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Sunday, November 25, 2018

The plan to pay down my margin account in the next three months

The TSX is really difficult to follow right now, its just so volatile! The ride is wilder than ever before and this is not my favorite time. My best time was following the 2008 stock crash. I love my TSX when it's calm and steady. Are the good old days gone for goods? There are always opportunities on the TSX, but it's just that things are getting harder and harder, at least for me. Its costing more and more to invest at credit, and the volatile market makes it riskier than ever to be on a margin account, like the one I had until recently. I decided to sell my PBH shares to pay down my margin and I have no regrets. 

My non-registered portfolio closed this past Friday session a $126 443.97, my TFSA portfolio at $74 795.23, and my RRSP, stocks only, at $37 755.88. Its now official, the TFSA contribution limit for 2019 will be of $6 000. Better start saving now!  A 6k represent a good amount of money to save.

This past Friday session, my margin closed on $66 731.31. Its an increased of $358.02 compared to November 16, but that's only because the interests kick in. And that's exactly why I decided to sell off my PBH shares. With interest rates that are just going to keep rising, a 66k margin felt better on my shoulders rather than a 100k+ one. And no one has the right to doubt on my decisions on that matter. And no one certainly doesn't even have the right to even think that I am not taking the best decisions for myself, because I always do. With this last paycheck, I am going to be able to decrease my margin to $66 011.31. Its amsll step in the right direction, but in other to take bigger steps, I need to sell some investments. And its now all planned!

I am thinking about selling the following stocks inside my TFSA portfolio:
Hydro One Limited (H)
Toronto-Dominion Bank (TD)
Royal Bank of Canada (RY)
Parkland Fuel Corp (PKI)
National Bank of Canada (NA)
Enbridge Inc. (ENB)
BMO Bank of Montreal (BMO)
Canadian Utilities Limited (CU)
Canadian Imperial Bank Of Commerce (CM)

The sell of those stocks should bring on close to $30 000. If I sell those stocks before the end of 2018 and if I transfered the money earn to my non-registered portfolio to pay down my margin, I will be able to reinvest that 30k inside my TFSA portfolio in 2019. I already spotted a few investment I have inside the non-registered portfolio that I would like to proceed with a contribution in kind of to TFSA in 2019: Nutrien Ltd. (NTR), Jamieson Wellness Inc. (doesn't), Aecon Group Inc. (ARE), TFI International Inc. (TFII) - and maybe: ATCO Ltd. (ACO.Y). While selecting some stocks to proceed with a contribution in kind for my TFSA, I always try to target stocks that I really want to keep in my portfolio, but that registered small capital gains, no capital gain at all - or who are experiencing a capital loss.

As soon as 2019 kick in, I could sell my PPL and ENB shares. Following what, I will collect more than what I need in order to completely pay down my margin. After this exercise, I will have a 5k left in cash in order to invest inside my RRSP - that RRSP investment will be made in order to help a bit to reduce my taxes, since I will collect a great following the sale of PPL and ENB inside my non-registered portfolio.

I could pay everything I own for my margin as soon as January 2019. And just to make sure a new debt cycle don't happen again, I will close my margin account. It will be a release for me to be debt free, it will be start of a new beginning where the money I collect as the dividend earned can goes as saving or for new investment, but definitively not to pay the interest of a margin account.

All this only to pay my margin account, but I decided to pay it all for many reasons. A recap of the reasons why:
-I will be turning 40 (!!!) in two years and I need to accelerate my savings and decreased my debt - which is my margin.
-Its getting more and more expensive to invest on credit, as prime rate just keep increasing - and will probably be increase again in 2019.
-A margin is link to the value of stocks, which value is volatile - you always need to check on your stocks to make sure your margin is ok.
-I borrow money from my credit lines when I am away to pay down my margin - and that cost me money.

Paying debt is never a wrong move, no matter what you need to sacrifice.

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