Tag Archives: Financial Independence

Will an expanded CPP speed your Findependence Day?

Posted By |

cpp_image2Lots of media coverage this week about the (relatively) modest expansion of the Canada Pension Plan. As I noted in the print edition of Wednesday’s Financial Post (and online), this isn’t going to help almost-retired baby boomers in any material fashion but it’s certainly a welcome development for the generations that follow, including the Boomers’ own kids.

I note that quite independently, the Globe & Mail’s Rob Carrick was equally in favour of the changes: We can’t afford NOT to make these changes.

(Added Thursday: My take on this for Motley Fool Canada can be found by clicking on this highlighted headline: CPP Expansion Too Late for Boomers but a Win for their Children.)

As I speculated in the headline of sister site FindependenceDay.com, you could argue that a slightly sweeter CPP package of benefits should at least marginally speed up the arrival of the Millennials’ collective Findependence Day. However, I also noted that — as in my own case — there is still an incentive to delay the receipt of CPP benefits. In a way, Boomers who don’t take “early” CPP at 60 and opt to wait until closer to 70 are choosing to almost double their ultimate benefits.

There’s still an incentive to delay receipt of benefits

Continue Reading…

Six rules for Foolish investing, as Fools visit Canada

Posted By |
IMG_6616(2)
L to R: Motley Fool’s Gardner, Butler, Muckerman and Gillies (Photo J. Chevreau)

Motley Fool co-founder and CEO Tom Gardner and his team of Canadian stock analysts were in Canada for a members-only event in Toronto on Thursday night.

Pictured is Gardner (in blue on the left) asking for stock buy and sell recommendations from a panel of three Fool analysts. From left to right, they are Stock Advisor Canada’s Iain Butler and Taylor Muckerman, and Pro Canada’s Jim Gillies on the extreme right.

The colourful headgear is of course central to the Motley Fool brand. The stock newsletter publishing company is based in Alexandria, VA. It’s also well known for its daily financial podcasts, with most of the panelists regular contributors.

The 6 Rules

Gardner kicked off the evening with his six rules for succeeding as a Motley Fool investor:

Rule #1:  Everyone should have at least 20 to 40 stocks. That’s a minimum but there’s no need to cap it at 40, Gardner said. Continue Reading…

Retired Money: The Joy of Pension Splitting

Posted By |

Elderly couple in a meeting with an adviser discussing a document as she watches across the desk in her officeThe third instalment of my new bimonthly Retired Money column at MoneySense.ca has just been published online and focuses on the important topic of pension splitting, or pension income splitting.

You can read the whole piece by clicking on this highlighted headline: How to keep more benefits with pension income splitting.

As the piece observes, pension splitting can be manna from heaven for retired or even semi-retired couples where one is collecting a generous Defined Benefit or other employer pension and the other is not.

Nor is it as complicated a process as it may seem at first blush: you don’t have to actually divide such a pension and send some to each spouse: it all happens at tax-time when for tax purposes you choose what percentage of the pension each spouse should receive. Naturally there are multiple things to consider, such as other income sources, relative tax brackets and so on.

But the bottom line is that in many cases, it should result in thousands of extra after-tax dollars a year in the pockets of the couple as a unit. And that’s how couples should behave, isn’t it?

For more information about pension income splitting, a good place to start is the Canada Revenue Agency’s web site, and in particular this explanation. Note too that it includes a short video.

 

With $100 billion in assets, can ETFs catch mutual funds?

Posted By |

An image of a 3d investment strategies funnel chart.My latest Financial Post column can be found in the print edition of Wednesday’s National Post as well as online right now, under the title The market share battle between ETFs and mutual funds is heating up, as Canadian ETFs pass $100 billion milestone.

As noted earlier here on the Hub, the ETF (Exchange-traded Funds) industry recently passed the significant milestone of $100 billion in assets under management. See ETFs break $100 billion milestone in Canada. That’s “Billion” with a B, but is still less than 10% of the $1.1 Trillion (Trillion with a T) that the entrenched and much older mutual fund industry still enjoys.

As an aside, if you have difficulty grasping how big the number “Trillion” is then read a hub post by Ian Campbell: Can you put the number ‘Trillion’ in context?

The FP column asks the question why the huge disparity in Management Expense Ratios (MERs) of mutual funds (i.e. high at around 2.5% per annum) versus ETFs (typically around 0.55% but in some cases as low as 0.4 or 0.5%) hasn’t resulted in even more incursions by the ETF industry into the mutual fund space.

ETF sign is held by businessman.

Powerful bank distribution network

One reason is the entrenched positions of the Canadian banks, whose powerful distribution network (i.e. bank branches)allows them to sell their own in-house no-load mutual fund families. Of course, BMO, RBC and now TD all sell ETFs as well but I doubt you’ll see many recommended by your local friendly branch rep any time soon.

As the old saying goes, mutual funds are sold, not bought. Continue Reading…

Millennial Wrap: Wedding Bell Blues, good debt and other illusions

Posted By |

a04a25d7-0da5-4af5-96b7-1e10d3b96580By Helen Chevreau, Hub Staff

Wedding Bell Blues

After reading this new post from Broke Millennial, I feel lucky to have been spared the first few years of the “wedding apocalypse.” At 24, I have yet to have any of my close friends or relatives tie the knot, and now I know that in addition to being thankful for this budgetary hall-pass, I should really be taking this extra time to start saving for “other peoples’ weddings.”  I know I’ve got at least another few years before I will need to start paddling the wedding wave, but knowing it’s something I will eventually need to factor in is important.

Millennial Illusions

The pressure to have our lives together has, I would assume, always been a very real and stressful issue for millennials. Since the onslaught of social media “dream lives” we see on sites like Pinterest, Etsy, Apartment Therapy etc., it’s extremely easy to fall into a pit of expectations that no normal 20-something should be expected to live up to. This is a huge issue I’ve found with becoming a grownup. We see snippets of peoples’ lives and we want our lives to look just like that, but we forget what it’s taken for them to get there. Continue Reading…