Except for my home contents and life insurance policies, and mandatory spending on all things life, work and Make More Monie related, all my financial activity takes place within four different accounts. One’s an all-inclusive checking account, which, provided I keep a minimum balance in it, the monthly fee is waived. It also features unlimited transactions and free credit, providing all charges are strictly paid off monthly, which negates any interest fees. Rarely will I ever need to use my debit card as a result of this discipline.
The remaining three accounts are all designed to maximize my limited financial resources and protect them. I do this by investing funds in common, dividend-paying and growth stocks and/or ETFs (exchange-traded funds) of solid companies in the Canadian, American, Investible and Emerging Markets around the world, especially those that also have potential for increases in value via DRIP’s (dividend reinvestment plans). These ensure all returns are reinvested. I also pay particular attention to the tax laws that apply to these various investments and ensure that each account’s holdings are optimized.
These accounts are a non-registered Cash Account, a registered Tax-Free Savings Account and a Registered Retirement Savings Plan account. They’re referred to this way as the latter two are registered with the Government of Canada to keep track of the investments within so they are taxed appropriately.
The annual/total amount I’m allowed to allocate to my TFSA and RRSP, is routinely invested and the maximum allowed also just happens to equal all that I have to spare, after the costs of the aforementioned food, clothing, shelter, work and Make More Monie mission expenses are met.
To reiterate; nothing is spent on anything I do not have to have; no dinners out, no movies out, no nothing out. Dinners out are replaced with great food and drink in, purchased at grocery and liquor stores – on sale wherever possible – prepared and enjoyed at home. Entertainment is provided via a digital cable-enabled flatscreen or laptop, showing programming found for free, and of course, the gym.
Specifically, my TFSA is where one of my two initial levels of investments are held. TFSAs are apparently favorable, tax-wise, for, among other investments, CA dividend/growth and US growth stocks, REITs and ETFs, as capital gains on US growth stocks are sheltered, unlike US dividend paying stocks. As such, this is where I purchase and hold primarily CA growth stocks, CA/US growth ETFs, an S&P/TSX ETF and an S&P 500 ETF. For additional diversification, I also hold an Emerging Markets ETF and an EAFE (Europe, Australasia and the Far East) Investible Markets ETF, along with a CA REIT ETF.
My Self Directed RRSP is where the other initial level of investments are held. RRSPs are apparently favorable, tax-wise, for, among other investments, CA/US dividend stocks, REIT’s, ETFs and bonds. As such, this is where I hold primarily US dividend stocks, a US dividend stock ETF and a US REIT ETF.
The cash account doesn’t offer tax benefits, but also doesn’t have a capped contribution limit, making it the only account I have (as a Canadian) for holding additional investments, once RRSP/TFSA limits are reached. Such accounts are apparently also suitable tax-wise, for CA dividend stocks and ETFs. As such, this is where I purchase and hold all of my Canadian, relatively-stable and rock-solid dividend stocks.
This activity is becoming increasingly critical. Having reached my age without being able to set much money aside, my capacity to afford a comfortable future – and avoid the fate of many I know, wasting away in dull and dreary old-age factories – is in serious jeopardy. Having said that, since I’ve been able to master poverty and the delayed gratification that accompanies it, things just may work out.
I say this as, just to get to where this small town, folksy, farming community boy is now, I’ve had to become somewhat of a de-facto, quintessential, value investor; one that legendary value investors Warren Buffet and Charlie Munger, equally famous for being folksy as well, would be proud of.
Disclaimer: The information contained herein should not be construed or considered professional advice. Nonetheless, thanks for reading! If it resonates, there’s “plenty more where that came from” on Facebook, Instagram, YouTube ‘n’ Twitter.