Decumulate & Downsize

Most of your investing life you and your adviser (if you have one) are focused on wealth accumulation. But, we tend to forget, eventually the whole idea of this long process of delayed gratification is to actually spend this money! That’s decumulation as opposed to wealth accumulation. This stage may also involve downsizing from larger homes to smaller ones or condos, moving to the country or otherwise simplifying your life and jettisoning possessions that may tie you down.

HCAL turns 5: Enhanced Exposure to Canadian Banks

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Image courtesy of Hamilton ETFs

By Hamilton ETFs

(Sponsor Blog)

Since launching in October 2020, the Hamilton Enhanced Canadian Bank ETF (HCAL) has provided investors with a simple way to get more from one of Canada’s most reliable sectors, the Big-6 banks. By adding modest 25% leverage to an equal-weight portfolio of Canadian bank stocks, HCAL has delivered strong results over the past five years, offering investors enhanced income and growth potential from a sector known for its stability and consistent dividends.

Five years of Enhanced Growth & Income

HCAL’s structure is straightforward: for every $100 invested, HCAL borrows ~$25 at institutional borrowing rates and invests it back into the same six banks, providing roughly 1.25x exposure to the sector. This approach has supported higher monthly income and higher long-term returns since HCAL’s inception when compared to a non-levered Canadian bank portfolio, specifically the Solactive Equal Weight Canada Banks Index (“Canadian Bank Index.”)

HCAL vs. Canadian Bank Index — Growth of $100K [1]

Long-Term benefits of Modest Leverage

Over time, the power of compounding is a key driver of returns, and modest leverage can amplify that effect. In HCAL’s case, the 25% leverage applied to Canada’s largest banks has contributed to meaningfully higher long-term returns. The leverage is realized at institutional borrowing rates, typically lower than those available to individual investors, and HCAL can be held in registered accounts, providing access to the benefits of low-cost leverage in accounts where margin isn’t normally available. Continue Reading…

Fritz Gilbert: My biggest Surprise in Retirement

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TheRetirementManifesto

By Fritz Gilbert, TheRetirementManifesto

Special to Financial Independence Hub

I’m fortunate to have saved aggressively in my company’s 401(k) since I started my career at Age 22.

It’s what allowed me to retire at Age 55.

And yet, like many folks my age, those savings were predominantly in “Before-Tax” accounts in my company’s 401(k) plan.  Sure, I got the tax break while working, and I felt like a genius. Besides, we didn’t have the option of investing in a Roth, so the decision was easy.

I knew those taxes would come due when I “got old,” but I’d worry about that later.

Later has arrived. 

As I shared in my Retirement Drawdown Strategy, when I retired, we had 56% of our retirement savings in Before-Tax accounts, as shown below:

The Golden Age of Roth Conversions

Now that I’m retired, I’ve been laser-focused on doing annual Roth conversions to reduce that Before-Tax balance. As I wrote in The Golden Age of Roth Conversions, it makes sense to do Roth conversions in your early retirement years (be careful if you’re getting ACA subsidies, and ugly Aunt IRMAA can be a problem if you’re 63 or older).  I won’t rehash the arguments for why; you can read about it in the linked article.

My goal is to manage the taxes on my terms, rather than being “forced” into whatever the Required Minimum Distributions rule requires in my 70s.  I’d also like to get as much of that money converted into a Roth for the benefit of my wife, in the event I die early (she’d pay higher taxes as a single tax filer vs. our current “Married Filing Jointly” status). For now, I’m playing the tax bracket “stuffing” game (topping off my selected tax bracket with Roth conversions) and trying to be smart about minimizing the taxes I pay throughout my retirement.

The Bad News: The Roth conversions are not making as much of a difference as I had hoped.

My Biggest Surprise in Retirement:  It’s Hard to reduce your Pre-Tax Account Balance!

We’ve all heard about the power of compounding and how valuable it is in personal finance.  If you want a refresher, check out my post, “The Most Powerful Force in the Universe.” 

What I didn’t think about, and only realized after I retired and started doing Roth conversions, is the fact that compounding makes it difficult to reduce your pre-tax account balance.

Despite doing aggressive Roth conversions, our pre-tax balance isn’t coming down like I expected!

In fairness, part of that “problem” is driven by above-average returns since my retirement in 2018.  First world problem, I know.  But it’s still been a big surprise.

Let’s do a hypothetical example to demonstrate the point. 

To make the math easy, let’s say you have $1M in your pre-tax account, and your first full year of retirement is 2019.  If you had that entire $1M in stocks, here’s what would have happened without doing any Roth conversions (S&P 500 returns from ycharts, including dividends):

In this example, a $1M portfolio would have grown to $2.6M in 6 short years.  That’s the power of compounding. Amazing!

Let’s modify the above example, and say you’re doing an annual Roth conversion of $50k.

How much impact would Roth conversions make? Not much…

Despite doing annual Roth conversions of $50k, the pre-tax value has still doubled, to $2.15 M!

A More Realistic Scenario – $500k 

Ok, I hear you.  No one has $1M in their pre-tax account.  I got your attention, though, right?

Fair enough, let’s assume the starting balance is $500k (which compares nicely with the average 401(k) balance of $573k for folks in their 60’s):

The problem remains.

With a $500k starting balance and $50k annual Roth conversions, the account has still grown by $357k (to $857k), or 71%.

Bottom Line:  It’s difficult to reduce your pre-tax account balance due to the power of compound interest.

In fact, the only way to reduce your pre-tax account is to do annual Roth conversions in excess of the annual return generated by the pre-tax portion of your portfolio.  Sticking with the $500k example, an average annual Roth conversion of $89k would have been required to maintain the pre-tax balance at $500k, as shown below:

(Note:  you could argue about my $0 Roth conversion in a down year, but it’s just an example.  Quit whining and do your own math – wink.)

What About A 60/40 Portfolio @ $500k?

No one has a 100% stock portfolio in their pre-tax accounts, right?  Let’s see what things look like if our retiree had a 60/40 stock/bond allocation in their pre-tax accounts.  We’ll use the S&P 500 for stocks, and Vanguard’s Total Bond Market Index Fund (VBMFX) for bonds, we can find their annual returns here.

Without any Roth conversions, the account would have grown from $500k to $990k, as shown below:

Add in our $50k/year of Roth conversions, and the ending balance is $609k, an increase of 22%:

Bottom Line:  Even with a 40% bond allocation, it’s difficult to reduce your pre-tax balance via Roth conversions.

We’ve done aggressive Roth conversions every year, yet I continue to be frustrated by how little we’ve moved the needle.  In full transparency, we’ve reduced it, but only by 15% of its starting value.  That’s far less than I would have expected, given the size of the conversions we’ve done. Continue Reading…

5 Key Wealth Management Factors that Influence Investment Decisions — Every Investor Should Know

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Understand the factors that affect investment decisions so you maximize your portfolio returns

TSInetwork.ca

It’s generally a waste of time to obsess about a short-term downward movement in the economy, stock market or both. These downward movements can occur for a wide variety of reasons, at any time: even outside the kind of significant downturn caused by COVID-19 or, more recently, higher inflation and the Russian invasion of Ukraine.

Still, for every “real” short-term downturn, you can spot a dozen fake-outs: situations where the market or economy looked like it was going into a tailspin but pulled out of the drop and began rising at the last minute.

On the other hand, it does pay to obsess about factors that affect investment decisions like portfolio diversification, investment quality, and the extent to which your portfolio suits your personal goals and temperament.

1. What is the appropriate asset allocation for my portfolio?

A diversified investment portfolio should be spread across multiple asset classes for risk management and potential growth. The main components typically include:

Stocks provide growth potential and can help protect against inflation over the long term. They tend to be more volatile but historically offer higher returns.

Bonds offer steady income and help reduce overall portfolio risk. They generally provide more stability than stocks but lower potential returns.

Cash equivalents, like money market funds or GICs, offer safety and liquidity but usually provide the lowest returns.

The specific percentage allocated to each depends on your personal circumstances, but maintaining this basic diversification helps balance risk and return potential.

Remember that regular rebalancing helps maintain your target allocation as market values change over time.

Spread your money out across most if not all of the five main economic sectors (Finance, Utilities, Manufacturing, Resources, and the Consumer sector). The proportions should depend on your objectives and the risk you can accept. The Finance and Utilities sectors generally involve below-average risk. Manufacturing and Resources tend to be riskier, and the Consumer sector is in the middle.

As well, balance aggressive and conservative investments in your portfolio, in line with your investment objective  and the market outlook. Above all, avoid the urge to become more aggressive as prices rise and more conservative as prices fall.

Discover more about properly diversifying your portfolio.

2. How do I find quality investments?

Quality investments can be identified by examining key financial metrics such as consistent revenue growth, stable profit margins, low debt levels, strong cash flows, and competitive advantages within their industry.

The best blue-chip stocks offer strong investment quality. When the market suffers a significant downturn like that prompted by the emergence of the coronavirus pandemic, these stocks generally keep paying their dividends, and they are among the first to recover when conditions improve.

In keeping with the Successful Investor philosophy, we feel stocks that have been paying dividends for five years or more are some of the safest investments you can have. Dividends are a sign of quality and a company’s financial health. Canadian banks and utilities are among the income-paying stocks that we consider to be safer investments.

Learn more about developing a long-term strategy focused on stocks with high investment quality.

3. Why is it important to have a disciplined savings plan?

A disciplined savings plan creates financial stability by building wealth consistently, protecting against emergencies, and helping achieve long-term goals through the power of compound growth.

If there is one piece of personal wealth management advice you should immediately implement, it’s to have a disciplined plan for saving during your working years. This, above all things, can set you up for optimal investment gains. We talk more about this in 9 Secrets of Successful Wealth Management, which is free for you to download. Continue Reading…

Growth, Defence, & Monthly Income: The Barbell Harvest ETFs Strategy

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Harvest ETFs

By Ambrose O’Callaghan, Harvest ETFs

(Sponsor Blog) 

Back in December 2023, we looked at how a barbell bond strategy works. In this piece, we will explore the barbell investing strategy from a different perspective. Conceptually, this investment strategy seeks to strike a balance between risk and reward by investing in high-growth “risk-on” assets, and defensive “risk-off” assets. By accessing the benefits of both “extremes,” this strategy aims to achieve balanced capital gains.

Today, we will review the barbell strategy using six Harvest ETFs on each end. Three defensive-oriented ETFs that also provide access to monthly cashflow through an active covered call option strategy, and three “risk-on” ETFs that offer exposure to growth-oriented areas, while also delivering consistent cashflow every month.

Reducing Risk | Defensive Income ETFs

HHL | Healthcare exposure plus monthly income

In August, we provided an overview of the healthcare space and how it has impacted the Harvest Healthcare Leaders Income ETF (TSX: HHL), Canada’s largest healthcare ETF. To reiterate; the health care sector has shown both defensive and growth-oriented qualities through its history. Healthcare is defensive due to the essential nature of it services, whereas its growth qualities stem from the high demand for specialized products as well as technological innovations.

Healthcare equities have faced challenges in North American and global markets through the first three quarters of 2025. As we highlighted in our recent monthly commentary, valuations have been compressed relative to the market and investors have looked for catalysts for a rebound in this climate. To that end, it is worth highlighting some stock-specific catalysts that are starting to surface.

Those catalysts have included Warren Buffett’s UnitedHealth purchase and headlines focused on the issue of reshoring and repatriation. More stock-specific catalysts have included some positive earnings released across select names. The most recent examples came in the form of Intuitive Surgical Inc., which jumped double-digits on the back of an improved medical devices market and large-capitalization biopharmaceutical innovator Regeneron Pharmaceuticals that posted strong returns following and upbeat quarter.  Compared to previous quarters when strong earnings went virtually un-noticed by the markets, seeing strong stock performance matching the strong reported earnings is perhaps a more subtle sign that sentiment has stabilized in the sector.

HHL offers exposure to a defensive sector that also has growth qualities. The portfolio is composed of 20 large-cap U.S. healthcare stocks, overlayed with an active covered call option writing strategy to generate high levels of monthly income. Indeed, HHL has delivered income every month for over a decade since its inception.

HUTL | Why utilities right now?

Utilities have long been regarded as a mainstay for those seeking stability, income, and defensive positioning in their portfolios. However, rising power demand, technological progress, policy shifts, and the ongoing global energy transition has made utilities a unique target for those who also want growth qualities. The Harvest Equal Weight Global Utilities Income ETF (TSX: HUTL) offers unique advantages as a utilities ETF, due to its global reach and its income generation.

HUTL | Benefits of utilities and steady income

Essential services with stable cash flows

Utilities deliver critical services like electricity, gas, water, and telecommunication, which are largely immune to economic cycles. Because of this, utilities are a stable source of revenue and cashflow.

Power demand growth

Electricity demand has soared in recent years and is set to increase at an even greater rate due to the proliferation of data centres and a broad electrification push. Data centres consumed roughly 1.5% of global electricity in 2024, a rate that could double by 2030. Goldman Sachs estimates that data centre power demand will grow by 165% by 2030.

Energy transition & infrastructure spending

Clean energy investment is projected to reach $2.2 trillion this year, more than double fossil fuel investment. HUTL offers exposure to leaders in this space, including VERBUND AG, Endesa, Fortum, Brookfield Renewable, and others. Meanwhile, the IEA forecasts that $450 billion will go into solar investment in 2025, with additional spending in grid and storage spending.

Diversification and the global advantage

Utilities are critical, but these companies also face risks from climate events and changing regulatory policy. HUTL’s global equal-weighted portfolio means that utilities exposure is spread across regions, reducing concentration risk. This helps to mitigate that regulatory risk as well as geographic challenges like storms, wildfires, and a changing political landscape.

Income generation and lower volatility

HUTL utilities Harvest’s active covered call option writing strategy to generate option premiums, which also serves to reduce portfolio volatility. Meanwhile, the utilities sector has historically outperformed during turbulent market periods. This is an added benefit in an uncertain market.

HVOI | A low volatility strategy with monthly income

In April, broader markets were reeling from the uncertainty that emerged in the wake of the “Liberation Day” tariff announcement. Markets have calmed in the months that followed, with the U.S. administration rolling back significantly on the high tariffs it originally had promised. That said, the CNN Fear and Greed Index shows that investors remain concerned at this late stage in 2025.

CNN Fear & Greed Index

Source: CNN.com, Fear & Greed Index, October 29, 2025.

Harvest launched the Harvest Low Volatility Canadian Equity Income ETF (TSX: HVOI) in April 2025. This ETF holds 40 top Canadian equities, which are ranked and weighted by their risk score and market cap weight, with a 4% maximum weight per name. The equities are scored according to risk and fundamental metrics.

Low Volatility | Portfolio Construction

Source: Harvest Portfolios Group, Inc. April 2025.

Benefits of HVOI

  • Access to rules-based portfolio that manages risk
  • Covered call strategy to generate monthly cashflow and lower volatility
  • Flexibility to employ cash-secured puts to generate additional income
  • Rules-based and disciplined portfolio construction process

Pressing Offense | 3 Growth-Oriented Income ETFs

HHIS | One ETF with top U.S. stocks built for a high monthly yield

In August 2024, Harvest ETFs launched the Harvest High Income Shares™ ETF suite. High Income Shares™ are single-stock ETFs that offer exposure to top companies in both the United States and Canada. The ETFs are overlaid with an active covered call writing strategy, seeking to generate high monthly income. Harvest High Income Shares™ have reached above $3 billion in total AUM since inception at the time of this publication. Continue Reading…

Is the “4%” Rule still relevant for Retirement Planning? What the experts say

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Late in October, my monthly MoneySense Retired Money column reviewed three recently published financial books, starting with financial planner William Bengen’s new A Richer Retirement: Supercharging the 4% Rule to Spend More and Enjoy More.

Below we canvassed more than a dozen retirement experts and financial planners in both Canada and the United States about their experiences with the Rule, both the original book as well as the new one.

These experts were gathered by Featured.com, which has been supplying Findependence Hub with quality content for several years now. It has changed its procedure so that editors like myself can request input on particular topics we think will interest our readership. The sources are all on LinkedIn, as you can see by clicking on their profiles below.

Here’s what we asked, followed by their answers, which have been re-ordered by me.

“What do you think of the 4% Rule: CFP Bill Bengen’s guideline about a safe annual Retirement withdrawal amount that factors in inflation? Have you read or do you plan to read Bengen’s just-published followup book: A Richer Retirement : Supercharging the 4% Rule to Spend More and Enjoy More? Do you agree or do you have your own tweaks to the 4% Rule? Looking for both Canadian and American input.”

Here is what these thought leaders had to say.

Adaptive Withdrawals protect Retirement through Market Cycles

The 4% Rule, created by CFP Bill Bengen in the 1990s, remains one of the most referenced retirement withdrawal guidelines. It suggests withdrawing 4% of your portfolio in the first year of retirement and adjusting that amount for inflation each year. The idea was to provide a sustainable income stream for at least 30 years without depleting your savings. Bengen’s newly published book, A Richer Retirement: Supercharging the 4% Rule to Spend More and Enjoy More, revisits this concept using updated data and broader asset allocations. He now argues the safe withdrawal rate could rise to around 4.7%, supported by stronger market performance and portfolio diversification beyond the original stock-bond mix. 

I see the 4% Rule as a reliable starting point, but not a fixed rule. It offers structure for retirees who need clarity on how much to withdraw each year, but real-world conditions require flexibility. For U.S. investors, I still begin with 4% as a baseline because it remains simple and conservative. Then I evaluate three major factors before adjusting: market volatility, portfolio performance, and expected longevity. For Canadian retirees, I tend to start lower, around 3.5%, due to differences in taxation, mandatory RRIF withdrawal rules, and the impact of currency and inflation differences compared to U.S. portfolios. 

My main adjustment to the rule is to make withdrawals adaptive rather than static. If the portfolio declines by more than 20% early in retirement, I recommend reducing withdrawals by 5% to protect capital. If inflation stays above 4% for more than two years while fixed income returns remain weak, I hold withdrawals steady instead of increasing them. Conversely, if long-term returns outperform expectations, withdrawals can rise modestly. These adjustments keep the retirement plan sustainable through changing market cycles. 

The lesson is to view the 4% Rule as a guideline, not a guarantee. Its true value lies in the discipline it introduces. A flexible version of the rule — tailored to taxes, inflation, and market behaviour — helps retirees spend with confidence while protecting their financial future. — Andrew Izrailo, Senior Corporate and Fiduciary Manager,  Astra Trust

Real Estate Investors Outperform Traditional 4% Rule

I’ve always thought the 4% rule is a decent starting point, but it’s really built around stocks and bonds. In my world of real estate, combining rental income with property value growth usually blows past that number. Instead of a fixed withdrawal, you can sell a property or pull out equity when the market’s high. That flexibility often makes your money last a lot longer in retirement. — Carl Fanaro, President,  NOLA Buys Houses 

Balance Freedom and Security in Retirement Journey

Retirement, much like embarking on a long and meaningful journey, is not just about reaching a destination but about learning how to move through each stage of life with purpose and enjoyment.

After reading Bill Bengen’s A Richer Retirement, I found his updated perspective on the 4% Rule both inspiring and practical. He transforms what was once seen as a strict withdrawal formula into a flexible approach that prioritizes experience, adaptability, and peace of mind.

Bengen’s message is that retirement should not revolve around fear or limitation. Instead, it should be about living fully within realistic financial boundaries. By adjusting withdrawals according to personal goals, market performance, and the natural flow of retirement years, retirees can enjoy their savings as a source of freedom rather than anxiety.

The concept feels much like travel: in some seasons, you venture farther, explore more, and spend a bit extra; in others, you slow down, rest, and savor simplicity. This approach is particularly meaningful for those who dream of traveling during retirement. The early, active years can be dedicated to exploring places like Morocco, when energy and curiosity are at their peak. Later on, spending can naturally shift toward quieter experiences closer to home.

Both Canadians and Americans can apply this mindset using tools such as TFSAs, RRSPs, Roth IRAs, or Social Security planning to balance flexibility and security.

In the end, Bengen’s vision reframes retirement as a phase of freedom, not restriction. It invites people to plan wisely but live fully, creating space for exploration, connection, and purpose much like a well-planned journey that leaves room for discovery along the way. — Nassira Sennoune, Marketing Coordinator, Sun trails

Tax-Efficient Withdrawals add 1-2% to Retirement

The 4% rule is a solid starting point, but after 20+ years advising clients, I can tell you it’s not one-size-fits-all. I’ve seen too many retirees lock themselves into unnecessary restrictions because they treat it like gospel rather than a guideline. 

Here’s what I actually do with clients: we start with 4% as the baseline, then adjust based on their actual spending patterns and market conditions. I had a couple last year who were terrified to spend more than their calculated 4%, even though their portfolio had grown 30% and they were skipping vacations they’d dreamed about for decades. We bumped them to 5.5% for two years because the math worked and life is short: they finally took that trip to Italy. 

The biggest mistake I see isn’t about the percentage itself: it’s that people forget about tax efficiency in withdrawal sequencing. I always look at which accounts to pull from first (taxable vs. tax-deferred vs. Roth) because that can add 1-2% to your effective withdrawal rate without touching principal. One client saved $47,000 over five years just by restructuring their withdrawal order. 

I haven’t read Bengen’s new book yet, but it’s on my list. My practical tweak: build a 2-3 year cash cushion in your portfolio so you’re never forced to sell stocks in a down market. That flexibility alone has kept my clients sleeping well through every correction since 2008. — Winnie Sun, Executive Producer,, ModernMom

Canadian Medical Costs require Flexible Withdrawal Rates

Look, the 4% rule is a decent guideline, but it’s not some magic number you can set and forget. I’ve watched people get into trouble because they didn’t account for medical bills, which are a real wild card here in Canada. I always tell people to build in a cash buffer and check in on that withdrawal rate every couple of years instead of just locking it in permanently. — James Inwood, Insurance Broker, James Inwood

Cash Reserves shield Retirees from Market Volatility

I assist clients with retirement and estate planning.  Bill Bengen’s original 4% rule was first published in 1994 and took into account a balanced investment portfolio modeled back to 1926.  At that time, he projected a 4% withdrawal rate, adjusted annually for inflation, would ensure the portfolio was sustainable for a 30-year retirement.  I recommend my retired clients review their portfolio allocation, investment returns, monitor for annual inflation and expenditures and then make adjustments for the next year’s withdrawals.  

 I plan to read Mr. Bengen’s new book published in August.  Mr. Bengen  is now recommending a broader asset diversification to add in small percentages of international equities and small-cap stocks in addition to his historic investment portfolio of 50% U.S. large-cap stocks and 50% intermediate bonds.  He claims with this broader diversification the safe withdrawal rate could now be up to 4.7% under best case scenario, 4.15% worst case.  I agree with Bengen that broader asset diversification can make sense for retirees who are investment knowledgeable and are monitoring annually the data I’ve noted above.

I recommend to my clients that any rule of thumb such as Bengen is simply a data point.  Retirees need to take into account their own risk profile as well as their investment understanding before making any significant adjustments to their rate of asset withdrawal.   Retirees now have longer life spans and are battling a heightened inflation rate.  I recommend my clients have a flexible withdrawal range of 3.5% to 4.5%, monitor assets annually, and continually adjust their annual withdrawal rate as necessary for volatile markets.   

I also recommend that my clients have a cash account established of at least two years’ withdrawals to avoid having to sell assets in a prolonged negative market environment. — Lisa Cummings, Attorney and Executive Vice President at Cummings & Cummings Law,  Cummings & Cummings

Tax Planning Matters more than Withdrawal Percentages

I’ve spent 40 years managing my own law firm and CPA practice, plus 20 years as a registered investment advisor, so I’ve seen hundreds of retirement plans play out in real life. The 4% rule is a decent starting point, but I stopped treating it as gospel about 15 years into my advisory career.

Here’s what I actually saw with my small business owner clients: their retirement income rarely came from just traditional portfolios. Most had business sale proceeds, real estate holdings, and irregular cash flows that made the 4% rule almost irrelevant. One client sold his manufacturing business at 62 for $2.3 million (US) but kept the building and leased it back: his retirement “withdrawal rate” was completely different because he had guaranteed rental income covering 60% of his expenses. 

The bigger issue I noticed was tax planning around withdrawals. I’d have clients rigidly following 4% from their IRAs while sitting on Roth conversions they should’ve done years earlier, or taking Social Security at the wrong time. The sequence of what you withdraw from matters more than the percentage: I’ve seen people save $50K+ in taxes over retirement just by pulling from taxable accounts first while doing strategic Roth conversions. 

My tweak: forget the percentage and work backward from your actual monthly expenses, then layer in guaranteed income sources (Social Security, pensions, annuities) before touching portfolio money. Most of my retired clients ended up withdrawing 2-3% because they structured things right on the front end. — David Fritch, Attorney,  Fritch Law Office Continue Reading…