I believe it’s important to have a financial plan. A financial plan can help serve many parts of your life, like budgeting, investing, buying a house, developing an emergency fund, and so much more. When I first started investing in May 2019, I was primarily concerned with cash flow; my intention was to utilize the dividends from my investments as a sort of reserve emergency cash flow.
My thinking was that this way, I could turn my investments into a sort of emergency fund; I didn’t necessarily need a large pile of cash sitting idle. 2 years later, I still think this is a prudent choice. As my portfolio has grown, I’ve split it up into 3 different sub-portfolios, with one of them being focused purely on income – this portfolio will serve as my emergency cash flow generator if I ever need it; Else, I can redirect those dividends towards more dividend growth companies.
This SHOULD allow me to largely keep my core investments (dividend growth) intact while still leaving me relatively well prepared with emergency cash flowing investments that pay monthly, along with a few untapped credit lines.
I’ve been thinking (read: obsessing) over how to structure these investments in the various accounts I have available to myself (RRSP, TFSA, and non-registered), and how I think would be best to deploy my funds. But we’ll come to that later.
The next big update I have is that I have recently purchased an investment property. Some readers may have noticed that I’m sitting on over 50k in cash lately. This is a down payment for the investment property. The mortgage comes with a home equity line of credit which I plan on making use of in a few months. This property will show up in my monthly networth updates from June onwards.
Since the property comes with a line of credit, I’ve been thinking of ways to utilize it. A friend recently made me a financial modelling tool (Thank you once again!) which is showing some promising results with things I had in mind:
My plan since originally discussing it with him remains largely the same; though I’ve revised investing strategies in my different accounts for better tax efficiency. This is one part of the leverage which I plan on implementing shortly. I will also be re-leveraging outside of my HELOC to max out my RRSP this year – it already makes sense to do so this year.
Finally, should other opportunities to re-leverage appear, I will likely utilize them within my non-registered tax account once my RRSP and TFSA are maxed out. In these circumstances, I may share some general tidbits of information and tips for those who are curious about leveraged investing – though I will say once again; I’m not a financial advisor, please seek professional guidance and advice if you wish to use leverage, as there is a significant degree of risk involved.
