedding photographer? That way you can be at home during the week to look after the kids. I can then have more clients during the week.

This was a question that Mrs. I asked me the other day.

I thought what Mrs. T had suggested was a great set up. I was legitimately excited about being completely self-employed and shooting weddings seasonally. But then I started making up excuses…

“But that means I would be shooting weddings basically every weekend in the summer.”

“Hmmm, I would really need to market the heck out of my wedding photography business. I don’t know about that.”

“If I charge $3,000 or more for an 8-hour wedding, I’d need to shoot X number of weddings each year to make up my current full-time work salary. And I would need to spend X number of hours each week per wedding to edit pictures… That’s a lot of weddings to shoot and a lot of hours editing pictures each week…”

And so on and so forth.

At the back of my mind, I was feeling uneasy about the idea of losing a regular steady pay cheque every 2 weeks. Self-employed has its ebbs and flows, so income does fluctuate. Some months you make more, some months you make very little. I wasn’t sure if I was completely up for that.

As I was going down the deep rabbit hole inside of my head, Mrs. T hit me in the head with one of her usual insightful remarks:

Isn’t your wildest dream to do something that you truly enjoy? You have always enjoyed photography, and I really enjoy helping people through my holistic healing practice. Isn’t this what we planned to do once we are financially independent? I know you enjoy what you do at work, but why wait to pursuit your photography dream until we are financially independent?

Exactly what I am waiting for so I can quit my job in the high-tech world and become a full-time wedding photographer? I’m not quite sure. Maybe because I am enjoying what I do and enjoy the challenges I face every day? Maybe I’m not quite ready to be self-employed full-time. Maybe I enjoy shooting weddings because I shoot weddings part time and it’s still kind of a novelty for me to shot them. Perhaps a part of me is still trying to figure out exactly what it means to be financially independent retire early.

I dislike using the word “retire” or “retire early” because I don’t think we will ever retire in the traditional sense. Mrs. T and I plan to work on projects (like my photography business and her holistic healing practice) when we are financially independent. So the income that these projects generate is simply a bonus.

And it looks like we aren’t the only ones that have come to this realization.

“Working” entirely for yourself and taking on work because you choose to, not because you have to is 100% different than working full-time and possibly having multiple side hustles because you have to.

Start seeing and defining work differently. Work doesn’t have to define who we are. We have the power to define who we are as individuals.

 

Financial Independence is Not a Singularity

Just like parenthood, I do not think financial independence is something that you can fully prepare for. Yes, you can have ideas about what your financial independence life might look like, but that image will most likely change.

There is no one single way to achieve financial independence, there aren’t instructional manuals, and there are no guaranteed shortcuts. How we plan to achieve financial independence may be entirely different than your financial independence plans.

The more I think about it, the more I believe that financial independence is not a singularity.

What do I mean by singularity? (BTW, this is the math nerd in me making stuff up..)

Perhaps controversial, I do not believe financial independence is about a specific singular number. It’s not about having 25 multiples of your expenses; It’s not about having a set amount of money in your bank account; It’s not about withdrawing a set amount of money each year.

You may have a number based on your financial independence assumptions. You may have historical expenditure data. You may have a buffer in your budget that you can eliminate to hit a specific number.

Life is fluid and things change.

As will your financial independence plans.

There are many unexpected expenses in life that you may not be able to control – your car may require an expensive repair, your dishwasher may need to be replaced, you might be pregnant (or you might get your wife pregnant) unexpectedly, you may decide to take an unplanned trip, cost of food may suddenly increase, etc.

Rather than seeing financial independence as a singularity, see it as a loosely defined zone. You might be able to get in with X amount of money and you might be able to get in with Y amount of money. Just like life is fluid, be fluid with financial independence. Don’t lose sleep over a specific number. Don’t lose sleep over a target FI date. Don’t spend every single minute of your waking hours thinking about these numbers.

Be flexible.

 

Money or Time? What’s More Important?

Going back to the question I asked at the beginning of this post. Would you accept the job offer?

Knowing what I know, I find it really really hard to answer this hypothetical question.

On one hand, taking the job means earning an extremely high income, which will help us build up our passive income stream quickly and expedite our financial independence journey. But this will be at the expense of working longer hours, spending less time with my family, and spending more time on the road. Are the tradeoffs worth it just so we can become financially independent quicker?

On the other hand, not taking the job means status quo. We continue with our financial independence journey and follow our plans. And who knows, maybe our plans may change, and we end up becoming financially independent earlier or later. But since we don’t have an FI date in mind, who cares right?

Maybe I would say yes to the job knowing that we can expedite our financial independence journey by a few years? Maybe I would only work at this job for one year or two and try to bring Mrs. T and the kids on some work trips with me so we can spend time together?

Maybe status quo is perfectly fine because I have found the right personal balance?

Honestly, it’s a tough question to answer.

What would you do?

 

I Am Not Perfect… Improvements needed

Taking a look at the top 5 regrets of dying again, is there anything I can improve on?

Certainly.

I am far from being perfect.

For one, I can work on staying in touch with friends more. I am not one of those people that just phone up friends randomly and just to catch up with them. What I need to do, perhaps, is to have more get-togethers with friends and keep in touch with them.

Another thing is to prioritize what’s really important in my life. I spend many hours at work and often have to work at home before and/or after the regular work hours. Sometimes, work seems to be my top priority and everything else comes after work. I need to realize that family comes in first. Baby T1.0 and Baby T2.0 won’t stay young forever. I need to spend time with my kids and be the dad they need me to be. I also need to spend time with Mrs. T, work on our relationship continuously, and be the husband she needs me to be. My parents won’t be here forever, so I need to spend as much time with them as possible, and at the same time, cherish the time that we spend together. I also need to let my two kids spend as much time with their grandparents (from both sides) as possible, so they will ever-lasting memories of their grandparents when they are older.

It may seem that I have all the time in the world… until I don’t.

Determine what’s really important in my life and work on these important things. I am the master of my own life, so be that master. Don’t let other people control what I do with my life. Be true to myself.

I have been getting better at expressing my feelings after meeting Mrs. T and marrying her. This is something I will need to continue to work on. Through this blog, I have also been able to express myself. I am grateful for that.

On my last day on Earth, it really won’t matter whether Mrs. T and I achieved financial independence at 38, 40, 45, 50, or at a specific age. It also won’t matter whether we have retired early in our 30’s, in our 40’s, or in our 50’s. In the grant scheme of things, financial independence retire early is just a tiny little part of life. After looking, examining, and pondering over what is really important in life, perhaps it is nonsense to think that financial independence retire early should sit at the top of the “importance pyramid.”

On that faithful day, I want to look back at my life without any regrets and leave this world with a smile on my face, and know that I have left a legacy.

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Dividend Income – April 2018 Update https://www.tawcan.com/dividend-income-april-2018-update/ https://www.tawcan.com/dividend-income-april-2018-update/#comments Mon, 07 May 2018 10:00:04 +0000 https://www.tawcan.com/?p=7571

It’s May and the weather in Vancouver is getting warmer and sunnier every day. I have been walking around in a T-shirt, without a jacket. It feels that summer is just around the corner. Nicer weather also means that Mrs. T and I are spending more time in the garden. Mrs. T had spent some time in March planting seeds. As you can see from the pictures, we have a number of things growing in our kitchen garden already. Lots of rain in April and lots of suns the last few weeks means our lawn has been growing really fast. We have been cutting it every week or so. The best part of mowing the lawn? Getting some exercise as we have a push lawn mower.   April Dividend Income In April we received dividends from the following companies: Pure Industrial REIT (AAR.UN) BCE (BCE.TO) Bank of Nova Scotia (BNS.TO) CIBC (CM.TO) Canadian Natural Resources (CNQ.TO) Dream Office REIT (D.UN) Dream Global REIT (DRG.UN) Dream Industrial REIT (DIR.UN) Enbridge Income Trust (ENF.TO) H&R REIT (HR.UN) Inter Pipeline (IPL.TO) KEG Income Trust (KEG.UN) Coca-Cola (KO) Nutrien Ltd (NTR.TO) Prairiesky Royalty (PSK.TO) Rogers (RCI.B) RioCan (REI.UN) SmartCentres REIT (SRU.UN) Telus (T.TO) TD […]

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It’s May and the weather in Vancouver is getting warmer and sunnier every day. I have been walking around in a T-shirt, without a jacket. It feels that summer is just around the corner.

Nicer weather also means that Mrs. T and I are spending more time in the garden. Mrs. T had spent some time in March planting seeds. As you can see from the pictures, we have a number of things growing in our kitchen garden already.

Can’t wait for the strawberries.

So it begins with the greenhouse.

Lots of rain in April and lots of suns the last few weeks means our lawn has been growing really fast. We have been cutting it every week or so. The best part of mowing the lawn? Getting some exercise as we have a push lawn mower.

 

April Dividend Income

In April we received dividends from the following companies:

  • Pure Industrial REIT (AAR.UN)
  • BCE (BCE.TO)
  • Bank of Nova Scotia (BNS.TO)
  • CIBC (CM.TO)
  • Canadian Natural Resources (CNQ.TO)
  • Dream Office REIT (D.UN)
  • Dream Global REIT (DRG.UN)
  • Dream Industrial REIT (DIR.UN)
  • Enbridge Income Trust (ENF.TO)
  • H&R REIT (HR.UN)
  • Inter Pipeline (IPL.TO)
  • KEG Income Trust (KEG.UN)
  • Coca-Cola (KO)
  • Nutrien Ltd (NTR.TO)
  • Prairiesky Royalty (PSK.TO)
  • Rogers (RCI.B)
  • RioCan (REI.UN)
  • SmartCentres REIT (SRU.UN)
  • Telus (T.TO)
  • TD (TD.TO)
  • TransCanada Corp (TRP.TO)
  • Domtar Corp (UFS.TO)
  • Vanguard Canada All Cap (VCN)
  • Vanguard All-World Ex Canada (VXC)
  • Ventas (VTR)
  • Wal-Mart (WMT)

In total, we received $1,545.42 from 26 companies in April 2018. It’s yet another all-time record! This marked the 4th straight month that we broke the all-time monthly dividend income record!

Woohoo!

The green bars in the above chart just keep going higher and higher each month. Love it!

At $25 per hour wage ($52,000 annual salary), this means we have saved ourselves close to 62 hours of work in April. That corresponds to almost 8 days worth of work, or almost 2 weeks. Crossed the $1,500 milestone felt really good. So far in 2018, we have managed to cross the $1,300, the $1,400, and the $1,500 milestones. This has been quite encouraging, considering not too long ago, back in 2015, we couldn’t even cross the allusive four-digit $1,000 milestone.

Out of the $1,545.42 dividend received, $110.27 was in USD and $1,435.15 was in CAD. April was a month that was heavy in Canadian currency.

Please note, we use a 1 to 1 currency rate approach. Therefore, we do not convert dividends received in USD to CAD. We are ignoring exchange rate to keep the math simple. This is our way to avoid fluctuations in dividend income over time due to changes in the exchange rate.

The top 5 dividend payouts in April 2018 were BCE, Bank of Nova Scotia, CIBC, Telus, and TD (not in order). Dividend payouts from these 5 companies accounted for 55.7% of our February dividend income, or $860.96.

 

Dividend Income Breakdown

We hold our dividend stocks in taxable accounts, RRSPs, and TFSAs. Every year, we maximize tax-advantaged accounts first before investing in taxable accounts.

For Apr 2018 dividend income, here’s the breakdown of the different accounts:

  • Taxable: $423.09 or 27.4%
  • RRSPs: $409.49 or 26.5%
  • TFSAs: $712.84 or 46.1%

Effectively, only 27.4% of our April dividend income was taxable. We constructed our taxable accounts so we only receive from stocks that pay out eligible dividend income. Since we plan to live off dividend income when we are financially independent, we want to construct our portfolio to be as tax efficient as possible. This way, we can minimize income tax during financial independence. 

 

Dividend Growth

Compared to April 2017, we saw a respectable YOY growth of 21.56%. Wow! This is the first time in 2018 we saw an above than 20% YOY growth! Given we had yet another record month, this shouldn’t come as a surprise. Our target is to continue having the YOY growth matrix to be above 10% for the rest of the year.

Dividend Increases

After a less than stellar month in March where we only saw 1 dividend increase announcement, we hoped we would get more dividend increase news in April. Fortunately, this was the case. In April we saw 4 dividend payout increase announcements.

  • Procter & Gamble raised its dividend by 4% or $0.7172 per share.
  • Costco raised its dividend by 14% to $0.57 per share.
  • Johnson & Johnson raised its dividend by 7.14% to $0.90 per share.
  • Unilever NV raised its dividend 8.01% to €0.3585 per share. (We own the ADR listed Unilever shares)

These announcements increased our annual dividend by roughly $40 (had to estimate the amount from UL due to currency conversion).

 

Dividend Stock Transactions

In April, many Canadian stocks continued to be volatile. Enbridge stock price took a big tumble after the Line 3 approval announcement. Having cash in hand, we decided to take the opportunity to add to some of our existing holdings.

  • Purchased 100 shares of Enbridge (ENB.TO)
  • Purchased 50 shares of Emera (EMA.TO)
  • Purchased 100 shares of Enbridge Income Fund (ENF.TO)

The 3 purchases increased our annual dividend by $338.96.

Since the beginning of 2018, we have managed to increase a total of $2,134.91 in our annual dividend income simply by adding new capital to buy additional dividend stocks. This amount does not include any dividend increases from organic dividend growth and growth from DRIPing additional shares.

 

Conclusion

With 4 months in the book for 2018, we have received a total of $5,679.13 in dividend income. This amount is already over our 2013 annual dividend income and more than half of the 2014 dividend income. It’s really cool to track our progress over the last 7 years.

Dear readers, how was your April dividend income? Have you been busy shopping for dividend growth stocks like us?

The post Dividend Income – April 2018 Update appeared first on Tawcan.

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