Trevor Abes: Writer

Tag: investing checklist

Young Canadian Investor #20 — The Pros of Financial Independence

Achieving financial independence means having enough money to do whatever you want with your time. In other words, your investment portfolio and cash reserves cover your food, housing, medical, and other basics expenses without you having to put in any more work, unless you want to. The result is that every day becomes an opportunity to tackle a new project your 9-5 job simply doesn’t allow.

The journey toward this independence and actually being able to experience it can be a fine way to spend your working years. Let’s explore why in a little more depth to help you determine whether or not it’s your deal.

  1. If you have a very specific vision about how you want to live your life, and that vision doesn’t match with holding down a job because it feels like you’re working toward someone else’s dream, financial independence is probably for you. You may want to start a business and be your own boss, do charity work overseas, or pursue art projects that may only provide you with satisfactory mental and emotional as opposed to financial returns. Whatever it is, you can’t ignore what you know will make you happy.
  2. The act of saving enough money to buy your freedom can be one of immense purpose. Picture yourself investing half or more of your monthly income, pinching pennies where you can, spurred on by the rush of your account balance climbing and climbing. There’s a lot of motivation to be had here that can make the less savory parts of a working life a little more palatable. Truth is, many of us don’t have a choice except to work, but long hours and annoying bosses and coworkers don’t matter as much when doing whatever you want is just over the horizon.
  3. At a very basic level, enjoying some degree of financial independence is key to minimizing day-to-day stress. If we were to establish a hierarchy, we could say that the bottom end of it includes an emergency fund, a few months expenses to give you the space to handle a home repair or loss of employment without having to max out the credit card. One level up might be a year’s worth of expenses to tackle a heavy-duty catastrophe like an injury or a death in the family. Any money you invest from that point on gets you closer to being able to accept only the work you want.

If the idea of reclaiming your time as soon as possible lights a fire in you somewhere deep inside, you need to learn how to invest your money so it can grow beyond your biweekly paycheck. It’s reasonable to expect that a balanced portfolio of stocks and bonds will earn you about 5 percent per year over a few decades. That can add up to tens or hundreds of thousands of dollars to support yourself as you practice your passion.

To get yourself started, check out my new book, Nine Steps to Successful Investing: A Guide for Young Canadians. In no more than an afternoon, it’ll give you the tools you need to invest prudently in the world’s stock and bond markets through index funds and fulfill your long-term life goals.

I’m also available to teach you 1-on-1 over Zoom if you prefer.

Feel free to drop your questions in the comments!

Disclaimer: This article is meant for general education purposes only. It does not constitute financial advice as I am unaware of your personal situation. Consult with a professional who abides by a fiduciary standard before making any investment decisions.

Young Canadian Investor #3 – A Step-by-Step Checklist

You’ve probably heard plenty about investing your money, perhaps through coworkers, your parents, or by mistakenly flipping the channel to CNBC. The question about how to actually accomplish this, though, doesn’t yield a readily-available answer. Well, here’s your answer.


I won’t go on at length about each numeral, because you can already find that information in my intro to investing. This is more about offering you an eagle’s eye view of that intro so you can take in how the investing process works. Here we go:

  1. Choose financial goals. Could be retirement, a car, an education, whatever you like.
  2. Choose investments that will allow you to meet those financial goals. If it’s short-term, a high-interest savings account that pays you around 2% per year will do. If it’s medium-term, say 3-5 years, an aggregate bond fund, which pays out a long-term average of 2-4% per year, will serve you well. If your goal is 5 years away or more, investing in a global portfolio of stock funds is your best bet because you can expect a long-term average return of 7% per year.
  3. Determine your risk tolerance. If you are risk-averse, you should have more bonds and cash than stocks in your portfolio. If you have the stomach to see your investments fluctuate in value, sometimes by half or more, with the probability of a higher return, you should own more stocks.
  4. Construct your portfolio. Whether that’s 20% bonds and 80% stocks, the inverse, or some other mix, depends on your risk tolerance and the return you need to meet your financial goals. That said, unless you’re a stock-picking genius, you should always diversify, which means owning stocks and bonds from all over the world in many different industries. ETFs are the cheapest and most efficient way for young folks just starting out like you and me to put such a portfolio together. Here’s an example for you. Focus on the lowest 12-month drawdown to get a sense of how much stocks can drop from year to year.
  5. Open a Registered Retirement Savings Plan (RRSP) or a Tax-Free Savings Account (TFSA) to hold your investments in. The former allows you to defer taxes by minimizing your taxable income by the amount of your contribution, which only makes sense if you’re making a good salary, while the latter can only be funded with after-tax dollars. Both allow investments to grow tax-free.
  6. Buy shares in your chosen investments to match the percentages in your portfolio. See the “Build an ETF Portfolio” video series for instructions from Justin Bender of Canadian Portfolio Manager.
  7. Contribute to your investments on a regular schedule that works for you.
  8. Rebalance once per year. This means selling some of your investments that have done well over the year and buying more of those that have done poorly to get you back to the percentages you chose in step 4.
  9. Repeat steps 7 and 8 until you meet your financial goals.


If you have any questions, feel free to leave them in the comments!

Disclaimer: This article is meant for general education purposes only. It does not constitute financial advice as I am unaware of your personal situation. Consult with a professional who abides by a fiduciary standard before making any investment decisions.

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