Monthly Archives: November 2014

The Women’s Guide to Financial Independence

Female hand holding up the number 5Hub Staff

From Sarah Ban and Michael Gordon at, a well-researched and fact-based guide specifically for women. This 5-step post is designed to help women arm themselves with the information that many of them may not have, to help them secure their own financial futures free from outside influence (spouses, parents etc).  The steps are as follows:

Step 1: Understand Your Cash Flow

Or: make sure you know where your money is coming from, and going to. The article suggests using financial app Mint to keep track of your expenses. Click the above link to complete a specifically tailored exercise to find out your monthly cash flow.

Step 2: Determine Your Goals and Set Your Budget

Whether it be paying off your various debts or saving to buy your first home, figure out what your goals are and how long it should take to achieve them. The article also has some handy tips to help you cut those costs, many of which are discussed here as well!

Step 3: Eradicate Debt

Remember to prioritize your debt. Paying down that high-interest credit card should take precedence over your low-interest student loan debts.

Step 4: Save!

Packed with more staggering statistics about American women’s financial education, step 4 dives into what women really need to do to prepare themselves for retirement including opting in to your company’s 401 (k) plan. There is also vital information on American healthcare costs, emergency savings, housing and car savings, and different savings vehicles to help you get the most from your hard-earned money.

Step 5: Protect Yourself 

After following steps 1-4, you will no doubt be financially secure and confident, however there are always unforeseen circumstances that come out of left field, and it is important to be aware of those circumstances and have a plan in place to help you stay afloat in even the worst of times. By nurturing your credit score, staying on top of housing, and being aware of your marital status’ possibility to change, your ability to adapt to changing financial situations will be greatly strengthened.

Click through for a much more in-depth guide that covers just about everything American women need to know to make themselves Findependent.

The 1,000 buck-a-month rule: You can retire sooner than you think


By Jonathan Chevreau

Here’s a blog I wrote for before the Hub launched, housed in what it now terms the MoneySense Findependence Archives. It seemed to resonate so I’ve repurposed it here, adding the cover shot of the book from which it’s drawn: You Can Retire Sooner Than You Think.

It deals with an interesting rule of thumb that most retirees and would-be retirees would do well to adopt. Developed by U.S. financial planner Wes Moss, it’s called the 1,000-Bucks-a-Month Rule. It means that for every thousand dollars in monthly income you want in retirement, you need to have saved $240,000. Continue Reading…

Active managers suffer worst year in 30; indexing triumphs

Joshua Brown;

As this article at Reformed Broker explained on Friday, Lipper data shows that active security selection is on track for its worst performance in 30 years, with 85% of stock-picking fund managers failing to beat their respective indexes. Brown sums up the gap between promise and the reality of fund managers pithily:

“They cannot do what they profess to do on a consistent enough basis to justify the extra trading costs, management fees or tax ramifications.”

Coupled with all the press over the failings of actively managed mutual funds and the cost and tax-advantages of exchange-traded funds (ETFs), and lately ETF-based “robo-adviser” services, it appears the message is finally getting through to ordinary investors. Consider these sales numbers published by Reuters:

“Through Oct. 31, index stock funds and exchange traded funds have pulled in $206.2 billion in net deposits. Actively managed funds, a much larger universe, took in a much smaller $35.6 billion, sharply down from the $162 billion taken in during 2013, their first year of net inflows since 2007…”

Brown suggests active managers need to cut their fees in half (and he’s talking about the U.S., where fees are already lower than their Canadian equivalents).

WSJ’s Jason Zweig

But let’s give the final word to the Wall Street Journal’s eminent personal finance columnist, Jason Zweig. The headline says it all: Stock indexing racks up another triumphant year.

Picking up on the Thanksgiving theme, Zweig begins by nothing “It’s been another turkey of a year for active stock-pickers.” He notes that the decline is even worse than three months earlier, when he wrote this:

” … active fund management is outmoded, and a lot of stock pickers are going to have to find something else to do for a living.”

However, taking a balanced approach to the issue, Zweig notes that these things go in cycles and there will be times when active managers have their time in the sun and indexing lags.  He concludes:

” … most stock pickers are still likely to underperform a comparable index fund over time. But they aren’t going to look quite this bad all the time.”


How the wealthy can qualify for “Senior’s Welfare.”

Fred Vettese, Morneau Shepell

My column in this weekend’s Financial Post looks at the collision course between Tax Free Savings Accounts (TFSAs) and the Guaranteed Income Supplement (GIS) to Old Age Security.

This is a followup to a curious strategy unveiled by Mornell Shapeau senior actuary Fred Vettese a few weeks ago in the Post. I also touched on it in a subsequent MoneySense blog. (Note the comments there).

Vettese showed how even relatively rich couples can contort their finances so they too can collect GIS for three years: generating over $60,000 of tax-free income between age 67 and 70. The furor over this gambit suggests either GIS or TFSA rules may eventually have to be tweaked as a result.

The strategy consists of postponing receipt of employer pensions, CPP benefits and RRSP income until age 70. Addressing younger people now 40, Vettese envisaged taking OAS and GIS at age 67 while drawing on joint TFSAs worth $320,000.

Normally, the wealthy don’t even consider the possibility of collecting GIS because of the low clawback threshold. In fact, the truly rich are resigned not only to not qualifying for GIS but realize even their OAS may get clawed back, in whole or in part.

Hypothetical scenario still far away?

Asked about this, the Department of Finance said it was a hypothetical scenario still far away, but that  “the tax system is continuously under review to ensure it is as fair and as current as possible.”

Advocates for low-income seniors quoted in the article say they should avoid RRSPs and invest in TFSAs instead, since they will result in neither tax nor OAS or GIS clawbacks. And they suggest some simple rule changes to the TFSA or GIS that would nip this “end-run for the wealthy” in the bud.

Those who are wealthy may not wish to go to the trouble Vettese describes to get three years of GIS payments (GIS is however tax-free!). But it may be wise to keep maxing out TFSA contributions while you still can, including for your children 18 or over.


A salon for would-be Boomerpreneurs & business owners seeing exit strategies

Dining room
Brainstorming over a dining table like this one.

The other evening ten 60-ish baby boomers got together in a private home in mid Toronto to discuss Boomer retirement and related matters. There were two main groups: most were business owners who have been self-employed for 30 or more years. A handful (including myself and the hostess) had spent most of our careers working as employees in large organizations.

Long-time business owners looking for exit

In both cases, the great question before us was “What do I do with the rest of my life?” The business owners were concerned about exit strategies to monetize their years of sweat equity, which could include outright sale or passing the reins to younger family members.

Long-time employees looking to find a transition business

The other group is considering becoming business owners or entrepreneurs even at this late stage of life, or what I term “Boomerpreneurs.” We may or may not have left the workforce voluntarily but suddenly had some leisure and money to contemplate our next move.

In almost all cases, this was a high-achieving group and while one younger attendee (in his mid 50s) had spent a “mini retirement” of several months in Central America, most of us agreed we were in no way ready for endless days of daytime TV, golf or bridge. Some were conscious of the extended Life Expectancy theme underlying this website’s “Longevity & Aging” section, but others were acutely aware that we all entering the final few laps of the great race of life. The long-time business owners in particular seemed ready for a change, but were aware the transition or exit could well require four or five more years of continued effort.

Actually, this was the second time the group had met. I would have love to have attended the first one in October but had already committed to a three-week trip to Turkey. The focus of the first one was that many baby boomers can expect another 10,000 days of life on the planet, so what’s your plan on how you’re going to spend that time? As the facilitator, Alan Kay (more on him below) put it, it’s all about “repurposing yourself, not a blank canvas.”

Acquiring new skills — at 60

Interestingly, the hostess (one of only two women in the second meeting; the rest were obviously men) experienced almost the same events as I have in 2014. Both of us had quite independently chosen to attend Toastmasters weekly, to hone our public speaking and leadership skills (neither of which suggests sitting before a fire in your rocking chair). She is also attending a Rotman course that prepares you to assume positions on corporate boards. As if that weren’t enough, this high achiever is also taking acting lessons.

Does Business Ownership run in the family?

Her husband, and our host, has long been a business owner. In fact, long ago when I worked on a computer newspaper, I had naively written a piece about him extolling the fact that he was a “27 year old president” of his own computer company. At the salon, he said his own father was a business owner so it seemed a natural step for him at the time. I replied that my father was a high school teacher with security and a Defined Benefit pension plan, which may have explained why I tended to stick with salaried employment within other people’s businesses.

Regrets of the dying

We discussed life purpose, why we are even on the planet, and the five regrets of the dying, a piece published recently in the Globe & Mail. Some felt that one of the advantages of building something even at this stage of life would be to employ the generations following us, including our children.

There was a feeling it’s time to simplify, perhaps to slow down a tad but few seemed to seek a traditional “full-stop” retirement. Call it semi-retirement or phased retirement, depending on circumstances. I didn’t get the impression anyone was suffering financially, so the continued interest in remaining active was more about community, giving back and the like.

Naps in the home office

Some of us work from home, some still go to an office, even if they own the building in which it’s housed. Among the “work-from-home” crowd, which included our host and myself, we confessed there was the advantage of the occasional afternoon nap.

As for the session and what’s next, it’s all rather fluid although the hosts did facilitate an exchange of emails with the intent of connecting on Linked In.  Certainly, this web site will happily describe further developments and facilitate communications between members and would-be members. There are, for example, our so-far-dormant discussion forums, which could be used to continue the dialogue in cyberspace.  It was just such a salon that spawned the Huffington Post.

Alan Kay, The Glasgow Group

Pending permission from the other participants, I’ve erred here on the side of protecting actual identities but may update this blog or post new ones with actual names and coordinates as they arise. I can say the session was moderated by Alan Kay, who is happy to be identified as “a fully recovered ad guy, facilitating change through tools like stakeholder consultations and roundtables using his Solution Focus expertise.”

And yes, this often means sitting around a kitchen table like the one illustrated above; you can find him via his website here. Or contact me at