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Start asking yourself $30,000 Questions

Have you ever sat down and thought about what that daily $3 coffee is costing you in lost savings?  If you have, by the way, you're not alone, there's even a popular book about it called The Latte Factor .  Or maybe you've decided to setup a budget - you download a budgeting app and start tracking each and every expense, only to abandon it two months later because it's just too much work. With personal finance, it's easy to get  caught up in the details of everyday expenses. However, author and financial expert Ramit Sethi in his book  I Will Teach You to Be Rich ,  suggests a different approach: asking $30,000 questions before focusing on the less important $3 questions. His idea is to prioritize significant and material financial decisions that have an outsized potential to build wealth, success, and happiness.  That is, he suggests spending way more time researching and considering important life decisions versus trivial day-to-day decisio...
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Optimizing RRSP withdrawals with CPP

Dan and Kate McGlovin are both 60 years old and have just retired.   They each have exactly $500,000 in RRSP savings and both of them will receive 85% of their CPP and 100% of their OAS at age 65. They own a house worth $700,000 that is mortgage free.  They have no other savings, no pensions, no debt, and no kids.  Their RRSPs are invested in a low cost balanced asset allocation ETF which consists of 60% globally diversified equities (stocks) and 40% bonds.  The expected return on this ETF is 5.22% less management expense fees of 0.25% for a total annual return of 4.97%.  Inflation is assumed to run at 2.2% per year and we have set their life expectancy at 95. They plan to take OAS at age 65. Also, Dan and Kate want to live in their house until they die and want to pass the proceeds of their estate to their favourite charity upon their death.  In other words, they do not want to use their home equity to fund their retirement. How Much can Dan and Kate ...
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Investing with margin or leverage for retail investors

This article was inspired by a marketing email I recently received from Wealthsimple.  The subject line read: " Coming soon: margin trading ".  The email goes on to say "Margin trading can help you boost your buying power by borrowing against your portfolio. Applying for your account is fast, hassle-free, and there are no hidden fees.  Best of all, our margin interest rate are as low as prime - 0.5% — lower than what you’d pay at your bank."   In fairness to Wealthsimple, the email further  explains what margin trading is, how it works, and what some of the risks are to using margin. It really got me thinking more about margin and leverage and especially the surprising findings regarding who can benefit the most from using margin and leverage.   What is Margin and Leverage? Margin investing refers to borrowing funds from a brokerage firm to purchase securities, using investments like stocks and bonds already in your account as collateral. This all...
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