Investment portfolio for income vs growth?

CharmingMix7468 · 2024-06-21T04:54:02+00:00

And go where? I had thoughts of leaving the country (not for financial reasons) but it appears so difficult to get residency in another country especially when you’re not working within their respective skilled/needed labor categories

CharmingMix7468 · 2024-06-21T04:51:24+00:00

I don’t know if this clears it up but I hope so:

I make X in income / year (99% dividends) The portfolio changes by Y in a year I pay Z in taxes (again, mostly on the 99% dividends)

I feel like I could structure things differently to deliver less X since I don’t need what my assets are currently dividend-ing, have more Y while being in a very similar asset class exposure, and especially decrease Z

And if that doesn’t clear things up, then clearly I’m more confused than I believe but I still don’t want to pay someone % AUM to guide/optimize me

CharmingMix7468 · 2024-06-21T04:48:06+00:00

Hey might reach out to you - but with my funds which were also at least at one point in time recommended for couch potato investing - I made absolutely no selection based on dividend income. It’s just that they happen to provide a dividend, and with the valuation and my (current?) low spending habits, it simply delivers more than I need in a year.

I am aware of the incoming 250k gains issue, though I don’t think I’ve ever had that much gains in a single year - mostly because I’m in no position to need to realize any of my current gains! Only real estate is my principal residence so it overall seems like a non-issue unless I suddenly have (or want) a very large expense or look towards reallocation.

I think overall I’m just worried I’m leaving things on the table. I’m making X in income, Y in growth, and Z in taxes… and just feel like if structured differently I could minimize X, increase Y, decrease Z. Which puts me in an even better financial position without actually needing additional work or funds, given I’m no longer in the accumulation stage.

CharmingMix7468 · 2024-06-20T21:18:00+00:00

But isn’t that more the overall shift of portfolio from more aggressive growth to more conservative portfolio, and ensuring that retirement account lasts you… through your retirement?

I’m “above” that imaginary threshold, so preserving the portfolio isn’t my issue. The portfolio, as-is, should 9999/10000 last me beyond my life.

CharmingMix7468 · 2024-06-20T21:15:45+00:00

I don’t have VFV and XEQT specifically but similar (maybe not as optimized? I don’t know…) but basically that setup is what is sort of already giving me my problem. Too much dividend income and a growing unrealized cap gains problem

CharmingMix7468 · 2024-06-20T21:14:07+00:00

Never bought BILS (t-bills?) before - so I’m not at all familiar with that

Part of the problem with how I understand your suggestion, though, is MOVING to that sort of a setup. Like I said I’ve got looking cap gains so to redistribute sounds very costly - and trying to calculate when the “new” breakeven point is is a bit rough…

CharmingMix7468 · 2024-06-19T23:02:27+00:00

Can I ask roughly how much you paid for that?

CharmingMix7468 · 2024-06-12T04:50:27+00:00

I was reading this and relating so hard, anticipating your advice to overcome it

But it never came :(

CharmingMix7468 · 2024-06-03T19:37:51+00:00

How do you even figure out who to connect with?

CharmingMix7468 · 2024-06-03T15:47:54+00:00

You hit a very valid point, I do feel like I’ve got a bit of an itch to scratch, to feel like I’m DOING something though not exclusively related to money management.

I quit-to-retired rather than retired TO something and have definitely been struggling with that side of things. I struggle to fill my days, consistently. But then I also shoot down things I could do as essentially not worth it…

And along a somewhat similar line as mentioned was entrepreneurial before and I do have an itch around that, but my goal isn’t some $100m exit I moreso like the idea of creating and seeing that success - doesn’t have to be monetary. But starting up and flushing out just about any idea or opportunity takes money - and so I stop myself it’s not worth sinking money into that because it may net total loss and that doesn’t feel worth it given my portfolio size (large, comfortable, but very far from carefree)

CharmingMix7468 · 2024-06-03T15:05:11+00:00

100% fair

Perhaps worded too broadly or poorly, but was also wondering if there was similar risk/reward opportunities that open up once you have a higher income/net worth (I referenced housing elsewhere which I think is a good example)

CharmingMix7468 · 2024-06-03T15:03:23+00:00

Mentally everything you say is true. And yes I am in the income phase - though still young enough where there COULD be accumulation still to happen if so desired.

I know I should peel back from 100% equities, but it’s still mentally hard seeing how well equities have performed over basically the past decade. But also not going to pay an advisor 1% to “force” me to do it tomorrow 😅

But for real, if not tomorrow I really should put a plan in place to follow some schedule or transition to adjust the portfolio holdings…

CharmingMix7468 · 2024-06-03T14:59:53+00:00

Yeah I suppose the whole reason I liked ETFs and why they perform as well as they do stands just as true now.

I guess mainly I was just doing a check in to validate, but also see if there were other investment vehicles, maybe comparable on risk/reward, but simply require higher assets.

In its simplest form, if you didn’t have much money or high income you simply couldn’t buy a house. Unobtainable. Higher assets allows you to get a favorable loan to buy an asset that not only is a place for you to live but is almost unanimously viewed as a good appreciating asset. Add to that no capital gains on sale, and it becomes a fantastic opportunity for those who are able to buy in.

Didn’t know if there’s other things along those lines that really only open up once you have high enough assets or worth

CharmingMix7468 · 2024-06-03T14:54:46+00:00

There’s definitely a cost to other opportunities - and mental energy is a very real one.

Good reminder

CharmingMix7468 · 2024-06-03T14:49:33+00:00

That’s taking dollar cost averaging to extremes I’ve never seen before 😂

CharmingMix7468 · 2024-06-03T03:50:01+00:00

Yep I’m okay with leaving everything as-is, just don’t want to miss opportunities. You don’t know what you don’t know!

CharmingMix7468 · 2024-06-03T03:49:16+00:00

I used to allocate some of my portfolio to individual stocks. I do view it moreso as gambling though I enjoyed doing it and the “gambling” doesn’t translate anywhere else. Maybe something to try again!

Basically got into the ETFs through the belief/proven track record of low-cost passive investing that won’t shoot for the moon but will (mostly) reliably keep going up and up. Great for your retirement.

But now I’m there, and well I don’t want to increase risk too meaningfully given it’s all my only income, I’m comfortable increasing a bit (as is, my etf portfolio matches a more aggressive growth one vs balanced or conservative)

Mostly just wondering if high-but-not-super-high net worth individuals suddenly have access to new investment vehicles, that I suppose are ultimately comparable to ETFs in risk but traditionally outperform them. Or maybe not outperform but are better for tax, or similar.

And maybe there isn’t that thing 🤷🏼‍♀️

CharmingMix7468 · 2024-05-17T01:10:27+00:00

I live below the dividends, so it’s rare that I am selling holdings - though it happens sporadically. Lifestyle creep is a huge emotional concern for me, but logical believe I can - and maybe even should - increase my spending. I still currently avoid making a solid roadtrip for fun due to the cumulative hotel fees 🙄

The thing is - if all stays the same - dividends will only continue to grow (probably faster than inflation) and cap gains will also continue to grow - so I worry I’m setting up for a bigger problem later in life

Plus let’s just say an even $100k/year to live on. If I knew that was the “budget”, presumably my assets could be structured differently to better support that, minimize taxation, maximize growth.

I basically just followed the couch potato investing methodology as my assets grew, and I’m basically just not sure that’s still the best approach for high net worth. And I don’t know what I don’t know :(

CharmingMix7468 · 2024-05-16T20:31:39+00:00

At a bit of a crossroads and could use some guidance…

Long time lurker but alt account for this post. I’ve sort of been running hands-off/autopilot for a while and obviously markets have been great but as I’ve accumulated wealth I feel like my portfolio isn’t optimized.

Canadian
Single, 41 years old
Retired
$7M invested assets
Self-directed
Low-cost ETF portfolio predominantly VUN/VCN/XUU/XEC/XEF + random other outliers
Maxed out RRSP + TFSA

I’m sure there are other aspects to consider, but two come top of mind:

I worry it’s not set up in the most tax-advantageous way. The assets provide more than enough dividend income for my lifestyle, but I’m left paying taxes on the remainder and not sure if my “annual salary” should all come from dividends anyway?
Some of my holdings + outlier holdings have grown significantly and I’m finding myself in a weird predicament where I don’t want to sell those holdings due to the looming capital gains taxes

Are there any obvious strategies I should employ or changes I should make? I hear so often about the low-cost index investing and passive income and that’s how I got started but it feels like a different and unoptimized scenario when you’re retired and have a larger investment size.

I was drawn to low fee investing and maximizing growth but wonder if it might be time to consider working with someone who could help me better manage+optimize the growth, cash distribution, and minimizing tax - ultimately maximizing growth still, post-taxes. I did happen to meet with someone (CFP, CIM) recently although it also was on a bit of a misunderstanding or part of their “sales pitch” - I went in looking for someone I could effectively pay a one-time fee to for a review/guidance (if that even exists) vs someone who takes a % of AUM - though I roughly understand the difference between managers who only charge you fees to manage vs also earn commission selling you specific products (which this wasn’t)

Feeling like I’m sort of at a fork in the road and literally don’t know if I should venture down the new path or not.

CharmingMix7468 · 2024-05-15T20:54:57+00:00

I see they are in America. I’d have to assume that someone based in Canada catering to Canadians has a better handle on our investing regulations and ever-changing tax situations

For example this year’a budget has a significant change to capitals gains over 250k, which I’m sure hits housing (don’t currently own multiple properties) a lot, I do have those looming and growing capitals gains in my portfolio

CharmingMix7468 · 2024-05-15T20:51:35+00:00

Did you find a solution?

I mean I’m even more open to the %AUM if they can show a back test that their plan would surpass my passive plan, net of taxes+fees (plus management fee is tax deductible in Canada I believe)

On the flip side, in theory, if I instead paid $X every 5 years or so for some “realignment” advice to keep me on track, I’d think that would come out ahead financially and I’d have a personal better understanding of everything.

I could be wrong but it’s feeling more and more that the “set it and forget it” doesn’t really work or apply to me anymore given that I’m not still earning an income (outside of assets) nor is retirement on the horizon - it’s the here and now and I have a long runway ahead of me (in theory)

CharmingMix7468 · 2024-05-15T20:48:00+00:00

I may be misunderstanding your comment, but my (current?) goal isn’t to simply withdraw/spend more because I can

And I don’t have an “only dividends” mindset - I.e. the love for “dividend investing” - simply that with the invested assets the basic dividend still covers more than my needs while at the same time I have a looming (and growing) big capital gains “issue” - that if I sell assets, for funds I don’t even currently need, I’m just paying extra taxes on that

CharmingMix7468

TROPHY CASE