By Billy and Akaisha Kaderli, RetireEarlyLifestyle.com
Special to Financial Independence Hub
Once someone learns that we retired at the age of 38 in 1991 and have been traveling the world ever since, they ask, “How could you afford such a lifestyle? It must cost a fortune for airfare, to live in guesthouses, hotels, apartments and eating out!”
When we tell them that this lifestyle hasn’t cost us anything — in fact, we made money — they’re floored. Remember, it’s a lifestyle, not a vacation.
When we left the conventional working world in January, 1991, the S&P 500 Index was 312.49. Today it is over 5300. That’s an average of roughly a 10% per year return including dividends. See the calculator below.
Sure, we had expenses, but our net worth has outpaced both spending and inflation because we created a money machine.
The cost of not retiring
Whenever we’re considering a trip, we ask ourselves, “Can we afford it?” Our answer shocks some: “We can’t afford not to go.”
We’re no spring chickens at 72. We’ve experienced enough in life to know that we will be more disappointed if we don’t try new things than if we make mistakes at the ones we attempt. We’re only getting one shot at this life, and find that our travel list is getting longer, not shorter.
Over the years many of our friends have passed on: some who never got a chance to retire from their jobs, and they had plenty of money. For the last 3 decades we have been spending about $30,000 per year. We have mentioned a few times about loosening the purse strings and this is what we have done.
We have seen dozens of countries, stayed in resort hotels, purchased new computer equipment and digital toys, refreshed our wardrobes countless times, drank fine wine, had maids, gardeners, and ate at some of the most fashionable restaurants in the world. We have hiked, biked, and scuba’d, lived on tropical islands and in million dollar homes, lived with the Maya, met musicians and magicians and generally enlarged our perspective about the world.
After all this traveling, spending and inflation, our net worth is still higher than when we retired.
Business finances are important for any company to pay attention to, but perhaps more so for small- and medium-sized enterprises (SMEs) given their limited capital and their need to make the most out of every single buck.
Errors or miscalculations in an SME’s financial records can potentially lead to disastrous consequences, such as an untimely shortage of funds, inefficient business decisions due to wrong financial forecasts, and — if worse comes to worst — a state of being in the red.
One of the best safeguards against troubles like these is a full financial audit. To that end, here is a quick guide on what financial audits entail, why they’re a must for your small business, and how to prepare for one.
Accounting vs. Auditing
To rookie entrepreneurs who are just getting a handle on their business finances, accounting and auditing may seem like the same thing: and the latter may even seem unnecessary. However, these processes actually serve different purposes.
While accounting is concerned with the regular record-keeping of a business’s financial transactions, auditing is a less frequent procedure meant to check if those records are indeed accurate and error-free. In addition, given that a financial auditor is typically an independent party, their services are invaluable for providing an unbiased look into a business’s finances and giving an entrepreneur a more objective appraisal of their company’s financial standing.
What are the Benefits of a Full Financial Audit?
To those who know the process better, getting a full financial audit yields multiple benefits for small businesses. One is that it helps spot any inconsistencies or errors made during the bookkeeping and accounting process. As mentioned above, identifying and correcting those mistakes are crucial for ensuring that an entrepreneur is basing their business decisions on accurate data.
Having an audited financial statement on hand can be helpful when dealing with various financial institutions, such as some business banking Philippines providers, just in case they happen to need exhaustive documentation about the business’s financial standing. If you’re exploring a banking solution like the Philippines’ Maya Business Deposit or financing through Maya Flexi Loan, it would be a good idea to complete a full financial audit of your SME first.
A financial audit can also be beneficial for cost-cutting measures, as the process will allow you to identify areas where you might be overspending and pinpoint expenses to be streamlined.
Lastly, having your business audited will make it easier for you to spot fraudulent activities from bad actors in your company. That means that you’ll also have better chances of neutralizing them quickly and, overall, improve the integrity of your financial processes.
In turn, this could elevate the reputation and credibility of your business: especially among potential investors, as they can be assured that you’re constantly on top of your finances.
Tips for Overseeing a Smooth Audit
Philippine businesses whose gross annual sales have reached or exceeded a sum of PHP 3 million are required by the Bureau of Internal Revenue (BIR) to submit an audited financial statement (AFS) every year. If your small business happens to meet that threshold, then you’ll need to work with a third-party auditor to conduct a financial audit on your business for full compliance with the country’s laws.
To make sure that the auditing process goes smoothly, have all the pertinent records prepared beforehand. Include your ledgers, financial statements, tax-related documents, and other accounting records. You can lessen the burden of collating all these documents by ensuring that your day-to-day record-keeping is transparent and organized, so that there won’t be a need for a last-minute scramble to locate what’s necessary. Continue Reading…
It’s been two years since Elon Musk acquired the former Twitter, now X. That led to a steady Xodus (sorry!) of hundreds of thousands or millions of formerly loyal users to new platforms like Mastodon and, the following summer, Facebook’s Threads.
Since last week’s shocking re-election of Donald Trump, another wave of X users has left for bluer pastures, this time for BlueSky, founded in part by former X co-creator Jack Dorsey, and some venture capitalists.
There is also a surge of Xpatriates moving to the decentralized Mastodon service. Mastodon creator Eugen Rochko posted Friday on Mastodon that it has benefited from the Xodus as well. Official “app downloads are up 47% on IOS and 17% on Android.” Sign-ups are up roughly 27% compared to the previous month, with 90,000 new accounts.
Thus far, though, Bluesky has drawn more media attention this week. Bluesky has been around since 2021 but had a slow start, beginning with an “invitation-only” approach to big names or those with massive followings. It is now wide open and free to all comers.
But the floodgates have really opened since last week’s election and Musk’s infiltration of the new Trump 2.0 administration. A million new users flocked to BlueSky in the last week alone, bringing the total user base to 15 million, according to Time. I am one of them, joining on Remembrance Day.
Truth to tell, (certainly not Truth Social!) I had NOT planned to join BlueSky, as I am already on Mastodon, Threads and — oh yeah — Linked In and Facebook. Since I have not yet left X, I felt 5 or 6 social media platforms was probably two or three too many. Even so, some contacts at X the past week suggested I try Bluesky as well, saying the new rush of sign-ups was reminiscent of the good old days of early Twitter.
So, somewhat reluctantly, I signed up, using the same handle as on most of my other accounts: @JonChevreau. I guess part of my reasoning was that when it comes to handles it’s a bit of a land grab and I didn’t want someone else posing as me at BlueSky. That appears to have happened to Mad Money’s Jim Cramer.
Now I’d be the first to say it’s ridiculous to be active on half a dozen social media accounts. It would be nearly impossible for someone with a full-time job and long commute but as I am semi-retired and work from home, it is (barely) manageable. Like most journalists, I’m a bit of a news junkie, though my focus is primarily financial (hence this website) and secondarily, politics (on the theory that politics is always going to impact our personal Financial Independence).
Social media splitting into Red and Blue Silos
Many journalists on X have been agonizing about staying there as standards have slipped under Musk and the site is rife with misinformation, most of it right of centre. In fact at Mastodon, we generally refer to X as “the Hell site.” I see broadcaster Don Lemon just announced his departure from X and arrival on Bluesky.
The problem is of course that many of us have spent the better part of 10 or 15 years building a large network of followers on X. In my case, I restrict most of my X posts to financial content, if only to promote the latest blog from this site. To the extent site sponsors like to see their guest blogs on the site promoted as much as possible on various social media, it’s hard to make the break. It takes years to build up a following in the tens of thousands.
But between Musk buying X and now joining the incoming Trump administration, the die seems to have been inevitably cast. Social media has fragmented into political siloes. X is now a Trump propaganda machine that amplifies what Trump’s own Truth Social was doing. It’s in effect Pravda for the incoming Republican White House. Call it the Red Silo. That was likely the main reason Lemon finally departed.
What you might call the “Resistance” is Threads, BlueSky and to a lesser extent Mastodon, which together I think of as the “Blue Silo.” But in addition to departures from X, I’m also seeing lots of Threads users moving this week to Bluesky: some abandoning it altogether and others opting to become “dual citizens.” One frustration I have myself with Threads is the current limit of following no more than 7500 people. Because of the still-common practice of “reciprocal following,” that policy also curtails Follower growth to a similar number.
Let me go through my evolving personal strategy for navigating these sites. I’ll list these in the order in which I tend to use them first thing in the morning and periodically throughout the day and often evening.
1.) Mastodon
This is my first port of call, even though my Follower account there after two years is less than 10% of what it is on X. Mastodon seems to me to be a bit of a Blue (i.e. U.S. Democrat) silo, as are the next two sites I’ll list: Threads and Bluesky. Presumably many liberal Canadians are sympathetic to that political orientation although things could change soon.
Why do I give Mastodon priority? For several reasons. First, it’s NOT owned by a single billionaire who can upset the apple cart and change the rules on some arbitrary whim. As I explained in a similar post to today’s when I joined Mastodon two years ago — Life After Twitter — unlike the centralized Twitter platform (or indeed Threads or Bluesky), Mastodon is decentralized.
That’s the first thing you need to know about it when signing on. First you have to pick a server, which is run by volunteers around the world. I often get pushback from people checking out alternatives who are under the impression Mastodon is too technical.
It’s not really: all these platforms behave in a similar way, albeit with subtle differences. The main stumbling block with Mastodon is picking the “instance,” which is another word for server. I picked one of the few (or only?) Canadian ones: mstdn.ca. It’s also called Mastodon Canada and bills itself as being run by Canadians for Canadians. Note too that Mastodon is spelt with the letter o in two places, NOT the letter “a”!
The other big reason I prefer Mastodon is that unlike the billionaire-owned centralized platforms, Mastodon does not use an “algorithm” to steer content in your direction. X, Threads and BlueSky all do this to some extent: either they explicitly ask you what kind of content you want or they gradually infer what you want from the content you appear to gravitate to. Down the road, the danger is they will monetize all this for advertisers or other purposes. When they’re free, remember that YOU are the product! Continue Reading…
In this episode of Two Way Traffic wealth management advisor Darren Coleman — who specializes in cross-border financial issues — discussed IT security with his namesake, Darren Coleman. Darren is founder of Coleman Technologies Inc., which handles IT managed services and cyber services. The latter Coleman – he’s been called Canada’s top IT expert – leads a team of technicians based in Langley, BC and Dallas, Texas. He says hacking is a trillion-dollar industry and business owners should take note.
Podcast host Coleman drew parallels between financial services and cybersecurity. He said he looks for gaps in a client’s financial plan, while in cybersecurity Coleman the IT expert looks for gaps or vulnerabilities in multi-factor authentication, threat protection to ensure business resilience, and endpoint protection (cybersecurity software that protects from viruses, malware and ransomware).
The two agreed what’s necessary in both their industries is prevention and managing risk. Another point is that Canada and the US have different tax regimes, and different laws for regulatory compliance.
“The U.S. government can gain access to your data if they want it,” said IT expert Coleman. “We believe the Canadian government can’t, but there are ways they can get it too.”
Their discussion explored …
Why clients of wealth management firms are good targets for hackers and what to do in a security breach when asked to pay a ransom.
How multi-factor authentication can prevent 99% of email breaches.
Why organizations devote too much security attention to senior management and not enough to everyone else.
Darren Coleman of Raymond James [Darren Coleman or Darren #1 henceforth]
Welcome back to another edition of Two Way Traffic, the cross-border podcast. Today my guest is now, let me see if I pronounced your name correctly. Darren Coleman.
Darren Coleman of Coleman Technologies [Darren C #2 henceforth]
You got it.
Darren Coleman
So you and I are namesakes. You run a firm in Langley, BC called Coleman technologies and do outsourced IT infrastructure. You are a cybersecurity expert. Why don’t you take us through Coleman technologies.
Darren C #2
I am the founder and CEO. Part of my mission is to help protect a million people from hackers, so being here on your podcast supports that cause. I’ve shared my cybersecurity insights on ABC, Forbes, MSB Success Magazine. I’ve spoken at Harvard, and co-authored some books. So that stuff led my company down the road to be an expert within the cybersecurity realm. But more than that, we provide 24/7, direct-detect, flat fee, IT support to our clients. We really just become your IT department.
Are there off-the-shelf tools?
Darren Coleman
Our firm has a huge IT spend every year, but for a lot of medium and small businesses, can they not just get all the tools off the shelf?
Darren C #2
Not really. You can hire an IT professional, but you’re probably going to hire multiple people because they’re going to want to take holidays. You’re going to be looking at double the cost right there. But you can’t just buy antivirus. Antivirus isn’t good enough anymore. You need endpoint protection, threat hunting, content filtering, and audits. There are things the IT professional may be good at, but there are things you need an expert for. If you’re looking for cybersecurity insurance, the forms are 10 or 12 pages long and require things you might not think about. Continue Reading…
Actuary Frederick Vettese has a third edition of his excellent book, Retirement Income for Life: Getting More Without Saving More.
He explains methods of making your retirement savings produce more income over your entire retirement.
These methods include controlling investment fees, optimizing the timing of starting CPP and OAS pensions, annuities, Vettese’s free Personal Enhanced Retirement Calculator (PERC), and using reverse mortgages as a backstop if savings run out.
This third edition adds new material about how to deal with higher inflation, CPP expansion, new investment products as potential replacements for annuities, and improvements to Vettese’s retirement calculator PERC. Rather than repeat material from my review of the second edition, I will focus on specific areas that drew my attention.
Inflation
“We can no longer take low inflation for granted.” “An annuity does nothing to lessen inflation risk, which should be a greater worry than it was before the pandemic.” “We could have practically ignored inflation risk before COVID hit but certainly not now.”
It’s true that inflation is a potential concern for the future, but it’s wrong to say that it was okay to ignore inflation in the past. Not considering the possibility of inflation rising was a mistake many people made in the past. We were lulled by many years of low inflation into being unprepared for its rise starting in 2021, just as many years of safety in bonds left us unprepared for the battering of long-term bonds when interest rates rose sharply.
Inflation risk is always present, and financial planners who have treated it as a fixed constant were making a mistake before inflation rose, just as they would be wrong to do so now. This underappreciation of inflation risk is what causes people to say that standard long-term bonds (with no inflation protection) are safe to hold to maturity. In fact, they are risky because of inflation uncertainty.
People’s future spending obligations are mostly linked to real prices that rise with inflation, not fixed nominal amounts. The uncertainty in future inflation should be respected just as we respect uncertainty in stock market returns.
Maximizing retirement income
Vettese does a good job of explaining that things like CPP, OAS, and annuities provide more income now because they offer your estate little or nothing after you die. To make full use of this book, you need to understand this fact, and “you have to commit to the idea that your main objectives are to maximize your retirement income and ensure it lasts a lifetime.”
Spending shocks
Retirees should “set aside somewhere between 3 percent and 5 percent of their spendable income each year, specifically to deal with spending shocks.” “This reserve might not totally cover all the shocks that people … might encounter, but it will definitely soften their impact.”
It’s easy to plug a smooth future spending pattern into a spreadsheet, but real life is much messier than this. I’ve seen cases of retirees choosing to spend some safe percentage from their savings while also expecting to be able to dip in anytime something big and unplanned for comes up. This is a formula for running out of retirement savings early.
Retirement income targets
In this third edition, Vettese assumes that retiree spending will rise with inflation until age 70, then rise one percentage point below inflation during one’s 70s, two percentage points below inflation from age 80 to 84, then 1.8% below at 85, 1.6% below at 86, 1.4% below at 87, 1.2% below at 88, 1% below at 89, and rising with inflation again thereafter.
This plan is based on several academic studies of how retirees spend. I don’t doubt the results from these studies, but I do have a problem with basing my plan exclusively on the average of what other people do. The average Canadian smokes two cigarettes a day. Does that mean I should too?
The academic studies mix together results from retirees who spent sensibly with those who overspent early and were forced to cut back. I don’t want to base my retirement plan partially on the actions of retirees who made poor choices. Similarly, I prefer to base my smoking behaviour on those Canadians who don’t smoke. Continue Reading…
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