All posts by Jonathan Chevreau

My 5 picks for classic books on Financial Independence and Retirement

A book discovery service called Shepherd.com has just published a multi-book review by me about my recommendations for some of the best all-time books on Financial Independence and Retirement. You can find the full review by clicking here. Shepherd.com is a year old; an alternative to older services like Goodreads, it helps readers and authors share and discover books in various genres.

Picking just five books is of course a tricky exercise and having seen this published late in July, I soon thought of several other books I might have included as well or instead, notably David Chilton’s classic The Wealthy Barber. But it’s safe to say that with more than 2 million copies sold, that would not exactly be a ground-breaking new recommendation.

Chilton of course created a monster with the genre of the financial novel: a hybrid that combines a story and characters with an overlay of enduring financial insights and strategies for achieving financial freedom. He has spawned many imitators, such as Robert Gignac’s Rich is a State of Mind and my own Findependence Day, which is also flagged in the Shepherd reviews.

For this exercise, however, I opted to go with straight non-fiction financial books. My thinking was what books influenced me in my own journey to Semi-Retirement and Financial Independence, or the so-called FIRE movement, for Financial Independence Retire Early.

Here are the 5 books I did pick: go to the original link to get my analysis and reasons for each pick. Below I offer just a line each but each explanation is closer to 400 words so be sure to click on the original Shepherd link to get the full take on each. The five titles below each include hypertext to the Shepherd book store where you can order directly.

1.)

Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence

By Vicki Robin & Joe Dominguez

Probably first for most other proponents of the FIRE (Financial Independence Retire Early) movement is this classic, subtitled Transforming Your Relationship with Money and Achieving Financial Independence.

 

 

 

2.)

Enough: True Measures of Money, Business, and Life

By John C. Bogle

The late Jack Bogle, founder of Vanguard Group, published this excellent book in 2009. To me, the title speaks for itself. The sooner you realize you have “enough,” the sooner you can quit the rat race.

 

 

 

 

3.)

How to Retire Happy, Wild, and Free: Retirement Wisdom That You Won’t Get from Your Financial Advisor

By Ernie J. Zelinski

Edmonton-based author Ernie Zelinski is probably best known for this self-published international bestseller and several others, all on the theme of escaping from full-time employment as soon as possible.

 

 

 

 

 

4.)

Pensionize Your Nest Egg: How to Use Product Allocation to Create a Guaranteed Income for Life

By Moshe A. Milevsky, Alexandra C. Macqueen

This book by the famed Finance professor and a certified financial planner caters to anxious would-be retirees who do not have the luxury of having an inflation-indexed, guaranteed-for-life Defined Benefit pension plan offered by an employer.

 

 

 

 

5.)

Work Optional: Retire Early the Non-Penny-Pinching Way

By Tanja Hester

The phrase “Work Optional” describes the state of being financially independent enough that you don’t have to work for money anymore, but nevertheless choose to for reasons like having a purpose, or structure. As the subtitle suggests, it’s about retiring early without having to be a miserly penny pincher.

Retired Money: In Semi-Retirement, reducing stress may be more important than generating extra taxable revenue

Pexels: Amir Ghoorchiani

My latest MoneySense Retired Money column looks at the trade-offs between leisure time and using time to generate extra but taxable revenue. Early in one’s career, there’s little choice but to generate taxable revenue but Semi-Retirement has a different dynamic. Find the full column by clicking on the highlighted headline: Is semi-retirement stressful? You bet — here’s what to do about it.

One of my philosophies of Semi-Retirement is the principle that reducing stress can sometimes be more important than maximizing revenue. Assuming you are self-employed in Semi-Retirement, as I am, you may find yourself juggling multiple clients and conflicting demands on your limited time and energy.

Given the sporadic nature of freelancing, most freelancer writers or suppliers know how hard it is to turn down paying work. I was like that in my first stint at freelancing, back in the 1980s: long before I achieved a modicum of financial independence.

This time around, I have the luxury of being able to pick and choose. I’ve even stated this boldly to some clients: “My goal these days is to minimize stress, not to maximize taxable revenue.” Another way to look at this is the age-old dilemma of time versus money. It’s been years since I read the classic book on financial independence, Your Money or Your Life (by Vicki Robin and Joe Dominquez); however I’ve never forgotten their core message that time is life energy. When we earn money we do so by exchanging our time or in effect giving up some of our life energy.

There comes a time it’s time to say “Enough” to further expenditures of Life Energy

So it follows that if you have accumulated enough money after working a lifetime to accumulate it, then at some point it may be necessary to stop and say “enough!” when it comes to requests to expend still more of your life energy.

True, not everyone in Semi-Retirement is self-employed and enjoys the flexibility to make these trade-offs. More likely though, a semi-retired person is self-employed or working part-time on one or two gigs, while simultaneously collecting some combination of Government benefits, employer pensions, and investment income. The more secure those passive sources of income are, the less you may feel compelled to take on extra work requiring your time and life energy. Continue Reading…

Vanguard Home Bias study says Canadians should raise global stock exposure to 70%

Vanguard Canada has released an interesting study on home country bias around the world, and makes the familiar case that most Canadian investors are woefully overweight Canadian equities and underweight the rest of the world. You can find the full report (PDF), by clicking here.

The report is written by Bilal Hasanjee, CFA®, MBA, MSc Finance, Senior Investment Strategist for Vanguard Investments Canada. He points out that Canadian stocks account for only 3.4% of the total global stock market as of June 30, 2022, but as the chart to the left shows, the average Canadian investor is more than 50% in domestic (Canadian) equities. That’s a whopping overweight position of 15 times!

“There are good reasons to have some overweight to Canada for domestic investors, including future return differentials, preference for the familiar, favourable tax considerations, the need to hedge domestic liabilities and currency risk,” writes Hasanjee, “However, Vanguard believes the optimal asset allocation for Canadian investors is 30% vs 70% allocation to Canadian versus international equities, based on our research …”

In other words, it’s okay to be overweight Canada by a factor of nine (30% versus 3.4) but most of us still need to boost our foreign content by roughly 50%: from 47.8% to 70%.

Home Country bias is hardly unique to Canada

Home country bias is hardly unique to Canada, the report says: it’s certainly the case in the United States and many developed countries, as Figure 2 demonstrates:

Americans are also overweight their home market —  the United States — but they can get away with it, as more than half the global market capitalization is in American stocks, plus many of those are blue-chip corporations that have the world as their market. If anything, Interestingly you can see from the above that Australia, which is similar to the Canadian stock market in being focused mostly on energy/resources and financials, suffers even more than Canada from home country bias. Continue Reading…

Approach the A.I. bandwagon with caution

Pexels: Cottonbro Studio

It’s hard to pick up a financial publication or peruse most general-interest media outlets these days without being blitzed by stories about ChatGPT and the latest mania: A.I. or Artificial Intelligence.

Just last week the New York Times devoted an episode of its The Daily podcast to Silicon Valley’s rush to A.I., even as venture capitalists start shying away with the previous darling, Cryptocurrency.

It seems everyone wants a piece of what they hope will become the next Nvidia, a chip play that pundit Jim Cramer once named after his own dog. Give him credit: anyone who bought before Nvidia famously passed the US$1 trillion market cap level this year is probably sitting on a double or triple, including Yours Truly.

In a recent video interview I did with Allan Small, I mentioned in passing that while I do happen to own Nvidia going back some years, I also have my share of painful losers, and that my approach to A.I. and technology in general is that it should merely be part of a normal diversified portfolio. I told him that I’ve always had a reasonable exposure to technology, seeing as I was the Globe & Mail’s technology reporter going back to the early 1980s (perhaps one of the first to specialize in that beat.)

A.I.-themed ETFs

Speaking of the Globe, I see that its personal finance columnist Rob Carrick recently weighed in with his take on A.I. You can find it (under paywall) here. For those who can’t get past the paywall, Carrick lists some examples of A.I.-themed ETFs, adding the hedge “if you’re comfortable with the risk of a more direct approach to AI investing.”

One is an ETF I happened to take a flyer on myself a few years ago, so far under water: the Global X Robotics & Artificial Intelligence ETF (BOTZ-Q; the others include the iShares Robotics and Artificial Intelligence Multisector ETF (IRBO-A) and the First Trust Nasdaq Artificial intelligence ETF (ROBT-Q.) Carrick also mentions a few other Canadian-listed ETFs with the most exposure to AI produced by TD Securities: I’ll just list the suppliers and ticker symbols here: two from Horizons ETFs (RBOT-T and MTAV-T), two from Evolve (TECH-T and DATA-T), and one from BMO: ZINT-T.

Personally, I doubt I’ll buy any of these theme ETFs. Investors typically get burned by the FOMO and elevated valuations inherent on jumping on a thematic bandwagon once the train has already left the station [to mix a metaphor] and embraced widely by the media. The most prominent example will be marijuana ETFs, which have generated little but painful losses for most investors, even those early to the party. More recently are cryptocurrencies, whether obscure individual holdings or packaged up in ETFs (led by Canada!) Continue Reading…

65% of Americans say partner having too much debt is a marital dealbreaker

65% of Americans say their partner having too much debt is a dealbreaker in deciding to get married. Little wonder that the national marriage rate in the United States has declined 60% over the last 50 years.

Source: Clever Real Estate — Marriage Survey, May 2023

According to the Marriage Survey of 1,000 American adults conducted by Clever Real Estate in May (see graph above), financial stability is a primary purpose for marriage, as reported by 1 in 5 Americans (20%). In fact, 19% admit they would marry solely for money reasons (19%). Entering into the calculation are factors like high inflation, escalating living costs, and an expensive real estate market.

While marriage positively impacts finances for 66% of couples, only 54% of married couples discuss finances regularly, and 7% never broach the topic.  53% favor separate bank accounts. However, married women are 10% less likely to manage finances in their marriage than men.  Money-related issues contribute to about 1 in 6 divorces (16%). Looking back at their lives, 10% of married respondents wish they chose a partner more financially responsible.

For more on Americans’ views on marriage, read the full report: 2023 Data: 1 in 4 Americans Think Marriage Is an Outdated Concept

Here are other highlights: