Thursday, April 21, 2005

MSN Money - How much is enough?

I've come through this: MSN Money - How much is enough?

The question is quite interesting. I think that we could translate it to retirement: when do you have enough to retire?

I think that the reason why most people are reluctant about (very) early retirement is that they don't think you have enough money to retire, they only think you are old enough. Thus they are piling more that needed and set new living standards to justify the over-accumulation.

Take care!

How much is enough?

I've come through this: MSN Money - How much is enough?

The question is quite interesting. I think that we could translate it to retirement: when do you have enough to retire?

I think that the reason why most people are reluctant about (very) early retirement is that they don't think you have enough money to retire, they only think you are old enough. Thus they are piling more that needed and set new living standards to justify the over-accumulation.

Take care!

Monday, April 04, 2005

The Man Who Plans to Retire at 37 (RET37) Reports Q1 2005 Results

RET37 today reported that earnings for the quarter ended March 31 has decreased 25% at $7k from $9.3k compared to the previous quarter ended December 31, resulting from decreasing income from stock and mutual fund portfolio.

Expenses decreased 4.7% from $4305 to $4299 on lower car costs, and new provision (100$ a month) for luxury items (mainly, a provision for travels).

Assets increased $6k to $181k from $175k in the previous quarter. Liabilities were nearly unchanged. Liabilities include $26k put aside in provision accounts, comprising $21k for contingencies, $1,500 future tax provision, $300 for travel, $500 for car repairs and $2k for home repairs, up from $25k in the previous quarter.

Total wealth (net assets) at the end of the quarter amounted to $112k.

Flat investment returns in the quarter
Yields on stock and mutual funds were much lower compared to the previous quarter, particularly at the end of March. A single stock, which makes about 20% of the stock portfolio, decreased nearly 25% during the quarter. This was partly offset by a stake in a oil and gas stock (15% of the portfolio), which increased 12%. Bond investments were flat as incomes were offset by a comparable value decrease.

RRSP portfolio returns were a non-annualized -2.1% on a nest egg of $39k during the quarter, but the yield is a non-annualized 4% in the trailing six months. Other investments include $20k cash in an INGDirect account yielding an annual 2.4%. Unregistered stock and mutual funds portfolios amount to $52k.

The stock market correction was expected, as you can see in the previous quarter report. The largest part of stock shares are invested in Canadian stocks (about 60%), American stocks make about 25% and international shares, 15%. About 33% of shares are actually ETFs.

Forward looking statement
I expect the stock market to be mixed in the next quarter. Canadian stocks could benefit from higher energy costs, since the TSX is highly exposed to oil-related stocks. Interest rates are not expected to move a lot in the next quarter, as inflation is kept under 2%. On the other hand, American stocks might decline, as higher inflation could result in interest rates increase by the Federal Reserve.

Statement on Retirement Target
Retirement is scheduled for not later than October 1st, 2012. Since the retirement plan was decided eight months ago, results are on track to raise about $175k registered and $169k unregistered and $40k equity in real estate for a total of $384k at 2012’s dollar. Expenses in 2012 would be inflation-adjusted $20k annually.

According to calculations using historical data (using FireCalc) and the number of years before target, I estimate that the probability of retiring by the target date has decreased to 72% in this quarter from 73% in the previous one. The main reason for this decrease is negative returns on investment.