All posts by Financial Independence Hub

Stocktrades.ca’s author interview on Findependence and Victory Lap Retirement

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By Dylan Callahan, Stocktrades.ca

Special to the Financial Independence Hub

We’re constantly reaching out to financial authorities we feel would benefit our audience the most. From Mark Seed, to Xiaolei Liu, to Rob Carrick, we are always looking to compile information and pick the brains of experts in the industry. This is why we were ecstatic to hear that Jon Chevreau was willing to do a little interview with us about his most recent book. (Highlighted link is to original post at Stocktrades.ca)

A little bit about Jon before we start

snippetpicture-150x150Jon has long had our attention here at Stocktrades from his writing at Moneysense and the Financial Post. He is the owner of FinancialIndependenceHub, the author of Findependence Day and the co-author of Victory Lap Retirement, which is what this interview will be about. He was a columnist for the National Post from 1993 to 2012 and was Editor-in-Chief for Moneysense Magazine from 2012 to 2014. If we had to choose some financial authorities on the internet today that we’d follow, Jon would be near the top of the list.

We hope you enjoy this interview, and if you’re interested in purchasing Jon’s book, head on over Victorylapretirement.com to see what it’s all about or purchase it from Amazon here.

WHAT INSPIRED YOU TO WRITE THIS BOOK?

Jon: Co-author Mike Drak approached me with the idea of a book about Retirement/Victory Laps after he encountered my website, the Financial Independence Hub, and my financial novel, Findependence Day. We thought we could marry the two concepts since Findependence gets you to the point you can launch a proper Victory Lap.

COULD YOU BRIEFLY DESCRIBE THESE FOLLOWING TERMS IN YOUR OWN OPINION, OR AS THEY RELATE TO THE BOOK?

What is Findependence?

JonathanChevreauJon: Findependence is simply a contraction of the phrase Financial Independence. And so Findependence Day is the day you achieve financial independence, which we define as the moment when all sources of passive income (pensions, investments, royalties etc.) exceed your monthly expenses nut (rent/mortgage, food, clothing, utilities etc.)

Explain a Victory Lap Retirement?

Jon: Victory Lap Retirement can be described variously as semi-retirement, self-employment, an encore career or launching a creative career (writer, artist, musician) that lets you monetize what was previously a hobby. Normally, the Victory Lap is made possible by first achieving Financial Independence. It differs from traditional full-stop retirement in that you may still be working, albeit not for a single employer.

Rather you have multiple streams of income, some of which may be passive (pensions, investments) and some of which may be active (part-time work, contracts, an online business). This allows you to pursue the inner creative dreams you may have harbored when you were young, and which you may have put aside during the decades you worked in a traditional “Job” and raised a family. In your Victory Lap, you work because you want to, not because you have to (financially speaking).

Lastly what is an Encore Career?

Jon: An Encore Career or Legacy Career is a late-life reinvention of your career, as described by the website encore.org and the book Encore by Marc Freedman. Its subtitle says it all: Finding Work that Matters in the Second Half of Life.

snippetpicture-150x150IN YOUR OPINION, HOW IS A VICTORY LAP RETIREMENT MORE BENEFICIAL THAN THE TRADITIONAL RETIREMENT?

Jon: We think it’s crazy to go from the 100% work mode of traditional salaried employment to 100% non-stop leisure, which is the traditional “full-stop” retirement that often occurs at age 65. By the way, I turn 65 next April and don’t expect to slow down much if at all. I’m in the fourth year of my own Victory Lap and am as productive as ever, and probably in much better physical and mental health.

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5 online marketing tips for your business

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By Alex Alexakis

Special to the Financial Independence Hub

Marketing your business online is crucial in the competitive marketplace of the 21st century. This is the case whether your business operates exclusively online, only in the brick and mortar world, or both online and in the proverbial “real world.”

As you contemplate your online marketing plan, you do not need to reinvent the wheel. You do want to put your own unique spin on your online marketing efforts for your business. However, there are some tried and true general strategies you will want to consider when developing your own online marketing plan for your business. Indeed, there are five specific tips you will want to keep in mind when it comes to your online business marketing endeavors.

1.) Fully leverage Social Media

In order to most effectively market your business online, you need to understand that social media is not just for socializing any longer. Indeed, that has been the case for some time. The effective marketing of your business demands that you fully leverage social media.

Research into social media and business marketing reveals that utilizing a platform like Facebook or Instagram can prove to be twice as effective as email marketing and telemarketing, according to CIO, a leading magazine on digital marketing.

Some business owners initially balk at the idea of integrating social media into their overall marketing plan. In the end, social media need not be overwhelming.

The best course to take to begin fully leveraging social media into a comprehensive marketing scheme is to commence the process slowly. What this means is you can begin to develop a successful, compelling social media effort by initiating the process through the use of one platform.

Focus your initial attention on a social media platform that appears to be favored by your customers or clients, as well as by opinion leaders in your industry or market segment. This may be Facebook, Pinterest, Instagram, Twitter, Google+, or LinkedIn. From beginning with one social media platform as part if your comprehensive marketing efforts, you can build over time and truly fully leverage appropriate social media options.

2.) Use Pay-Per-Click advertising

Another methodology you can employ to develop an effective online marketing regimen for your business is utilizing pay-per-click advertising. Pay-per-click, or PPC, advertising allows you to place ads in certain locations online, including at social media sites.

PPC advertising permits you the ability to highly target your advertising. You truly can focus on a very precise market segment, a process that works to optimize your overall return on the investment you make in advertising dollars. With PPC advertising, you only pay when a potential client or customer actually clicks on your advertisement.

3.) Prepare and distribute Press Releases

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Smart withdrawal strategies that ensure a comfortable Retirement

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By Rick Pendykoski

Special to the Financial Independence Hub

Retirement planning is critical — no doubt about that. You worked hard all your career to save enough money and now that you have comfortable retirement savings, you must ensure that it lasts you through the golden years. If you don’t handle the retirement savings properly, you will run out of money earlier than expected.

It is important to have a withdrawal strategy in retirement, which needs to be handled tactfully. The objective of a withdrawal strategy must be to help you provide with the income you need, minimize the effects of taxes, and keep your investment mix diversified and in line with your personal lifestyle and situations.

How Much To Withdraw

Withdrawal rates are the most important factor because you’ve got a limited supply of assets in retirement.

Consider your age, life expectancy, living expenses and rate of return on investment to determine an approximate withdrawal rate.

If you fall under the ‘healthy-have adequate savings-will retire by 65’ bracket, it would be a good idea to begin with a 4%-6% withdrawal rate during the first year of retirement. After the first year, you can build in the cost-of-living adjustment each year to account for the inflation.

5 Key Points to Remember 

  1. Consider the Withdrawal Strategy.

 

The simplest withdrawal strategy is to take assets from the retirement and savings accounts in the following order:

  • Minimum required distributions (MRDs), also referred to as required minimum distributions (RMDs) in the United States,
  • Taxable accounts
  • Tax-deferred retirement accounts, such as a traditional IRA, 401(k), 403(b), or 457
  • Tax-exempt retirement accounts, such as a Roth IRA or Roth 401(k)
  1. Tap Taxable Accounts First

Ideally, you must tap into the taxable accounts first as a source of income. When you use money from taxable mutual funds, individual stocks and other investments, you allow tax-favored assets to enjoy compounded growth for as long as possible.

Once the reserves of the taxable sources of income, which include personal savings, are spent you can move on to tax-deferred accounts, including traditional IRAs, 401(k)s, 403(b)s. This helps in delaying paying taxes on this money for as long as possible, until RMD withdrawals must begin.

Ensure that you are at least 59½ years before you take money from a tax-deferred account as you will incur a 10% early withdrawal penalty if you withdraw before that age, although exceptions to this rule do exist. Start taking distributions from your traditional IRA by the age of 70½ to avoid paying a 50 percent excise tax on the amount not distributed.

Leave Roth IRA as the last option as there are no minimum withdrawal rules for a Roth, thus allowing your earnings to grow tax-free.

  1. Check the Tax Bracket

It is important that you monitor the source of your withdrawals to understand the effect of the withdrawals on your tax rate. It will also avoid a move into a higher tax bracket.

  • If you withdraw any distributions at all from a tax-deferred account, it would result in undesirable outcomes that are not directly related to income tax but that are tied to taxable income like Medicare costs.
  • If you withdraw from a taxable account, it would require selling assets that are held less than a year, resulting in short-term capital gains, which are taxed at ordinary income tax rates.
  1. Limit Taxation on Social Security 

The government considers up to 85% of your Social Security benefits to be taxable. This formula depends upon taking into account other income sources, along with one-half of your benefits. You must manage your income in such a way that a smaller percentage of your Social Security benefits will be taxable.

  1. Have Sizable Emergency Funds  

Ideally, as a retiree, you should have a financial safety net in place to cover your living expenses for at least 1-2 years. Strive for an 8 percent investment return on average.

Smart withdrawing strategies from the retirement savings will guarantee you of a comfortable retirement.

 

Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He has over three decades of experience working with investments and retirement planning, and over the last 10 years has turned his focus to self-directed accounts and alternative investments. Rick regularly posts helpful tips and articles on his blog at SD Retirement as well as Business.com, SAP, MoneyForLunch, Biggerpocket, SocialMediaToday and NuWireInvestor. If you need help and guidance with traditional or alternative investments, email him at rick@s

Will investing in your child’s business endanger your retirement?

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By Dave Faulkner, CLU, CFP

Special to the Financial Independence Hub

Your son or daughter just asked you for a short-term loan to help them start a business. If everything goes well, they will pay you back with interest in a few years. But what if they never pay you back? How much will it impact your ability to enjoy your retirement?

RediNest is a personal financial planning application that you can use to get answers to your retirement planning questions.

How RediNest can help

John and Joan plan to retire in 10 years. Although they do not have a pension plan, they have $300,000 in RRSP and $100,000 in TFSA investments. With no mortgage, they are able to contribute the maximum each year to both RRSP and TFSA.

Using RediNest they calculated their Retirement Potential™ at $73,900 of after-tax retirement income, slightly more than the Canadian average* of $69,000.

Their son has asked them to invest $100,000 in his business. He has prepared a business plan, and expects to repay the full amount over five years. John and Joan want to fully understand the risks before loaning their son the money, so they modified their RediNest plan and reduced their TFSA balance to zero.

Assuming a worst case scenario where they never get their money back, John and Joan re-calculated their Retirement Potential to be $67,800, a reduction of over $6,000 / year for life! A significant amount when you consider it is after-tax and fully indexed for inflation. If they never get their money back, John and Joan want to understand the options available to them to restore their Retirement Potential, as they do not want to have less disposable income in retirement.

Using RediNest, John and Joan discovered they would have to increase their monthly savings by over $900/month for the next 10 years: something they feel they cannot do.

Deferring retirement by a year

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6 types of loans for people with poor Credit

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By Emily Roberts

(Sponsored Content)

Even if you’re used to getting rejected because of your bad credit, there’s no need to panic. There are plenty of lenders offering solutions for people such as yourself. You just need to make sure you know all of your options and understand what each offers. The following are the main types of bad credit loans you should be considering when a traditional loan is simply not an option.

1.) Guarantor Loans

Guarantor loans are unsecured loans that can help you borrow as little as £100 [£1 = US$1.33] and as much as £15,000 even with a poor credit history. They are among the most popular types of loans because they’re cheaper and more flexible than other forms of borrowing with a bad credit.

As a matter of fact, the credit history and score of the guarantor will be more important, making them one of the best for people with poor credit or with blemishes on their report. They’re also ideal for people with no credit history. Furthermore, guarantor loans can also help borrowers improve their credit rating after successfully repaying them.

2.) Personal Loans

The great thing about personal loans is that you can borrow large sums over one to five years, all this without providing any collateral or security. Less than perfect credit scores are accepted by many lenders and you don’t need a guarantor either. Opal Loans, for example, offers unsecured loans to people with bad credit provided they have a salary of at least £800 per month.

3.) Secured Loans

Secured loans allow borrowers to borrow even larger sums than regular unsecured loans, and the sum can be repaid up to 25 years in some cases. Poor credit plans are available, which makes them a viable option for those with a not-so-perfect credit score. However, you do need to own a home and have a mortgage in order to be eligible for secured loans because they are secured on the value of the property.

4. Logbook Loans

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