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.

A Canadian Perspective on Health Care Overseas: Q&A with RetireEarlyLifestyle.com

Posted By |
Jim and Kathy McLeod in Mexico/RetireEarlyLifestyle.com

By Akaisha Kaderli, RetireEarlyLifestyle.com

Special to Financial Independence Hub

Billy and I are Americans. For most of our adult lives we have been self-employed, paying for our own health insurance out-of-pocket.

We retired at age 38, and while initially we paid for a US-based Health Insurance policy, we eventually “went naked” of any health insurance coverage. Wandering the globe, we took advantage of Medical Tourism in foreign countries and again, paid out-of-pocket for services.

This approach served us very well.

However, we understand that choosing the manner in which one wants to pay-for-and-receive-health-services is a personal matter.

In our experience, it seemed that Canadians generally were reticent to stay away from Canada longer than 6 months because they would lose their access to their home country’s health care system.

We did not know the full story of why many Canadians preferred not to become permanent residents of another country due to this healthcare issue. So, we asked Canadian Jim McLeod if he would answer a few questions for us to clarify! And then, to give that information to you.

Below is our interview with Jim McLeod. He and his wife are permanent residents of Mexico, and now receive all their healthcare from this country.

It is our hope with this interview, that there would be options explained to other Canadians who might not want to maintain 2 homes, be snowbirds in Mexico, or could vision living in Mexico with its better weather and pricing.

Take a look!

Jim and Kathy in Mexico

Retire Early Lifestyle: In the beginning, did you choose to do a part-time stint in Mexico before fully jumping in? You know, like to test the waters?

Jim McLeod: Yes. Because of the following stipulations for our Ontario Health Insurance Plan (OHIP) and the possibility of getting a maximum of 180 days on a Mexican Tourist Card, we decided to do the “snowbird” thing initially: 6 months in Ontario during the warmer months, and 6 months in Mexico during the colder months.

“You cannot be out of Ontario for more than 212 days (a little over 6 months) in *any* 12 month period (ex. Jan – Dec, Feb – Jan, Mar – Feb, etc.)”

During this time, we used World Nomads for trip insurance to cover us while in Mexico. For us, this wasn’t too bad. However, according to other couples we’ve spoken with, after a certain age, depending on your health, this can become quite expensive.

Retire Early Lifestyle: When you retired early and left your home country of Canada, was leaving the guaranteed health care system that your country provides a large hurdle to your plans? How did you factor that cost in?

Jim McLeod: After doing the “snowbird” thing twice, we had enough data from tracking all our spending, as per Billy and Akaisha’s The Adventurer’s Guide to Early Retirement, that we knew we would save approximately $10,000cdn a year by moving full time to Mexico. And we knew we would lose our OHIP coverage. As such, we budget $2000cdn a year for out-of-pocket medical expenses. But we also knew that, at that time, we qualified for the Mexican Seguro Popular insurance coverage. Note: Seguro Popular has since been replaced with a new health Care system, el Instituto Nacional de Salud para el Bienestar (INSABI), which has the following requirements:

• Be a person located inside Mexico

• Not be part of the social security system (IMSS or ISSSTE)

• Present one of the following: Mexican Voter ID card, CURP or birth certificate

As an expat, in order to obtain a CURP,  you must be a Temporal or Permanente resident of Mexico.

Retire Early Lifestyle: Initially, did you go home to Canada to get certain health care items taken care of and then go back to Mexico to live?

Jim McLeod: No, we have not gone back to Ontario for any health care. Having said that, there is one medication that Kathy needs, that she is allergic to here in Mexico, so she gets a prescription filled in Ontario whenever we return and we pay for it out-of-pocket. Continue Reading…

The Art and Math of RRIF withdrawals

Posted By |
myownadvisor

By Mark Seed, myownadvisor

Special to Financial Independence Hub

Unlike some financial experts, I’ve long since touted the merits of making RRSP withdrawals before waiting until the age of 71 for RRSP>RRIF conversion to take effect, when minimum RRIF withdrawal rates kick in.

I’m hardly 70. Not even close (since I just left my 40s)!

Rather, I’ve learned these benefits from others:

While personal finance and investing is always personal, I believe, being forced into managing your portfolio in any way is usually the wrong decision. Successful folks have told me so.

Here are two key experiences from others to share related to RRSP/RRIF withdrawals:

  • Unless retirees have very high taxable income already; lots of assets (in the millions) whereby they already stomach paying higher taxes most retirees or semi-retirees should at least consider some RRSP withdrawals in their retirement years to help “smooth out taxation.”
  • Beyond RRSP/RRIF income, should any retiree have a workplace pension and/or who may have other significant income streams in retirement (like non-registered investments that generate healthy dividends) they may find themselves in a higher tax bracket as they age into their 70s and 80s, via forced RRIF withdrawals, potentially losing out on government Old Age Security (OAS) benefits.

One of the inspirations for this week’s theme was from this MoneySense article:

I thought the punchline was spot on for this 80-something (Amy), who has a wealth/tax problem to navigate now:

“In summary, Amy, there is no magic bullet to help with your large RRIF account. You will pay a high rate of tax during your life or upon your death on those withdrawals.”

While any retiree’s cashflow objectives will differ, unless you’re in the extreme minority, most successful early and traditional retirees with whom I chat and engage seem to plan WAY ahead on such matters whereby they consistently choose to make some RRSP withdrawals well ahead of when there are forced to.

In making financial decisions before they are forced to, I’ve observed four key benefits: Continue Reading…

Are split-shares safe for building a dividend portfolio?

Posted By |

By Bob Lai, Tawcan

Special to Financial Independence Hub

Image Courtesy Tawcan/unsplash

Lately, I have received many emails and questions on Twitter [now X] asking me about split-shares, or split-share corporations (split corp for short).

Specifically, are split-shares safe for building a dividend portfolio? Some readers also asked why I haven’t included split-shares like DFN.TO and LBS.TO in the best Canadian dividend stocks list or the best Canadian dividend ETF list.

With an initial look, these split-shares are extremely enticing and attractive due to the very high yields. Are there risks associated with these split-share corporations? Should one build an investment portfolio with them to generate dividend income?

List of Canadian split-shares

Before we dive deeper into the details, here is a list of available Canadian split shares I can find, the share price, and the yield percentage. CanadianPreferredShares.ca keeps an updated list of all Canadian split-share corporations issued in the Canadian market.

Ticker Fund Name Price Yield %
BK.TO Canadian Banc Corp. $13.08 15.19%
DF.TO Dividend 15 Split Corp. II $4.03 0% (suspended)
DFN.TO Dividend 15 Split Corp. $6.43 17.94%
DGS.TO Dividend Growth Split Corp. $5.08 23.39%
ENS.TO E Split Corp. $14.59 10.60%
FFN.TO North America Financial 15 Split Corp. $4.00 0% (suspended)
FTN.TO Financial 15 Split Corp. $8.85 16.83%
GDV.TO Global Dividend Growth Split Corp. $9.50 12.45%
LBS.TO Life & Banc Split Corp. $8.70 13.59%
LCS.TO Brompton Lifeco Split Corps. $6.40 14.06%
LFE.TO Canadian Life Companies Split Corp. $3.70 0% (suspended)
OSP.TO Brompton Oil Split Corp. $4.19 0% (suspended)
PDV.TO Prime Dividend Corp. $5.76 12.63%
PIC.A Premium Income Corporation $4.90 16.59%
PRM.TO Big Pharma Split Corp. $14.50 8.50%
PWI.TO Sustainable Power & Infrastructure Split Corp. $6.28 12.74%
RS.TO Real Estate Split Corp. $14.25 10.96%
SBC.TO Brompton Split Banc Corp. $9.87 12.12%
SBN.TO S Split Corp. $2.78 0% (suspended)
TXT.UN Top 10 Split Trust $2.70 0% (suspended)
WFS.TO World Financial Split Corp. $1.40 0% (suspended)
XTD.TO TDb Split Corp. $4.05 0% (suspended)
YCM.TO Commerce Split Corp. $1.39 0% (suspended)

As you can see from the table, most of these split-shares provide a 10% or higher distribution yield. This is extremely attractive if you’re seeking regular investment income.

You will also notice that some split-shares have suspended their distributions. This is due to how split-shares are structured, distributions will only get paid out if the Unit Net Asset Value (NAV) is over a certain threshold. More on that later …

What are split-shares? 

So what are split-shares or split corps? Unfortunately, not many investors are familiar with them, due to how they are set up. I certainly had to do a bit of research to understand the details.

Within the split-share corporations, two classes of shares are available: Preferred Shares and Class A or capital shares. Investors can choose to hold both types of shares or just one. These two different kinds of shares are traded on the stock exchanges and can be purchased from online brokers like Questrade or National Bank Discount Brokerage.

Preferred Shares are designed for the more conservative investors who seek regular monthly distributions. Preferred shares typically have a finite term (e.g. 5 years but usually get renewed) and have a claim on fund distributions first. No capital gains or losses from the underlying holdings will impact preferred shares. In other words, the preferred shares are structured like a fixed-income vehicle.

Similar to how other preferred share stocks work, while distributions are quite safe, there’s usually a limited capital appreciation potential. There’s no management expense ratio (MER) associated with these split share preferred shares as fees are paid by the Class A shares. Continue Reading…

Navigating Short, Medium, and Long-Duration Fixed Income in 2024

Posted By |
Image courtesy Harvest ETFs

By Ambrose O’Callaghan, Harvest ETFs

(Sponsor Content)

Fixed-income securities are financial instruments that have defined terms between a borrower, or issuer, and a lender, or investor. Bonds are typically issued by a government, corporation, federal agency, or other organization. These financial instruments are released so that the issuing institution can raise capital. The borrower agrees to pay interest on the debt security in exchange for the capital that is raised.

The maturity refers to the date when a bond’s principal is paid with interest to the investor. In the modern era, interest rates tend to fluctuate over long periods of time. Because of this, shorter-duration bonds have predictable rates. The longer investors go down the maturity spectrum, the more volatility they will have to contend with in the realm of interest rates.

On January 16, 2024, Harvest ETFs unveiled its full fixed income suite. That means investors will have access to ETFs on the full maturity spectrum: short, intermediate, and long-duration bonds.

In this piece, I want to explore the qualities, benefits, and potential drawbacks of short-term, medium-term, and long-term bonds. Let’s dive in.

The two types of short-term bonds for investors chasing security

Short-term fixed income tends to refer to maturities that are less than three years. In the realm of short-term fixed income, we should talk about the relationship between money market and short-term bonds.

Money market securities are issued by governments, financial institutions, and large corporations as promises to repay debts, generally, in one year or less. These fixed-income vehicles are considered very secure because of their short maturities and extremely secure when issued by trusted issuers, like the U.S. and Canadian. federal governments. They are often targeted during periods of high volatility. Predictably, money market securities offer lower returns when compared to their higher-duration counterparts due to the liquidity of the money market.

Short-term bonds do have a lot in common with money market securities. A bond is issued by a government or corporate entity as a promise to pay back the principal and interest to the investor. When you purchase a bond, you provide the issuer a loan for a set duration. Like money market securities, short-term bonds typically offer predictable, low-risk income.

The Harvest Canadian T-Bill ETF (TBIL:TSX) , a money market fund, was launched on January 16, 2024. This ETF is designed as a low-risk cash vehicle that pays competitive interest income that comes from investing in Treasury Billds (“T-Bills”) issued by the Government of Canada. It provides a simple and straightforward solution for investors who want to hold a percentage of their portfolio in a cash proxy.

Medium-term bonds and their influence on the broader market

When we are talking about intermediate-term bonds, we are typically talking about fixed income vehicles in the 4-10 year maturity range. Indeed, the yield on a 10-year Treasury is often used by analysts as a benchmark that guides other interest rate measures, like mortgage rates. Moreover, as yields increase on intermediate-term bonds so too will the interest rates on longer duration bonds.

Recently, Harvest ETFs portfolio manager, Mike Dragosits, sat down to explore the maturity spectrum and our two new ETFs. You can watch his expert commentary here.

US Treasuries avoided an annual loss in 2023 as bonds rallied in the fourth quarter. These gains were powered by expectations that the US Federal Reserve (the “Fed”) was done with its interest rate tightening cycle. The prevailing wisdom in the investing community is that the Fed will look to pursue at least a handful of rate cuts in 2024. Continue Reading…

Mastering the Art of Podcast Audience Building: A Step-by-Step Guide

Posted By |
Image courtesy Canada’s Podcast/unsplash royalty free

By Philip Bliss

Special to Financial Independence Hub

Podcasting has become an influential medium for sharing stories, ideas, and expertise. However, creating a successful podcast goes beyond just recording and publishing episodes; it involves building a dedicated audience that will eagerly tune in to your content. In this guide, we’ll break down the process of podcast audience building into manageable tasks, provide realistic timelines, and offer essential summary information to help you maximize your podcast’s reach and impact.

Task 1: Define Your Niche and Target Audience (Week 1-2)

Before diving into podcast production, take the time to identify your niche and target audience. Understanding your audience’s interests and preferences will guide your content creation and set the foundation for effective audience engagement. Use tools like surveys, social media polls, and analytics to gather insights. Once you have a clear understanding, create a listener persona to help tailor your content to their needs.

Task 2: Develop a Consistent Content Schedule (Week 3-4)

Consistency is key in podcasting. Establish a realistic and sustainable content schedule, whether it’s weekly, bi-weekly, or monthly. Stick to a reliable release day and time to build anticipation among your audience. Consistency not only helps retain existing listeners but also attracts new ones who appreciate a reliable source of valuable content.

Task 3: Optimize Your Podcast for Search (Week 5-6)

Boost your podcast’s discoverability by optimizing it for search engines and podcast directories. Craft a compelling podcast title, write a detailed description using relevant keywords, and choose an eye-catching podcast cover art. Submit your podcast to major directories like Apple Podcasts, Spotify, and Google Podcasts. A well-optimized podcast increases the likelihood of reaching new listeners organically.

Task 4: Leverage Social Media Platforms (Week 7-8)

Create a robust social media strategy to promote your podcast across various platforms. Establish a presence on platforms such as Instagram, X [formerly Twitter], Facebook, and LinkedIn. Share engaging content, such as episode highlights, behind-the-scenes glimpses, and interactive polls. Utilize relevant hashtags and collaborate with influencers or other podcasters to expand your reach.

Image courtesy Canada’s Podcast/unsplash royalty free

Task 5: Engage with Your Audience (Week 9-10)

Building a podcast audience is not just about numbers; it’s about fostering a community. Actively engage with your audience by responding to comments, emails, and social media messages. Consider creating a listener feedback segment in your episodes to encourage participation. The more connected your audience feels, the more likely they are to become loyal, long-term listeners.

Task 6: Implement Guest Collaborations (Week 11-12)

Invite relevant guests to your podcast to bring diversity and expertise to your content. Collaborating with influencers or experts in your niche can introduce your podcast to their existing audience, expanding your reach. Plan collaborations strategically to align with your content and appeal to both your guest’s followers and your own. Continue Reading…