Hub Blogs

Hub Blogs contains fresh contributions written by Financial Independence Hub staff or contributors that have not appeared elsewhere first, or have been modified or customized for the Hub by the original blogger. In contrast, Top Blogs shows links to the best external financial blogs around the world.

The Ripple Effect of Representation: Elevating Voices in Canadian Finance

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By Sara Loriot

Special to Financial Independence Hub

Representation in our industry matters: a lot. For too long, finance has been associated with a narrow archetype of who belongs.

But in reality, some of the most successful minds in our industry come from different backgrounds and took unconventional paths, bringing unique perspectives that drive innovation. By showcasing these individuals, my goal is to challenge outdated stereotypes and make it clear: finance is for anyone. Seeing real people succeed by being unapologetically themselves can inspire others to recognize their own potential in this space.

Diverse Dividends is a new video series by CFA Society Toronto, the largest association of its kind serving the investment and finance industry in Toronto. At the heart of what we do is helping our members advance in their careers, build connections, and share knowledge and insights through educational programming that fosters growth and empowers the next generation of leaders in finance and investing.

This series is an example of that mission in action and, as host of this series, I have the privilege of amplifying the voices of leaders who aren’t just part of the financial landscape: they’re reshaping it. Many of my guests didn’t study finance, yet they’ve become some of the most influential figures in the industry. Their diverse backgrounds influence how they lead, how they assess risk, and how they solve problems. They don’t fit into a single mold, and that’s precisely why they excel.

When I talk about diversity, I don’t just mean gender or optics: it’s about how people think, lead, and approach challenges. Life experiences shape leadership, and the paths that bring people into finance are as important as the technical skills they acquire along the way. In fact, I often ask my guests about their hobbies because what we do outside of work shapes how we innovate inside of it.

Analytical skills are important in finance, but creativity and emotional intelligence are equally essential. Some of the most innovative financial professionals aren’t the ones following formulas: they’re the ones questioning them.

Diversification the universally accepted principle in Finance

In finance, diversification is a universally accepted principle: no one questions that spreading risk across different assets leads to more resilient portfolios. The same logic applies to leadership and building teams. A team that brings diverse perspectives, experiences, and ways of thinking is better equipped to navigate challenges, adapt to change, and drive innovation. That’s why Diverse Dividends embraces a “go-anywhere” format; because understanding who someone is, rather than just what they do, reveals the true value they bring to the industry. Continue Reading…

The Cost of Overspending in Retirement: How a Withdrawal Strategy saved $16,500 annually

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A Retirement Income Solution: How Milestones Retirement Insights helped one Alberta Couple Save $16,500 annually

By Ian Moyer

Special to Financial Independence Hub

Retirement is meant to be a time of relaxation and enjoyment, but for many Canadians, managing retirement income efficiently can be a major challenge. This was the case for a couple in Alberta, aged 70 and retired for five years. They were concerned about depleting their savings too quickly and needed a tax-efficient withdrawal strategy to better sustain their retirement lifestyle.

The Problem: Overspending Without a Plan

The couple had a mix of financial assets, including:

  • RRSPs: $400,000 remaining
  • TFSAs: $75,000 remaining
  • Joint Non-Registered Savings: $50,000 remaining

They were spending $80,000 a year without a clear withdrawal strategy, leading to inefficiencies and over-taxation. This lack of guidance was costing them $16,500 annually, money that could have been used to enhance their lifestyle.

 

 The Solution: A Tailored Withdrawal Strategy

Using Milestones Retirement Insights, they were able to restructure their withdrawals to maximize after-tax income while preserving their savings for the long term. Here’s how:

  1. Prioritizing TFSA Withdrawals: We tapped into their tax-free savings account first, allowing them to access funds without triggering additional taxes.
  2. Splitting RRSP Withdrawals Over Time: By drawing from their RRSP in smaller increments, we kept their income within lower tax brackets.
  3. Non-Registered Savings for Gaps: Joint savings were used strategically to fill gaps, minimizing tax exposure while ensuring consistent income.
  4. Optimal RRIF Conversion: We structured their RRSP to RRIF transition to further reduce taxes and take advantage of pension income splitting.

Key Consideration: RRSP to RRIF Conversion

When you reach retirement, a registered retirement savings plan (RRSP) has the option of converting to a registered retirement income fund (RRIF). To provide a sustainable retirement income and minimize your income and estate taxes, we’ve calculated an average annual RRIF payment of $28,112 starting at age 70. At an assumed rate of return of 5%, this investment will deplete to $0 at age 88. Continue Reading…

2024 in Review and 2025 Kick Off

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Stock image courtesy Harvest ETFs

By Ambrose O’Callaghan, Harvest ETFs

(Sponsor Blog)

The year 2024 started in a similar fashion as 2023. The mega-cap-concentrated technology sector fuelled positive upward momentum.

Economic data slowed in the first quarter of 2024. Meanwhile, relatively defensive areas benefited through the spring months and again through the end of the summer season as recession concerns resurfaced ahead of the first interest rate cut in August.

How a “soft landing” has impacted the market

Equities and bonds continued to be very sensitive to the day-over-day economic data points. In another period these data points might have less impact on the behaviour of individual stocks and bonds. The chart below illustrates the dramatic shift in earnings growth expectations from 2022 through to the first quarter of 2026. Market and investor sentiment has improved as the US Federal Reserve has seemingly been able to orchestrate a “soft landing.”

Source: Bloomberg, January 10, 2025.

The ability of the Fed to produce a “soft landing” in 2024 was reflected in the meaningful uptick in earnings expectations for the entire market. Previously, the Magnificent 7 (Apple, Microsoft, Alphabet, Amazon, NVIDIA, Meta, and Tesla) has been the driving force, outshining the broader market.

Through November 2024, the stock market rejoiced the certainty of the coming Republican administration. It continued to rally hard through to the end of November with nearly every sub-sector up over 10%.

Source: Harvest Portfolios Group, Inc. January 2025.

Transitioning from 2024 to 2025

The month of December 2024 closed as only the third negative month of that calendar year. Factors like tax loss selling, volume voids, and policy rhetoric compounded to contribute to the decline in the final month of the previous year. Regardless, the broader markets finished in the black for the second year in a row with a 20% upward movement. That rate of increase is a rarity over the past 40 years. That said, the strong move upward does not mean a correction is more likely to occur in 2025. Continue Reading…

Saving vs. Investing: Understanding the best approach for Findependence

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Image by unsplash

By Devin Partida

Special to Financial Independence Hub

Achieving Findependence [aka Financial Independence] requires a balanced strategy combining short-term stability and long-term growth.

Saving and investing both play crucial roles in this journey, serving different financial goals and timelines.

Explore how you can navigate these strategies to optimize your financial portfolio.

 

 

The Role of Saving: Security and Liquidity

Savings are the foundation of Findependence. An accessible savings account provides a safety net for emergencies, such as medical expenses or job loss. Experts recommend maintaining at least three to six months of living expenses in a high-yield savings account or money market fund for quick access.

Here are some key advantages of saving:

  • Risk-free growth: In addition to offering modest interest, savings accounts protect your principal from market fluctuations.
  • Short-term goals: Savings are ideal for upcoming expenses like vacations, home repairs or a new car.
  • Liquidity: Saving provides liquidity during unexpected situations. Certain saving vehicles — like 529 plans — also allow for tax-free growth and withdrawals for qualified expenses.
  • No market risk: Unlike investments, savings are not exposed to fluctuations, making them a reliable choice for safeguarding funds.
  • Psychological benefits: Having a financial safety net reduces stress and fosters confidence in your ability to handle unexpected events.
  • Flexibility: Savings provide liquidity without penalties, making it easy to pivot funds as priorities change.

However, relying solely on saving limits wealth-building potential due to inflation, which can erode the purchasing power of idle cash over time.

The Role of Investing: Growth and Wealth Accumulation

Investing is essential for long-term financial growth, particularly for goals like retirement or major life milestones. By allocating funds to stocks, bonds or mutual funds, you can potentially achieve higher returns that outpace inflation.

Here’s how investing can benefit you:

  • Compound returns: Investments grow exponentially over time due to reinvested earnings.
  • Inflation protection: Historically, investments in the stock market have delivered higher returns than inflation.
  • Wealth generation: Investing enables you to build significant assets over decades.
  • Diversification opportunities: Investments allow you to spread risk across various asset classes, industries and geographies.
  • Passive income generation: Certain investments — like dividend-paying stocks or rental properties — create ongoing income streams.
  • Long-term tax benefits: Investment accounts like individual retirement accounts (IRAs) or tax-free savings accounts (TFSAs) offer tax advantages that amplify growth over decades.

Investing does involve risks, including market volatility and potential losses. It requires a clear understanding of your risk tolerance and financial goals.

Savings and Investments: Finding the right balance

A well-balanced approach integrates saving and investing to address immediate needs and future aspirations. Here are steps to consider:

  • Assess your financial situation: Calculate your emergency savings and allocate sufficient funds to cover unexpected expenses.
  • Define your goals: Short-term goals may require savings, while long-term aspirations like retirement demand an investment strategy.
  • Evaluate risk tolerance: Younger individuals with longer timelines can generally afford higher-risk investments, while those nearing retirement may prefer conservative options.
  • Diversify your portfolio: A mix of savings and investments minimizes risk while capitalizing on growth opportunities.

Practical Tips for Success in Saving and Investing

Finding the perfect balance between saving and investing can seem daunting, but taking specific action steps can make the process manageable and effective. Here are additional practical tips to enhance your financial strategy: Continue Reading…

 Why you should be a bit wary of the U.S. market in 2025

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Getty Images, courtesy BMO ETFs

By Bipan Rai, BMO Global Asset Management

(Sponsor Blog)

When one hears the term ‘American exceptionalism,’ for some investors, the first images that come to mind are perhaps that of a certain President-elect and his inclinations towards jingoism. But the usage of the term outside of the U.S. has intensified of late, particularly when it comes to markets.

Indeed, more than any other time in modern history, the U.S. markets are benefitting from a strong influx of foreign capital (Chart 1). The impact has been profound, with U.S. equity market valuations now at levels that go beyond what is generally thought reasonable, while the U.S. dollar (USD) is trading close to two-year highs. Within the leading global equity index, the U.S. accounts for almost 70% of the weight, well over double where things stood a few decades ago.

Chart 1 – U.S. Attracts more Foreign Capital than any Other Point in History

Source: BEA, BMO Global Asset Management, as of December 31, 2024.

Chart 2 – Two-Year Price Return of Selected Equity Indices

 

*In USD terms, prices only. Source: BMO Global Asset Management, as of December 31, 2024.

Now, there are several easily digestible reasons why the U.S. market continues to capture the hearts and minds of investors worldwide. To start, U.S. economic fundamentals remain sound, with flexible labour and deep capital markets combining to deliver an enviable track record of productivity. That’s directly helped generate impressive earnings for American companies. Additionally, lower debt levels among U.S. households (compared to other developed markets) buttress a strong propensity to consume. As such, the U.S. economy has expanded by an average of just under 3% year-over-year (YoY) over the past four quarters – even with interest rates not far off generational highs.

Chart 3 – Average Real Growth by Economy (Past Four Quarters, Year-Over-Year)

Source: BMO Global Asset Management Q3 2023-Q3 2024

Those sorts of fundamentals form the bedrock of why the U.S. continues to draw in foreign capital. From the eyes of global investors, Japanese and European markets offer too low of a yield, with political risk for the latter becoming more of a risk going forward. Meanwhile, authorities in China appear bent on moving forward with deleveraging in the real estate sector and at the regional government level. That means the necessary stimulus to prop up Chinese consumption will likely be done piecemeal and via monetary policy. Elsewhere, while some Emerging Markets (EM) may still offer relatively attractive yields, the risk profile looks very different as inflation threats linger and the world’s largest buyer of EM goods (the U.S.) becomes more insular. And we haven’t even mentioned the liquidity of U.S. assets – which becomes very attractive during volatile periods. Add it all up, and the risk/return profile in the U.S. looks far better than it does in any other country.

4 Reasons to Reorient Exposures

However, having said the above, the coast is not all clear for another banner year for U.S. assets. Instead, we see strong enough arguments that tell us that U.S. assets shouldn’t perform to the same degree that they have over the past few years. Being less enthusiastic about the theme of ‘U.S. exceptionalism’ means that we will be orienting our strategy for the coming year away from index plays and towards alternative investments and structured outcomes that are tailored towards generating cashflow. There are many reasons why we think this will be the optimal strategy to pursue. Continue Reading…