Weekend Reading – How to reach financial independence edition

Weekend Reading – How to reach financial independence edition

Are you doing what it takes to leave your job – if that is your financial independence goal?

Well, some folks have figured out the simple secret to financial independence and I will share one particular story today in this weekend reading edition.

First up, my updated post from the last week while I was travelling about Scotland:

These are the six key phases to work through to achieve financial independence.

How to reach financial independence

Reaching financial independence isn’t complex.

There really are no secrets. There are no shortcuts.

You do not need to be a financial whiz or premium stockpicker – although that could help!

No, how to reach your personal financial independence target boils down to two major things:

1. Save and increase your savings rate for investing over time, and
2. Invest your money wisely.

That’s it.

Your saving rate

When you use this handy calculator (free by the way) from networthify.com you can easily see how your savings rate (when it increases over time) can a be signifcant enabler to wealth-building and therefore financial independence.

In a snapshot you can see when you can retire based on any current estimated values like annual savings and annual expenses.

When can I retire calculator

The reality is – any person that wants to retire or semi-retire early is not average. You’re going to have to do some unaverage or unconventional things – such as being intentional with your spending, increasing your savings rate over time, and growing the gap between income and spending over time for investing purposes.

Investing the difference

Investing your money creates a snowball effect – the power of compounding can start working for you…

(I personally started with just $25 per month a few decades ago. That money has compounded and snowballed away to a much higher level over time.)

This makes the process of getting started; saving in small, consistent ways essential to achieve financial independence.

Investing doesn’t need to be complicated nor time-consuming.

Some investors may seek out real estate. Some investors might use strictly low-cost indexed funds. Still others, might use a mix of real estate, individual stocks, alternative investments and more to realize their financial independence goal.

The punchline is, regardless how you invest, consistent investing at a modest to high savings rate for investing should yield significant wealth creation over time.

Investing helps you turn your current money into more, future money.

How much do you need to become financially independent?

Ha. One of my favourite questions with one of my favourite personal finance answers: “it depends”.

Yes, you can follow a decent rule of thumb (the 4% rule) but that’s just a guideline and for the most part, that rule doesn’t serve early retirees very much good anyhow.

Why the 4% rule doesn’t work for FIRE can be found here.

I believe if you want to know how much you need for retirement, you really need to figure out how much you want to spend, with some margin of safety built-in.

This makes a good (but conservative) target to strive for: The Crossover Point.

October 2021 Dividend Income Update - Crossover Point

I believe once your income derived/earned solely by your investments comes close to or ideally at least matches your expenses, I believe most folks can retire since they are financially independent. 

At any Crossover Point, you no longer need to work to cover your expenses. Your investments do all the work for you. You can live off the money earned by your investments as you wish, almost in perpetuity. 

How much do we need to become financially independent?

I try and keep things somewhat private but also transparent to the extent possible on this site since I want to pay my experiences forward as much as possible. This way, you can learn from me and in many respects I also learn from you!

I’ll link to some case studies below in a bit but when it comes to our FI path, I’ve already hinted at what that looks like.

I’ll update this post in a few months towards the end of 2022.

In a nutshell, we figure once we can earn close or just over $30,000 per year from a few key accounts, part-time work or occassion work should pick up the extras in life throughout our 50s. 

My Dividends

Notes: subscribers to this site know for well over a decade now, we invest this way:

1. We invest in many Canadian dividend paying stocks for passive income. We hold these stocks in our taxable account and TFSAs. Again, our goal is to earn about $30k per year from just these accounts.

2. We use our RRSP accounts to invest in U.S. stocks but also low-cost ETFs.

We’re confident that if we keep investing this way (something I coined our “hybrid investing” approach well over ten years ago now), we should be able to realize our financial independence dreams.

To realize FI in the coming years we’ll do the following until the end of 2024:

  1. Max out TFSAs every year.
  2. Max out RRSPs every year. 
  3. Build our cash wedge/emergency fund to cover 1-years’ worth of expenses.

Here are some articles to gauge how much you might want to save and invest for to realize your early retirement goals:

How much do you need to retire on $5,000 per month?

Can I retire at age 55 with higher inflation?

Weekend Reading – How to reach financial independence edition summary

Looking at your bank account today, I know you might be thinking it’s impossible for you to save $500,000 or $750,000 or more for any early retirement.

The reality is, you don’t need to save that much if you start saving early, and often, and remain invested since your financial behaviour coupled with the power of time will deliver much of ingredients for any financial independence success for you.

Behaviour over Returns - The Behavior Gap

Reference: The Behavior Gap

I hope you continue to follow this site to see where my wife and I will end up in a few years, how we’re (hopefully) making more good financial decisions than not over time (by usually just staying invested), while enjoying some experiences like travel along the way.

More Weekend Reading – How to reach financial independence edition articles

Congratulations to fellow blogger and friend, Liquid, from Freedom 35 Blog. He recently wrote:

Today is the first day of the rest of my life. I have been working at various 9 to 5 jobs for the last 14 years. But no more. June 28th was officially my final day at work. 🙂”

It was interesting to read about his personal path to financial independence. 

“About half of my investments are in real estate. I have 2 investment condos. Both are cash flow positive. The remaining ~50% contains stocks, bonds, cryptocurrencies, etc.”

And on his debt load now that full-time work is done:

“Associated with these investments are loans. My total mortgage balance and margin debt outstanding is $650,000. This means the equity I have in my investments is worth $1,350,000.”

Again, no one-size fits all…

Henry Mah cited some content on my site saying dividends are very important but not magical. 

I always enjoy Dale’s Sunday Reads from CTCI, including some insights about what higher interest rate hikes by our Bank of Canada might mean…

Curious about the shortest and longest bear markets on record? A Wealth of Common Sense has the data.

Further curious about the average savings by age in Canada? Well, GenY Money has the stats. 

Finally, I enjoyed Bob’s roundup from the PF community this week on Tawcan. 

Have a great weekend!


My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

18 Responses to "Weekend Reading – How to reach financial independence edition"

  1. Mark, do you have any recommendations pin portfolio tracking software for Canadians? Specifically for tracking all account types, dividends, total return, reporting, etc. It can be paid or free. I find there are big limitations with my current bank trading platform.

    1. Indeed, there are limitations.

      Here are a few:
      1. Sharesight – Most extensive features like tax reporting & more but the free-version is very limited unfortunately.
      2. Wealthica – Includes personal finance tools – might be one of the best free ones?
      3. Yahoo Finance – pretty good but I haven’t used it either.

      This site also used to have a very good one!

      Hope that helps a bit!
      Mark 🙂

  2. Thanks again for the mention Mark!

    Glad you were able to travel to Scotland, I feel so grateful to be able to travel again without the Covid restrictions! 🙂

    I liked seeing your budget projections, I am impressed it is so low! I like that you added the $1000 a month for ‘extras’ as a buffer. My car insurance alone is like $1500, lol, and that’s not including gas.

    1. Yes, it was great. Glad to be home but also grateful for the time away 🙂

      Yes, that $4,500 per month is really the basics so it excludes major entertainment and travel. I figure we’ll need another $15k or so per year for that. That would be nice.

      Yes, your car insurance is expensive but my Ottawa property taxes are $6k per year for a 1,200 sq. ft. condo. 🙂

  3. My comment would be inline with some of the other ones and, to me, this highlights the importance of really understanding your own lifestyle and spending. We are not retired yet, but this is our retirement budget straw dog.

    700 Vehicle/transportation (assumes one car)
    300 Cell phones. internet, apple music, disney+, netflix
    350 Property tax
    350 Entertainment (includes restaurants)
    350 Gasoline & 407
    1,000 Out of pocket medical
    250 Vehicle and home insurance
    1,000 Groceries
    1,000 Home maintenance
    400 Misc expenses (including alcohol)
    350 Utilities (Natural gas, water, hydro)
    1,000 Vacation
    500 Personal spending (me)
    500 Personal spending (spouse)

    Total is $8,050 per month.

    We live in a modest 1,450 square foot bungalow in Kitchener, Ontario. The house is paid for. We have three cats (which accounts for close to $200 of the $1,000 per month in groceries).

    1. Thanks Neil – I have no doubt we’ll need to re-assess in time!

      When I really add up everything, including international planned travel, etc. I figure our desired needs and wants spend is closer to $70k per year or closer to $6k per month. Home maintenance is essentially our condo fees and our vehicle costs are very low since we don’t need to drive very much.

      Healthcare is going to be a bit of a wildcard for sure…but my workplace might have a portable package by then?! to some degree.

      Sounds like you’re on top of your financial game.

  4. Hey Mark

    Very interesting on your budget and I think it would be totally amazing if you could live on $35k per year.

    We don’t budget at all and don’t track most expenses but we do an annual reconciliation of our banking info as everything on the expenses front goes through our online banking. I think we have quite an inexpensive lifestyle as most of our activities are family and outdoors related. Our total expenses for 2021 before income taxes were $53k (income taxes are running around $11k combined so we are really in the $64k range)..

    Also, we live in Calgary so it is a little less expensive than Ottawa (eg: our property taxes were $2400 vs your $6000).

    Some of the things that are quite different are that we have 2 vehicles, spend about $4500 annually for vacations, and give $2400 annually to charity. Our car and house insurance totals $4400 so $1400 more than your total insurance of $3000. I’m not quite sure where all the rest of the difference is but I somehow think your $35k is going to be really hard to attain. Good luck with it.

    Interesting stuff.


    1. Ya, I figure the “basics” for us is about $4,500 per month or closer to $54,000 per year for retirement. (That $35k in the table is really the bare bones with very little entertainment, let alone major healthcare considerations.)

      I actually don’t do much of a monthly budget. We pay ourselves first 10-15% net and spend the rest as we please 🙂

      As long as we live in the city, only 1 car to deal with and we only drive it 10,000 km per year. Put it this way, it’s almost 13 years old with less than 150,000 km on it. Ha.

      On top of the $54k per year, I hope to travel internationally for a few months so that’s another $15k or so per year in retirement.

      All said, I think if we can plan to spend about $70k per year in retirement and have our total portfolio churn out about $70k or so in dividend and distribution income, to cover those expenses, then I think “that’s enough” – which also excludes CPP x2, OAS x2 income streams eventually when they come online.

      Remember, my/our RRSP withdrawals will be easily $10-15k per year per account starting in a few years.

      Happy to discuss more of course!

      Thanks for your comment. 🙂

  5. Agreed with Ricardo, a couple of burgers and a beer with an ice cream out for 2 rings in at $100 these days.
    A $100 a month doesn’t buy a lot of enjoyment these days, in particular when you have more time on your hands.
    In terms of home expenses: the first 2 years we retired we got hit with special levies adding up to $30K. 1 car repair wiped out the budget for a year. There is another less expensive levy this year (5 years on) for a couple of thousand. And I haven’t touched on a few pricey dental bills.
    Similar to eating out / take out, home maintenance and home insurance has sky rocketed over the past decade.
    Grateful for my husband who can look after a lot of repairs and maintenance inside the house (painting, new floors, appliance repair to an extent, and other ‘renewal’) so we don’t end up living in a museum as he likes to say. He and our neighbour try to keep the strata bill down as well with smaller jobs around the complex (small number of units).
    Also grateful that we can manage without undue stress and there is still budget left for vacations and our hobbies, supporting our mental health.

    1. Thanks for your comment, Gin. Great details.

      I think we’ll need to increase our dining out/entertainment budget for sure, but that’s a want not a need per se.

      “A $100 a month doesn’t buy a lot of enjoyment these days, in particular when you have more time on your hands.”

      I would agree – so part-time work is essential for us in the coming years if we do not want to change our lifestyle – so far, so good 🙂

      We’ll have $50k+ in cash for any special condo levies or assessments in the coming year or so, so I’m not worried there. We’ll be buying a nearly new car before semi-retirement so that purchase buys 10 more years or car travel.

      Healthcare is a bit of wildcard and I need to factor that in a bit more but I should have a portable plan from work to a limited degree. Healthcare is going to get very expensive for us over time!!

      Hope you’re having a great summmer,

  6. Hi Mark,

    Thank you for this post. Wondering if you’ve given thought to funding long term care/senior retirement home/assisted living costs down the road. I don’t see this often addressed in blogs and would love to hear your thoughts.

    Hope you are enjoying the weekend. Take care,

    1. I have actually (thought about this) and I hope to be doing a post about that from an expert in the coming months – please stay tuned JF 🙂

      Thanks again for your engagement,

  7. Don’t know your lifestyle Mark but $35K without he mortgage is cutting it close.
    My last two years have run $32.5 K and $42K (major expense),
    Back around 2013 (pre-retirement) I budgeted $42.7K. Mind you I had vacation money in there as well.
    Your dining out may need to be inflated a bit. Just bought three clubs and pops for $78
    Your right about term insurance. The only need for insurance is to stabilize the family if anything unfortunate happens. I have a couple of small whole life policies (enough to get me in the ground i tell the kids) but otherwise there is no need for insurance once the family is on their own and your stash can cover any shortfall in dire circumstances.
    I even have a catchall “other” line for things that pop up that do not seem to fit the more conventional expense lines. It can catch things like magazine subscriptions or buy a one off book/magazine every now and then Go to the movies. If like popcorn and soda a movie will run around $25.

    Take care


    1. I figure $4,500 per month after tax without major travel is just fine and good, to be honest.

      Yes, I also figure insurance without any debt is really a premium paid without taking on any risk. Just seems odd to me!

      Dining out – that budget will have to increase too 🙂

      Thanks for your comment,

  8. That’s a beautiful chart with the crossover point, Mark. It really shows how simple the FI concept can be, but that doesn’t necessarily mean it’s easy or quick to get there. Thanks a lot for the mention! I hope the weather was good in Scotland during your vacation. 😀

  9. Hi Mark and glad you enjoyed your trip to Scotland. Yep, financial freedom doesn’t happen by itself. It happens when one either works to achieve it, or works to save enough so that at some point, the money saved allows them freedom. In either case, eliminating debt must be a big part.
    We did the later, kept out of debt, enjoyed life, and managed to save. What we didn’t do was make the money saved do it’s part, and that didn’t begin to happen till we started investing to earn an income.

    1. Good stuff, and good lessons learned for others Henry.

      I found the key for me in my early 30s was to understand (better) the power of time – save more, early and let time do it’s thing. We’re in a great position for the coming years given time has been the true engine of wealth-building power 🙂



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