The Resolution: March 2018

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Here we go again.  The resolution continues.  How many of you are still thinking of your New Years’ Resolution?  Are you tracking your progress?  How are you doing so far?

As my readers know, my New Years Resolution is to spend no more than $1250 CAD per month during 2018, or $15,000 for the year.  In January and February combined,  I ran up a bit of a budget deficit, and going into March was about $900 behind on my goal already.

Something Good

I was much closer to my budget this month, having reduced my spending from February.  Considering that my time spent in Mexico in March was a little more expensive than usual, and that I had to replace some of the underwear and T-shirts the folks at the Laundromat seem to have been misplacing*, I’m still quite satisfied with my performance and still on track for the year to spend less than ever and save more than ever.  After all, March was my best month of the year so far.

Something Bad

That said, I have added to the deficit.  I spent $1,500.94, $250 more than my goal.  My daily average cost in March was $48.42, and my grand average for the year is $55.38 so far, with a new total deficit of $1,203 .  Although it was my least expensive month of the year, with its added deficit, I am now on track to have a annual deficit, albeit small ($37).  Hopefully I can make that up somewhere between here and there rather than add to it, and finish in the green, although if I finish the year having spent $15037, I will of course consider it a resounding success.

Also, for anyone holding equities, the last few months have been less thrilling.  In fact they have probably been more painful than pretty much anytime since 2009.  I suspect that, like me, many of us out there haven’t been through a downturn like that yet, and have now received a small taste of what it might be like.

I have only been directly investing in equities for the last few months**.  In that short time, I have seen the peak of the Marijuana market’s speculation bubble followed by some of the worst days/weeks/months and, just since today, fiscal quarters in years.  I have erased almost all of my windfall gains from December, but I have learned a heck of a lot in such a short period of time and am happy with my current positions and my strategy and resolve for my future of investing.

Something Learned

Don’t count your chickens before they hatch.  The reason you should assume a modest return like 7% in your retirement planning, is because there WILL BE downturns. Which means there will be entire YEARS or more where your account is bleeding, and you have to sit pat or even invest more to maintain the desired asset mix in your portfolio.  Unless you plan to spend your lifetime trying (and failing) to time the market, you have to be prepared to live with that.  It’s easy during the good times to start to look forward, using current return rates to calculate returns into perpetuity,  and laughing all the way to the bank about how easy it is to get rich.   But that’s now how it works.  The best thing to do is to check in monthly or quarterly to make sure your desired asset mix is in tact, and nothing else.

Although the advice “don’t buy individual stocks” is hardly novel at this point, most people still do.  And in any case, it is more of a note-to-self than anything at this moment.  Most stocks don’t exist just a few years after their inception.  Decide on your Equities:Fixed Income (i.e. stocks:bonds) ratio, diversify your risk, stop checking your Stocks App every hour, and hold on for the long term without wasting your time, energy and mental capacity trying to follow every single move in the market and associated onslaught of opinions associated with them.***

No matter how strong of a stomach you think you have, the most tempting time to buy is when the market is at it’s highest while the most tempting time to sell is when the market hits rock bottom.  Over time, this is what will play out on average, even for the most strong-willed person with a ton of trading experience and financial ‘expertise’.

In fact, I was checking just today actually, and found that the Emerging Markets ETF that I hold (IEMG), includes about 500 companies from all over the world, with no single company making up more than 4% of the fund.

How much easier does it get to diversify than to buy funds like that, with a high diversity and a low cost?

Be smart, find your thing, and do it while you enact your money plan and ignore the noise. Before long you’ll be in a position to live your life on your terms, where the biggest concern will be deciding what you will do now.


*Noone said preparing for early retirement was going to be particularly exciting or sexy.  Yes, t-shirts and underwear are all part of the equation, unless your mom still gets you some every Christmas still.

**i.e. buying Stocks and ETFs using Questrade. I have been using Wealthsimple for some time before that although they do the purchasing after you deposit your money.

***Again, noone said preparing for early retirement was going to be particularly exciting or sexy.  Putting your money away in diversified ETFs with a logical asset mix and continuing to add to it regularly while trying to ignore its existence as much as possible is the scientifically proven way to maximize your likelihood of maximal returns on your investment.

3 thoughts on “The Resolution: March 2018

  1. veronica

    Hi. I’ve been hunting around for an emerging market ETF to purchase for my portfolio, so I looked up IEMG. My google searched turned up an ETF offered by iShares US. Their Canadian website offers XEC, which only has 1 holding – surprise! – IEMG. I’m just wondering whether it’s IEMG or XEC that you purchase. Can a Canadian buy off the iShares US site? I’ve never tried it before. Is there an advantage to buying from the iShares US site rather than the Canadian site? Sorry if this is dumb question, but I’m a rookie investor and still trying to figure it all out.

    1. Hi veronica,

      Thanks so much for reading! There are (almost) no bad questions.

      Personally, I buy IEMG right now, although after this I am re-considering.

      I understood that there are various pros and cons for Canadian to buying the American versions of the ETFs instead of the Canadian version. These are questions I have had before, and had settled on IEMG as my portfolio piece for emerging markets until just before I started buying and realized there was a Canadian version, so I currently hold XEC.. However, once you asked the question I decided I should probably dig a little deeper and make sure I understood the difference a little better. Here’s a bit of what I learned:

      – The American version may have lower fees, although these are likely minimal.

      – Many trading platforms and banks give you subpar currency exchange rates, so unless you have American currency in your account already it may not be worth it.

      You should also try to wrap your head (a little bit) around the idea of Foreign Withholding Taxes. My understanding is for something like IEMG/XEC, the tax is paid by the fund on the equities it holds according to each of the countries the equities originate from, and that it wouldn’t matter so much if you hold the ETF listed in the US or on the TSX, but honestly I have had a hard time wrapping my head around that this morning. This is paid on the dividends only and not on capital gains, but if it is held in an RRSP, one can avoid paying these taxes altogether. Check this out (pages 12-14 in particular):

      All of this leads me to believe that it makes sense for Canadians to stick to the Canadian version, even if mostly for the sake of simplicity and avoiding poor exchange rates.

      However, the reason I bought IEMG and even knew it existed in the first place is because in my Wealthsimple account, that is what they purchased as part of my ‘Growth’ portfolio. I am going to message them to see if they can explain to me their rationale on this.

      I will let you know if I learn anything more! Thanks for getting the brain working this morning and I hope I have been of at least some assistance :).

      Also, FYI, I use Questrade where I can buy all ETFs and stocks, etc. I have never explored the Canadian iShares site but I don’t think you’ll be able to sign up for an American iShares account. For VanGuard, for example, I know that there is no Canadian site through which people can purchase their products, they’re simply listed on the TSX.


    2. Hi Veronica,

      As a follow up, I received this response from Wealthsimple after enquiring with them about why the choose IEMG over XEC in my portfolio with them.

      “The reason why we invest in IEMG in your portfolio is for diversity and reduce the risk you are exposed to. As you can recall, in 2008 there was a correction in the market. The US dollar however actually went up since it is a “global currency.” To have exposure in the US currency diversifies your portfolio and reduces the risk of being exposed solely in one currency.

      In addition, USD ETFs are more liquid, which is why it is easier to trade them, and that subsequently makes the costs and the MER lower. Thus, it’s is economically more beneficial to have USD ETFs, as they are low-cost, and considered a global currency.

      I hope that helps – let us know if we can help further.

      Have a great day!”

      Thanks again for reading! I hope you’ll continue to follow along 🙂


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