Debt & Frugality

As Didi says in the novel (Findependence Day), “There’s no point climbing the Tower of Wealth when you’re still mired in the basement of debt.” If you owe credit-card debt still charging an usurous 20% per annum, forget about building wealth: focus on eliminating that debt. And once done, focus on paying off your mortgage. As Theo says in the novel, “The foundation of financial independence is a paid-for house.”

“Unretirement” — more than one in four near-retirees plan to work in Retirement to make ends meet

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My latest MoneySense Retired Money column has just been published. You can find it by clicking on the highlighted text here: Why “unretirement” may be the fate of so many Canadians.

Even before the Tariffs threats emerged under Trump 2.0, Canadian seniors were starting to find the economic uncertainty and rising living costs to be unmanageable. No surprise then that many seniors approaching Retirement Age are delaying their exit from the workforce.

According to a report by HealthCare of Ontario Pension Plan, 28% of unretired Canadians aged 55-64 say they expect to continue working in retirement to support themselves financially.  Here’s a screenshot from the HOOPP survey:

 

The Healthcare of Ontario Pension Plan (HOOPP) commissioned Abacus Data to conduct its sixth annual Canadian Retirement Survey in the spring of 2024.  The latest survey finds “persistent high interest rates and a rising cost of living continue to have a significant negative impact on Canadians’ ability to save and manage the cost of daily life, threatening their retirement preparedness.” While all Canadians are struggling, “women and those closest to retirement are especially hard hit with lower savings and higher levels of financial stress.”

While most Canadians are struggling to save amidst a high cost of living, HOOPP finds women are particularly affected. Half (49%) of all Canadian women have less than $5,000 in savings and almost a third (28%) have no savings (compared to 33% and 17% of men, respectively), similar to the 2023 results

 

The MoneySense column also looks at more recent Retirement surveys that also reveal anxiety about rising costs of living. One is from Bloom Finance Co. Ltd., conducted by founder Ben McCabe after Trump’s Tariffs started to kick in this year.

A Bloom study conducted with Angus Reid found 46% of Canadians thinking of working part-time in Retirement. That’s in line with a Fidelity survey in 2024 that found half of Canadians plan to delay Retirement. According to the Bloom Report [in March 2024], 67% of Canadian homeowners over 55 were concerned their savings would not sustain their quality of life through retirement. Only 29% considered downsizing or alternative living situations to access their home equity earlier than expected. 59% of the same cohort agreed accessing micro-amounts of their home’s equity would help maintain their desired living standard. Continue Reading…

Saving vs. Investing: Understanding the best approach for Findependence

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By Devin Partida

Special to Financial Independence Hub

Achieving Findependence [aka Financial Independence] requires a balanced strategy combining short-term stability and long-term growth.

Saving and investing both play crucial roles in this journey, serving different financial goals and timelines.

Explore how you can navigate these strategies to optimize your financial portfolio.

 

 

The Role of Saving: Security and Liquidity

Savings are the foundation of Findependence. An accessible savings account provides a safety net for emergencies, such as medical expenses or job loss. Experts recommend maintaining at least three to six months of living expenses in a high-yield savings account or money market fund for quick access.

Here are some key advantages of saving:

  • Risk-free growth: In addition to offering modest interest, savings accounts protect your principal from market fluctuations.
  • Short-term goals: Savings are ideal for upcoming expenses like vacations, home repairs or a new car.
  • Liquidity: Saving provides liquidity during unexpected situations. Certain saving vehicles — like 529 plans — also allow for tax-free growth and withdrawals for qualified expenses.
  • No market risk: Unlike investments, savings are not exposed to fluctuations, making them a reliable choice for safeguarding funds.
  • Psychological benefits: Having a financial safety net reduces stress and fosters confidence in your ability to handle unexpected events.
  • Flexibility: Savings provide liquidity without penalties, making it easy to pivot funds as priorities change.

However, relying solely on saving limits wealth-building potential due to inflation, which can erode the purchasing power of idle cash over time.

The Role of Investing: Growth and Wealth Accumulation

Investing is essential for long-term financial growth, particularly for goals like retirement or major life milestones. By allocating funds to stocks, bonds or mutual funds, you can potentially achieve higher returns that outpace inflation.

Here’s how investing can benefit you:

  • Compound returns: Investments grow exponentially over time due to reinvested earnings.
  • Inflation protection: Historically, investments in the stock market have delivered higher returns than inflation.
  • Wealth generation: Investing enables you to build significant assets over decades.
  • Diversification opportunities: Investments allow you to spread risk across various asset classes, industries and geographies.
  • Passive income generation: Certain investments — like dividend-paying stocks or rental properties — create ongoing income streams.
  • Long-term tax benefits: Investment accounts like individual retirement accounts (IRAs) or tax-free savings accounts (TFSAs) offer tax advantages that amplify growth over decades.

Investing does involve risks, including market volatility and potential losses. It requires a clear understanding of your risk tolerance and financial goals.

Savings and Investments: Finding the right balance

A well-balanced approach integrates saving and investing to address immediate needs and future aspirations. Here are steps to consider:

  • Assess your financial situation: Calculate your emergency savings and allocate sufficient funds to cover unexpected expenses.
  • Define your goals: Short-term goals may require savings, while long-term aspirations like retirement demand an investment strategy.
  • Evaluate risk tolerance: Younger individuals with longer timelines can generally afford higher-risk investments, while those nearing retirement may prefer conservative options.
  • Diversify your portfolio: A mix of savings and investments minimizes risk while capitalizing on growth opportunities.

Practical Tips for Success in Saving and Investing

Finding the perfect balance between saving and investing can seem daunting, but taking specific action steps can make the process manageable and effective. Here are additional practical tips to enhance your financial strategy: Continue Reading…

Canada’s best Asset Allocation ETFs

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By Dale Roberts

Special to Financial Independence Hub

When the Canadian asset allocation ETFs were introduced several years ago, the investment community hailed them as “game changers.” That is, the final nail in the coffin for high-fee / low-performance Canadian mutual funds.

The asset allocation ETFs are well-diversifed, managed global portfolios available at 5 risk levels. The fees represent about a 90%-off sale compared to the typical mutual fund. The fees range from 0.17% to 0.25%. It’s a no-brainer for most Canadians. You can open an account with a discount brokerage, enter one ticker symbol (XEQT for example), enter an amount, press Buy and own thousands of companies around the globe. Are these the best funds available in Canada? Yes, that’s a rhetorical question.

Here’s an ode to XEQT from Loonies and Sense.

 

Cut The Crap Investing is the only blog that tracks the performance of the leading Asset Allocation ETF providers. I also sort them by risk level. For example, you’ll see the performance comparison between the balanced portfolios from Vanguard and BlackRock and the rest of the AA gang. You’ll also see the surprising outlier “winner” that includes modest amounts of bitcoin in its offerings.

Check out the ultimate Canadian asset allocation ETF page. Here’s a teaser: the balanced growth models. They range from 80% stocks / 20% bonds to 90% stocks / 10% bonds. The returns listed are average annual.

Build your own portfolio

While the asset allocation ETFs are the easiest, hands-off way to go, you can certainly build your own ETF portfolio. You’ll save modestly on fees, and you will be allowed some flexibility on how you would like to shape the portfolio. I’ve offered examples of core portfolio models.

Here’s the updated (to the end of 2024) total returns for the core Canadian ETF Portfolios on Cut The Crap Investing. The build-your-own models have outperformed the asset allocation ETFs, in modest fashion. Continue Reading…

7 Tips to Save on Health Insurance in 2025

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Image courtesy Pexels: Leeloo The First

By Evan Tunis

Special to Financial Independence Hub

As healthcare costs continue to rise, finding ways to save on health insurance is becoming increasingly important.

In 2025, it is estimated that the average American family will spend over $25,000 a year on healthcare expenses.

This high cost not only affects individuals and families but also puts a strain on the overall economy.

 

Here are 7 tips to save on health insurance in 2025

Compare Plans

With the rise of online marketplaces, comparing health insurance plans has become easier than ever. Take the time to shop around and compare different plans from various providers. Consider factors such as premiums, deductibles, and coverage options before making your decision. You may find a plan that offers the same coverage for a lower cost.

Consider High-deductible Plans

High-deductible health plans (HDHPs) typically have lower premiums but higher deductibles. This means you will pay less each month for insurance, but will have to pay more out of pocket before your insurance kicks in. If you are generally healthy and do not require frequent medical care, an HDHP could save you money in the long run.

Utilize Preventive Care Services

Many health insurance plans cover preventive care services at no additional cost to the patient. Take advantage of these services — such as check-ups, screenings, and vaccinations — to catch any potential health issues early on and avoid expensive treatments in the future. Continue Reading…

8 Financial Fitness Tips that will help achieve your Wealth-Building Goals

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By Monica Mendoza

Special to Financial Independence Hub

Wealth-building plays a critical role in securing your financial future. More than just having enough money to cover day-to-day expenses, it’s about creating a financial cushion that allows you to navigate life’s uncertainties and enjoy peace of mind in the long term.

Whether your goals are to own a home, provide for your family, or retire comfortably, it’s essential to take steps to build your wealth as soon as you can. Follow the smart financial strategies listed below to help you set a solid foundation for achieving  your long-term wealth-building goals.

Start the Process by Creating a Realistic Budget and Sticking to it

Your budget is the cornerstone of your financial plans. As such, it’s important to set a solid foundation for achieving your long-term goals by putting together a realistic budget that reflects your financial needs and capabilities. This means keeping a record of your expenses, categorizing your spending into essential and non-essential items, and using these details to plan your future spending. Having a clear picture of where your money goes can help you identify areas where you might be overspending and adjust your budget if needed. Once you’ve established control over your finances, you’ll have more room to save and invest for the future.

Build an Emergency Fund that can Sustain your Household for several months

There are circumstances, such as illnesses and accidents, that may require you to immediately shell out money or disrupt your source of income for some time. These can quickly derail your finances if you’re not adequately prepared. That’s why building an emergency fund is crucial. Start as early as possible to grow your funds; open a bank account with high-yield savings, such as Maya’s Personal Goals or Time Deposit Plus that let you earn at least 4% p.a. and up to 5.75% p.a., respectively. Aim to set aside 3 to 6 months’ worth of living expenses in such accounts. This fund will serve as a financial buffer so that you won’t need to rely on credit cards or loans when an emergency arises. Having an emergency fund gives you a sense of security and keeps your wealth-building efforts on track.

If you have Debt, make a Priority of Paying off High-Interest Debt First

Debts, particularly high-interest debt like credit card balances, can severely hamper your ability to build wealth. Focus on paying these debts first to prevent your balance from ballooning even further. If you have multiple high-interest debts, consider using either the avalanche method (pay the debt with the highest interest rate first) or the snowball method (start with the smallest debt for quick wins). You may also want to consolidate debts so you only have to worry about one amount and one deadline. Once you’re free from high-interest debt, you’ll have more flexibility to redirect your money toward savings and investments that grow your wealth.

Look into Investing in Retirement Accounts as early as possible

Even though retirement may seem too far into the future, it’s never too early to plan for it. In fact, the sooner you start investing for retirement, the better. Aside from government-backed retirement plans like the Social Security System (SSS) and Personal Equity and Retirement Account (PERA), you can also put some of your money in investment products like time deposits or stocks. Consistently contributing to these accounts over time allows you to benefit from compound interest, which grows your investments faster. Prioritize retirement contributions as part of your wealth-building strategy to ensure that you’ll have a secure financial future when you’re ready to stop working.

Diversify your Investments to Control Risk and earn Long-Term Returns

Instead of putting all your money in one place, spread it across different types of investments, such as stocks, bonds, mutual funds, or real estate. Each type of investment behaves differently under various market conditions, so diversification helps protect your wealth from sudden market downturns. If you’re new to investing, consider working with a financial advisor or using investment apps that provide access to diversified portfolios with lower entry points. Continue Reading…