Tuesday, 12 November 2019

The Homestead Fund (Interim) Update

This is a special update on how I shot myself in the foot (so to speak) when it comes to my Grand Savings Plan (sigh).

Okay, so let’s see how I did . . . 
   

For review, here is how things looked from last payday (as in the one on this last Thursday, November the 7th) . . .
   

That is 14.3% (of my Savings Target).

And this is how things look like, after the dust settled on this payday’s budget . . . 
   

That’s right, things dropped to where they were the payday before (as in October 22nd) . . . down to 13.3% of my savings target. 

That means I lost 1% of my total Savings Target between payday (Thursday) and now.

How did this happen?

Okay so this will sound like a bit of “Rich Guy Problems” but bear with me.

So, when I put cash into my Long Term Savings Account, it is either my TFSA or will be another investment account, (or accounts). 

These kinda work like an RRSP, but you can access your cash without penalty 

Disclaimer Notice: There is a 30 day penalty if you take cash out within 30 days of putting it in there, but it is nothing like the massive clubbing you get if you try to take cash out of an RRSP.

So, when I put cash into my TFSA I have to first transfer the cash into the TFSA Account and then do something with it. As in, buy an investment of some kind.

What I do is buy a “High Interest Savings Account” that is traded like a Mutual Fund. It takes a two business days to get cash in or out of that account. 

What I have noticed is that any time I put a buy/sell order in, it is not processed until the next business day. That buy/sell order is not fully completed until the end of that business day.

So, here I was, with cash in hand (so to speak) to put into my TFSA, I transferred the cash into my TFSA, and put in a buy order for the Long Term Savings Account (mutual fund thing).

Or so I thought . . . 

What I had actually done was transfer the cash into my TFSA, but put the buy order in my RRSP. 

I didn’t realize my mistake until the order was processed. This meant that my RRSP was down, in the negative 1 full percentage point of my Savings Total. 

Now, what I could have done, if I was thinking was put in a sell order for that mistaken buy order (that was already completed by this point).

What I did was transfer cash from my Mid-Term Savings into my RRSP to cover it.

So . . . in theory my Income Tax Return should be a bit better than my usual 2 digit refund . . . but I have faith in the Taxman to ensure that I receive my usual 2 digit refund and nothing more. 

So, there you have it, I technically didn’t lose that 1% but it is in a place that I can’t touch (until I turn 65, at which point when I withdraw it from my RRSP, it will be TAXABLE income. (Do you see why RRSP’s suck yet?)

Anyways, I am frustrated and it will take a miracle (sales wise) or the near decimation of my Holiday Pay at work in order to make the day and make my Savings Target this year. 

How much will I miss my target by? By 0.8% . . . close but no cigar. 

It is not a disaster, as I am still putting a great deal into savings and any dollar that goes into savings is a success. 

It is just frustrating. We will see how this year and the next 3 paydays, the final 3 paydays of the year, turn out.

As always: Keep your head up, your attitude positive, and keep moving forward!

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