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 avoid the 7 Biggest Mistakes that Entrepreneurs Make

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How to stop comparing yourself to Others: 12 Tips

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What is one tip to help stop comparing yourself to others?

To help you stop comparing yourself to others, we asked personal coaches and thought leaders this question for their best advice. From practicing gratitude to asking yourself questions that challenge you, there are several things you may put into practice to help you stop comparing yourself to others.

Here are 12 tips to stop comparing yourself to others:

  • Practice Gratitude

  • Look Back and Count Your Gains

  • Admire Your Differences Instead

  • Override Your Dissatisfaction With Positive Affirmations

  • Celebrate Others

  • Take a Break from Social Media

  • Remember Everyone Has Their Challenges

  • Identify and Celebrate Your Own Strengths

  • Practise Meditation To Stay Grounded in Yourself

  • Focus on Your Own Personal Growth

  • Choose To Practise Good Values

Ask Yourself Questions That Challenge You

Practice Gratitude

When you regularly practice gratitude, you don’t have time to focus on what others have. You’re not inclined to compare yourself to them or think about what you lack. With a gratitude mindset, you’re focused on what you have, and how appreciative you are of having it. Gratitude resets your mind and redirects your energy towards building up more of what you already have rather than trying to catch up to someone else. — Chris Abrams, Abrams Insurance Solutions

Look Back and Count your Gains

It’s easier said than done, but try thinking about or even making a list of the things you used to want that you have or are closer to having now. For example, maybe 10 years ago you wanted to be moving up in your career and getting closer to buying a house. Rather than beating yourself up about what your friend or that person on Instagram is doing, ask yourself what you’ve already achieved that a past version of you would be proud of, or what you’ve learned that a younger version of you didn’t understand.

When you frame challenges and comparisons this way, you’re not only able to see your strengths and what you’re capable of much more clearly, but you’re also setting yourself up to be a better version of yourself as opposed to a better version of someone else. — Gigi Ji, KOKOLU

Admire your Differences instead

When you compare yourself to others, you mentally put yourself below them. You convince yourself that you don’t have something that someone else does have and you take your power away. But, if you admire your differences instead of comparing them, you put positive energy out into the world and that gives you the power.

The power to appreciate what you have, the power to learn from what others have, and the power to choose how you view the world and yourself in it. It’s easier to be positive than to be negative, so take the easy and healthy route and admire someone instead of comparing yourself to them. –– Staci Brinkman, Sips by

Override your Dissatisfaction with Positive Affirmations

Drown out the comparisons with positive affirmations. The moment that you start to compare yourself to someone, think of something that you do well and tell yourself that instead. It’s a simple trick, but over time, your mind gets the idea and will stop seeing yourself as less than, and instead as equal to, and the comparisons will fall away. It will take time, and it feels funny at first, but it’s a reminder that we’re our harshest critic, instead of our greatest support, and the latter takes practice. — Tony Staehelin, Benable

Celebrate Others

Many people do compare themselves to others these days and that tends to make them more self-absorbed. One way to stop that attitude is to celebrate others’ achievements. You can avoid the comparison syndrome by focusing on other people and learning to be happy for them in their moments. This can take some practice. It may not feel good at first because many are motivated to draw attention to themselves. However, you will care less about where you stand in society the more you learn to focus on other people. Focusing on others will make you happier and then the comparisons don’t have as much power over you. — Bruce Tasios, Tasios Orthodontics

Take a Break from Social Media

My top tip to stop comparing yourself to others is to take a break from social media. Social media is likely only one place you compare yourself to others, but it’s a big one. If you scroll on your phone for a few hours a day and in that time, feel bad about yourself, it’s time to take a break. Disconnect from social media for a bit and focus on yourself! If you choose to get back on social media, unfollow anyone who makes you feel bad about yourself. — Macy Sarbacker, Macy Michelle

Remember Everyone has their Challenges

Comparing yourself to others is fruitless because everyone has their own set of challenges. These challenges are often not visible to those on the outside. Individuals can never hope to know the struggles of others by comparing themselves to the success they see on the surface.

Wanting what others have lacks perspective because we often do not know what other people are carrying with them. A successful executive may appear to have a wealthy lifestyle when in reality they have the misfortune of tumultuous family life or chronic illness. Comparing yourself to others is pointless when you are unaware of what others are truly dealing with. — Katy Carrigan, Goody Continue Reading…

Stop checking your portfolio

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We’re halfway through 2022 and the year has not been kind to investors, to say the least. Global stock markets are suffering their worst prolonged losses in recent memory. The S&P 500 is down about 18.5%, international stocks are down about 17%, and emerging market stocks are down about 15%. Domestic stocks have fared better, but the broad Canadian market is still down about 4% this year.

Meanwhile, bonds have not been a safe haven as rising interest rates pushed bond prices down. A broad Canadian bond index is down almost 13% this year, while short-term bonds are also down about 5.5%.

What’s an investor to do?

For starters, stop checking your portfolio so often. Investors who focus too much on short-term performance tend to react too negatively to recent losses, at the expense of long-term benefits. This phenomenon is known as myopic loss aversion:

“A large-scale field experiment has shown that individuals who receive information about investment performance too frequently tend to underinvest in riskier assets, losing out on the potential for better long-term gains (Larson et al., 2016).”

Loss aversion is a cognitive bias – the idea that a loss is psychologically more painful than the pleasure of an equivalent gain.

Think of the your portfolio returns over the past three years (2019-2021). It felt good to see your investments increase by double-digits. Here are the returns for Vanguard’s Balanced ETF (VBAL) during that time:

  • 2019 – 14.91%
  • 2020 – 10.24%
  • 2021 – 10.27%

Fast forward to 2022 and VBAL is down 10% on the year. Loss aversion tells us the pain of these losses is felt twice as powerfully as the pleasure of the previous years’ gains.

Myopic loss aversion fails to consider the bigger picture

With myopic loss aversion, we focus too narrowly on specific investments without taking into account the bigger picture. You’ve experienced this if you’ve ever checked your portfolio a short time after a recent purchase and cursed your luck if the investment is down.

Professor John List was a recent guest on the Rational Reminder podcast and he co-authored a paper on myopic loss aversion. The paper found that, “professional traders who receive infrequent price information invest 33% more in risky assets, yielding profits that are 53% higher, compared to traders who receive frequent price information.”

When asked how often investors should check their portfolio, List said, “as rarely as possible”:

“I would say once every three, six months is fine. But the reason why I don’t want you to look at your portfolio is, because when you do and you see losses, even though they’re paper losses. You say, “My gosh, that hurts.” And you’re more likely to move your portfolio out of risky assets and into less risky assets. And as we all know, just look at the data. The data over long periods of time, that’s the equity premium puzzle, is that you get much higher returns, if you’re willing to bear some of that risk. Now, if you look at your account a lot and you have myopic loss of version, you’ll be much less likely to bear that risk. So, you’ll move out and you’ll be in inferior investments.”

This applies to both novice and experience investors. I coach clients regularly on the benefits of sticking to their investment strategy and ignoring short-term market fluctuations. But it’s hard when the daily news headlines are screaming in your face about how bad the market is doing and why it’s only going to get worse.

My worst moment was during the March 2020 crash. I had just quit my job three months before, and my investments were down 34% in a short period of time. It was a rough time when even I was questioning what to do. It didn’t help that I had no RRSP or TFSA contribution room – so I couldn’t even “buy the dip” to make myself feel better.

Related: Exactly How I Invest My Own Money

What did I do? I stopped checking my portfolio. I had no reason to log-in anyway, since I wasn’t making regular contributions. I reminded myself that my investments were long-term in nature, and that markets go up most of the time. Periodic declines are the price of admission for risky assets like stocks. Continue Reading…

7 simple ways to pay off Debt in Retirement

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By Lyle Solomon

Special to the Financial Independence Hub

Carrying debt into retirement can ruin your golden days. You will most likely have a limited income after retirement. Though you can boost your Social Security income by taking the proper steps, your spending may rise yearly due to inflation, causing your budget to collapse. The burden of debt and the high expense of medical bills can wreck your retirement.

According to a CNBC report, the total debt burden of America’s senior citizens has increased by 543 per cent in the last two decades. 70% of baby boomers are in credit-card debt and are unsure how they can get out of it. It is recommended to pay off your obligations as soon as possible and enjoy your golden years. Repaying your debts during retirement is always a good idea. But how will you go about it? Here are some of the ways to repay your debt in retirement so that you can enjoy your golden years.

1.) Sort your debts by priority

The first stage in debt management in retirement is prioritizing which bills to pay off first. So, make a list of all your loans, including their interest rates and remaining balances. Unsecured debts, such as credit cards, typically carry high-interest rates because no collateral is required. I recommend that you begin paying off loans with the highest interest rates first, which will help you save money in the long term. Furthermore, unlike student loans or mortgages, you cannot deduct interest payments from your tax returns on unsecured debts.

It is preferable to pay off unsecured obligations first, as they are not usually tax-deductible.

2.) Seek professional debt assistance

Are you drowning in high-interest unsecured debt? If this is the case, you may be working hard to repay your obligations but cannot do so due to the constant high-interest rates. In that case, you can seek professional assistance by contacting a reliable debt relief business. The company’s debt advisers will examine your debts and develop a reasonable payback plan based on their findings. You can enroll in a credit card consolidation process to repay your huge credit-card debt. Settling debts can be possible under the guidance of a professional debt relief company. They will  negotiate with your creditors to lower the excessive interest rates. Once your creditors have agreed, you can begin making single monthly payments for all of your debts. In this manner, you may pay off your unsecured obligations without worrying about coordinating multiple payments. You can also save money on interest payments because your debts’ interest rates will likely be reduced.

3.) Examine your budget again

Hopefully, you have a budget to keep a proper spending plan and preserve money for your financial well-being. The more you put into your monthly loan payments, the faster you’ll be debt-free. As a result, you must save more to increase your monthly loan payments.

To do so, go over your budget and identify places where you may decrease costs and save money. You can save money on things like eating out, entertainment, cable TV subscriptions, etc. You can save a significant amount of money to put towards your monthly debt payments.

4.) Follow your preferred debt repayment plan

You can use any debt payback method, debt snowball or avalanche. The debt snowball strategy requires prioritizing the debt with the lowest outstanding sum first. At the same time, you must make minimum payments on all of your other loans. After you have paid off that loan, you must focus on the debt with the second smallest outstanding balance, and so on. Continue Reading…

Retired Money: Rising rates make annuities more tempting for Retirees

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My latest MoneySense Retired Money column looks at whether the multiple interest rate hikes of 2022 means its time for retirees to start adding annuities to their retirement-income product mix. You can find the full column by clicking on the highlighted headline here: Rising rates are good news for near-retirees seeking longevity insurance.

The Bank of Canada has now hiked rates twice by 50 basis points, most recently on June 1, 2022.  That’s good for GIC investors, as we covered in our recent column on the alleged death of bonds, but it’s also  welcome news for retirees seeking longevity insurance.

As retired actuary Fred Vettese recently wrote, retirees may start to be tempted to implement his suggested guideline of converting about 30% of investment portfolios into annuities. As for the timing, Vettese said it is “certainly not now: but it could be sooner than you think.” He guesses the optimal time to commit to them is around May 2023, just under a year from now.

After the June rate hikes, I asked CANNEX Financial Exchanges Ltd. to generate life annuity quotes for 65- and 70-year old males and females on $100,000 and $250,000 capital. The article provides the option of registered annuities and prescribed annuities for taxable portfolios. It also passes along the opinion of annuity expert Rona Birenbaum that she greatly prefers prescribed annuities because of the superior after-tax income. Of course, many retirees may only have registered assets to draw on: in RRSP/RRIFss and/or TFSAs.

For a 65-year old male investing $100,000 early in June 2022, with a 10-year guarantee period in a prescribed (non-registered) Single Life annuity, monthly income ranged from a high of $548  at Desjardins Financial Security with a cluster at major bank and life insurance companies between $538 and $542. (figure rounded). Comparable payouts on $250,000 ranged from $1299 to $1,390. Because of their greater longevity, 65-year old females received slightly less: ranging from around $500/month to a high of $518, and for the $250,000 version from $1238 to $1319.

Here’s what Cannex provides for comparable registered annuities (held in RRSPs):

For a 65-year old male (born in 1957), $100,000 in a Single Life annuity nets you between $551 and $571 per month, depending on supplier; $250,000 generates between $1,399 and $1,461 a month. For 70-year old males (born 1952), comparables are $625 to $640/month and $1,578 to $1,634 a month. Continue Reading…