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.”

Plain-Sight Strategy #3: Controlling Costs — Don’t spend more than you need to

Posted By Financial Independence Hub | September 24, 2015

By Paul Philip CLU, CFP Financial Wealth Builders Securities.

Special to the Financial Independence Hub

In the first two installments of our three-part “Hidden in Plain Sight” investment strategy series, we’ve covered the importance of staying invested to earn market returns, while managing the risks involved. We’ll conclude with what may be the most obvious and powerful piece of advice of all, even if it does not seem to receive the attention it deserves.

Being there
Managing for market risks
Controlling costs

Plain-Sight Strategy #3: Controlling Costs

Don’t spend more than you need to.

Why do investors spend more than they need to on their investments?

Revealing the Numbers

While spending less to earn more seems obvious, the costs themselves aren’t nearly as apparent. Continue Reading…

Should you help your Adult Children get out of Debt?

Posted By Financial Independence Hub | September 22, 2015

By Douglas Hoyes

Special to the Financial Independence Hub

We have all heard the expression “once a parent, always a parent,” so it’s not surprising that you may want to help your adult children with their financial problems.

A young adult may be burdened with student loans and other debts, and may have not yet had success in the job market. As a senior adult, perhaps having already achieved Findependence, is it wise to financially help your adult children?

The first question to consider is: will giving them money truly help them? You won’t be around forever, so at some point your offspring must learn to fend for themselves. Letting them deal with their financial problems now, on their own, while you are still around to provide moral support may be in their long-term best interests.

Such assistance could jeopardize your own financial security

Of greater concern is that financially assisting your adult children could jeopardize your own financial security.

In my firm’s recent Joe Debtor study we discovered that, of people who go bankrupt, seniors and pre-retirement debtors have the highest levels of unsecured debt of all age groups. If the only way you can help your children is by going into debt yourself, you put yourself at risk for serious financial problems. Continue Reading…

What it means to Retire with Debt

Posted By Financial Independence Hub | September 15, 2015

By Douglas Hoyes

Special to the Financial Independence Hub

It’s a reality that Canadians are increasing their personal debt load.

Whether or not the debt levels they are carrying are cause for concern depends on who you talk to and on what day. On one day you will see a story that debt-to-income ratios, now at 163%, are at record highs and households are standing on the precipice. The next day you will read an article about how interest rates are at an all-time low, making debt affordable.

I can confidently say that my opinion doesn’t change from season to season or year to year. In my opinion, debt does not go well with either retirement or Findependence.

Seniors accounting for more bankruptcies

Granted, I’m an insolvency professional: a bankruptcy trustee who sees people who have accumulated an extreme amount of debt. Every two years at my firm, Hoyes, Michalos & Associates Inc., we review all of our client files to determine who is carrying debt and why. In our Joe Debtor study this year we discovered that seniors represent an ever increasing percentage of total bankruptcy filings. Even worse, they have the highest level of unsecured debt of any age group at the time of filing, with over $69,000 of unsecured debt. Continue Reading…

Lower trading fees aren’t an excuse to day-trade

Posted By Robb Engen | September 10, 2015

By Robb Engen, Boomer & Echo

Special to the Financial Independence Hub

As a Canadian investor, I’ve been pleased to see that most of the big bank brokerages lowered their cost per trade from $29 to under $10. Previously, most investors needed a minimum of $50,000 in assets to qualify for lower trade commissions. This has presumably levelled the playing field for small investors.

When I first opened a discount brokerage account with TD Waterhouse (now TD Direct Investing) back in 2009, high trading commissions were the norm. I chose TD because I had an existing banking relationship and my $25,000 investment met the threshold to waive the $100 annual admin fee.

At the time I wasn’t aware of online brokerages like Questrade – which offered trades for as low as $4.95 with no administration fees.

High costs for small investors

The costs added up over the years. From 2009 to 2011 I made 36 trades and paid a total of $1,044 in fees. Had I been with Questrade, I would have paid a fraction of that amount – just $178.20 in trading fees. Continue Reading…

A Simple Way To Boost Your Retirement Savings

Posted By Robb Engen | September 3, 2015

By Robb Engen, Boomer & Echo

Special to the Financial Independence Hub

One of the core tenets of financial planning is to pay yourself first. Automating your savings is a painless way to save for retirement and, in all likelihood, you’ll barely notice that you’re living on less.

Most experts suggest putting away 10 per cent of your income for retirement, but that number might seem out of reach for many people today. The key to developing good savings habits, however, is that you need to start somewhere.

That’s why I suggest setting aside what you can afford, be it three or five per cent of your income, and try to increase that amount every year.

Small changes lead to big improvements