Thursday, April 23, 2020

Surviving Bear Markets

I live off my dividends, so I am interested in surviving Bear Markets. I have been through quite a few as I started to invest in the mid-1970’s. I started off in Mutual Funds as most people I think do. I did not buy my first stock until 1982.

I have a CDN$ Trading Account, a US$ Trading Account, a TFSA Account, a RIF Account, and a LIF Account. Each year I have to take money from my RIF and LIF accounts. I do this in December. This is funding the for following year. So, the money I take out in December 2019 was funding for the year 2020.

I am fully invested in my CDN$ Trading Account and now also fully invested in my TFSA Account. Ditto for the US$ Trading Account, but there is not much left in that one. For my RIF Account and my LIF Account I always have enough in cash and anticipating earnings to be able to fund 3 to 5 years of withdrawals.

For my CDN$ Trading Account, I have a $10,000 line of Credit that I use to invest in stocks. Before the last drop in the stock market, I had run this down to almost $0. At present, I have spend most of the line of Credit on Pembina Pipe Lines.

I do transfer stocks from my RIF and LIF accounts to my CDN$ Trading Account, but I also need cash. There are basically two things I need cash for. One is to pay my taxes due in the year of my withdrawal and the second is to top up my Reserve Fund. I never, ever want to be in a position when I have to sell investments in these accounts at a loss to cover my yearly cash withdrawal.

I do not have any health insurance coverage. When I first stopped working, I did not buy any because I had not used much the health insurance coverage that I did have while working. I have not lived to regret this, at least not yet. Since I have stopped working in 1999, I have had only one large bill. This was a dental bill for $8,000. Most years it is just regular dental bills. I do not pay for drugs fully because Ontario covers most things and I have not had to get much.

I have a reserve fund. This is in cash in savings accounts. I have used it when I could not fully cover my expenses with my dividends which often happens in February each year. I have used it for special expensive vacations. I have used to fund trips for my great nephews when they graduate High School. I have used it to fund some medical bills. I have it now in cash in case too many of my dividends get cut in the current bear market.

There will always be unexpected expenses. There will always be bear markets. It is best to be prepared.

On my other blog I wrote yesterday about SNC-Lavalin Group Inc (TSX-SNC, OTC-SNCAF) ... learn more. Next, I will write about Fortis Inc (TSX-FTS, OTC-FRTSF) ... learn more on Friday, April 24, 2020 around 5 pm.

This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

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