The Money Mustache Community

Around the Internet => Antimustachian Wall of Shame and Comedy => Topic started by: beaster on February 21, 2015, 06:55:03 AM

Title: Attention Canadians- $4.5m required for Financial Independence!!
Post by: beaster on February 21, 2015, 06:55:03 AM
http://m.theglobeandmail.com/globe-investor/investment-ideas/financial-freedom-is-just-45-million-away/article23133417/?service=mobile

Thought the mustachians would enjoy this one!
Title: Re: Attention Canadians- $4.5m required for Financial Independence!!
Post by: arebelspy 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.
Title: Re: Attention Canadians- $4.5m required for Financial Independence!!
Post by: SaintM 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.
Title: Re: Attention Canadians- $4.5m required for Financial Independence!!
Post by: Heckler on February 21, 2015, 09:39:02 AM
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.
Title: Re: Attention Canadians- $4.5m required for Financial Independence!!
Post by: HenryDavid 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!"
Title: Re: Attention Canadians- $4.5m required for Financial Independence!!
Post by: skyrefuge 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?
Title: Re: Attention Canadians- $4.5m required for Financial Independence!!
Post by: SaintM 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.
Title: Re: Attention Canadians- $4.5m required for Financial Independence!!
Post by: daverobev 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.
Title: Re: Attention Canadians- $4.5m required for Financial Independence!!
Post by: RetiredAt63 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.
Title: Re: Attention Canadians- $4.5m required for Financial Independence!!
Post by: Deano 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%.
Title: Re: Attention Canadians- $4.5m required for Financial Independence!!
Post by: scottish 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.
Title: Re: Attention Canadians- $4.5m required for Financial Independence!!
Post by: beaster on March 01, 2015, 07:04:01 AM
http://www.globeinvestor.com/servlet/ArticleNews/story/GAM/20150227/RBGILONGVIEWMCGUGANFINAL   Follow-up article published this weekend
Title: Re: Attention Canadians- $4.5m required for Financial Independence!!
Post by: GuitarStv 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.
Title: Re: Attention Canadians- $4.5m required for Financial Independence!!
Post by: daverobev 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?
Title: Re: Attention Canadians- $4.5m required for Financial Independence!!
Post by: Scandium 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.
Title: Re: Attention Canadians- $4.5m required for Financial Independence!!
Post by: Kaspian 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!