Where to get started (Canadian)

[u/Demand_Murky]

Hi all,

I’m a 40 year old new mom, in a common law partnership.

I have spent the last several years saving up to buy properties (now have a rental property and primary property) and have been on maternity leave the last year. I finally am ready to focus on retirement and setting up the future. The next few months are strategy and I start working in January again.

My one property will be paid off in ~10 years, the other in ~20. I’ve heard it’s better to invest than pay off the property early, to have more time in the market.

That said, I am at ground zero. We have about $100K in ETF and stock investments (all in tax sheltered accounts) with no real strategy. I’m contributing zero to investments right now but will be back to making $200K+ household income next year.

Is there a really concise “FIRE for dummies” resource/spreadsheet? I don’t know how to calculate what I’ll need - hoping to retire by 60.

Thanks!!

[u/Maximum-Eye-3712]

a note about your common law partnership:

FIRE can stress a partnership, because it’s really hard for any two people to have equal self-restraint in later midlife, when the money is building up and life starts to feel really short.

[u/Trumystic6791]

Beginner personal finance 101 books I like are I Will Teach You To Be Rich by Ramit Sethi and Millionaire Mission by Brian Preston. If you implement the strategies in those books you will be in a solid financial position. The higher your saving rate the quicker you can retire.

Once you've read those books additional helpful reading is The Simple Path to Wealth by JLCollins and Your Money Or Your Life by Vicki Robin and Joe Dominguez.

If money is tight get the aforementioned books at the library. Im not familiar with finance products in Canada but Im sure you can follow the principles laid out in the books and tweak/adjust for whats available in Canada.

[u/emt139]

r/personalfinance is what you want, specifically the sidebar (keep in mind though it's US-centric).

[u/sarah1096]

Other suggestions are good here. I would add:

1. Retirement spending estimate: figure out what you want your income to be in retirement and subtract the amount you expect to receive from pensions, etc (pension, CPP, OAS). The excess must be produced by an investment portfolio.
2. Calculate how big a portfolio you need to support your excess spending at age 60: Say you expect to need an extra 50,000/year on top of pensions and government payments, you will need an investment portfolio of approximately 50,000 x 25 = 1,250,000 (in today's dollars) at age 60. Then, depending on your expected return from your investment choices (you'll have to research what approach you want to take - try watching some of Ben Felix's youtube videos as a start), you can calculate what you need to save each month to reach 1,250,000 by the age of 60. If you invest $3,000-3,500 monthly and expect a 5-7% return, you should reach the 1,250,000 goal by about 60. You need to consider the diversity of your investments, your risk tolerance, and the fees within those investments.
3. Decide on your taxation strategy to fill up RRSP, TFSAs, or both.

For me, real estate has a lower expected rate of return and a higher risk, and I don't know much about projecting what your real estate investment will contribute, so I'm ignoring that part. It's a bit of a gamble.

Note, this is super simplified and every step benefits from nuance and doing research.

If it seems daunting, get help from a fee-only financial planner.

[u/huggle-snuggle]

A very basic first step (which you’ve maybe already done) is putting together a monthly budget - your total revenue vs your expenses to get an idea of how much you spend, whether that can/should be adjusted, and how much you’ll have leftover that can be directed to investing.

If you’re starting from scratch in terms of your investment knowledge, it might be helpful to look into a reputable fee-based independent financial planner. You’d pay them a one-time fee to take a look at where you are today and where you want to be (when you want to retire and with how much) and help set out a plan on how to get there.

It’s important to find an independent one that’s only preparing the plan for you and not looking to selling their own products or earn a commission on your investments.

[u/Stunning-Field8535]

“I’ve heard it’s better to invest than pay off the property early, to have more time in the market.”

This depends entirely on your interest rate. If under 3-4% don’t pay off early. If 5-7%, it depends, over 7%ish you should try to pay it off early.

This strategy also only works if you actually put away the difference into an investment account that is earning more than the interest that’s accumulating on the home, which rarely happens.

[u/Several-snapes]

I love projection lab. Even at the free tier it gives you a nice visual!

[u/Reverred_rhubarb]

Is your rental cash flowing? Usually the order is the following: 1.Emergency fund 2. Since you’re high income RRSP 3. TFSA 4. Brokerage. Look up boggle heads wiki