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.

Canadians with expensive mutual funds need to learn about ETFs

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Deposit Photos

By Dale Roberts

Special to Financial Independence Hub

Canadians pay some of the highest investment fees on the planet. Most of the Canadian mutual funds charge very high fees. Those fees directly reduce your returns. Too much of the investment returns end up in the wrong pockets. The very good news is that in 2025 you can move to very good, very simple and very inexpensive investment options. Cutting your fees from the 2.0% area to 0.20% or lower is life-changing. It could even double your retirement nest egg. Who doesn’t want to retire with twice the financial security, twice the lifestyle? Canadians should avoid most mutual funds. It’s so easy to leave your mutual funds and your advisor behind; you can move to a better place.

Most Canadian mutual funds are offered by salespersons, not qualified advisors. These advisors at Canadian banks and other sales shops for the high-fee funds have very low investment knowledge. Their only concern is selling you a product and lining their own pockets.

Beat the bank at their own game

That’s the premise and the truth told by former banker Larry Bates. Larry outlines just how poor are Canadian mutual funds, and the mutual fund industry. Have a read of …

Don’t give away half of your investments – Beat the Bank.

On wealth destruction Larry offers a humorous ‘quote’.

My investments put three kids through University. Unfortunately, they were my advisors’ kids – Anonymous

And there’s the crux, the punchline. When Canadians pay those high fees that average 2.2% annual or more, over an investment lifetime they will give away half of their investment wealth. Don’t be that investor. Don’t let your portfolio get crushed by fees.

Canada’s largest mutual funds, not so bad?

Canada’s largest mutual funds are offered by Canada’s largest bank – Royal Bank of Canada. When I first looked at the RBC Select Funds, including the RBC Select Balanced Portfolio I suggested they were ‘not so bad.’  But over time the fees and poor portfolio management continue to take their toll.

In that post I compare the RBC funds to a simple and superior low-fee approach, using an ETF portfolio. An ETF is an exchange traded fund.

  • Over the last three years the iShares Balanced ETF Portfolio (XBAL.TO) is up 7.4% compared to 5.2% for the RBC Balanced Fund.
  • Over the last 5 years the iShares Balanced ETF Portfolio (XBAL.TO) is up 7.7% compared to 6.2% for the RBC Balanced Fund.

Scorecard: over the last 3 years the RBC fund underperformed by an average of 2.2% annually. Over the last 5 years the RBC fund underperformed by an average of 1.5% annually.

You’ll find other comparisons to RBC Select and dividend funds in that post link.

How bad are TD mutual funds?

Canada’s second largest bank says ‘hold my beer.’ I can take your poor performance and go one better. This past week I looked at TDs very popular portfolio solutions known as the “Comfort” Portfolios. Once again, this is an attempt to create a diversified global balanced portfolio in one offering. A one-fund solution.

Check out the GIC rates at EQ Bank

I compared the Comfort Portfolios to a simple Canadian ETF Portfolio. The following table lists the average annual returns.

The underperformance is tragic. We see the TD portfolios underperforming simple ETF models by 2%, 2.5%, 3.o% annual and more.

Earn 50% more? Double your money over mutual funds?

With an additional 2.5% annual over a 20-year period, you could retire with 59% more. Over a 25-year period you’re talking 80% more. Over 30 years we move to ‘twice as much.’

For the above, I used a simple investment calcuator comparing 6% and 8.5% annual returns. In the investment world your return advantage could be greater or less given the sequence of returns. But it gives us a very good idea of the potential for greater returns, and a much richer lifestyle in retirement.

How to invest in ETFs

lf you’re new to the Exchange Traded Fund (ETF) concept please have a read of …

What is index investing?

An Exchange Traded Fund will allow you to own the companies within a market index, for example the TSX Composite (the Canadian stock market) in one fund, ticker symbol XIC. The fee for buying the Canadian stock market is 0.06%. Yes you read that right, that’s 6/100th of one per cent. Continue Reading…

Rob Carrick’s G&M retirement: what he and other retiring PF writers have learned about Retirement

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Rob Carrick: Globe & Mail

My latest MoneySense Retired Money column has just been published and features input from Rob Carrick, who just retired from the Globe & Mail after almost three decades covering Personal Finance (PF henceforth). You can find the full column by clicking on the hyperlinked headline here: How financial journalists plan their own retirement.

While some may view this as an exercise in Inside Baseball, the column also features interviews with someone Rob and I agree was the “granddaddy” of Canadian PF writing: Bruce Cohen of the Financial Post. Bruce in effect handed off the PF beat to me a few years after I joined the paper in 1993. For the column, Bruce provided several retirement tips but clarified there were at least two such PF writers even before him (Mike Grenby and Henry Zimmer.). Guess you could call them the grandaddies of Canadian personal finance writing!

Unlike other journalists mentioned in the column, Bruce is one of the few who actually did truly retire: after a 5-year transition he says he fully retired at the traditional retirement age of 65. Now 75, he lives on 50 acres north of Toronto. He cites actuary Malcolm Hamilton’s conclusion that spending/lifestyle in retirement is pretty much the same as pre-retirement: “Ergo, most people did not need a 70% income replacement ratio. That’s been true for me, though I don’t know if it still applies  to the general population as many older people seem to carry significant  debt into retirement and many adult children are living with their parents.”

The MoneySense column also includes input from Garry Marr, another ex Postie who just weeks ago announced he is returning to the Financial Post to write about — you guessed it — Personal Finance.

Retiring from Full-time Retirement Blogging

Retirement Manifesto’s Fritz Gilbert

Meanwhile, south of the border, we got some input from Fritz Gilbert, who announced this spring in his The Retirement Manifesto blog that he is  “retiring” from full-time blogging about Retirement. 

Pretty ironic, isn’t it?

Since Rob Carrick is still only 62 years old, he clarifies that while he is no longer a salaried employee at a newspaper (he formally left on June 30th), he definitely plans to keep his hand in PF writing, including two monthly columns at the G&M: one on traditional PF, the second on his new Retirement experience.

He agrees that Retirement is a bit of an outdated word and that what he is doing is closer to Semi-Retirement, or indeed the term I coined in my financial novel, Findependence Day. Continue Reading…

Investing for Income vs. Total Return: Why choose?

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By Mark Seed, myownadvisor

Special to Financial Independence Hub

Welcome to a new Weekend Reading edition, on an important but seemingly never-ending debate: should you be investing for income or total return?

Maybe in the end, why choose one over the other at all???

First up, recent articles on my site.

I contributed to this recent MoneySense Best ETFs in Canada edition – that includes one global ETF I own for total return since 2020:

And, I shared our planned financial independendence budget. I would be happy to compare notes with you on what you intend to spend and when in your retirement.

Investing for Income vs. Total Return, why choose?

Leading off this Weekend Reading edition, a theme I’ve written about from time to time here: income investing vs. total return.

Is there a right way to invest? Which one is better?

Both approaches have merit: which was the subject of my enjoyable debate with passionate DIY income investor Henry Mah a few weeks ago. You can watch it here!

Personally, while I’ve always had a passion for owning some dividend-paying stocks in my portfolio and likely always will, I can’t ignore the benefits of total return.

At the core:

Investors often focus on total return and likely should during their asset accumulation years in particular since total return encompasses both income generation, such as dividends, and capital appreciation (changes in the market value of your investments). We should all know by now that growth/price increases remain an essential component of wealth-building: prices moving higher and higher than what you paid for them is good.

Income investing focuses on generating regular cash flow from your investments, rather than solely relying on capital appreciation or downplaying it based on your stock selections. Income funds, income-oriented Exchange Traded Funds (ETFs) or in Henry’s particular case, owning a small basket of concentrated stocks from the TSX that pay dividends has provided income-focused investors like Henry arguably lower-risk for him while growing his income higher over time via higher dividend payments.

Honest Math - Dividends

In the TD debate here, I argued striking the right balance between income needs and growth in the total return equation is probably best for most: it has historically delivered long-term success and there is no reason to believe why a basket of global stocks won’t continue to do so.

So, I get the income investor debate, I really do, and maybe moreso given I consider myself in semi-retirement now; my part-time work started a few months ago.

Investing for income via dividend stocks often includes these benefits for retirees:

  • Tangible income: shares of companies that distribute a portion of their profits to shareholders, are often mature and established businesses that have ample cashflow to sustain their payment obligations. This tangible income (and arguably stable income) can help cover living expenses.
  • Rising income: such established companies can also raise their dividends year-over-year, rewarding shareholders with rising income that can help offset inflationary pressures. Sustained 3-4% or more dividend increases by some companies can be inflation-fighters.
  • Tax benefits: depending on what stocks you own where (i.e., in what accounts), dividend payments can offer favourable tax benefits. Read about the tax treatment of Canadian dividends below. 

Academic history lessons along with any Google search on this subject will show various charts and graphs that demonstrate the critical role that dividends – and, in particular, reinvested dividends – play in delivering an attractive total return to investors over time. But this just makes sense, in that reinvested dividends are like not getting any dividend payment paid to you in the first place …

Another important contributor to equity market returns has been dividend growth. Equities are growth assets – which I argued in the TD debate – so companies who tend to grow their revenues, profits and earnings over time, is the reason why they can continue to reward their shareholders with higher dividend payments. Growth is needed, for total return, for your/our juicy dividend payments to continue. Continue Reading…

Which Companies will Dominate the Next Decade? Insights from the Past 10 Years

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By Alain Guillot
Special to Financial Independence Hub

If you had invested $1,000 in some of the world’s most innovative companies a decade ago, your portfolio would look vastly different today. The explosive growth of technology-driven businesses demonstrates the power of innovation and long-term investing. Let’s dive into the big winners of the last decade and explore which companies might lead the charge in the next ten years.

The Big Winners of the Last Decade

Here’s how $1,000 invested in 2013 would have grown in some of the most successful companies:

  1. Nvidia: $272,235
  2. AMD: $47,190
  3. Tesla: $29,890
  4. Broadcom: $24,390
  5. Netflix: $19,020
  6. Amazon: $14,685
  7. Microsoft: $9,150
  8. Apple: $9,090
  9. Meta (formerly Facebook): $7,470
  10. Alphabet (Google): $7,225
  11. The S&P 500: $4,017 or about 13.5% per year.

These companies have one key thing in common: they’re all rooted in innovation and operate mostly in the technology sector. They dominate fast-growing markets like artificial intelligence, renewable energy, cloud computing, and digital platforms.

Also, not all of us have the know-how or the time to pick any of those winning stocks, but all of us can easily pick the S&P 500.

What do these Companies have in Common?

  1. Leaders in Innovation: Companies like Nvidia and AMD have revolutionized computing and AI, while Tesla has led the way in electric vehicles and renewable energy.
  2. Fast-Growth Industries: These businesses are in sectors with enormous growth potential, such as semiconductors, e-commerce, and clean energy.
  3. Global Reach: Serving customers worldwide has allowed these companies to scale operations and grow revenue exponentially.
  4. Scalability: Their business models allow for significant growth without proportional cost increases.
  5. Strong Network Effects: Platforms like Amazon and Meta thrive as they attract more users, creating self-reinforcing cycles of growth.

Who will be the Big Winners of the Next Decade?

While the future is never certain, several companies in the S&P 500 are well-positioned to dominate over the next ten years. Here are some categories and potential leaders:

1. Artificial Intelligence

  • Nvidia: Already a leader in AI hardware and software, Nvidia’s dominance in GPUs places it in a prime position.
  • Meta Platforms: With investments in the metaverse and AI-driven advertising, Meta has room for growth despite recent challenges. Continue Reading…

Harvest Low Volatility ETFs: A smoother Investment Experience

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Image courtesy Harvest ETFs

By Ambrose O’Callaghan, Harvest ETFs

(Sponsor Blog)

Canadians in retirement, or those nearing retirement, are faced with unique challenges in the present-day market. Interest rates have moved up from their historic lows since 2022. The benchmark rate for the Bank of Canada (BoC) reached its zenith of 5.00% in July 2023.

Economic headwinds forced the hand of the BoC in 2024 and 2025. The benchmark rate now sits at 2.75% as of July 7, 2025. More rate cuts are expected before the end of the year. This downward trend for interest rates means that investors who want a secure investment while outpacing inflation may have to look beyond GICs and other fixed-income products in this changing climate. Market volatility is another headwind investors are now contending with, spurred on by a new and aggressive U.S. administration.

There was enthusiasm surrounding the broader economy and the stock market coming into 2025. The previous GOP administration cultivated a reputation as a market-friendly one in the late 2010s. That momentum ground to a halt due to the COVID-19 pandemic, but the perception of a market-friendly GOP largely remained.

Investor sentiment soured in the spring, in large part due to the uncertainty surrounding U.S. government policy, particularly when it comes to trade. Trade tensions have remained elevated, but sentiment has improved into the summer as markets have normalized.

Uncertainty in the spring contributed to elevated levels of market volatility. Some names suffered steep retracements in the first half of April. However, the 90-day pause announced on tariffs led to a dramatic reversal. That led to a rapid recovery for the broader U.S. market. Despite the improved conditions, this market is unique in that lingering trade policy uncertainty is fueling negative sentiment. Headline risk will continue to be elevated through the second half of 2025.

A research note from Vanguard earlier this year speculated that volatility was likely to remain. This is due to factors like policy uncertainty, disruptive currents in the economy like Artificial Intelligence development, and the shifting policy of the Federal Reserve.

Demand for Low Volatility products has increased in this environment. These ETFs offer Canadian retirees a pure low-volatility play with exposure to 100% Canadian equities.

Harvest Low Volatility ETFs:  A Smoother Investment Experience

Harvest’s new Low Volatility ETF suite may be appealing to defensive and long-term investors. This approach to equity investing is factor-based, disciplined, outcome-oriented, is designed to mitigate risk, as well as provide long-term growth. Moreover, the suite includes a high-income solution that generates monthly cash distributions through an active covered call writing strategy.

Low Volatility strategies can outperform in bull or bear markets. They follow a portfolio construction and investment strategy that is built to limit downside while capturing the upside. Investors can capture gains more efficiently by minimizing risk during periods of market turbulence.

The Harvest Low Volatility Equity ETF (HVOL:TSX) holds 40 top Canadian equities. These equities will be ranked and weighted by their risk score and market cap weight, with a 4% maximum weight per name. HVOL’s Canadian equities are scored according to risk and fundamental metrics.

Low Volatility – Portfolio Construction

Source: Harvest Portfolios Group, Inc. April 2025.

Low-volatility strategies have existed in the market since the 2007-2008 financial crisis. However, these strategies have typically followed a generic approach.

The Harvest approach utilizes multiple risk metrics to achieve its stated goals. These include Beta, Volatility, and fundamental analysis. Harvest emphasizes a robust portfolio construction to achieve a defensive low volatility portfolio and superior upside capture. Continue Reading…