If you’re so smart, why aren’t you retired?

I’ve pondered this question often.  Of others.  Of myself.

If you’re so smart, why aren’t you retired already?

I’ll speak for myself….a few reasons why I’m not retired now, or soon.

  1. I invested in high-priced mutual fund products for far too long

In my 20s, I invested in mutual funds that charged money management fees close to 2%.  Back then I simply didn’t know how much those fund fees would eat into my investment returns. On top of that, I had no idea that most mutual fund managers have no hope of beating their benchmark index, even after a few years let alone after many years.

The fix

I’ve seen the light…

I don’t invest in pricey mutual funds anymore for these key reasons:

  1. I tinkered too much with my portfolio

As a novice investor in my 20s I was very guilty of chasing the hottest products.  So, not only did I pay sizeable money management fees (see #1 above) for my mutual funds but I also chased the performance of those funds.  This was a massive double-whammy.

The fix

No more whammies.  Not only are the pricey funds long gone but so is the bad investing behaviour.  I buy, I hold and when the market crashes or dips I buy more.   I’ve learned to train my investing brain and so can you.  If you need help you can find it here.

  1. I wasn’t engaged in the process

In my 20s, I was more concerned about having fun than investing.  I didn’t save very much money in my 20s.  Fun is still very important but so is investing to me, and investing is now fun too.  Not casino-fun-let’s-blow-some-cash-or-make-it-rain-kinda-fun.  More like, save, invest, give it time, watch-it-grow-kinda-fun.  Nerdy?  Maybe.  Financial flexibility eventually?  Absolutely.

The fix

Start this blog.  Share what I know.  Share what I don’t know.  Learn about myself.  Learn from others.  Grow personally.

The Summary

Looking back, had I not invested in costly financial products for about 10 years too long, had I not tinkered with my portfolio, had I been more engaged in the financial process and been ultra-frugal I probably could have reached semi-retirement by now.

Then again, that journey has made me who I am today and brought me to the here and now.  I wouldn’t change a thing.

50 Responses to "If you’re so smart, why aren’t you retired?"

  1. Mark: “It’s certainly hard to know at 22, what you want to do for the rest of your life. Life should and does, change you.”

    Saving and retirement was the last thing in my head at that age and probably everyone else at that age. But looking back 50 some years I and probably most others now know it should be a priority. It’s not that one has to save 10%, 15% or any other number, its that one should START saving something and increase the amount one saves as ones income grows. Once that habit is ingrained than the rest will take care of itself.

    That’s why DRIP’s are a great way to do this and see ones income grow even with very small savings.

    1. In retrospect that’s the key – get into the habit of savings. Hopefully those savings/savings rates improve over time. Behaviours are hard to start and change though. The flipside is, some folks don’t have the means or income to save. Not easy.

      I know for me – DRIPs are great because they take the decisions out of where to invest the money, the money makes, for you automatically. I’m certainly glad I’m running mine.


      1. DRIPs are ok but, as far as I know, only synthetic whole shares can be DRIPed with Canadian discount brokers. Motif should be made available in Canada!

        1. Bernie: Only ShareOwners Investments Inc does Full DRIP’s, other than the Transfer Agents. We have all our accounts with Shareowners, again other than some with Transfer Agents.

        2. Its good to spread the word regarding DRIPs. Personally, I prefer to build up my dividends and then reinvest selectively. I like the freedom to buy value wherever/whenever I see it. I’ve never DRIPed but do recognize the value in it especially for the younger investor.

          1. Bernie: Nothing wrong with letting them build and buying what you want. For me we automatically reinvest because even if we had new money to invest we would just buy more of what we have.. Reinvesting doesn’t cost us and the money gets invested even when the amounts are small.

          2. My sentiments as well. To keep costs down when buying I prefer to invest a minimum of $1,800. This equates to a one time MER of 0.55% (based on $9.95 commission cost).

  2. (I see Rich beat me to it, but I’ll post any way…)

    “If you’re so smart, why aren’t you retired already?”

    I am smart…and that’s precisely why I’m NOT retired.

    Retirement, be it early and/or otherwise, seems to be a mental predisposition which plagues the working class.

    Thing is, there are plenty of rich people who are still working, and working a lot (e.g. Betty White), despite having and over-abundance of wealth on which to retire. Mentality, not money, is the issue.

    The problem isn’t that you (in a general sense) aren’t smart enough to retire — any fool can retire; the problem is that you weren’t smart enough to pursue/create a career that you actually want to do on a long-term basis and now “more money” is your only answer. I’d rather not live with that worry.

    re: “Derek Forster…was also frugal to the point of being a skin flint.”
    He also plays the system and, even though being a millionaire, decided that he is of “low income” status and has the government (i.e. you and I) pay to support his wife and five children. I’d use a different word besides “frugal”.

    1. I never want to be retired in the traditional sense – our path is about having “enough” and finding new ways or different ways of working. This is where we’re aligned: mentality is the issue.

      “The problem isn’t that you (in a general sense) aren’t smart enough to retire — any fool can retire; the problem is that you weren’t smart enough to pursue/create a career that you actually want to do on a long-term basis and now “more money” is your only answer.:

      I suspect I’m not alone on this! It’s certainly hard to know at 22, what you want to do for the rest of your life. Life should and does, change you.

      Derek is an interesting guy. He now has seven children I recall.

      1. “It’s certainly hard to know at 22, what you want to do for the rest of your life. Life should and does, change you.”

        Two things about this:
        i) Yes, it’s difficult to have wisdom when one is young but that doesn’t exempt one from actually thinking; intelligence does not require wisdom. I suspect many a current forty/fifty/sixty-two year old didn’t spend a whole lotta time thinking into the future when they were twenty-two. If this is endemic then perhaps the solution isn’t chasing early retirement but developing better mental practices. Perhaps a shift in public policy and parenting approaches would help.

        ii) Yes, life does change you, but it sounds as though some of those who crave early retirement have a difficult time with change, thus they are desperate to escape.

        As a personal anecdote, I spent my twenties trying a few different “careers” before zoning in on one (or two) for the long haul. But all the while I was still saving and investing (you don’t have to wait to save!). I’m guessing it’s those with a ‘job’ are the ones who are desperately seeking retirement, and those with a ‘career’ are still satisfied with working.

        “Derek is an interesting guy. He now has seven children I recall.”
        Nothing interesting about him.
        Seven, huh. I guess he really wants to keep that free government money rolling in for as long as he can.
        Wonder if he still uses the “I’ve paid more than my share of taxes!” argument to justify his freeloading.

        But that’s just the way I see it. 🙂

        1. Hi SST,

          I think you’re missing my perspective on this…which is fine. Life changes and people evolve. Nobody needs to chase early retirement. Choosing to work on my own terms will hopefully be something I can achieve because I want it; I’ve evolved. I didn’t realize I wanted this at age 22.

          I suspect, although I don’t know for sure, you’ve matured and gained more wisdom at age 22 as well.

      2. Derek is a smarter guy than he claims to be. You can’t knock a guy who takes advantage of legal “perks” available to anyone who qualifies. Tom Connolly and Derek Foster were the two most influential investment authors in my decision to invest in dividend growth stocks.

    2. Love your comments SST, they make me think. When I started my RRSP saving at 19 I wasn’t necessarily thinking retirement. It was a combination of a way to shelter income from taxes and a way to increase my options. I knew that if I wanted to take a year off from work, I could access the RRSP to fund it. With a great DB pension I wasn’t too concerned with losing the contribution space by doing so. As it turned out I didn’t take the year off so that became moot. Once the habit of maxing the RRSP became ingrained it was basically on auto-pilot. Between overtime and the occasional back-pay income (directly paid to RRSP to avoid withholding) it was not difficult. It also helped that I had a great FA to hold my hand when I really knew zip about investing (thanks Matt).

      1. Good on you to start your RRSP at 19 Lloyd! I didn’t start until I was 34. You are living proof that “young” and “smart” are not necessarily a contradiction of terms.

  3. If you’re so smart, why aren’t you retired? I was smart enough to find something I loved to do (in my early 30s) and continue to do it to this day and still love it (and I’m 65).

  4. Starting my twin 18 year olds off on the right foot. I took care of school with resp and long term growth. Had them do 3 bank accounts starting at age 12 with paper routes and babysitting money. One for everyday spending another for emergency and a third for retirement. Now both have opened and maxed self directed TFSA’s to the tune of 11K with dividend paying Canadian stocks. Teach them early!!!!

  5. What I read from your post, “It’s never too late” and you’re right. Most in their 20’s aren’t thinking about retirement. They are thinking about how they will pay off their massive student loans, career and getting out with friends. Good for you Mark… soon you’ll kill that mortgage too!

    1. If I was thinking about retirement in my 20s, and had a huge savings rate, I’d be in a very good financial position right now. Such is life, live and learn, and happy to be where I am. Very fortunate and grateful overall.

      Cheers Mr. CBB.

  6. I often wonder this of professional money managers. I feel like it would be a good question for any potential financial advisor. I have some friends in ths investment industry and some of the numbers they throw out in conversation are astronomical and I think, if I could get those kinds of returns I would be retired already. If you are really getting those returns, why are you still working?

    1. I have the same thoughts Mat. I do think about this, “Of others” at the beginning of my post. I will always work, maybe they work because they (FA’s) love their job?

      I would like to think some do but like many people – they work because they have to.

      I think any investor getting consistent returns more than the index, over a decade or more of investing, is either rather smart or lying 🙂

      1. Consistently over the index, highly doubtful and rare. Over the index on average, most investors no but quite doable for the experienced long term diy investor, not trader.

  7. Very nice post Mark. I am not retired either. This is because I started from zero a decade ago, and it takes time to get savings,invest them, and get the snowball rolling.

    I would guess that I would be financially independent by the end of the decade ( forward dividend income exceeding expenses). But probably won’t retire for years after that. Don’t pop the champagne corks yet 😉

    1. I don’t think I’ll ever “retire” in the traditional sense – as in not working but my work will evolve over time, I hope it does.

      I have no intention of popping any bubbly corks until:
      1) the dividend income goal is reached, and/or.
      2) all debt is gone.

      Either one will be cause for a small celebration.

  8. I don’t spend a lot of time with the woulda, could, shoulda. When we were starting out things were different. RRSP contributions were 3500-RPP so some years my limit was around 500 bucks. TFSAs, RDSPs, ETFs etc didn’t exist. If one wanted to buy stocks one had to call a broker by long distance telephone. Researching a company was next to impossible as everything had to be done by mail. So, comparing what one can do now to then isn’t realistic. We had what we had.

      1. Ha, uh, no….I don’t think CRA would ever go for that!!! I suspect in the future their might be a “cap” on the TFSA contributions anyhow. I hope it never happens but you never know….

    1. Yeah, TFSAs didn’t exist when I started to invest. ETFs were not commonplace either. Brokerage trading commissions were $29 and you had to call someone to execute your order. Now, everything is online and can be done DIY. Much, much better.

      Thanks for your comments.

  9. Mark can you delete the above comment, noticed a few typos

    Oh my how I can relate. When I was a teenager some “old fart”, (thinking about it now probably someone in their 40s) said to me “man if I was your age I’d do things so differently” poof right over my head!

    Anyways reaching FIRE or FI requires not only the right circumstances but also a bit of luck. Just being a good saver often isn’t enough. It requires an above average income and a lower than normal cost of living. It also helps if you don’t graduate with a ton of debt. As is getting into the housing market at the right time (think Toronto or Vancouver now). It also means having your partner on board. Nr 1 issue on frugal living blogs is SO (significant others) how to get them on board.

    Derek Forster didn’t earn much while he was working but he made a ton of money gambling on the stock market and he bought just as the housing market hit bottom. He was also frugal to the point of being a skin flint. He talked about this on a message board once but when he stopped working he had a portfolio in the $400,000 range and an income of around 20 grand a year. Tight for a family of 4. He was also more than willing to sponge off the government something he still gets flack for today. Personally I have no issue with but a lot do. Not many people are willing to make that kind of sacrifice to get out of work early. Obviously he makes a lot of money from his website and book sales but the fact remains that he retired before any of that happened.

    Pete aka MMM moved to the states to a low cost of living area and him and the wife both got above average paying jobs and saved a very high portion of their pay. They also were both total skin flints. Had his wife been a spending I don’t think he would have been able to stop working. Of course you’ve got to do this all in you’re still in your 20s. by the time your 30 usually you have a partner. mortgage, car payment and kids and savings is really tough.

    1. I think FIRE (Financial Independence Retire Early) needs a number of things:
      1. Right mindset
      2. Right initial circumstances
      3. Prolonged obsession
      4. Luck

      I agree, a good saver is not enough. Great incomes and low spending are a HUGE enabler.

      “Derek Forster didn’t earn much while he was working but he made a ton of money gambling on the stock market and he bought just as the housing market hit bottom. He was also frugal to the point of being a skin flint.”

      We was very frugal. I couldn’t live that way…rather, I don’t want to live that way although it worked for him and that’s what matters. I’ve talked to Derek a number of times about that actually…

      At the end of the day, you have one life and you have to live it with your own goals in mind. We’re getting there on our own terms which feels good Rob.

  10. Your post is a walk down memory lane for me too. Same deal here and no regrets either.

    I would encourage enjoyment of working and life overall, and not obsessing over retirement at an early age. Having the financial ability to make the choice of when/if you want to concentrate on more leisure is the key.

    Cannew, I agree with you on the comment about Financial Advisors. I have thought the same at different times.

    1. Nope, no regrets although some great lessons learned – hence the site to remind me not to make the same mistakes and if I help others – great.

      We enjoy a good work-life balance. Sometimes the scales are tipping too far in one direction but overall, my wife and I have been very, very fortunate in life.

  11. Mark: Sounds like a statement made by Bill Staton (who wrote Invest in America’s Finest Companies), when he referred to Financial Advisors, if they are so smart why are they not retired and living the good life.

    Those who spout “I’ve retired at 35″…etc, normally achieved it in unusual circumstances. Your route is the one which most people could achieve their goal over the long term with much less stress and worry (though I still believe one would do better without the etf’s).

    1. Your comment made me smile cannew 🙂

      We could have likely “retired” by living in a small one-bedroom apartment, not travelling, riding the bus to work, few new clothes, etc. for the last 15 years but that wouldn’t have made me happy. Otherwise I would have chosen that path. I don’t regret my journey to date.

      Am I retired yet? No. Will we get there on our path? Yes. In our own way.

      As for ETFs, I own a few and that’s all I will ever own until another, better financial product comes along – as you know – otherwise it’s holding my 30-odd stocks all the way for income.

      Speaking of which, you must have had a VERY good year last year. CDN banks and many other companies were up 20+%.

      1. My INCOME was up 9.94% from 2015 (10.94% last year) so yes, very happy! Market value change is not something we worry about, but yes it was up as well.

        1. Nicely done Cannew! I did ok too with my dividend growth portfolio. DGR 12.94%, TR 20.88%. No new money added in, or taken out, in 4 years. I plan to start distributing in 2018 after converting to a RRIF later this year.


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