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.”

6 Financial New Year’s Resolutions for 2026

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Image courtesy TriDelta Financial

By Matthew J. Ardrey, CFP, R.F.P. FMA, CIM®

Special to Financial Independence Hub

As I sit here at the beginning of 2026, I would like to take a moment to reflect on 2025. We had increased U.S. protectionism through tariffs, labour market concerns with the advancement of AI, changing interest rates and another strong year of stock market returns.

With all of these macro themes out of our control, I thought of some of the personal conversations I had with clients during the year about things in their control.

1.) Keep a Positive Cashflow

One of the simplest rules in personal finance is to spend less than you earn. One of the most consistent matters I see when drafting financial plans is people know what they earn and know what they save, but do not have a complete grasp on what they are spending.

A simple way to know what you are spending is to subtract savings from after-tax earnings. Whatever remains you are spending. To take control of that spending though, you need to know where the funds are being spent. Armed with that knowledge, you can decide to continue spending on something, reduce it or cut it out altogether.

Once you are in control of your budget, use it to your advantage to save. Savings are key to wealth creation.

2.) Stay Invested

We have now had several strong years of market performance since COVID in 2020. There is no way we can predict what will happen in 2026. We may have another great year or maybe we won’t. Either way, studies show over and over again that staying invested is one of the most important factors in financial success.

There is a famous phrase in investing, “time in the market beats trying to time the market.“ Aside from how impossibly difficult it is to time them market, this also shows the power of compounding returns over time.

3.) Getting Wealthy vs. Staying Wealthy

Many financial plans I did for new clients this year were for people planning to retire in the next five years and almost every one of them had a portfolio that was at least 80-90% in stocks.

A large allocation to stocks is a great way to get wealthy but may not be the best way to preserve your wealth, especially when decumulating that wealth as part of your retirement plan.

Though we have not seen much of it in recent years, stocks can be a very volatile asset class. In the 2008 Global Financial Crisis, the S&P500 fell more than 50% and took close to six years to fully recover. A similar situation would be devastating to a retirement plan, as not only would the portfolio value fall, but there would also be crystallization of losses, as stocks are sold at losses to fund the retirement.

A well diversified portfolio among asset classes and geographic regions can help mitigate the impact of market declines. Once you have made your wealth, you don’t need homeruns to win the game. You can get around the bases on singles and doubles.

4.) Risk Mitigation: Part 1

In every plan I prepare, I want to create safety margin for my client. It could be using a Monte Carlo volatility analysis in retirement projections or an emergency fund against loss of income or large, unexpected expenses.

The benefits of these safety margins include the ability to survive a negative event, stress reduction and with that the ability to think more clearly to make better decisions. Stress clouds decision making and in a time of crisis, it is clear thinking that is most needed.

Life is never a straight line from A to B. Preparing for inevitable risks that life will bring you is sound financial planning.

5.) Keeping up with the Joneses

There is an immense amount of social pressure to fit in. To make sure you are of a similar status of those around you. But have you ever thought, how do others achieve or maintain that status? Your neighbour with the fancy house, pool and great car make look wonderful on the outside but may be swimming in debt up to their neck to “afford” all of their luxuries.

This is where the real value of a comprehensive, personal financial plan is visible. It will quantify if you can afford the reality you want. It also removes all of the rules of thumb and what works for the average person and focuses on what you need to do to achieve your personal financial goals.

6.) Risk Mitigation: Part 2

Much of financial planning is focused on the happy ending. Sailing off into the retirement sunset and enjoying the life you have worked so hard to earn. Unfortunately, life throws us curveballs and ensuring the risk management side of financial planning is covered is just as important. Continue Reading…

How to turn a Little Money into a Lot of Money

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Alain Guillot in Cascais, Portugal, a rich neighborhood.

By Alain Guillot

Special to Financial Independence Hub

Learning how you can turn a little bit of money into a lot of money is a great way to get your finances on the right track. After all, this can help with everything from paying off debt and credit card bills to growing your savings.

With that in mind, here are some top tips that you can use to do exactly that!

 

Add money to your savings immediately after getting paid

Don’t wait until the end of the month (i.e., when you have spent all your money) to think about transferring cash into your savings account. Instead, transfer a pre-designated amount of money into your savings account each payday. This way, you are reducing the chances of spending money you’d originally wanted to save!

By regularly adding to your savings account, you put yourself in the best possible position to improve your finances in the long term. When setting up a savings account, make sure you choose one with a great interest rate!

Start investing

Whether you’re going to buy and sell Cyrpto currency or going down a more traditional investment pathway, investing money is a great way to turn a little cash into a lot of cash. This can also be a great way to earn passive income, as a lot of the work is out of your hands once you’ve made the initial investment.

Of course, you should make sure to do plenty of research ahead of time so that you are protecting your best interests as much as possible. Remember, while no investments are risk-free, some are more stable than others, and you should not invest money you cannot afford to lose.

Turn your hobby into a side-hustle

Turning your hobby into a side hustle can also help you to turn your finances around, and could even become a real money-maker over time. While it may not seem that way to begin with, you can monetise just about every hobby. Whether you’re a painter or a writer, you simply need to be willing to put the work in to refine your craft and get your name out there. Continue Reading…

Early Retirement Q&A with Dividend Daddy

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Image courtesy Tawcan/Unsplash

By Bob Lai, Tawcan

Special to Financial Independence Hub

The Financial Independence Retire Early (FIRE) community is a very supportive and tight-knit one. Because the community is made up of folks who have different backgrounds and different ages, it’s very diverse (not just Caucasian bros from high tech).

Earlier this year, after having been financially independent for a while, Dividend Daddy decided to step away from work to pursue other passions! Since stepping away from work, Dividend Daddy has been travelling around the globe and enjoying life.

I’m happy to have Dividend Daddy joining me today on the latest Early Retirement Q&A.

Q1: Welcome back Dividend Daddy. Congratulations on reaching FIRE and stepping away from full-time employment. Can you tell us a little bit about yourself? 

 

I’m in my late 40s and Canadian. I worked in high pressure roles for my working career and this January, I pulled the plug on full-time work. With return to office mandates clashing with my desire for work location freedom, work was no longer tenable for me so I stepped away. As of July 2025, I’ve been retired for 7 months and travelling a ton.

Tawcan: Amazing stuff!

Q2: You and I utilize hybrid investing, a combination of individual dividend stocks and low-cost ETFs. What made you decide on utilizing hybrid investing in the first place? 

Replicating the Canadian stock market is super easy so I buy individual Canadian dividend stocks and get the dividend tax credit for doing so.

Internationally, in the U.S. and world, it’s very hard to do that yourself so buying an index fund like $VTI and an ETF like $XAW just makes sense.

Q3:What made you decide to finally pull the plug and step away from full-time employment? Walk me through your decision process.

It was a mix of mental burnout and circumstances at my job that led to my early retirement. Of course, I had done the “math” several times and early retirement was possible financially for me.

Being financially independent meant that I had the control to decide my future. If work arrangements no longer suited my needs, I could walk away from them. So, that’s what I did.

At this stage, I wanted time freedom more than I did the next pay cheque.

Tawcan: that makes a lot of sense. In some level I’m probably there too.

Q4: Tell me more about your plans for this new chapter of your life.

Right now, it’s all about travel. I’m doing a ton of it and I have to say, it’s great without having the stress of work or a job on your mind.

I’m not travelling with a laptop for the first time in a very long time. Just my smartphone. Being untethered from your job while travelling is so very freeing, mentally and physically. It’s wonderful.

Q5: Prior to stepping away from full-time employment, did you do a lot of soul-searching to determine what you plan to do in early retirement? Why is this an important process for early retirement? 

I did do some soul-searching and planning. Nothing rigorous, trusting myself to figure it out. Some planning is important because you suddenly have many more hours in a day and week to fill.

For me, I increased the amount of pickleball I play (when I’m at home), I cycled way more at home and abroad, increased the amount of time I spend at my second home in Mexico (to avoid those nasty Canadian winters), and have been travelling a ton more.

Q6: I know you were considering doing part-time work with your previous employer. Did that ever happen? Why or why not? 

I did not end up doing part-time work with my employer. Circumstances changed at my employer and that flexibility was no longer available.

I may end up doing some very limited consulting in the future but that’s not on the table for 2025 or 2026. I do miss aspects of my work.

Q7: Tell me a bit more about your portfolio withdrawal strategy. I believe you plan on withdrawing from non-registered (N) and registered (R), and leaving TFSA (T) untouched for as long as possible? Are you planning to collapse your RRSP early? Or do you envision converting RRSPs to RRIFs at some point?

Not sure completely yet on strategy but I’ve only been early retired for 7 months as of July 2025. I’m definitely spending dividends from my non-registered account with a cash reserve/bucket of $75,000.

I will reinvest most dividends from my RRSP and all of them from my TFSA. I will need to seek professional advice for what to do with my RRSP going forward and whether spending it down is advisable give tax planning purposes.

Q8: Why is it important to “learn” how to spend money and enjoy life a bit more in retirement rather than a “save-save-and-save-some-more” mentality so many FIRE seekers tend to have? 

Life is short. This hits you as you approach 50 years old. My parents’ generation is starting to pass on and I know I’m next in line (hopefully a long way off still). Continue Reading…

The Critical Element of Bonds  

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Image from Shutterstock, courtesy Outcome

Pleased to meet you
Hope you guess my name
But what’s puzzlin’ you
Is the nature of my game

  • Sympathy for the Devil, by The Rolling Stones

 

 

 

By Noah Solomon

Special to Financial Independence Hub

Historically, bonds have offered investors two main benefits. Firstly, their yields provided a reasonable, if unspectacular return. Secondly, they offered diversification value, muting overall portfolio losses during bear markets.

In my view, it is the second attribute that is the most important. In relative terms, bonds are not particularly useful for providing investors with strong long-term returns (that’s equities’ job!). So, by process of elimination it follows that the primary function of bonds is their diversification value.

When comparing equity strategies, one should compare their relative returns, volatilities, Sharpe ratios, drawdown characteristics, etc. However, given bonds’ primary purpose of providing diversification, an extra layer of diligence is required when evaluating bond strategies. Specifically, you should analyze their differing correlations to equities, and by extension their varying abilities to offset stock price declines during challenging environments.

There is no Free Lunch Part I

Economist and Nobel Prize recipient Milton Friedman famously stated, “There is no such thing as a free lunch,” which means that every choice has a cost, even if it’s not immediately obvious.

Traditional bond mandates each have their individual advantages and pitfalls with respect to returns, risks, and diversification properties. In terms of the tradeoff between risk and return, history strongly suggests that there is no clear free lunch to be had.

Risk vs. Return by Bond Type: 2000 – 2024

 

As the above table illustrates, there is a clear relationship between the returns of the various segments of the bond market and the maximum losses that they have sustained over the past 25 years. If you want extra return, you can reasonably expect to suffer larger losses in bad times. That being said, large losses in bond holdings are generally not what investors want or expect.

There is no Free Lunch Part II

Not only is there no free lunch with respect to the tradeoff between risk and return, but there is also none when it comes to diversification value. Higher returns are not only associated with larger losses but are also associated with higher correlations to equities.

Return vs. Correlation to Stocks by Bond Type: 2000 – 2024

Bonds that offer higher returns have a greater tendency to move in tandem with stocks, thereby providing less ability to mitigate stock losses during bear markets. In contrast, lower-return bonds possess greater diversification properties and thus are better equipped to offset stock-price declines during times of equity market turmoil.

None of the above: Sometimes there’s Nowhere to Hide

Notwithstanding the fact that higher-return bonds have on average suffered more severe losses and offered less diversification value than their lower return counterparts, these relationships have exhibited significant variations across different bear markets. Continue Reading…

Book Review: The Wealthy Barber (2025 fully revised edition)

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Special to Financial Independence Hub

 

Many aspects of personal finance have changed in the 36 years since The Wealthy Barber classic book first appeared.

To update it, author David Chilton had to not only do an extensive rewrite, but he had to come up with new advice.  He did a great job of making The Wealthy Barber 2025 update fully relevant to Canadians today.

Chilton takes important topics that are usually dry and hard to understand and brings them alive in an entertaining story format. But this book is much more than just a fun take on personal finances; the advice is excellent.  Chilton gives insights you won’t find elsewhere.  The book is like a course on personal finance requiring no previous knowledge, and even discussions of insurance and wills are funny and compelling enough to be page-turners.

The bulk of the book is a set of financial lessons mainly aimed at Canadians between 20 and 45.  The early chapters introduce the characters, make it clear that the lessons require no prior expertise, and that the lessons really will help with seemingly impossible problems like the high cost of housing.  These early chapters do a good job of convincing readers that they really can improve their financial lives.

Between the jokes and identifying with the characters, readers will find themselves enjoying lessons that would normally be boring.  Chilton uses dialogue to emphasize important points, to voice objections to his advice, and to clarify common misunderstandings.

I often find things I disagree with in books, but that really isn’t the case here.  Chilton had to make some tough decisions about which details to include and which to leave out, and most readers could come up with a topic or nuance they wish was covered.  One topic I think could have made the cut is that some investors think they don’t pay investment fees.  I’ve heard people recommend their advisor because he doesn’t charge any fees.  All advisors get paid out of their clients’ money in one way or another, no matter what anyone says to the contrary.

I won’t try to summarize the lessons because the result wouldn’t be useful.  Without Chilton’s explanations of the whys behind his advice, too much would be lost.  Instead, I’ll comment on several areas.

Artificial Intelligence (AI)

Chilton didn’t really discuss AI except to make a good joke that I won’t spoil.  He was asked the question “What happens if AI takes away most of our jobs and the economic system collapses?”  There are some bad things AI could do such as cyber war, monitoring all of our actions, preventing us from doing “unapproved” things, and limiting our movements.  However, I don’t see negatives in AI doing jobs for us.  If AI together with machines will eventually grow our food, make clothes and other goods, and build houses, why will we need money?  Until we get to that point, we’ll still need money and people to do jobs.

Pay yourself first

One of the book’s characters says “Save first, spend the rest, good.  Spend first, save the rest, bad.”  This core piece of advice survived from the original book, but there are some caveats now.  For example, some diligent savers “offset the growing value of their assets on their net-worth statements with matching, or near matching, debts on the liability side.  From excessive car loans to large credit-card balances to massive lines of credit, many [live] beyond their means to a scary level.”

Watching other people, I’m convinced that it’s important to set aside savings from your pay first and then spend later, but my wife and I are weirdos who never needed to do this.  Our natural tendency to spend little usually left plenty of savings at the end of each pay period.  We’re the type who had to learn to spend more as our income and savings grew.

Index investing

I thought the passage explaining why we should just buy all stocks instead of trying to pick the best ones was well done.  It included “No, we can’t just buy the winners.  No, there is no way for us to consistently pick them ahead of time.  No, the people we hire to do it for us aren’t any good at it either.”

Like most experts who are trying to help their audiences, Chilton is a fan of all-in-one asset allocation ETFs.  “Not only does the fund buy the individual stocks for you, it does so across the world,” and “These funds also do all the rebalancing for you.”  These funds handle everything so there is no need to monitor your progress.  In fact, to avoid making emotional decisions, you’re best to “pay almost no attention” to the daily or weekly changes in the value of your savings.

“One of the most important factors, if not the most important, as you choose what type of investments to make, is the associated time frame.  How long are you able to set the money aside?  How long until you need it?”  Stocks in the form of all-in-one ETFs are for the long term.  For something like a house down payment, “unless I thought my purchase was at least five to seven years away,” I wouldn’t invest it aggressively.

Starting early

I’m a fan of advising people to start the saving habit early.  Chilton gives an example to motivate this advice where saving $1000 per month for 8 years is more valuable than saving $1000 per month for the subsequent 24 years.  Continue Reading…