Set SMART Goals in 2018

Last week, as planned, I dutifully dumped $11,000 into our Tax Free Savings Accounts (TFSA). That's $5,500 for my wife and $5,500 in my own account. As usual, the Bill Payment from our chequing account to the Questrade TFSA accounts takes a few days to settle before it becomes available for investing in the TFSAs.

I get a little lazy when it comes to financial stuff and investing when I'm on vacation, but now that we're back it was time to make our actual investment purchases.

In the past, I used our TFSAs as a bit of a play account. My rationale was that transactions are not taxed in a TFSA, so this was the best place to buy and sell individual stocks. It was also a leftover symptom of the days where I always invested in individual stocks and all we had were TFSAs and RRSPs. But I'm making a pledge here today that those days are over.

From this year forward, there will be no more single stock buying and selling or "playing" in our TFSAs or elsewhere. I'm moving to a straightforward bi-weekly peek that investing should be. ETFs only. That's it.

It's not that I lost money playing with individual stocks. In fact, miraculously I somehow pretty much kept pace with a buy-and-hold Canadian Couch Potato strategy over the years. For example, in 2016 a bet on Canadian bank stocks resulted in me earning 18% returns.

Our combined TFSA accounts today are worth around $160,000! I'm not complaining about the results. Instead, it's just a life choice and sustainability choice.

Analyzing Stocks vs Focusing on Strategy

When a person buys individual stocks, they often fool themselves into being a sort of amateur stock analyst. I did this, so I am a fool.

Reading MD&A reports, financial statements, analyzing PE ratios, checking moving averages, following writers on Seeking Alpha. The whole works.

However, if I'm really honest with myself it's not stock analysis which I enjoyed. Instead, I enjoyed being right. Analyzing a stock, making a purchase, and seeing it go up in price. It was a type of self-validation.

This type of self-validation made me emotional about stocks. It wasn't the outward, plainly visible type of emotion where I behaved like a bipolar depressive individual depending on the stock performance that day.

It was more of a deep smugness when things went my way and a form of worry when they did not. This is foolish.

Instead, I'm going to focus intently on strategy. I'm continually working on cleaning up my strategy so that it requires less work and remains within the boundaries of my loss parameters.

I'm not going to become a Couch Potato buy-and-hold investor. Why? Because it doesn't fit my loss parameters. Also, the traditional form doesn't really lend itself well to leverage and careful use of leverage is an important part of my investment strategy. (Something I will share more on in the future).

Setting A SMART Goal for 2018

One thing I've learned in my investment journey is the importance of setting clear goals. I use the SMART principle because it worked for us.

Time Limited

In the past few months I created spreadsheets to track our net worth since marriage. I used it to create the nice graph on the About Daren page.

I was amazed to see the results of SMART goals there. In 2010, we had about $50,000 to our name. It took four years to double that to a little over $100,000. During these four years I hardly did any investing at all and our savings were pumped into our house and our education costs. Meanwhile our investment accounts foundered. We didn't have goals other than to stay out of additional debt and pay our mortgage and car payment.

However, in 2014 we started to get more serious about investing. We started by putting some money into RRSPs and TFSAs. As a result, we doubled our net worth that year.

In 2015, we set the goal of topping up my RRSP and TFSA accounts until they were maxed. It took all year, but we ended up more than $100,000 wealthier that year.

In 2016, our goal was to max my wife's TFSA, keep up with my TFSA and RRSP, sell our house, and start a Cash/Margin account. Again, we saved around $50,000 and ended the year more than $100,000 wealthier and debt free!

In 2017, our goal was to save $60,000 and focus on strategy, including introduction of leverage. We beat our goal by October and ended the year over $200,000 wealthier!

In 2018, our SMART goal is to once again save $60,000. This time I would like to refine our use of leverage and make our investment strategy simpler. That's a little vague, so more Specific and Measureable my goals are to have every stock position leveraged (by no more than 2:1) and to buy or sell a position no more than once every two weeks (not including stop-loss sales). Given that we've dumped $11,000 into the TFSAs so far, we have $49,000 of saving to go and I'm excited to see the progress!

Your Goals for 2018

While I was inspired by others in my journey, I am not endorsing our path for everyone else out there. People have different life circumstances to deal with and I understand my wife and I are fortunate with our dual income, no kids situation.

This year I encourage you to set a SMART financial goal for yourself. Try to max out a TFSA account ($57,500 cumulative limit if you were 18 or older in 2009). If you are paid bi-weekly, it's an ambitious $2,211 per paycheque.

If that's too much, at least put in the increase for 2018 ($5,500). If you are paid bi-weekly like many, it would take $211 per paycheque to hit that goal.

Open up a Questrade TFSA and begin by purchasing an ETF. A simple, broad global stocks fund is a great place to start. Right now XAW.TO is arguably the best choice out there and last year it returned 15.88% after fees and taxes. That handily beat the 1% or less that your big bank TFSA pays you.

Side Note: I've updated the portfolios page and last month's update now that iShares has released their December returns. The Dual Momentum call is still the same as XEF.TO (Developed Countries Stocks) for January.

I've also cancelled my email service to save costs as my 1-year free trial expired. To get hold of me, please leave a comment.

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4 Replies to “Set SMART Goals in 2018”

  1. Hi Moose,
    I came here after a comment you left on MMM’s website. Thanks for sharing and doing what you do. Just reading a couple of your articles has helped the right juices flow in my brain. I am quite clearly inexperienced in the realm of wealth, but I am young and know that it’s only a matter of time and staying healthy once I’ve begun the learning process. All the best from Ontario.


    1. Mr. Rich Moose says:

      Hey Andrew, thanks for checking out the blog. MMM is a fantastic community! Let me know if you have any questions. I’m always looking for blog post ideas. Happy saving and investing!

  2. Hi Daren,

    Where and how should one invest after a tfsa is maxed?

    1. Mr. Rich Moose says:

      Hey Katie, depends on your income levels. If you or your partner earn >$46,000 per year in taxable income then it’s likely that the RRSP would be the next choice.
      If net taxable earnings are lower, a cash/margin account would be better.
      With the RRSP remember that you need to invest the tax refund to get the full benefit of that account.

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