Canadian Dream: Free at 45 One Canadian's dream to retire at 45. Topics include: early retirement, investing, savings, spending, and happiness.

Statistics Unique Visitors: Total Unique Visitors: Visitors Out: Total Visitors Out: 8 2087 4154 4154

Book Review: Juggling Dynamite
2007-06-06 12:10:00
In a sea of personal finance books it is nice to see something a bit different once in a while and I was nicely surprised when I was recently sent a copy of a new one called Juggling Dynamite by Danielle Park.Danielle first breaks us of our concept of risk. She lays out how many of us are juggling dynamite and we don’t know it. We talk of risk tolerance, but unless you have lived through a major market down turn it is really hard to know how you will react. The plan seems good when the good times are rolling along, but the drop off is very painful and many people can’t follow through with the buy and hold method. Actually the drop off is typically so painful that she suggests a bit of different idea, we should time the market a bit.Let me first put of the truce flag. She is not suggesting any as silly as day trading, but rather timing the market to the larger cycle that occurs approximately every five years. When the world is hitting record highs everyday and people are getting lev ...
Book  Book Review  Dynamite  Juggling  Review 

The Dividend Retirement Myth
2007-06-06 11:45:00
It seems to me that several people are planning retirements using at least some dividends to provide part of their income. This is a good idea, the problem becomes when you take it too far and try to pull off a Derek Foster and live off only dividends.Let me say I do like dividends. They get great tax treatment from the government if you are lower income (see here) and if you pick good companies they will provide a nice raise and likely keep up with inflation. Yet people tend to ignore their dark side, the low yield.You see in this over inflated market of nearly continuous record breaking highs for the TSX index the actual yield on most dividend paying stocks is very low. When most dividends are around 1 to 4% yield you end up needing a lot of cash to generate your retirement income. Let me provide an example.Let’s say you need about $25,000/year in retirement income for a couple. If you buy all dividend paying stocks and manage to get an average yield of 2.5% you would need $1,000, ...
Dividend  Retirement 

Update
2007-06-05 12:21:00
Well folks I did have the best intentions of writing a proper post today. My airline had other thoughts, since I ended up suck in an airport for five hours yesterday waiting for my second flight of the day. Therefore last night I got in and ate some supper and went to sleep. So here is the deal. I did get some reading done during my exile in the airport, so I will be writing a couple of posts tonight and will publish an extra post either later today or tomorrow morning.Thanks for your patience,CD ...

Getting Things Done
2007-06-01 14:09:00
To be honest I'm not the most motivated person at times. If I deem a task as non-critical it can languish on my To Do list for months. Yet in the last month I've been very good about cleaning up various personal finance issues.For example, my pension from my previously employer has now been transfered to a Lock-In RRSP at my bank. I just filled out the paper work to increase my life insurance for my wife and myself so I can finally drop my mortgage insurance in the next few weeks. I also increased the deductible from $500 to $1000 on my home insurance renewal to save $123/year. Then I also just took advantage of RBC's new rebate program and will drop my bank fees from $6/month to approximately $6 per year.So what spurred this burst of energy? Nothing specific other than the feeling of I should just stop pushing off everything and just get it done. To deal with all of the above issues took perhaps a total of 2 hours of my time and have a cost savings of approximately $223/year. ...

Wandering Reading #3
2007-05-31 14:16:00
Welcome to my weekly summary of links. I hope you enjoy a few of the following items.Investoid looks at the implications of the Bank of Canada raising interest rates soon and he also has a contest for anyone who wants to win a subscription to the National Post online (deadline to enter is Friday).JD over at Get Rich Slowly found a great tool about determining your class (lower, middle, upper) which I found very amusing, since according to it I'm in the upper class. So where's my maid then?The Money Gardener takes a look at his saving rate and is off to a great start.The Canadian Capitalist is again rolling out another list of new blogs and has a great post on the research on the financial circumstances of retirees which is just full of interesting information.The Dividend Guy has a great post of the implications of Walmart offering brokerage services. ...
Wandering 

Emotional Retirement
2007-05-30 14:26:00
Retirement itself can be a funny thing emotionally. Suddenly your entire world is turn upside down and shook a few times. For some people it's a great feeling like riding a roller coaster, for others it makes them feel a bit sick or detached from it all. Overall retirees actually share quiet a bit in common emotionally with high school students leaving their final year (as a reference point for anyone who isn't retired).I've spend a few weeks digging around message boards to see how everyone reacts to it all, as well as talk to several people my parents age about people who have recently retired and how they feel about it. In general there appears to be a few different patterns around it.First it is very common to actually miss your co-workers a bit. After all these are the people whom you spent most of your days with for years and depending what you do in retirement you will have very little contact with them and suddenly a lot less in common if you retire early and they remai ...
Emotional  Retirement 

The Water War - Part I
2007-05-29 14:48:00
As I mentioned a while back I'm currently updating some items in my house to see how much money I can save on my water bill. My average bill use to be about $50/month. Last month my bill came in at $43.48, so what changed? Nothing but my attitude and a few minor habits.I basically just became aware of when I was using water in the day and trying to reduce that amount. So when brushing my teeth I fill up my rinse cup with 1/3 full of water and that's all I use to brush my teeth. I also stopped running the water while washing my hands. I just fill the sink with a bit of water and then proceed to wash my hands and then let the water out. I'm down to perhaps two cups of water to wash my hands now. Then when washing the dishes I start with a small amount in the sink and during rinsing of objects I end up with a larger volume at the end to wash the big dirty pots and pans. I'm also letting my grass grow longer so it needs less frequent watering over the summer. That's all I cha ...
War  Water 

The Early Retirement Portfolio
2007-05-28 14:19:00
It occurs to me that I need to do some more planning about how my portfolio is going to look in early retirement. I specifically need to be conservative with that money that is going to bridge the gap between 45 to 65.Currently most of this money is in index funds with the following allocation:25% Bond index25% TSX index (Canada)25% SP 500 index (US)25% International indexThis is what I'm thinking about using when I turn 45:60% bond index or other fixed income15% Real Estate Income Trust or similar10% TSX index (Canada)10% S&P 500 index (US)5% CashAt the same time I'm unsure about dropping the international portion of the portfolio. Despite being subject shifts in the currency exchange international markets does offer some diversification outside of North America just in case there is an economic slow down just in our local markets.Another issue I'm a bit unsure on is how do I convert the one portfolio over to the other? Do I just wait until I'm a few years out and start to sl ...
Portfolio  Retirement 

70 Is The New 50
2007-05-25 14:11:00
I was reading this interesting article the other day on 70 is the new 50 for retirees. It was a great read because it pointed out a few interesting facts like of those in retirement only 16% over 60 actually retired early. Perhaps what is more interesting is a fifth to a half of the population still works in their sixties with a huge amount (71%) saying they are because they want to, not because they have to.Beyond anything that just shows me that the old idea of retirement is time to just sit and relax is long dead with more Canadian retirees doing work or volunteer work which combined contribute a staggering $5.3 billion dollars to our economy. Also Canadians on average are a healthy group with most reporting good or very good health in their seventies.So semi-retirement seems to be a poplar option overall which is a nice blend of paid work and still having the time to chase your own interests. This agrees a bit with my own views. I'm planning on a early retirement, but I would ...

Wander Reading #2
2007-05-24 14:02:00
It's been a busy week of reading for me. I've been having a bit of a problem narrowing down the field, but here is what I like this week. Enjoy.Canadian Capitalist has a great post on spending habits in retirement which shows it actually goes down.Crunch Money has an interesting idea on creating a social network for us personal finance addicts.Here is a great article on why my house price keeps going up.The Money Diva talks about how to deal with a huge expense (like an over sized tax bill).Financial Jungle talks about Exotic Retirements and their cheap price tag.JD over at Get Rich Slowly takes a look at a rain barrel and if it will save you money, which I've been thinking about installing myself. ...
Wander 

Juggling Priorities
2007-05-23 14:14:00
Let's face it saving money itself is fairly easy to do, the problem is what am I going to do with those savings? You can pay down debts, invest in your kid's future, save for retirement, save for buying/starting a small business, save for a second property or save to buy something you REALLY want (car, trip, shoes, TV, computer...). So how do you balance all those issues or juggle those priorities? You have to have a plan and then stick to it. Here's how I do it. 1) Pay off all non mortgage debts - Debt is just a dead weight you have to carry around so the sooner you get rid of it the easy things become for the rest of your savings.2) Save for a rainy day - Once you are out of debt having a small amount of savings for when things go wrong is typically a good idea. Start small like $1000 and then play around to find the amount that works for you. (I personally don't do this, but I run my finances with a large amount of spare cash).3) Save for retirement - You know the best thing ...
Juggling  Priorities 

Planning Plan B
2007-05-22 14:07:00
Despite my best planning and research I am aware that my plan to retire at 45 can go up in smoke due to any number of different variables such as inflation or investment performance. So it occurs to me that perhaps a Plan B would be in order. So let's look at my options.1) Push off retirementThis is the easiest of the options to put into place. If I'm checking my numbers when I'm five years out and things are not looking good I can always push back the date by a year or two. This would allow for some additional savings and if I'm lucky a bit more time to get the kid out the front door for good.2) Scale back retirementIn my particular case I'm not putting a lot of fat into my retirement plans anyways so I'm not comfortable cutting back on anything. Yet this is an option for some people if you are close to your goal and you have a fair amount of padding in your retirement plan calculations (for example you have 10% extra spending per year and you are using a 4% inflation rate) ...

Long Weekend Plans
2007-05-18 14:33:00
Today finally marks the start of the long weekend here in Canada. More importantly it marks the beginning of gardening season. So this weekend I'll start planting the garden in hopes of getting lots of nearly free organic food starting in a month or so. Afterward I intend to sit down and do a lot of nothing for at least one day this long weekend (with the exception of turning on the BBQ and finding a cold beer).So regardless of what you have planned I highly recommend you put down that calculator and make sure you get outside and enjoy yourself. After all we spend so much time here discussing money that at times I think we forget about making sure we have some fun too.A quick reminder that I will not be posting on Monday due to the holiday. Have a great long weekend.CD ...
Plans  Weekend 

Wandering Reading #1
2007-05-17 14:00:00
Today marks our first Wandering Reading post. I was thinking about posting the entire Problogger Top 5 list, but instead I've included a summary list (from Grad Money Matters) and here is the main list if you would like to keep busy for the entire long weekend.The Top 5 Ways to Become a Millionaire by JeremyThe Top Five Steps to Grow Your Net Worth by FMFTop 5 Ways To Save Money Without Noticing by jimTop 5 Reasons Personal Finance Blogs Are Better Than The Media by Canadian DreamTop 5 Reasons To Save For Retirement Now! by Retire HappyTop 5 Reasons I Started and Continue A Personal Finance Blog by SunTop 5 Good Reasons to Sell a Stock by QWhy Your Mom is the Engine of Growth in the Global Economy by BenTop 5 Financial Tips for Recent Graduates by ElizabethFive Reasons That Credit Cards Rock and Debit Cards Suck by nickel5 ways to reduce your car’s fuel consumption (and save you money) by Scott BirdTop 5 Obsessions Of A Finance Blogger: Stuff I Like And How It Affects My Wallet by ...
Wandering