Millionaire on the Prairie - Personal finance for singles looking to finance their dreams.

Slow and Steady – My Dividend Story

Way back in 2011, I started to invest in dividend funds. I started with a bank’s mutual fund, then moved my money into an index fund with an investment company, and I’ve now finally settled on a couple of exchange traded funds.*** I had a goal of creating a steady stream of passive income. What could be more passive than dividends? I work once. Then I invest my money into dividend-paying investments. Those investments pay me dividends for as long as they live in my portfolio. It was a simple and brilliant plan!

So I stuck to my slow and steady method of building my dividend portfolio. I’d paid off my mortgage very, very early so I used my former mortgage payments to invest. And there was nothing wrong with my vehicle so I didn’t buy a new one. Instead, I invested my former car payments. My career was still young, which meant I was getting salary increases over the years. I used half of each increase to improve my day-to-day life, but the other half went to invest in my portfolio.

The plan was very simple. Buy dividend-paying investments for a very long time then use the dividends to pay for life’s expenses in retirement. I wanted my dividends to be a reliable source of cash flow when my paycheque disappeared.

Was my plan perfect? No! Have I always made the correct choices when writing my dividend story? Again, no!

There are so many things that were wrong with my plan. One, I didn’t start early enough. You see, I paid off my mortgage in 2006 but I didn’t start investing beyond my RRSP and TFSA until 2011. That was 5 years of simply living. I travelled and renovated to my home. My RRPS and TFSA were stuffed to their limits, but it took me a little while to realize that I could be investing in my non-registered portfolio.

Secondly, I failed to appreciate how long it would take. Dividends are wonderful, and I love each of mine equally! However they don’t grow very fast without exceedingly huge up-front investments. Remember, I was investing both my former mortgage payment and my former vehicle payment. That was not a small amount of money. Even with a dividend re-investment plan, it took many years before I saw note-worthy effects of compounding. Earning four figures in dividends each month did not happen overnight. Today, I’m consistently earning over $2,000/mth in dividends… yet it’s still not enough for me to retire comfortably. I’d been hoping that my dividends would exceed my contributions by now, but that’s yet to happen. I’m close but not quite there. All in good time…

With the benefit of hindsight, I see that my portfolio would have grown much faster and been much larger had I invested the exact same amount into an equity-based, growth product. Between 2009 and 2020, the stock market was on a bull run. My portfolio would’ve grown exponentially larger had I invested differently. Growth ETFs and index funds generated much better returns that my dividend products. Growth products were a lot more volatile, and their distributions were not as frequent. At the time, I didn’t know as much as I do now so I saw those factors as deterrents. I chose dividend products, but I would have had more money in my kitty today had I chosen equity products.

Thirdly, I didn’t take the time to find other dividend investors and learn from their experience. Several years after starting my dividend story, I found Tawcan’s website and truly started to learn about how to invest in dividend-paying stocks. His system is more sophisticated than mine, but my armamentarium has benefitted from his lessons. I’ve often wished that his website had been around when I was in high school. I could’ve started down this investment journey from my first job as a grocery store clerk! If wishes were horses, then beggars would ride.

I’m sharing my dividend story with you because it’s important that you know that you don’t have to be perfect when it comes to investing. For all my mistakes, and they weren’t small ones, I’ve met my goal of building a passive stream of income to help pay for my living expenses in retirement. The effects of compounding are noticeable now, as my annual dividend payment is increasing thanks to the DRIP feature.

There were a few things that I did perfectly.

First, I chose to live below my means. Once the necessities were paid, I didn’t spend every other nickel on my wants. Some of those nickels were diverted to investing. This is key. A portion of every raise was re-directed towards my investment goals. I’ve travelled and attended concerts and spent weekends in the mountains and bought gifts and contributed to charity and bought garden supplies and worked on craft projects and bought furniture and paid for parking and etc, etc, etc… However, I have always made sure to pay myself first from every paycheque.

Second, I picked a path and stuck to it. There is no one perfect path for everyone. My imperfect path works for me and it will get me where I want to be. I’m a huge proponent of buy-and-hold. It’s an investing philosophy that has worked for me over the years. I don’t watch the stock market ticker. And I have little faith in my ability to time the market. How can I possibly know in advance which stocks will take off and which ones will fail? Buying into ETFs means I don’t have to do all of the rigorous financial analysis myself.

Third, I stayed out of debt. This can be tough, but it’s doable. I had to say “No” to myself, a lot. I didn’t want debt payments to creditors. Instead, I wanted contribution payments to my future. Please don’t think I deprived myself. When I wanted something badly enough, I found a way to get it. I simply chose not to want everything that the AdMan told me I should want.

Fourth, I ignored the incessant chin-wag of the Talking Heads of the Media. I learned early on that they couldn’t predict my future. They didn’t know the particulars of my circumstances. I had a very healthy skepticism about whether their “advice” and “insights” would be useful for me. Instead, I stuck to what I understood.

In my humble opinion, dividends are an excellent source of passive income. All things considered, I can’t say that I regret making the choice to invest in them more than a decade ago. While I may never reach the dividend income of this particular individual who earns $360,000 per year in dividends, Part 1 and Part 2, I’m satisfied with what I’ve been able to accomplish on my own. My dividend story is not too shabby, if I do say so myself!

*** The reason for so many switches? Each move from one product to the next meant that my management expense ratio decreased. First, I was paying over 1.76% of whatever amount I was investing when I was in the bank’s mutual fund. When I learned about index funds, I transferred my money from the bank to the private investment company, where I started paying an MER of 0.75%. Along came exchange-traded funds and I reduced my MERs even more, so that I paid 0.55%. Today, I’m paying 0.22%. My thinking is simple. Why should I pay higher MERs for the exact same investment product?

Sinking Funds – Key to Winning With Money!

Spring has finally sprung! We are nearly halfway through 2022, so it’s time to start doing some financial forecasting for 2023. What big expenses do you have to pay for in first six months of next year? And have you set up your sinking funds to pay for them?

While it’s important to live in the present, it’s also prudent to plan for the future. How you’ll spend your money is definitely one of the things that you should be planning well in advance. After all, there’s a fairly good chance that your dreams and goals for your life have some kind of financial component. If you’re frittering your money away on stuff that doesn’t matter to you, then where will you find the money to pay for the things that you really & truly want?

My financial life got immeasurably better when I started using sinking funds, aka: planned spending. Doing so meant that I was saving money for the most important stuff first. When I was younger, I decided that I wanted to have money already set aside for the big, major expenses that come up every year. In my case, those expenses included property taxes and insurance premiums. I had to pay for these necessities even though I didn’t particularly enjoy them. And they were very expensive – several thousand dollars a year. By having sinking funds in place, I didn’t have to scramble to pay my taxes or go into debt to make sure I was covered in case something happened to my car or property.

Please don’t misunderstand me. There are other major expenses that definitely fall into life’s goals and dreams category. For me, travel is a huge spending category. One of my dreams is to visit as many places as I can while it’s still physically comfortable for me to do so. In the Before Times, I was fortunate enough to visit Europe several times and had been planning my first trip to Asia. Then the pandemic hit and my travel plans went on hiatus. That doesn’t mean that I don’t have a sinking fund in place for travel. Au contraire! When I feel comfortable doing so, I’m heading back to the airport and going somewhere. Flights and travel haven’t gotten any cheaper in the last 12 months. Demand for travel is high right now thanks to all the pent-up demand. I’m confident that it will settle again. At that point, I’ll be roaming the world on the money that’s been set aside in my travel account.

How to Start a Sinking Fund

My first step to starting a sinking fund was to track my expenses. I wanted to know where every nickel was going so I could project how much I’d need the following year to cover big annual expenses. My next step was to divided next year’s anticipated expense by the number of paycheques until that expense would be due. The resulting amount was the amount that would go to my sinking fund.

For example, if my insurance premiums are $2600 per year, then I save $100 per paycheque for the following year’s premium payment. (I’m not a fan of monthly debits and prefer to pay my premium in one lump-sum.) When the following year rolls around, I’ll have $2600 waiting to pay the invoice.

It’s no secret that I’m a huge proponent of automatic transfers. I rely on them to put money into my sinking funds and to re-fill the funds as necessary. Over the years, I’ve learned the following tidbit about myself. If the money is available to me, then I will spend it… and generally on things that aren’t that important to me. However, sinking funds remove this option from me. I can only spend what’s leftover after the automatic transfers have gone through!

Another little tidbit I’ve learned about myself is that it’s best if my sinking funds are in another banking institution. While I use my chequing account daily, I access the sinking funds way less often. There’s no need for me to see those dollars just sitting there. It’s best for me that they be squirrelled away so that I’m not tempted to spend them.

Goals, Dreams & Fun Stuff!

Winning with money also means that you have sinking funds in place for your wants too! After I’d successfully set up sinking funds for the un-sexy stuff, I created a few for the non-necessities of life. The things that normally threw a wrench in my budget involved fun: birthday parties, holidays, anniversaries, invitations to concerts, etc…. I want to participate in these things with my family and friends. Money is sometimes a part of those celebrations, whether it involves a present, travel, tickets, contribution to a group gift or whatever. Sometimes fun is free. Other times, it involves money. When it does, I need to have some on hand so I can say “Yes, I’ll be there!” without worrying about cost.

When you have the money, make sure that some of it is going towards your goals and dreams. You shouldn’t feel bad for wanting to achieving what your heart really wants. Maybe it’s a weekend at a creative writing workshop. Perhaps you’ve always wanted to take horseback riding lessons. Some of you might want to take culinary courses in various cuisines. Whatever it is, it’s important to you and you should try to make it your reality. You know best what would make your heart sing. I’m just here to encourage-prod-nudge you into creating a sinking fund so that you improve your odds of making those goals and dreams come true!

Getting Good Advice

When it comes to your money, you want to get good advice. The problem is that it’s very hard to know if you’re getting good advice, or whether you’re being scammed.

For my part, I’ve built my portfolio by myself and I started when I was a young adult. All told, it took me more than 25 years before I went to see a fee-only financial planner. He took my information – he crunched my numbers – he told me that I could retire 2 years earlier than I’d planned. His fee was worth every penny!

Bank Advisors

Reader of Long Association know that I’m not terribly fond of banks. I hate paying bank fees. For the most part, I think lines of credit are poisonous. Debt is not something I encourage people to have. If you take away debt & fees, banks have precious little to offer their clients. My impression of bank advisors is similarly dim.

Banks offer mutual funds to their clients. However, the bank’s offerings are generally more costly than what can be purchased elsewhere. Advisors from Bank A will sell you mutual funds with management expense ratios of 1%-2%. They will not tell you about nearly identical products that can be purchased for 0.35% or less, i.e. exchange traded funds (ETFs).

The advisors who work for banks are not bad people, necessarily. They’s simply employees. Part of their job is to sell their employers’ products to the bank’s customers. They are trained and are knowledgeable about financial products. However, the terms of their employment are such that they will never advise customers to check out the competition’s investment products. Advisors working for banks will never encourage customers – you – to go and see if the same product can be obtained for a lower price. This is just a simply fact. Advisors at Bank A receive their paycheques from Bank A, not from you. Since you’re not paying them, the advisors’ interests are more aligned with their employer’s than with yours.

I went to a Bank near the start of my investment journey. It was a less than great experience.

Was I getting good advice? No.

Did the bank charge me a high management expense ratio? Yes.

As I learned better, I did better. Time to move on.

Investment Companies

After my experience with buying mutual funds from the Bank in my early twenties, I decided to invest with one particular investment company. They had a slick marketing folder, an office in the mall near my job downtown, and I liked their website. What other criteria could I have possibly needed to choose an investment company?

I have no idea if that company is still around. What I do remember is that they charged atleast 1% for their mutual funds. The management expense ratios (MERs) were the same as, or a touch lower than, the Bank’s.

Was I getting good advice? No… but atleast more of my money was directed into my investments and not being paid out in MERs.

As time passed, I moved my money to a different investment company that had far lower MERs for their products. While this second company did not have an office in the mall, they did have a much better website and a wider array of products. (Throughout my whole investment journey, I never stopped reading about money and investing. As I learned more, I made better choices. Like they say – when you know better, you do better.)

I improved my portfolio mix by moving to the second investment company and I saved money on the MERs I was paying. Further, the second company was easily able to set up an automatic transfer from my chequing account to my investment account. Each time my paycheque landed in my bank account, the investment company would scoop out a portion of it to be added to my investment portfolio. This was a free service! Once I’d set it up, I never had to think about it again. I could go about my daily life knowing that my money was being investing for the Care and Feeding of Future Blue Lobster. All was well… for a time.

Bear in mind that I never stopped learning. I continued to read more books from the library and I delved into online articles about money & investing. That’s how I came to learn about ETFs and index funds, investment products that mirrored mutual funds for a much lower price. In other words, I could re-create the same portfolio by replacing expensive mutual funds with cheaper ETFs and pay even lower MERs. Eventually, I had to accept the fact that my second investment company’s MERs were too high when I could get the nearly-identical portfolio elsewhere for less money. Though I really enjoyed the convenience of my second investment company, that convenience wasn’t worth paying higher MERs. Whatever wasn’t diverted to paying MERs would instead be invested for long-term growth. I realized that I could improve my returns by investing my money into ETFs so that’s why I did.

Self-Directed Learning and Investing

At some point in my investment journey, I had opened a self-directed brokerage. When it was time, I moved my portfolio from my second investment company to my brokerage account. In a few simple keystrokes, I sold the mutual fund products and bought ETFs from BlackRock (aka: iShares). Unlike my last investment company, this one did not make withdrawals from my bank account. I had to set up my own automatic transfer so that I could buy units every month. And since I was using my brokerage account, I had to pay a commission.

Big deal! The money I was saving on my MERs was more than sufficient to cover the monthly commission fee. My twin goals were being met: consistently investing every month and saving money on my MERs.

What could be better?

Vanguard Canada was better. By the time Vanguard came to Canada, my self-directed investment education had already led me to its US counterpart. I was ready for their Canadian arrival. Now, I didn’t sell anything from my BlackRock holdings. For the most part, I’m a buy-and-hold investor. The exceptions I can remember were moving from the Bank to the investment company, between my investment companies, and then from my last investment company to my brokerage account.

Instead of selling investments, I simply re-directed future investment dollars to Vanguard’s products instead of BlackRock’s. Again, Vanguard’s offerings were nearly identical to BlackRock’s and Vanguard’s cost less. There was no good reason to pay more money for the same damn thing.

My Fee-Only Advisor

Despite the pride I felt in building my investment portfolio, I wanted an objective review of what I had done. My goal was to retire early on a certain income. Despite my years of self-tutelage, I’d never discovered the formula that could give me a straight answer. Could I retire when I wanted? Or was I looking at another 15 years of work?

So after 25+ years of investing on my own, I went to a fee-only financial planner to get the answers to my questions…. The news was good. It was better good – it was great! He told me that I was on track and that I could retire two years earlier than I’d planned. Woohoo!

For the first time in my investing life, I was getting good advice. The financial planner pointed out a few weaknesses in my investment strategy. He offered me a tentative, new plan and explained how it could improve my returns going forward. However, he also assured me that I had done a very good job by myself and that my goals would be met whether I followed his suggestions or not.

When it comes to getting good advice, I’m a fan of fee-only financial planners. They work for the customer, who is you. They make recommendations, but they don’t sell investment products. That means that they don’t get a commission from someone else for making certain recommendations or pushing the investment-product-of-the-month. You’ll pay a fee for them to analyze your current situation and to create a plan whereby you will meet your financial goals. They will give you advice and it’s up to you whether to follow it.

Have I made mistakes? Yes – many mistakes. I didn’t get great advice to start. The only rule that I’ve always followed was to live below my means. (Even when I was stupid in 2008/2009 and stopped investing when the market crashed, I just piled up money in my savings account until it was “safe” to start investing again.) I saved and invested and switched my investments and kept learning-learning-learning … then more than 25 years later, I finally went to a professional advisor.

Getting good advice is worth the effort. It allows you to reach your goals faster and more efficiently. Though I am self-taught, I have benefitted from many resources over the years. I’m confident that I have the knowledge to separate the good advice from the bad as I continue to fulfill my financial goals. You can do it too. Start today. Save – invest – learn – repeat. When you know better, you’ll do better. I promise.

Power thru the volatility & stick to your knitting

There’s no doubt about it. We’re in a period of volatility in the stock market. For the first time, in a long time, there’s been a run of “down” days. The stock market has been in the red and the market has closed lower than the day before. I do not claim to be any kind of expert on such things, but even I can see that the value of my portfolio is dropping too. This is entirely due to the fact that I’m invested in the stock market.

So what’s my next move? What steps should I take to make my portfolio go up?

Short answer: it’s time for me to stick to my knitting!

I can’t do anything to move the stock market the way I want it to go, which is up. The factors I control are how much I contribute, how often, and into which investment. Everything else is out of my hands. Over the long term, the stock market goes up. This has been proven repeatedly in the past. I have no reason to think it won’t go up again in the future. So I’m going to power thru the volatility.

And you should power thru the volatility too.

I view what we’re experiencing now as a correction. It’s happened before, and it will happen again. Corrections are completely normal! Do the Talking Heads of economic media generate a lot of jibber-jabber about them? Yes, they do…. because that’s their job. The jibber-jabber results in viewers, which translate into ratings, which translate into money.

Pay them no mind. Stick to you knitting.

When the 2009 correction rolled around, I made one of my biggest ever investing mistakes. I stopped making regular contributions into the market. In other words, I halted my dollar-cost averaging system of investing. I froze like a deer in the headlights because I focused on the jibber-jabber. I stopped my contributions for 3 months. Yikes! Huge mistake! Doing so meant that I wasn’t investing at the bottom, when the market was at its cheapest. I waited until the recovery and then I re-started my investment system. This was one of the stupidest moves I have ever made, and I promised myself that I would never make that particular mistake again!

Learn from mistakes wherever you find them.

You need not make this mistake yourself. Don’t stop contributing to your investments just because we’re in a period of volatility. Trust in your plan. You’re investing for the long-term, remember?

There have been subsequent corrections, and I’m happy to say that I’ve kept my promise. No matter what, my automatic transfer funnels money from my chequing account to my investment account and I buy units in my ETFs on the appointed day. My investment strategy has remained consistent ever since 2009.

These past two weeks haven’t been fun. No one likes to see the value of their portfolio decrease, including me. I’ve decided to stop checking the value of my portfolio for a little while. Before this correction started, I would check the value each day and smile to myself. Lately, my smile’s been turned upside-down. I’ve chosen not to torment myself. My transfer will remain in place, and I will continue to invest in my selected ETFs. However, I’ll check my portfolio’s value less frequently.

This is the lesson I learned from the 2009 correction. The stock market will never go to 0. It will go up and down, but it will never go all the way down to 0. I’m investing for the long haul. Even after retirement, there’s a good chance I’ll be around for another 20-30 years. This means I still have decades of investment ahead of me. (Whether I’ll be investing as much during retirement as I do now remains to be determined.) There is no point in worrying about the day-to-day gyrations of the stock market when I’m still invested for the long-term.

Allow me to very clear on this next point – I am not an expert. My wisdom, such as it is, comes from years of personal experience. I cannot predict the future, and I don’t know your particular circumstances. I am not qualified by anyone to give you expert advice. What I say is based on what has worked for me & for those in my circle who discuss such things. I fully admit that my experience is not going to be the same as yours.

That said, I want you improve your odds of ensuring that Future You is financially secure. Continue to invest in the stock market. Take a long-term view. Keep atleast 60% of your portfolios in equities. Invest on a regular basis. Stick to your knitting and ignore the jibber-jabber. Save – invest – learn – repeat. Power thru the volatility and enjoy the rewards on the other side of this correction.

Living Underwater is Fantastic for Fish & Bad for People!

When it comes to mortgages, you never want to be underwater. Repeat after me – living underwater is for fish, not people!

A person is underwater on their mortgage when the mortgage amount owing is higher than the value of the house. For example, if you have a $450,000 mortgage but you would only be able to sell your house for $395,000, then you are underwater on our mortgage.

This is a not a desirable situation because it means you cannot sell your house without taking the deficiency to the bank in order to pay off the bank. In the above example, the deficiency is $55,000 (=$450,000 – $395,000). The mortgage debt to the bank can only satisfied by a payment of $450,000. This is known as discharging the debt.

Unfortunately for you, potential buyers of your home are only willing to give you $395,000. In order for the bank to discharge your mortgage debt, you would need to take the $395,000 from the buyers of your home and another $55,000 from your own pocket to the bank.

Just out of curiosity, do you have an extra $55,000 lying around? No? Then you, my friend, are trapped in your house.

The Downsides of Being Trapped in a House

If you’ve got no reasons to leave the house you’re in, then living underwater on your mortgage is an academic problem. Since you’re not going anywhere, there’s no issue about having to pay any sort of deficiency to the bank. You can continue to pay your mortgage and wait for the real estate market to recover. Even if recovery takes a decade, you don’t need to care since you won’t be trying to discharge the mortgage on your house.

The situation is quite different if you want to move across the country for a new job, or your health status changes and your home is no longer suitable for you. There are any number of reasons why you might choose to move your current abode to another one. None of them change the fact that being underwater on your mortgage means you can’t sell your place without satisfying your full debt to the bank.

I ask you again, do you have enough money in your wallet to satisfy the deficiency and get the mortgage discharge you need?

Mortgage Rates are Rising

Those without a mortgage can be forgiven for not realizing that the cost of mortgages is increasing. For the rest of you, it’s imperative that you start thinking ahead. When it comes time to renew your mortgage, will your budget accommodate a 1%-2% increase in your current rate?

If the answer is “No”, or “I don’t know”, then you should be making extra payments to your mortgage. Make extra payments as often as you can. And make those payments are large as you can! This will ensure that, at renewal time, your mortgage is as small as it can be. This means that your new payment at the higher rate will be lower than it would be otherwise.

You can use an online calculator to estimate the size of your next mortgage payment. Whatever rate you’re paying now, add 2%. Assuming you’ll be renewing a mortgage of $350,000 and the anticipated 5-year rate at renewal time will be 5%, here are the mortgage payments generated by this online calculator.

If you’re renewing with a $350,000 balance at 5%, then your bi-weekly mortgage payment is $1,017.81 or $2,025.62 monthly.
If you’re renewing with a $325,000 balance at 5%, then your bi-weekly mortgage payment is $945.11 or $1890.22 each month.

How to Stop Being Underwater

There are a few ways to stop being underwater. Some are harder than others. The most effective way to cease living underwater is next to impossible – you can change market conditions so that the value of your house rises above the balance on your mortgage. See what I mean? That method is next to impossible. Manipulating market conditions likely isn’t within your particular skillset.

Your best bet is to find a way to make extra payments on your mortgage until the balance equals, or is less than, your mortgage’s balance. At that point, the trap is sprung! In other words, what you get from a potential buyer is enough to satisfy you debt to the bank.

Paying extra on your mortgage is a simple plan. Note that I said “simple”, not “easy”. Depending on your other financial obligations, it might not be easy to find the extra money to throw at your mortgage. You might take on another job or start a business. Maybe you’ll sell you no longer need or take in a roommate.

Ridding yourself of non-mortgage debt facilitates another way to make extra payments. Maybe you owe money on student loans, credit cards, vehicle loans, or other consumer loans. As you pay off other debts, re-direct that former payment to your mortgage. Think about it. You were already sending that money to a creditor, so you’ll keep doing so. Your lifestyle won’t change since you were living without that money anyway. All that will change is the name of the creditor.

However you choose to do it, the goal is to stop living underwater on your mortgage.

Spend Your Money on What You Love!

Today, I’m encouraging you to spend your money on what you love. The beauty of personal finance is that it is uniquely specific to what each individual needs and wants. There are general, overarching financial needs that everyone has – think emergency funds, retirement accounts, and just-for-fun money. Everyone who is alive needs to have these in one form or another.

However, my just-for-fun money will be spent very differently than how my family & friends spend their just-for-fun money. This is why I want you to pay very close to attention to what makes you happiest, and then I want you to spend your money on what you love.

Not so fun fact – inflation in Canada is up 6.7% from where it was last year. Boo!!!

A very fun fact – spring has sprung in my corner of the world. Yay!!!! In a few short weeks, I’ll be shopping at a number of greenhouses, picking up various annuals and containers and fertilizers and stakes and nozzles and potting soil… You get the idea. I’m an amateur gardener, and I love the anticipation that comes with the start of the gardening season. One of my favourite ways to spend my money is on flowers. As a matter of fact, I’m taking a container gardening course tomorrow at a local greenhouse.

When I’m feeling a little blue, I visit another greenhouse and tour their gardens and stroll their aisles. Of all the greenhouses I’ve visited, this is the one where I’m most like to find all of the plants I want in one place. One of my favourite greenhouses isn’t particularly large but they have the most spectacular geranium selection I have ever seen in my life. And it was the only place where I found sweet potato vine when I needed it. It is one of my happy places!

My garden is a work in progress.

For me, it is very easy to spend my money on my flowers. I’m trying my hand at planting perennials, since that’s the frugal way of doing things. Last year’s tulips are emerging and I hope to see some blooms very soon. It took some doing but I finally found some hollyhocks for the south wall along my garage. My fingers are crossed that they come back this year. Due to some landscaping work, I had to transplant several established perennials – hostas, balloon flowers, peonies – last year. I’m holding my breath that I didn’t kill them in the process!

Perennials are a frugal gardener’s friend. A one-time investment can yield years of enjoyment. There are spots in my garden where I dislike trying to plant new annuals every year. If I can get my perennials well-established in those spots, my knees and lower back will thank me…. and I’ll have something beautiful to look at instead of just dirt.

However, I’m becoming a huge fan of container gardening too. Elevated planters have been a game-changer for me. Waist-high and arm-length wide, these wonderful creations allow me to comfortably plant, fertilize and water my wee baby plants while standing. I’m in a zone 3, so I can only plant annuals in these planters but that’s okay by me. While I’m a big fan of perennials, I’m an even bigger fan of annuals – petunias, coleus, begonias, geraniums, zinnias! These are my darlings. They’re so colourful! If I don’t particularly enjoy a colour one year, then I simply don’t buy it the next year. Annuals flower for the whole season, while perennials only flower once. They’re all beautiful but there is nothing more satisfying to me than to watch my annuals bloom continuously all summer.

Indulge me for a moment…

These are my beloved ballon flowers. I started with 2 blue plants, and the white ones came up a few years later. Fingers crossed that they survived my transplanting efforts!

Back to spending your money on what you love

So I’ve been in my current home for 18 years… wow! That seems like a long time, but I swear I just moved in a few days ago. Anyway, ever since my first summer here, I’ve been tinkering with a few new flowers each season. Though I still don’t have a formal gardening plan, I’ve enjoyed the show each year. There are so many beautiful and varied things to try. I’m like a kid in the candy store when I visit my greenhouses!

Today, I’m at the point of seriously considering the benefits of hiring a landscape designer and a crew to build some flowerbeds for even more perennials and some raised beds for my annuals. The only drawback I see to this option is the cost. It won’t be cheap. Yet… the fact remains that I likely won’t regret spending my money on this particular want. I have a great big backyard, that’s currently just grass. Gardening is a great hobby, one I can enjoy for the next 20+ years barring any physical limitations. It’s a way for me to get outside and enjoy all the spots of my property. I’m thrilled to see things bloom, and I like the idea of helping pollinators get what they need to stay alive.

One of the reasons that I sacrificed a few experiences when I was younger was so that I could fully fund my RRSP and my TFSA. I’d also wanted to have my non-registered account well-funded long before retirement. My financial dream had been to create a cash flow that I could live on when I stopped working. Lately, I’ve been crunching my numbers with a fee-only financial planner, and various internet calculators. They’re all telling me the same thing – that I will be okay. I’m starting to believe them!

So now it’s time for me to loosen the purse strings a little bit. I’ve enjoyed the journey up to now, but it’s okay for me to enjoy it a little bit more. So kindly wish me the best as I head to the greenhouses with the hordes of other gardeners. There are wee baby plants in my future and it’s almost time for me to get my hands back in the dirt.

So this is my non-professional and completely non-binding advice to you. Do what you need to do to ruthlessly cut out all spending that doesn’t bring you joy. Get out of debt. Fund your emergency, retirement, and investment accounts to the best of your ability. Spend some fun-money along the way, but not too much! When you’ve identified what brings you the most joy, spend your money freely. Do so with a smile on your face and joy in your heart as you spend your money on what you love!

F.I.R.E. – A Refreshing New Perspective

For those who don’t know, F.I.R.E. is the acronym for Financial Independence, Retire Early. It’s a financial point of view that has gained traction in the past 10-15 years. People live significantly below their means in order to grow their money as fast as possible until they no longer need to work. Once they hit that point, they are considered financially independent. If they wish, they can choose to retire early at that point. There are a multitude of websites and blogs devoted to the F.I.R.E. way of life. I will admit that my personal finance coming-of-age was heavily influenced by the initial hardcore tenets of FIRE.

For a long time, I easily adopted the face-punching viewpoint of Pete who runs Mr. Money Mustache even though I was not going to give up some of things that he clearly eschewed. For a little while, I was also enamored with the draconian thriftiness espoused by Jacob’s on his website, Early Retirement Extreme, even though I would never choose to live that way. I was constantly searching for stories of people who lived well-below their means because I wanted to see how far I was willing to go to have money for my investments. When I found a poster on YouTube who only ate once a day in order to save money for investing, I realized that I had limits. Starving when you don’t have enough money is one thing. Purposely starving yourself in order to invest money is offensive to me. I decided to stop seeking the extremes.

Lately, a refreshingly new perspective has emerged. In my view, it is healthier and more welcoming than what I learned. The concept is an homage to living your best life while investing your money. Your money should be used to make your life as good as possible. This doesn’t mean going into debt. It doesn’t mean working forever. It does mean being laser-focused on that which is most important to you. Debts eventually get paid. Salaries increase, one way or another. Consistent contributions to investments will churn out capital gains and dividends. At some point, the gap between the cost of your monthly necessities and the cash flow coming to you will widen to an appreciable amount. This is called your disposable income. The new perspective is about figuring out how to spend that disposable income in a way to brings the most joy and happiness into your life.

I find the new perspective more persuasive than I would have even 5 years ago. One of my biggest challenges is finding balance between living today to the fullest while saving and investing just enough for tomorrow. Two authors come to mind. They’ve articulated ideas about living each day to the fullest, without ignoring the onus to take care of Future You. Specifically, I’m thinking about Ramit Sethi of I Will Teach You To Be Rich and his exhortation to live your rich life now. The other author is Bill Perkins, who has encapsulated the essence of the new perspective in his book book, Die With Zero.

What I like most about the new perspective is that it offers a sense of balance. It gives people permission to enjoy the present, and to enjoy spending a little bit of money today. The new perspective recognizes that time is fungible – once gone, it can never be reclaimed. Accordingly, everyone should figure out what is most important to them and spend their money accordingly in order to maximize the utility of their money while securing their financial future.

Ramit Sethi encourages people to pursue their rich life today. As I understand his message, he doesn’t want you to wait 10-15-20 years to start living well. He wants you to determine what you want and to figure out if you can incorporate it into your life today. Mr. Sethi advises people to ruthlessly cut out the stuff that doesn’t matter so that they can focus their money on the things that do.

I love this idea! For my part, cable TV is unimportant. I cut it out of my life 8 years ago, and I don’t really miss it too much. I can’t host Grey Cup or Super Bowl parties, but that’s the extent of the drawbacks to not have cable in my home. What I do love is traveling to new countries. Before the pandemic, I was able to fund 3 trips to Europe in the space of 4 years. For me, that was a huge accomplishment. My rich life definitely includes travel!

In Die With Zero, the author’s position is that dying with too much money means that you have deprived yourself of experiences that could have enriched your life. This book really challenged my views about spending, saving, and investing my money. Truth be told, my mind was blown! First of all, how could a person die with too much money? Was that even a thing? I really had to slow down and contemplate what the author was saying.

Speaking only for myself, this book forced me to consider whether I was spending money in ways that made me happiest. I’ve been saving consistently since age 21. I’d finally visited a fee-only financial planner to get an objective opinion on whether I could hit my financial goals. (The answer was a resounding “Yes!”) By the time I read Die With Zero, I was comfortably past the Coast F.I.R.E. point in my money journey. I was ready to contemplate the idea that I might not have been using my money in the best way possible. After reading this book, dying with un-spent millions no longer seemed like the wisest choice.

It’s truly not my intention to be the richest person in the graveyard. There are experiences that I’d like to have which will require me to open my wallet. Though I’m not entirely convinced that I should die just as my net worth hits $5.47, I appreciate the ridiculousness of dying with millions of dollars to my name. That money will only benefit my heirs. The opportunity for me to benefit from the money dies the moment that I do. While I intend to leave something to my heirs, I want to help and not hinder. There is an intrinsic value in attaining your own personal goals. I won’t deprive them of the chance to experience the pride of accomplishment.

Right now, I’m still searching for the sweet spot. In my humble opinion, the new perspective is going to gain traction. There are those who hate their jobs and want to leave as soon as humanly possible. To those unfortunate masses, I encourage you to change jobs or find a new career. Life is too short to be miserable at work. If changing jobs isn’t an option, then know that I completely understand why you’re willing to sacrifice time today and gamble that you’ll have the time tomorrow to enjoy your money when you eventually do quit.

There will always be hardcore adherents to the “sacrifice everything in the short-term to retire ASAP” view of F.I.R.E. However, that path to financial independence and early retirement is not palatable to everyone. As with most lessons to be learned in life, it is up to each of us to take what we need and to leave the rest. We alone are the ones who know best what we truly desire from our precious time here on Earth. We owe it to ourselves to learn new ideas, try them out, see if they work, keep them if they do, discard them if they don’t, and to do it all over again.

My 5 Most Successful Steps to Retiring As I Wish

Ever since I started working, I’ve been thinking about the day that I can stop – for good. Thankfully, I’ve had very good jobs and worked with amazing people. My work has been challenging and my tasks have been interesting. All that said, work is not my passion in life. I’m not one of those people who bounds out of bed every morning because I’m excited to get to the office. Nope. I’m willing to admit that I’m happier with life when I’m not at work. Whether it’s two weeks away on my annual vacation, two days away on a weekend, or a day off during the week for whatever reason. I’m always happier with my life when I’m not at work.

Thankfully, I learned this truth about myself when I was quite young. As a result, I started my retirement planning when I was 21 years old. Here are the most successful steps that I’ve taken over the years to maximize the odds that I can retire as I wish.

Contributing the Maximum to my RRSP

In hindsight, maybe it wasn’t the best decision to start investing in my Registered Retirement Savings Plan at age 21. I still remember my parents’ accountant telling me that taking the tax deduction while I was a student wasn’t the best idea. He didn’t have any qualms with me contributing to my RRSP but he thought I should wait to claim the deduction in the future when I’d graduated and was working in my chosen profession.

Looking back, I can see that his advice was very good. Admittedly, I didn’t really understand it. My lifelong love of learning about all things personal finance was nascent so I didn’t appreciate the wisdom of his words. At 21, I happily claimed the deduction and spent it on some item whose memory thereof has been lost to the mists of time.

Stupid decision or not, the RRSP-habit was formed. I have contributed the maximum allowable amount to my RRSP every single year since age 21. The money first went into GICs, then into mutual funds, and finally it is now all invested in exchange traded funds. As I learned better, I did better. Over the years, my MERs have dropped and my returns have skyrocketed.

Contributing the Maximum to my TFSA

In 2009, the federal government introduced the Tax Free Savings Account. I can still recall sitting at my computer desk and hearing the words come out of the Minister of Finance’s mouth as I listened to the recap of the federal budget. My head whipped around and I immediately started paying attention. What had he just said? There was going to be a new way for me to save money without paying taxes? Tell me more!

My wise younger sibling then said the following to me:

“Blue Lobster, for you, the TFSA is just another retirement savings vehicle.”

Lightbulb on!

Ever since it’s been available, I have been making the maximum contributions to my TFSA. These contributions have never been sullied by interest rates incapable of matching inflation, as are offered by GICs, nor have they been brutalized by the higher-than-necessary MERs of mutual funds. Nope. I immediately put my TFSA money to work in dividend-paying ETFs.

After another discussion with my accountant, I decided that my TFSA could be used to create a tax-free stream of income in retirement. If I invested in dividend-paying ETFs, then I could withdraw the monthly dividends from my TFSA in retirement. It would be tax-free cash flow. Cha-ching! There was also the tiny little benefit that money from my TFSA wouldn’t impinge my ability to get OAS payments.

Was this the smartest use of my investment? Probably not. I now listen to the wisdom of Bridget Casey of Money After Graduation, and she’s convinced me that I should’ve gone for growth by investing in different equity ETFs. She’s probably right. There was a bull run in the stock market from 2009 to 2020. My TFSA would be bigger had I made different investment choices.

Contributing a Good-Sized Chunk of my Paycheque to my Brokerage Account

This is where the rubber really hits the road. Once I’d paid off my mortgage, I had a good bit of money remaining in my bank account every two weeks. (For the record, I’m a big believer in accelerated bi-weekly mortgage payments.)

Instead of spending that money on this-and-that, I put it to work in my non-registered investment account at my brokerage. My former mortgage payments went straight into ETFs. As with my RRSP & TFSA investments, I put everything on the dividend re-investment plan. When I got raises, I diverted some of the newly-earned money to my investment portfolio and some of it went to increasing my standard of living. As time passed, I was able to get to the point where I’m investing 1/3 of my net pay into my brokerage account and living on the rest.

Staying Away from Debt

In today’s world, it is very hard to avoid all debt. I understand that. I don’t like it, but I understand it.

For my part, I’ve had student loans, vehicle loans and a mortgage. Thankfully, I’ve never had revolving credit card debt. In the interests of transparency, I’ll admit that I do use my credit card but I pay the balance in full every single month.

However, I don’t have debt. The last time I bought a vehicle was in 2008. I used my line of credit and I did everything possible to pay off that LOC-debt within 6 months. It sucked but I didn’t care. I knew that having a car loan for 5 years would’ve sucked too. In my mind, 6 months of short-term sacrifice was well-worth the extra 4.5 years of car-loan freedom. And, yes – my former car loan payments were re-directed to my investments once that debt was gone.

My house has been paid off for 15+ years. While the property taxes, utilities and insurance aren’t cheap, my housing costs are far less than they’d be if I still had a mortgage to pay on top of everything else.

Life without debt is generally better. Instead of money going to your creditors, it can be re-directed to paying for your life’s dreams. It’s best avoided altogether. And if you can’t avoid debt, then minimize it to the greatest extent possible. While it’s in your life, do whatever you can to get rid of it as soon as possible.

Playing the Lottery

Bet you weren’t expecting that one, were you?

It’s true. I play the lottery every week – to the tune of about $20/wk. Even though it hasn’t yet paid off, I consider this one of my most successful steps.

I’ve heard that the lottery is a tax on the stupid, and that those who can’t do math are the ones who play the lottery. I don’t care. The fact of the matter is that I can’t win if I don’t play. Someone has to win and it might as well be me.

Let’s face facts. I’m contributing the max to my RRSP and my TFSA. One third of my paycheque is going into my investment portfolio. I don’t have any debt. Spending $1040 per year on lottery tickets is not going to make or break me. My retirement plans are still on track. If I win the lottery, they’ll just get a fantastically, awesome boost and I can retirement today instead of tomorrow.

Playing the lottery is my indulgence and I’m not giving it up. Other people will spend their disposable income as they wish. I will too. No judgment.

Final Thoughts on Why I Save So Much

I’ve been working in my current position for a long time now. Believe me when I say that my feelings towards working haven’t changed. I’m still happier when I’m not at the office. And I say this despite the fact that I have mentally challenging work. I’m rarely ever bored by my work. My colleagues are truly wonderful people who carry their weight and are always there for me when I need guidance, advice, or mentorship. My bosses are all fairly good people. And while I would never turn my nose up at a raise, the truth is that my compensation allows me to live the life I want. Even my benefits are not too shabby. All in all, I have a working situation that many others can only dream of yet I’m still far happier when I’m at home or with family or on vacation.

I have no illusions that my feelings are unique or that others prefer working to spending time doing what they love with those whom they love. The difference between me and them is that I’ve created a financial foundation for myself where work is becoming optional. This blog post is about the most successful steps I’ve relied on during my working life. Thanks to them, I’ve put myself in a position where I don’t have to allow my paycheque to be the overriding factor in decisions about my life. If my paycheque were to disappear, I wouldn’t have to find another one immediately… or at all. I have the comfort of knowing that my investments – and hopefully a newspaper-worthy lottery win! – will replace my paycheque when I’m ready to part ways with my employer.

Meal Planning is Your Secret Weapon Against Food Inflation

If you’ve been paying attention at all, then there’s no way that you’ve missed the impact of inflation at the grocery store. Food has gotten more expensive! One of the few ways to combat the increase in prices is to make each grocery dollar stretch a little bit further. Enter meal-planning.

One of my friends has a large family. She’s been meal-planning for as long as I’ve known her. Each week, she scours the flyers and plans her meals around whatever’s on sale. I’ve always admired her commitment to keeping her grocery expenditures as low as possible while still feeding herself (and her family) very well.

Yesterday, I failed to heed my mother’s wisdom and spent $36.31 on takeout. I let myself get too hungry and the result was that I made a bad choice with my food dollars. Had I been a little more thoughtful earlier in the week, I would have taken that same $36.31 to the grocery store and bought the fixings for a good meal that would have generated some leftovers.

My mother has been a widow for nearly 20 years. Her “trick” to keeping her food costs down is to always have food cooked in her house. Yes – that’s it. That’s the trick. My mother cooks every few days and she makes enough to last. After raising her family, she no longer wants to cook every single day. At the same time, my Wise Mother knows that she’ll make better food choices if her fridge is well-stocked with tasty leftovers. She lives and breathes the benefits of meal planning.

Why am I not as smart as my own mother? Very good question. I know better!

Two things are true.

One, you know best what you like to eat. Two, you will be hungry later. These are irrefutable facts. You have the power to use these two bits of knowledge in ways that will maximize the utility of your money.

The internet is rife with recipes! If there’s a recipe that you like, rest assured that someone somewhere has written about it online or has created a video for you to watch on your desktop, your tablet, or your phone. Here are a few of my favourite spots to find new recipes, or to be inspired by someone else’s culinary wizardry at filling their freezers.

When you plan your meals in advance, you aren’t forever asking yourself what you want to eat. If you’re anything like me, you are tired of wondering what’s for dinner every night! It would be nice to have a couple of nights in a row where I didn’t have to ask myself that question.

I used to believe that cooking for one was harder than cooking for a family. If you believe that too, then please stop. It’s time to start thinking differently. There are always ways to scale a recipe down for one or two people.

You need not cook the whole turkey if that’s what you’re craving. You can buy turkey parts at the grocery store. One turkey thigh can last 2-3 days, depending on how your use it.

Maybe you’re craving a lasagna? Cut the ingredient list in half and make it in a smaller dish. Or make the full-sized recipe and freeze the leftovers. The beauty of most pasta recipes is that they freeze and thaw beautifully, which means that much less work the next time you want to eat that particular meal.

Perhaps you’re craving homemade bread? I love it too, but it’s a lot to eat in 2 days. Homemade bread goes stale fast. You know what takes as much time but doesn’t go stale as fast? Homemade buns! Make a pan – eat what you want – freeze the rest. When you want another bun, just take it from the freezer.

Impediments are in your mind.

Meal planning is a skill that will take time to master. My mother has it down to a science. She’s retired so she has more flexibility with her time and can grocery shop as needed. For those of us who still work, a teensy bit more effort is required. We have to find the time to grocery shop. Not a problem. If you can’t get to the grocery store, then go online, order your food, and pick it up at a time you’ve scheduled. You can even have it delivered to you at your convenience. The time it takes to grocery shop is not an impediment if you truly want to maximize your money.

In the same vein, there has to be time to prepare your food before it gets cooked. Again, this is not an insurmountable problem. Read the recipe before you start cooking. Then read it again. Personally, I enjoy prep work – the slicing, the dicing, creating little piles of food that have to be combined in a particular order. I find it both relaxing and satisfying to get ingredients ready before I start my recipe.

If you don’t find prep work satisfying, that’s not a problem. You can buy pre-shredded cheese, minced garlic, pre-cut onions, pre-sliced carrots, etc… You can even use a meal prep service if that’s your fancy! The bottom line is that someone, somewhere has already done the prep-work for you, but you still need to get the ingredients into your kitchen so you can cook them.

Step #3 is the follow-thru. In other words, you actually have to cook the food that’s in your kitchen. I know, I know – this might be a radical idea to some of you. My advice is to buck up and get it done. Remember what I said about the internet? It’s everywhere! You can be commuting to work while watching cooking videos on YouTube, Instagram, TikTok, and websites. There is nothing holding you back from meal planning and cooking your own food.

Meal planning is not hard. It takes practice and patience, and a willingness to try something new. It’s a skill that gets better over time. The more meals that you prepare and/or eat at home, the more money you will save for the other parts of your life.

Know Your Ex-Dividend Date & Maximize Cash Flow from Dividends

This post is about creating cash flow by understanding ex-dividend dates. Buying a share in companies that pay regular dividends is way to creating passive income for yourself. Once invested, your money will be put to work. The dividends will come to you for as long as you own the shares. It’s a great way to create a steady cash flow for your later years, when you’re no longer will or able to send your body out to work. If you’ve sent your money out to work instead, then you have some assurance that it will generate an income for you at some point.

I am not promising you that this method of generating a retirement income will be quick. I’ve been investing for decades. While I’ve learned a lot along the way, I’m still not at the point yet where my dividends can support my current lifestyle. My first dividend payments amounted to tens of dollars per year, then hundreds of dollars per year. I’ve finally reached the point where I’m earning a five-figure amount of dividends on an annual basis. It’s comforting to have that passive income, even if I still have to rise-and-shine for my employer most days of the month.

You should definitely consider whether a dividend portfolio would be a good fit for your finances. If you need to hear an inspiring story about someone who did phenomenally well at divided investing, then please check out this 2-part interview at the Tawcan blog.

Dividends & Date of Record

Companies pay dividends to shareholders who buy their shares before the ex-dividend date. There is a date of record that entitles shareholders to a portion of the profits that are distributed as dividends. It’s a very important date to know if you’re planning to receive dividends. If you aren’t listed as an owner of the underlying security on the date of record, then you won’t be paid any dividends even though you bought shares or units in that security.

Every stock, mutual fund, index fund or exchange-traded funds that pay dividends will list their ex-dividend date on their website. Personally, I have a good chunk of my portfolio invested with Vanguard Canada in the VDY ETF. This ETF pays dividends on a monthly basis. I receive dividends based on a distribution price per unit. For the most part, I know in advance just how much money I’ll receive from this security before it’s paid to me. I simply multiply the number of ETF units I already own by the distribution price to be paid. So long as I’ve bought my units before the ex-dividend date, I can get an accurate amount of the dividends that I will receive on the payment date.

Click on the link and scroll down to the bottom of the page. There, you will find the distribution frequency for VDY. Pay attention to the ex-dividend date. If I wanted to be paid on any new purchases of ETF units, then I would have to buy those new ETF units before March 31, 2022 in order to get paid dividends on those units on April 8, 2022. This is because I have to be listed as the owner of those new units on the record date, which is April 1, 2022. If I’m not listed as an owner on April 1, 2022, then I won’t be paid for those units in the month of April. Instead, I’ll start receive payment for those new units in the following month.

As I said earlier, companies pay dividends to those who are listed as an owner of the underlying security on the date of record.

Creating a Cash Flow of Passive Income Takes Time

Knowing the ex-dividend dates of the securities that you’re buying will help you to forecast your cash flow. Once armed with this information, you have the ability to know exactly when you’ll be receiving your passive income.

In the interests of transparency, I can advise that I spent years and years investing in dividend-paying ETFs. (In October of 2020, I tweaked my investment strategy and have been investing new contributions into VXC.) My two dividend ETFs of choice are VXC and XDV. As with VXC, the link for XDV will disclose its distribution dates and amounts. Both of these ETFs pay me dividends every month.

I track my purchases on a spreadsheet. Each month, I update my spreadsheets with the distribution price. This way, I’m able to calculate how much passive income I’ll be earning. It’s awesome! Unlike the money from my 9-5, these dividend payments are effort-free money. Contributions to my portfolio that were made 10 or more years ago are still churning out passive money for me.

When I was a child, my parents purchased bank stocks for my brother and I. I still own them today. Those stocks have paid me dividends for decades. I just wish my parents had been wealthy enough to buy me more! Now that I’m at my current stage of life, perhaps I should do that for myself.

Procrastination is your enemy

When it comes to investing, procrastination is a cancer. It slowly and irrevocably eats away at the potential growth of your portfolio. Your money must be invested in order to work its hardest for you. Creating a steady, reliable cash flow based on dividends won’t happen through wishing and hoping and good thought. You need to actually invest the money then leave it alone to do its thing.

If you let procrastination win, then you’re not investing before the ex-dividend date. That means you don’t receive your dividends until the following month. At the start of your investment journey, you might be missing out on a few cents or maybe just a dollar. Big deal, right? It is a very big deal. The sooner you receive your dividends, the sooner you can re-invest them through a dividend re-investment plan aka: DRIP.

While you’re building your dividend portfolio, you want to earn dividends as soon as possible. They can be re-invested with your regular contributions so that the following month’s dividend payment is even bigger. Compound growth is a key to increasing your dividend payments every month. If you invest after the ex-dividend date, you’re not doing yourself any favors.

Now, I know that you can only invest when you have the money in hand. This is why I suggest that you set up an automatic transfer so that a chunk of your paycheque is diverted to your investment account. Doing so means that you have money to invest. Sometimes, the transfer will take place after the ex-dividend date. While this is unfortunate, it’s also out of your control. You cannot invest what you don’t have.

By the same token, procrastination is entirely within your control. I don’t want you to set up an automatic transfer and just let the money accumulate. If it’s not invested, then your money isn’t being given the opportunity to grow. When you’re interested in pursing cash flow through passive income, then you need to be investing your money in dividend-paying securities as soon as you can. I do my investments every month, but you may want to do your investing quarterly or every other month or once a year. Whatever you choose, ensure that it’s result of your choice and not the result of procrastination.

As with everything you learn in life, you have the option of how to put the lesson to use. If you want passive cash flow, then start today. Get your money invested. Buy your securities before the ex-divided date. Then go about your daily life while your dividends do their thing in the background.