Worried about retirement?  Don’t be if you consider this wealth of advice

Worried about retirement?  Don’t be if you consider this wealth of advice

For a few years now, I’ve been inspired and motivated by early retirement stories.  We’re certainly not there yet but we’re getting there slowly.  Using this site to chronicle our financial journey (the good, the bad and the everything in between) I’ve been fortunate to meet a number of fine folks who are willing to share their own financial stories with me.  Today’s post is another one of those stories….

Bio:

  • Name: Janus10 from Canadian Money Forum
  • Age: 52
  • Family status: Common Law for 17 years, 3 adult children (1 from my previous marriage and 2 from my wife’s previous marriage)
  • Retired since: October 28, 2016 (not like I’m keeping track!)
  • Retirement plans: Stay retired, grow investment portfolio by > $200k/year, downsize house, move out of GTA but still close enough to kids
  • Retirement worries: I figure my wife and I have at most 20 years to be of sound enough mind, and physical health, to enjoy retirement.  But, these will be big changes – no longer having children at home, both of us not working and pursuing our personal goals – can we stay happy together and grow closer?

Deep bio already!  Thanks for this Janus10.  I enjoy learning from folks – certainly people that can confidently say “been there, done that”. 

Well Mark, its early stages, so I’d say it’s more like “being there, doing that” right now.

The last several years have been quite eventful, and the next year promises more of the same.  Relationship, career and financial plans are all well and good, but I think it is like a chart of the stock market – looking closely shows a lot of, sometimes neck snapping ups and downs, but with the perspective of a long time horizon, those valleys and mountains look more like bumps and dips.

Good perspective.  So, how did you get started in investing?  Anyone show you the ropes?

I’d have to say I pretty much taught myself.  I can remember at around six years old having a passbook savings account and being thrilled when I could see my balance growing because I only deposited (never withdrew!) and also got paid some measly monthly interest (probably a nickel or something).

During a summer when I visited my mom, her 2nd husband asked me to help them by filtering stocks by hand. I had to take some printouts and look for any stock that met certain criteria (e.g. EPS (earnings per share), market cap, etc.). It was boring, tedious work and although I loved numbers, I didn’t gain any insight into stock picking.

However, there was a stock ticker channel for the precursor to the VSX (Vancouver Stock Exchange) at the time. And it would show the various penny stocks (mostly resource based) as they traded with how many shares, the price, and the absolute and percentage changes.  I noticed that stocks that were very active tended to continue moving in the same direction.  Thus, I got my mom to create an account for me at a brokerage, funded it with my own money, and would watch the channel for 2-3 days before I identified a likely momentum play.  I believe it was Breakwater Resources that was my first trade and turned about $2,500 into $3,500 in a couple of days.

Interesting start.  So what was your investing journey over the years?

Retirement Hourglass 

Fast forward to three years out of university.

I fortunately won a full scholarship so I graduated without any debt and in fact probably had close to $10k in my savings accounts back in 1987.  However, what I didn’t have, was a clear path to a job from my academic studies.  I parlayed my experience teaching myself how to program and administer servers into an IT job. It took me about 2 years before I was making enough money to take a good chunk of my income and become an investor in equities.

I tried a full service broker but realized, after losing well over $1k, that he was a salesman trying to sell penny stocks with stories of great potential.  That was the first, and last, time I put my money in the hands of someone else.

I really wasn’t (and still am not) any good at evaluating companies as excellent choices for investing.  But, I was good at saving, saving, saving. So, I just kept putting money into my RRSP (I also eventually worked at one company that had a stock option plan where you could purchase their stock, at a 15% discount, every quarter at whatever price was the lowest – either the beginning or end of the quarter. Easily the best investment I have ever been given).

guess part of the reason why I’ve always focused on saving was because I have lived through some very big life events that I didn’t plan on – graduating with a degree that wasn’t going to lead to the kind of career I wanted; getting married; having a child; getting divorced; plus an almost consistent change of employers every 5 years.  My philosophy became, save and invest whatever you can and eventually you’ll end up where you want to be.

Sounds like a good recipe.  OK, so, all the rage is index investing using low-cost Exchange Traded Funds (ETFs).  What’s your take on index investing?

I’d recommend it to everyone I know as I think that, as long as one has the discipline to buy even more when the market suffers a setback rather than sell, it is a low stress and consistent method to grow your investments with reasonable risk.

Certainly, as one gets a little more comfortable, it wouldn’t be a bad idea to explore additional strategies. But, for some people, they may never be more comfortable than employing a Couch Potato Portfolio using low cost ETFs.

Dividend investing seems to be a decent way to invest, although there might be more risks involved.  What’s your take on that?

Sometime in the mid-2000’s I was working with a colleague who is about the same age as I am, he made good money and so did his wife.  He looked to be on track to rise within the company but he said something that was a turning point for me.

He said that he wanted to amass enough money so that if, one day, he came into work and he couldn’t take the BS anymore, he’d pack up his things and leave.  Just like that.  So, not only did that inspire me to stop flying on auto-pilot with my investments, it made me put a plan together. And, one of the cornerstones, was this beautiful concept of dividend investing.

I could see myself, in the future, having a portfolio that generated enough dividend income to cover all of our expenses.  Having CPP/OAS would be a bonus, of course, but the end state seemed ideal.

A few years later, I implemented the Smith Manoeuvre and so all of my new investments were dividend payers.  However, that was during, but not before the worst of, the global meltdown.  All of a sudden, many of my dividend payers not only had huge drawdowns but they slashed or even eliminated their dividends.  It was a pretty difficult time indeed.

In the last few years, I’ve completely abandoned the idea of pinning my goals on a massive dividend paying portfolio and looked to more managed investing.

Do you think most investors should have a financial advisor?  Why or why not?

I don’t think so.  That’s because I think you need to educate yourself first and foremost. No one cares more about your money than you do, and no one suffers/succeeds as much as you do when it comes to your money.

That isn’t to say that a financial advisor with fiduciary responsibility can’t add tremendous value, especially when it comes to advising on a comprehensive plan (insurance, wills, powers of attorney, estate planning, etc.), but I think this is an area that is well worth one’s time to gain a fundamental understanding of household financial management.

If you contract a financial advisor as a professional instructor, rather than outsource your decisions, then I believe that is a reasonable compromise.  But, understand that this is one person’s perspective and it may not always be the best perspective for you at all times.

What are your current income streams in retirement?

My wife and I have no pensions, so we will rely on our investment portfolio for the next several years.

She will be eligible for CPP in a little over 5 years while I still have a bit more than 7 years.

Our investment approach probably falls well outside the norm for people our age. I’m actively managing our money (i.e., trading) in order to realize exceptional returns.  This isn’t without risk.  Our success depends on my ability to adequately manage that risk. If I had to put a number on it, I would be disappointed if I can’t generate 20%+ annual returns on our portfolio. It will be interesting to see what our balance will be on October 28, 2017 – a full year after I retired.

(Editor’s note – active money management is not for everyone. Buyer always beware.)

I’ve written about retirement withdrawal strategies on my site.  There doesn’t seem to be any consensus on what is best practice.  What approach are you taking and why?

We will withdraw from our RRSPs first.  The reason is that our margin accounts generate much higher returns, so I don’t want to hamper their growth more than is necessary. I do expect that some years we could see a gain in our RRSP that is larger than our withdrawals.  We will take additional money out to fund the TFSAs on an annual basis.

If I’m right about the growth in our RRSPs, it may take a long time to draw them down and, in fact, we may still have them when we would be incented to convert them into RRIFs.

The next stage would be to start drawing down the margin accounts. In fact, I could see us dipping into them well before we need to in order to help our children.  At this point, it looks like they will be about average wage earners, but they are growing up when housing costs take up a much larger portion of their after tax incomes.  If we are very successful with our investing approach, then we can give them a head start on their path to financial independence. It has the potential to be a monumental game changer for them to have a significant sum while in their early 30’s than inherit our wealth in their 50’s.

That would leave the TFSAs to the end.  It will be harder to grow this quickly because of the restrictions (as in any registered account) with the type of investments and trades you can do, but also because they aren’t nearly as well funded as the other accounts.

This is a big retirement essay Janus10 so to wrap this up what final words of financial wisdom do you have for readers?

Perhaps the two biggest factors that have put me where I am is that I worked at my career to make more and more money, and when I did earn that money, I modestly increased my lifestyle so that the beneficiary of my additional compensation was my investment portfolio.

For our kids, I know that we may have to take a different path, so I’m showing them how it is possible to not follow the crowd, adopt a very different strategy for investing, and get to where they want to be sooner.  I believe they can already realize the value of having their money working for them.  The by-product of this:  it prompts them to invest in themselves and their careers.  If their investments can grow and make money, then it follows that the more money they have to invest, the greater their gains will be.

t is quite a remarkable feeling when you have a year that sees your investment portfolio grow by a larger amount than how much you earned through your job.  It’s a feeling you want to experience every year thereafter – it is the closest I’ve ever felt to being “self-employed”.

A big thanks to Janus10 for sharing his story.  What is your retirement story going to be?  Got questions for him?  Fire away and please leave a comment below. 

Mark Seed is the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've grown our portfolio from $100,000 to well over $500,000. Our next big goal is to own a $1 million investment portfolio for an early retirement. Come follow my saving and investing journey by subscribing to my site. Delivered by Subscribe Here to My Own Advisor

73 Responses to "Worried about retirement?  Don’t be if you consider this wealth of advice"

  1. I’m quite impressed that in spite of a divorce (on both sides) and kids they were able to make retirement at such an early age. It just goes to show that where’s there’s a will there’s a way!

    Keep the great stories coming

    Reply
  2. Congratulations Janus10 on your early retirement and the freedom you have discovered with your new “self employed investing job”.

    If you can consistently grow your investments at anywhere near that level it will be quite an accomplishment. You’ll be doing something even very few, if any, professionals can. Best wishes.

    Leverage and/or actively investing for exceptional returns is pretty well the opposite of my strategy.

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    1. Yes, my goals to grow our funds are lofty and certainly the majority of people who are retired wisely choose a more conservative approach than they took during accumulation phase. My approach might be the most atypical element of my story.

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  3. Congrats to Janus 10 for his great achievement. It’s very brave to actively trading after retirement.

    I am looking at Smith Manoeuvre carefully right now as I will have quite some equity in my heloc sometime next year and our highest tax bracket is at 40% level. It’s interesting to see Janus10 abandoned this completely while Milliondollarjourney decided to keep his Smith Manoeuvre portfolio for foreseeable future. Milliondollarjourney began the SM portfolio before the financial crisis I believe. He got some dividend cut even elimination too, but he managed to get through it and being profitable.

    Leveraged investment is always very risky, especially the interest is rising, market is at the top and yield is low. I guess I have to make lots of calculations and planning before I made up my mind.

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    1. Hi May,

      I apologize for any confusion. We didn’t abandon the Smith Manoeuvre – we were fortunate to pay off our $300k mortgage in about 5 years after starting the SM (that sounds a little fast, so perhaps it was 6 years). We still have a large HELOC that was created to participate in the SM – but we will have to discharge it in a couple of months.

      The reason we have to eliminate our HELOC is that there have been some recent developments that took place after I provided the info to MOA. A couple of weeks ago my wife was let go from her job (this was a GOOD thing – she got a small severance package) and so she is now retired with me.

      On the same day, we ended up buying a new home about an hour away from where we live. It fulfilled our goal to downsize – only in the sense that it is much less expensive than our current home. It is a larger home, on a much larger lot of land, a good 10 years newer, and should allow us to live there until we decide we don’t want to maintain a home. So, we will take the difference in house prices and apply that to the HELOC.

      We may end up turning around and getting a HELOC for the new home but I doubt we’d get the same rate as we currently enjoy. On the other hand, we could also have access to even more money because we never went back to the bank to increase our HELOC based on the increase in the home’s value.

      Reply
      1. In our case the HELCO had to be paid off from the proceeds of our house. We were not allowed to carry it forward to a new home, rather we had to re-apply for a new HELCO.

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        1. This reminds me that I plan to stay in my new home only for about 12 years. I plan to downsize after the kids go to university. I guess a plan for downsizing is also required to be thought carefully before I begin the SM portfolio.

          Depending on the market and the interest rate, maybe I will never begin a SM portfolio. Who knows. I still have some cash in our RRSP accounts that I feel difficult to invest due to all equities are so expensive right not.

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        2. My understanding is unless you have a second; collateral mortgage, the HELOC is always tied to the primary mortgage/home equity. Cannew….are you still leveraged?

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        3. Yes canew you are absolutely correct. We will have to eliminate the current HELOC and apply for a new one based on the new house’s value.

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      2. Thanks for the explanation. Congrats on your new home. Letting go and getting a severance package is the best thing that can happen when you plan to retire.

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        1. Thank you May.

          It was a surreal experience because my wife didn’t want to work there any longer but she wasn’t going to make the same mistake many of her co-workers dis by leaving on their own for new jobs. Some of her colleagues unknowingly walked away from $100k+ severance packages.

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        1. The SM is a method where, while keeping your total debt the same, you gradually and systemically transition your mortgage into an investment loan which, if properly invested, allows you to apply for interest deductions.

          Basically you have to get a special readvanceable mortgage and, in theory, everytime you make a mortgage payment you take whatever the principal payment is and withdraw it from the readvanceable mortgage’s HELOC portion. You then invest that amount in a month registered account using an underlying investment that has the potential to produce income (so that CRA allows the interest deduction write off – most people seem to choose dividend payers).

          I say in theory because it would be more likely that the entire principal paydown amount might only be invested monthly or quarterly rather than every single payment. And only because some discount brokers now have a series of ETFS that they allow you to purchase commission free would it even be practical to buy so often rather than using a no charge mutual fund.

          Now because you keep borrowing the same amount you paid down on your mortgage, your total debt remains the same. However, part of your debt is tax deductible and you also are slowly building up an additional investment account, albeit a taxable one.

          The additional benefit is that you are encouraged to use the expected tax refund (after interest deductions and dividend income is taken into account) to apply that to the mortgage, redraw that from the HELOC portion and invest. This quickens the pace at which you’ll transition the non deductible debt into a deductible one.

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          1. So the SM only works with a Heloc if you still have a mortgage (or remortgage)? I paid off my mortgage before I took a Heloc(70% value of assessed value of home but I only took $30K) and then opened a nonregistered account with my discount brokerage. Then I slowly made payments on my Heloc until it was paid in full. I claimed the interest on my taxes. Is this the same as a SM? Maybe I did it without knowing the term?

    2. Leveraged investing is always risky indeed. I would probably consider it more if rates were going the opposite direction (down). Otherwise, I will remain boring….max out TFSAs and get my wife’s RRSP maxed in another year. Mine is maxed. 😉 That will be good in our early 40s.

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  4. (Editor’s note – active money management is not for everyone.)

    Certainly not for this cowboy! No way I could follow this method, it would kill me. Hats off to those that can.

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    1. I agree, Lloyd, that this approach is not an advisable one, especially if one doesn’t have a safety net (e.g. company/government pension). We are certainly young enough we could go back to work, but I have ZERO desire to do so. About half of our investment portfolio is held in cash – it only gets deployed when the right opportunity comes along. So far this year, we haven’t found the right trigger to deploy all of it, but in mid-August we did put about $500k to work. Late September we were out of the trade with about $100k gain (if I had held it until today, it would have been another $40k in our pockets, but I like to exit these trades when either a certain time frame has passed or a profit has been realized.)

      I have had to take a break from volunteering (which I did very much enjoy, working with some food banks and community outreach centres) so that we can get our house ready for sale. Once we land in our new home, we will have to find the local organizations that would want our help.

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  5. I’m not sure what sort of dividend paying stocks this fellow had, that cut or eliminated dividends in the GFC. All the big banks stopped raising for a bit, but did not cut. Same for BCE and T. Pipelines and utilities kept right on raising. It’s dangerous to confuse a stock that pays a dividend with a stable blue chip, long term dividend grower. Quite different beasts.
    Secondly, he says he’d be disappointed to not make a 20% return. A long term 20% CAGR is a Warren Buffet level of return. Not for the faint of heart. Buffet famously challenged any hedge fund to beat the S&P 500 over 10 years with a $1 million dollar bet. None could, so Warren won the bet. So if Janus10 can, my hats off to him. But its one thing to make a 20% return for a year or two in a bull market. Another thing completely to do it over a long period of time and not blow up from using high risk strategies. The proof of the pudding and all that. Make sure you diarize a follow up with him in 5 years or so and see how its going!

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    1. You know those companies that have large dividend yields which, for smarter people than I, is a signal that they are going to cut them? Yes, a few of those were in our SM account. Teck was a one that comes to mind. The banks were good, but we also had some E&P oil companies.

      Don’t be like me – don’t get suckered into the high yielding stocks thinking that you’re going to get rich off dividends.

      Our strategy to have such high growth actually requires market retracements. This past year has been tougher to make the kind of money I’d like. That being said, the strategy has produced probably above that 20% I was seeking. It’s a strategy that I’ve seen used by others with far, far more impressive returns, but they use the same underlying but more aggressive tactics.

      It’s also easier to get the larger gains if you have a margin account which permits more aggressive approaches (e.g. option spreads, futures, shorting, etc.)

      I’m mentoring about a dozen people using this strategy. Only half of them have learned enough to begin using it this year and they are doing well, with about 30% returns on their capital invested (yet not one of them ever had deployed more than 40% of their total trading capital) since May.

      It actually helps me be more conservative because it’s one thing for me to lose our money on a bad decision, but it’s quite a different thing to feel responsible for others to lose their money. So, I’ve been cautious in how I scale in and quicker to take profits regardless of leaving money on the table.

      As you said, though, it’s only been 2 years, and it’s worked out extremely well. I know of one person who has been doing it for at least 5 years and his returns are out of this world – and his approach is different and much more active. He is managing other people’s money so the additional capital allows him to make many more trades that provide quick and small returns. I don’t want to daytrade – I’m happy with only activating this strategy a couple of times per year.

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      1. 30%?

        Geez…huge. I don’t know if I have the temperment to be an active trader. Too stressful for me. I couldn’t daytrade.

        I would be interested to hear Janus10 how those investors do in the next downturn. Thoughts on active investing when the bottom falls out 10% or more? It’s bound to happpen eventually….no?

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        1. Mark

          This strategy requires market retracement so we are actually hoping to see some turmoil. That’s why this year has been a bad one for our strategy because it’s almost been an upward move without pause.

          What’s nice is that not one of my group had ever bought or sold a stock or even held a mutual fund.

          And I stress over and over this isn’t daytrading. They all have jobs and I don’t want them to be stressed out or let this take over their lives. We might get 2 or 3 setups a year and that should be enough to generate above average returns.

          A 10% correction would be a phenomenal setup for us and that’s where we could see enormous returns.

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    2. Well written comment Ed. You might already know from my site I’m a fan of growers and payers. Currently own a mix of 30 CDN stocks. I hoping for 4% yield from those stocks…so that’s $40k or so via tax-free and tax-efficient income per year; cash for life…

      We figure with any pension income >$30k and that’s darn good.

      Back to Janus10…if he can get his 20% total retun…well….that’s very good. Impressive and far better than I could do!!

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  6. Mike – our margin accounts total close to $700k; our RRSPs are about $650k (I cashed out a small one earlier this year); our TFSAs are only about $60k – I’d like to see them grow quite a bit from organic gains (and, of course, contributions), and our savings/chequing accounts are about $30k.

    As for our expenses, I don’t really know. My wife and I have separate accounts and I don’t know exactly what her expenses are, nor where she prioritizes her spending. My guess is that they haven’t really changed much since I retired, so perhaps a little less than $5k/month (after taxes).

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      1. Well Mark you’re actively pursuing it and have a plan. I wouldn’t be surprised you’ll get there faster than you forecast

        When people have expressed surprise that we are retired because we are “So young” (which isn’t REALLY young) I reply that it’s the best time to retire. While you can enjoy it.

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  7. “All of a sudden, many of my dividend payers not only had huge drawdowns but they slashed or even eliminated their dividends.”
    Sounds like he was Chasing Yield during the good times with companies that could not sustain their dividend when the market dropped.
    Not that I haven’t done it and had the same results, but there is a better and safer way of: ” having a portfolio that generated enough dividend income to cover all of our expenses.” It called DG investing, not dividend investing. There’s a huge difference between the two and probably most companies he originally invested in would not meet the basic criteria of DG investing.

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    1. Not quite. I bought into them during the market meltdown, but before things got even worse. So, the yields went up while their stock prices went down. I’d say about half of what we bought kept their dividends intact, but the other half dramatically cut or even suspended their dividend payments.

      So, I’d say I was chasing yield rather than dividend stability, ability to pay, dividend growth and total return. I don’t make that mistake anymore.

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      1. @janus10: “So, I’d say I was chasing yield rather than dividend stability, ability to pay, dividend growth and total return. I don’t make that mistake anymore.”
        Glad to hear that. We had only one cut (MFC) during the financial crisis and though we’ve bought a few stocks for their higher yields, it’s the Steady Eddies that have grown our income (and continue to grow) to the point they exceed our needs.
        Continue success in your retirement.

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      2. Sounds like you’ve learned from your mistakes. My biggest ones were penny stocks in my 20s and pricey mutual funds until my early 30s. Live and learn. Thanks again for sharing your story Janus10.

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        1. Oh I still make mistakes. They are different ones and bigger. I am slowly learning from every mistake.

          I also used to be much more active trading but I am weaning myself off that but it’s still a work in progress. I’m moving toward a mindset where I focus on my single strategy and forgo all legacy strategies.

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    2. Good point becuase I own a combo of divi payers and growers. I own SLF for example. Definitely a steady payer but not a grower. The inverse is true with ENB and FTS….these are consistent growers and payers.

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    1. If we had to cash out, we’d have about $700k but then we’d also have to pay taxes on the capital gains. Thus, like our RRSPs, what we would have after tax is certainly less. More than half of that $700k is sitting in CDN and USD cash right now, some are in CDN stocks and some are in commodity futures (this is a trade not a long term position) and options (small amount expiring next month).

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    1. I’m actually hoping for a market retracement. This almost incessant rise has been contrary to my expectations and desire. So while it is prudent to not be fully invested into equities in our situation, it has hurt our returns.

      In a down market there are derivatives which suffer much bigger drawdowns than the market indices. Some of those derivatives then have much greater returns once stability resumes. That’s where we would look to deploy our capital.

      As I’ve recently told some people, our strategy is not dissimilar to Warren Buffett’s saying about being greedy when others are fearful. So far this year, there have been few opportunities where people have been fearful.

      Our time will come.

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      1. I think so Janus10. Keep some powder dry as they say. Hoping to have $11k ready for our TFSAs in a few months. Going to try and load up on a few dividend payers soon.

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  8. While I enjoy articles like this they can be a tad depressing for us baby boomers. For many of us age and retirement caught us off guard. As the old saying goes Too soon old, too late smart!

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    1. I understand Rob but the intent is to share to help others learn. No one right way to be financially successful but all of these stories have at least one thing in common – a focus on growing wealth.

      Thanks for being a fan.

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    2. Hey Rob, I can’t go along with painting an entire generation like that.

      I’m a late baby boomer and wasn’t caught off guard by retirement or age and I like reading other people’s success stories. I certainly didn’t do everything right but fully retired on 55th birthday 3.5 years ago, and semi retired 2.5 years earlier when my wife stopped working.

      I think the wealth building thing crosses all generations with lots of different factors impacting why some gravitate to it and why others don’t.

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      1. Great points RBull. I have and continue to make mistakes.

        But I’ve always had an interest in making my money work for me. I believe that makes it easier to be successful because I never needed convincing that this is a reasonable approach.

        Some people have side jobs and some take the RE investment approach. There are lots of ways – one needs to find an approach that works for them in their current position and stage of life.

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        1. Perhaps depressing is too strong of a word. I posted it after a conversation with my family, pretty much everyone is working to 67-70. We’re all entering the twilight years and It’s not hard to feel a tad regretful that one didn’t make better choices in thier mis 40s. Especially when your childhood heros start dying.

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          1. “too soon old, too late smart”! @rob. you hit the nail on the head. our education system MUST take some responsibility for our short comings. we need to educate our kids and grandkids or atleast provide info such as mark’s blog if they will listen. (the fairies have come and sucked out my brain because the younger generation won’t listen.)

        2. Thanks and ditto here on making money and not needing convincing janus10. Although I’ve been a better saver than investor over the years, but fortunately I started young at 22. Early on I did both investing and RE. More worked than didn’t and I kept plodding along.

          I find it interesting to observe and try to understand why some are motivated to build wealth and future security and why some really aren’t (the choices people make), to the degree they can.

          It seems you’ve made some great decisions to get to where you are, and have a high level of confidence in your investing approach. Reading about big returns and gains are always intriguing but not sure I’d have the stomach for what is likely more risk involved, at this stage of the game.

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  9. I am not a pessimist, but how sustainable is that 20%+ return? To be able to have those kind of returns year after year is under heard of. Also, that is almost twice the average of the S & P 500 index’s return.

    I am just curious, how many years have you been investing and how many years did you achieve 20%+ return?

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    1. @Leo — consistent 20%+ returns are very doable (ever investigate the profit margins of your local businesses?). I’ve had similar types of returns for many, many years running. That said, if you put your money into the stock market ONLY, you will almost never achieve these kinds of results. Doing stocks-only will guarantee you a base-line 4-5% return.

      As well, if you take a completely “passive”/index investment route vs actively working your money, you will never see similar gains (again, do you think companies just let their profits float along to where ever they may roam? Nope — money is strategically and tactically deployed each and every time). I have my money in public stocks, private equity, side-hustles, etc. (e.g. I traded penny stocks in the 90’s for 4-5 years and had raging success with a very boring routine of churning a handful of stocks; my side-hustle nets 25%/yr for the last 10 years).

      Those who are pessimistic just need to broaden their scope of what is possible.

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      1. Great points SST. I’d add, to bolster your argument, that anyone shouldn’t expect above average returns if they’re only doing what the average person is doing.

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    2. It’s a very fair question and anyone should have a healthy dose of skepticism for any, unsubstantiated claims especially from a stranger on the internet.

      I’d suggest you look up some of the people whom I follow and have been fine tuning their strategies which use the same underlying principles: Seth Golden, Eli Mintz, and Vance Harwood.

      The concept is to utilize the many options (no pun intended) to profit from the inevitable reduction of realized volatility from implied volatility and how dramatic this can be after volatility spikes.

      I see people lose a lot of money trying to anticipate upward movement of volatilty – your timing has to be just right and it’s easier if there is a known event (like I did with Brexit, the US election and the recent looming deadline for raising the debt ceiling in the US). However it’s MUCH easier to wait for those uncommon large rises in volatilty and trade for its unrelenting denouement.

      I took the most conservative approach when I started. Selling long dated OTM calls on a leveraged US ETF that rises as VIX futures rise. It was the easiest money I’ve ever made but you can only do that in a margin account and it’s limited to profits based on your margin and it has a large margin hit.

      Perhaps take a look at UVXY and it’s performance since it was created six years ago. If something can go down that much so consistently then there is a clue that money can be made based on the underlying’s fundamentals.

      I’ll end by saying I’ve been searching for a great strategy that produces wonderful returns, with minimal attention, triggered by metrics and with adequate risk management for over 30 years. This is it.

      Reply
  10. Congrats on the retirement. Regardless of the strategy, what I take away is that you looked after your money and you were in control.
    Life throws us curve balls at times but you certainly made the best of everything.

    Reply
    1. Thank you DE. In reality I made some big mistakes but persevered otherwise I wouldn’t be in the very fortunate position I’m in.

      I’ve been knocked down quite a few times but I’ve also gotten back up each and every time.

      Now the erroneous belief that I needed to risk more is gone.

      I think RBull and I have a similar streak – I haven’t been a good investor but I have been a good saver – sometimes TOO good of a saver.

      And I also agree with Gary above that it’s disappointing to not see our school system doing more to educate kids on life skills that will do them justice for decades. It can have a far greater impact to their success than the 90%+ of what they forget.

      I’m currently helping over a dozen people with informal discussions on financial matters. I’m not an expert and I’m not telling them what to do but I’m giving them confidence that they can help change their own course if they are willing to spend the time and effort in learning. More than half are young people – if I complain about the lack of support in the schools yet I end up keeping my knowledge to myself, then I’m being hypocritical.

      It’s too bad I’m not a great teacher but thankfully they are patient with me!

      Reply
    1. Not sure why a stat like this jumps out at anyone anymore.

      When 40% of the adults in the US utilize pay-day loan services on a (semi-)regular basis, you know public financial well-being is not healthy.

      Yes, America is the wealthiest nation on the planet but that wealth is owned by a small fraction of their population, which makes America also one of the poorest (developed) nations on the planet.

      Reply
      1. I’m pretty sure my dad had a lot less when he retired at 60. BUT, he has an indexed DBP plus CPP and OAS. He has more income than he needs now that he’s in his late 70’s.

        I certainly understand how someone who expects to retire with an indexed DBP wouldn’t focus much effort on investing above and beyond.

        Reply
          1. re: “Indexed DBP is golden.”

            I know a firefighter who will receive an indexed DBP at 55 (it’ll start at around $150k). Because the pension will be 100% of his salary, his current savings rate is 0%. Only time will tell if that will work out (I suspect it will).

  11. Interesting post Rob. Disturbing numbers but not really surprising.

    I agree with what both Mark and SST stated above. The US is very wealthy but there is also a huge amount of disparity with many in poverty. Canada certainly has problems too.

    Reply
    1. With 75% of US adults having a low net worth, it’s probably safe to say that at least 50% are not worried about retirement — they are simply worried about making it to the next paycheque.

      Reply

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