Tag Archives: saving

“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…

Saving vs. Investing: Understanding the best approach for Findependence

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Image by unsplash

By Devin Partida

Special to Financial Independence Hub

Achieving Findependence [aka Financial Independence] requires a balanced strategy combining short-term stability and long-term growth.

Saving and investing both play crucial roles in this journey, serving different financial goals and timelines.

Explore how you can navigate these strategies to optimize your financial portfolio.

 

 

The Role of Saving: Security and Liquidity

Savings are the foundation of Findependence. An accessible savings account provides a safety net for emergencies, such as medical expenses or job loss. Experts recommend maintaining at least three to six months of living expenses in a high-yield savings account or money market fund for quick access.

Here are some key advantages of saving:

  • Risk-free growth: In addition to offering modest interest, savings accounts protect your principal from market fluctuations.
  • Short-term goals: Savings are ideal for upcoming expenses like vacations, home repairs or a new car.
  • Liquidity: Saving provides liquidity during unexpected situations. Certain saving vehicles — like 529 plans — also allow for tax-free growth and withdrawals for qualified expenses.
  • No market risk: Unlike investments, savings are not exposed to fluctuations, making them a reliable choice for safeguarding funds.
  • Psychological benefits: Having a financial safety net reduces stress and fosters confidence in your ability to handle unexpected events.
  • Flexibility: Savings provide liquidity without penalties, making it easy to pivot funds as priorities change.

However, relying solely on saving limits wealth-building potential due to inflation, which can erode the purchasing power of idle cash over time.

The Role of Investing: Growth and Wealth Accumulation

Investing is essential for long-term financial growth, particularly for goals like retirement or major life milestones. By allocating funds to stocks, bonds or mutual funds, you can potentially achieve higher returns that outpace inflation.

Here’s how investing can benefit you:

  • Compound returns: Investments grow exponentially over time due to reinvested earnings.
  • Inflation protection: Historically, investments in the stock market have delivered higher returns than inflation.
  • Wealth generation: Investing enables you to build significant assets over decades.
  • Diversification opportunities: Investments allow you to spread risk across various asset classes, industries and geographies.
  • Passive income generation: Certain investments — like dividend-paying stocks or rental properties — create ongoing income streams.
  • Long-term tax benefits: Investment accounts like individual retirement accounts (IRAs) or tax-free savings accounts (TFSAs) offer tax advantages that amplify growth over decades.

Investing does involve risks, including market volatility and potential losses. It requires a clear understanding of your risk tolerance and financial goals.

Savings and Investments: Finding the right balance

A well-balanced approach integrates saving and investing to address immediate needs and future aspirations. Here are steps to consider:

  • Assess your financial situation: Calculate your emergency savings and allocate sufficient funds to cover unexpected expenses.
  • Define your goals: Short-term goals may require savings, while long-term aspirations like retirement demand an investment strategy.
  • Evaluate risk tolerance: Younger individuals with longer timelines can generally afford higher-risk investments, while those nearing retirement may prefer conservative options.
  • Diversify your portfolio: A mix of savings and investments minimizes risk while capitalizing on growth opportunities.

Practical Tips for Success in Saving and Investing

Finding the perfect balance between saving and investing can seem daunting, but taking specific action steps can make the process manageable and effective. Here are additional practical tips to enhance your financial strategy: 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…

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…

How to Save for a Big Purchase without going into Debt

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Image by Pixabay

 By Louis Wheeler

For Financial Independence Hub

It is possible to amass enough money to buy a car, renovate one’s house, or go on a dream vacation without borrowing money to finance the exercise. When one wants to make such a large purchase, one should lay down a plan, change one’s spending pattern, and dedicate oneself.

Guidelines for Saving up for big Expenses

Planning for a big project can be financially exhausting. Here are some things one needs to do to save for their next purchase:

Know your objective and establish a budget

First, identify the amount you wish to save and how long you want to achieve that. Subtract the number of months available before the target date from the total amount and divide the result by the number of months available to discover how much must be saved every month. This will also provide you with a specific, achievable task at hand.

Get a new checking or better yet, a high-interest savings account.

You should use another account and open it simply for this particular purchase. The money needs to be kept in separate accounts to avoid converting them to other assets by mistake, as well as to be able to monitor performance. You might want to consider selecting a high-yield savings account for further growth. You can open a high interest savings account at koho for your next big project.

Cut back on non-essentials

Take your current spending habits and determine which ones can be sacrificed quickly. Micro-level decisions include eating out less, canceling subscriptions, or looking for cheaper or free entertainment options.

Automate your savings

Ensure you create a recurring payment method from your main checking account to your savings account on paydays. Automating makes saving very easy and guarantees that no time is given to destroy the plans that you have in mind.

Boost income with side gigs

Perhaps moonlighting, part-time work, or even some freelancing kind of occupation. Any additional money earned can be added to the savings amount, which can be achieved without too much sacrifice of daily expenses. You can also earn some extra cash by selling unwanted items or offering services such as pet-sitting, tutoring, or freelance writing.

Monitor and adjust

Review your savings plan every month to see if it is still realistic. Life gets in the way sometimes and unexpected expenses may arise, so be prepared to make necessary adjustments to your savings plan accordingly. It’s important to continuously monitor your progress and make changes as needed to stay on track towards reaching your target date. Continue Reading…