I’ve made my share of mistakes when it comes to money.
One of my biggest mistakes was waiting 5 YEARS before I started investing in my non-registered portfolio of dividend-paying exchange traded funds (ETFs). I paid off my house when I was 34 but I waited half a decade before I started investing in dividend-producing assets outside of my TFSA and my RRSP. That was such a dumb move that I almost want to slap myself! I was investing my former mortgage payment money in somewhat expensive mutual funds. Fortunately, I’d had the brains to not spend my newly-freed-up mortgage payment on stuff! However, I was getting raises at work during this time so I’d had the good fortune of having additional disposable income on top of my former mortgage payments. Unfortunately, I wasn’t smart enough to re-direct these extra funds towards my non-registered investment portfolio. In other words, money from my raises did not work as hard for me as it should have.
And if you were to ask me what I did with my “extra” money during that time-frame, I’d be hard pressed to tell you. I know that I took a trip to Hawaii with my mother. I know that I bought my SUV, although I paid it off within 6 months of purchase through gazelle intensity. I know that I did some renovations to my house. However, the rest of it must have just disappeared via thoughtless spending. I have no idea where it went and that drives me crazy!
You want to know the kicker? I’d spent the three years prior to actually investing thinking that I should be putting my money into an asset that would pay me dividends. I yearned for a dividend-paying portfolio so badly that I could taste it. I craved a dividend-paying portfolio because I understood that those dividends would compound over decades to create a solid cash flow to supplement my other retirement income. I spent hours reading blogs and personal finance books, pouring over newspaper articles about value investing versus growth investing, deciphering the various blah-blah-blah from multiple sources. Yet, I was no closer to actually buying the dividend-producing assets that I wanted.
Despite all my time thinking about what I wanted, I didn’t take any action to make it happen – instead, I waited and waited and waited to start! And when the financial crisis hit, I froze. I listened to the faceless voices on the radio who were predicting the end of the stock market as we knew it. Years of procrastinating will cost me dearly because I could have been investing steadily during the financial crisis and scooping up investments at low, low prices. Instead, I waited and pondered and thought and wondered and dreamt and delayed and considered and waited a little bit more!!! My inaction means that my Little Money Soldiers have five fewer years to go out and reproduce themselves.
I’d always wanted to retire at 50, but I don’t think I can hit that target without winning the lottery. In case you were wondering, picking the right numbers is a lot harder than it looks!
Part of me will always wonder if I could’ve hit my goal if I’d started investing all of my disposable income into my non-registered portfolio as soon as I’d paid off my mortgage. It’s a horrible game of “What if?” and there’s no good answer. The truth is that I can’t go back and re-write history. What’s done is done. And I have to remember that I still love the renovations that I’ve done to my house, and that I loved the travelling that I’ve done since becoming mortgage-free. During those 5 years of procrastination, I was smart enough at the very least to pay cash for everything so I never got myself into debt.
So what caused me to finally make the investment that I’d wanted for 5 years? Mainly, it was a smart little voice inside my head that spoke firmly and said the following: “Enough! Just start or it will never get done.”
I wish that voice had been more melodramatic or that the words had been more inspiring but the little voice was short and sweet. I listened to the little voice and went to my brokerage account’s website to get started. It only took a few minutes to set up my automatic transfers, to enter the initial buy order for my dividend-producing assets, to set up the dividend re-investment plan (DRIP), and to take the first step towards getting the kind of portfolio that I wanted.
The other thing that kicked me into gear was all the reading I was doing on personal finance blogs about something called the “side hustle.” Back in my day, a side hustle was called a part-time job. Times change and I must change with them. In any event, a side hustle is a way to make money beyond going to your main job. I knew that an investment portfolio which paid me dividends every month would count as a side hustle…and it offered the added benefit of not requiring me to really do anything in order to get the money. Yes, I had to earn the money to buy the units in my ETF but I already had a firmly established habit of investing my former mortgage payment so there was no trouble on that front. I simply had to move the contribution from my old investment to my new one. Easy-peasy!
The other benefit of my chosen investment plan was that my deeply-held preference for laziness would be satisfied, yet I could still tell myself that I had a side hustle. I too had joined the ranks of the personal finance bloggers whom I admired and who had found ways to benefit from a side hustle in addition to their regular, full-time employment. The cherry on top of my plan was that my dividend income would receive preferential tax-treatment, which is just a fancy way of saying that my dividend money would be taxed at a lower rate than my employment income.
There are many, many ways in which I could have made significant financial mistakes with my money. Procrastination is the one that will hobble my dream of early retirement at age 50. However, it could have been worse. I could’ve gone into debt, or I could’ve co-signed a loan with someone who skipped out on the debt. I could’ve spent my mortgage money after my mortgage was gone. I could still be waiting to start!!! When I’m flagellating myself a wee bit too much about this financial mistake, I remind myself that I’ll still retire sooner than most and that I could’ve done a whole lot worse than living in my own head instead of taking action as soon as I’d figured out what I wanted to do with my money.