Victory Lap

Once you achieve Financial Independence, you may choose to leave salaried employment but with decades of vibrant life ahead, it’s too soon to do nothing. The new stage of life between traditional employment and Full Retirement we call Victory Lap, or Victory Lap Retirement (also the title of a new book to be published in August 2016. You can pre-order now at VictoryLapRetirement.com). You may choose to start a business, go back to school or launch an Encore Act or Legacy Career. Perhaps you become a free agent, consultant, freelance writer or to change careers and re-enter the corporate world or government.

How to Decide which Canadian Bank Stocks are Best for You

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Canadian bank stocks are true blue chip stocks and have long been a top choice for growth and income. Today’s economic uncertainty doesn’t change that

Image courtesy TSInetwork.ca

We’ve long recommended that all Canadian investors own two or more of the Big Five Canadian bank stocks — Bank of Nova Scotia, Bank of Montreal, CIBC, TD Bank and Royal Bank. That’s mainly because of the importance of these institutions, and their blue chip stocks, to Canada’s economy. That hasn’t changed despite lingering economic uncertainty about high inflation. Investing in bank stocks remains a popular strategy for many Canadians.

Canadian bank stocks – unlike Canadian penny stocks – remain key lower-risk investments. As well, the Big Five Canadian bank stocks all have long histories of annual dividend increases. That makes the Big Five the best bank stocks that the country has to offer. It also makes them top blue chip stocks for income investors.

Picking the best bank stock between two of Canada’s big banks is a lot harder choice than choosing between a bank stock and a Canadian penny stock. Still, if you’ve decided to start by investing in bank stocks with just one Canadian bank, one key question remains: which Canadian bank is the best bank stock for you? How can you tell which bank will give you the best long-term performance? There are a few performance clues you can look out for.

Performance clues to look for

When deciding on the best bank stock to buy, you want to start with the same criteria you would use for any investment in blue chip stocks (as well as with a Canadian penny stock):

We believe Canadian bank stocks are still well-positioned to weather downturns in the Canadian economy, despite their significant increases in loan-loss provisions over the last couple years because of COVID, the inflation that followed, and its impact on the economy. All five stocks trade at attractive multiples to earnings and are well positioned for any economic fallout from continuing high interest rates. Investing in bank stocks remains a popular strategy for many Canadians.

Canadian bank stocks have always been some of the best bank stocks globally. They’re also among the best income-producing securities: true blue chip stocks. Below are 3 tips for using dividends as barometer for picking Canadian bank stocks when investing in bank stocks.

1.) Dividends are a sign of investment quality. It’s why so few Canadian penny stocks offer them. While some good banks reinvest a major part of their profits instead of paying dividends, failing banks hardly ever pay dividends. So if you only buy stocks that pay dividends, you’ll automatically stay out of almost all the market’s worst banks.

2.) Dividends can grow. Stock prices rise and fall, so capital losses often follow capital gains, at least temporarily. Interest on a bond or GIC holds steady, at best. But the best banks like to ratchet their dividends upward: hold them steady in a bad year, raise them in a good one. That also gives you a hedge against inflation.

For a true measure of stability when hunting for the best bank stocks, focus on banks that have maintained or raised their dividends during economic and stock market downturns. These banks leave themselves enough room to handle periods of earnings volatility. By continually rewarding investors, and retaining enough cash to finance their businesses, they provide an attractive mix of safety, income and growth. Canadian banks stocks are well known for their financial stability in the face of economic downturns.

3.) Look for Canadian bank stocks with consistent dividends. One of the best ways of picking a quality stock is to look for banks that have been paying dividends for at least 5 to 10 years. Dividends are cash outlays that an unsuccessful bank could never produce. A history of dividend payments is one trait that all the best dividend stocks have.

Don’t limit your investing to bank stocks

Simply put, a well-constructed stock portfolio will make your life easier and maximize your gains.

Early in their investing careers, many investors have only a vague idea of the value of a planned portfolio when investing in the stock market. Continue Reading…

What if you run out of life? Save-Spend balance

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Mrs. T and I went on an Alaska cruise years ago, before kids and had a great time.

By Bob Lai, Tawcan

Special to Financial Independence Hub

Let’s be honest here, inflation is real. Very real! Despite being as frugal and careful with our expenses as possible, we are seeing an increase in our living expenses; arguably, just like everyone else.

Unfortunately, many of these expenses are completely outside of our control …

  • We were just informed by the city that our property tax increased by 11.5% this year
  • Our monthly equalized Fortis-BC payment increased by 20% due to natural gas rate adjustments
  • Gas prices recently hit over $2 per litre
  • Groceries cost way more now. I mean, a bag of Hardbite chips is over $5, and avocado costs $2 at regular price? What is this, highway robbery?

Let’s not forget the rising interest rates, leading to higher mortgage payments.

And those are just core expenses. Now if we consider discretionary expenses as well …

  • It’s not unusual to see hotels at over $250 per night, or even over $300 and even $400! In fact, recently a lawyer complained about the hotel prices in Vancouver. And is not alone!
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  • Staying at an Airbnb is just as costly and sometimes it costs even more than staying at a regular hoteltweet 2
  • Airfares are far more expensive than pre-COVID. Good luck finding tickets to Europe for under $1,000 per person.
  • Dining out is more expensive. A bowl of ramen costs close to $20 with taxes and tips added. We spent over $120 for the four of us dining out at a local White Spot last month, and we only had burgers, a couple of milkshakes, and a dessert to share.

You get the picture. At this point, I wouldn’t be surprised that our 2023 annual expenses will be considerably higher than the previous years.

Feeling frustrated with our expenses

The other day I was looking at our budget/expense tracking spreadsheet. To my horror, I noticed that we have been overspending in our Play account by a significant margin. To be more specific, we have dined out far more so far in 2023 than in other years. We have had three months where we spent over $1,000 on dining out! (On average, we usually spend around $350 on dining out per month)

While I know we’ve spent big money on a few occasions, like Kid T2.0’s birthday dinner with 15 people, a big dim sum lunch with 9 people, dinners a few times in Whistler with Mrs. T’s family, Mrs. T’s birthday lunch with 11 people, and celebrating our wedding anniversary, I was surprised to see that we spent over $1,000 on dining out for May.

Sure, we ate out multiple times during our recent 4-day trip in Calgary, but that was around $500 in total. I couldn’t explain how we spent the other $500.

I was frustrated and bummed out about spending so much money dining out yet again. For the life of me, I couldn’t figure out how we spent the other $500. I did recall having takeout sushi for about $120 but I couldn’t think of other dining-out occasions.

After going through the credit-card statements and spreadsheet, I realized we have had many smaller dining out expenses. $20 here and there, $30 here and there, and the amount quickly added up.

During this frustrated & annoyed state, the only thing I could think of was that we needed to take some extreme action.

“No dining out or take-outs for June!” I declared to Mrs. T.

“And what do you plan to spend our money on?” Mrs. T asked.

I couldn’t answer her question at all. All I could think of is that we need to reduce our spending, so we can save more. I think deep inside I was worried that we’d run out of money because of the increase in our overall expenses.

Even with me writing about having a save-spend balance (i.e. spending money to enjoy the present moment and saving money for the future), all I could think of are…

Save! Save! SAVE!

Unfortunately, my save, save, save, and save some more mentality was creeping in very quickly.

What the heck is going on here? Continue Reading…

Contradictory Retirement Plans

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By Michael J. Wiener

Special to Financial Independence Hub

I get a lot of friends and family asking for help figuring out their retirement finances when they’re just a few years from retiring.  These discussions follow a common pattern: people say they want to spend more in their 60s while they’re still able to enjoy new experiences, but they make plans that involve spending less in their 60s than they will have available in their 70s and beyond.  They resist a simple idea even after I show them how much more they could be spending early on.

I’ll illustrate what’s going on with an example that borrows from some of the real cases I’ve helped with.

Meet Dan

Dan is a single guy about to retire at 60.  Here are his relevant financial details:

TFSA: $200,000
RRSP: $300,000
Pension: $4000/month indexed to inflation + $800/month bridge until he is 65
CPP: entitled to 90% of the maximum amount ($826 at 60, $1290 at 65, $1832 at 70)
OAS: entitled to the full amount ($740 at 65, $1006 at 70, 10% increase at 75)

Dan tried to work out what to do on his own initially.  His thinking was mostly short term.  To compensate for his drop in income when he retires, he would take his CPP right away, and take his OAS at 65.  He wants some money to do some traveling over the next decade, and his work pension isn’t enough.

Here’s a chart of Dan’s inflation-adjusted income based on these plans.  Note that in nominal terms, his income will go up with inflation each year, but we show it in constant 2025 dollars.

The first thing to notice is that Dan hasn’t included his RRSP or TFSA in these plans.  He didn’t really think about them; he just assumes that they are for “later.”  By default, Dan will have to convert his RRSP to a RRIF when he’s 71, and will have to start drawing from the RRIF when he’s 72.  Let’s add in Dan’s RRIF income, assuming conservatively that his RRSP/RRIF will earn 2% above inflation.

We see now that contrary to Dan’s stated goal of having more income for traveling in his 60s, he’s actually planning to live small in his 60s.  This is the point where I suggest starting to draw from his RRSP/RRIF right from the start of retirement.

Immediately, we run into a problem.  Dan doesn’t think of himself as the sort of person who spends his RRSP.  That’s for old people.  He doesn’t feel very old.  He doesn’t like this idea.  He’s still the kind of person who saves money.

Not everyone can get past this point.  Some live small for years to give themselves a large income in their 70s and beyond.  Let’s hope that Dan can get used to the idea of starting to live now.  Here’s a plan that smooths out Dan’s RRSP/RRIF income: Continue Reading…

Unlocking the Annuity Puzzle: why Canadians avoid what seems to be the perfect Retirement vehicle

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Image courtesy boomerandecho.com

My latest MoneySense Retired Money column looks at a curious Canadian phenomenon called The Annuity Puzzle: that while life annuities sold by insurance companies seem to have all sorts of compelling reasons to acquire them, more often that not retirees shun them.

You can find the full column by clicking the hypetexted headline here: Unlocking the Annuity Puzzle: Why Canadians avoid what seems to be the perfect retirement vehicle

Financial planner Robb Engen recently tackled this puzzle in his Boomer & Echo blog, illustrated in the above graphic. You can find the full blog here: Why Canadians avoid one of Retirement’s most misunderstood Tools.

Engen notes that experts like Finance professor Moshe Milevesky and retired actuary Fred Vettese say “converting a portion of your savings into guaranteed lifetime income is one of the smartest and most efficient ways to reduce retirement risk.” Vettese has said the math behind an annuity is “pretty compelling,” especially for those without Defined Benefit pensions.

 Engen observes that a life annuity is “the cleanest version of longevity insurance … You hand over a lump sum to an insurer, and they guarantee you monthly income for life. If you live to 100, the insurer pays you. If stock markets collapse, you still get paid. If you’re 87 and never want to look at a portfolio again, the income keeps flowing.”

In other words, annuities neutralize the two big risks that haunt retirees: Longevity Risk (the chance of outliving your money) and Sequence-of-returns risk: the danger of suffering a stock-market meltdown early in Retirement and inflicting irreversible damage on a portfolio.

Despite all the seeming positives about annuities, Engen notes that “almost nobody buys one.” He cites a Vettese estimate that only about 5% of those who could buy an annuity actually do so.

A chance to lock in recent portfolio gains?

Even so, the new Retirement Club created by former Tangerine advisor Dale Roberts earlier this year — see this blog posted on this site in June  — recently featured a guest speaker who extolled the virtues of annuities: Phil Barker of online annuities firm Life Annuities.com Inc. Barker said many clients tell him they’ve done really well in the markets over the last 20 years and now they’d like to lock in some of those gains. They may be looking for Fixed-Income strategies and many were delighted with GIC returns when they were a bit higher than they are now (some in the range of 5%). But they less happy with the new rates on GICs now reaching maturity. Meanwhile, annuities have just come off a 20-year high in November 2023 so the time to consider one has never been better, Barker told the Club in August. With annuities you can lock in a rate for the rest of your life so if your timing is good, it may make sense to allocate some funds to them.

See the full MoneySense column for the list of the eight life insurance companies that offer annuities in Canada, how they are covered under Assuris, when Annuities really shine, and how to fund annuities with registered or non-registered accounts.

 I suspect the Club’s session on annuities was enough to get a few members off the fence. I have long been impressed by the aforementioned Fred Vettese, who often argues that those preparing to convert their RRSPs into RRIFs might opt to annuitize 20 or 30% of the amount, thereby transferring a chunk of investment risk from the do-it-yourself investor on to  the shoulders of a Canadian life insurance company. Continue Reading…

AI Bubble Worries? Read This

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By Ariel Liang, BMO Global Asset Management

(Sponsor Blog)

If you’ve ever felt nervous about the stock market ups and downs, you’re not alone. Most investors want their money to grow steadily without the wild swings: especially if you’re thinking about retirement. Lately, worries about an AI bubble and changing interest rates have shown just how quickly things can get unpredictable.

That’s why building the right portfolio is important to help you stay calm and stay invested, even when markets get a little rocky.

Low-volatility investing, and specifically using funds such as BMO Low Volatility Canadian Equity ETF (ZLB) and BMO Low Volatility US Equity ETF (ZLU), are designed to give you a smoother experience. These strategies help you stay invested with confidence no matter what the markets are doing.

What does Low Volatility mean for your Investments? 

Imagine low-volatility investing as playing it smart in baseball: not trying for risky home runs, but focusing on steady singles and doubles. This way, you keep making progress, scoring runs over time, and avoiding big losses. It’s all about reliable growth, not wild swings that could set you back.

ZLB and ZLU are designed to help your investments stay on track, even when markets get unpredictable. They pick companies that don’t jump around as much as the overall market: think of them as the steady players on the team. By steering clear of those big ups and downs, your money can grow more smoothly, and you can benefit from compounding over time.

Building a Smoother Ride with Low volatility

ZLB and ZLU focus on defensive sectors like utilities, consumer staples, and healthcare. These ETFs can act as financial shock absorbers, reducing risk from market swings and limiting exposure to more volatile sectors like technology. Position and sector caps further protect against over-concentration, while the selection of low-beta1 companies means the portfolio is designed to cushion losses during downturns.

The disciplined construction of ZLB and ZLU helps you stay on course regardless of market conditions. This approach isn’t about chasing the latest trends but about building steady, long-term growth through stability and diversification, letting compounding work its magic over time.

Low volatility cushioned the blow with stability

Chart 1

Note: Data as of September 30, 2025. Source: BMO AM Inc. Bloomberg Sector allocation subject to change without notice.  Chart compares sector allocations of BMO Low Volatility Canadian Equity ETF and S&P/TSX Composite Index as of September 30, 2025, and shows Consumer Staples outperforming Energy in Canada from 2011 to 2024.

Common Myth: Low-Volatility ETFs reduce Return

Low volatility doesn’t mean you have to settle for lower returns. In fact, Canadian low-volatility investments have consistently outpaced the S&P/TSX Capped Composite Index since inception, offering strong returns while helping to reduce risk.

Chart 2

Note: Data as of September 30, 2025. Source: BMO AM Inc. Bloomberg Sector allocation subject to change without notice.  Chart compares sector allocations of BMO Low Volatility US Equity ETF and S&P 500 Index as of September 30, 2025, and shows Technology outperforming Utilities from 2013 to 2025.

The U.S. market is highly concentrated in the Magnificent 72 and generally information. Because ZLU invests more in stable sectors like utilities and healthcare, it provides steady, long-term returns, though it might not keep up with the S&P 500 when the market is booming, as it has more recently with the growth dominated in the Tech sector. Even with this more cautious approach, ZLU still delivers strong annual returns for investors by emphasizing stability and value rather than jumping into the latest tech trends.

Balanced Growth, Less Stress: Blending ETFs for Smoother Returns

If you want steady growth for your portfolio without taking on too much risk, you may not have to choose between safety and strong returns. By combining BMO Low Volatility US Equity ETF (ZLU) with BMO NASDAQ 100 Equity Index ETF (ZNQ), you can get the best of both worlds: reliable stability and exciting growth. This mix has delivered higher returns and lower risk than simply investing in BMO S&P 500 Index ETF ( ZSP) as shown in Chart 3. Continue Reading…