The 6 steps to Financial Independence

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L to R: Ed Rempel, Jon Chevreau, Mike Drak

By Ed Rempel, CPA, CFP

What is financial independence? How do you get there?

Financial independence means work is optional. You have enough money to live the way you want without having to earn money.

When you get there, life changes. You have freedom. You can do only what you enjoy or find meaningful.

If you don’t like your job or your boss, just quit. Your life is full of options. You can make the most of your own life.

When you get there, you can have a quiet confidence. You are financially secure.

Your plan should start with understanding your inner motivation and defining specifically the lifestyle you want to have once you are financially independent. It is your opportunity to determine your future.

Becoming financially independent requires planning and effort, but it is worthwhile to live a more fulfilling life. “It’s not about the money. It’s about your life.”

“Real freedom is financial freedom.” When is your Findependence Day?

Achieving financial independence is a very broad topic. Writing nearly 1,000 comprehensive, professional financial plans specifically for real Canadians has given me a deep insight into what really works.

Seminar Wednesday in Toronto

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How Dividends can speed Findependence

TSI-Dividend-AdvisorI recently had a chance to discuss a new Canadian advisory on dividend stocks with the people responsible for that newsletter. The advisory comes from TSI Network, founded by Pat McKeough, whose investment approach I have always respected.

The advisory is TSI Dividend Advisor, and it grew out of a long respect for the power of dividends.

Pat and his investment team have always viewed dividends as a sign of investment quality. By extension, dividend stocks become the most reliable foundation of an investment portfolio built for growing wealth and financial independence.

This confidence in dividends is accompanied by a detailed examination of dividend-paying stocks to identify those with the greatest potential to sustain, and raise, their payouts.

The 8 key points they use to evaluate dividend stocks grew into their Dividend Sustainability Ratings. This proprietary ratings system became the backbone of the new TSI Dividend Advisor.  It was launched late in 2016 to impressive reviews in the media and a flood of subscriptions from Canadian investors.

Here are some of the keys to that success, from the editors’ point of view:

Jon Chevreau: First of all, Pat, thanks for your time. What role do dividends play in a successful portfolio? How can they lead to Findependence?

patmckeoughPat McKeough: Top dividend stocks are a key part of a successful portfolio.

Top dividend stocks can produce as much as a third of your total return over long periods. These payouts are drawn from earnings cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or monthly as well.

At TSI Network, we think investing in dividend stocks is one of the best investment decisions you can make to achieve Findependence. Dividends serve as a way for companies share to the wealth they accumulate through successfully operating their businesses.

JC: Many stocks pay dividends. What makes a top dividend stock?

PM: Top dividend stocks provide steady dividends—a sign of investment quality. Some good companies reinvest profits instead of paying dividends. But fraudulent and failing companies hardly ever pay dividends. So if you only buy stocks that pay dividends, you’ll automatically stay out of almost all the market’s worst stocks. For a true measure of stability, focus on companies that have maintained or raised their dividends during economic and stock market downturns. These firms leave themselves enough room to handle periods of earnings volatility. By continually rewarding investors, and retaining enough cash to finance their businesses, top dividend stocks provide an attractive mix of safety, income and growth.

JC: What other benefits do dividend stocks offer? Read more

Burn Your Mortgage: The simple, powerful path to Financial Freedom

BurnMortgageFrontCover_150RGBBy Sean Cooper

Five years ago I read Jonathan Chevreau’s financial novel, Findependence Day, and it changed my life forever.

One of the central themes of the book is that the foundation of Financial Independence is a paid-for home. I wasn’t a fan of six figures of mortgage debt hanging over my head for the next 30 years, so I aimed to pay off my mortgage as quickly as possible.

A little over a year ago I reached my goal of “Findependence” when I burned my mortgage – literally. I paid off my home in Toronto in just three years by age 30. Thanks to a stroke of luck and good timing, the story went viral, making headlines around the world from the U.K. to Australia. I received hundreds of email from people congratulating me and wanting to follow in my footsteps.

This inspired to me write my new book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for CanadiansWith home prices skyrocketing in cities like Toronto and Vancouver, many feel like  the dream of homeownership is out of reach. I’m here to tell you that it’s not. I may have paid off my mortgage in three years, but that doesn’t mean you have to. There are simple yet effective lifestyle changes that anyone — from new buyers to experienced homeowners — can make to pay down their mortgage sooner.

Some people argue it doesn’t make sense to pay down your mortgage early with interest rates near record lows. I see it differently. Instead of using low interest rates as an excuse to pile on more debt, use them as an opportunity to pay down the single biggest debt of your lifetime: your mortgage.

Here’s an excerpt from my book that looks at why you’re most likely better off paying down your mortgage instead of investing.

Why pay down your Mortgage when you can come out ahead Investing?

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ChangeRangers’ Mark Venning on Findependence & Victory Lap Retirement

markvenning

Mark Venning of ChangeRangers.com

By Mark Venning, ChangeRangers.com

Special to the Financial Independence Hub

“We’re on a bit of a crusade to change the way our society thinks about retirement.” — Jonathan Chevreau & Mike Drak

Mike Drak and Jonathan Chevreau, co-authors of Victory Lap Retirement (published, October 2016) are not the first to head out on this crusade. Apart from the material on the larger subject of aging and longevity, in my library I must have at least 19 books, in addition to the stacks of reports, studies and new models on the subject of Retirement.

Over the twenty years in the career services industry, where I worked directly with business executives in their later life transitions – leaving the corporate crow’s nest, as I call it, I can appreciate where Mike and Jonathan are coming from in their take on this. I have produced three retirement programs since 2001, and in the process suffered from metaphor madness, developing novel ways of reframing the concept of retirement and our later life journey.

However, this Drak & Chevreau volume is a welcomed new addition to this crusade. The book, by way of its novelty, weaves the conversation from the threads of a concept called Findependence, as the cornerstone of a Victory Lap Retirement.  So here we go. Rather than a traditional book review, here in this blog post, I present views of the authors as shared through interview questions with them in late October.

Authors Interview

Mark’s Q: Your co-authored book, early on, takes a shot across the bow at the “financial media & financial services industries” in the way they persist to push “Retirement” as if it were some final destination. (There seems little shift between the 1970’s London Life’s Freedom 55, to Prudential’s 2016 Race for Retirement campaigns for example.) What one new key message should marketers take from reading Victory Lap that could become a differentiator in their marketing?

Mike: The industry is using the same commercials that they used 40 years ago. The only difference is that they are now in color. The world of retirement has changed significantly over the years and most people cannot afford nor do they want to live the lifestyle portrayed in their commercials.

Banks assume more money equals better retirement, which is wrong thinking. Banks are good with the investment piece but they need to become more involved with the lifestyle piece. How can you ever know if you have enough if you do not have a firm handle on what type of retirement lifestyle you want in retirement and what that lifestyle will cost?

Mark’s Q: At one point in Chapter 3, you make the point that: “Compounding the problem is the lack of financial education our children receive in school.” You also say in Chapter 4 that the importance of financial independence is a prerequisite to the new stage of life you call “Victory Lap Retirement.”  Let’s play here. What do you think about an opportunity for you to design/deliver a “Findependence” course relatable to high school teenagers that didn’t use the word Retirement? What then would the main message sound like to them? Read more

Boomer & Echo’s review & giveaway of Victory Lap Retirement

By Robb Engen, Boomer & Echo

There’s a growing body of evidence that suggests postponing retirement – even by just one year – can lead to a longer, healthier life. The reality is that we’re living longer and saving less. Something has to give. But another year or two spent pushing paper in a cubicle is probably not the holy retirement grail we’ve been searching for.

Related: Growing older in America – The Health and Retirement Study

Indeed, if you’re healthy and can afford to stop working, the idea is to find something else you’re passionate about and do that instead – whether it’s switching to a new career in an unrelated field, writing a book, starting a blog, or simply volunteering at your favourite charity. Call it your work-optional years.

Victory Lap Retirement

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