## The Big 2017 Financial Review

As we’re well into 2018 by now, it’s time to share the Moose house numbers for 2017.

As you probably figured out by the regular monthly updates, 2017 was a big year for us. We hit some big financial milestones and our investments rocketed higher thanks to disciplined investing and favourable markets.

We started 2017 with around \$442,000 in our investment accounts. On top of that, we have pensions which were valued at approximately \$103,000. Our other assets and debts are trivial. We pay off our credit cards each month and we always carry a moderate balance in our chequing accounts to cover about 2 months of expenses.

We have been renting since 2016, so there are no real estate assets or associated debt. At the beginning of 2017, we owned two vehicles: both older models. The value of these vehicles would have been around \$13,000 combined.

## Savings Rate Information

Since we both have careers with defined benefit pensions and plenty of mandatory deductions, calculating the true savings rate can be a bit subjective. Do you include employer contributions to certain plans into income and expenses? If you include pensions, should you also include benefits and union dues? How much control do you have over these kinds of expenses?

I decided to keep things as simple as I could without distorting the numbers too much.

Basically I took our net income (which is the money actually deposited into our accounts) and added both our pension contributions and the employer contributions. This formed the denominator of the adjusted income number.

Then for savings—the numerator of the equation—I added our personal savings from net paycheques, our pension contributions, and the employer pension contributions. This isn’t a perfect calculation because my wife’s pension isn’t vested yet, meaning her employer contributions don’t go towards our net worth numbers. However, we’ll assume she will be in the pension plan at least until that becomes vested.

## 2017 Financial Information

I welcome any questions about these numbers, including suggestions on how I should better calculate savings rates!

#### Beginning Net Worth Data

Investment Accounts: \$442,000
Pensions Value: \$103,000
Vehicles: \$13,000
2017 Starting Total Net Worth: \$558,000

#### Income Data

Net Income: \$113,000
Estimated Taxes: \$30,800
Other Federal Deductions: \$6,800
Benefits & Pension Payments: \$22,900
2017 Combined Gross Income: \$173,500
Other Gain: \$4,300 asset sale from our truck

#### Expenses Data

House Rent Expense: \$19,150
Tuition Expenses: \$2,700
Other Living Expenses: \$31,650
2017 Total Expenses: \$53,500

#### Savings Data

Personal Savings: \$63,500
Pension Contributions: \$19,450
Employer Contributions: \$24,550
Savings Rate from Adjusted Income: 68.5%

#### Ending Net Worth Data

Investment Accounts: \$671,000
Pensions Value: \$135,000 (wife’s pension is not vested yet)
Vehicle: \$7,000
2017 Ending Total Net Worth: \$813,000

## Summary Observations

Overall I'm very happy with our numbers for the year. Our expenses were kept pretty tight considering our lavish, first-world lifestyle. We eat like kings, we do a fair amount of entertaining, we live in a beautiful newer rental home, drive a nice and reliable vehicle, I ride a super-nice mountain bike, and we live in general luxury and comfort.

We keep our expenses under control mainly through limiting outside entertainment (bars, restaurants, big name concerts, etc.), choosing to rent a size-appropriate dwelling instead of buying a too-large, too-risky house, having just one older model vehicle (2010 Mazda), and focusing on basic and wholesome living. We buy staple groceries and cook nearly everything from scratch, we make our own wine, and we spend a lot of our spare time with friends at homes or outdoors, reading and studying, and enjoying fun volunteering activities.

In 2018, I expect that our rent expenses are going to drop a bit while education expenses will go up significantly. Our other living expenses will remain pretty comparable.

We've got a few vacations planned, but they're already partially paid for and part of our normal spending. Given our spending, we would need a net worth around \$1.5 million to quit our jobs tomorrow and never work again without any reduction in spending power for the rest of our lives. (That's not the plan.)

Our income should go down a bit as I am trying to work less overtime and will be booking most of my overtime for more days off instead of pay. Unfortunately in my position it is nearly impossible not to work overtime as I am a shift worker with an odd schedule and working on some of my days off is part of the job and largely out of my control.

We are in the fortunate position where our household income is definitely higher than the Canadian average. The median total household income for couples in Edmonton area is around \$120,000, so we would be solidly in the upper-middle class (approx. 70th percentile).

With two, full-time earners in this house, it makes sense that we earn above the average. Considering our education levels, we are right in the ballpark for average earners with my wife earning a bit below the average and myself earning above (mostly because of that overtime pay).

If you are looking to get ahead financially, Alberta is a good place to be!

All comments are moderated before being posted for public viewing. Please don't send in multiple comments if yours doesn't appear right away. It can take up to 24 hours before comments are posted.

Comments containing links or "trolling" will not be posted. Comments with profane language or those which reveal personal information will be edited by moderator.

## Monthly Summary

2018 has started off with a bang! This past month we were quick to top up both of our Questrade TFSA accounts (\$5,500 in each one). The stock markets have roared ahead this month as well.

I had to laugh when people started calling the next correction after just two consecutive down days near the end of a really profitable month. Who knows, January 26, 2018 might be the peak of the 2009-?2018? stock market run... but it's absolutely nuts to make that prediction after just two down days. Right now, all anyone can say with certainty is the trend is most definitely UP!

Thinking about the mini-panic and doom forecasts of the past few days, I realize our portfolio has never gone through a major downturn yet. Our biggest drawdown was around 16% in the 2015 market correction. (I started investing after the 2007-2009 crash and our investments were tiny in the 2011 correction.)

In the past few months, I've done a lot of market research, back-testing, and fine-tuning our investment strategy. I am confident that we can handle pretty much anything that comes our way.

Having predetermined selling points is very important in our strategy. Our portfolio is running very hot right now with nearly every position using 2x leveraged index ETFs or purchasing ETF positions using 2:1 initial margin.

I stuck my pledge not to dive into my investment accounts more than twice this month. However, I realize I'll probably need to log into my accounts once a week.

With the big upwards move of the past month, my stops got a little too far away from the price. By the end of the third week of January, my positions were up around 10% on average and I had not adjusted my stops up at all. That's a bit silly, but nothing a weekly update can't fix.

The move to Interactive Brokers has gone very smooth so far. The transfer of our positions was easy and I am enjoying IB's more technically advanced systems. I only placed one order so far, but I was happy with the order system, speed of the execution, and the price.

I can't comment on the tax situation yet as I have not received my tax slips for 2017 in my Questrade account. That said, I did an in-kind transfer using the ATON system, so there "shouldn't" be any tax issues.

After the transfer, I was able to update my position cost on the Interactive Brokers site, so proper reporting should not be a problem when I sell the transferred positions.

In December 2017, we finished the month with a total of \$670,856 in our investment accounts. That was up a massive \$230,000 for the year with a 35% investment return. The larger the accounts grow, the bigger the impact of the investment returns. At this point our monthly contributions seem to barely make a dent, but I recognize they are still important!

I hope through sharing our real numbers you will be inspired to start saving and investing young—it pays!

## The Current Numbers

Here are our current Investment Assets as of the last trading day in January. We invest in TFSAs, RRSPs, and a joint margin Account. We use a trend investing strategy to determine what we buy and when we sell our ETF positions.

January 1 of the current year is in brackets to help illustrate the change during the current year. Net Worth Change reflects the total increase/decrease of this past month including new contributions.

The Investment Return is the total year-to-date return on our investment positions, corrected for new contributions at the end of the month. Due to the end-of-month adjustment, the true rate of return on a daily adjustment basis would be slightly different dependent on the intra-month return on the new contribution.

Total Investments:  \$739,108  (\$670,856)

Net Worth Change:  +\$68,252

30x Rule Safe Annual Income:  \$24,637  (\$22,362)

YTD Investment Return:  +8.53%

## Background Story

My wife and I are late-20s professionals working in the public sector. We don't earn enormous salaries, but by keeping our spending under control we save a large portion of our incomes each month. Our Investment Assets are 100% the result of our own hard work and the return on investments; we have not received any gifts or won any lotteries.

While we both work in pension careers, for this purpose we don't include pension values in our net worth nor pension contributions in our savings. Our investment assets and contributions are from our net paycheques.

We invest primarily with index ETFs using a trend strategy that I personally developed and maintain. To keep our investing costs as low as possible, I use Questrade and Interactive Brokers as my online brokerages. Questrade is my go-to choice for registered accounts. Interactive Brokers offers powerful tools, low commissions, and low margin interest for our joint margin account.