Tag Archives: Financial Independence

Was retiring 35 years ago at age 38 worth it?

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By Billy and Akaisha Kaderli, RetireEarlyLifestyle.com

Special to Financial Independence Hub

During one of our private two-hour lunches, Akaisha brought up the topic: “Was retiring early at the age of 38 worth it?”

Wow! What a question.

We each have had our share of personal ups and downs in life – before and after we retired. It was a subject worthy of discussion.

Beaches, babes and boys in Boracay, Philippine Islands

If we had stayed in our careers until the “normal” twenty years of service in the corporate world, that would have us retiring in 2006 at the age of 54. This still would have qualified us for “early retirement” by most definitions. Assuming things would have been the same, financially we would be much better off had we continued working.

With a house and our cars paid for, living near a beautiful beach with great weather in California, a corporate pension, plenty of stock market assets and cash, it would seem that we would be wanting for nothing.

 

 

Lakeside treasure home, Lago Atitlan, Guatemala

Health wise, who knows? The stress of working high pressure jobs for those extra years most likely would have taken a toll on our physical health. And two decades later with the aches, pains and caution that ageing brings, would we still be as adventurous and willing to try new things in a retirement that was just beginning?

And then there is the question of whether or not we would still be together. Many of our friends are on their second marriages, and this could possibly have happened to us as well.

Of course these are all hypothetical notions as this is not the way it happened.

However, had we retired from the workplace in 2006 with a greater portfolio, “traveling in style, having the good life and livin’ large,” we would have been sitting pretty until the markets took one heck of a fall in 2008. With the S&P, Dow Jones Industrial Average and the NASDAQ all dropping over 38%, the shingles of our financial house would have been heartily shaken, making us ponder if we did the right thing by leaving work early.

Is there ever the perfect time to retire? And how do you know?

Experiences vs. Assets

Traveling the world for as long as we have, we have garnered a wide range of experiences and have tested our mettle. How do you put a price on first-hand education and thirty years of living around the globe? Continue Reading…

Why you should focus on Lower-Risk Investments in your TFSA

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Here’s a Look at the Best Investments to Hold in a TFSA – and Why

Image via Deposit Photos

We recently had a question from a member of Pat McKeough’s Inner Circle that asked:

“Pat, I hold Intel in a non-registered account with a capital loss showing and am thinking of transferring it to my TFSA “in kind” with no tax penalty. Is Intel a suitable stock to hold in a TFSA?”

We’re not tax experts, so you might want to consider talking to an expert, especially if there are large funds involved.

However, transferring shares in kind into a TFSA does trigger a capital gain or loss for income tax purposes.

If the investment is in a capital gains position, you will have to declare it as a capital gain on your income tax return. But if there is a capital loss, you will not be able to declare the loss for tax purposes. This is because the government still sees you as the beneficial owner of the security.

Note that if you sell the shares in a non-registered account, you can deduct your loss against capital gains. For example, if he were to sell his Intel shares in 2023, he’d get to deduct the loss against his 2023 capital gains.

If you still have capital losses left over, you can carry them back up to three years (2022, 2021 and 2020), or forward indefinitely to offset future capital gains.

Hold Lower-Risk Investments in a TFSA

We think it is best to hold lower-risk investments (such as blue-chip stocks we see as buys like Intel) in your TFSA. That’s because you don’t want to suffer big losses in these accounts. If you do, you can’t use those losses to offset capital gains, as is the case with taxable (non-registered) accounts. You’ll also lose the main advantage of a TFSA: sheltering gains from tax. You won’t have gains to shelter if the value of your investments falls. Continue Reading…

5 things you can do now to gain control over your financial future

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By Billy and Akaisha Kaderli

Special to the Financial Independence Hub

No matter what goes on in the news, Washington or the world, to build a stable tomorrow, we must take control of our own lives. Even with all the current upheaval, here are five things you can do today to empower yourself.

Track spending

This is the number one most useful financial technique to implement today. Imagine if businesses did not track their expenses. How would they know the financial health of their enterprise? It is no different for you and me. It is paramount to know where your money is going and what percentage of your net worth you are spending.

Know your net worth

Assets minus Liabilities equals Net Worth. Place a value on everything you own and subtract what you owe. This figure is your net worth. Now divide how much you spent last year by your net worth number and you will have your percentage of spending to net worth. Continue Reading…

The Fairway to Financial Freedom: Lessons from Golf for Building Wealth 

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What can golf teach you about financial freedom? You’d be surprised… These lessons from the golf course will help you become a finance whizz. 

Pixabay

By Jordan Fuller

Special to Financial Independence Hub

Golf and personal finance share surprising similarities: both take precision, patience, and strategy to be successful. Just as golfers navigate challenging courses with a clear plan, approaching your financial journey with foresight and discipline is the best way to get the result you want. 

This article explores how lessons from golf — planning, mastering fundamentals, adaptability, and learning from mistakes —can guide us toward building wealth and achieving financial freedom. By aligning these principles with your financial goals, you can chart a course to lasting prosperity. 

Lesson 1: The Importance of Planning 

In golf, players develop a course strategy before teeing off, analyzing each hole to decide on club selection and shot placement. This preparation helps them to navigate challenges and optimize performance during the game. 

Similarly, in personal finance, setting long-term goals and crafting a detailed financial plan can set you up for success from the start. This approach helps you anticipate financial obstacles and make informed decisions, leading to a secure financial future. 

Lesson 2: Master your Basic Techniques 

In golf, a proper grip, stance, and swing form the foundation of a consistent game. The grip is the only connection to the club, influencing your control and power over the golf ball. A correct stance keeps you balanced and aligned, while a smooth swing leads to accurate shots. 

In personal finance, grasping core concepts like budgeting, saving, and investing early sets the stage for financial stability. Without these as a strong foundation, success will be much harder.  

  • Budgeting: Tracking income and expenses helps manage spending and achieve financial goals. 
  • Saving: Building an emergency fund and setting aside money for future needs provide a safety net and prepare for unforeseen expenses. 
  • Investing: Allocating funds to assets like stocks or bonds can grow wealth over time, leveraging the power of compound interest. 

Lesson 3: Adaptability 

In golf, each hole presents unique challenges — varying terrains, weather conditions, and obstacles — that require players to adjust their strategies on the go. This adaptability is a big part of success on the course. 

In personal finance, adapting to economic changes is just as important. Markets fluctuate due to things like inflation, interest rates, and geopolitical events. By diversifying your investment portfolio across different asset classes, you can manage risk and capitalize on opportunities in various market conditions. 

Lesson 4: Consistency over Spectacular 

In golf, consistently playing steady shots often leads to better scores than attempting risky, spectacular ones. This approach minimizes errors and builds up your confidence over time. 

When it comes to investing, steady, consistent contributions harness the power of compound interest, leading to much bigger accumulation of wealth. For example, investing $50 monthly in an S&P 500 ETF over 20 years can grow to approximately $43,700, showing how regular, modest investments can yield great returns. 

This strategy reduces exposure to market volatility and avoids the pitfalls of high-risk ventures. Both in golf and investing, a disciplined, consistent approach often outperforms the allure of high-risk, high-reward tactics. 

Lesson 5: Short Game Mastery 

In golf, excelling in your short game — putting and chipping — is a must if you want a good score. You can’t just rely on a powerful drive … It’s the smaller, less impressive moves that really count. 

Mastering short-game techniques allows golfers to recover from missed greens and avoid unnecessary strokes, directly influencing their final score. Don’t just stick to the golf mats on the driving range: spend time on the putting and chipping green too. Continue Reading…

8 Financial Fitness Tips that will help achieve your Wealth-Building Goals

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By Monica Mendoza

Special to Financial Independence Hub

Wealth-building plays a critical role in securing your financial future. More than just having enough money to cover day-to-day expenses, it’s about creating a financial cushion that allows you to navigate life’s uncertainties and enjoy peace of mind in the long term.

Whether your goals are to own a home, provide for your family, or retire comfortably, it’s essential to take steps to build your wealth as soon as you can. Follow the smart financial strategies listed below to help you set a solid foundation for achieving  your long-term wealth-building goals.

Start the Process by Creating a Realistic Budget and Sticking to it

Your budget is the cornerstone of your financial plans. As such, it’s important to set a solid foundation for achieving your long-term goals by putting together a realistic budget that reflects your financial needs and capabilities. This means keeping a record of your expenses, categorizing your spending into essential and non-essential items, and using these details to plan your future spending. Having a clear picture of where your money goes can help you identify areas where you might be overspending and adjust your budget if needed. Once you’ve established control over your finances, you’ll have more room to save and invest for the future.

Build an Emergency Fund that can Sustain your Household for several months

There are circumstances, such as illnesses and accidents, that may require you to immediately shell out money or disrupt your source of income for some time. These can quickly derail your finances if you’re not adequately prepared. That’s why building an emergency fund is crucial. Start as early as possible to grow your funds; open a bank account with high-yield savings, such as Maya’s Personal Goals or Time Deposit Plus that let you earn at least 4% p.a. and up to 5.75% p.a., respectively. Aim to set aside 3 to 6 months’ worth of living expenses in such accounts. This fund will serve as a financial buffer so that you won’t need to rely on credit cards or loans when an emergency arises. Having an emergency fund gives you a sense of security and keeps your wealth-building efforts on track.

If you have Debt, make a Priority of Paying off High-Interest Debt First

Debts, particularly high-interest debt like credit card balances, can severely hamper your ability to build wealth. Focus on paying these debts first to prevent your balance from ballooning even further. If you have multiple high-interest debts, consider using either the avalanche method (pay the debt with the highest interest rate first) or the snowball method (start with the smallest debt for quick wins). You may also want to consolidate debts so you only have to worry about one amount and one deadline. Once you’re free from high-interest debt, you’ll have more flexibility to redirect your money toward savings and investments that grow your wealth.

Look into Investing in Retirement Accounts as early as possible

Even though retirement may seem too far into the future, it’s never too early to plan for it. In fact, the sooner you start investing for retirement, the better. Aside from government-backed retirement plans like the Social Security System (SSS) and Personal Equity and Retirement Account (PERA), you can also put some of your money in investment products like time deposits or stocks. Consistently contributing to these accounts over time allows you to benefit from compound interest, which grows your investments faster. Prioritize retirement contributions as part of your wealth-building strategy to ensure that you’ll have a secure financial future when you’re ready to stop working.

Diversify your Investments to Control Risk and earn Long-Term Returns

Instead of putting all your money in one place, spread it across different types of investments, such as stocks, bonds, mutual funds, or real estate. Each type of investment behaves differently under various market conditions, so diversification helps protect your wealth from sudden market downturns. If you’re new to investing, consider working with a financial advisor or using investment apps that provide access to diversified portfolios with lower entry points. Continue Reading…