Posts

Income Today, Legacy Tomorrow: Investment Picks for Canadian Retirees

When you retire and your regular paycheque stops, a new challenge appears: How do you create steady monthly income without giving up the long-term growth your estate depends on? The good news: you don’t have to choose. With a balanced mix of stable income, diversified investments, and a realistic withdrawal strategy, Canadian retirees can enjoy life today while still building a meaningful legacy. At Armchair Financial , our philosophy is simple: Retirement planning should be easy, clear, and sustainable. Let’s walk through what that looks like in practice. 1. Start With Your Guaranteed Income Base Before tapping into your investment accounts, map out the reliable income sources you’re already entitled to: ✔ CPP (Canada Pension Plan) Inflation-protected income for life, based on your work history. ✔ OAS (Old Age Security) A steady base for most Canadians, unaffected by market ups and downs. ✔ Employer Pensions Whether you have a defined benefit plan (predictable monthly income) or ...
Post a Comment
Read more

Investing in Retirement

Image
Investing in retirement is a hard one.   Investing in retirement is different, because everyone's life situation and financial situation is different. One size definitely does not fit all. The focus in retirement is on turning your investments into an useable income stream, to live on, travel, or to supplement your work pension, CPP , and OAS. At the same time, you want to make those investments last long enough so that you never completely run out of money. You may also want to have enough left over to leave a legacy to your children, or perhaps your favorite charities.  Investing in retirement requires taking a step back, and perhaps making some portfolio adjustments in order to reduce or mitigate risk. If you have additional, reliable sources of income coming in (for example, a nice defined benefits work pension), your investment strategy in retirement could look totally different than someone who's relying primarily on their savings and investments. What products should I ...
Post a Comment
Read more

Investing in Precious Metals

Image
  Armchair often gets asked about investing in precious metals such as gold or silver. Investing may not be the right word here. As  Warren Buffet  will gladly tell you, gold pays no interest nor dividends to you. Metals are more of a traditional store of value, a hedge against inflation, or a good way to prepare for the inevitable Zombie Apocalypse. Buying precious metals is not something a lazy, relaxed, armchair investor should do. Please go back to  Be Rich  as well as  How to Invest . That being said, for more sophisticated investors who have already accumulated a good nest egg of wealth, it certainly doesn’t hurt to put part of your portfolio (say 5 percent) into precious metals for the reasons stated above. Avoid mutual funds and ETFs that deal in gold and silver. They’re just paper. Some are of dubious intent and may or may not be backed by the full amount of physical product. That won’t help you when the Zombie Apocalypse hits and you’re bartering ...
Post a Comment
Read more

Check your Credit Score and Report for Free

Image
Getting your credit score, and your credit report, is much easier for Canadians than it has ever been before. There are two primary credit bureaus in Canada:  Equifax   and  TransUnion . Canadian legislation requires that they provide you, for free but only at your request, with a credit report once a year. Neither are required to provide you with your credit score. Both will do so, but only if you want to pay them to see it! What’s a credit report? Your credit report is simply a snapshot of your credit file, which is created when you borrow money or apply for credit. Credit card and loan companies you deal with will regularly update and send financial information related to your transactions to the credit bureaus. Your credit report, which is ongoing and evergreen, is is one of the main tools a lender uses when deciding whether or not to give you credit. What’s a credit score? Your credit score is a credit bureau’s or lender’s judgment about your overall financial health...
Post a Comment
Read more

Low Cost All-In-One Investing

Once in a rare while, something comes along that may make a real difference for you as an investor. Today is one of those days. As we discussed in  Investing is Easy  and  How to Invest , there are two main principles that good armchair investors will always follow: One:   Create a well-diversified global portfolio  of equities (stocks) and fixed-income instruments such as bonds. The fixed-income component ensures you’re always getting paid, no matter what happens to equity markets, and it also serves to lower the volatility of your portfolio. A 60-40 mix of equities versus fixed-income has proven over time to provide good growth along with the ability to mitigate the immediate impact of financial storms. Two:   Keep your portfolio low-cost.  Minimize the fees you pay by building a passive portfolio of very low cost exchange traded index funds (ETFs), or alternatively a low-cost passive or actively managed balanced fund with a good track record. Vangua...
Post a Comment
Read more

When should I take the CPP?

A common question of retirees and soon-to-be retirees is when to elect to take start payments from the   Canada Pension Plan (CPP).   The traditional or ‘expected’ time to begin to receive a CPP retirement pension is the month after your 65th birthday. However, in accordance with changes that have been in place for the last few years, you can now take your CPP as early as age 60, or defer it as long as age 70. If you elect to take your CPP early, the downside is you will receive less. The upside is that you will receive your CPP sooner, and for a longer period of time. From a strictly mathematical perspective, taking CPP prior to age 65 will result in a reduction in payments of 0.6% per month prior to age 65 (7.2% per year). This means that your pension will be reduced by up to 36% if you elect to take it as early as age 60. If you take CPP after age 65, your monthly payment amount will increase by 0.7% for each month after age 65 that you delay receiving it (8.4% per year). B...
Post a Comment
Read more