Building Wealth

For the first 30 or so years of working, saving and investing, you’ll be first in the mode of getting out of the hole (paying down debt), and then building your net worth (that’s wealth accumulation.). But don’t forget, wealth accumulation isn’t the ultimate goal. Decumulation is! (a separate category here at the Hub).

Can you Pursue Financial Independence without giving up Travel?

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By Devin Partida

Special to Financial Independence Hub

The Financial Independence, Retire Early [FIRE] movement has gained awareness and popularity. It’s commonly believed that to achieve this highly-sought-after goal, young adults must live an immensely frugal life, guided by constraints and a “suffer now, enjoy later” mentality that results in the restriction of leisure like traveling. However, maintaining Financial Independence while traveling is entirely possible with a proper strategy.

The Perceived Conflict of Financial Independence vs. Travel

Findependence Hub CFO Jon Chevreau and his wife Ruth avoided some of Canada’s harsh winter by living (and doing a little work) in Malta. Here are the island’s famed colourful boats.

People often feel that travelling can drain budgets and delay retirement. This mindset comes from the perception that travel entails expensive hotels, premium flights and fancy dinners. Instead, try viewing travel as an investment in your well-being and growth.

As enjoyable as exploring new locations and sightseeing are, the heart of travelling is much deeper. Stimulating the brain in new ways can release chemicals like serotonin, lower cortisol levels and improve cognitive thinking skills.

Traveling offers opportunities to broaden perspectives and engage in self-discovery, which is far more valuable than a weekend at a 5-star hotel. By aligning your travels with core financial values, it becomes sustainable and a solid return on investment.

Strategies for Reducing Travel Expenses

Cutting down on travel costs starts with budgeting. Before you even board a flight, you should have decided how much you’re willing to spend on your trip, which is something that differs from person to person based on personal goals and circumstances. Establishing a strict daily budget provides the data required to adjust spending patterns in real time.

Jon & Ruth spent February in this AirBnB in Malta. Rates are lower when you commit to a whole month. Save more eating in with a fully equipped kitchen.

Implementing discipline in your travel spending prevents minor costs from eroding an investment portfolio over the long term. Primary strategies for minimizing the three largest travel expenses include:

  • Alternative accommodations: Choosing alternative lodging accommodations has become a popular way of reducing traveling costs. Notable options are house sitting, pet sitting and hostels. Alternatively, volunteering opportunities often provide free accommodation.
  • Off-season transit: Booking flights and transit during the off-season is a great way to reduce costs without compromising the quality of the experience. Booking flights months in advance often results in lower
  • Local logistics: Prioritize local transit systems and walking over private rentals or ride-sharing services.

Generating Income while Travelling

Building capital, whether actively or passively, is another great way to achieve Financial Independence while travelling. An increasingly popular option is through professional mobility or remote work. Individuals in fields like software development, design and consulting can continue to work and maintain consistent earnings regardless of location.

Jon Chevreau doing a little work over lunch in Rome last week, taking advantage of a restaurant’s free wi-fi to promote the site’s latest blog.

In addition to having a location-independent business, finding passive income streams is a great way to earn while traveling. In today’s digital age, people can start an e-commerce business on their phones, enabling them to be anywhere in the world and still maintain a steady flow of capital.

For those who aren’t entrepreneurial, investing to generate passive income is a great alternative. Even if you don’t have a finance degree, there are plenty of resources online regarding simple and safe long-term investing strategies. These could include ETFs, dividends or real estate.

Being a digital nomad has become a highly desirable aim for many professionals in the modern age. The key to this approach succeeding is finding a way to balance fun and productivity while traveling, and setting the right boundaries where necessary.

Achieving Financial Independence while Travelling

Balancing financial freedom with travel is a matter of strategic design rather than sacrifice. The key to achieving longevity is letting go of extremes, finding balance in long-term health planning and collecting life experiences. By prioritizing mindful choices, it is possible to build a life of liberty that begins today, not in a few decades.

Devin Partida is the Editor-in-Chief of ReHack.com, and a personal finance writer. Though she is interested in all kinds of topics, she has steadily increased her knowledge of the intersection of finance and technology. Devin’s work has been featured on Entrepreneur, Due and Nasdaq.

Tips for picking Stocks from the TSX index

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Financial, safety, and survival factors are important to consider when looking for stocks on the TSX

TSInetwork.ca

The TSX is the abbreviated name for the Toronto Stock Exchange. You will often see our stock recommendations on TSINetwork accompanied by a TSX index symbol. When we’re looking for the best investments to recommend in 2025 (ones you might consider as buy and hold), we start, as we traditionally do, by putting all the important information we know about a company into perspective. This is the case for making investments from the TSX index.

What is the TSX index?

The TSX is the largest stock exchange in Canada and the third largest in North America, representing approximately 95% of the Canadian equity market with roughly 3,417 listed issuers across various sectors of the Canadian economy.

Of note is that the Toronto Stock Exchange has more oil and gas companies listed on it than any other stock exchange in the world. That’s also reflected in the S&P/TSX Composite Index, commonly called the TSX index. The Toronto Exchange started on October 25, 1861. The TMX Group operates a number of stock and commodity exchanges, including the TSX.

Like most other major stock exchanges, the TSX index is highly regulated. The Toronto Stock Exchange lists common shares of companies, but also index securities like ETFs.

What are the different sectors of the TSX index?

The main sectors of the TSX (Toronto Stock Exchange) index include:

  • Financial Services – banks, insurance companies, and investment firms
  • Energy – oil, gas, and renewable energy companies
  • Materials – mining, forestry, and chemical companies
  • Industrials – manufacturing, transportation, and construction
  • Information Technology – software and hardware companies
  • Utilities – electricity, water, and gas providers
  • Consumer Discretionary – retail, entertainment, and automotive companies
  • Consumer Staples – food, beverage, and household products
  • Communication Services – telecommunications and media companies
  • Healthcare – pharmaceutical companies, healthcare providers
  • Real Estate – property management and development companies

How does the TSX index compare to the S&P 500?

While the S&P 500 has historically outperformed the TSX due to its heavy technology weighting, the Canadian index could reverse this trend in 2025 due to more attractive valuations, higher dividend yields, and potentially investors moving away from tech stocks.

Factors for finding the best stocks to invest in on the TSX index 

a) Financial factors:

Start your search for “buy and hold stocks” by looking for companies that have a 5- to 10-year history of profits. Companies that make money regularly are safer than chronic or even occasional money losers. You’ll also want to look mostly for companies that have been paying dividends for at least 5 years. Ten years is even better. Companies can fake earnings, but dividends are cash outlays. If you only buy dividend-paying value stock picks, you’ll avoid most frauds. The last financial measure we like to see in a company is manageable debt. When bad times hit, debt-heavy companies often go broke first.

b) Safety factors:

At TSINetwork we continue to look for companies that have industry prominence if not dominance when we consider stock to buy and hold (and watch carefully). That’s the same in 2025 as it was in 2005. Major companies can influence legislation, industry trends and other business factors to suit themselves. Smaller firms, on the other hand, don’t have that ability.

The next safety factor we look at is geographical diversification. We tend to buy and hold strong companies that operate Canada-wide, but we think multinational corporations are even better. There’s extra risk in firms confined to one small geographical area. The last safety factor we consider is that the best stocks must be free of excess regulation, free of dependence on a single customer, and free from self-dealing insiders or parent companies.

c) Survival/growth factors:

We feel that the best stocks to buy and hold are the ones that are free from business cycles. Demand periodically dries up in “cyclical” businesses, such as resources and manufacturing. You can hold some of these stocks in your portfolio, but keep them to a reasonable part of a well-balanced portfolio.

We are also particularly keen on companies that have ownership of strong brand names and an impeccable reputation. Customers keep coming back to these businesses, and will in turn try their new products.

Factors we look at when picking stocks from the TSX index   

  • We insist on political stability. For example, mineral exploration is risky enough without the threat of expropriation or onerous taxes.
  • We look for well-financed stocks with no immediate need to sell shares at low prices, since that would dilute the interests of existing investors.
  • We like to see a strong balance sheet with low debt. For junior stocks, we like to see a major partner who can finance a mine, software and so on to production.
  • We want to see experienced management with proven ability to develop and finance a new business.
  • We avoid stocks trading over-the-counter where regulatory reporting and so on is lax.
  • We avoid stocks trading at unsustainably high prices due to broker hype or investor mania.
  • We compare the market cap of the stock with the estimated value of its reserves, future product sales and so on.

Our stock research is always focused on investment quality

Even if a stock looks like it might thrive, we may still refrain from recommending it for a number of reasons. Our stock research may lead us to conclude that it presents too much risk of heavy losses if it fails to thrive. Or we may feel that stocks we already recommend offer better alternatives for investors seeking quality stocks to buy and hold. Or we may simply prefer to hold off on a promising stock because we feel it has limited near-term potential. This can happen because it has been overhyped in the broker/media limelight, for instance.

In many cases, we watch the progress of these stocks-we-like-a-little. We may recommend buying them months or even years later, but only after seeing favourable developments and signs of progress.

How have your TSX-listed stocks performed compared to your U.S. investments?

 

Pat McKeough has been one of Canada’s most respected investment advisors for over three decades. He is the founder and senior editor of TSI Network and the founder of Successful Investor Wealth Management. He is also the author of several acclaimed investment books. This post was originally published in 2014 and is updated regularly, mostly recently on Oct. 23, 2025.  It is republished on Findependence Hub with permission.

Perceived Risk vs. Actual Risk

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Image via Pexels: Fernando Arcos

By Michael J. Wiener

Special to Financial Independence Hub

We often see debates about whether or not volatility of returns is a good measure of risk.  This debate is related to what I think is a bigger issue: the difference between perceived risk and actual risk.  Perceived risk is influenced by observations and “dollar bias,” but actual risk comes from the full range of what might happen and its influence on buying power.

Dollar bias and buying power

In some contexts we forget about inflation and view dollars as constant over time.  For example, we tend to focus on nominal returns and think that it’s okay to spend gains as long as we leave the principal intact.  But the principal will erode with inflation if we spend all the nominal gains.

Another context where we see this bias is with mortgages.  We can calculate that with a 30-year $400,000 mortgage at 4%, the first year’s payments will only reduce the principal by about $7000.  But even with only 2% inflation, the buying power of the principal will erode by about $8000, and the fixed payments will become easier to make with rising salaries.  Homeowners are making more progress than they think.  If they can keep up the payments, inflation will eventually take care of both the principal and fixed payments.

Observations and what could have happened

It’s natural to be most worried about the things that we’ve seen happen, but there are many more things that could have happened.  Just because some employees invested everything they had in their employer’s stock and it worked out well doesn’t mean that it was a good idea.  If the employer had stumbled, the employees might have lost their jobs and all their savings at the same time.

The way we measure volatility of returns is often by looking at past returns over some period like a decade and calculating their standard deviation.  But this doesn’t capture what might have happened.  Measured volatility might reflect actual risk some of the time, but we’re guaranteed to have quiet periods with low measured volatility even though actual risk remains higher.

We see this at casinos all the time.  Craps tables sometimes appear to be “hot” with everyone making money, but in reality, the odds never change.  It’s not safer to gamble at craps when a table has been hot for a while.

Any investment strategy that tries to optimize leverage using measured volatility of past returns is destined to blow up after a period where measured volatility is much lower than actual risk.  This fact played a role in both the implosion of Long-Term Capital Management (LTCM) in 1998 and in the Global Financial Crisis of 2008.

Nassim Taleb’s parable of the turkey nicely illustrates the big difference between past experience and what could happen in the future.  A turkey might think that life is wonderful with all of its needs being met.  It never anticipates that fateful day when it becomes someone’s dinner.

Lessons

Actual risk is what might happen to the buying power of our savings.  It is not just what we’ve observed happen to our nominal savings in the past.  Here are some lessons we can take from these facts:

  1. Focus on buying power, not dollars.  The main way we get into trouble with dollar bias in investing is when we think long-term bonds are safe because they preserve principal.  Over long periods, inflation can be devastating, particularly when it rises unpredictably.  Long-term bonds are much riskier than they appear.
  2. There are risks out there that we can’t anticipate.  Whatever level of risk you decide is right for you based on the risks you can anticipate, it’s likely that you’d be better off with a little less risk.  This line of reasoning is often used to tell people to shift their portfolios a little away from stocks and more to bonds, but remember that long-term bonds are risky.  Sometimes the best way we can deal with unknown financial risks is to save a little more.
  3. Any financial plan that adapts to measured past return volatility is likely flawed.  If you’re into the weeds thinking about the Kelly criterion and Sharpe ratio of your portfolio, you’re probably on the wrong path.

Michael J. Wiener runs the web site Michael James on Money, where he looks for the right answers to personal finance and investing questions. He’s retired from work as a “math guy in high tech” and has been running his website since 2007.  He’s a former mutual fund investor, former stock picker, now index investor. This blog originally appeared on his site on  Sept. 8, 2025 and is republished here with his permission

Why Cash Flow Management is the Key to Early Retirement

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Image by Pexels: Tima Miroshnchenko

By Kylie Ann Martin

Special to Financial Independence Hub

The dream of retiring early is no longer a niche pursuit reserved for the ultra-wealthy. Thanks to the Financial Independence, Retire Early (FIRE) movement, thousands of professionals are restructuring their lives to exit the traditional workforce decades ahead of schedule.However, many aspiring retirees focus exclusively on their “magic number” — the total net worth required to stop working.

While having a significant nest egg is crucial, the true engine of a sustainable early retirement is not the size of the pile, but the efficiency of the flow.

Early retirees must plan for 40 to 60 years of living expenses, navigating market swings, inflation, and longevity risk. A smart strategy for tracking, adjusting, and optimizing income and withdrawals is what keeps your portfolio lasting — and your freedom intact — long after you leave the traditional workforce.

The Shift from Accumulation to Distribution

For the majority of an individual’s career, the focus is on Accumulation. You earn a salary, minimize expenses, and invest the surplus into growth-oriented assets. The upward trajectory of your net worth measures success.

The moment you retire early, the game changes entirely. You move into the Distribution phase, where the primary objective is no longer growth at all costs, but the consistent generation of liquidity to fund your lifestyle.

The challenge of early retirement is that your assets must serve two masters: they must provide enough cash for today’s bills while continuing to grow enough to outpace inflation for the next half-century. This transition requires a psychological and mechanical shift.

You are no longer “saving” for the future; you are managing a private endowment where the “yield” must be carefully harvested without killing the “golden goose.” Learning how to balance your inflows and outflows effectively is the first step in making this mental leap from a steady paycheque to self-funded sustainability.

Managing the Sequence-of-Returns Risk

One of the most significant threats to early retirement is “Sequence of Returns risk,”which is the danger that the stock market will experience a major downturn in the first few years of your retirement.

If you are forced to sell stocks to pay for living expenses when the market is down 20%, you are effectively locking in those losses and depleting your principal at an accelerated rate.

Effective cash flow management mitigates this risk by ensuring you never have to sell equities during a bear market. You can achieve it through a “bucket strategy” or a cash buffer. Many financial experts suggest streamlining your liquid assets by keeping two to three years’ worth of living expenses in low-volatility accounts.

When the market is up, you replenish the cash bucket from your gains; when it is down, you live off the cash and give your portfolio time to recover.

Strategies to Make your Money Last

To thrive over a 40-year retirement horizon, you need a dynamic withdrawal strategy. Rigidly adhering to a “4% rule” may not be enough if inflation spikes or market conditions remain stagnant for a decade.

A proactive approach to spending in retirement involves creating “guardrails”—predefined rules that dictate when you should belt-tighten and when you can afford a luxury purchase.

Dynamic spending adjustments

Instead of withdrawing a fixed amount adjusted for inflation, dynamic spending allows you to reduce your “paycheck” during market dips. This preservation of capital during downturns is one of the most effective ways to extend the life of a portfolio.

The role of yield-producing assets

Diversifying into assets that provide natural income — such as real estate or dividend-paying stocks — helps bridge the gap between your needs and your portfolio’s growth. This reduces the friction of selling assets and provides a more predictable monthly floor for your budget. Continue Reading…

Three Ways Life Insurance can Protect you from Inflation

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Photo courtesy LSM Insurance

By Lorne Marr, LSM Insurance

Special to Financial Independence Hub

Inflation means the prices of everyday things — like food, housing, transportation, and healthcare — increase over time. This reduces the purchasing power of your money and can affect your family’s standard of living. Permanent life insurance can be a powerful tool to help protect your finances against these rising costs.

What type of Life Insurance helps with Inflation?

Permanent life insurance provides lifelong coverage and builds cash value over time. Unlike term life insurance, which only covers a specific period, permanent policies can grow in value and death benefit, helping your family maintain financial security despite inflation.

Main types of permanent life insurance:

  • Whole Life Insurance
    • Provides a guaranteed death benefit and builds cash value.
    • Participating whole life policies pay dividends, which can buy Paid-Up Additions (PUAs)—small increments of additional insurance that increase both death benefit and cash value.
  • Universal Life Insurance (UL)
    • Flexible premiums and death benefits.
    • Option to choose a level death benefit or an increasing death benefit to keep up with inflation.

There are three main ways permanent life insurance can protect you against inflation:

1. Inflation Protection through Increasing Death Benefit Option in Universal Life Policies

How it works: Your death benefit can grow over time to match inflation.

Example (2% inflation):

By choosing an increasing death benefit, your coverage keeps pace with inflation, preserving purchasing power for your family.

2. Inflation Protection through Participating Whole Life Insurance and Paid-Up Additions

How it works: Dividends from a participating whole life policy can purchase Paid-Up Additions (PUAs), increasing both death benefit and cash value over time.

Example (2% inflation, PUAs $12,000/year):

With 2% inflation, the original $500,000 loses value to $452,000 in today’s dollars. PUAs grow your policy above this, effectively protecting your family against inflation. Continue Reading…