Sunday, September 11, 2005

One year later

It's been a year now that I've started this blog and, simulteanously, my early retirement plan.

October 1st, I will post my first "annual" financial update, I will thus be able to compare my projected figures with actual ones. So far, I think I've reached or done better than my objectives. Wages were slightly higher than planned, I think my overall annualized return on investments where over 10% this year. These better figures were slighly offset by higher than expected expenses, but, overall, I'm in the black.

I'm still as motivated as last year to reach my goal before October 1st 2012, in seven years now.

So what's ahead? We are considering moving. We are owners of a condo, its value increased much in the past years. We could sell and take a profit, then rent an apartment. I have calculated that it would cost lower than actually owning, thanks to the profit and future return on the net proceeds. For us, renting could also mean increased freedom: if one of us lose its job, it would be possible to move in another city or temporarily rent a smaller apartment, for instance.

This year, I expect a wage increase in the 5-7% range, which is more that what I used in my plan (I projected 4% increases for the next 12 years) as projections. I base this expectation on last year increase and my overall performance at work.

Thus, the plan is well on track. On the other hand, the year to come is full of uncertainty and not as rosy looking as last year. Following Katrina, gasoline prices have increased by a large amount, which could result in general inflation, which in turn could slow the global economy and thus, investment yields. But lately, markets have been reluctant to go down despite bad news such as Katrina.

Good luck to all!

10 Comments:

Anonymous Anonymous said...

Hi Jack, re your thoughts of selling your condo and renting an apartment: As for freedom to move, if you have to sublease your apartment at a later date, it may take longer and be more trouble than selling a condo. And breaking a lease before it's over (normally a year in Quebec) is not easy...

12:38 PM  
Anonymous Anonymous said...

From RetireAt35:
Jack, I did the trade-up to a more expensive house every few years for the past seven years. I looked at each house as an investment and was able to sell high and buy low 3 times. 4 months ago, I decided to sell out and go back to apartment living.

I have to say I am enjoying it a lot more than I did when I last rented an apartment 7 years ago. Now that I've had homes and property to take care of, I have gained an appreciation for a number of things:
- No yard to maintain
- Less space to clean
- Less space to furnish
- Less space to heat
- Ability to move/downsize quickly and painlessly (assuming you aren't locked into a long lease)(nice if you've ever had bad neighbors)
- No stress about what the market will do
- Pool maintained by someone else
- Live closer to your job (in big cities, houses are too expensive close to jobs but apartments are often affordable regardless of where they are)
- Most important, you will be used to apartment living so your expenses will be lower and will allow you to retire earlier, knowing you can live happily on that level of income. This way, retirement doesn't require a significant downsize/change. Instead, it becomes more of a switch in where you income comes from and what you spend your time on each day.

7:47 AM  
Blogger Viajera said...

I don't know if it is the same in Canada, but in the U.S. you have to pay capital gains tax on the money you make from a sale of a home if you lived there less than 2 years. Just check on that. No need to pay the tax man if you don't need to.

Good job!!

3:45 PM  
Blogger Jack said...

Viajera,

No, in Canada, there is no capital gain tax on home sales, as long as it was your main house at the time of the sell.

On the other hand, interests paid on mortgage are not tax-deductible.

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