Monthly Archives: February 2015

The trouble with core-and-explore

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robb-engen
Robb Engen, Boomer & Echo

By Robb Engen, Boomer & Echo

Special to the Financial Independence Hub

We all know how the story goes: You get a hot stock tip from your uncle who works in the oil & gas industry, or from your brother-in-law who works in the tech space, or from your mortgage broker (who’s an idiot).

I’m sorry, but just stop right there. No, Tiger Mike’s Drilling Co. is NOT going to be the next Suncor, and Flappy Bird (or whatever the kids are playing these days) is definitely not going to be the next Facebook or Instagram. And your mortgage broker is still an idiot, no matter what his day-trading recommendation was this time. So why are you listening to him?

Many investors obsess over fees, trying to shave tenths or even hundredths of a percentage from their mutual fund or ETF expenses. But some investors are willing to throw away those benefits by trying (and failing) to hit a home run picking junior mining stocks on the Venture Exchange.

“Play money” doesn’t belong in your retirement plan

The problem with a core-and-explore approach is when investors view “explore” as play money to gamble on risky penny stocks or the next up-and-coming trend. Was it play money when you first decided to save instead of spend your hard-earned dollars? Why is it different now that the money is in your brokerage account?

Why take that kind of risk with your investments? If you feel like gambling, go to a casino. “Play money” does not belong in your retirement plan.

I get it – it can be fun to try and find the next Microsoft or Google from a list of up-and-comers. But the odds of that happening are overwhelmingly not in your favour.

There’s a reason why most “hot stock tip” stories end up as cautionary tales for investors. So why do we keep doing it?

Remember, you don’t need to swing for the fences when a base hit will do just fine.

In addition to running the Boomer & Echo website, Robb Engen is a fee-only financial planner. This article originally ran on his site [note the comments that follow it] and is republished here with his permission. 

Worried about money in Retirement? The best parts are free!

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happy mature couple relaxing baltic sea dunes
Walking by the lake? Priceless!

 

By Jonathan Chevreau

Here’s my latest MoneySense blog, entitled The Cost of Leisure Activities in Retirement. Given the media fuss today over Sun Life’s latest “Unretirement” survey — see Barry Critchley’s piece at the FP and my subsequent blog here at the Hub — you may find some solace in the MoneySense blog, which suggests that many common activities in retirement just don’t cost that much.

As for the prospect of more of us working until age 66, I don’t think that’s all that tragic: this web site focuses on longevity and the concurrent idea that the longer we stay active and productive the better — both for our financial situations and our sanity, or that of our significant other!

By the way, I expressed my views about the Sun Life survey and “Unretirement” Wednesday evening on CTV TV, which you can find here.

Here’s the blog: Continue Reading…

Is the Retirement grass greener in the United States or Canada?

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Depositphotos_40901151_xsBy Jonathan Chevreau

The Financial Independence Hub attempts to be a North American portal running content that may interest readers on either side of the 49th parallel.

This isn’t always easy; sometimes we run blogs from people like Roger Wohlner, The Chicago Financial Planner and perforce the content (like this blog he adapted for the Hub) will be mostly US-specific: touching on topics like IRAs, 401(k)s, Roth IRAs and all the rest of it.

By the same token, our Canadian contributors often write about things like the TFSA or Tax Free Savings Account, which is the equivalent of America’s Roth IRAs and variants of same.

As fate would have it, the Financial Post (my former employer until 2012), asked me to contribute an article comparing the tax and retirement systems of the two countries. You can find it here under the headline Canada vs. the US: Whose Retirement grass is greener?

Findependence is legitimate cross-border topic

I was happy to take the assignment because I’ve been grappling with US/Canadian tax and retirement issues ever since I wrote the book that spawned this and other web sites. The original edition of my 2008 financial novel, Findependence Day, was meant to be a transborder financial love story, covering the tax and retirement topics of both countries through the eyes of characters residing in both countries.

My feeling was then and remains that when you get right down to it, the main lessons of Financial Independence are pretty similar in the two countries. Continue Reading…

The Growing Power of the TFSA

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Canadian Tax-Free Savings Account concept word cloud

By Jonathan Chevreau

The Financial Post has just published an online version of my piece, entitled The Rising Power of the TFSA. Are RRSPs even relevant any more? Click on the link to read the full article.

In a nutshell, of course RRSPs are still relevant for most of us, and we’d hate to discourage people from topping up their RRSPs before the imminent Mar. 2nd deadline this year. My point really is that while there are certain people who should not RRSP if they have only enough money to fund a Tax-Free Saving Account, it’s not quite the same in reverse.

I really can’t think of a reason why anyone age 18 or over, anyone approaching advanced old age, and the rest of us between those extremes, shouldn’t max out their TFSAs. It’s the gift that keeps on giving — tax-free income, that is. (An aside for any American readers: Canada’s TFSA is the equivalent of the Roth IRA).

patmckeoughWe have run several pieces on TFSAs here at the Hub, the most recent one being a joint collaboration between myself and TSI Network.ca’s Patrick McKeough. (TSI is one of his flagship newsletters, The Successful Investor).

In the piece 5 low-risk investments for your TFSA, Continue Reading…

Long term care options for seniors: How much will you pay?

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SherylSmolkin
Sheryl Smolkin (SherylSmolkin.com)

By Sheryl Smolkin,

Special to the Financial Independence Hub

Whether you are considering a move to an assisted living facility for yourself or an elderly member of the family, the options available and how much they cost may come as a surprise to you.

The rules vary considerably across Canada, but a series of informative bulletin from Sun Life Financial covering each province and territory describe the three main alternatives, how much they cost and the level of government subsidy, if any. In this blog I refer to the situation in Ontario, because that’s where I live. Generally care for seniors can take place in one of three settings:

  • At home
  • Retirement homes
  • Nursing homes

Home care

Continue Reading…