Building Wealth

For the first 30 or so years of working, saving and investing, you’ll be first in the mode of getting out of the hole (paying down debt), and then building your net worth (that’s wealth accumulation.). But don’t forget, wealth accumulation isn’t the ultimate goal. Decumulation is! (a separate category here at the Hub).

US Large Caps top Templeton asset-class chart but remember Winners Rotate

Posted By Jonathan Chevreau | May 6, 2015

Here’s my latest MoneySense column, entitled Why Diversify? This chart shows you why. I used to write about this chart back at the Financial Post, and tacked the chart up on my cubicle wall. An updated version of the chart later followed me to my office at MoneySense, and the one below is now in my Editor-at-Large’s home office. Click on the above link to get to the chart, which can be further enlarged on your monitor.

The Hub’s version of the blog below also shows a second chart at the bottom about Risk. As you’ll see, it’s more predictable, living up to Franklin Templeton’s assertion that risk is more predictable than returns. I’ve always found it a useful reminder of the futility of chasing last year’s winners or attempting to predict next year’s winning asset classes. If you can’t get the charts free through your financial advisor, you can download them here.

By Jonathan Chevreau

How to get the new TFSA limit to work for you

Posted By Jonathan Chevreau | May 5, 2015

By Jonathan Chevreau

Financial Independence Hub

Here’s my latest column from the print edition of MoneySense magazine, written right after the federal budget: Get the new TFSA limit to work for you.

Click on the link for details, but in a nutshell — and has been extensively reported in the media, such as this piece by Gordon Pape (subscribers only) — there’s no reason why you can’t add another $4,500 to your Tax Free Savings Account right now, in addition to $5,500 you may have contributed anytime on or after Jan. 1, 2015. (Note to American readers: the TFSA is the equivalent of Roth IRAs, providing no upfront tax deductions but which let you eventually withdraw money tax-free in Retirement or for other purposes).

That means a whopping $20,000 per couple. Now while Liberal Leader Justin Trudeau seems to think only “rich” people have that kind of money available, the fact is that many hard-working middle class people have been saving and investing for the better part of two or three decades, and built up substantial non-registered or “taxable” portfolios. Even though they may have paid income tax to acquire the capital in the first place, over those decades they have been paying annual taxes on interest, dividends and (often) capital gains generated by that capital.

As the column points out, those who have built such “open” portfolios don’t have to use new cash to put $10,000 per annum into their TFSAs. They merely have to start transferring their non-registered securities into their TFSAs. This is called a “transfer-in-kind” Continue Reading…

How parents can give their children the gift of future Financial Independence

Posted By Jonathan Chevreau | May 3, 2015

Friday’s post on how Hub readers are generally embracing the $4,500 TFSA expansion promised we’d run one particular letter in full on Sunday.

Below is the letter referred to. The parents in question gave this letter to their three children at Christmas of 2011, just a few years after Tax-free Savings Accounts were launched. They gave us permission to run it, in the hopes that other families could benefit from the ideas, which include parental matching of whatever savings the kids can come up with to fund their TFSAs.

Merry Christmas 2011

Name of Child here _____________________

This Christmas and future Christmases Mom and I wish to help you to start planning and working towards your long term financial goals/security. We realize that as responsible young adults you use your financial resources to meet your everyday fixed/living expenses and that with your busy lifestyles you do not always have the time to manage/consider long term financial planning. Continue Reading…

What’s the right amount of retirement income?

Posted By Jonathan Chevreau | April 30, 2015

By Marie Engen, Boomer & Echo

Special to the Financial Independence Hub

“Money may not be the most important thing in life, but it’s way up there with oxygen.” – Zig Ziglar

How much is enough? That’s a question that’s asked often. Everyone measures the concept of “enough” differently. Some of us think in terms of dollars per month or year:

$50,000 per year
$5,000 per month

Or, you may think of a percentage of pre-retirement income: 70-85%.

Many want to know what the “average” Canadian needs, or what “most” people require.

The proper question is, “What is enough for me?”

If you are retired, or close to it, I’m going to give you an assignment (should you wish to accept it). Spend some serious time with this. You are going to make three budgets. Continue Reading…

Unified & Defined: finally, some plain-English definitions for financial planners

Posted By Jonathan Chevreau | April 29, 2015

Here’s my latest MoneySense blog, which looks at a new book that provides unambiguous definitions of common terms like financial planning. Click on The New Definition of Financial Planner for the MoneySense blog.

Below is a guest post by Cary List himself, president and CEO of the Financial Planning Standards Council (FPSC). We thought we’d give Hub readers the take on the new book right from the horse’s mouth!

Unified & Defined: Let the Canadian Financial Planning Definitions, Standards & Competencies Be Your Guide to Sourcing the Right Professional

By Cary List, CA, CPA, CFP®

President & CEO, Financial Planning Standards Council

Special to the Financial Independence Hub

Studies have clearly demonstrated that Canadians are not getting the financial help they need from qualified, professional financial planners. This is partially the result of a lack of understanding of how to identify a qualified financial planner and of what they should expect of a financial planner and/or a financial plan.

Today’s unregulated financial planning environment leaves many of us vulnerable and at risk of receiving advice from individuals who call themselves financial planners but who have not had to attain any qualifications specific to the financial planning practice and who are not held accountable to any oversight body related to the financial planning advice they offer.

Anyone outside Quebec can still call themselves a financial planner

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