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).

Get out of debt in your 20s or 30s, but get serious about Wealth accumulation by 40s

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This is the theme of my Personal Finance column in this weekend’s Financial Post: page FP9 for those with a dead-tree edition. Asked when you need to get serious about saving and investing towards retirement, I make the case for first getting out of debt. As one character says in Findependence Day, “You can’t climb the tower of wealth while you’re still mired in the basement of debt.”

This means paying off high-interest credit-card debt and maybe student loans before worrying about stocks, bonds and ETFs. The sooner you do, the sooner you get a TFSA. Once you’re in a higher tax bracket, add the RRSP. And if you’re not serious about all this by your mid 40s, be prepared to work a long, long time and/or have a simple enough lifestyle that by the time you turn 67 and qualify for government benefits (Social Security in the US, CPP/OAS/GIS in Canada) you will be accustomed to living on a modest income.

Here’s the full article.

Why you need to stay on top of geopolitics and macroeconomics

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We will be adding to this category in time. We think a big part of financial independence is staying on top of global geopolitics, macroeconomics and regional developments. Even if you believe in low-cost passive “asset-class” investing and strategic asset allocation (as many on this site do), we all know how unexpected global developments can impact our best-laid plans for Financial Independence. Look at the plunging price of oil (and gold) at the same time as ISIS has emerged as a global threat — and one that leverages social media to boot.

Now it’s true that some advisers may counsel you to ignore all the noise, and that’s fine. Or perhaps your adviser is a full-service professional who considers it his or her job to worry about all these things on your behalf. Also perfectly fine.

But for do-it-yourself investors or those who use a fee-for-service adviser to validate some of our investing decisions, it helps to stay abreast of world developments, which is why I personally subscribe to publications like The Economist.

We can’t always get the latest trends up on this site in time, which is why we run my personal Twitter feed on the top right of the home page. We try to stay on top of the world’s major newspapers as well as many more experts that can be found at my FindependenceDay Twitter feed.

For geopolitics and macroeconomics specifically, check out my Economics & Politics Twitter feed, which contains 500+ experts focused on global macroeconomics, politics etc. — JC