All posts by Financial Independence Hub

How to choose your financial oasis

Posted By |

By Lidia Staron

Special to the Financial Independence Hub

So, you have a job where you have to start at 9 a.m. in the morning and end at 5 in the afternoon. It pays a good amount; you’re able to enjoy life and you also have the capacity to pay the bills.

And then it hits you: you asked yourself the question, “Do I want to live here for the rest of my life? Or do I want to go somewhere else and live there instead?”

Questions such as these are pretty common, especially if you’ve reached your 30s. Some people quit their day jobs and turn to freelancing instead, because of the freedom to work from home. Do you want to do that?

In today’s article, I am going to talk about choosing your financial oasis. An oasis, by its definition, is a haven where everything is perfect. So, how do you choose yours? Read on to find out

1.)  Is it Better to Go Abroad?

One of the questions you need to ask yourself is if it is better for YOU to go abroad or not? I emphasized the word “you” because not everyone wants to go abroad due to a lot of reasons such as family, friends, your current job, among others.

Now, if you ask me, the answer to the question depends on where you live. If you live in a developing country where money is a bit harder to earn, then I highly recommend moving to another state or province.

Conversely, if you already live in a country or state that doesn’t have a lot of problems (especially when it comes to money and taxes), then I would suggest that you stay.

Again, this decision is entirely up to you. You have to weigh the pros and cons so that you can have a clearer mind to make the decision.

2.) Find a place with low Income Tax

If you do decide to move out of your country or place and into a new one, find a place where there is low income tax.

You see,  some countries take a huge chunk of your salary per month for taxes. Heck, they even take almost 30% of your salary just for taxes!

Ideally, find a place where income tax is not present. There are certain states in the U.S such as Washington, Florida, Nevada, and Texas that do not require Income taxes.

If you found a place where there is still an income tax, make sure that it doesn’t require more than 15% of your total salary.

3.) Find a place with a low cost of living

One of the criteria for moving into a new state is that it should have low-cost living.

There are certain places that do not have a huge cost of living, such as Iowa, Indiana, Oklahoma, Arkansas, to name a few. Continue Reading…

Sizing up the Size Factor

Posted By |

 

Small-Cap Growth & Small-Cap Value begin to diverge in 2015

By Chris Ganatti, Wisdomtree Investments

Special to the Financial Independence Hub

It seems like everywhere across the investment landscape in these days there is talk about “factors.” While this isn’t necessarily a new discussion (research has been done for decades regarding the drivers of excess returns within equities), it is easier than ever to pick and choose the factors to which you would prefer exposure.

Size: popular but volatile

When people get excited about changes — changes in policy, changes in growth expectations, changes in political leadership — we’ve tended to see this excitement show up in the behavior of small-cap stocks. We saw this most recently during the “Trump trade,” with the bulk of the performance response coming between the November 8, 2016, election victory and the January 20, 2017, inauguration.

  • In 2012 and 2014, the Russell 2000 Value Index and the Russell 2000 Growth Index performed very similarly. Even the approximate 9% difference between these indexes in 2013 wasn’t particularly noteworthy because U.S. equity market indexes across the board tended to be up 30% to 40% that year.
  • The most recent “tough” year for small caps was 2015, and it was clear that the Russell 2000 Value Index was the laggard, as the Russell 2000 Growth Index was nearly flat. But 2016 saw greater than 20% outperformance of the Russell 2000 Value Index vs. the Russell 2000 Growth Index. In 2017 through July 14, these indexes have reversed again, with the Russell 2000 Growth Index now outperforming the Russell 2000 Value Index by 1,000 basis points (bps).

Value, Growth, Core…What’s the “Right” Choice?

Based on what we’re seeing in more recent index behavior, trying to time the shift between value and growth could carry with it a significant opportunity cost and the risk of being incorrect. Intuitively, one might say, “why not just own all the stocks?,” which could then lead to the Russell 2000 Index: very much the status quo choice. But as we mentioned before, it has never been easier to fine-tune exposure to a market segment through the use of factors.

Over the long term, did Size or “Size-Plus” lead to outperformance?

Continue Reading…

Early Retirement: It’s a Lifestyle, not a Vacation

Posted By |
Billy and Akaisha in the Highlands of Ecuador

By Akaisha Kaderli, RetireEarlyLifestyle.com

Special to the Financial Independence Hub

Ever wonder how it was for us in the beginning of living life without a paycheck?

In 1991, we understood that we were retiring with the idea that we would not be returning to work. If we had to, we would, but it was not part of the plan. We were not taking a break from work, we were leaving the working world all together. It was a little unnerving to be making such a clean break because we were out on our own with little emotional support from family and friends. Our retirement at age 38 challenged the belief systems of everyone we knew.

Important points

After all this time, the most important thing we want our Readers to know is: Don’t let anyone destroy your dream. Learn to be self-sufficient and self-motivating and you can create the life you want to live. If you desire something strongly and it makes you happy, don’t look to others for approval. Move in the direction of your dream.

Additionally, we want to inform you of the value of tracking spending. We’ve tracked our spending since our early years of owning a restaurant when we were in our 20’s. This has given us a sense of control over our finances and that brings self-confidence. If you track your spending you always know where you are financially, and if you know your net worth you can calculate what percentage you are spending. A rule of thumb is to keep your spending at 4% or below of your invested capital. If the market changes or your life circumstances change, knowing where you are with your money output is priceless.

What we wanted to achieve

Above all else, we wanted our freedom.

We had been working 60-80 hour work weeks with very little personal time or time with family and friends. While we consider ourselves to be productive people and we loved our jobs, this amount of time focused on work began to feel like a grind. I am sure many readers understand this feeling as we were not unique. We longed for large stretches of time before us that were unstructured so we could do as we wanted, when we wanted. So we traveled, read books, took classes, played music, took photos, and met new people – all on our own time schedule.

This pleased us greatly.

The greatest lessons we have learned Continue Reading…

How annuities can help fund a full lifestyle in retirement

Posted By |

By Jean Salvadore, Director, Wealth Insurance, RBC Insurance

(Sponsored Content)

Summary: While Canadians want to live a full lifestyle in their retirement, a majority (62 per cent) are worried about outliving their retirement savings. The majority are missing annuities in their portfolio that can help guarantee an income stream in their retirement. 

If you’re like most Canadians, your vision for retirement includes a full roster of activities such as travel, dining out and shopping for the things you want. But while many of us look to our retirement years as a time to enjoy life to the fullest, having enough money to support that lifestyle is a real concern. Canadians are living longer than ever before and, according to a recent survey by Ipsos for RBC Insurance, the majority (62 per cent) are worried that they’ll outlive their retirement savings.

In fact, even with various financial tools in place such as RRSPs and TFSAs, almost half of Canadians are still not confident that they will be able to afford the lifestyle they want. And perhaps not surprisingly, what’s most important to that lifestyle is keeping a sense of independence. Among those between the ages of 55 to 75, eight out of ten want to live at home for as long as they can and 72 per cent say it’s important to own a car. On top of that, almost three-quarters (68 per cent) would like to be able to travel at least once a year, shop for the things they want (62 per cent), and go out for lunch or dinner a few times a week (53 per cent). Continue Reading…

U.S. Tax Reform: What’s in it for Canadian businesses?

Posted By |

By Dan Lundenberg, BDO Canada LLP

Special to the Financial Independence Hub

For Canadian businesses that have been wanting to explore their prospects south of the border, the United States’ recent tax reforms could provide that impetus to finally make that happen.

In mid-December, the U.S. Congress agreed to aggressively cut its corporate tax rates from a maximum of 35 per cent to 21 per cent.  In addition, the U.S/ reduced its top personal tax rate to 37 per cent and this can be reduced for certain owners of pass-through entities to 29.6 per cent.  These changes open the door for Canadian business owners to invest or set up a shop in the U.S. without fear of higher taxation.

The U.S. tax reform comes on the heels of the Trudeau government’s move to roll out proposed tax changes that would make it more difficult for Canadian businesses to use private corporations to be tax-efficient. After receiving backlash from small business and industry groups, Finance Minister Bill Morneau in October unveiled a gentler tax plan geared to target mainly high-income Canadians.

But still, the revised tax changes would constrain the ability of businesses to implement tax efficient structures through income “sprinkling” with family members. Using small business corporations as a vehicle for making passive investments would also be more cumbersome under proposed changes.

While Canada is making it harder for private corporations to reduce taxes on certain income, the U.S. just widely opened its door to slash taxes for private businesses. In Ontario alone, assuming profits are paid to its shareholders, an integrated top rate of 54 per cent would apply. In the U.S., the tax hit in a pass-through vehicle would only be roughly in the mid-30s, depending on the state where the business is conducted.

Winners and Losers

So, what does this new U.S. tax environment mean for Canada?

Continue Reading…