Tag Archives: TFSA

And in Reply…

My last post about knowing when you’re able to retire based on your dividend income elicited some good questions and counter-points from Robb at Boomer and Echo. The answers I have would have involved a rather long response in the comment section, so I decided to reply in a new post. For the record, here is what Robb said:

I used to think this way, how­ever I don’t think it’s real­is­tic to live off div­i­dends and never touch your cap­i­tal in retire­ment. First of all, any RRSP sav­ings will even­tu­ally be con­verted into an RRIF and face stiff with­drawal rates. Sec­ond, what if you want (or need) excess cap­i­tal in one year to pay for a car, new roof, large vaca­tion, etc.? You’d prob­a­bly look to sell off some stock to access the cap­i­tal. Finally, there’s the poten­tial to work longer than needed in order to reach a tar­get div­i­dend income stream. It’d take a mil­lion dol­lars in cap­i­tal to spin off $35,000 to $40,000 in div­i­dends. Why wouldn’t you want to tap into that mil­lion dollars?

In response, I say this: Continue reading And in Reply…

Dividend Investing Makes Retirement Threshold Obvious

Dividend investors know exactly when they can retire.
Dividend investors know exactly when they can retire.

I’m sure it’s just coincidence, but I’ve come across a lot of “When do you know you’re ready to retire?” articles the last little while. — EDIT: Just this morning, Robb at Boomer and Echo has written a post on this very topic. — After reading a few of these, it struck me that I had never really considered the question of when I would reach my (financial) retirement threshold. It’s not just because retirement is so far away, or because I haven’t taken the time to make a specific goal. The reason is because, as a dividend investor, the answer is so obvious that almost no thought is needed.

Continue reading Dividend Investing Makes Retirement Threshold Obvious

Dollar Cost Averaging

Dollar cost averaging
Market go up…markets go down. Doesn’t it make sense to buy more when they’re down?

Dollar cost averaging is one of the most powerful concepts that affects you as a retail investor.  It is also one of the simplest, most effective, and virtually idiot-proof ways to get both time and math working for you.

You get time working for you, because regardless of how much money your have to invest, you can get started right now.  Because you choose the amount you are able to invest, dollar cost averaging also allows you to make regular investments at a level that you can afford throughout the year.  Once making these investments becomes one of your monthly money habits, you won’t even notice the “missing” money.  Consider it a monthly bill; one that must be paid not to a bank or utility, but to your future self.

Dollar cost averaging gets math working for you because you automatically buy more shares when stock prices are lower, and buy fewer shares when stock prices are higher.

Dollar cost averaging in action

Lets look at an admittedly simple, but illustrative, example: Continue reading Dollar Cost Averaging