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Wednesday, January 9, 2013

The retirement calculator of TD Canada Trust

It’s still looking good for now. My non-registered is popping up on the $124 400. I gave a quick look at my stocks, everything seem to be fine. CHR.B is giving me awesome profits. I will take them as long it will last.

TD Canada Trust has a fun calculator tool. I adore online calculators. They let you imagine all kind of scenarios.... Like what if I make a 15% (!!!) per year from my investment, how I will have when I 45, 55 or 65?

I would qualify myself as being a good investor and in control but sometimes, I get adventurous and I guess at a point, even “good” investors can turn bad. Take for example Jean-François Tardif. He used to rock out the place. And now? His JFT Strategies Fund (JFS.UN) closed its first year on the market, the year 2012, at -6% or something like it. WHY?

Jean-François Tardif simply stops trying. He’s not as hard as he had been on himself because he no longer has Eric Sprott as boss. Now millionaire and on a more relax lifestyle, Jean-François Tardif is simply letting it go. And I am going to explain to you why we should all be doing the same: LET IT GO.

To be able to understand, we need to move back on that retirement calculator thing from TD Canada Trust.

First, play the game for real. Enter all the information needed in the section 1. About you.

Me: I am 32. I would to retire – let say 45.

I earn about 43k annually before tax.


2 – Retirement plan

How many years of retirement are you saving for? I enter 40.

How much income will you need for your desired retirement lifestyle? I enter $25 000.

If you expect to receive additional income after you retire, please enter it: I enter 0. But at a point, I guess at 67+, I will qualify for a small Canadian pension.


3. Savings and investments

RSP accounts

How much have you saved? I enter $38 097.97

How much do you regularly contribute to these accounts? I enter 0 because I no longer contribute to my RRSP.

Other retirement savings and investments

How much have you saved? I enter $125 488.61 (non registered account + TFSA values on date of December 31).

How much do you regularly contribute to these accounts? I enter $1500 – Monthly. (realistic savings of 1k per month AND reinvestment of the dividend earn, $500. Even there, we could say $650 instead of $500, for a total of $1 650...)

4. Rate of Return

How much do you expect to earn on your investments annually, as a percentage?

I enter 6%


Your Retirement Savings Goal is: $563,114

You are projected to save: $637,959     You will have a surplus of: $74,845

With that scenario that is quite realistic, I will be able to retired at 45 and I will still have a surplus of more than 74k. You need 7%, 8%, 9% or 10% in annual results on the stock market to be able to make it happen. In this case, I did not even enter any possible pension income that I will probably receive once I hit 67.... So that’s quite impressive, isn’t?

Lesson learns: you can be easy going, not to say lazy, like Jean-François Tardif on the TSX angel stock market. A 6% annually as income is quite realistic goal. You don’t have to try really hard. The early retirement dream is really that simple and easy. You really had to read this post tonight just to find out that yeah, money easy with the Dividend girl and Jean-François Tardif (sorry buddy, but I do really like u that much :0)).

In other words: TAKE IT EASY.


Anonymous said...

Looks like you're double counting the dividends. If you're earning 6% on your portfolio (which you almost certainly are not) then that must include dividends, but you're also counting $500 in dividends as savings that you're contributing to the portfolio. Also, don't you have $50k+ in debt? Where did you enter that into the equation? The calculations you made aren't even in the right ballpark.

Anonymous said...

You can't enter the reinvestment of the dividend as part of your monthly contribution (it's part of your return). If you add it, that equals to a 12% rate of return on your investments. Of course, I don't expect you to understand this. You need a financial advisor to explain these things to you.
Plus, good luck with achieving those returns because as it was pointed out to you, your rates are return are closer to what you're getting from Jean Francois Tardif being in the minus.

I know you like to receive replies telling you wow, you'll be able to retire at 45, but the truth is, you can play with the numbers now, but you won't be able to play with them in real life. And even though you would achieve 12% rate of return, 25k is a drop from your salary today; so you would have all that free time and not much money to do anything.

Anonymous said...

The only question I have - does it take into account for the inflation that will be coming soon because of all this printing of money by world governments? It said I would have a surplus of 250K for my plan, but having more if it is really more will only add security to my retirement. I think I will stay the course. Cheers.

Anonymous said...

didn't you forget to include your debt into the calculation? To be accurate, your net assets should your investments - liabilities = NET investment value for the calculation...

Anonymous said...

Happy new year Sunny,

I wonder if you have done any calculations of the annual return rate on your investments. Like some of those from mutual funds. It is a good way to see how you do compare to the index.


Anonymous said...

Once again, your readers are right, you double counted the dividend, you supposed a rate of return you haven't been able to achieve in the last 5 years and you forgot to take into consideration your 87k of debt. You will need to re-calculate.

Anonymous said...

Sorry, that's 78k in debt. 86k was last year.
Last year you had a portfolio of $160,801 minus 86,833 of debt for a net worth of $73,968. This year you have a portfolio of $165,644 minus $78,010 in debt for a net worth of $87,634. Your increase in net worth for the year is $13,666. Taught you might like to know.

If you would have achieved a rate of 6% in 2012, you should have earned (160k*.06)$9,600; if you had monthly contribution of 1k, that's an extra 12k and if you add the dividend like you did, that's an extra 7k. You should have increase your net worth by $28,600 for your calculation to work. But your real increase of $13,666 barely covers your contribution of 12k and doesn't gave you much in way of returns (1% at best) and that includes your dividend so don't try to add them again.

Sunny said...

I have more than 13 k in increased. You forgot the money I made with the Maple Group acquisition of TMX Group and and you forgot to include the money made on a few trades in 2012.

Once again, it seem like some readers are not doing there job. Read me fully and deeply before writing shit about me. Losers.

The dividend are not double counted.

Debt are not included, as they are part of the reason why I need an income of 25k.

25k is a fortune when you don't have a car and don't have a house to care for. I only have my minimum monthly payments on my debt to care about.

Get your records straight before posting. Or keep doing that way, its just showing of how ignorant you are.

I think what I am posting as information should be enough. I have a lot to take care of right now so you'll have to deal with my numbers - but all honest.

Fact is, what you have to understand the idea behind this post is this: it doesn't matter that you beat the index or not, as long you can generate 5%+, you'll be just fine. The sooner you begin to save, and the more you save, the less you have to stress about the return. That's the idea, to keep it simple and real.

If you want to burn yourself into the idea to beat the index and the rest of flow, you are reading the wrong blog. But I am certainly the best of all.

Anonymous said...

And everyone don't forget to take into account inflation. If you get a raise of $1000 and you end up spending $1500 more per year on food then you're in the hole $500.



Anonymous said...

You're the ignorant one, the money made on the few trades and TMX is included as it contributed in reducing your debt. If you didn't make that money, your debt would be higher and your net worth less than it is right now. And if you can't comprehend that the dividend is calculated twice like most readers pointed out, why waste my time.

Anonymous said...

A simple way of seeing this :
Your portfolio performance should be

6% (your estimation)

+ 3,64% (dividends : 500$ *12 / 165 k$)

+ 1,03% ( to cover your margin interest : 2100$/165k$ )

= 10,67%

With moves like the one you made on Heroux-Devtek, I doubt you have the knowledge to get such a performance in the next 13 years.

Sunny said...

Poor guy, just out of your mind.

If you cannot express yourself clearly and straight to the point, don't comment. If you are not willing to express yourself respectfully and explain, well you know what to do. Act like a gentleman.

One problem with this TD calculator is that I don't think it take in consideration the inflation rate. Inflation is about let say roughly 2% a year... Kind of bad.


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