All posts by Financial Independence Hub

10 Millennials on how they approach planning for their Retirement

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The importance of planning for retirement is something every parent, mentor, and financial advisor will reiterate time and time again. While the general concept makes sense, it isn’t always accessible or palpable for all parties, especially millennials. Previous generations seem to have prioritized their finances, so what about millennials? How are they handling it?

Below, 10 millennials talk about their approach to retirement planning.

Admit that you don’t know

As a millennial, I think the greatest service that someone in my generation can do is admit that they don’t know what they don’t know: and then find someone who can teach them. Let’s face it, retirement planning is a convoluted phrase that doesn’t express its various nuances. My advice: if it is accessible, partner with a fiduciary financial advisor to help map out your future financial goals and create a plan. If it isn’t accessible at this moment, make it a habit of setting aside a few dollars each payday until you can hire a financial advisor. Action is important; however, informed action is what will serve you best in the long run. — Desiree Cunningham, Markitors

Avoid high fees

If you are an investor, you want to earn income on your retirement balance. Whether you are identified as a “Boomer” or “Millennial,” that desire doesn’t change. What you do tend to see with millennials in regards to their retirement plan is the avoidance of high fees. With a long road ahead to retirement, retirement planning fees can eat into a retirement balance.  — Kimberly Kriewald, AVANA Capital

Benefits, Benefits, Benefits

As a staffing agency, we’ve worked with hundreds of employers in helping them attract and retain talent. We have placed many millennials in roles over the years. The thing that helps put employers over the top in terms of ability to attract talent relates to the strength of an employee benefits package. When discussing benefits, a “401k” is often the first thing millennial candidates ask about. At this point, it’s almost an expectation that an employer offers a retirement plan as part of their offering. — Ryan Nouis, TruPath

Start early

Retirement has always been top of mind when financial planning. The earlier you start, the more time your money has to compound interest and accumulate wealth. This smart financial philosophy only gets stronger when you consider that most employers offer a dollar for dollar match up to a certain percentage. — Megan Chiamos, 365 Cannabis

Make ends meet

Many millennials are in a tough spot: they are trying to make ends meet in a difficult economy. Most millennials I know value building meaningful lives and experiences: above accumulating wealth. — Rebecca Longawa, Halong Esports

It varies

Before diving in, I think it is important to highlight the fact that the age range that constitutes a millennial is vast. Some are in their young ’20s and just entering the workforce, while others are in their ’30s and may have a family of their own. With that said, everyone’s financial situations are different. Some people have student loans, medical bills, family obligations, etc. and may not have the means to put away as much as they like. Others may have more freedom and the capacity to save up more. It really depends on the individual. — Shiela Lokareddy, UCSD Health

Compound interest

From what I understand, millennials are not putting as much money or thought into their retirement planning as generations prior. Continue Reading…

I’ve maxed out my TFSA and RRSP. Now what?

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By Mark Seed

Special to the Financial Independence Hub

Seriously, what a great problem to have!

Some readers have maxed out their TFSA and RRSP. Now what?

Here are some recent reader questions and comments (adapted for site):

Reader 1:

“I’ve finally been able to max out my TFSA and RRSP. I’m 41. Now what? Should I consider investing in a taxable account? If so, what should I own?”

Reader 2:

“Mark, I’ve been reading your site for years. I’ve put a priority on paying down our mortgage for many years now, and striving to max out our kids’ Registered Education Savings Plan (RESP) every year for their financial future. Those have been priorities number one and two for years.

When the TFSA came along, I thought it would be an excellent place to keep our family emergency fund for our house repairs and small renovations in a tax-free way but I’ve since realized by reading your site that I should have thought of this as an investment account (like you did) since day 1. I now invest in low-cost ETFs inside this account and I’ve never looked back!  I have a six-figure portfolio thanks to you!

Now, with the mortgage balance down the high-five figures; RESPs maxed for our two kids and now our TFSAs maxed out as well – I’m thinking we should work on maxing out the RRSPs like you have and eventually get into taxable investing if we can.

Thoughts on my approach?”

Reader 3:

“Mark, I have been an avid reader of your blog for the last two years but this is my first intervention 🙂 Better later than never! My question today is how I can diversify my portfolio even more?

I’ve maxed out my registered accounts (RRSP: $32,000 in VEQT and TFSA: $75,000 also in VEQT) and invested significant chunks of money in a non-registered account ($50,000 in VEQT). I’m also helping my cousin with his RESP. I’ve also got an emergency fund with Tangerine.

At only 29, and single, I think I am off to a good start but it would be nice to find more ways to diversify my investments. I still have another $10,000 that I want to invest. What are some options?

  • Real estate? (not sure about this)  Maybe Real Estate Investment Trusts (REITs)?
  • Crowdfunding?
  • Peer-to-peer lending? (seems risky)
  • Other?

Looking forward to your thoughts Mark!”

Wow, great stuff readers.

I mean, people thinking about investing inside your taxable accounts after your registered accounts are maxed; readers paying down their mortgage while diligently investing; folks wondering how to invest in a taxable account now that their emergency fund, TFSA and RRSP are managed and full: amazing stuff!

Get invested and stay invested!

Now, what should these readers do???

Continue Reading…

Financial tips and tricks for savvy Home Buyers

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Image courtesy of Rawpixel

By Jim McKinley

Special to the Financial Independence Hub

Purchasing a house is a major investment, and finding one you can afford can feel like quite a puzzle. However, there are some smart, money-stretching strategies you might not know, but that can make all the difference in your financial situation. Read on for tips and tricks to help you land the home you’re dreaming about.

Dealing with Down Payments

One of the big hurdles for home buyers is gathering funds for a down payment. Lenders traditionally require 20 per cent down, which calculates to tens of thousands of dollars that many people don’t have sitting in their bank accounts. There are strategies for gathering those funds, like paying off credit cards and saving your cash, taking on a second job, or selling belongings.

Bear in mind that lenders will look at your bank statements to examine where your funds came from, and if anything looks fishy, such as a sudden large deposit, they might hold it against you. Mortgage lenders want to see financial stability, so big fluctuations, bounced checks, and irregular activity could damage your chances for a loan.

For home buyers struggling to come up with a down payment, there is good news. There are FHA loans available that permit as little as 3.5 per cent money down (in the United States). On top of that, you might be able to use gifted funds, which most lenders do not allow.

A couple other opportunities for special mortgages are available. Veterans can aim for a home loan through the VA, and for low-income applicants in rural areas, the USDA offers 100 per cent financing through Rural Housing loans.

Squeaky clean Credit

No matter where you apply for a loan, the lender will examine your credit history. Chances are you know if you’ve made some mistakes, but sometimes credit reports have clerical errors on them. Thankfully, there are ways you can clean up your credit score, but it can take a little time, so if you plan to apply for a loan, get started early.

Start by requesting a free credit report and give it a thorough once-over. If you find errors, you will need to dispute them with the reporting agency, explaining the problem and documenting the error. After that, there will be a time period in which the error can be substantiated by the appropriate credit institution, and if they fail to do so, it is then removed from your credit report.

It can also help to pay down your debts because lenders will examine your debt-to-income ratio. As InCharge points out, you will generally need a result no higher than 43 percent of your income. Keep in mind the lender will include your potential mortgage payment in that calculation.

Rethink your Search

House hunters often search traditional home listings in hopes of finding the home of their dreams. However, thinking outside the box can mean broadening your search. For example, foreclosures can be a bargain under the right circumstances, but you should weigh the pros and cons carefully. Continue Reading…

Are you creating Loneliness in your future?

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Empty park benches… waiting for YOU to fill them up!

By Billy and Akaisha Kaderli, RetireEarlyLifestyle.com

Special to the Financial Independence Hub

I’m a little troubled.

Twice now in the last year, two friends of almost four decades have confided in me that they no longer have an interest in making new friendships. The man said “It’s too much work” and the other, a woman, said she is “without enthusiasm or desire for it.”

Couple that with the fact that my friends and I are all proceeding to the milestone age of 70.

Articles abound on how loneliness is an epidemic and adds to our health problems. Loneliness feeds on itself creating terrible self-talk (what do I have to offer? What would I talk about, anyway? It’s not safe to express an opinion, and besides I’m not up on the news …) that keeps us housebound.

A recent article about a study in the UK says hundreds of thousands of people often go a week without speaking to a single person. Nearly half of all the seniors interviewed said they’d feel more confident to head out each day if they knew their neighbors. This begs the question … why don’t we know our neighbours?

Why aren’t we looking into the eyes of people we live next to and giving them a smile? Or talking about the roses in their gardens, or the pup they walk daily?

Are we just so afraid of each other that we cannot afford to make small talk anymore? I have lived outside the US for many years now, and forgive me for asking … But is this chatting up a stranger considered impolite these days? Or hazardous?

Two more first-hand experiences

Some years back I witnessed two of my relatives in curious circumstances. One elderly aunt said “I don’t need any more friends. I have my husband, my church group, children and grandchildren. Why would I need more?”

To myself I responded “Do we have so many friends that we can’t squeeze in another one? Someone who can make us laugh, or teach us something? Who in the world has too many friends?”

Another elderly relative, on the way to breakfast after church, had a well-dressed gentleman say hello to her and something about “what a nice day it was” — and she was aghast.

She responded, “Do I know you? Why are you talking to me?”

To me this situation was incomprehensible. It seemed obvious that the man meant no harm and he was actually on the way to his car in the restaurant parking lot – right where we were – after finishing his morning meal.

Heads up here

If loneliness is the epidemic disaster that health studies say it is, then maybe we could prepare for this ahead of time.

Ask yourself how might we be part of our own problem here? Or if you are inclined to take action, I have a couple of suggestions below which you might find useful. Continue Reading…

15 ways to flourish financially in a Covid-19 world

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T.E. Wealth

By Aaron Hector, B.Comm, RFP

Special to the Financial Independence Hub

COVID-19 has brought wide-sweeping change. The silver lining with any change is that it opens the door to new opportunities. Here are 15 thoughts on how a financial planner views moments in a time like this:

1. You now have more time to get your taxes prepared. You also have more time to pay your taxes for 2019 and your instalments for 2020.

2. Those of you with RRIF or LIF accounts are familiar with your requirement to take a minimum withdrawal each year, which is fully taxable as income. This year, the minimum payment will be adjusted downward by 25%, which will allow you to report less income on your tax return. Given the situation, this may also preserve some of your OAS if you’re currently being fully or partially clawed back. Cash flow could potentially be replaced by withdrawing the additional 25% from your non-registered account this year.

3. Somewhat surprisingly, the Government of Canada has recently confirmed that if you had previously withdrawn your original RRIF minimum payment earlier in 2020, that you will not be permitted to re-contribute the 25% excess withdrawal back into your RRIF.

4. Let’s recognize that stock markets are down. Let’s also recognize that they’ll go back up. How can we turn this moment into an opportunity?

5. If you make more money than your spouse, spousal loans are a great way to shift income. Now might be a great time to initiate new spousal loans because portfolio values are lower than they used to be and the eventual recovery could be captured by your lower income spouse.

Pension Splitting

6. In other circumstances (typically in retirement after age 65+ when RRIF, LIF, and pension income can be split between spouses), previous spousal loans can lose their merit. In some cases, it’s too costly from a capital gains perspective to repatriate funds back to the original spouse, so these loans remain in place for longer than they need to. If your portfolio has fallen in value then the capital gains cost to unwind a spousal loan may no longer be a detriment. You could look at this time as an opportunity to repatriate the loan and tidy up your overall affairs.

7. If you reported taxable capital gains on your previous three tax returns, you may look to trigger a capital loss today, which you could carry back against those gains. The losses could also be carried forward and applied against gains in the future.

8. If you have a plan to unwind your RRIF, LIF, or investment holding company over the next several years, then you could look at this as an opportunity to extract some money out of those accounts now at their lower values (pay the tax on the dividend or RRIF/LIF income) and then shift your money into a personal non-registered account or TFSA to be better positioned for recovering equity values as we move forward. Continue Reading…