How much do you know about financial independence?

Posted by: Vikb

As far as I know if you stay with the same lender you do not need to requalify for a mortgage once you get one.

another thing to consider is that if your mortgage bumps up against the amount where you need mortgage insurance its something else to consider IF you move to another lender

I introduced my younger sibling to the joys of VGRO dividends in a TFSA in September.

Just in time for the downward slide of the past two weeks.  I luckily haven't heard about the losses yet.

https://www.cbc.ca/radio/thecurrent/costco-gold-bars-investment-1.6985367

Some brilliant insight into gold. Not kashima, but actual gold.

Posted by: heckler

I introduced my younger sibling to the joys of VGRO dividends in a TFSA in September.

Just in time for the downward slide of the past two weeks.  I luckily haven't heard about the losses yet.

When stocks are up I enjoy the larger account total at my investment broker. When stocks are down I enjoy buying new shares at a lower cost. In the rare case I need to sell stocks and they are down I open up the chart for that ETF and hit "MAX" timeline. Usually the current drop is a tiny squiggle at the end vs. this nice long ramp up in value and I feel good about holding that ETF share as long as I did. 

Give them the right perspective on investing and they'll see the good side no matter what's going on.

Am I stupid to be moving my savings into various HISA promotions? I'm risk averse and like to keep the money available. Current promo is up in a couple months, I'll take a chunk out to max out my FHSA and move the remainder into another HISA.

Posted by: Madman

Am I stupid to be moving my savings into various HISA promotions? I'm risk averse and like to keep the money available. Current promo is up in a couple months, I'll take a chunk out to max out my FHSA and move the remainder into another HISA.

Not stupid to try to maximize your return.

But consider your after-tax return, as it seems you are doing by maxing out FHSA (but why wait?). You pay income tax on HISAs that aren't in a TFSA or FHSA.

I hate "promotions". Turns out I had one in my 1.9% Savings Amplifier (BS) account, but I didn't know, or care, that they offered a 3.35% promotional rate for a whopping total of 5.25% for ~3 months.

The account just showed a transaction PROMOTIONAL INTEREST NEW MONEY OFFER. + $0.28. You might be able to tell I only keep a grand of really easily accessed float there.

My actual HISA (BMT104) currently makes 4.75%, no gimmicks or conditions, tracking pretty close to Bank of Canada policy rate announcements by -0.25%. That's not a fact I've seen advertised by BMO anywhere.

Do your research. It's worth it.

https://www.highinterestsavings.ca/chart/

https://www.financialwisdomforum.org/forum/viewtopic.php?t=125434

Posted by: heckler

Posted by: Madman

Am I stupid to be moving my savings into various HISA promotions? I'm risk averse and like to keep the money available. Current promo is up in a couple months, I'll take a chunk out to max out my FHSA and move the remainder into another HISA.

Not stupid to try to maximize your return.

But consider your after-tax return, as it seems you are doing by maxing out FHSA (but why wait?). You pay income tax on HISAs that aren't in a TFSA or FHSA.

I hate "promotions". Turns out I had one in my 1.9% Savings Amplifier (BS) account, but I didn't know, or care, that they offered a 3.35% promotional rate for a whopping total of 5.25% for ~3 months.

The account just showed a transaction PROMOTIONAL INTEREST NEW MONEY OFFER. + $0.28. You might be able to tell I only keep a grand of really easily accessed float there.

My actual HISA (BMT104) currently makes 4.75%, no gimmicks or conditions, tracking pretty close to Bank of Canada policy rate announcements by -0.25%. That's not a fact I've seen advertised by BMO anywhere.

Do your research. It's worth it.

https://www.highinterestsavings.ca/chart/

https://www.financialwisdomforum.org/forum/viewtopic.php?t=125434

Solid info, thanks.

Something about risk tolerance (since Madman said "I'm risk averse").

I also consider myself risk averse. I always saved but never invested outside a work plan until 10 years ago. I used to think the stock market was a casino and for the work retirement plans those risk questionnaires always pointed me to "balanced" asset allocations (50/50 or 60/40 stocks/bonds). However once I read up on it and learned what stocks are and how the stock market works, and what index investing is, I realized I had no problems going 90-100% stocks with my long-term / retirement savings.

Emergency fund / short-term money, always in a HISA. For chasing interest rate promos, calculate the difference in after tax return and decide if it's worth the hassle.

I have $8000 ready to go into FHSA but my broker still hasn't implemented it yet... Prefer to keep everything in one place but worst case I'll open the FHSA at another broker to get this year's deduction.

Niels, were you investing in 2008?   

I still remember being quite mad that every biweekly contribution made the RRSP go down more than I put in.  I didn’t understand a thing about interest, dividends, diversification, fees, stocks or bonds.  

The past decade has been quite solid returns, but I educated myself in 2012-14.   Knowledge is power.

5/25/70 for us, treating all accounts as one asset allocation. (cash/fixed/global equity)  This changed recently from 30/70 when HiSAs started to payout better than bond returns.

Madman,

For a FHSA, I can totally understand playing it safe, unless the plan your first home is still ten years away.  

Just like many banks offering 2-3% cash TFSAs so they can invest your money for you (and take the other 5% as profit), I fear the new FHSA can be a similar trap - the FHSA account type is intended for tax free growth.  Its up to you to choose how. (Although the investment account offerings by major brokerages are lagging)

Posted by: Duncan

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 ….

Another point to reconsider from page 1.

Posted by: heckler

Niels, were you investing in 2008?

Only through small paycheck deductions into a work retirement plan. I saw the number go down and figured I'd probably have to work until death.

Now I know I was buying at a discount and wish I would have put in more that early in my life and benefited from compounding returns. But back then I thought it was a casino.

It's a mental exercise to disconnect actual stock value from their daily price fluctuations but I think I can manage. In the long-term, value is determined by actual earnings and growth is determined by increased productivity. I'm pretty confident we'll keep getting smarter and more efficient for a good while.

Only time will tell if I'm right of course. As long as I'm still accumulating it's not something I worry about. Once I flip to withdrawing I'll re-assess but I'll probably just keep a large cash buffer of a year or so. And even 10% bonds represents more than 2 (additional) years of expenses based on 4% withdrawal.

Also CPP/OAS and my Dutch social security will provide guaranteed income covering a decent chunk of living expenses after they kick in between 65 and 70.

I see the bond holding as interest income, never to be sold (thus is a long term hold, not short term expenses, strangely enough)

Posted by: heckler

I see the bond holding as interest income, never to be sold (thus is a long term hold, not short term expenses, strangely enough)

I only care about total return. I mainly see my tiny bonds allocation (<10% currently) as providing a small diversification and rebalancing benefit.

Once in withdrawal mode, withdrawals to live off will come from distributions (dividends and interest) first and the remainder will be from selling shares (stocks or bonds) while rebalancing towards my target allocation.