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.

Should you Buy a Business instead of Starting one?

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Photo by Amy Hirschi on Unsplash

By Devin Partida

Special to Financial Independence Hub

For entrepreneurs, the path to success often begins with the critical decision of whether to buy a business or start one from scratch. The right choice boils down to a few key preferences, such as the level of risk you’re willing to take and your long-term goal of achieving financial independence. Identifying these factors is key to understanding which option is ideal for you.

The Blank Canvas of a New Business

Building a business from the ground up is the ultimate exercise of creative control. You formulate the business model, create the brand identity and hire the team. For opportunistic professionals, this flexibility allows you to jump on market openings the moment you spot them. The level of operational and strategic autonomy you have when starting a business is far greater than when acquiring one.

However, that creative freedom does come with a unique set of risks. In fact, roughly 50% of new businesses fail within their first five years. This staggering statistic underscores the difficulty of building consistent cash flow and securing a customer base while simultaneously proving your business model.

More likely than not, starting a business means navigating years of financial losses before turning a meaningful profit. If you’re the founder, your personal finances are likely to absorb the initial shocks.

Buying a Business means acquiring Immediate Momentum

Taking over an established business is essentially an investment in momentum. You get instant access to existing cash flow, a customer base and a working business model. The costly trial-and-error phase is completely mitigated, and you have the privilege of building off the previous owners’ inertia.

Yet, acquiring an established business often comes at a considerable cost. Acquisitions require significant seller financing or up-front capital, which often entails complex bank loan arrangements. While it is the less risky option, the initial investment will likely be more costly than building a new business on your own terms.

Additionally, buyers risk inheriting unseen liabilities or a toxic workplace culture. When you buy an existing business, you’re simultaneously purchasing someone else’s success and unaddressed problems.

Key Factors to Consider before making a Decision

Making the right decision requires a meticulous navigation of your preferences and resources, including:

  • Financial resources: Startups can allow you to develop your business at a pace that aligns with your financial reality. However, if you have substantial capital to invest, buying a business can generate far quicker returns, directly accelerating your timeline to Financial Independence.
  • Risk tolerance: Starting a new company is statistically risky, requiring a high tolerance for volatility and economic uncertainty. While taking ownership of a working enterprise is more predictable, approaching it without adequate knowledge brings considerable financial dangers.
  • Industry expertise: Building a successful business requires deep market expertise and an aptitude for strategy. Alternatively, taking over a stable operation allows you to rely on existing teams while you learn.
  • Desired level of control: Founders typically want a blank canvas to execute a specific vision. Buyers must be willing to adapt to existing workflows and culture.

Essential Due Diligence Steps before Finalizing an Acquisition

Before officially acquiring a business, entrepreneurs are advised to conduct a thorough evaluation of the company and develop a strong understanding of its financial and operational standing.

Financial Verification

Even if a company’s overall revenue is healthy, it doesn’t showcase the full financial reality of owning it. Before making a purchase, you must review several years of tax returns and bank statements to understand the business’s financial history. Understanding the Seller’s Discretionary Earnings — which is the calculation of an owner’s entire financial benefit — is also nonnegotiable. Continue Reading…

Rising or Falling Markets? Roll with it!

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Image Outcome/Shutterstock

 

Luck’ll come and then slip away
You’ve gotta move, bring it back to stay
You just roll with it, baby

— Roll with It, by Steve Winwood

 

 

 

 

By Noah Solomon

Special to Financial Independence Hub

There is never any shortage of pundits opining on what could make markets rise or fall. Tragically, the greatest cheerleading has tended to occur when markets were at their riskiest and the loudest fearmongering has tended to occur when markets have harboured the greatest opportunity. However, this does not change the fact that anything can happen at any time:  markets have and always will continue to periodically present investors with dynamically evolving combinations of risk and reward.

To never suffer losses is an unrealistic objective for those who wish to receive a satisfactory return on their investments. Rather, it is far more efficient (and financially rewarding) to roll with it: which entails adapting to changes to (1) maximize gains when markets offer above-average returns with relatively low risk and (2) to minimize losses when markets offer below average returns with above average risk.

This month, I present a framework for investors to dynamically manage their portfolios to meaningfully participate in rising markets while limiting losses in bear markets.

The Sine Qua Non of Successful Investing

If 100% of your portfolio is sitting in cash, then it is impossible for you to lose money (at least in non-inflation-adjusted terms). However, if markets rise, you will miss the proverbial boat and suffer significant opportunity loss. At the other end of the spectrum, if your portfolio is 100% allocated to equities, while you won’t miss the party if markets advance, you will most certainly suffer substantial losses in the event of a bear market.

The Latin phrase sine qua non means “without which not,” which refers to something that is a necessary or indispensable requirement. The sine qua non of successful long-term investing entails constantly assessing and reassessing the magnitude of potential losses relative to potential gains. When downside risks are elevated and potential gains are muted, you should hold a more conservative portfolio. Conversely, when the risk of loss is eclipsed by potential gains, it is prudent to take more risks with your investments.

Theory, Practice, and Yogi Berra

Baseball legend Yogi Berra stated, “In theory, there is no difference between theory and practice. In practice, there is.”

If you dial up your risk profile when the odds favour doing so and take some chips off the table when the probabilities dictate as such, your long-term performance will inevitably be well above average: so far so good. Unfortunately, accurately assessing and reassessing these probabilities as they ebb and flow over time is no easy feat.

You can’t Predict Behaviour

First the bad news: I don’t believe there is any accurate way to calculate the relative magnitude of upside vs. downside risk over the short term … and by the short term, I mean periods of at least one to two years! One need only to observe markets over the past three decades to appreciate that investors can persist in irrational behaviour for longer periods and with greater voracity than might seem possible.

In hindsight, most investors should have exercised prudence long before tech stocks reached their peak in early 2000 or real estate sung its swan song in 2008” but they didn’t. Similarly, they should have been scooping up bargains en masse either before, during, or not long after markets bottomed in early 2003 and March 2009: but they didn’t.

Excesses and financial aberrations cannot be explained by classic financial theory. Rather, their root lies in human behavioural biases and emotions, which can prove sufficiently powerful to propel asset prices to unrealistically optimistic and pessimistic levels. Greed and fear are impossible to precisely gauge or time and are arguably the largest determinants of prices over the short term. Given these facts, attempting to assess the relative risk of loss vs. opportunity cost over shorter horizons is an exercise in futility.

Valuations are a Proxy for the Margin of Safety

Valuations serve as a proxy for the margin of safety that is embedded in asset prices, and by extension for how vulnerable prices are to delivering subpar or even negative average annualized returns over the next 5-7 years.

Market Responses to Various Environments by Valuation Level

  • When valuations stand near the high end of their historical range, even strong economic and earnings growth may fail to result in higher-than-average annualized returns over the next several years, while anything short of such an environment is more likely to result in anemic performance or even losses.
  • When valuations stand near the middle of their historical range, prices are most likely to track economic conditions and profit growth.
  • When valuations reside near the bottom of their historical range, average or even above-average returns can persist even in the face of subpar economic conditions and/or profit growth, while more favourable or even average conditions are likely to produce strong gains.

Risk and Reward: Probability Distribution by Valuation

 

As valuations increase, the probability distribution shifts to the left, indicating a lower likelihood of gains and a higher probability of losses. Similarly, a decline in valuations results in a rightward shift in the distribution, portending an increased chance of gains accompanied by a lower risk of losses. At extremes, when markets are priced to perfection, there is almost no amount of good news that can prevent subpar returns over the next five to seven years, and when they are priced for Armageddon, strong returns are likely to ensue over the same timeframe in all but the most cataclysmic circumstances. Continue Reading…

IMAX: A World of Opportunity for International Equity ETFs

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Image source: Hamilton ETFs

By Hamilton ETFs

(Sponsor Blog)

International equities continue to be in focus. As global market leadership broadens, Canadian investors are paying closer attention to geographic diversification and opportunities beyond North America. International stocks, which outperformed the U.S. stock market in 2025, have continued to attract attention as the geopolitical landscape evolves.

So far this year, Canadians have poured $22.8 billion into international equity ETFs, according to National Bank of Canada Capital Markets[1]. In contrast, they directed just $13.4 billion to Canadian equity funds and $11.3 billion to U.S. equity funds, over the same period.

Recent market performance has helped reinforce this trend. Since December 31, 2024, the MSCI EAFE Index rallied 40.5% compared to 24.6% for the S&P 500[2].

This combination of improved relative performance and more attractive valuations has helped bring international equities back into focus for investors looking to broaden exposure beyond North America. This shift has also been reflected in market commentary. Yardeni Research began recommending a “Go Global” approach in December 2025, after more than a decade of favouring a “Stay Home” allocation. “So far this year, the U.S. has been among the laggards in the global performance derby,” he wrote in a research note published April 27, 2026.

Canadian investors have plenty of options for accessing international equity exposure. Yet for those seeking attractive, tax-efficient monthly income from developed markets outside North America, the available solutions have been far more limited. That’s why we’re closing that gap with the Hamilton International Equity YIELD MAXIMIZER™ ETF (IMAX).

Introducing IMAX

IMAX is designed for investors seeking diversified international equity exposure paired with attractive, tax-efficient monthly income. To achieve this, IMAX holds ETFs that provide exposure to both the MSCI EAFE Index and MSCI EAFE IMI Index and overlays a covered call strategy on a portion of the portfolio. The MSCI EAFE Index captures developed markets outside the U.S. and Canada.

International and global covered call ETFs remain relatively limited in Canada. The few available strategies often have significant geographic concentrations, such as Europe or the U.S., or provide exposure to a narrower group of companies through concentrated portfolios. By contrast, IMAX offers broad developed market exposure specifically outside North America. Through this approach, investors gain exposure to more than 2,500 large-, mid- and small-cap equities across markets including Japan, Britain, Switzerland, France, Germany and Australia.

To help generate monthly income, IMAX employs an actively managed covered call strategy overseen by our experienced options team. Like the other ETFs in our YIELD MAXIMIZER™ suite, IMAX utilizes an income first approach that primarily writes at-the-money call options in an effort to generate higher option premiums to provide enhanced cash flow potential. The strategy also maintains a flexible coverage ratio, allowing the portfolio management team to balance monthly income generation with long-term capital appreciation potential.

Importantly, IMAX helps provide tax efficient income, as options premiums are generally taxed as capital gains and/or return of capital.

Going Global with IMAX

Diversification is one of the most important principles of portfolio construction, and it applies not only across asset classes (stocks, bonds, commodities etc.), sectors and market capitalizations, but also regions. Continue Reading…

Vanguard Canada launches two new Dividend ETFs

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ETF TSX Symbol Management Fee1
Vanguard Developed ex-North America Dividend Appreciation ETF VIGG 0.28%
Vanguard U.S. High Dividend Yield Index ETF (CAD-Hedged) VUDH 0.28%

On Monday (June 1),  Vanguard Investments Canada Inc. announced two new income-focused Dividend ETFs. The same day, they started trading on the Toronto Stock Exchange (TSX):  Vanguard Developed ex-North America Dividend Appreciation Index ETF (TSX: VIGG) and Vanguard U.S. High Dividend Yield Index ETF (CAD-Hedged) (TSX: VUDH).

The two new funds are focused on high-dividend yield and dividend growth respectively, said Sal D’Angelo, Head of Product and Marketing, Vanguard Canada, in a press release.   VIGG tracks  a market cap-weighted index focused on companies located in developed markets excluding Canada and the U.S., with a history of increasing dividends over time.  Management fee is 0.28%. The Vanguard fact sheet describes VIGG as being medium risk.

VUDH tracks a market cap-weighted index focused on common stocks of U.S. companies with higher-than-average dividend yields, hedged to Canadian dollars; management fee is 0.28%. It is also rated medium risk.

In March, Vanguard also launched the Vanguard U.S. High Dividend Yield Index ETF  (VUDV, TSX).

In a backgrounder released with the ETFs, Vanguard said Dividend Income ETFs account for $42 billion or 5.4% of total ETF assets in the Canadian market. They include passive funds, fully active mandates and covered call options.

Dividend-focused ETFs have historically shown resilience across many market environments, the document says: “They can also provide stability in uncertain and inflationary environments through reliable cash flows which can partially offset inflation. The companies included in these portfolios tend to be more defensive during periods of market volatility, supported by steady earnings and stronger balance sheets.”

The backgrounder focuses on two main types of Dividend ETFs: those that generate high Dividend Yield, and those that grow their Dividends over time.

High-Dividend Yield ETFs

Vanguard says High-Dividend Yield ETFs are best suited for “investors looking for more immediate income including retirees drawing from their portfolios or those supplementing current cash flow.”  Higher starting yields provide more immediate income as the portfolio invests in mature, stable and value-oriented companies, with a higher allocation to sectors like energy, utilities and financials. Continue Reading…

Why Secular Trends beat Market Indicators

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Forget about market indicators–picking up on secular trends is a much better way to spot top stocks

TSInetwork.ca

Investors sometimes ask how I learned about investing and the stock market. The answer is that I started early, read a lot, and learned how to write so that readers understand what I’m saying.

I got started as a teenager, with a part-time job for an investment writer. My job was to gather and organize information on public companies and the economy. This called for a lot of reading, but I was always an avid reader.

Learning how to write easy-to-read material is also a plus. After all, you have to understand information to be able to explain it to others.

During my first full-time decade in the investing business, I learned that many factors influence market trends. Naturally, I tried to learn about or create market indicators that could tell me how these factors could help my investing. Gradually it dawned on me that most market indicators turn out to reflect the fact that random events tend to occur in bunches.

Some of these bunches are big enough and last long enough that you can mistake them for sure signs that the market is headed in a particular direction.

The four-year U.S. Presidential Election indicator is different. It’s the most valuable market indicator I know of because it takes advantage of recurring cycles in the U.S. Presidential Election cycle. It’s still far from perfect. However, you might say that every few years, it gives investors a helpful nudge in the right direction.

The four-year rule is of little interest to many investors, particularly those who are new to the game. They lack the patience for it. Over the years, I’ve talked to many young investors who seem more interested in short-term trading than in our long-term Successful Investor approach.

From their point of view, they don’t need to obsess about risk because they don’t have enough investment capital to worry about losses. They say they’ll switch to our approach when they’ve made a windfall in something that works out as they hoped. When they have more money to risk, they’ll be more careful with it.

The trouble is that since they disregard risk, they may never acquire the gains they hope for. All too often, they get sucked into one bad investment after another. These include short-term trading (particularly in so-called meme stocks), dabbling in stock options or IPOs or SPACs or cryptocurrencies or NFTs. Dabblers fail to see that the big gains in these opportunities go to those who sell them to the investing public.

Secular trends beat market indicators

In the 1980s, I lost interest in market indicators and began to focus on secular trends. These are economic trends that last longer (sometimes much longer) than the typical prosperity/recession cycle.

Back then, for instance, goldbugs were sure that federal deficit spending was responsible for the high inflation of the period. It seemed to me that they were paying too little attention to the economic changes going on, particularly the impact of the baby boomers’ entry into the workforce. When employers hired boomers, it raised costs, since these newcomers needed training (particularly women who were going to work in higher numbers than previously). Continue Reading…