Saturday, December 10, 2011

Drum roll, please, 65th birthday on the horizon

Ah, 2012. For me, a fabled year. It was always the year of my retirement, right up until I retired early with a buyout and a slashed pension. Take a pension early, draw on your CPP well before your 65th and possibly suffer a 25 percent cut (or more) in payments. Ouch!

But all's well that ends well, and so far my retirement story is ending very well indeed. I left my job in early 2009 and put much of my buyout funds in my RRSP. It was a good move. My portfolio is up about 37 percent, even after taking out tens of thousands to live. If I could have left my investments untouched, I'd be up 48 percent today.

Of course, the story is not over. It's not over until the Fat Lady sings, or in this case the old, bald guy dies. And even then the story is not really over, my wife has to get by on our portfolio until she too punches out. (With a serious heart disease slowly destroying my heart, I think it is almost certain that my wife will outlive me.)

Still, I'm alive and kicking --- and investing --- and I think 2012 is a good year for taking stock of my financial situation. I track my investments with Excel with one worksheet containing my entire portfolio and showing how closely it follows my allocation model. The truth is, it doesn't. Wild profits in some sectors and fair losses in others have distorted my actual asset allocation over the passing years.

I subscribe to the general rule that one should not remove more than four percent from one's retirement fund annually unless you want to risk running out of funds at some point in the distant future. The problem for me is that I have done so damn well that I am now removing six percent based on my balance at retirement.

On the first day of the month of my birthday, I'm updating my retirement starting balance. If I'm lucky, the amount that I am removing annually will be about four percent of that new figure. This isn't all that important as I only remove dividend income from my portfolio; I do not spend my principal. I like to feel I am respecting my own rules, even if it takes a little bending of the truth to do so.

I'm also going to do my best to bring my portfolio more in line with the allocation model I designed years ago. And while I am at it, I'll rejig the model a little.

  • I may buy about another $1000 of the TD Monthly Income fund (TDB622).
  • If it regains lost ground, I'll sell my small number of Suncor (SU) shares.
  • Likewise, if I get an uptick I'll sell my Progress Energy (PRQ) shares.
  • I'd like to buy another 300, maybe 400, units of ZUT and then hold.
  • A remnant of my BTH.UN investment days, VIP.UN will be sold if it enjoys a small rebound.
  • I'd like to get out of Penn West (PWT) but it will take a jump in the price of oil to reach my exit point.
  • I'd like to sell some XIC and buy some XMD when the opportunity arises.
  • And lastly, I'd like to take a flyer on Canfor (CFX) if it cuts its dividend in early 2012 causing a drop in the price of the stock. I like to place a bet now and then. Adds a little spice to the portfolio.

There is, of course, one big fly in the financial ointment --- Europe. How Europe will play out is any one's guess. It looks ugly. I fear it will have repercussions felt around the world. (Hey, it already has.) There may be more pain than gain in the coming year. Still, as I wrote before, there's no need to panic. There never is. C'est la vie.


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