Unlike some financial experts, I’ve long since touted the merits of making RRSP withdrawals before waiting until the age of 71 for RRSP>RRIF conversion to take effect, when minimum RRIF withdrawal rates kick in.
I’m hardly 70. Not even close (since I just left my 40s)!
Rather, I’ve learned these benefits from others:
While personal finance and investing is always personal, I believe, being forced into managing your portfolio in any way is usually the wrong decision. Successful folks have told me so.
Here are two key experiences from others to share related to RRSP/RRIF withdrawals:
Unless retirees have very high taxable income already; lots of assets (in the millions) whereby they already stomach paying higher taxes most retirees or semi-retirees should at least consider some RRSP withdrawals in their retirement years to help “smooth out taxation.”
Beyond RRSP/RRIF income, should any retiree have a workplace pension and/or who may have other significant income streams in retirement (like non-registered investments that generate healthy dividends) they may find themselves in a higher tax bracket as they age into their 70s and 80s, via forced RRIF withdrawals, potentially losing out on government Old Age Security (OAS) benefits.
I thought the punchline was spot on for this 80-something (Amy), who has a wealth/tax problem to navigate now:
“In summary, Amy, there is no magic bullet to help with your large RRIF account. You will pay a high rate of tax during your life or upon your death on those withdrawals.”
While any retiree’s cashflow objectives will differ, unless you’re in the extreme minority, most successful early and traditional retirees with whom I chat and engage seem to plan WAY ahead on such matters whereby they consistently choose to make some RRSP withdrawals well ahead of when there are forced to.
In making financial decisions before they are forced to, I’ve observed four key benefits: Continue Reading…
Seeking financial independence, we gathered insights from entrepreneurs and small business owners on their side hustles and how these ventures have shaped their financial journeys.
From joining affiliate programs for extra income to diversifying income with e-books, discover the diverse strategies these twelve professionals have employed to bolster their family’s finances.
Join Affiliate Programs for Extra Income
Balance Side Gigs with Full-Time Work
Invest in Real Estate for Early Retirement
Create Digital Financial Courses
Focus on One Project at a Time
Turn Your Passion into a Full-Time Job
Develop Skills Through Polling Side Hustle
Boost Income with Short-Term Rentals
Leverage Social Media, Newsletters, and Podcasts
Supplement Income with Title Searches
Diversify Income with E-Books
Join Affiliate Programs for Extra Income
I was enrolled in an affiliate marketing program for an AI-based question-generation platform, PrepAI. Since I blog about tools for educating children, I found their product resonated with my goals. I chose to apply for their program and earned some handsome payouts. I tracked my commissions through their dashboard and was confident about it.
These commissions were my savior; they funded the course I was taking and helped save some bucks for my family. If financial independence is what you are craving, join an affiliate program like I did and help your family. –– Tejeswini N, Digital Marketing Intern, DataToBiz
Balance Side Gigs with Full-Time Work
When I first graduated, I struggled to find a full-time job. With a BA in visual arts, my options seemed limited to being a struggling artist, working as regular staff at local art galleries, or trying to get into art auctions, which didn’t align with my passion. Fortunately, I had been dancing since the end of high school, and I had developed my skills enough to pick up side gigs, including teaching dance, choreographing, and working as a professional backup dancer for different shows.
By applying for any dance-related opportunities that came my way, I started earning around HKD 30,000 per month, which was triple what I would have earned as a regular office worker. During this time, my father was bedridden, and without this side hustle, I wouldn’t have been able to support myself or later save up enough money to also take care of my widowed mother.
However, relying solely on side hustles wouldn’t have helped me achieve financial stability. I found a balance by having a mixture of both a full-time job that paid less but offered a better future career path, and investing in side gigs that provided extra income and served as backup plans if I ever found myself without a 9-to-5 job.
This approach did take a toll on my work-life balance, but after seven years, my full-time job paved the way for me to gain enough experience and secure a much better salary. With that, I had the option to let go of my side gigs and eventually leverage my diverse experiences to start my own business, where I now work for myself. — Joyce Tsang, Content Marketer and Founder, Joyce Tsang Content Marketing
Invest in Real Estate for Early Retirement
I’m a pharmacist by profession, but I started investing in real estate as a side hustle in 2016. Specifically, I invest in student housing, which means I buy properties in college towns and convert as many rooms as possible into bedrooms to maximize my income.
Using this strategy, I’ve been reinvesting my returns and buying an additional rental property every year. And now, I’ve been able to retire in my early thirties thanks to real estate. It’s given me complete financial independence, and that’s why I started a real estate coaching business to help others do the same. — Ryan Chaw, Founder and Real Estate Investor, Newbie Real Estate Investing
Create Digital Financial Courses
I delved into creating digital financial courses, leveraging my expertise. This side gig significantly bolstered our family’s income, accelerating our path to financial freedom. Crafting courses allowed for flexible hours and reached a broad audience, bringing in a steady stream of passive income.
This venture not only diversified our earnings but also empowered others to enhance their financial literacy. The impact was profound, creating both financial stability and a sense of fulfillment in aiding others on their financial journeys. — Danielle Roberts, Co Founder, Boomer Benefits
Focus on One Project at a Time
Over the past couple of years, I have tried over 10 different side hustles and online business models. The biggest takeaway? Avoid that shiny-object syndrome and don’t spread yourself too thin. I was juggling so much that I hardly had any time left for my family or a social life. It felt like I was constantly running on a treadmill—always working, but not really getting anywhere.
The real kicker was, despite all the hustle, I felt like I wasn’t doing enough. It was a fast track to burnout, and at the end of the day, I didn’t have much to show for it. At some point, I had to put a stop to it and put most of my side projects on hold to stay sane.
Now, I focus on one thing at a time. And let me tell you, it’s amazing how much you can achieve when you pour 100% of your attention and energy into a single project. In the last several months, this approach has made more difference in my family’s financial success than everything I did in the previous three years. —Juliet Dreamhunter, Founder, Juliety.
Turn your Passion into a Full-Time Job
After graduating from college, I started working as a fitness writer and made people aware of yoga through my writing. Blogging was something that I really loved from the beginning, and it turned into my side hustle.
As for my journey, Yogi Times is proof of how my interest turned into a full-time job and made me an entrepreneur. If it weren’t for that blogging, I wouldn’t have realized how much this field makes me happy. Through Yogi Times, I get to teach others about yoga, publish my own work, and create a positive community for fitness enthusiasts. No matter what age they are, this community is for everyone. — Jean Christophe Gabler, Founder, Yogi Times
Develop Skills through Polling Side Hustle
My first steps toward financial independence began with a career as a pollster, conducting online, telephone, and in-person surveys. Besides financial support, this side hustle has been instrumental in developing my professional path, which has oscillated around HR, public relations, communication, and content creation. Continue Reading…
Welcome to another Then and Now post, a continuation of my series where I revisit some older blog posts and either rip them to shreds (because my thinking has totally changed on such subjects) or I’ll confirm my position on some subjects including some specific stock or ETF investments.
Instead, I’ll share my investing history with a low-cost tech ETF: QQQ.
You can read about my previous Then and Now posts on certain stocks (good and bad!) at the end of this post.
Then – QQQ
Passionate readers and subscribers of this site will know, I’m a HUGE fan of not just dividend-paying stocks but low-cost ETFs as well.
The reason for owning some ETFs beyond some dividend growth stocks is simple: I cannot predict which stocks will truly succeed long-term.
So, owning low-cost ETFs is a hedge against how I’ve largely unbundled my Canadian ETF for income, beyond holding a few U.S. stocks for mostly portfolio defence.
I mentioned in my reply that was like splitting hairs given both low-cost U.S. ETFs have and will likely continue to deliver very similar, strong returns.
“Whether you invest in U.S.-listed VTI, ITOT, SPY, IVV or another low-cost U.S. fund that tracks the U.S. S&P 500 or the U.S. total market, I think you’re picking a winning long-term equity product for your portfolio.”
I’ve been right, at least historically speaking.
Source: Portfolio Visualizer.
But even before that post, I invested in a small amount low-cost tech ETF QQQ – not because I didn’t think VTI, ITOT or other S&P 500 ETFs were bad choices, not at all, just that I believed at the time Invesco’s QQQ could perform better.
“Invesco QQQ ETF gives you access to a diverse group of cutting-edge Nasdaq-100 companies — all in one fund.” – Invesco
Since launch in 1999 (gosh, I wish I owned it then!) QQQ has demonstrated a history of outperformance, typically beating the S&P 500 Index. Continue Reading…
With an initial look, these split-shares are extremely enticing and attractive due to the very high yields. Are there risks associated with these split-share corporations? Should one build an investment portfolio with them to generate dividend income?
List of Canadian split-shares
Before we dive deeper into the details, here is a list of available Canadian split shares I can find, the share price, and the yield percentage. CanadianPreferredShares.ca keeps an updated list of all Canadian split-share corporations issued in the Canadian market.
As you can see from the table, most of these split-shares provide a 10% or higher distribution yield. This is extremely attractive if you’re seeking regular investment income.
You will also notice that some split-shares have suspended their distributions. This is due to how split-shares are structured, distributions will only get paid out if the Unit Net Asset Value (NAV) is over a certain threshold. More on that later …
What are split-shares?
So what are split-shares or split corps? Unfortunately, not many investors are familiar with them, due to how they are set up. I certainly had to do a bit of research to understand the details.
First, a split-share corporation is set up by investing in a selection of stocks, like banks, utilities, pharmaceuticals, pipelines, etc. For example, Dividend 15 Split Corp. (DFN.TO) invests in 15 stocks: Bank of Montreal, Bank of Nova Scotia, BCE, CI Financial, CIBC, Enbridge, Manulife, National Bank, Royal Bank, Sun Life Financial, Telus, Thomson Reuters, TD, TransAlta, and TC Energy.
Within the split-share corporations, two classes of shares are available: Preferred Shares and Class A or capital shares. Investors can choose to hold both types of shares or just one. These two different kinds of shares are traded on the stock exchanges and can be purchased from online brokers like Questrade or National Bank Discount Brokerage.
Preferred Shares are designed for the more conservative investors who seek regular monthly distributions. Preferred shares typically have a finite term (e.g. 5 years but usually get renewed) and have a claim on fund distributions first. No capital gains or losses from the underlying holdings will impact preferred shares. In other words, the preferred shares are structured like a fixed-income vehicle.
Similar to how other preferred share stocks work, while distributions are quite safe, there’s usually a limited capital appreciation potential. There’s no management expense ratio (MER) associated with these split share preferred shares as fees are paid by the Class A shares. Continue Reading…
Fixed-income securities are financial instruments that have defined terms between a borrower, or issuer, and a lender, or investor. Bonds are typically issued by a government, corporation, federal agency, or other organization. These financial instruments are released so that the issuing institution can raise capital. The borrower agrees to pay interest on the debt security in exchange for the capital that is raised.
The maturity refers to the date when a bond’s principal is paid with interest to the investor. In the modern era, interest rates tend to fluctuate over long periods of time. Because of this, shorter-duration bonds have predictable rates. The longer investors go down the maturity spectrum, the more volatility they will have to contend with in the realm of interest rates.
On January 16, 2024, Harvest ETFs unveiled its full fixed income suite. That means investors will have access to ETFs on the full maturity spectrum: short, intermediate, and long-duration bonds.
The two types of short-term bonds for investors chasing security
Short-term fixed income tends to refer to maturities that are less than three years. In the realm of short-term fixed income, we should talk about the relationship between money market and short-term bonds.
Money market securities are issued by governments, financial institutions, and large corporations as promises to repay debts, generally, in one year or less. These fixed-income vehicles are considered very secure because of their short maturities and extremely secure when issued by trusted issuers, like the U.S. and Canadian. federal governments. They are often targeted during periods of high volatility. Predictably, money market securities offer lower returns when compared to their higher-duration counterparts due to the liquidity of the money market.
Short-term bonds do have a lot in common with money market securities. A bond is issued by a government or corporate entity as a promise to pay back the principal and interest to the investor. When you purchase a bond, you provide the issuer a loan for a set duration. Like money market securities, short-term bonds typically offer predictable, low-risk income.
The Harvest Canadian T-Bill ETF (TBIL:TSX) , a money market fund, was launched on January 16, 2024. This ETF is designed as a low-risk cash vehicle that pays competitive interest income that comes from investing in Treasury Billds (“T-Bills”) issued by the Government of Canada. It provides a simple and straightforward solution for investors who want to hold a percentage of their portfolio in a cash proxy.
Medium-term bonds and their influence on the broader market
When we are talking about intermediate-term bonds, we are typically talking about fixed income vehicles in the 4-10 year maturity range. Indeed, the yield on a 10-year Treasury is often used by analysts as a benchmark that guides other interest rate measures, like mortgage rates. Moreover, as yields increase on intermediate-term bonds so too will the interest rates on longer duration bonds.
Recently, Harvest ETFs portfolio manager, Mike Dragosits, sat down to explore the maturity spectrum and our two new ETFs. You can watch his expert commentary here.
US Treasuries avoided an annual loss in 2023 as bonds rallied in the fourth quarter. These gains were powered by expectations that the US Federal Reserve (the “Fed”) was done with its interest rate tightening cycle. The prevailing wisdom in the investing community is that the Fed will look to pursue at least a handful of rate cuts in 2024. Continue Reading…
Posted By 
