How much do you know about financial independence?

THIS IS NOT FINANCIAL ADVICE, NOR AM I A FINANCIAL ADVISOR (ER).

https://www.canada.ca/en/financial-consumer-agency/services/savings-investments/choose-financial-advisor.html

I'm curious if we're all invested in carbon frames and tubeless tires, or if there are people other than the two others I can think of that are on the financial independence program. I only wish I'd figured this out when I was 25. I still have to go to work on Monday.

I'm not at all affiliated to moneygeek, couch potato or Money Moustache. Just some basic info presented in a clear manner.

edit - here's a new one I found, based on the US Bogleheads, who are followers of John Bogle, the founder of Vanguard. http://www.finiki.org/wiki/Getting_started

https://www.youtube.com/watch?v=xMkzF3bawvY

Posted by: syncro

I've been slowly re-reading this thread from the start and collecting some of the more valuable (imo) links from this thread for anybody joining late. This is all from the first half, but it's all the info needed to get started on the HM maneuver. You'll have to read the thread from the start or paypal $20 to [email protected] for the answer.

MMM - https://www.mrmoneymustache.com/

Mint - https://mint.intuit.com/

https://www.bogleheads.org/wiki/Main_Page

https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore-ebook/dp/B00JUV01RW/ref=tmm_kin_title_0?_encoding=UTF8&sr=&qid

https://en.wikipedia.org/wiki/Asset_allocation#Return_versus_risk_trade-off

https://www.investopedia.com/

https://www.moneysense.ca/

https://canadiancouchpotato.com/getting-started/

heckler

First, know about asset allocation and more importantly, location.

http://canadiancouchpotato.com/2010/03/05/put-your-assets-in-their-place/

Then learn about asset location and tax implications.

http://canadiancouchpotato.com/2012/09/17/foreign-withholding-tax-explained/

Then figure out what currency hedging means. I'm still working on understanding the full implications.

http://canadiancouchpotato.com/2014/01/16/currency-exposure-in-international-equity-etfs/

http://canadiancouchpotato.com/2014/03/06/why-currency-hedging-doesnt-work-in-canada/

Then make a tax efficient allocation and location plan for your accounts. Back to:

http://canadiancouchpotato.com/2012/09/17/foreign-withholding-tax-explained/

Then learn how to buy US listed funds at a low cost. (I haven't done this yet, and am not yet sold on buying VTI over VUN).

http://canadiancouchpotato.com/2013/12/03/norberts-gambit-the-complete-guide/

http://wordvibes.com/2010/09/23/have-to-and-need-to-vs-want-to/

https://www.finiki.org/wiki/Norbert%27s_gambit

https://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/

https://financialpost.com/personal-finance/family-finance/high-net-worth/how-a-couple-with-a-net-worth-of-10-million-and-annual-income-of-215000-can-pay-0-in-income-tax

Most of this stuff is credited to heckler.

https://srv111.services.gc.ca/generalinformation/index

Posted by: [email protected]

cFIREsim https://cfiresim.com is the ultimate nerd tool for "goobers" who want to play with withdrawal rates/strategies using real (US) data.

There's a nerdy article about that here: https://www.gocurrycracker.com/path-100-equities/

Posted by: [email protected]

This looks like a pretty extensive tool for financial planning that is specifically designed for Canadians:

https://www.moneyreadyapp.ca/

It's a paid tool but they have a separate simple retirement calculator that you can use for free without registering:

https://www.moneyreadyapp.ca/simple-retirement-calculator/

Free download of David Chilton's The Wealthy Barber Returns.

https://www.rbcwealthmanagement.com/assets/wp-content/uploads/documents/the-wealthy-barber-returns-en.pdf

I actually discovered MMM when someone linked to him from nsmb a couple years ago. As soon as I started reading the blog I was hooked, and have since done tons of research into investing and generally teaching myself that there are alternatives to the "spend spend spend!" that seems to be the normal way of life for most of the population.

While my investments may be a little more heavily weighted towards carbon fiber than they should be, that's just a personal choice on the value-for-money spectrum. Simply put, the happiness I get from riding my bikes far outweighs the cost I pay for them. And I'm careful not to get sucked into thinking I need to be constantly upgrading.

jlcollinsnh is another great blog to check out.

There are times when I miss having a carbon frame.

There are times when I miss having a carbon frame.

You weren't one of the two. You need to still pay your cable bill to be considered FI.

Here are some things that people often forget …

If you invested $10,000 in 1944 compounded 5% annual return, it would be worth $186,791.86 today. Sounds great, right?

However, $10,000 in 1944 had a purchasing power equivalent to $138,350 today (according to the Bank of Canada's inflation calculator.) So if you socked away $10,000 in 1944, it means you would had a savings rate about 4.5 times the average Canadian's salary. Today would be like socking away 4.5X$38,000 (roughly averaged annual income in Canada) or $171,000 nest egg for 2014.

So putting $10,000 into your savings 1944 is like socking away $171,000 in 2014. Basically, if you had $10,000 in cash to invest 60 years ago, you were wealthy anyway. Similarly, your cash savings today will very likely be eroded by inflation over the next 60 years. All I'm saying is that while cash does return compounded return, you still need a hedge against inflation (like Securities). Cash is often a good short-term place to hold money, but historically has been seriously eroded by inflation.

PS I love going to work ….

Question:
lets pretend I have 10G, I want to invest in 8.5 % wtf does that even mean

how do you get a 5% return on holding cash??

Here are some things that people often forget …

If you invested $10,000 in 1944 compounded 5% annual return, it would be worth $186,791.86 today. Sounds great, right?

However, $10,000 in 1944 had a purchasing power equivalent to $138,350 today (according to the Bank of Canada's inflation calculator.) So if you socked away $10,000 in 1944, it means you would had a savings rate about 4.5 times the average Canadian's salary. Today would be like socking away 4.5X$38,000 (roughly averaged annual income in Canada) or $171,000 nest egg for 2014.

So putting $10,000 into your savings 1944 is like socking away $171,000 in 2014. Basically, if you had $10,000 in cash to invest 60 years ago, you were wealthy anyway. Similarly, your cash savings today will very likely be eroded by inflation over the next 60 years. All I'm saying is that while cash does return compounded return, you still need a hedge against inflation (like Securities). Cash is often a good short-term place to hold money, but historically has been seriously eroded by inflation.

PS I love going to work ….

I don't think anyone would advocate holding cash as a retirement/financial independence plan. Historical returns of 5-7% are based on being invested in stocks and bonds, and are REAL returns, ie: over and above inflation. Sitting on cash for 60 years will get you nothing, investments compounding at 5% for 60 years will make you rich.

AW: Invested at 8.5% means every year your investment will return 8.5% of its initial value to you. This can come in a lot of different forms depending on the investment vehicle. Interest on bonds, dividends from stocks, capital gains on stocks, etc…

A big part of being financially independent for my generation is owning your own home and not having any debt. Not so easy to do these days. I often wonder if my kids will be able to afford to live on the Shore when they grow up.

Financial independance and aluminium

Sitting on cash for 60 years will get you nothing, investments compounding at 5% for 60 years will make you rich.

I know, but this is how people describe describe the power of fixed compound interest (which mostly applies to cash investments), neglecting the fact that cash's depreciation is also typically compounded. Cash over the long term loses purchasing power due to inflation (which is a compounded depreciation).

I know, but this is how people describe describe the power of fixed compound interest (which typically only applies to cash), neglecting the fact that cash's depreciation is also typically compounded. Cash over the long term loses purchasing power due to inflation (which is a compounded depreciation).

I see what you're saying, but compounding applies equally to investments that yield much higher than cash in a savings account. The problem isn't with over-stating the value of compounding, it's with not understanding that cash in a 0.05% savings account is losing you money due to inflation out-pacing your interest rate.

the important thing is to start doing something, some of this some of that and the common thing if you read this stuff for long enough is that nobody really knows so … diversify

long enough

… diversify

long enough, diversify and and reduce expenses.

I'm trying to motivate the younger generation.