Financial Independence for Newcomers to Canada

Financial Independence for Newcomers to Canada

The leap of faith it takes, to take financial matters into your own hands can be huge for some people.

I know. I’ve been there.

The leap of faith it takes to move you or your family to entirely different country, that’s next level.

With many questions, thoughts, and future aspirations from one particular new reader, I figured it was time to write this important post: financial independence for newcomers to Canada.

Let’s get right into it…and thanks to my new reader JP for asking such very important financial questions. Information adapted slightly for the site.

Hi Mark,

Thank you for your kind offer to answer my questions and point me to some great information in advance.

Apologies for the long note but I have lots of questions…and I want to share your information with others.

Here are some details for background:

  • I am around 44 years old, an IT professional from India, migrating to Canada as a Permanent Resident in next few weeks.
  • I have a 15-year-old child, and my spouse is a homemaker. She may take on some part-time work, but I would not include that in my financial independence calculations.
  • My job and other considerations mean that I’ll be staying in a high cost of living area.
  • My monthly expenses (including rent, for now) are probably going to be around $5,000 per month.
  • I hope to save and to be able to invest about $20,000 per year.

I really enjoyed that case study about those millennials who want to FIRE at age 50.

Millennials want to FIRE at age 50

Based on what I’ve already read on your site, with more disciplined savings and more investing, maybe I can do the same!

Here are my objectives and general assets for consideration:

  • I would like to FIRE around age 50. By that time, my son would have graduated.
  • Given my work is stressful, I would like to consider even part-time work from ages 46-50 if possible but it depends on many factors I know. If required, I can continue part-time work from ages 50-55. Not a problem.
  • I will have no real estate to rely on in Canada – but it would be nice to have a paid off home in Canada.
  • We have been good with money, the ability to save almost $1 million but mostly in non-appreciating
    real estate in India. The plan is to sell those assets in the coming years and invest the proceeds into low-cost ETFs – like some of the ones on your site. Most FIRE-stalwarts seem to index invest and that seems smart to me.
  • I expect some inheritance, maybe up to $600k (?), in next 10-15 years so while it’s part of my plan it’s a long time out.
  • I will be looking to utilize the TFSA (Tax Free Savings Account) and RRSP (Registered Retirement Savings Plan) as much as I can. Again, it makes sense to me to invest in those accounts but would like your take!
  • Given I am a newcomer, I understand I will have negligible CPP (Canada Pension Plan) and OAS (Old Age Security) benefits but you can help clarify. It would be nice to have some employer-provided retirement scheme, as I don’t plan to remain in active workforce for many years but it’s not critical.

My key questions for you Mark are:

  1. How should I get started – meaning does my approach to look at TFSAs and RRSPs make sense?
  2. Are there good low-cost brokerages to consider?
  3. I’ve read about U.S.-indexed ETFs but thoughts on paying the additional MERs (Management Expense Ratios) for just owning Canadian ETFs?
  4. Income-splitting would be great, can I do that?
  5. I wonder if you could offer a take on real estate, as best you can. Like you, I don’t like being a landlord! I read your older post on that.
  6. I would anticipate my post-retirement needs could also be around $5,000 per month – I am fully aware of Trinity Studies, etc. so thinking a safer withdrawal rate around 3% or so makes sense?

All this to say, with no long-term debt and my investable assets of $1M, along with some expected inheritance of say, >$500k in next 10-15 years to pay off any house we buy, what are your thoughts on my FI journey?

Lots of questions I know, lots of assumptions, but I appreciate anything you can share even though it’s not advice I know.

Thanks so much!

JP

Great stuff JP and lots to unpack there for sure.  And thanks for your readership, very much appreciated.

As you noted, I cannot offer direct advice whatsoever.

I can however, since it’s my blog after all, offer a personal take along with some links, tools and more to help you with your plan.

Here goes with lots of assumptions….

First of all, kudos for making the moving leap to Canada with your family. I’ve never done a HUGE move like that, so I can’t imagine how nervous you might be. That said, I believe you are moving to one of the greatest (rather, the greatest!) countries in the world.  I only wish you and your family the best.

As you know, realizing a goal requires two things: a good plan and good execution.

Question 1: How should I get started – meaning does my approach to look at TFSAs and RRSPs make sense?

Yes, it makes a LOT of sense to me.

I have believed for years that tax-free investing (TFSA) and tax-deferred investing (RRSP) is better than taxable investing. Why pay taxes on investment assets if you don’t have to?

Here is a primer about TFSAs. I own a self-directed TFSA myself so I can pick my own stocks and ETFs. That may or may not be right for you.

RRSPs are great for tax-deferred investing. I own a self-directed RRSP.

While people in Canada may focus on the “Savings” word in the TFSA name, consider investing beyond cash, beyond Guaranteed Investment Certificates (GICs) into stocks or a collection of stocks via low-cost ETFs. Seems you already know the benefits of that.

Unfortunately, the “Savings” name is also in the Registered Retirement Savings Plan (RRSP) name but unlike the TFSA, when you eventually decide to withdraw the money, withdrawals are added to taxable income the year the money is withdrawn. That said, I believe the RRSP after the TFSA is the second-best wealth generation account there is in Canada for most people.

All this to say, TFSAs and RRSPs are excellent wealth building vehicles as part of any financial plan.

Here is what a good financial plan should cover, with my friend Steve Bridge, a Certified Financial Planner (CFP®) from Vancouver who works as an advice-only financial planner with Money Coaches Canada (no affiliation with My Own Advisor).

Question 2: Are there good low-cost brokerages to consider?

Absolutely!

I haven’t put together a huge, comprehensive list of low-cost brokerages to compare in Canada (yet!) but many other finance sites have and MoneySense is one of the best at it.

MoneySense is a free site for Canadians in the personal finance and investing space, so check out their comprehensive reviews.

As part of my partnerships with many leading Canadian financial institutions, I have cash back promotions for new accounts, and much more products and services available at a discount.

Check out this dedicated Deals page for my current promotions, but of course there is never any obligation. Always do what is best for you and your family.

Question 3: I’ve read about U.S.-indexed ETFs but thoughts on paying the additional MERs (Management Expense Ratios) for just owning Canadian ETFs?

JP, really up to you!

Depending on the ETF of course, some U.S.-listed ETFs could charge higher fees than some Canadian-listed ETFs. As always in personal finance and investing, “it depends”.

You seem well-versed about my standing ETFs page so check that out again, and if you have more detailed questions, I can try and help as time permits.

Based on my personal lessons learned, don’t obsess over money management fee and/or tax decisions – don’t let those reasons trump any particular investing product. While low fees and low taxation are absolutely important, making your financial plan and securing products that match up with that financial plan is more important.

You can exchange USD <> Canadian currency for less using this approach here – Norbert’s Gambit.

Norbert’s Gambit – how to exchange Canadian to U.S. dollars – for less

Question 4: Income-splitting would be great, can I do that?

Unfortunately, not really. I mean, yes, you can income split pre-retirement while you are working but it is complex to say the least.

You could legally provide a spousal loan, then your spouse can earn investment income pre-retirement. I would suggest if you are interested in that approach, I encourage you to speak to a tax accountant after you get things settled in Canada.

Without using a tax accountant, here are the things I can think about to build on the above for income-splitting pre-retirement and in planning for retirement:

Income splitting pre-retirement
RESPsInvestment income earned within an RESP is tax-deferred, and since future withdrawals for education are taxable to the child, this means a lower tax bill for the overall family!
TFSAContributions from either spouse, to either TFSA, avoid messy tax attribution rules!
RRSPThe higher income spouse or partner can make a tax-deductible RRSP contribution for their spouse. This way, future withdrawals can be taxable at the spouse’s lower rate!

 

Income splitting during retirement (age 65 or higher)
Split incomeYou can split eligible income on your tax return with your spouse or common-law partner. Common examples include: pensions, prescribed annuities, Registered Retirement Income Funds (RRIFs), and Life Income Funds (LIFs).

Any pension income that qualifies for the $2,000 federal pension income credit also qualifies to be split. Specifically, this would include annuity-type payments from a Registered Pension Plan (RPP), regardless of age, and also includes Registered Retirement Income Fund (RRIF) or Life Income Fund (LIF) withdrawals upon reaching age 65.

Income from the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) cannot be split in the same way, although there may be options (see below).

If you are at least 65 years of age, you may want to consider converting a portion of your RRSP to a RRIF (if you do not already have a RRIF) so that you can benefit from pension splitting. Any withdrawals from your RRIF, whether minimum withdrawals or other amounts, would qualify for pension splitting. Note that RRSP withdrawals are not considered to be pension income. To be able to split your pension income, you and your spouse or partner must make a joint election on your income tax returns using Form T1032 ‒ Joint Election to Split Pension Income. 

Source:

https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t1032.html

CPP benefitsWhen you and your spouse are eligible for it, you can share this income from this government benefit. 

Make sure you check out this well-written guideline document below where I referenced some of my information above:

https://www.cibc.com/content/dam/personal_banking/advice_centre/tax-savings/income-splitting-strategies-en.pdf

Question 5: I wonder if you could offer a take on real estate, as best you can. Like you, I don’t like being a landlord! I read your older post on that.

Gosh, I wish I could predict the future – including the real estate future!

All I can say is, if homeownership is something you aspire to have and can afford, go for it.

I can’t say whether real estate will or won’t be a great financial/investment decision in the years to come, but I can say it’s more of a lifestyle decision.

You have to live somewhere. Home ownership does come with tradeoffs as compared to renting.

All the reports of late I’ve seen, say, with interest rates being so low right now and with demand being higher than supply in many HOCL cities, house prices will continue to go up for the coming years.

Nobody knows where the “top” is right now.

Question 6: Does a 3% withdrawal rate make sense?

Also, with no long-term debt, investable assets of $1M, along with some expected inheritance in the coming 10-15 years, what are your thoughts on my FI journey?

Lots to digest but also to assume!

Well, for quick fun, I put some inputs into the calculator we have access to from our brother site Cashflows & Portfolios.

Cashflows & Portfolios

My partner and I have been using these tools for our personal FIRE journeys and now using the tools to help readers, like you, with retirement projections. We often answer key questions like, do I have enough to retire?  When can I retire with my current lifestyle?  Which account should I withdraw from (and when) to minimize taxes and maximize my retirement income?

Keeping things simple and overly conservative, I assumed, I mean lots of assumptions:

  • Your salary is a very good one: just over $110,000 given “work is stressful”.
  • You will save $20,000 per year, focusing on your TFSA and RRSP.
  • Your assets, including what you cannot yet contribute to your TFSA and RRSP (therefore taxable investing with assets coming to Canada) will be 5.10% – a blend of stocks and bonds.
  • You will work full-time until at least age 50. In fact, I’ve assumed you’ll continue to work into your 50s if you have a plan to reach age 100. (See chart below.)
  • With your real estate proceeds from India, $250,000 will be used for a home down payment later this year. The rest ($750,000) is invested. I will assume you will pay off the house in the coming 10-15 years, including using any inheritance money.
  • You will make contributions to CPP, given your high-salary, so for simplicity you will contribute up to the maximum for YMPE (year’s maximum pensionable earnings) for years worked.
  • You will receive a partial OAS pension. So will your wife. A *partial monthly pension is earned at the rate of 1/40th of the full monthly pension for each year of residence in Canada after the age of 18. For example, if you have lived in Canada for 15 years after the age of 18, you will receive 15/40ths of the full monthly pension amount. Once a partial pension has been approved, it cannot be increased due to additional years of residency in Canada. You take OAS at age 65. *You can find more details about partial OAS here. 

Assuming you earn just over 5% annualized on your investments, before and after retirement, and want to spend about $5,000 per month/$60,000 per year after-tax rising with inflation (2%) – math says you can likely retire by age 55 for certain – with that spend including inflation to age 100 without fear. 

To do so, you’ll need to consider working full-time until at least age 50 and potentially part-time in your 50s once more clarity about debt load, income, CPP contributions, taxation, plans to invest, current expenses, and much more are factored in.

JP - Sources of Income FI for Newcomers 2021-05-08

Source: Cashflows & Portfolios – sources of JP income assuming inflation over time. 

I hope this information provides some insights…but I can’t stress enough this information includes too many assumptions to be considered any sort of accurate projection. It is for educational and illustrative purposes only.

Good luck with your move, thanks very much for your readership and I hope you share this site with others!

Mark

Further Reading:

You can check out dozens of case studies, financial independence stories, retirement essays from readers and much more on my dedicated Retirement page here.

Examples:

These millennials want to FIRE at age 50. Can they do it? What will it take?

Do they have enough for FIRE at age 52?  With $800k invested and a workplace pension? Find out.

This investor retired at 32! Find out how here.

I interviewed Millennial Revolution (some of Canada’s youngest, early retirees) about their approach to ditch Toronto home ownership and becoming millionaires instead. 

Spend more or retire earlier in this bulletproof retirement plan.

Can I retire on a lower income? I only have a small pension and nowhere what other readers have. 

Disclosure: This is not direct investing advice nor should it be taken as such.  Assumptions above are for case study purposes only.  If you have specific needs, please consider consulting a fee-only financial planner to discuss any major financial decisions. 

My name is Mark Seed and I'm the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've surpassed my goal and I'm now investing beyond the 7-figure portfolio to start semi-retirement with. Find out how, what I did, and what you can learn to tailor your own financial independence path. Subscribe and join the newsletter! Follow me on Twitter @myownadvisor.

52 Responses to "Financial Independence for Newcomers to Canada"

  1. WOW Mark! What a post. I am not sure how I missed it. But, this person’s situation is unique. I am not sure how many newcomers (specially those from India) have a $1M in paid assets plus a potential $600K in 10-15 years. I think they can just choose XAW / VXC 50% and another 50% in Canadian Dividend ETF like XDIV or VDY. Honestly, this family should be fine as long as they can keep their rent low. $5K for rent and expenses sounds too high to me.

    We came to Canada with 10K only which we saved for working 12+ hours 6 days a week for 2 years (Both my wife and I). But by the time we were in our 8th month in Canada, we only had less than $1000 left. Now, we are aiming to reach $400K by end of 2021 and yes only on 1 income which isn’t 6 figures or anything fancy. So,

    I also have a post of the mistakes we did (or didn’t) as newcomers to Canada which could save others thousands. Thins from how to not spend hundreds on phone plans to insurance and banks.

    Reply
    1. Thanks Vibrant! Yes, likely a very unlikely story per se but JP has done very well and kudos to him and his family.

      Do share the link on this site if you want, re: I also have a post of the mistakes we did (or didn’t) as newcomers to Canada. That might help others!

      All the best,
      Mark

      Reply
  2. It’s amazing just how more mainstream that the FIRE movement is becoming and how more people are interested in it. Great interesting case study. Maybe personal finance blogs will have started the case study of FIRE seekers. Then universities will follow suit until everyone has no desire to work.

    Reply
    1. Ha. Maybe David.

      I think the FIRE movement has always been around, just that the internet made it more popular. Living below your means has existing long before blogs and podcasts.

      Thanks for the kind words. How is your income/FIRE journey coming along?

      I see you saved a bundle by age 25. Impressive!!

      Reply
  3. As mentioned many times before you don’t need as much money as you think to retire. Working is expensive. Réjean Venne author of 5 Years to Freedom: A Canadian Guide to Early Retirement went in detail covering the pre vs post retirement numbers. Short version, 30,000 a year is plenty for a family (kids included) to live on. Main weakness of the book, finding a way to generate 30 grand a year in income without working. As Mark knows, much easier said than done

    Reply
    1. Hi Rob,

      30k a year budget in a HCOL place like Vancouver or Toronto with a family of 3-4, especially without a paid-up residence, seems very optimistic.

      It would be nice to get an idea about how to accomplish this…perhaps you can kindly share any anecdotal evidence based on your experience…?

      Thanks,
      JP

      Reply
      1. I wouldn’t be able to do it justice in a comment. I highly recommend reading his book he spends several chapters going over how he got those numbers. As mentioned the main weakness of the book is how do you generate 30 grand a year in passive income

        Reply
          1. Sounds like an interesting topic. $30k plenty for raising a family?

            Sounds extraordinarily frugal, especially in a metropolitan area. Don’t we taxpayers effectively subsidize families with children and incomes this low? I also wonder how our country could operate if many citizens chose this lifestyle?

            Reply
            1. I agree. They must shop second-hand, have limited transportation and likely do not dine out or travel often. I recall they live in Northern Ontario so certainly not HCOLA (High Cost of Living Area). Sudbury area maybe?

              Based on what I know, they have a rental and derive their income stream from that for living expenses.

              I will try and have him on.

              Sometimes I consider selling everything and moving and not living in HCOLA. I could call myself “retired” too but I’m not sure I would be happy. 🙂 I would also not be contributing to society like I am and supporting small businesses like I am today in my city. Our takeout and expenses have gone WAY up since COVID-19 because we are supporting small businesses in our area. The couple of restaurants on our street get business from us at least x1 per month each.

              I dunno, lots to consider here/there when it comes to early retirement. I need purpose and drive. I like to be busy to a point. . Ha.

              Reply
              1. Deane Hennigar (RBull) · Edit

                That kind of lifestyle and income isn’t for me. I need some purpose too- my exercise stuff takes a lot of time and energy. Maintaining our property, vehicles etc takes both of those too. We used to be away 2mths/yr as well.
                A few useful hobbies, fun stuff on my motorcycle, kayaks, car and boat fills in a bit more. Reading, posting, a little finance/investing stuff etc and I’m busy enough!! Soon we’ll have a little more social contact hopefully.

                Living where and how you want to is what its about IMHO. Create the cash flow you need for that. And you are.

                We’ve gone through all that same thinking on HCOLA. Am in a home/property that takes a lot more work and a pile more money than my larger city home. And a lot more driving to go anywhere. But the views, privacy, tranquility, recreational times and memories are worth it for us.

                Just had my 62nd a couple of days ago and feeling real fine.

                Reply
                1. That’s the thing right – you need to find “your enough”. What income you need to cover your expenses (and fun) can be totally different than someone that wants to live off $30k per year. I figure for us, our sweet spot is likely $50k-$70k spend per year. I’ve highlighted that many times on my site and I have included those lists of needs and wants here:
                  https://www.myownadvisor.ca/dividends/

                  If you figure $50k after-tax is just over $4k per month:
                  -about $2k covers condo fees, taxes, utilities, etc. for life.
                  -about $2k covers groceries, personal insurance, slight additions to emergency fund, car/transportation, dining out, craft beer/fine wine and other local stuff such as hockey and football games seasonally.

                  That’s still good living in retirement.

                  You figure another $1k or so per month provides a decent travel budget for a month or so per year.

                  Any couple spending > $70k per year is likely living very well and enjoy multiple months of travel even in a HCOLA.

                  Congrats on the birthday!!!
                  Mark

                  Reply
                  1. As we have a big family and we retire when the kids still at home, plus living in a HCOLA, I figured long time ago we need $100K after tax for a comfortable but not luxury retirement. When the kids left home, it might go down, I have a figure similar to yours, $50K-$70K should be good enough for us. But as we have kids, we might want to throw in something for them from time to time, like paying the air tickets for them to visit us, a nice trip with the kids together, etc. So I figure I still would like to be able to spend $100K a year. Right now I think we are on the right track. We will see what happened when both of us really retire.

                    We spent much less though last year. I cannot wait to get rid of this COVID life style and really want to be able to spend money where I could enjoy life.

                    Reply
                    1. Deane Hennigar (RBull) · Edit

                      I think your plan with more earlier (due to kids) and then a little less later makes sense.

                      Sounds great you’re on track towards your goal to buy the lifestyle you want.

                      Yes, getting out of Covid will be wonderful.

                      Thanks for the Birthday wish and the kind comments Mayflower. I am certain you’ll continue to have a great meaningful life into retirement yourself, and it doesn’t seem like long from now!

                    2. I hear you May….”We spent much less though last year. I cannot wait to get rid of this COVID life style and really want to be able to spend money where I could enjoy life.”

                      $100K in retirement will be very good. Quite luxurious for sure and I figure $50K-$70K is great for us. I suspect it will for you too!

                  2. I’m sure you have an excellent handle on all that for yourself Mark. I strongly suspect your income will well exceed your planned expenditures, and you will have decisions on the income and asset balances remaining into the future. Spend more? Donate? Die rich?
                    Lots of years ahead to live and enjoy though!

                    I have posted our retirement expenses (includes tax) before but here goes again:

                    7 yr annual avg. $74651
                    high $90625 (2019)
                    low $55153 (2020)

                    Thank you on the birthday!!

                    Reply
                    1. Ha, well, not sure about that. We’ll continue with our plan with maxing out x2 TFSAs, x2 RRSPs and paying off the mortgage in now 3 years, 4 months, and see where we end up! I’ll run some projections for my own plan later this year. 🙂

                    2. Deane Hennigar (RBull) · Edit

                      Ha, but I am sure!!

                      Yes, stick to the plan. Its working gangbusters. Projections will confirm what I said!!

                      Gotta get my butt in gear for my 8k run plus strides now. Tomorrow 23k.

                    3. I always have the same feeling that Mark will have more than enough money when he retires with his very conservative projection. He needs a serious plan for the extra money sooner or later.

                      We spent more than you last year, RBull, but not too much. Looks like we are more frugal than you considering my family size is more than double of yours, or that’s due to the car toys you have? I am encouraging my husband to buy more toys for himself. But due to his frugality nature, it won’t be easy.

                    4. Yes, I am conservative but it has served me well thus far May 🙂

                      I’m sure once the debt is gone I can consider part-time work and I hope to stay with my current employer for that for a couple of years if they will have me…

                      Thanks for the kind words. Trying to do what I can to meet our objectives and help others via the site along the way!

                    5. Deane Hennigar (RBull) · Edit

                      Hi May, you and I agree re Mark!

                      Ha maybe you are more frugal than us. We’re pretty careful and frugal for sure. We even make our own wine and beer, have large vegetable garden for freezing, canning etc. Don’t drive much.
                      Thinking of building boat house this year, buying used ATV, used truck so the spending might get crazy. Already bought one newer car. LOL

      2. I am pretty sure there are families living on 30K annual budget. But not every family for sure. Not my family anyway. Before pandemic, we are planning a trip to Europe and the budget is more than 20K. We saved a lot due to pandemic but I’d rather we actually did the trip. Before that, we went to Disney World and that trip cost 10K. We are pretty happy just going to camp too. But if we could go to Disney and Europe, to have precious experiences and memories, why not?

        You can go to tawcan.com and see how much his family spends as a family of four in greater Vancouver. They are pretty frugal but still enjoy the life a lot. Anyway, people are different and have different definitions of living and surviving. I think it will be only realistic once you settled down here in Canada and live for a while, tracking your expenses, then you would know for your family, how much is reasonable. You can have a good plan based on that.

        Welcome to Canada. This is a great country. We are also first generation immigrants. We came here younger but with almost no assets. My English was pretty poor too. We managed to have a good life here and I am pretty sure you will too. You have a great start and you are already financially savvy. I expect great success for youf life in Canada. Best luck to you and your family.

        Reply
        1. Oh for sure MayFlower. re: families less than $30k but it’s not common. But it can’t really in any HCOLA (High Cost of Living Area). It’s just not very likely with property taxes, housing maintenance costs and other expenses for kids especially.

          Some quick math sharing. No kids – our condo expenses alone (assuming no mortgage) are about $1,500 per month. Ottawa property taxes alone make up almost 50% of that. We haven’t eaten anything. There is no car. No cell phones. No travel. We haven’t even fed our cats!

          To spend less than $30k per year as an individual or couple of family with kids you almost must be a) doing very little with your life and b) living in a lower cost of living area.

          Neither a) nor b) are “bad” rather it’s about choices at the end of the day.

          Tawcan is a fine example and a friend of mine but I would say his lifestyle is not the norm since he has a paid off home in one of the highest priced cities in the world. There are very, very few late-30-somethings that can say that 🙂

          That said, he has absolutely made the most of his fortunate circumstances and I applaud my friend for living well below his means to build wealth for his family.

          MayFlower – from what I know, you have done a fine job in your wealth building. Folks can look to you as an example 🙂
          Mark

          Reply
        2. Thanks, MayFlower…appreciate your kind and encouraging words.

          Totally agree with you about making precious memories being worth the extra budget.

          Cheers,
          JP

          Reply
      3. Hi JP,
        Firstly welcome to Canada! How exciting to start a new chapter. One thing I have noticed from all of the comments is that HCOLA(high cost of living area) is mentioned multiple times. Regardless of where you live in this vast country, Canada is EXPENSIVE. I am retired and live in a conservative rural prairie town alone with my pets and I still go through $40k annually after tax. Retirement at 50 could be too optimistic and don’t be surprised if you have to work longer to build your retirement nest egg. Cheers

        Reply
        1. Yes, Canada is getting expensive but still the greatest country in the world I believe.

          I figure for a couple like us Bonnie – retirement is going to run around $50K per year. That’s in Ottawa where our property taxes alone are just over $6,000 per year. And we downsized! There are houses in our neighbourhood where the property taxes are approaching $1,000 per month – they are very nice homes but goodness, getting expensive.

          Ottawa is certainly not an inexpensive city and still lags TO, Vancouver and Montreal.

          Reply
        2. Hi Bonnie,

          Thanks for your kind comments.

          Yes, it is exciting and scary at the same time, to start a new life at this stage 😀

          Totally agreed with you regarding living anywhere in Canada is quite expensive.
          However my comments about HCOL was especially directed towards the insanely high Real Estate prices in a place like Toronto.

          My plan is to own a fully-paid home before retiring, and with these prices, it’s gonna take that much longer. Frankly, I am not too concerned about the day-to-day living expenses in the HCOL area, though.

          I am ok to work part-time beyond 50, if required.
          And going by Mark’s excellent analysis, it seems that I just might have to.

          How about you? What is your FI plan, if you wouldn’t mind sharing?

          All the best.

          Cheers,
          JP

          Reply
          1. JP,

            I retired at 54.5 years old, 2 years ago. Fortunately I have a government defined benefit pension which I gave been able to live on without dipping into my portfolio. As I live in a small rural town my expenses are manageable as I have no where to shop.😎 Covid has also curbed alot of unnecessary spending. I adopted a minimalist lifestyle after I retired. I think this naturally occurred due to my stage in life and the initial fear that I was no longer earning a salary. It is true that when you retire you don’t need the same income as you had while working. I credit this blog for educating me. I became a DIY investor in 2006 after firing my financial planner and selling all his mutual funds. I started reading about RRSPs, non registered accounts, and then TFSAs. I followed blogs, watched videos, went to my bank’s seminars on investing, and read, read, read. I still remember how scary it was to buy my first stock online. I bought $1000 worth of shares of BMO!! Now that seems like peanuts!! As I became more comfortable with dividend growth investing through my brokerage I was able to accumulate alot faster and now I’m starting deaccumulation. Today I withdrew some RRSP cash, which feels weird after contributing for 40 years. That cash will fund some travel hopefully later this year 😎

            Reply
            1. Hi Bonnie,

              Thanks for sharing your FI journey; looks like you are doing remarkably well.

              And congratulations for being able to retire before 55, and still not needing to dip into your portfolio.
              That’s very motivating and an enviable position to be in.

              Hope you enjoy your hard-earned FIRE.
              All the best.

              Reply
  4. JP you sound like the kind of newcomer we want in Canada. You’re in great financial shape at this stage of your life. Good luck with your savings and retirement plans.

    Mark, that’s a heck of good job on that insight for JP and the question answers. Kudos.

    Reply
    1. Thanks, RBull…appreciate your kind comments.

      As Mark rightly pointed out, moving permanently to another country at this stage of life, especially when you are doing reasonably well in your native country, is a very difficult decision.

      Believe me when I say that we spent countless nights double-guessing our decision 😀
      But I hope that this wonderful country will provide us with plenty of opportunities and a fulfilled life.

      Hope to be a part of this wonderful group of like-minded, open and helpful FI aspirants.
      All the best to you too in your FI journey.

      Cheers,
      JP

      Reply
      1. You’re welcome JP.

        I can imagine how big a decision that is and why someone might want to second guess. I am retired (7 years) and up to Covid had been volunteering teaching English to new immigrants to Canada. So I heard about peoples motivations for moving here along with some stories about their former countries.

        Yes, Canada provides a lot of great opportunities for a good life. You’re already part of the community!

        Reply
        1. Thanks, RBull.

          Looking for inspirations from the real-world successes like yours and other FI stalwarts here.

          My spouse and I would love to take up some community volunteering work, like what you are doing.
          Perhaps once we settle down, we can connect to discuss more on this…?

          Cheers,
          JP

          Reply
  5. Hi Mark, thank you so much for your efforts on this, this is amazing. I enjoyed reading.

    My partner and I are in early 30’s, and just like many others, we have so many unknowns which make retirement planning really challenging..
    For example, our main unknowns are:
    Are we going to have kids? If so, how many?
    Buying a house or keep renting? and where? (GTA or moving to California, for example)

    What is a good way to deal with these unknowns for retirement planning,
    should we develop multiple plans using different assumptions each time?

    If you could kindly share your thoughts on this, I would really appreciate it.
    Thank you again.

    Reply
    1. I was there with the kids thing. Never expected to have any but then had two very late in our life.

      Being so young I think any plan will face lots of changes and challenges. From my own experience, spending within our means really helps. We didn’t really encounter any financial problems with the unexpected changes in our life thanks to being good savers.

      The biggest mistake we have made, of course, is not investing properly for many years. As you are here already, I am sure you won’t make that mistake. You can just develop one plan and adjust on your way. Life happens, just be agile.

      Wish you great success on your financial journey.

      Reply
      1. Hello MayFlower!
        Thank you very much for such kind words and advice!! It’s so nice and valuable to hear stories from someone like you who handled unexpected life events successfully.
        I completely agree with you; having a good amount of savings (and good saving habits) really helps deal with life changes.
        We’ve been saving as much as we can for our unknown future, but appreciating our current life within our budget 🙂
        Thank you again, MayFlower!

        Sorry, I think I may have stolen your name unexpectedly; I will change it to June (which is my actual nickname anyway) 🙂 Talk to you soon!

        Reply
    2. Thanks very much May. 🙂

      We all have unknowns when it comes to the financial future. This makes the process of some planning and re-planning critical.
      I would look at your questions this way:

      1. Are we going to have kids? If so, how many? (So, how much extra income might we need if we decide to have kids? Are there ways to keep expenses in check with home, transportation, other? How might we do that?)

      2. Buying a house or keep renting? and where? (GTA or moving to California, for example) (What might be the social, environmental benefits of moving to a different location? Is the cost of living different? How do we know? Are those costs worth the move or location? What are the benefits of home ownership for us vs. renting?)

      A great way to deal with unknowns is to define them, document them and discuss ways to monitor them over a year or so. If your assumptions prove to be correct – your plan can be more robust. If your assumptions prove to be wrong, you can make adjustments.

      Best to have one plan (which if your life), with assumptions and see how that goes. There are no perfect plans but having one will give you a sense of direction and course correction.

      Hope that helps!
      Mark
      https://www.myownadvisor.ca/what-is-a-financial-plan/

      Reply
      1. Thank you so much, Mark!
        I first have to say, you have such an amazing community. Thank you so much for sharing your expertise and making the platform engaging for readers. I will keep sharing your website with others.

        Having read how you rephrased my questions, I noticed how passive I had been when thinking about uncertainties. We will slowly start to move on to the next stage in order to be more in control by, as you wrote, defining them (instead of keeping them like ghosts). Your website has been a great help in developing our first financial plan.
        Thank you so much again!
        June

        Reply
  6. Hi Mark,

    Thank you so much for the detailed analysis on my financial situation and on my ‘FIRE at 50’ aspirations.

    I totally agree that there are plenty of assumptions and many variables to consider, but this analysis is extremely helpful in providing a roadmap for FI not only to me, but also for so many newcomers that come to Canada every year.

    I have a couple of questions reg your suggestions in the post, pls:

    1. Assuming you invest in Canadian ETFs, US ETFs, Canadian stocks (including dividend stocks), US direct stocks as well as Bonds, which is the best placeholder out of your various accounts – TFSA, RRSP, RESP and non-registered accounts, for each of them for maximum tax efficiency as well as ease, pls? Eg US ETFs and US stocks in RRSP to avoid withheld tax(?), etc.

    2. Can you pls elaborate on your comments about “… taxable investing with assets coming to Canada will be 5.10%” ? Are you suggesting that any assets brought to Canada will incur 5.1% tax?
    I was under the impression that an immigrant can bring in any amount of funds within a certain timeframe with no tax implications.

    Thanks once again.

    You are doing a tremendous service in not only providing the nuances of smart financial investing for your experienced readers, but also educating the newbies like me about the various financial instruments available in Canada.

    I would be definitely recommending your blog to my fellow new comers.

    – JP

    Reply
    1. Very nice to hear from you JP. I certainly wish you the best….

      1. I personally invest this way, although again, not advice 🙂
      https://www.myownadvisor.ca/investing-in-taxable-accounts/

      I find, because bonds, interest from them are taxed like employment income, best to shelter tax so TFSA and RRSP makes a good home for bonds, bond ETFs, etc. Of course, TFSA and RRSP is great for stocks as well.

      2. I assumed, very loosely, your mix of stocks and bonds (e.g., 70% stocks/30% bonds or 80% stocks/20% bonds) may earn on average about 5.10% per year on average. I wish I could predict the future. You returns could be 2% or 15% next year, no idea. I have assumed because you cannot contribute all your money into TFSA and RRSP, right away, you will contribute over time but most of your assets will be invested in a taxable account in the coming years and as TFSA and RRSP room “opens” for you you can contribute to those accounts. Again, lots of assumptions but the key would be to find ways to open TFSA and RRSP self-directed accounts as soon as possible and contribute what you can to them I believe. This way, you are investing tax-free (TFSA) and tax-deferred (RRSP) as much as possible. With such a large sum of money you might want to speak to a tax accountant you can guide you to tax efficient investing once you get settled.

      I cannot speak to the “can bring in any amount of funds within a certain timeframe with no tax implications” – this is a great resource:
      https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/newcomers-canada-immigrants.html

      “If you owned certain properties (other than taxable Canadian properties) at the time you immigrated to Canada, the CRA considers you to have sold the properties and to have immediately reacquired them at a cost equal to their fair market value (FMV) on the date you became a resident of Canada. This is a deemed disposition.

      Your property could include items such as shares, jewelry, paintings or a collection.

      Usually, the FMV is the highest dollar value you can get for your property in a normal business transaction.

      You should keep a record of the FMV of your properties on the date you arrived in Canada. The FMV will be your cost when you calculate your gain or loss from disposing the property in the future.

      You dispose of your property when, for example:

      You sell it
      You give it
      It is destroyed
      It is stolen
      If you have a loss resulting from the disposition of those properties, you can only deduct those losses from any gains you had from selling the same type of property. You cannot use this type of loss to reduce any capital gains you had from selling other types of properties.”

      My understanding:
      You can bring any amount of money anytime, regardless the first you come to Canada or any future date. Only income is taxable. That said, you have to declare any amount over $10,000, otherwise you will be fined. If you are flying on a international flight, you would be given a form to declare. If you are driving, the immigration officer might ask you about it or you can disclose it.

      Unfortunately I cannot offer tax advice JP. Here is our government resource:
      https://www.canada.ca/en/immigration-refugees-citizenship/corporate/contact-ircc.html

      Take good care!
      Mark

      Reply
      1. Hi Mark,

        I was reviewing some of the wonderful articles in your blog about investing in ETFs.
        Specifically, I was looking at https://www.myownadvisor.ca/indexing/ and I was hoping you might be able to clarify something for me.

        In that article, you mentioned that investing a Canadian ETF that holds international stocks “in a RRSP or TFSA account, withholding taxes will apply”;
        whereas, investing it in “a non-registered account withholding taxes will apply (15%) but they are recoverable when investors file their tax returns”.

        Despite the above, you conclude that you “own a growing % of U.S. equities (stocks and ETFs) inside my RRSP”. If I understood your post correctly, I was wandering why do you not consider non-registered accounts in order to avoid withholding tax?

        Since I’ll be moving my funds to Canadian market in high five-figure tranches, I’ll be investing mostly in non-registered account. While I have a fair idea about the dividend stocks/ETFs that I am interested in, what is your recommendation as to how I should go about it, pls?

        Pls excuse me if this is not a right placeholder for this type of query.

        Many thanks in advance
        – JP

        Reply

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