All posts by Financial Independence Hub

7 steps to downsizing your Home: a checklist

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Achieving financial independence often comes with dreams of a big house on a quiet cul-de-sac with plentiful space and bedrooms for the family. But during a worldwide pandemic, many homeowners have sought to simplify their life and downsize their primary residence.

To help demonstrate what downsizing may look like, we asked homebuilders and homeowners about the steps they would recommend taking if they were to downsize a home.

Here are seven steps to downsizing your home:

  • Right-Sizing
  • Accessibility
  • What Items Do You Use to Support Your Habits?
  • Do The Hard Things
  • Have a Financial Plan
  • Don’t Get Sentimental
  • Keep Things Only if They Bring You Joy

“Right-Sizing”

At Cullum Homes, instead of downsizing, we call it “right-sizing”! We have been designing and building lock-and-leave luxury homes in this specialized niche market for many years. Steps we would recommend include (1) free yourself from a large lot, pool, landscaping, etc. and the endless expense, upkeep, and maintenance they require, (2) consider a private, gated community with resort access and/or amenities that are maintained by someone else, and (3) before making the move or having a new home built, give careful consideration to the rooms and spaces you want now and might need or want in the future. Don’t become so focused on cutting space that rooms become unworkable. We have actually had clients that cut out too much space, only to return and have us add on later, or build them another larger home! — Rod Cullum, Cullum Homes

Accessibility

As a company that specializes in accessibility lifts, many of our customers are either looking to downsize or reduce the impact of mobility challenges in their homes. Many of our customers find that adding accessibility to their existing home allows them to remain comfortable and surrounded by the things that are important to them. This is often the easiest way to simplify your life. If you do need to downsize, a stair lift can make an in-law suite readily accessible. — JJ Hepp, Arrow Lift Stair Lifts

What items do you use to support your habits?

Having recently downsized our home, we took stock of how we spend our time and what we use in support of our habits. This made donating and discarding unwanted items a lot easier. We also looked ahead at the space we were moving into and how our current furniture and other items would help make this smaller space as efficient as possible. In hindsight, we spend less time maintaining our space and have more free time and a better quality of life. — Steven Brown, DP Electric Inc

Do the hard things

The reality of downsizing a home is that homeowners have less storage space and less living space. Getting rid of things is hard. Doing Goodwill drop-offs or posting items on OfferUp means saying goodbye to lots of memories. But, making the hard decision to part ways with items opens up an opportunity to say hello to a new lifestyle with reduced upkeep and increased savings. Do the hard things that come with downsizing, and your lifestyle will benefit as a result. — Brett Farmiloe, Real Estate SEO Company

Have a Financial Plan

Whenever downsizing is brought to the table, it can be a phenomenal experience. It is quite surprising to learn how you can function on a lean basis, void of clutter and unnecessary items. Continue Reading…

4 Investing lessons from 2020

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By Steve Lowrie, CFA
Special to the Financial Independence Hub
Sometimes, it takes years for key investment lessons to play out to the point we get to say, “See? Told you so.” 
Not so in 2020. Now that this excruciating year is behind us, we can at last appreciate the remarkable crash course it offered in nearly every principle inherent to successful long-term, goal-focused investing.

Where to begin?  Let’s start with the power of planning.

Lesson #1: Planning beats reacting

“Short-term thinking repeated again and again doesn’t lead to long-term thinking.” — Seth Godin

You were there, so you probably remember:  Major global stock markets declined from near all-time highs in mid-February to a low on March 23rd (34% in 33 days).

Few of us saw that coming.  Fewer still might have guessed things would so abruptly reverse, to end 2020 with new highs, well into positive territory.  The U.S. stock market reached new heights last summer, even as the pandemic and its economic devastations raged on.  The Canadian stock market reached a new high recently on January 7, 2021.  Europe and other global stock markets still have a way to go.

The lifetime lesson here, and my key, repeated observation for 2020, is simply this:

The economy can’t be forecast, and the market cannot be timed.  Instead, have a long-term plan and stick to it during dramatic turning points.

Planning as opposed to reacting: this is your and my investment policy in a nutshell, once again demonstrating its enduring value.  Consider these points:

Much ado about nothing:  The velocity and trajectory of the equity market recovery nearly mirrored the violence of the February/March decline.  For those who like to relate letters of the alphabet to economic or market performance charts, the 2020 stock market chart was a pretty pronounced V.

Patience is a virtue:  In volatile markets, it’s tempting to “wait for the pullback” once a market recovery is underway, and/or wait for the economic picture to clear before investing.  Either or both formulas are more likely to underperform compared to simply sticking with your disciplined plan.

Lesson #2:  In investing, “shiny and new” often isn’t

“Modern portfolio management tools give today’s investors control over their own savings, insight into fees and performance, and the luxury of watching their money vanish in real-time when markets plunge.” — Tim Shufelt, The Globe and Mail

The most significant behavioural mistakes investors make (individuals and institutions alike) are panicking in a down market or getting caught up in the allure of a hot market fad.  While both can be severely hazardous to your financial health, my experience is that chasing hot new trends is often the most damaging.

Today’s trends may be new, but the lesson is all too familiar:  A hot new investment trend is wonderful and exciting … until it’s not.

For example, reading today’s financial news, I sometimes wonder if I have been asleep for the past 20 years, like Rip Van Winkle.  Have I just woken up in the tech boom of the late 1990s, when there was more than an average number of hopeful investors trying to score big on the latest tricks of the trade?  If you’ve been around as long as I have, you know that didn’t end well.  A lot of investment portfolios were left woefully deflated once that bubble burst.

From the adventures of day-trading brokerage accounts, to chasing the latest hot IPO, to piling into large technology companies (regardless of their bloated valuations), the similarities between then and now are uncanny.  Today, we could add record-busting bitcoins and blank-check SPACs to the mix.

Then and now, rising markets often tempt the uninitiated to abandon their well-diversified portfolios to chase after the “easy” money.  Then and now, your best move remains the same: stay diversified.  Concentrated bets on hot trends generate wildly unpredictable outcomes, which makes them far closer to being dicey gambles than sturdy investments.

Put another way, if investing were a school, the markets charge a steep tuition to those who don’t heed their history lessons.  I wonder if 2021 could be an expensive year for those chasing the latest hype?

Lesson #3:  Be selective in your media diet

“Wow. If I’d only followed CNBC’s advice, I’d have a million dollars today … provided I started with $100 million dollars. How do they do it!?” — Jon Stewart, The Daily Show

This is a topic for deeper discussion, but it’s worth including in our 2020 reflections:  Investors should remember that popular and social media is much better at hyping extreme news than offering calmer views. Continue Reading…

How the one-ticket Asset Allocation ETFs performed in 2020

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By Dale Roberts

Special to the Financial Independence Hub

The one-ticket ETF portfolios are game changers in Canada. You can get a more comprehensive and ‘complete’ portfolio by way of entering one ticker symbol. The fees are incredibly low, in the area of .20%. Yes, that’s about one-tenth of the cost of a traditional mutual fund in Canada. Of course most Canadians should ditch their mutual funds and head on over to their one-ticket ETF of choice. The performance has been very strong. Today we’ll look at the performance of the one-ticket ETFs for 2020.

A one-ticket ETF portfolio will give you access to Canadian, US and International stocks. The stock market risks and volatility are managed by way of bond ETFs. Those bonds (depending on the ETF provider) can be by way of Canadian, US and International bonds.

Remember, stocks are the unruly and unpredictable toddlers, while the bonds are the adult in the room. We might also manage risks by way of cash, gold stocks and gold ETFs that hold physical gold, plus bitcoin and a basket of commodities and currencies. Personally, I am in the camp of managing the risks beyond the bond ETFs. You may choose to top up your one=ticket ETF; that is a personal choice.

One ticket ETFs are managed portfolios

When you invest in a one-ticket ETF you are accessing a managed portfolio. Your job is to add the monies. The ETF provider will buy the stocks and bonds and will rebalance the portfolio on a regular schedule. Easy peasy. That’s why most Canadians will not or do not need an advisor or broker. Especially if you are in the accumulation stage and are simply filling up your RRSP and TFSA accounts.

It’s so simple and effective. When you do need financial planning you can pay as you go by way of a fee for service financial planner. You don’t have to fork over a percentage of your investment wealth every week. In fact, IMHO, most Canadians should not allow perpetual access to their pockets.

The one-ticket ETF providers

The most famous and adopted one-ticket portfolios are offered by Vanguard. The following post will also help you learn how to choose the right ETF portfolio at the right level of risk. Here’s which Vanguard One Ticket ETF should you invest in? The following links are my reviews of each offering.

You might also look at the BMO One Ticket ETFs.

There are also the Horizons One Ticket ETFs and the iShares One Ticket ETFs.

And new to the fold is the TD One Click Portfolios offered by TD Bank. The TD portfolios were launched in August so they will not be part of our full year 2020 evaluation.

If you have any questions about which one ticket might be right for you, please use that contact form. I’m happy to help. No charge.

The one ticket returns for 2020

Even though we experienced the first modern day pandemic, returns for investment assets in 2020 was very strong. Here’s the 2020 year in review. In that post you can see the breakdown of returns for stocks and bonds in 2020. Continue Reading…

Top 10 tips on becoming Financially Independent (or “Findependent”)

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Financial independence is something for which everyone strives. But most of us never get to a stage of financial independence by choice and we reach this stage when we are very old and can no longer work anymore. And although it is not easy to achieve financial independence (aka “Findependence,”) it can be done if you know how to manage your money effectively.

1.) Develop a budget

The first thing that you need to do when you are trying to save money is to develop a budget. To develop a budget, you need to start by figuring out how much money you need to live on each month and then giving yourself an appropriate amount of money to use over the course of the month.

2.) Get a financial planner

If you have had trouble managing your finances in the past, you should consult a financial planner so that you can get the most out of your money. He or she can help you to plan out what you need to spend, so you will be able to figure out how much money you need to save in order to get where you want to be financially.

3.) Create financial goals

Setting financial goals ensures success, because it helps you to get a sense of what you want to achieve and where you want to go on your financial journey. Giving yourself short term and long term goals is usually the most effective way to achieve financial goals, because it allows you to plan and amend your plans as you go.

4.) Pay off your debts

If you have a lot of debt looming over your head, you should make sure that you pay it off before you start actively trying to save. Start by paying off your smaller debts that have the highest interest rate first, so that you won’t have to pay so much later on when the debt has increased.

5.) Get rid of student loans

When most people think of paying off their debts, they forget about paying off their student loans because they are a different kind of debt to your standard credit card debt or loan repayment. There are a few different options when it comes to repaying your student loan, from paying a fixed amount each week, to contributing a percentage of your average income every pay-day. Continue Reading…

Life Insurance and Covid vaccines: what we know now

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By Lorne Marr, CFP

Special to the Financial Independence Hub

No nation has been spared the impact of COVID-19 and Canada is no exception. With more than half a million cases and tens of thousands of deaths, the news of approved vaccines and the subsequent rollout is more than welcome. The vaccines mean a light at the end of a long, dark, scary tunnel. The vaccines will have an impact on every aspect of our (hopefully soon to be) post-COVID life, including life insurance. Here is how insurance professionals see that.Va

The impact of a COVID vaccine is still being scrutinized by the life insurance industry.

We are early in the game and new information is unfolding as we speak. Below is some initial reaction. Most of the executives we reached out to could not give a concrete answer due to all the uncertainty surrounding the vaccine. The ones who did respond said they are leaning towards “not asking a COVID-related vaccine question on applications.” The rationale likely stems from the fact that insurance companies do not currently ask if other vaccines are up-to-date or whether people are having other routine recommended health screening tests.

Other considerations include the vaccines not being available for everyone due to other health complications (currently Pfizer is not recommended for people with anaphylaxis type food and drug reactions).

Insurance companies will likely continue to review studies provided by the pharmaceutical companies that have produced the vaccine to understand what the risks will be overall after the vaccines are deployed.

Vaccine questions more likely for those over 70

Insurance carriers may be more likely to ask a COVID vaccine question to applicants over the age of 70 as they are in the highest risk category.

Norm Leblond, Vice President, Chief Underwriter and Claims Risk Officer at Sun Life Financial said, “The health and safety of our employees, clients and communities is our top priority. Since the start of the COVID-19 pandemic, we have been monitoring the evolving environment including the development of these new vaccines. We continue to take a long-term view of risk. It is too soon to fully understand what permanent changes the industry may need to make to our guidelines or requirements.” Continue Reading…