A’s Journey

My relationship with money began when I was a youngster in Canada. My parents were my biggest influence and made a point to save as much as they could. They were frugal. Along the way they made some money mistakes and shared them with me so I could learn too. For example, they once gave about $10 000 to a financial advisor recommended by a friend, and lost all their money.

They were pretty clear that I should not spend more than I earned and debt was to be avoided. So growing up, I had one credit card and paid off any charges immediately. Paying interest on a balance seemed like giving away my hard earned money to the bank! No thank you!

My earliest memory with money was putting money into ING Direct, now rebranded into Tangerine. This was a bank where I’d get a slightly higher interest rate in a savings account then your regular bricks and mortar bank. So I parked part of my savings there beginning in high school. ING also had some GIC’s (which are term deposits with slightly higher interest rates, where you cash is locked in for a specific period of time). When I was in high school I experimented with some of my after school job savings, and put it into a European Mutual Fund.

Full disclosure, growing up I was also privileged in the sense that my parents paid for 100% of my university education. I lived at home and tuition was about $20 000 for a 5 year degree, so I didn’t graduate with any debt. Thanks mom and dad!

Then when I moved overseas after university I opened up an account with HSBC Hong Kong and put some cash in foreign accounts with higher interest rates like AUD or NZD hoping to make again some extra money.

My first year living overseas in Hong Kong was my watershed moment. At that time I was living rent free with relatives in Hong Kong. For the first time I was working full time and had minimal living expenses.

However, at the end of the year I realized that I was no longer frugal and had spent all of my job earnings! How could that have happened?! That June night, I had a chat with my cousin. He was studying to be an accountant and showed me how he tracked his expenses with a spreadsheet. I was so inspired that I started creating my own yearly budget on Excel.

For the next 12 years as I moved out on my own, I tracked my monthly expenses. I would keep most of my receipts and enter them in the spreadsheet on the weekend. June was the most fun month as then I would tally up my expenses and see how much I had saved over the year.

About seven years ago, I discovered Andrew Hallman’s book “Millionaire Teacher.” Reading his book helped me understand some of the basic concepts of index fund investing. While working in Prague, I managed to make a trip to Singapore to DBS Vickers Bank and open up a trading account. There I bought my first index fund. The online platform though was not so easy to use and a few years later I closed this account.

When I moved back to Toronto 5 years ago, I opened up a trading account with TD WebBroker. It was here that I created my first index fund portfolio. Here is my current portfolio allocation with TD:

My XWD did quite well, but has a higher 0.44% MER (Management Expense Ratio). But compared to other actively managed mutual funds that have a MER of 2-3% I still think it’s still acceptable. There’s been less growth in the other 2 funds.

TD WebBroker’s online platform was very intuitive and easy to use and as well had some great analytical tools. I felt I had a slightly better understanding of how my investments were doing.

I did run into some problems though. In theory I was suppose to re-balance my portfolio yearly and make regular contributions. I did not. I found re-balancing to be tricky. As well, my goal was to create a diversified investment with a bit more focus on Canadian investment products since I plan to retire in Canada.

The theory behind my portfolio is that my bond allocation would be a cushion when my equities investments dropped in value when the market went down, however hopefully the bond investment’s value would rise when this happens. My goal is to keep this investment for retirement purposes and not sell it.

After a few years, I also realized my index funds were also increasing in value due to monthly dividends too. I didn’t realize this until I took a closer look at my statements. I needed to take more responsibility for reading and understanding some of the financial jargon!

Even though my net worth was increasing year by year, I was not sure if this was due to my savings, an increase in my portfolio’s market value or the yearly dividends. This is something I have to sort out!

Finally this year, I decided I wanted a one product solution. I was tired of the re-balancing math. So this month I finally purchase Vanguard’s Balanced Index Fund (VBAL). This fund had a MER of 0.22%. It was 60% equities and 40%Bonds.

The rest of my extra cash I’ll continue to put in high rate savings account and term deposits.

My goal ultimately is to be financially independent and retire early (FIRE) in 10 years.