Due to popular demand, QCash has graciously offered to provide more details into his financial life. For those of you who are new here, QCash retired at the age of 36 with a net worth of over $1.5 million.
After my last post (how I achieved $1.8 million in net worth), I suggested to FT that I might provide an outline of how I keep my finances organized and from there pick an account every couple weeks and explain the reasoning for the investments I hold.
Also, I want to let everyone know that I don’t for one minute think I have all the answers. I have learned many things from reading and the internet and believe that I have a pretty good understanding of finance and investments, but it is still a work in progress.
So without further ado, here is are the accounts and what they are for:
Investments – Non-registered
- I1 – Non-registered Joint Account – I hold in this account most of my “growth” stocks
- I2 – Non-registered Joint Account – I hold all my income bearing investments (*I am in the midst of converting I1 to I2 through a leverage and the use of a HELOC – see C3)
- I3 – Non-registered Account – This is, in actual effect, simply a critical illness life insurance policy with a return of premium rider. My monthly fee is $135 per month and I am in year 7 of a 10 year term. The face value of the policy is $250,000. It is my hope not to collect the $250,000 :-) however, the premiums will be returned at the end of the policy. I initiated this policy when I owned my business and had a sizeable line of credit with the bank.
- I4 – Non-registered Account – Mine
- I5 – Non-registered Account – Wife’s
The purpose of these two accounts is to slowly evolve into an income splitting mechanism. To avoid attribution rules, my wife’s money is allowed to compound and any money she receives from our joint accounts, she reinvests. As these two accounts achieve parity, it is our hope to have a “balanced” income stream. In an ideal world, I would like my total income to be the dividends produced by I4 and I5.
Investments – Registered
- R1 – My RRSP Account – contains my income trust investments
- R2 – My RRSP Account – contains my fixed income investments – most notably this is through B2B Trust which offers mortgages to third parties. I hold a couple mortgages in this account. As the monthly and bi-weekly payments are made, each year I transfer the cash over to R1 and invest in trusts and REITS
- R3 – Wife’s RRSP Account – she hold mostly REITS in her RRSP
Children – Informal trusts and RESPs
- T1 – Child #1’s Bank account
- T2 – Child #2’s Bank account – both of these are high interest accounts where I put birthday money and “baby bonus” cheques from the government
- T3 – Joint RESP
- T4 – Child #1’s Investment account – growth stocks that only provide capital gains to avoid any attribution problems
- T5 – Child #2’s Investment account – see T4
- B1 – Chequing account
- B2 – Savings account
- P1 – Primary residence
- P2 – Rental property
- P3 – Rental property – jointly owned with my friend
- Q1 – Corporate account – shareholder loan to corporation
- C1 – Credit Card account – CIBC VISA Dividend Card – 1% on just about everything else we buy
- C2 – PC Financial MASTERCARD – we use this exclusively at our local Real Canadian Superstore and Refuel when there are discounts on gas
- C3 – Homeowners Equity Line of Credit – I set this up to purchase investments in I2. Without this leverage, I would have had to sell investments in I1 and had a significant capital gain tax.
So there you have it. This represents every account I have. The next time I provide updates, I hope FT will link to this to understand why I have what I do.
I list every investment I have on a spreadsheet and include a field for “type” and “account”. This way I can get a picture of my entire portfolio and ensure that I have the appropriate investments in the appropriate type of account.
The majority of my investment accounts are with Nesbitt Burns and my bank accounts are with Bank of Montreal. I like to consolidate and simplify where I can. I4 is with BMO Investorline as are the kids investment accounts.
I would be interested to know how everyone else organizes their accounts and who they use for various investment brokers? As I said, I don’t think this is necessarily the best way and I hope to eventually consolidate the Investment accounts into three accounts, my RRSPs into one account. However, I will be adding two TFSAs as soon as they are available.
Next time…. an update of the portfolios and an explanation of what I own where.