Tag Archives: Financial Independence

Canadians’ quest for Financial Independence

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An RBC poll finds Canadians believe they’ll need almost $850,000 to ensure an independent financial future

By Craig Bannon, CFP, MBA, TEP

(Special to Findependence Hub)

For many Canadians, Financial Independence is the ultimate goal: a future where they can live comfortably, support themselves and their families and enjoy their desired lifestyle without the constant stress of striving to make ends meet.

However, with ongoing market fluctuations, a higher cost of living, and overall economic uncertainty, reaching that milestone may feel more challenging than ever before. Many individuals find themselves trying to navigate a complex financial landscape, where saving for retirement and other financial goals requires careful planning and informed decision-making.

Findings from the recent RBC Financial Independence Poll indicate that Canadians believe they need an average of $846,437 to ensure an independent financial future : which they variously described as “having a nest egg large enough to enjoy my retirement,” “not living paycheque to paycheque” and being “debt free.”  In some regions, that number is even higher: respondents in the Prairies, for example, estimate they’ll need an average of $958,535. Among generations, Gen X (aged 45 to 60) anticipates needing over a million dollars to achieve Financial Independence.

 

Investing a Key Strategy for Growth

With such ambitious targets, investing has become a crucial strategy for many Canadians. Nearly half (49%) of poll respondents say they invested in 2024, with Gen X and Millennials participating at similar rates. But concerns linger, with nearly half of all respondents (48%) calling out market volatility and investment performance as a key worry, with this concern jumping to over half (54%) for Millennials.

However, while markets fluctuate, one constant remains: the value of having a strong financial plan based on one’s goals, with a long-term investing strategy to implement, to help investors stay the course through market ups and downs. The encouraging news: 51% of Canadians say they have a financial plan, either formal or informal. Those with a plan report feeling more confident (42%) and reassured (30%) about their financial future.

Staying the Course and Seeking Professional Guidance

For those hesitant to re-start – or begin – investing, waiting for the ‘perfect’ moment to invest may mean missing out on valuable growth opportunities. Time in the market, rather than timing the market, is important. The sooner you can invest and the longer you can be invested, the greater the opportunity to potentially benefit from the gradual growth that markets and economies can experience over the long term. Continue Reading…

All-in-one ETF showdown TD vs. BMO vs. iShares vs. Vanguard: Which is best?

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Image courtesy Tawcan/Unsplash

By Bob Lai, Tawcan

Special to Financial Independence Hub

Over the years, I have come to really like the all-in-one ETFs from Vanguard and iShares. I like these ETFs because they are a simple way to diversify your portfolio across different sectors and countries. These ETFs also automatically rebalance regularly, making an investor’s life much easier.

Due to the popularity of the all-in-one ETFs, both TD and BMO also created similar ETFs. Which company offers the best all-in-one ETFs? Are TD ETFs better? Are iShares ETFs better? Are Vanguard ETFs better? Or are BMO ETFs better?

Let’s find out!

TD ETFs

TD has many different ETFs, including active ETFs, special focused ETFs, and broad market index ETFs that are well-suited for different investment strategies. When it comes to all-in-one ETFs, TD offers three different ETFs that were created in 2020:

All three of these TD all-in-one ETFs have a MER of 0.17%. This means if you have $1k invested in one of these ETFs, you effectively would pay $1.7 in fees every year, which is extremely cheap if you think about it.

Here are the historical performances of these three ETFs:

1 Yr 2 Yr 3 Yr
TCON 12.48% 9.63% 4.41%
TBAL 19.27% 14.96% 8.04%
TGRO 26.27% 20.16% 11.70%

You can buy and sell all three ETFs via online brokers. Since many brokers offer commission-free trades nowadays, you can buy one of these all-in-ones regularly and build up your portfolio.

BMO ETFs

Like TD, BMO offers five different all-in-one ETFs (BMO calls them Asset Allocated ETFs).

All five BMO all-in-ones have an MER of 0.20%.

ZBAL and ZESG are very similar, except ZESG is for investors looking to align their investments with their social values.

Here are the historical performances of the five BMO ETFs:

1 Yr 2 Yr 3 Yr
ZCON 13.94% 9.74% 4.79%
ZBAL 18.67% 13.10% 7.25%
ZESG 18.63% 14.61% 7.68%
ZGRO 23.52% 16.49% 9.71%
ZEQT 28.35% 19.83% 12.09%

ZCON, ZBAL, and ZESG have more than 40% exposure to Canada, while ZGRO and ZEQT are more heavily exposed to the US.

iShares ETFs

Like BMO, iShares offers five all-in-one ETFs. 

All five ETFs have an MER of 0.20%.

Here are the historical performances of the five iShares ETFs:

1 Yr 3 Yr
XINC 9.97% 2.81%
XCNS 14.38% 5.07%
XBAL 18.81% 7.70%
XGRO 23.47% 9.65%
XEQT 28.06% 11.92%

Vanguard ETFs

Finally, Vanguard all-in-one ETFs:

VRIF has an MER of 0.29%, while the other five all-in-ones have an MER of 0.22%. VRIF probably has a slightly higher MER because of the fund structure. Interestingly enough, Vanguard all-in-ones have the highest MER out of the four fund companies (I said this because historically Vanguard has lead the way when it comes to lowest MER).

Here are the historical performances of the Vanguard all-in-one ETFs:

1 Yr 3 Yr
VCIP 8.90% 1.99%
VRIF 10.44% 3.08%
VCNS 13.61% 4.45%
VBAL 18.40% 6.90%
VGRO 23.39% 9.39%
VEQT 28.40% 11.83%

The best all-in-one ETFs for your investment portfolio

As you can see, all four fund companies offer all-in-one ETFs with different asset exposures. Which are the best all-in-one ETFs for your investment portfolio?

Well, that is totally dependent on your risk tolerance and your investment timeline.

If you are an investor who is approaching retirement or is already retired, you might want to invest in something more conservative. In other words, you don’t want to lose sleep whenever there’s a market correction. For you, a steady investment income and stable portfolio value growth is more important. Therefore, you probably will go with either a conservative all-in-one ETF or a balanced all-in-one ETF.

If you are younger with a longer investment time horizon, you want to aim for portfolio growth. Therefore, you’d probably go with either a growth all-in-one ETF or an all-equity ETF to maximize your return over the long term.

Best Conservative All-in-One ETF

As mentioned, if you are a conservative investor who needs a steady investment income with stable portfolio value growth, a conservative all-in-one ETF is probably the best choice for you.

The question is, which conservative all-in-one ETF is the best?

Let’s compare TCON, ZCON, XINC, XCON, VCIP, VRIF, and VCONs all of which are heavily exposed to fixed income.

Fixed income to equities Mix MER  1 yr return 3 yr return 5 yr return Yield %
TCON 70-30 0.17% 12.48% 4.41% N/A 2.26%
ZCON 60-40 0.20% 13.94% 4.79% 4.87% 2.45%
XINC 80-20 0.20% 9.97% 2.81% 2.86% 2.70%
XCON 60-40 0.20% 14.38% 5.07% 5.35% 2.17%
VCIP 80-20 0.25% 8.90% 1.99% 2.11% 2.86%
VRIF 70-30 0.32% 10.44% 3.08% N/A 3.55%
VCON 60-40 0.24% 13.61% 4.45% 4.71% 2.51%

Among ZCON, XCON, and VCON, which all have the same 60-40 mix, it’s interesting to see that XCON had the best returns consistently, but XCON has the lowest distribution yield.

Among TCON, XINC, VCIP, and VRIF, TCON has had the highest returns, most likely due to the lower MER fees.

Not surprisingly, ETFs with a higher exposure to stocks have had higher returns in the last five years. Continue Reading…

“Unretirement” — more than one in four near-retirees plan to work in Retirement to make ends meet

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My latest MoneySense Retired Money column has just been published. You can find it by clicking on the highlighted text here: Why “unretirement” may be the fate of so many Canadians.

Even before the Tariffs threats emerged under Trump 2.0, Canadian seniors were starting to find the economic uncertainty and rising living costs to be unmanageable. No surprise then that many seniors approaching Retirement Age are delaying their exit from the workforce.

According to a report by HealthCare of Ontario Pension Plan, 28% of unretired Canadians aged 55-64 say they expect to continue working in retirement to support themselves financially.  Here’s a screenshot from the HOOPP survey:

 

The Healthcare of Ontario Pension Plan (HOOPP) commissioned Abacus Data to conduct its sixth annual Canadian Retirement Survey in the spring of 2024.  The latest survey finds “persistent high interest rates and a rising cost of living continue to have a significant negative impact on Canadians’ ability to save and manage the cost of daily life, threatening their retirement preparedness.” While all Canadians are struggling, “women and those closest to retirement are especially hard hit with lower savings and higher levels of financial stress.”

While most Canadians are struggling to save amidst a high cost of living, HOOPP finds women are particularly affected. Half (49%) of all Canadian women have less than $5,000 in savings and almost a third (28%) have no savings (compared to 33% and 17% of men, respectively), similar to the 2023 results

 

The MoneySense column also looks at more recent Retirement surveys that also reveal anxiety about rising costs of living. One is from Bloom Finance Co. Ltd., conducted by founder Ben McCabe after Trump’s Tariffs started to kick in this year.

A Bloom study conducted with Angus Reid found 46% of Canadians thinking of working part-time in Retirement. That’s in line with a Fidelity survey in 2024 that found half of Canadians plan to delay Retirement. According to the Bloom Report [in March 2024], 67% of Canadian homeowners over 55 were concerned their savings would not sustain their quality of life through retirement. Only 29% considered downsizing or alternative living situations to access their home equity earlier than expected. 59% of the same cohort agreed accessing micro-amounts of their home’s equity would help maintain their desired living standard. Continue Reading…

How Pursuing Financial Independence has Positively Impacted our Stress Levels

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Image by Pexels: Count Chris

Navigating the complexities of personal finance can be overwhelming, but strategic approaches lead to significant stress reduction. This article delves into the transformative power of  Financial Independence, drawing on the expertise of seasoned professionals. Gain actionable insights on how to fortify financial health and secure a more serene state of mind.

  • Automate Investments and Minimize Unnecessary Expenses
  • Prioritize Savings to Build Financial Cushion
  • Build Financial Resilience for Future Security
  • Automate Finances to Improve Sleep Patterns
  • Pay Off Debt to Reduce Mental Strain
  • Diversify Income to Ease Financial Stress
  • Maintain Safety Net for Peace of Mind
  • Pursue Financial Independence for Strategic Decisions
  • Financial Stability Empowers Value-Based Choices

Automate Investments and Minimize Unnecessary Expenses

Before discovering Financial Independence, every surprise expense felt like a mini heart attack. A sudden car repair or an unplanned medical bill would throw my whole month into chaos. I used to track my expenses obsessively, but it felt more like watching a sinking ship than steering it.

When I embraced the principles of Financial Independence, everything changed. I automated my investments to ensure consistent growth, minimized unnecessary expenses, and started treating my net worth like leveling up in a video game. Each step forward brought a tangible sense of progress, like gaining “health points” for life’s challenges.

The real difference came when the unexpected happened. For instance, when my car needed a major repair last year, I calmly paid cash instead of scrambling for a solution. That moment solidified my newfound confidence: I was prepared, not panicked.

Pursuing financial independence has been transformative for my stress levels. It’s not just about the numbers-it’s about turning fear into opportunity and anxiety into control. Every step toward independence feels like reclaiming a piece of peace. — Ahmed Yousuf, Financial Author & SEO Expert Manager, CoinTime

Prioritize Savings to Build Financial Cushion

Breaking free from the paycheck-to-paycheck cycle was one of the most transformative changes in my life, and it significantly reduced my stress and anxiety. Early on, I found myself constantly worrying about covering expenses, with little room to plan ahead. It felt like I was stuck in a cycle of survival, with no opportunity to build stability or security for the future. That constant financial uncertainty weighed heavily on me, affecting my focus, decision-making, and even my health.

The turning point came when I decided to prioritize savings. Even with modest means, I began setting aside a small percentage of each paycheck into a high-yield savings account. At first, it required discipline, sacrificing small luxuries like dining out or unnecessary purchases, but over time, the effort began to pay off. Watching my savings grow gave me a sense of control that I had never felt before. Instead of reacting to emergencies, I started feeling prepared for them.

A defining moment came during a time of professional uncertainty when layoffs were happening at my workplace. Previously, the prospect of losing a job would have left me in a panic, consumed by questions about how to pay for rent, bills, or necessities. This time, however, I had built a financial cushion that gave me peace of mind. Knowing I had several months of living expenses saved, I was able to remain calm, evaluate my options, and focus on finding the right path forward instead of making decisions out of desperation.

That experience taught me the profound power of financial stability. It not only reduced my anxiety but also allowed me to approach challenges with clarity and resilience. Building that security was a key step toward greater personal and professional confidence, reinforcing my commitment to the values of preparation and intentionality. — Sean Smith, CEO & ex Head of HR, Alpas Wellness

Build Financial Resilience for Future Security

Pursuing Financial Independence has had a profoundly positive impact on my stress levels and anxiety by creating a sense of security, freedom, and control over my future. The process of building financial resilience has allowed me to approach challenges with more confidence and reduced the mental burden of living paycheck to paycheck.

How It Reduced Stress:

  • Peace of Mind: Knowing I have a financial cushion reduces the worry about unexpected expenses, such as medical bills or job loss.
  • Freedom to Make Choices: Financial independence provides the ability to take calculated risks, whether in career changes, starting a business, or investing.
  • Clear Goals: The structured process of saving, investing, and reducing debt brings a sense of purpose and direction, alleviating financial uncertainty.

In 2023, a major opportunity arose for me to transition from a salaried role to building my company. While exciting, the leap into entrepreneurship came with inherent risks, including the loss of a stable income. However, my pursuit of financial independence over the years had equipped me with:

  • An emergency fund covering 12 months of living expenses.
  • A diversified portfolio generating passive income.

This financial safety net allowed me to focus on growing the business without the anxiety of immediate financial pressure. Instead of stressing over daily operational costs, I was able to make thoughtful decisions about hiring, marketing, and product development. The result was not only professional growth but also improved mental health, as I could prioritize long-term success over short-term survival.

Pursuing financial independence isn’t just about wealth: it’s about reducing uncertainty and empowering yourself to lead a balanced, fulfilling life. It’s one of the most impactful ways to mitigate stress and foster a sense of control. — Kalpi Prasad, Finance Partner, Renown Lending

Automate Finances to Improve Sleep Patterns

Reducing financial stress has profoundly improved my overall well-being, and one of the most noticeable changes has been in my sleep patterns. Before I began focusing on financial stability, my nights were filled with worry, whether it was about unexpected bills, looming due dates, or just the general uncertainty of not having a financial plan. I often found myself lying awake, replaying scenarios about how I might manage in case of emergencies. This mental turmoil not only disrupted my sleep but also impacted my ability to fully show up for others during the day, especially in my personal and professional life.

One of the most transformative steps I took was automating my finances. By creating a system where a portion of my income automatically went into savings and setting up automatic bill payments, I removed the risk of late fees and the constant fear of forgetting due dates. For instance, I prioritized building an emergency fund by setting aside a small percentage of my income every month. Slowly but surely, watching that fund grow gave me a sense of security I hadn’t felt before. My recurring expenses were handled without the stress of constantly monitoring them, which freed up mental space for more meaningful pursuits.

This sense of order allowed me to sleep peacefully for the first time in years. Knowing that my financial house was in order provided a deep sense of relief, allowing me to let go of the endless cycle of “what-ifs” that had previously kept me awake. A pivotal moment for me came when an unexpected family expense arose. In the past, I would have spiraled into worry, trying to figure out how to manage. Instead, I was able to handle the situation calmly, knowing I had prepared for moments like this. That experience reinforced how much my financial independence was improving my life.

Now, I wake up rested, focused, and ready to continue serving others, which has always been my greatest passion. Recovery taught me the importance of building stability in all areas of life, and Financial Independence has become a key part of that journey. It’s a reminder that taking small, consistent steps toward stability creates a foundation for lasting peace and purpose. — Tyler Bowman, Founder & CEO, Brooks Healing Center

Pay off Debt to Reduce Mental Strain

Paying off debt was a transformative milestone in my journey toward Financial Independence and significantly reduced my stress and anxiety. The weight of monthly payments was a constant source of mental strain, creating a cycle of worry that seemed impossible to break. I vividly remember how overwhelming it was to see interest charges pile up, making progress feel out of reach. It often felt like no matter how much I tried, I was stuck in a loop that only deepened my stress.

To address this, I took a methodical approach, prioritizing high-interest debts and creating a structured repayment plan. Each payment became a small victory, reinforcing my determination to push forward. It wasn’t always easy, but focusing on the long-term goal of freedom kept me motivated even during challenging moments. The day I cleared my debt was nothing short of life-changing. The relief I felt was profound, like a weight I had been carrying for years was suddenly gone. Continue Reading…

7 Hidden Traps of Retirement

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By Fritz Gilbert, TheRetirementManifesto

Special to Financial Independence Hub

The article was from the Harvard Business Review and highlighted 7 Hidden Traps of Retirement, which the writers discovered during interviews with “dozens of highly respected former chief executives.”

As I read the article, I realized the traps of retirement don’t apply only to folks retiring from top management positions.

These traps present a risk to all of us.

Today, I’m presenting each of the 7 Hidden Traps of Retirement and my thoughts on how best to avoid them.

Be forewarned.

Don’t get trapped.

Don’t fall into any of these 7 Hidden Traps of Retirement. Use these tips to avoid them and live a great life in retirement. Share on X

7 Hidden Traps of Retirement

The article that made me think was The Challenges of Retiring from a High-Powered Job, written by three founders of ONYX, an invitation-only group designed to build a community for current and former CEOs.  I encourage you to read the article, but I’ll summarize the key points below.

In their work helping CEOs prepare for retirement, the team has discovered seven hidden traps of retirement. While focused on senior managers, I’m taking a different twist with their list and considering how these traps apply to all of us. I’ve taken the liberty of renaming each of the seven hidden traps of retirement to better align with the readers of this blog and providing my thoughts on how to avoid falling into each.

The risks apply during our planning for and transition into retirement.  If you’re struggling with the transition into retirement, perhaps it’s because you’ve fallen into one of these traps.

1. Focusing on who you are, instead of who you want to become.

Original Title:  Looking through the lens of the present impedes you from seeing future possibilities.

In your final years of work, it’s easy to procrastinate on retirement planning and focus on your current role.  You’re busy doing your job and you can deal with that retirement stuff after you’re done working.  That’s a dangerous approach that far too many people follow.  It’s one of the traps of retirement for a reason. Seeing beyond your current role requires a creative imagination, the type that has likely been dormant for years.  Losing your sense of identity can be a shock in retirement, but the impact can be minimized by the appropriate planning.

How to Avoid the Trap:

Forget about your current role for a minute.  After all, it will be irrelevant the day after you retire. (Let that sink in)

Think about what you want your life to BECOME in retirement.  You’ll no longer have that title, and that sense of identity you get from your work will be gone.  That’s scary, and something a lot of people avoid thinking about. Don’t be that person.  Rather, think about your new identity in retirement. What do you want to be known for? What areas are you curious about?  What did you do as a child that you’d like to revisit now that you’re free from those chains of work? Carve out time to think about what impact you want to have with your newfound freedom.  It takes some time, so be patient.  The important thing is to think beyond your current role and imagine what you can do to make a difference once the job is gone.

In What I’ve Learned From Writing 400 Articles About Retirement, I wrote about my new identities in retirement (writer, running a charity, grandfather, etc).  A quote from that article is relevant here, and I’d encourage you to adopt it as one of your goals in retirement:

“I’m not who I used to be, and I love who I’ve become.”

2. Focusing on too many options.

Original Title:  A wealth of options can overwhelm and paralyze decision-making.

That busy schedule and rigid structure will disappear when you retire, and you’ll be looking at a “blank sheet of paper.”  Having no schedule or structure to your day sounds appealing, but it becomes disorienting after a surprisingly short period.  Your brain will start searching for something to do, and you’ll have difficulty prioritizing what you want to do with your life.

How to Avoid the Trap:

Take some quiet time to think about what impact you want to make with your retirement years.  Think about the causes you have a passion for.  Listen to your inner curiosity, and take that first step to see where it leads. When you’re thinking about something you could do, compare it to that list of things that matter to you.  For example, you may have enjoyed working with younger people during your career and would like to find a way to do that in retirement.  Perhaps you’ll become a mentor, a Big Brother, or a business coach to the next generation.

Find your “North Star” and pursue only those opportunities with strong alignment to the things that matter to you.  Don’t pursue “busyness” for the sake of being busy.  Rather, invest your time in areas where you have a real interest (lack of experience doesn’t matter, as I’ll demonstrate below).

Using your time to impact an area you care about is the true path to happiness.

3. Not building relationships outside of work.

Original Title:  Relying on your old network can distract you from the critical task of building your new one.

Everybody thinks they’ll keep in touch with folks they worked with.  Almost no one does. It’s one of those strange realities of retirement, and it will likely happen to you.  (Note this statistic in “Shining The Light on Retirement Blind Spots”: 62% of retirees missed the relationships from work, whereas only 29% of pre-retirees expected it to be an issue).The relationships at work are about “work.”  Once you’re out of the scene, it becomes difficult and awkward to maintain those relationships.

And yet, relationships matter.

I dedicated an entire chapter in my book to relationships.  People think about their paycheck stopping when they retire, but they often overlook the “softer” benefits they receive from work which will also disappear:

  • Structure
  • Sense of Identity
  • Relationships
  • Sense of Purpose
  • Sense of Accomplishment

Ironically, these 7 traps of retirement align almost perfectly with that list.  That doesn’t surprise me in the least.  If you’re a regular reader, you know I’m passionate about the importance of the “soft side” of retirement.

How to Avoid the Trap:

In your final year or two of work, be intentional about building relationships outside your workplace.  Your mission: build relationships that will be there after you retire.  Spend a few Saturdays volunteering at a local charity.  Get involved with a few Facebook groups in your area that do things that interest you.  Join a gym and learn to play pickleball. Join a local hiking club. Go to a Trout Unlimited meeting.  Call an old friend. Attend a local church.

Explore whatever interests you and pay attention to the people in the groups you visit.  In time, you’ll find a group that feels “right.” Pay attention, that’s where you’ll get your retirement relationships.

They matter more than you expect.

4. Waiting to figure out retirement until after you retire.

Original Title:  Delaying retirement planning can lead to urgent, anxious, and awkward outcomes.

don't retire without a plan

A quote from the original article is telling:

“The majority of CEOs and executives we talked with told us they failed to appropriately plan for their retirement — and nearly all told us they waited too long to start.”

It is, perhaps, the most common of the traps of retirement.  Many people are nervous about retirement, and procrastination is a common response.  “I’ll deal with it when I’m retired,” many people think.  That’s one approach, but research has shown that taking that route will lead to a difficult transition. The cliff is coming, and you can prepare your parachute or just take the leap and figure it out once airborne.  I recommend the former approach, it makes for a much smoother landing.

How to Avoid the Trap:

As I was in my final working years, I was interested obsessed with figuring out why some people had a smooth transition to retirement, whereas others struggled.  As I’ve written before, there’s one single element that is the most highly correlated with the smoothness of your transition.  That element?

The amount of time you spend planning for retirement in your final years of work (both on financial and non-financial issues).

Spend a lot of time planning, and your retirement will be smooth.  Ignore it until you retire, and buckle in for a rough ride.  As I wrote in The 4 Phases of Retirement, only 15% of retirees skip over the dreaded Phase II.  I was lucky enough to be one of them.  So can you. Continue Reading…