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).

Nobody can consistently make accurate Stock Predictions today — or any other time

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Relying on stock predictions today to forecast future market trends is likely to cost you money. Follow this advice instead: Focus on share value and using our three-part investing philosophy to profit

TSInetwork.ca

We think it’s a mistake to let stock predictions today guide your investments, but especially so at times like now, when new ideas and differences of opinion are continually streaming into the markets. They make more choices available to you if you are trying to create or update a prediction. This is hard on investors who focus on predictions. When more predictions are floating around, predictions fans have more ways to guess wrong.

The best way around this problem is to quit making predictions. Forget about trying to pinpoint future events or developments. Everybody who tries often enough will wind up making some good guesses. However, no one can foresee the future.

Instead, take a close look at what we know about the current investment situation. Then, try to spot investments that seem to offer attractive opportunities under a variety of future conditions.

No one can consistently make stock predictions today — or any other time

In investing, it pays to avoid relying on stock market predictions. Successful predictions can pay off enormously, of course. But nobody can consistently or even frequently predict the future in individual stocks or the market. The more your investment success depends on predictions, the greater the risk you face.

On the other hand, it’s possible to assess investment conditions in a general sense. That way you may recognize when it’s a good time to buy stocks, if you can afford to hold them for the next couple of years or longer. If you do most of your buying in times like that, you’ll wind up making a lot of money over the course of your investing career.

Keep a long-term view in mind when considering stock predictions today and “a good time to buy”

Mind you, “a good time to buy” is an opinion on a long-term probability. It doesn’t mean the market will go up right away. For that matter, you may buy just prior to one of the market’s occasional downturns. You have to accept this risk if you want to profit from the stock market’s ability to turn middle-income people into well-off retirees over the course of a few decades.

The funny thing is that many people hurt their prospects by going at it backwards. Instead of looking for good times to buy, which are relatively plentiful, they fixate on avoiding the market’s relatively rare downturns. They try to do that by hunting for reasons to stay out of the market. Continue Reading…

How often should you rebalance your portfolio?

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By Dale Roberts, cutthecrapinvesting

Special to Financial Independence Hub

How often should you rebalance your portfolio? There’s good news on that front as less is more. We’ll take a look at a very telling chart from Frederick Vettese. And I take another look at the very telling perfomance table for the core Tangerine Portfolios. In this post I will also take you through my top observations of the week – by way of my Twitter / X Tweets. That includes – bonds vs GICs, big dividends under attack, my U.S stock portfolio returns, and what’s in store for the Canadian banks.

Courtesy of Fred Vettese in the Globe and Mail, a look at rebalancing a core ETF portfolio.

Here’s the link for those who have a Globe subscription.

On April 1, 2013, $1,000 was invested in each of four exchange-traded funds: a U.S. stock ETF, denominated in Canadian dollars (stock symbol XUS), a Canadian stock ETF (XIC), an international stock ETF (XEF) and a Canadian bond ETF (XBB). The initial asset mix is therefore 75-per-cent equities and 25-per-cent bonds.

Fred’s test showed almost identical results for rebalancing every quarter and once a year. That suggests that you can save yourself some time and effort (and perhaps trading costs) by rebalancing just once a year.

We can also see that when the unbalanced portfolio performed better during a period of robust stock returns. That said, the portfolio risk level has increased.

I have been evaluating portfolios for many years (decades) and more often find that rebalancing once a year often leads to greater returns. It allows a successful asset to go on a greater run before the money is moved to the under performing asset.

You might also consider rebalancing based on thresholds – perhaps when an asset is 5% or more about your target allocation.

The lessons of the Tangerine Portfolios

I had another look at the index-based Tangerine Portfolios. As you may know I was an advisor and trainer with Tangerine for several years. Those are a wonderful solution for those who want lower-fee managed portfolios and investment advice.

You can also have a look at the Tangerine Global ETF Portfolios.

There are many lessons that can be learned or observed from the returns of the portfolio models. I offered some ideas in this Twitter thread.

While you can check out that thread, and yes you should follow me on Twitter / X I will strip out the main lessons (shown below).

Lesson 1: Risk and returns

Investors were rewarded for taking on more risk. The risk/reward proposition.

An all-equity portfolio might earn in the area of 9% annual, while a balanced growth model is more 7%’ish and a balanced model more 6%’ish. Keep in mind that the start dates for the balanced portfolios was terrible – just before the financial crisis in 2008. Continue Reading…

Fritz Gilbert on why he’s Retiring from full-time blogging about Retirement

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By Fritz Gilbert, TheRetirementManifesto

Special to Financial Independence Hub 

 

On April 12, 2015, I wrote my first post on this blog.

  • A decade of writing.
  • 441 articles.
  • 1 Million Words.

Wow.

It’s been a heckuva ride. I’m in awe that over 16,000 of you subscribe to my blog and read what I write (a sincere “Thank You!” to all of you).  It’s an honor, and I take it seriously.  In that very first post, I wrote the following:

“This is the story of my journey, told in The Present before it becomes The Past.”

I’ve always liked that sentence, and it’s become one of my goals with this blog.  To share my journey, as I’m living it, with the hope that sharing my experiences will help others achieve a great retirement.

At this point in my journey, I feel I’ve accomplished that goal.

As I seek to continually experiment with my retirement lifestyle, I challenge myself to embrace the freedom these years offer. Sometimes it’s hard, and today is one of those days.  As that journey has evolved, it’s reached the point where it’s led to a major decision for this blog.

That decision?

I’m retiring from full-time blogging.

But…I’m getting ahead of myself.  To gain insight into my decision and what it means for this blog, read on…

I’m retiring from full-time blogging. Today, the story behind my decision, and my plans for the future… Share on X

Shifting Gears after 10 years of Blogging

I’ve known a lot of bloggers over the past decade, most of whom have faded away. That’s not a surprise, given that 80% of blogs fail to survive beyond 18 months.

They just … disappear.

One day, you’re reading their stuff, and a few months later, you realize you haven’t seen anything from them in a while.  A year later, they’re all but forgotten.

I’m taking a different approach

As always, I’m being transparent about this phase of my journey, and I’d rather tell you what I’m thinking than have you wonder where I’ve gone. This is my Present, before it becomes my Past.

After 10 years of diligent writing, it’s time to shift gears.  I still enjoy writing, but it’s becoming more of an obligation than the true joy it’s been in the past.  With over 440 articles in my archives, it’s harder to find fresh topics to challenge my mind.  I think less and less about potential topics, a sharp contrast to the earlier years of writing when ideas were constantly flooding my mind.

It’s time to move on

I’ve always encouraged you to remember that Retirement Is Like A Game of Poker, and challenged you to constantly improve the cards you’re holding.  If a card is getting stale, don’t hesitate to exchange it for a new card from the deck.

I’d be a hypocrite if I didn’t apply the same advice. The blogging card has gotten a bit stale, so I’m shuffling the deck and putting the cards down for a while.

I hope you’re doing the same.

Never stop experimenting.

Never stop improving your hand

The Future of The Retirement Manifesto

The good news is, this blog isn’t going anywhere.  I have no intention of selling it, and I plan on keeping it online well into the future.  I’ll still write when the urge strikes.

The thing that will change is the frequency of my writing.

After all, I’m retiring from full-time blogging.  😉

I don’t know exactly what that means yet, but I’m going to explore it for a while to see where it leads. I’ve been writing about retirement for a long time, perhaps I’ll use this platform to share thoughts on other topics in the future.  Most likely, I’ll follow the path that Mr. Money Mustache and JL Collins have taken, and write when I feel I have something worthwhile to say.  They both only write a few times a year, but I still read every word.  I hope my readers will do the same for me.

Stay tuned (and please don’t unsubscribe)…

I’m getting busier with other activities that I enjoy, and the blogging card has become more intrusive. I seldom find time to sit at my keyboard, and I’m fine with that.  I prefer to be out… .. Continue Reading…

Retirement Confidence is Crashing: Here’s how Canadians can take back Control

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Image via Pixels: Marcus Aurelius

By Ben McCabe, Bloom Finance

Special to Financial Independence Hub

Over the past year, Canadian seniors have faced rising inflation, high interest rates, and ongoing economic uncertainty, all of which are reshaping what retirement looks and feels like in Canada.

Retirement was once viewed as a time of ease and stability; instead, for many, it now feels like a constant calculation of trade-offs and tough decisions. Recent data paints an unfortunate picture, as retirement confidence is declining fast. Only 36% of Canadians feel confident in their ability to stay financially stable in retirement and just 7% feel very confident, while 27% are not confident at all.

This isn’t about long-term planning gone wrong: it’s about the real-time impacts of economic conditions that have changed dramatically over the last few years. Inflation has outpaced income, and daily essentials like food, utilities, medical care and housing are up nearly 30% over the past three years. However,  there are ways to regain control.

A Shifting Retirement Reality

Many older Canadians are now exploring alternative ways to stretch their resources. For some, that has even meant returning to work:  nearly half (46%) of Canadian homeowners aged 55+ are considering part-time jobs to make ends meet with rising living costs. For others, it means delaying retirement altogether: 67% say they’re concerned their savings won’t sustain the quality of life they had envisioned.

Meanwhile, traditional supports like the Canada Pension Plan, Old Age Security, and personal savings no longer offer the security they once did, especially since many seniors are financially supporting family members. According to another survey, 1 in 3 Canadian grandparents are financially supporting their children or grandchildren, with 53% saying that support has increased over the last two years. With 65% acknowledging that assistance impacts their own retirement savings, it’s clear that seniors are carrying more financial weight than ever.

Taking back Control

In response, seniors are taking steps to regain their financial control. One critical first step is getting a clear understanding of the full financial picture: knowing what money is coming in and what is going out. By distinguishing between “wants” and “needs,” retirees can prioritize essentials like housing, food, healthcare, and look for opportunities to cut back where possible.

Exploring New Solutions

In a financial landscape that is ever-changing, more and more seniors are open to innovative solutions that may not have been part of their initial retirement plans. Three-quarters of Canadian seniors own the homes they live in, and most entered the housing market decades ago. With years of sustained low interest rates and population growth that has outstripped new housing supply, home prices have tripled nationwide in the last 20 years (and more than that in many markets). Continue Reading…

How to Create a Crisis Budget that Supports your Path to Findependence

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Image by Rilson S. Avelar from Pixabay

By Devin Partida

Special to Financial Independence Hub

No one expects a monetary crisis to strike until it does. Some events that might throw you into a tizzy include losing your job, a pet getting ill and needing emergency veterinary services or the family vehicle breaking down.

To stick to financial goals, you must have a plan for when the current one falls to pieces. Creating a budget that allows you to survive a sudden catastrophe while saving for a home, travel or retirement is the secret ingredient to keeping the nest egg you need.

Amid the Storm: Identify and Prioritize Essential Expenses

An annual emergency savings report by Bankrate, YouGov and SSRS found that 59% of Americans are not comfortable with their emergency savings. For millions of people struggling paycheck to paycheck, anything outside their normal costs spells trouble.

The first thing to do when you experience fewer funds than bills coming in is to assess where you are and how much money you need to survive.

Identify Needs versus Wants

Although your favorite treat from the grocery store may seem like a need, you can likely find something less expensive to fuel your body. Some examples of needs include:

  • Shelter
  • Food
  • Heating and cooling

Once you have a list of the things you can’t live without, you’ll be better able to assess your priorities. In the short term, calling creditors or subscription services to pause payments or end plans can free up enough money to get through the predicament or assess how much money you need now.

Renegotiate Bills

The next step is to call each company to see what flexibility you have. For example, you need utilities to cook, heat your home and use the lights. Many local utility companies will put you on a payment plan so the bill remains the same around the calendar year rather than increasing exponentially during extreme weather.

For credit cards or subscriptions, explain your financial crisis and ask how to reduce monthly payments. Remember that delaying them may increase the total interest paid on the debt, so only use this technique to survive a short-term spending mess.

Cut to the Bare Bones

If you lose your income or have an unexpected expense, you may need to slash spending even more. Look to local resources for help. Food banks can provide sustenance when you lack grocery funds. Talk to your local county, township or public trustee about help with power bills and other resources in your area.

3 things to do to prepare for Financial Emergencies and Unexpected Expenditures

Life is filled with surprise charges. One way to plan for any crisis is to budget for it now. Weathering the next monetary tsunami will feel more like jogging up a hill than crawling up a steep mountain when you’re prepared. Here are some things you can do to be ready:

Create Multiple Streams of Income

Prepare for extra expenses like medical emergencies or the added costs of parenthood by finding ways to bring in more income. If the raises at work are lower than inflation, you can pick up a side hustle and join the gig economy to cover emergency funding.

In addition to diversifying your income sources, you can receive education to become eligible for higher-paying roles at work. Get an online certification, take a course through the local community college or enter management training through the workplace.

Add apps that earn you money for doing things like walking, taking surveys or buying things online. Look for creative ways to bring in extra cash, such as selling art you create or selling used items. Continue Reading…