All posts by Financial Independence Hub

Fritz Gilbert: My biggest Surprise in Retirement

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TheRetirementManifesto

By Fritz Gilbert, TheRetirementManifesto

Special to Financial Independence Hub

I’m fortunate to have saved aggressively in my company’s 401(k) since I started my career at Age 22.

It’s what allowed me to retire at Age 55.

And yet, like many folks my age, those savings were predominantly in “Before-Tax” accounts in my company’s 401(k) plan.  Sure, I got the tax break while working, and I felt like a genius. Besides, we didn’t have the option of investing in a Roth, so the decision was easy.

I knew those taxes would come due when I “got old,” but I’d worry about that later.

Later has arrived. 

As I shared in my Retirement Drawdown Strategy, when I retired, we had 56% of our retirement savings in Before-Tax accounts, as shown below:

The Golden Age of Roth Conversions

Now that I’m retired, I’ve been laser-focused on doing annual Roth conversions to reduce that Before-Tax balance. As I wrote in The Golden Age of Roth Conversions, it makes sense to do Roth conversions in your early retirement years (be careful if you’re getting ACA subsidies, and ugly Aunt IRMAA can be a problem if you’re 63 or older).  I won’t rehash the arguments for why; you can read about it in the linked article.

My goal is to manage the taxes on my terms, rather than being “forced” into whatever the Required Minimum Distributions rule requires in my 70s.  I’d also like to get as much of that money converted into a Roth for the benefit of my wife, in the event I die early (she’d pay higher taxes as a single tax filer vs. our current “Married Filing Jointly” status). For now, I’m playing the tax bracket “stuffing” game (topping off my selected tax bracket with Roth conversions) and trying to be smart about minimizing the taxes I pay throughout my retirement.

The Bad News: The Roth conversions are not making as much of a difference as I had hoped.

My Biggest Surprise in Retirement:  It’s Hard to reduce your Pre-Tax Account Balance!

We’ve all heard about the power of compounding and how valuable it is in personal finance.  If you want a refresher, check out my post, “The Most Powerful Force in the Universe.” 

What I didn’t think about, and only realized after I retired and started doing Roth conversions, is the fact that compounding makes it difficult to reduce your pre-tax account balance.

Despite doing aggressive Roth conversions, our pre-tax balance isn’t coming down like I expected!

In fairness, part of that “problem” is driven by above-average returns since my retirement in 2018.  First world problem, I know.  But it’s still been a big surprise.

Let’s do a hypothetical example to demonstrate the point. 

To make the math easy, let’s say you have $1M in your pre-tax account, and your first full year of retirement is 2019.  If you had that entire $1M in stocks, here’s what would have happened without doing any Roth conversions (S&P 500 returns from ycharts, including dividends):

In this example, a $1M portfolio would have grown to $2.6M in 6 short years.  That’s the power of compounding. Amazing!

Let’s modify the above example, and say you’re doing an annual Roth conversion of $50k.

How much impact would Roth conversions make? Not much…

Despite doing annual Roth conversions of $50k, the pre-tax value has still doubled, to $2.15 M!

A More Realistic Scenario – $500k 

Ok, I hear you.  No one has $1M in their pre-tax account.  I got your attention, though, right?

Fair enough, let’s assume the starting balance is $500k (which compares nicely with the average 401(k) balance of $573k for folks in their 60’s):

The problem remains.

With a $500k starting balance and $50k annual Roth conversions, the account has still grown by $357k (to $857k), or 71%.

Bottom Line:  It’s difficult to reduce your pre-tax account balance due to the power of compound interest.

In fact, the only way to reduce your pre-tax account is to do annual Roth conversions in excess of the annual return generated by the pre-tax portion of your portfolio.  Sticking with the $500k example, an average annual Roth conversion of $89k would have been required to maintain the pre-tax balance at $500k, as shown below:

(Note:  you could argue about my $0 Roth conversion in a down year, but it’s just an example.  Quit whining and do your own math – wink.)

What About A 60/40 Portfolio @ $500k?

No one has a 100% stock portfolio in their pre-tax accounts, right?  Let’s see what things look like if our retiree had a 60/40 stock/bond allocation in their pre-tax accounts.  We’ll use the S&P 500 for stocks, and Vanguard’s Total Bond Market Index Fund (VBMFX) for bonds, we can find their annual returns here.

Without any Roth conversions, the account would have grown from $500k to $990k, as shown below:

Add in our $50k/year of Roth conversions, and the ending balance is $609k, an increase of 22%:

Bottom Line:  Even with a 40% bond allocation, it’s difficult to reduce your pre-tax balance via Roth conversions.

We’ve done aggressive Roth conversions every year, yet I continue to be frustrated by how little we’ve moved the needle.  In full transparency, we’ve reduced it, but only by 15% of its starting value.  That’s far less than I would have expected, given the size of the conversions we’ve done. Continue Reading…

Book Review: The Wealthy Barber (2025 fully revised edition)

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Special to Financial Independence Hub

 

Many aspects of personal finance have changed in the 36 years since The Wealthy Barber classic book first appeared.

To update it, author David Chilton had to not only do an extensive rewrite, but he had to come up with new advice.  He did a great job of making The Wealthy Barber 2025 update fully relevant to Canadians today.

Chilton takes important topics that are usually dry and hard to understand and brings them alive in an entertaining story format. But this book is much more than just a fun take on personal finances; the advice is excellent.  Chilton gives insights you won’t find elsewhere.  The book is like a course on personal finance requiring no previous knowledge, and even discussions of insurance and wills are funny and compelling enough to be page-turners.

The bulk of the book is a set of financial lessons mainly aimed at Canadians between 20 and 45.  The early chapters introduce the characters, make it clear that the lessons require no prior expertise, and that the lessons really will help with seemingly impossible problems like the high cost of housing.  These early chapters do a good job of convincing readers that they really can improve their financial lives.

Between the jokes and identifying with the characters, readers will find themselves enjoying lessons that would normally be boring.  Chilton uses dialogue to emphasize important points, to voice objections to his advice, and to clarify common misunderstandings.

I often find things I disagree with in books, but that really isn’t the case here.  Chilton had to make some tough decisions about which details to include and which to leave out, and most readers could come up with a topic or nuance they wish was covered.  One topic I think could have made the cut is that some investors think they don’t pay investment fees.  I’ve heard people recommend their advisor because he doesn’t charge any fees.  All advisors get paid out of their clients’ money in one way or another, no matter what anyone says to the contrary.

I won’t try to summarize the lessons because the result wouldn’t be useful.  Without Chilton’s explanations of the whys behind his advice, too much would be lost.  Instead, I’ll comment on several areas.

Artificial Intelligence (AI)

Chilton didn’t really discuss AI except to make a good joke that I won’t spoil.  He was asked the question “What happens if AI takes away most of our jobs and the economic system collapses?”  There are some bad things AI could do such as cyber war, monitoring all of our actions, preventing us from doing “unapproved” things, and limiting our movements.  However, I don’t see negatives in AI doing jobs for us.  If AI together with machines will eventually grow our food, make clothes and other goods, and build houses, why will we need money?  Until we get to that point, we’ll still need money and people to do jobs.

Pay yourself first

One of the book’s characters says “Save first, spend the rest, good.  Spend first, save the rest, bad.”  This core piece of advice survived from the original book, but there are some caveats now.  For example, some diligent savers “offset the growing value of their assets on their net-worth statements with matching, or near matching, debts on the liability side.  From excessive car loans to large credit-card balances to massive lines of credit, many [live] beyond their means to a scary level.”

Watching other people, I’m convinced that it’s important to set aside savings from your pay first and then spend later, but my wife and I are weirdos who never needed to do this.  Our natural tendency to spend little usually left plenty of savings at the end of each pay period.  We’re the type who had to learn to spend more as our income and savings grew.

Index investing

I thought the passage explaining why we should just buy all stocks instead of trying to pick the best ones was well done.  It included “No, we can’t just buy the winners.  No, there is no way for us to consistently pick them ahead of time.  No, the people we hire to do it for us aren’t any good at it either.”

Like most experts who are trying to help their audiences, Chilton is a fan of all-in-one asset allocation ETFs.  “Not only does the fund buy the individual stocks for you, it does so across the world,” and “These funds also do all the rebalancing for you.”  These funds handle everything so there is no need to monitor your progress.  In fact, to avoid making emotional decisions, you’re best to “pay almost no attention” to the daily or weekly changes in the value of your savings.

“One of the most important factors, if not the most important, as you choose what type of investments to make, is the associated time frame.  How long are you able to set the money aside?  How long until you need it?”  Stocks in the form of all-in-one ETFs are for the long term.  For something like a house down payment, “unless I thought my purchase was at least five to seven years away,” I wouldn’t invest it aggressively.

Starting early

I’m a fan of advising people to start the saving habit early.  Chilton gives an example to motivate this advice where saving $1000 per month for 8 years is more valuable than saving $1000 per month for the subsequent 24 years.  Continue Reading…

Growth, Defence, & Monthly Income: The Barbell Harvest ETFs Strategy

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Harvest ETFs

By Ambrose O’Callaghan, Harvest ETFs

(Sponsor Blog) 

Back in December 2023, we looked at how a barbell bond strategy works. In this piece, we will explore the barbell investing strategy from a different perspective. Conceptually, this investment strategy seeks to strike a balance between risk and reward by investing in high-growth “risk-on” assets, and defensive “risk-off” assets. By accessing the benefits of both “extremes,” this strategy aims to achieve balanced capital gains.

Today, we will review the barbell strategy using six Harvest ETFs on each end. Three defensive-oriented ETFs that also provide access to monthly cashflow through an active covered call option strategy, and three “risk-on” ETFs that offer exposure to growth-oriented areas, while also delivering consistent cashflow every month.

Reducing Risk | Defensive Income ETFs

HHL | Healthcare exposure plus monthly income

In August, we provided an overview of the healthcare space and how it has impacted the Harvest Healthcare Leaders Income ETF (TSX: HHL), Canada’s largest healthcare ETF. To reiterate; the health care sector has shown both defensive and growth-oriented qualities through its history. Healthcare is defensive due to the essential nature of it services, whereas its growth qualities stem from the high demand for specialized products as well as technological innovations.

Healthcare equities have faced challenges in North American and global markets through the first three quarters of 2025. As we highlighted in our recent monthly commentary, valuations have been compressed relative to the market and investors have looked for catalysts for a rebound in this climate. To that end, it is worth highlighting some stock-specific catalysts that are starting to surface.

Those catalysts have included Warren Buffett’s UnitedHealth purchase and headlines focused on the issue of reshoring and repatriation. More stock-specific catalysts have included some positive earnings released across select names. The most recent examples came in the form of Intuitive Surgical Inc., which jumped double-digits on the back of an improved medical devices market and large-capitalization biopharmaceutical innovator Regeneron Pharmaceuticals that posted strong returns following and upbeat quarter.  Compared to previous quarters when strong earnings went virtually un-noticed by the markets, seeing strong stock performance matching the strong reported earnings is perhaps a more subtle sign that sentiment has stabilized in the sector.

HHL offers exposure to a defensive sector that also has growth qualities. The portfolio is composed of 20 large-cap U.S. healthcare stocks, overlayed with an active covered call option writing strategy to generate high levels of monthly income. Indeed, HHL has delivered income every month for over a decade since its inception.

HUTL | Why utilities right now?

Utilities have long been regarded as a mainstay for those seeking stability, income, and defensive positioning in their portfolios. However, rising power demand, technological progress, policy shifts, and the ongoing global energy transition has made utilities a unique target for those who also want growth qualities. The Harvest Equal Weight Global Utilities Income ETF (TSX: HUTL) offers unique advantages as a utilities ETF, due to its global reach and its income generation.

HUTL | Benefits of utilities and steady income

Essential services with stable cash flows

Utilities deliver critical services like electricity, gas, water, and telecommunication, which are largely immune to economic cycles. Because of this, utilities are a stable source of revenue and cashflow.

Power demand growth

Electricity demand has soared in recent years and is set to increase at an even greater rate due to the proliferation of data centres and a broad electrification push. Data centres consumed roughly 1.5% of global electricity in 2024, a rate that could double by 2030. Goldman Sachs estimates that data centre power demand will grow by 165% by 2030.

Energy transition & infrastructure spending

Clean energy investment is projected to reach $2.2 trillion this year, more than double fossil fuel investment. HUTL offers exposure to leaders in this space, including VERBUND AG, Endesa, Fortum, Brookfield Renewable, and others. Meanwhile, the IEA forecasts that $450 billion will go into solar investment in 2025, with additional spending in grid and storage spending.

Diversification and the global advantage

Utilities are critical, but these companies also face risks from climate events and changing regulatory policy. HUTL’s global equal-weighted portfolio means that utilities exposure is spread across regions, reducing concentration risk. This helps to mitigate that regulatory risk as well as geographic challenges like storms, wildfires, and a changing political landscape.

Income generation and lower volatility

HUTL utilities Harvest’s active covered call option writing strategy to generate option premiums, which also serves to reduce portfolio volatility. Meanwhile, the utilities sector has historically outperformed during turbulent market periods. This is an added benefit in an uncertain market.

HVOI | A low volatility strategy with monthly income

In April, broader markets were reeling from the uncertainty that emerged in the wake of the “Liberation Day” tariff announcement. Markets have calmed in the months that followed, with the U.S. administration rolling back significantly on the high tariffs it originally had promised. That said, the CNN Fear and Greed Index shows that investors remain concerned at this late stage in 2025.

CNN Fear & Greed Index

Source: CNN.com, Fear & Greed Index, October 29, 2025.

Harvest launched the Harvest Low Volatility Canadian Equity Income ETF (TSX: HVOI) in April 2025. This ETF holds 40 top Canadian equities, which are ranked and weighted by their risk score and market cap weight, with a 4% maximum weight per name. The equities are scored according to risk and fundamental metrics.

Low Volatility | Portfolio Construction

Source: Harvest Portfolios Group, Inc. April 2025.

Benefits of HVOI

  • Access to rules-based portfolio that manages risk
  • Covered call strategy to generate monthly cashflow and lower volatility
  • Flexibility to employ cash-secured puts to generate additional income
  • Rules-based and disciplined portfolio construction process

Pressing Offense | 3 Growth-Oriented Income ETFs

HHIS | One ETF with top U.S. stocks built for a high monthly yield

In August 2024, Harvest ETFs launched the Harvest High Income Shares™ ETF suite. High Income Shares™ are single-stock ETFs that offer exposure to top companies in both the United States and Canada. The ETFs are overlaid with an active covered call writing strategy, seeking to generate high monthly income. Harvest High Income Shares™ have reached above $3 billion in total AUM since inception at the time of this publication. Continue Reading…

Why Polymarket could become the World’s biggest Betting Exchange

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By Alain Guillot
Special to Financial Independence Hub

Have you heard of Polymarket yet?

In short, Polymarket is a betting exchange, although they prefer to call it a prediction market. But let’s be honest … it’s gambling. The difference is in the structure.

In traditional sports betting, you gamble against the house. The sportsbook sets the odds, takes your bet, pays out winners:  and keeps a hefty share of the profits.

Polymarket flips that model. Instead of betting against the house, users bet against each other, while Polymarket simply takes a small 2% fee from the winner.

The platform launched in 2019 — just six years ago — founded by college dropout Shayne Coplan, who has already become one of the youngest self-made billionaires at just 27.

Only in America can someone go from bathroom coder to billionaire in under a decade. Bill Gates, Mark Zuckerberg, Larry Ellison, Michael Dell, Steve Jobs — and now Shayne Coplan — all proof that dropping out of college can pay off massively.

Polymarket first exploded during the 2020 and 2024 U.S. presidential elections, when users wagered millions on political outcomes. Originally focused on non-sports events, Polymarket eventually added sports betting, and that’s when things went vertical.

Now I believe Polymarket is on track to become the #1 sports betting platform in the world — potentially disrupting giants like FanDuel and DraftKings.

Here’s why:

Why Polymarket has an Unfair Advantage Continue Reading…

Rethinking your Allocation to Alternative Assets for 2026

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Image by Pexels: DS stories

By Devin Partida

Special to Financial Independence Hub

Alternative assets are investments that go beyond traditional stocks, bonds and cash. These include real estate, private equity and commodities. Unlike conventional investments that move with the broader market, these assets often behave differently, which gives your portfolio extra stability and opportunity.

Diversifying beyond the usual mix has become essential as market volatility and inflation make returns less predictable. Adding alternatives can smooth out performance swings, protect your purchasing power and access growth opportunities that public markets can’t always offer. It’s a wise way to strengthen your portfolio and prepare for whatever the market brings next.

What are Alternative Investments?

Alternative investments come in many forms, offering different ways to diversify your portfolio. Real estate provides steady income and long-term appreciation. At the same time, private equity and hedge funds aim for higher returns through active management and exclusive opportunities. Commodities like gold and oil can hedge against inflation, and infrastructure projects offer a stable cash flow tied to essential services. Even collectibles such as art, wine or rare coins can hold value beyond market trends.

These assets often move independently of public markets, which helps balance your portfolio during volatile periods. While they require high initial minimums and upfront investment fees, their transaction costs are often lower than those of traditional assets. Still, they come with unique challenges, such as limited liquidity, complex valuations and higher entry barriers that demand careful planning and due diligence.

Benefits of adding Alternatives to a Portfolio

Alternative assets offer new ways to manage risk, protect against inflation and uncover growth opportunities in areas often overlooked by public markets. When used thoughtfully, they can make your portfolio more resilient and better equipped to handle economic ups and downs. Here are some key benefits to consider:

  • Steady income streams: Real estate and infrastructure can generate reliable cash flow through rent, dividends and yield.
  • Inflation protection: Real estate and commodities tend to retain or grow in value when inflation rises. For example, gold prices are up more than 40% in 2025, proving how commodities can be a powerful hedge during uncertain times.
  • Higher long-term return potential: Private equity and venture capital can outperform public markets over time, rewarding patient investors.
  • Enhanced portfolio resilience: Combining alternatives with traditional assets can reduce volatility and create a more balanced, adaptable investment strategy.

Risks and Complexities to watch out for

Many of these investments require long holding periods, meaning your money could be locked in for years. Private equity and hedge funds often charge high management and performance fees that can affect your gains. Some alternatives don’t have transparent market prices, so tracking their real value isn’t always easy.

Commodities and emerging market assets can also swing sharply in value, reacting to global events and economic changes. Understanding these risks early allows you to make informed decisions, choose investments that match your comfort level and build a strategy that balances opportunity with smart risk management.

Determining the Right Allocation

When deciding how much to invest in alternative assets, it is important to align your allocation with your risk tolerance, time horizon and financial goals. Conservative investors might dedicate a modest amount of their portfolio to other options. At the same time, those with a higher risk appetite could go beyond that. Interestingly, 37% of Americans have expressed interest in using artificial intelligence tools to help manage their money. Continue Reading…