All posts by Jonathan Chevreau

GIS for the wealthy? TFSA is key so maximize it while you still can

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fredvettese
Fred Vettese, Morneau Shepell

My latest MoneySense blog is a followup to an interesting piece by actuary Fred Vettese about the curious phenomenon of wealthy couples being able to contort their finances between ages 67 and 70, by which they can receive the Guaranteed Income Supplement or GIS.

Considering that the GIS is aimed at seniors with no savings and minimal pensions, the idea of putting such a gambit in place offends some, although as the blog points out, most of the readers who contacted Vettese just wanted more details on how they could benefit from the strategy themselves.

Hypothetical now but expect eventual crackdown

I’ll be doing more on this but it seems that the strategy is not so much likely to become widespread as it is an example of the inherent contradictions and unintended consequences that accompany such a proliferation of government programs. This one is based on suspending most sources of income from 67 to 70, except Old Age Security (OAS) and the GIS, plus taking tax-free income from the Tax Free Savings Account or TFSA. TFSA withdrawals are neither taxed nor trigger clawbacks of OAS and GIS. In fact, it’s arguable TFSAs were created expressly to motivate low-income workers to save without being penalized by the taxes and clawbacks that accompany RRSPs and employer-sponsored pensions plans.

Will Ottawa move to crack down on this theoretical loophole? Who knows but the TFSA was the Conservative administration’s creation and if they lose the next election, it’s quite possible the Liberals or NDP would move to tweak either the TFSA rules or the GIS qualifying rules. Best advice? Max out the TFSA while you still can!

Meltup? The Coming Global Boom

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global warming and meltingInteresting piece from Reuters a few days ago titled Time for a ‘Melt-up’: The Coming global boom.  The writer, Anatole Kaletsky, says this:

There are many fundamental reasons for believing that stock markets may have embarked on a long-term bull market comparable to those in the 1950s and 1960s, or the 1980s and 1990s, and that this process is nearer its beginning that its end.

He presents four arguments for a “structural bull market.”

1.) The worst financial and economic crisis in recent memory has ended and most of the world economy is enjoying “decent, if unspectacular, growth.”

2.) While not perfect, economic and financial policies around the world are predictable and so “unlikely to cause further market disruptions.”

3.) Technology continues to advance and innovation should stimulate investment and consumer demand.

4.) Inflation is “almost nonexistent” in the advanced economies, so “interest rates are guaranteed to stay low for a very long time.”

How to transition to retirement

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DavidAston
David Aston

Good piece by David Aston in MoneySense magazine on the big next step for baby boomers and anyone else with sufficient wealth or pension income to stop working full-time. David is one of the best financial writers out there and it’s little wonder he’s won awards that prove it. Note that one of his sources in this piece is Lee-Anne Davies, whose Agenomics blog you can find links for in our Longevity & Aging section.

He also talks to actuary Fred Vettese (author of The Real Retirement) and fee-only planners Money Coaches Canada and Daryl Diamond, author of The Retirement Income Blueprint. Both are also listed here at the Hub’s “Getting Help” section and you can find my review of Daryl’s book in the Reviews section here.

The three levers

My favourite line from David’s piece is “You can make adjustments by pulling on three levers: save more, work longer or spend less in retirement.”

No mention of Findependence although David has mentioned it in the past. Like most mass media outlets, MoneySense is sticking with the word Retirement. Hey, I couldn’t get them to change from Retirement to Findependence even when I was the editor–in-chief!

But also check out Sheryl Smolkin’s guest blog here at the Hub today: she chronicles her ten-year road to Findependence (yes, she used that exact word!) that occurred AFTER she took early retirement at age 54.

As I’ve often said, that’s way too young to retire and do nothing and Sheryl has doubled her retirement savings since her “first” retirement. As she says, it’s all about second or “encore” careers. As is also clear, she finds working on your own terms (aka Findependence) to be lots of fun.

I agree. Sure beats watching daytime television!

 

My road to Findependence: Guest Blog by Sheryl Smolkin

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sherylholdingrufus.
Sheryl Smolkin and Rufus

By Sheryl Smolkin

Special to The Financial Independence Hub 

Almost 10 years ago, at age 54, I took early retirement from my job as a pension lawyer and Canadian research director of an international benefits consulting company. I locked the door of my downtown office for the last time on a Friday; on the following Monday I started my new career as editor-in-chief of an industry magazine.

My new job paid only about one third of what I earned before, but I left with a defined benefit pension (albeit reduced by about 30%) and retiree health benefits so I was prepared to take the risk in order to try something new.

With the benefit of hindsight, I can say it was a totally audacious move. I knew how to write peer-reviewed, factual client publications but didn’t have a clue about the economics of running a trade magazine or how to turn a bunch of disparate articles into a cohesive product.

Hard work but fun, and I learned fast Continue Reading…

Tony Robbins on how to invest like a billionaire

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tonyrobbins
TonyRobbins.com

Via Fred Kirby’s Permanent Alert comes this morning’s piece on Marketwatch written by Tony Robbins (yes, the financial guru with the cameo spot on the movie, Shallow Hal) on how to invest like a billionaire. Fred, by the way, is one of the true fee-for-service advisers listed in our “Getting Help” section.

But back to the Robbins piece. He starts with the premise that the key to gaining financial freedom (aka Findependence?) is to control your money mistakes. The money masters share four traits:

1.) Don’t lose. (remember Warren Buffett’s two rules, the second of which is “Don’t forget Rule 1: Don’t lose money.”)

2.) Risk a little to make a lot.

3.) Anticipate and diversify.

4.) You’re Never Done.

P.S. After this was posted, a few financial advisors griped about whether we should be helping to publicize Robbins’ new book, his first in a long while. But check out this article about ten things one influential writer learned from Robbins.