2017 Goals: Mid-Year Checkpoint

As we pass the halfway mark of this year, it’s time to review the goals that I originally laid out in January.

Goal #1: Increase TFSA Contributions

My target for this year was to cut my TFSA contribution room in half. Going into this year, I had a little over $40,000 in contribution room, so to cut that in half meant I had to invest at least $20,000 into my TFSA. I’m happy to say that so far this year I have beaten that goal by 35%. Moreover, if I am able to maintain this pace, I will have completely used up all of my contribution room, meaning next year I would start with a fresh $5,500 limit.

Keep in mind that the funds transferred into my TFSA were not necessarily net new cash – much of it was moving holdings from my margin account to my TFSA to reduce my tax burden. Regardless of the source of money transferred in, the net result is that any gains from inside my TFSA will be tax free, forever.

Goal #2: Minimize Taxes

I’ve managed to completely eliminate about 98% of my margin account holdings, by moving all of my US investments into my RRSP, and all of my Canadian investments into my TFSA. One downside to doing this is that if I have any losers in my portfolio, I will no longer be able to use the capital losses to offset any capital gains. But, that shouldn’t matter…All investments in my TFSA are exempt from capital gains taxes, and any (capital) gains in my RRSP won’t be taxed until I retire years from now. So the loss of a tax write-off is more than made up for in the gain in no taxes.

Goal #3: Rebalance my Total Fund to my Target Allocation

I had intended on revisiting my IPS this year, but haven’t had a chance yet to do so. Sadly, I haven’t had a chance to do that yet, nor rebalance my portfolio. Luckily I still have six months to do so!

Goal #4: Increase Passive Income by 5%

One goal was to increase my passive income by at least 5%, and that could have been done organically (i.e. through dividend increases), or accretively (i.e. through purchasing of additional shares). At the end of last year, my projected annual passive income was over $6,000. As of June 30, 2017, my projected annual income is has gone up by 20.15%, or $7,400. The source of the gains was both organic and accretive: dividend increases accounted for 28.10% of the overall gain, and accretive gains (i.e. new investments) accounted for 71.91% of the gains.

But wait, it gets better.

Because all of my investments are now in tax advantaged accounts, I no longer pay taxes at the moment on any of those investments. Assuming a marginal tax rate of 35%, that means I am currently avoiding over $2,600 in taxes!

Goal #5: Update and Expand Investment Research

Finally, I wanted to increase my investment research, by researching at least four companies this year. To support this goal, I started writing articles on Seeking Alpha, along with articles on this site. To date, I have written 12 articles on this site, and 9 on Seeking Alpha:

I have certainly passed my target of 4 companies to research!

Summary

To summarize, so far this year I have completed 4 of my 5 goals:

  • Increase TFSA Contributions: Exceeded!
  • Minimize Taxes: Complete!
  • Rebalance: Not yet started.
  • Increase passive income: Exceeded!
  • Update and Expand Research: Exceeded!

The rest of the year will be spent on re-formalizing my IPS, and continued research.

What about you? How are your investment goals going?

Onwards and upwards!


Investment Goals: 2017

It’s that time of year where we start looking at investment goals for the new year.

I didn’t really have any goals F2016, except to become a member of thediv-net.com, which I’m happy to say that I was successful in accomplishing! I also mentioned in several posts in F2016 that up until recently I had lost focus on my investment portfolio. Well, for F2017, I plan on changing that trend.

To that end, the goals!

Goal 1: Increase TFSA Contributions

I have been an infrequent contributor to my TFSA for the past 2+ years. To pay off my business school loan, and to purchase a new house with my family, I made some significant withdrawals. Taking into account the $5,500 contribution limit for F2017, I have a little over $40,000 in contribution room in my TFSA. My goal for F2017 is to contribute to at least 50% of that limit, or $20,000.

Goal 2: Minimize Taxes

My investments fall into five investment books: a taxable margin account, a tax-free account, a tax deferred account, a certificated account, and a LIRA. My second goal for F2017 is to minimize taxes by consolidating investments into my tax deferred and tax-free accounts, where it is sensible to do so.

Selecting which investments go into tax sheltered accounts is not a trivial task. On the one hand, moving investments from my taxable account will defer any taxes payable (in the case of my RRSP), or eliminate taxes completely (in the case of my TFSA). However, tax sheltered accounts have a disadvantage in that any losses cannot be used to offset capital gains. This means that I will have to take a close look at the investments to ensure they are good fit to go into an account where I am unable to do any tax loss harvesting. Put another way: I have to ensure I am comfortable (financially, and psychologically) to move investments, confident that they will not go down in value to the point where I sell them at a loss.

That said, Goal 1 and Goal 2 are complementary: by moving investments from my taxable margin account to my tax-free account, I can easily come within throwing distance of Goal 1.

Moreover, by moving my US investments from my margin account to my tax deferred RRSP, I will reap an immediate 15% cost avoidance: US based stocks are not subject to the (15%) withholding tax on US dividends, which means I will receive the full amount of dividends from my US holdings.

Goal 3: Rebalance my Total Fund to my Target Allocation

When I started investing in earnest in F2012, I had a very rigid target allocation. The past few years I have deviated very far from that. So my third goal (and arguably the most important) will be to revisit my investment policy statement, and determine the appropriate asset mix for my investments.

Goal 4: Increase Passive Income by 5%

As I am a dividend investor, passive income is my primary goal for investing. Following my December 2016 results, I will be baselining my F2016 income, with a goal of beating that income by 5% this year.

I plan on accomplishing this goal through three key strategic activities:

  1. Re-allocation. I know for a fact that my portfolio is overweighted in some areas. Once I complete Goal 3, I will be reallocating funds to other holdings, to increase exposure to some of my more successful dividend holdings.
  2. DRIP Investing. I plan on increasing exposure to DRIP investments, as they provide a frictionless vehicle for quickly growing dividend income.
  3. TFSA Contributions. As mentioned with Goal 1, I plan on increasing my TFSA exposure. This increase will undoubtedly bring more passive income into the total fund.

Goal 5: Update and Expand Investment Research

Many of my investment research posts are horribly out of date. As the calendar year is starting, many companies I follow will be releasing their annual results in the coming months. I plan on updating all of the companies I follow based on F2016 results. Moreover, I am targeting to analyze at least four new companies this year.

And there you have it; the F2017 goals! I would love to hear what everyone else’s goals are for F2017.

Onwards and upwards!