When Stock Markets Go Down

When the stock market goes up, I am happy. And look at the Dow Jones Industrial Average since the great financial collapse of 2008:

I should be ecstatic, right? Except for Trump tweets and trade wars. And perhaps a long overdue correction for the markets.

When the stock market goes down, as it has over the past few days, I am unhappy. When the stock market goes down and I am surrounded by awful weather, well, that leads to a full-blown depression.

There is no spring in this part of Canada. Nothing but clouds and rain. And cold. We’ve had the heat pumps and the floor heat running continuously since we returned to Ontario.

You get the idea. I am, how should we say, malheureux, unhappy. Unhappy with the stock market. Unhappy with the weather.

Whenever the markets go thump, Lorraine always reminds me that it really doesn’t matter. Keep the course. Don’t let the markets get you down.

She is wise.

But the weather is starting to get to Lorraine. Yesterday she went out and purchased rubber boots. “So nice to finally have dry feet.” she told me.

Life’s little pleasures.

I keep the following rules of investing handy. They came to me from a particularly insightful Canadian investor. To my American friends, I am certain that these rules of investing would also apply to you.

This is what to do when the stock market goes down.

  • Never sell into a storm.
  • Ditch your emotions.
  • Be disciplined. Stick to a plan.
  • Don’t time the market.
  • Never chase returns.
  • Use tax shelters.
  • Start early. Never stop.
  • Invest, don’t gamble. No speculation.
  • Be balanced and diversified.
  • And don’t be a cowboy.

This is what to do when the weather is awful.

Go back to your happy place.

Happy, Wild and Free Again

We had a great seminar on Saturday at the Hitch House. We were warmly welcomed by the Hitch House team, almost like we were family. I think they really missed us. We were stranded here last year for about 6 weeks and that gave us an opportunity to really get to know the team. Wonderful people.

The seminar was packed. The organizers had to bring in more chairs. And yours truly started at 10:30am and did not clear the room until after 1pm. Clearly a lot of interest in the RV lifestyle.

Lorraine and I are by no means experts. We had a dream for our retirement years and we are pursuing that dream.

I promised that I would highlight ten lessons that we have learned during our time on the road so far. There are many more but ten seemed like a good number for the presentation. By the way, if you have an interest, you can download a pdf version of the presentation right here (large file at roughly 100MB). You won’t find much in the way of words as I am violently opposed to “death by Powerpoint” presentations.

Our ten lessons.

  1. Life is short. We see more and more of our friends pass away, often unexpectedly. It comes as a shock and a sharp reminder to live in the moment and to enjoy this blessing and gift of life. Follow your dreams!
  2. (re)Discover your passion. With an abundance of time, you can finally set your own calendar and pursue your passions and interests. People with passion can change the world. The alternative? Hang out in God’s waiting room. Waiting for death. Yuck.
  3. Be bold. Achieving our dream wasn’t easy. It wasn’t a gift. And it took some bold actions, like selling our house and getting rid of a mountain of stuff.
  4. Eat your vegetables. You know what they say, if you don’t have your health, well, life won’t be much fun on the road. You have a choice in how the rest of your life goes, and it can be great. The rules are straightforward: exercise hard and you will grow younger. Care about other people and you will grow happier. Build a life that you think means something and you will grow richer. This from an incredibly inspiring book: Younger Next Year. Highly recommended if you want to learn more about aging well.
  5. Someone will always have a bigger coach. Collect moments, not things. And stop trying to keep up with the Joneses. They’re broke anyway.
  6. There will be bumps along the way. If we accept the fact that things will go wrong, it is a lot more fun when they do go wrong. And believe me, if you own a motorcoach, something is always going wrong.
  7. Never trust the GPS. You determine the destination. Follow your dream and don’t let something (or someone) tell you what to do in life.
  8. Make a new plan, Stan. If you don’t like where you are, if you want a different experience, move on.
  9. Pack one bag. Because that coach is mighty small compared to a house.
  10. Take it easy. You worked hard to get this far. Live every moment, happy, wild and free!

There you go. The Cliff notes from the seminar.

It was wonderful to meet with many of the participants and to chat with them about their dreams.

How We Manage Money On The Road

How do we manage our money while being out of our home country for several months at a time?

Here are five things that we do to make it easier to manage our money while travelling.

  1. Online Banking
  2. Online Investing
  3. Currency Exchange
  4. U.S. Financial Transactions
  5. Tracking and Budgeting

Online Banking

We do the vast majority of our banking transactions online. And that certainly helps us to keep track of our finances while travelling.

As we spend time — and money — in the United States, we have to optimize the use of our poor Canadian dollar to avoid unnecessary fees and/or prohibitive currency conversion costs.

We have a Canadian checking account, a Canadian US dollar account and a Canadian US dollar MasterCard. We also have a US checking account with a US debit card. We have 18 accounts in total but these are the basic accounts that allow us to manage our finances while travelling in the United States. All of our accounts are no fee accounts. We get preferred rates on currency conversion.

Banking fees are killer fees. I try to eliminate as many fees as possible across our banking and investment accounts. It is so important to keep these fees as low as possible.

All of our income goes into our Canadian checking account. This would include things like pension and investment income as well as any big lottery wins.

We keep a small float of money in our US checking account.

We put as many purchases as possible through our Canadian US dollar MasterCard. If we can’t use the Canadian US dollar MasterCard, we use the US debit card. We try to avoid using cash. We want every transaction to be captured electronically so that we know how we are spending our money. The software we use can categorize all of our expenses making it much easier to manage to a budget.

Our money flows from the Canadian checking account to the Canadian US dollar account. We use that US dollar account to settle the Canadian US dollar MasterCard and to maintain the cash float in our US checking account.

Online Investing

I am an active investor and I manage all of our investments so being able to do everything through my online brokerage account is a major advantage when travelling.

We manage seven investment accounts in multiple currencies.

Most people do not manage their investments directly. Most prefer to work with an advisor. As with banking fees, it is so important to keep the fees as low as possible. My investment accounts are all no fee accounts. The drag on my investment portfolio is very low as we hold shares directly for most of our investment assets. We pay 8 basis points on the few Exchange Traded Funds that we do hold in our portfolio.

Many Canadian mutual funds charge fees in excess of 2 percent making it particularly challenging to grow an investment portfolio especially if the investments are concentrated in the Canadian stock market. Most advisors are paid by commission on products that they recommend. These can be hidden costs which erode the gains in your investment portfolio. So be careful and be knowledgeable with your investments.

Unlike banking, I find no difference between managing our investments while in Canada or while travelling in the United States. For our household, it is vital to stay current with our investments and to make any buy/sell decisions as required regardless of where we might be travelling.

Currency Exchange

There are several ways to get money converted from Canadian (CAD) to US dollars (USD). The costs for currency conversion can be quite high — often over 250 basis points — so it is well worth the effort to find the best source for converting your currency. If I wasn’t getting such a great deal at my own bank, I would consider Knightsbridge or Canadian Snowbirds.

U.S. Financial Transactions

I produce a detailed budget and I relentlessly track every single expense. What makes life difficult for a Canadian snowbird in the U.S.? The currency. It is always changing. Just look at the past 12 hours.

When we convert, when we settle payments, when we buy, the amounts are never the same. The timing around all of our U.S. financial transactions can contribute to making things more expensive simply because of currency fluctuations. Currency desks are down on the Canadian dollar due to the level of Canadian household debt (too high), the price of oil (too low), the Canadian government (too left), and taxation (too high).

The currency can swing substantially from day to day, week to week, month to month.

Here is another chart from the Canadian perspective, showing how the Canadian dollar has fared against the US dollar over the past 10 years.

Immediately after the Great Financial Collapse of 2008/2009, the Canadian dollar soared and was above parity for a few years. And then it began to devalue. Largely due to the collapse of oil and the rebounding of the U.S. economy.

Late 2015 was a very expensive time for Canadian snowbirds. And even now, with the Canadian dollar trading so low, it makes the timing of U.S. financial transactions challenging. Very difficult to predict what the Canadian dollar might do an hour from now, never mind a week from now.

If you live in the U.S. you probably never worry about the value of your dollar. Sure, you might be concerned about prices rising but the purchasing power stays relatively consistent over time.

Not so for Canadian snowbirds.

We will stock up on US dollars whenever the Canadian dollar gets above 85 cents or so. Beneath that level, we try our best to minimize the damage.

Tracking and Budgeting

We use a wonderful app for the Mac called Banktivity. It allows me to track all of our expenses. I categorize all of our spending and the software will produce detailed planned versus actual spending reports. I generally review our expenses every few days. Banktivity will automatically convert our US transactions into Canadian dollars so I can keep all of our household spending plans in one currency.

Keeping track of how we spend our money allows us to spend our money appropriately. It provides us with stability. We know where we are and we know what we can responsibly do with our money at all times. Regardless of whether it is in US or Canadian dollars.

There you have it. Our attempt at navigating the financial jungle while enjoying our time south in the United States.

Packing

Sticks and bricks (house)? Gone for the time being.

Part-time or full-time in the motorcoach? Full-time for the next while. Possibly for the next two years. And we’ll see how much fun we are having. The nice thing about being retired is that we can always change our mind.

Moving day into our coach? Tomorrow.

Packing? Yes. For the past few days. Almost done.

We have been putting items into our storage unit in preparation for moving into our coach tomorrow. The picture above looks like there are not that many items in the unit.

That’s the cool thing about horizontal crops.

The vertical crop below shows a few more odds and ends. I am still staggered by how much stuff we had accumulated over the past forty years. We went from roughly 7,000 square feet of stuff in a house to a 50 square foot storage unit and to a roughly 400 square foot motorcoach.

Much smaller footprint on life. Less stuff overall but after packing for the past few days, a surprisingly large amount of stuff is coming with us.

Hope it all fits in the coach.

Moving Day

Moving day is coming up fast.

We move out of our condo into our coach in just a few weeks.

We have been busy getting all of our current stuff either bound for the storage unit or bound for the coach.

With our last big move, we managed to fill this trailer full of stuff and I do mean full:

Oh, and a second one too. Not as big as this one. It was a large cube truck to move all of my recording studio equipment.

We went from one huge house to another. And we filled nearly every nook and cranny with stuff.

As part of our retirement planning, we did a pretty dramatic downsizing. Sold a lot of stuff. Gave away a lot of stuff. Threw out a lot of stuff.

And, even though we are decidedly much more minimalist now, we still have a lot of stuff. Enough to fill two large storage units when we sold our house — although we are now down to one storage unit — and enough to fill a large two-bedroom condo.

We are fortunate to have a Class A motorcoach for our travels however we have to be really careful about how much stuff we carry. It has been interesting going through our condo and doing much of what we did when we first downsized our house a year or so back. What should we sell? What should we give away? What should we throw out?

Travelling light is a joy. We’ve experienced that when we have travelled abroad.

Travelling light in our motor coach is a given. There is limited space for stuff.

Moving day awaits. I’ll show you how much stuff we are taking with us when we get the truck loaded up.

On September 18th, we will be taking the stuff for the coach from our condo in Kingston to our coach at the dealership near Toronto. We will move everything in, get it stored away as quickly as we can, return the truck to Kingston and then head out the following morning back to our coach at the dealership for the start of our travels.

Between now and then, lots to keep us busy!