Hey, y’all! I’m back from my blogging hiatus!
I have not published an article on this site for, let’s see, almost half a year.
But I have a very good reason for that: I am now 6 months pregnant with a baby boy!
My husband and I are beyond excited and can’t wait to meet the little one, but the early stage of my pregnancy hasn’t been the easiest: I was constantly dizzy, fatigued, unfocused and puking. Sitting down at my desk and writing seemed like an insurmountable challenge. So unfortunately I just had to step away from this blog for a while and focus on my freelance projects and taking care of my health.
With that said, I haven’t been slacking off on the money front.
With a new baby in the picture, it’s more important than ever to get our finances in order.
Let me catch you up on what we have (and have not) accomplished money-wise since last September:
We were $58,003.32 short of hitting our 2018 net worth goal
Our net worth has increased by $33,311.74 in 2018, which we’re content with, considering my husband’s job situation last year.
The latter half of the year was particularly tough for us. We have cut our budget to the bone, took on side hustles to increase our income, and managed to break even and not incur any debt.
Despite all of our efforts, we’re falling behind our net worth goal of $1,000,000 by Dec 2020 at the moment. Lots of catching up to do in the next 2 years!
My husband has landed a new job
My husband started a new job last month that not only pays significantly better than his last temporary gig but also makes him happy.
We fully expect our expenses to go up by at least a couple hundred dollars a month after the baby is born, so the timing of this new job couldn’t be more perfect. I am frankly relieved.
We have accumulated our first $100,000 in investable assets
We have literally hit that goal on the last day of 2018.
$100,000 in investable assets isn’t the most impressive achievement for our age group and income bracket. But with so much of our money tied up in real estate, saving for our registered accounts took a backseat for a while, so I’m still incredibly proud that we finally passed that threshold.
How did we get here? Part of it was through diligent saving and investing, part of it was luck.
Remember the mini stock market crash in 2018 that culminated in the worst December since the Great Depression?
We luckily managed to sidestep that. Everything I was reading and learning regarding the state of the economy led me to believe that a stock market correction was imminent, so I sold most of our stocks and ETFs in late August/early September 2018 (just before the stock market began to dip), realizing a healthy portfolio gain for the year.
As a random aside, I’ve been slowing reinvesting the money in our registered accounts since, mainly in dividend growth stocks when they go on sale.
Looking forward to the rest of 2019, we only have 3 major financial goals:
1. Open a RESP for our new baby and contribute $2,500
RESP is a tax-advantaged investment vehicle that helps Canadian parents save for their kids’ post-secondary education.
Our goal is to use RESP in the most strategic manner by taking advantage of the generous Canadian Education Savings Grants (CESGs).
CESGs work like this: if you contribute at least $2,500 per beneficiary to a RESP every year (up to a lifetime maximum of $50,000), you will receive a yearly grant of $500 per beneficiary (up to a lifetime maximum $7,200 per beneficiary).
Contributions to an RESP are not tax-deductible. However, earnings accumulated inside a RESP are only taxed when withdrawn.
And that’s a great thing!
Because the funds withdrawn will be part of our kid’s income (after they become a student), and taxed at their lower tax bracket, we should expect to pay minimal tax on investment earnings within RESP.
The magic of the compound effect is no joke – the earlier we start contributing to a RESP, the earlier we receive our grants and our investments can begin snowballing – so it makes sense to open a RESP as soon as possible to reap the financial rewards down the road.
2. Increase our investable assets by $40,000
I consider “investable assets” to be money set aside for investing – meaning that this money needs to generate revenue. Currently, our investable assets are housed in our RRSPs, TFSAs, high-interest savings accounts (through EQ Bank), LendingLoop accounts and Coinbase account.
Having just reached 6-figure investable assets, we want to further increase it by $40,000 in 2019. It’s a lofty goal, I’ll give you that.
I wish I can tell you why we want to increase it by $40,000 and not some other arbitrary dollar amount. At this point, we just want to beef up our nest egg in order to steadily grow our passive income.
3. Amass $3,000 in passive income
Currently our main sources of passive income are:
- dividends from blue-chip stocks (roughly 4% average yield)
- interests from bonds (2.1% interest rate)
- interests from LendingLoop (roughly 8% interest rate)
- interests from EQ Bank (2.3% interest rate)
The majority of our passive income should come from dividends this year, as I will continue to add new positions throughout the year.
Considering the size of our investment, I feel confident that $3,000 in passive income is more than doable IF every dollar will be invested. Since our registered accounts currently hold a large percentage of cash, whether or not we will meet this $3,000 passive income goal will depend on how the economy plays out this year.
Stay tuned for more financial updates!