How much do you know about financial independence?

Posted by: [email protected]

I hold 0.00893% GME through VEQT, along with 13,621 other companies. 

I'll be buying many decades of riding my MTB anytime I like from my VEQT tendies ;-)

I started my response by trying to figure out what % of GME that VTI holds and gave up.  VTI has 4098 holdings, listed on 407 pages of their site, I gave up.

Is 0.00893% for realz?  I’m actually curious what % it is.

Posted by: heckler

Posted by: [email protected]

I hold 0.00893% GME through VEQT, along with 13,621 other companies. 

I'll be buying many decades of riding my MTB anytime I like from my VEQT tendies ;-)

I started my response by trying to figure out what % of GME that VTI holds and gave up.  VTI has 4098 holdings, listed on 407 pages of their site, I gave up.

Is 0.00893% for realz?  I’m actually curious what % it is.

Yep, 0.00893% of VEQT. For Canadian Vanguard ETFs you can download an Excel sheet with all holdings.

GME is 0.02079% of VUN (same holdings as VTI). VUN is 43% of VEQT.

Posted by: [email protected]

Yep, 0.00893% of VEQT. For Canadian Vanguard ETFs you can download an Excel sheet with all holdings.

GME is 0.02079% of VUN (same holdings as VTI). VUN is 43% of VEQT.

I made out like a bandito!

Posted by: heckler

How's inflation going for ya?

The nice thing about spending well below our means is that the high inflation is relatively insignificant. My savings rate was 70% last year, so spending 30%. With ~8% inflation I should now be spending ~32% and still saving 68% so no big deal. We are flexible and adapting. Like Vik, smart grocery shopping, very little driving, not eating out much etc. We're also not big spenders so there isn't much to inflate to begin with.

I think not being car-dependent probably makes the biggest difference. Many people were driving themselves poor even before gas prices shot up so they must have been hit hard.

Posted by: [email protected]

I think not being car-dependent probably makes the biggest difference. Many people were driving themselves poor even before gas prices shot up so they must have been hit hard.

This ^^ is definitely a factor for a lot of people. I've driven ~1100kms so far this year.

FHSA is quite useful for me, though I admit there probably aren't a lot of people that are in my position. 

1. Had to sell my house in 2017 due to divorce, and haven't been able to buy back in. Anyone who hasn't owned a home in over 4 years qualifies as a 'first time' home buyer.

2. Retired, and my RRSP needs to be drawn down to minimize OAS clawbacks when I'm forced to convert the RRSP to a RRIF and take the minimum annual draw.

This FHSA allows me to move $8k/yr from my RRSP to a FHSA, then use the FHSA funds for home down payment without being taxed on the RRSP withdrawals. Not a huge sum but getting $8k out of my RRSP without tax would mean $2-3k less tax paid. If I do this for '23 and '24 then buy a place, that puts $5k in my jeans.

Posted by: KenN

If I do this for '23 and '24 then buy a place, that puts $5k in my jeans.

$5K is nothing to sneeze at. I'm glad it's going to work out well for you.

You might have heard interest rates are heading up. I know how variable mortgage holders feel, but I’m curious who has optimized their cash savings, and how.

Our two savings “big bank” accounts now make 0.5% (easily accessed) and 1.3% (if balance increases $200/mo). Seeing the $ difference between these two rates made me investigate further.

A new account type offers easy access with 1%. I was planning to double my money and ditch the 0.5% account

However….

Online HISA could get me ~3%, and non-cashable GIC closer to 4% depending on the length of term. But lock into a GIC while rates are climbing?

The debate now is the taxman. Where do I hold short-term (<1 year and 3-5 year plan to spend it) cash? Still working (for now, OMY)

Posted by: heckler

You might have heard interest rates are heading up. I know how variable mortgage holders feel, but I’m curious who has optimized their cash savings, and how.

I keep 1 year of spending at the lower comfortable bound of my budget in cash in a savings account at TD at 1.25% currently. I keep 3 years [higher bound] to 5 years [lower bound] of money in bonds at Questrade in a mix of short term and medium term bond ETFs.  My income is sporadic these days. If I need money I take it from my TD cash savings. If I earn more than I need in a month I top that TD savings account back up. If I still have more excess income I'll invest it in stocks. If my TD savings run dry I sell some stocks in my RRSP and replenish the TD savings.

The cash I hold is pretty small compared to my investment account value so I don't spend a ton of time trying to optimize its return.

FWIW - I have a variable rate mortgage. Whenever the rate goes up I try and remember the pile of debt I owe is going down in value much faster than the payments are going up so I am winning in that regard.

Posted by: Vikb

FWIW - I have a variable rate mortgage. Whenever the rate goes up I try and remember the pile of debt I owe is going down in value much faster than the payments are going up so I am winning in that regard.

Uh?  I’m not sure I follow on this one.

Posted by: Couch_Surfer

Posted by: Vikb

FWIW - I have a variable rate mortgage. Whenever the rate goes up I try and remember the pile of debt I owe is going down in value much faster than the payments are going up so I am winning in that regard.

Uh? I’m not sure I follow on this one.

Bank of Canada inflation calculator says inflation 2021 --> 2022 = 7.59%

My mortgage interest increase from same time 2021 --> 2022 = 1.45% to 3.7%

Difference is 7.59% - 3.7% = 3.89%

I got ~$500K from lender in 2021 dollars and bought a house.

3.89% of $500K is ~$19.5K.

So I am paying back the lender in inflated dollars in 2022 and beyond. Inflation at 7.59% is greater than my increased mortgage rate at 3.7% hence my debt is being inflated away at a faster rate [~3.89%] than the interest charges are growing. So I am paying back less value than I could have if inflation was steady for the life of my mortgage. This is one of the reasons I plan to maintain a mortgage on my property indefinitely. As it gets paid down I'll pull out $$ out every 5 years when I renew the term and I'll reamortize the mortgage back to 25 years. If interest rates vs. inflation change so this isn't attractive I'll just pay off the mortgage until they are again.

I also live in an area with a serious earthquake risk so I'd like the bank to own a significant chunk of the property!

Note ^^^ these are rough numbers and the dates for starting the mortgage don't line up perfectly with the inflation calculator so they are just for illustration purposes only.

Thanks - that’s more hoop jumping than I want to do in thinking about m6 own debt load vis a vis inflation, but appreciate the rational of it.

The 30,000' view is that mortgages can be a useful inflation hedge in your overall financial plan.

https://www.cbc.ca/news/business/credit-card-surcharge-shop-1.6606997

Looks like we’re going back to using cash.  A 2% hit on all spending (currently with a no fee cc) is not going to happen.