I often read interviews of FIRE (Financial Independence Retire Early) bloggers and absolutely love reading about their individual journey. I thought readers of this blog might like to know more about me and how I came to FIRE?
So I’m interviewing myself! Ten questions and ten answers. If you have other questions, post them in the comments below and I’ll answer them in a future follow up blog post.
- How did you discover Financial Independence Retire Early (FIRE)?
I feel like I accidentally stumbled into FIRE. I’ve always been frugal, spending within my means (most of the time) throughout my 20s and 30s. I’ve never been one for flashy clothing labels or jewellery. I’ve never owned a car. When I finally discovered the FIRE concept a few years ago online via various bloggers like Millennial Revolution, I felt like it was a homecoming of sorts for me. I only wish I had discovered FIRE when I was in my teens but the Internet did not exist and the availability of information was rather circumscribed.
However, once I discovered FIRE bloggers, I read veraciously and widely. The main reason for starting this blog was to connect (at least digitally) with like minded people.
2. Did anything about your childhood inspire your views on money, savings and spending?
The single biggest influence was probably my grandfather. He lived in the same small house he help build for his entire life. He had a middle class job and saved for his retirement diligently and lived within his means. He even bought his cars with cash and was very proud to drive it off the lot knowing he owned the car outright.
3. Do you budget?
I do not budget. I never have made a budget. I’m pretty confident I wouldn’t stick to it but also feel for me it’s not necessary. I don’t carry debt (beyond real estate investment debt) and I spend within my means. My biggest expenditure line item monthly is investment related so I am fortunate to be in a position to have my focus be on how much money I can invest monthly. I do use Mint to track expenses so I can get a better picture year over year on what I’m spending annually. This will be helpful for me to concretely know exactly what I spend on average a month and annually and if there is anywhere else I might cut. It will also help me to know for “budgeting” purposes going forward so I have a sense of what I actually spend each year.
4. How did you get started investing?
I started investing in my mid-20s using Index investing. I made automatic payments from my bank account once or twice monthly — set it and forget it. At the time, it was still inconvenient. I had to complete paper forms and mail them in. Making changes involved more paper forms and mail and fax. I only wish the tools that exist now, existed when I started investing. The ability to buy shares easily online (even at no cost via WealthSimple Trade nowadays, including fractional shares now) would have been fantastic for me at that time. I’d probably be even further ahead today if I had today’s tools available to be back then when I started investing.
Once I got my first full-time job after university, I invested in real estate in terms of my principal residence.
5. You own your own home. What has been your approach to mortgages and paying it off?
I do own my principal home. It’s located in a major Canadian city and is more modest than what I would otherwise be able to afford. This has allowed me to be in the fortunate position of being able to pay off my principal mortgage after about 10 years. The freedom of not having a mortgage payment (an accelerated mortgage payment) every month is liberating. This money is redirected into equity investments. Psychologically, no mortgage on my home has been a major benefit.
I do continue to hold a small mortgage on an investment property but am in no particular rush to pay it off as interest payments are low and the interest is deductible.
6. What is your investment strategy? Do you invest in mutual funds, index ETFs, dividend stocks, rental properties?
My investment strategy spans the array of available assets:
- Individual stocks (Canadian and American)
- Domestic and Global ETFs
- REITs
- Bonds
- Real estate (principal residence and investment property)
- Gold
I’ve never owned mutual funds given the high MERs and other negatives such as trailing commissions, etc. I’m also starting to look into real estate syndicates (alternative investments) for accredited investors. I recently put a very small amount of money into www.addyinvest.com.
7. Do you use an RRSP, TFSA, or Non-Registered Account?
I use all three: RRSP, TFSA and Non-Registered Accounts. I max out both my RRSP and TFSA annually.
8. Have you FIREed? If not, how close are you to FIRE? Does your family and close friends know? What are you doing about it?
I don’t know? Maybe? I think so. I’m on track to hit my annual dividend target for 2021 of $50,000. As you can see in my answer to the “Do you have a budget” question above, I don’t budget so I don’t have an accurate read of my annual expenses (yet – I’m working on it). However, I know my expenses are low, particularly since my principal home mortgage is paid off, which otherwise would represent a sizeable expense if it still existed.
I’m using Mint to track my expenses and will soon be in a position to understand my annual expenditures and monthly average. Using this data, I’ll be able to perform the traditional FIRE calculation of 25 times my annual expenses to get my Financial Independence #. I am a fan of FatFIRE so I do think about having more so I can spend easily without any worry.
Either way, I still work in a traditional 9-5 job so I have not retired early. Right now I’m thinking about how I might work less in the future (challenging given my line of work) or retire completely in a year or so. My immediate family and close friends know I have options.
For me, FIRE is all about freedom and the freedom to choose. The freedom to choose to work rather than having to work.
9. Has approaching FIRE or being FIRE changed anything for you? Do you plan on pulling the plug so to speak soon?
Approaching FIRE or being FIRE hasn’t changed anything really for me. I don’t spend or save differently. I continue to diligently save and invest. It has however given me choices to do other things if I want to such as retire early. Right now I’m investigating what I might do with myself / what I want to do: Work less, travel (post COVID), take a year off work, be my own boss? I’m also exploring potential draw down strategies and strategies related to avoiding sequence of return risk. Living off dividends at least early in any retirement is particularly attractive to me although structuring it is challenging given that some dividends/distributions rest in my RRSP. Perhaps being able to only pull dividends from my taxable account for a period of time might work since most of my dividends come from my taxable account?
10. Have you made any financial mistakes along the way? Did you learn anything from them?
I don’t feel I’ve made any monumental mistakes along the way. A few things:
- I sold a real estate investment property and reinvested the proceeds into the stock market. Should I have kept the second investment property rather than selling it?
- I bought some REITS in my taxable account rather than RRSP account before I knew that presented issues. Now I’m left with the choice to move them into my RRSP (deemed disposition on transfer) or keep them in my taxable account?
- Invested some money into Bitcoin with Quadriga and lost my small investment when the founder of Quadriga met an untimely demise. I also sold some Bitcoin and Etherium when I probably should have held onto it.
Thank you for reading this and sharing it. Do you have additional questions you’d like answered? Drop a comment below and I will follow up with a second post answering those questions.
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