Author Topic: Attention Canadians- $4.5m required for Financial Independence!!  (Read 5347 times)


arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28018
  • Age: -999
  • Location: Seattle, WA
Re: Attention Canadians- $4.5m required for Financial Independence!!
« Reply #1 on: February 21, 2015, 08:24:10 AM »
Yeah under the most conservative  assumptions, I can jack up the amount needed for FI really high too.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

SaintM

  • Guest
Re: Attention Canadians- $4.5m required for Financial Independence!!
« Reply #2 on: February 21, 2015, 09:12:57 AM »
Why would someone want half their money in "safe government bonds"?  That sounds like the best way to lose purchasing power over time.  At least if I bury cash in the backyard the banks and government can't seize it.  Maybe the ground is too frozen in Canada to dig.

No thanks, I will stick to rentals and stocks.

Heckler

  • Handlebar Stache
  • *****
  • Posts: 1346

HenryDavid

  • Bristles
  • ***
  • Posts: 438
Re: Attention Canadians- $4.5m required for Financial Independence!!
« Reply #4 on: February 21, 2015, 09:39:18 AM »
The article is simply an advertisement for mutual funds and banks. "Don't stop saving, I.e. Lending us your money for nothing! You don't have  $4.5 mil yet!"

skyrefuge

  • Handlebar Stache
  • *****
  • Posts: 1007
  • Location: Suburban Chicago, IL
Re: Attention Canadians- $4.5m required for Financial Independence!!
« Reply #5 on: February 21, 2015, 09:53:14 AM »
The article is simply an advertisement for mutual funds and banks. "Don't stop saving, I.e. Lending us your money for nothing! You don't have  $4.5 mil yet!"

Not at all. If you actually read the article, the author sort of expects to you see that $4.5M number as ridiculous. It's intentionally an ultraconservative number, made even more conservative by today's relatively low dividend and interest rates.

I suppose I'm biased, but I actually interpret the article as a sly commentary on how dumb a "live off the dividends" strategy is. The fact that the number varies so wildly ($4.5M today vs. $1.4M (today's dollars) in 1995) based solely on the variation in dividend/interest payments reveals how silly it is to use current dividend/interest rates to determine your Safe Withdrawal Rate. Does anyone actually believe that the expected total return on a 50/50 portfolio would vary more than 3x between 1995 and now?

SaintM

  • Guest
Re: Attention Canadians- $4.5m required for Financial Independence!!
« Reply #6 on: February 21, 2015, 10:51:03 AM »
I suppose I'm biased, but I actually interpret the article as a sly commentary on how dumb a "live off the dividends" strategy is.

Yes, you are biased.  And then there are those of us that are biased the other way.

daverobev

  • Magnum Stache
  • ******
  • Posts: 3377
  • Location: France
Re: Attention Canadians- $4.5m required for Financial Independence!!
« Reply #7 on: February 21, 2015, 02:15:37 PM »
http://m.theglobeandmail.com/globe-investor/personal-finance/retirement-rrsps/fund-picks-for-more-aggressive-rrsp-investors/article23025261/?service=mobile


Her are their picks for high fee funds to achieve your unrealistic goal.

Motherfuckers. Tangerine: Balanced Growth is 25/25/25/25 Cdn/US/Intl/bonds, 1.07% MER, and that is an expensive option.

RetiredAt63

  • Senior Mustachian
  • ********
  • Posts: 11388
  • Location: Eastern Ontario, Canada
Re: Attention Canadians- $4.5m required for Financial Independence!!
« Reply #8 on: February 21, 2015, 04:54:29 PM »
Well I am in deep doodoo then, no way my assets >$1 million.  That is valuing my pension as if I had to buy an annuity, BTW.  And I am definitely above the median (not be a lot, but above).

But they are in Toronto, which is a super high COL area for Canada.  Skews the view.

Deano

  • Stubble
  • **
  • Posts: 213
Re: Attention Canadians- $4.5m required for Financial Independence!!
« Reply #9 on: February 21, 2015, 09:01:39 PM »
Why would someone want half their money in "safe government bonds"?  That sounds like the best way to lose purchasing power over time.  At least if I bury cash in the backyard the banks and government can't seize it.  Maybe the ground is too frozen in Canada to dig.

No thanks, I will stick to rentals and stocks.

The article was more about the fact that those bonds used to pay 7.5%.

scottish

  • Handlebar Stache
  • *****
  • Posts: 1428
  • Location: Ottawa
Re: Attention Canadians- $4.5m required for Financial Independence!!
« Reply #10 on: February 23, 2015, 04:01:12 PM »
I agree, I think he was just complaining about how much harder it is to retire with low interest rate bonds.

beaster

  • 5 O'Clock Shadow
  • *
  • Posts: 45

GuitarStv

  • Senior Mustachian
  • ********
  • Posts: 14046
  • Age: 38
  • Location: Toronto, Ontario, Canada
Re: Attention Canadians- $4.5m required for Financial Independence!!
« Reply #12 on: March 02, 2015, 01:17:01 PM »
But they are in Toronto, which is a super high COL area for Canada.  Skews the view.

Super high COL?  That's news to me.

daverobev

  • Magnum Stache
  • ******
  • Posts: 3377
  • Location: France
Re: Attention Canadians- $4.5m required for Financial Independence!!
« Reply #13 on: March 03, 2015, 07:09:12 AM »
But they are in Toronto, which is a super high COL area for Canada.  Skews the view.

Super high COL?  That's news to me.

*for Canada*. Where else in Canada has a higher COL than Toronto? Vancouver, and Fort McMurray - anywhere else?

Scandium

  • Handlebar Stache
  • *****
  • Posts: 2223
  • Location: EastCoast
Re: Attention Canadians- $4.5m required for Financial Independence!!
« Reply #14 on: March 03, 2015, 07:29:27 AM »
http://www.globeinvestor.com/servlet/ArticleNews/story/GAM/20150227/RBGILONGVIEWMCGUGANFINAL   Follow-up article published this weekend

from the article
Quote
To be a stickler about it, genuine financial freedom consists of being able to live solely on dividends and interest payments - to be what the French call a rentier.

What? Says who? Why does he assume 0% growth of all stocks? Unrealistic indeed. To be fair he does mention the 4% rule, but imply that it only apply for a 30 year period.

Kaspian

  • Handlebar Stache
  • *****
  • Posts: 1536
  • Location: Canada
    • My Necronomicon of Badassity
Re: Attention Canadians- $4.5m required for Financial Independence!!
« Reply #15 on: March 03, 2015, 11:00:02 AM »
Surely this is a very well-disguised, "You can't win, so don't try" article?  So much of it doesn't make sense. 

Quote
My $4.5-million estimate applies to a couple whether they're 25 or 65. It's the amount you and your spouse would need to generate the median Canadian household income by using only the dividends and interest payments generated by a low risk portfolio.

Even with only a 3% return, that's like $135000.  The median Canadian household income is $74540.

And why do these writers always ignore the capital?  Shit, if you have $4.5 million, even with 0% return, you can give yourself a salary of $75K for 60 years!