For the lazy reader:
Only buy VGRO and you’re fully diversified. Investing complete.
And now for those of you who want more context:
For the lazy reader:
And now for those of you who want more context:
I’ve been know to stray from the index path. When you are in full control of your investments it’s tough to resist that sweet siren call of the Netflix and Amazon stocks of the world. What normally happens when I pick stocks? This image sums it up nicely:
Maybe I don’t have the will power to hold on when I’m down 30%. And sometimes unforeseen external circumstances forced me to sell (Moving to USA). But at one point I realized:
I’ve made more money at the casino than I have picking “risky” stocks
Okay I’ve profited maybe $200 between all my visits to the blackjack table. It’s not much but I’ve lost more gambling with stocks. Luckily my solid foundation of index funds have completely insulated me from any big losses. I have healthy ETF gains over the past few years. And these risky picks are less than 5% of my total portfolio value.
If you truly want to gamble with your investments I’d recommend using no more than 10% of your total portfolio value. Or whatever you’re willing to lose.
Perhaps you’ve heard about the Canadian Pension Plan, but have you also heard about Old Age Security and the Guaranteed Income Supplement? The average Canadian probably doesn’t know what they are, how they works, and what else is available. Some people assume the government will cover them, and often these people don’t bother with retirement savings. Is this a good idea? Lets dig in and investigate:
So you’ve just finished reading The Four Hour Workweek (or any entrepreneurial self help book) and you’re all amped up to quit your job and automate your own business. Except you don’t have a business. And you don’t have the guts to quit your job. And the other suggestions in the book, like hiring an online assistant, are a frivolous use of your meager savings.
Let’s entertain an exotic thought. Say you’re doing pretty well financially. You have a ton of money saved, and you want to retire. But you don’t have enough to cover all your expenses passively (i.e. earning 3-4% investment interest will not cover your yearly expenses).
As you may know I find reducing expenses more effective than attempting to earn more money(link, link, link). But what if you’re at your expense-cutting limit? Cutting any more expenses would force you onto the street, or stop you from eating.
The answer is creative and extreme savings ideas!
Taking a note from The Four Hour Workweek, you can stretch your money significantly if you earn in Dollars but spend in Pesos. Moving to a low cost of living country could enable you to retire years earlier. And lets face it. Your life in a foreign country is likely to be way more interesting than staying at home.
The cheapest countries tend to be equatorial countries for some reason. Maybe nice weather isn’t good for the economy because people are too hot to work. But that’s a good thing for retirement! Think about the benefits:
Central and South American countries will keep you close to the same time zone as Canada. They are friendly with delicious food and incredible nature. Southeast Asian countries are further away, but have similar benefits. Especially if you prefer fried rice to refried beans.
So how much cheaper are these places? And how can one decide where to go? Well let’s compare some typical expenses for a typical retiree lifestyle in some typical and non-typical destinations. For more detailed comparisons there are websites like Expatistan and Numbeo
|CANADA, Penticton||MEXICO, Cuernavaca||COLOMBIA, Medellin|
|2 bdrm apartment||$1,500||$900||$650|
|Food (Restaurant per person)||$15-$25||$8-$12||$5-$10|
|Domestic Beer (store bought)||$2.70||$1.70||$1.15|
|Transportation (gas price)||$1.21/L||$1.14/L||$1.06/L|
Now before you start yelling at me, I know there are other things to consider besides money. Language for one, if you don’t speak Spanish you’ll be restricted to English expat communities which typically are more expensive. But come on. Learning a second (or third) language is an excellent way to spend your free time.
And I know you have friends and family back in Canada. And I know you might have Canadian real estate, and gym memberships, and library cards. Well how about becoming a snow bird? Make a cheap country your wintertime destination. You can reap all the benefits of a cheaper lifestyle for half the year, and still maintain a lifestyle in Canada during the best months.
If you want to stay in your new country longer, many countries have retiree visas. Just prove that you have retirement income, no criminal record, and provide a health check. Speaking of health care, bring your medical records, and get health insurance, it’ll probably be $100/month.
I’ve been banking with BMO for nearly a decade now. I opened a BMO bank account because my PC Financial bank wasn’t able to process an international cheque (Australia). When I moved to the USA I was forced to close my PC Financial account because they didn’t support non-residents of Canada. Luckily I never closed that BMO account and they do support non-residents. I’ve also had a BMO credit card for over a decade (but I’m replacing it soon)
Now that I’m back in Canada I’ve been exclusively using my BMO bank account. In the USA I banked with Chase. After using and American bank I am completely shocked at the state of Canadian banking today. I’m speaking primarily as a BMO customer but my understanding is most of the big banks are similar. Let’s go into some of the reasons I’m done with BMO:
Starting with the goods if you want to skip the article: Use the promo code below with Questrade to get your first $50 in trades for free after opening an account:
So you are ready to start investing in Exchange Traded Funds (ETFs). You understand how mutual funds are costing you tens of thousands of dollars and it’s time to take control of your own future. Or maybe you are a crazy gambler and want to try your hand in the stock market. Either way it’s time to actually open an account. But where should you start?
Everyone has encountered blogs, or web-logs, at some point. And everyone has written blogs whether they realized it or not. At the core, a blog is just writing. If you’ve written a little as an email you can write a blog.
If you are reading this I assume you are interested in blogging. Well. Unless you read everything I write regardless of the content. In which case you obviously have excellent taste.
Blogging has hidden benefits. And even if no one ever reads what you write you’ll get these benefits:
I’m always on the lookout for interesting ways to save money. Unfortunately giving up luxuries like lattes or alcohol is normally the only way. Typically there is a linear relationship between money saved and quality of life. Meaning quality of life increases as spending increases. Buy the nicer car and be more comfortable, go to the more expensive restaurant and eat better.
Fortunately the world is not so predictable, or fair. There are numerous exceptions to the spend-more-get-more trend. You simply need to re-frame money saving opportunities to highlight their benefits. For example, take alcohol (and recreational drugs in general). For the low price of $9/drink you get reduced inhibitions and a generally fun time. But what if you ordered water instead? Well, aside from being that jerk at the bar who doesn’t spend money, you’re likely to have a similar amount of fun. People who have fun tend to make those around them have fun.
Beyond fun I like to focus on health. Alcohol is not healthy (Wow great insight I know). Even one drink per day has been linked to increased cancer risk, especially in women. Also vomiting, stomach aches, and hangovers are good enough reason for me to reduce alcohol consumption.
For me, the financial and health benefits of abstaining outweigh the fun of consumption. This attitude has the added benefit of sounding morally superior to all my alcoholic friends!
Transferwise is the cheapest way to send money internationally compared to traditional bank transfers.
So you’ve decided to move back to Canada eh? Maybe you didn’t like your new country, or maybe Canada lured you back through family, friends, access to nature, relative political stability, employment, universal healthcare, politeness, excessive skiing…. should I keep going?….. beavers, mild summers, few natural disasters, legal cannabis (pending July 2018), funny accents (or lack thereof), hockey, poutine, flannel shirts, immigrants, subsidized education, and of course the majestic moose.
Regardless of your motives for returning you’ll need to figure out how to re-establish your financial life to maple country. It’s not going to be simple, but it can be relatively cheap.
The information here will also be relevant to new immigrants. If you are a new immigrant or refugee there are additional government services to help with your transition that us former residents don’t get.
It’s very important that you pick a firm date to regain Canadian residency. Both countries will be after your precious taxable income and this date determines who gets first dibs. Typically it’s the day you physically arrive in Canada. The CRA will use this date to determine when to start taxing you. Here’s some things to do before and after that date:
You’ll need to decide what to do with your foreign financial accounts. This decision will mostly depend on your plans for the future and how the other country deals with non-residents.
If you’ve spent a significant amount of time abroad you’ve probably established some roots in your new country. Maybe you found a beautiful spouse who will want to visit their family back home every year. If you expect to be making repeat visits you’ll probably want to keep a bank account open for spending money. First check to see if the foreign bank allows non-residents to hold accounts, and check what you need to do to avoid monthly fees. The money will be just sitting there for months at a time and you wouldn’t want it to get eaten by fees.
Depending on your country you might want to keep some of the currency anyways. USD have always been valuable and should continue to be in the future. The downside is that the money will be just sitting there losing value to inflation. I’d advise against holding your overseas money in a savings account that earns interest. Chances are you’ll be earning 0.1% which might be a few dollars per year and you’ll have to deal with more complex foreign taxes.
What’s that? you got fired and your visa is void and you’re returning to Canada tonight? Bummer. Most reasonable banks should let you transfer your money and close your account remotely. Probably best not to mention that you got deported till after your money is safely back in Canada.