Most investors think dividends are one of the safest and smartest ways to create retirement income.

But are they really?

Ordinary dividends have some significant drawbacks that are often overlooked:

• They’re a forced withdrawal you don’t control
• They can create unnecessary taxable income
• They can increase OAS and GIS clawbacks
• Dividend portfolios are often concentrated in slower-growth sectors
• They can cause you to miss many of the world’s best growth companies

There’s another option: self-made dividends.

Instead of relying on companies to decide when and how much income you receive, you create your own cash flow by selling small portions of a broadly diversified, total-return portfolio.

In my latest article, I explain why self-made dividends are better than ordinary dividends in every way — from taxes and diversification to flexibility and control.

CLICK THE LINK BELOW TO READ THE ARTICLE BY JOANNA LEWIS 

Ed Rempel, CFP, Explains Why Self-Made Dividends Are Better Than Ordinary Dividends, In Every Way

For decades, income-focused investors and retirees have treated ordinary dividends as the holy grail of financial security. The narrative seems simple and comforting: buy shares in established blue-chip companies that pay reliable dividends, collect the quarterly payouts, and live off the yield without ever touching the capital. However, Ed Rempel CFP, Toronto, argues that relying strictly on traditional dividend-paying stocks is an old and heavily flawed income strategy for modern investors. Instead, a comprehensive analysis of portfolio mechanics reveals that self-made dividends (generating predictable cash flow by selling small portions of a broadly diversified, total-return growth portfolio) are superior to ordinary dividends in every measurable way.

To evaluate both investment methods, financial analysts point to how share prices behave on distribution dates. When a corporation issues a cash dividend, the company’s stock price decreases by the exact amount of the payout on the ex-dividend date. In practical terms, an ordinary dividend functions as an automatic, mandatory withdrawal of capital, determined by corporate executives rather than the individual investor.

“Dividends are not ‘free money,” says Rempel. “When a company pays a dividend, the stock price drops by the exact amount of the dividend on the ex-dividend date. Dividends are just a forced cash withdrawal.”

Conversely, self-made dividends operate by holding a portfolio optimized for global market expansion and selling off precise dollar amounts on a monthly or quarterly basis using a Systematic Withdrawal Plan (SWP). This shifts the primary investment goal from immediate yield generation to total portfolio return, providing investors with complete authority over the timing and size of their distributions.

A primary drawback of traditional dividend strategies involves taxation. When corporations distribute dividends, investors incur taxable income in that calendar year, regardless of whether they require the liquidity. For high-earning individuals or retirees, eligible and non-eligible dividends can inflate taxable income due to Canadian gross-up formulas, potentially triggering higher marginal tax rates and benefit clawbacks, such as the Old Age Security (OAS) or Guaranteed Income Supplement (GIS).

By contrast, self-made dividends help investors control their taxable event. Because liquidating a portion of an investment yields a return of original capital with capital growth, only the capital gain portion is subject to taxation. In Canada, where capital gains receive favourable tax treatment compared to ordinary income or grossed up dividends, this structure minimizes overall tax liability.

“In your retirement plan, it is actually cash flow that you need, not income,” says Rempel. “Income is taxable. Cash flow is sometimes taxable and sometimes not. Self-made dividends give you the cash flow you want in your retirement, while having only a small portion of it be considered taxable income.”

For instance, if an investor holds a portfolio that has doubled in value from $500,000 to $1,000,000 and requires $40,000 in annual retirement income, selling $40,000 worth of shares results in $20,000 of returned capital (tax-free) and $20,000 of capital gains. Under standard tax rules where 50% of capital gains are taxable, only $10,000 enters the investor’s taxable income calculation for the year.

Beyond tax considerations, financial advisors highlight severe sector concentration as a major risk associated with dividend-focused portfolios. In Canada, high-dividend mutual funds and exchange-traded funds (ETFs) remain heavily weighted in Canadian stocks, as well as cyclical, lower-growth industries like telecommunications, utilities, energy, and financial institutions. Consequently, investors who filter strictly for dividend yield routinely exclude major international growth sectors, particularly global technology, healthcare, and broad-market innovations.

Focusing strictly on yield can also lead investors into “dividend traps”, holding mature or financially strained companies that maintain high dividend yields to attract capital despite stagnant earnings. Should market conditions deteriorate, corporations can reduce or eliminate payouts, disrupting an investor’s income stream.

Rempel notes that a total-return approach avoids these constraints by enabling broad geographic and sector exposure without requiring individual companies to pay dividends.

“Smart investors never pay extra for dividends on their investments,” Rempel emphasizes, citing legendary investor Warren Buffet’s view that investors should remain agnostic about dividends. “Invest based on fundamentals like risk, return, and growth potential, and invest for the highest, reliable long-term total return after tax.”

This is the key point. The long-term success of your investing and retirement plan is based on the highest, reliable long-term total return after tax. Whether or not there is a dividend payout is a minor technical heavier tax factor.

From an operational standpoint, financial planners emphasize that self-made dividends offer a level of flexibility that corporate dividends cannot match. Retirees can set exact monthly distributions to match their budget, increase withdrawals for major expenses, or pause cash flows entirely during years when secondary income streams are sufficient.

By prioritizing total return over dividend yield, investors retain full ownership over their financial plan, insulating their cash flow from corporate board decisions while maximizing long-term portfolio growth.

Ed

The post iWatchMarkets article: Ed Rempel, CFP, Explains Why Self-Made Dividends Are Better Than Ordinary Dividends, In Every Way appeared first on Ed Rempel.

As equity investors, we put our money into companies through the stock market because we believe in the power of innovation, competition, and long-term growth.

But for the stock market to deliver strong returns over time, we need economic freedom and free enterprise.

When people can freely start businesses, invest, trade, hire, and compete without excessive government barriers or favoritism, capital flows to the best ideas, companies create real value, and investors are rewarded with compounding wealth.

Without that freedom, markets become distorted, innovation slows, and returns suffer. That’s why defending economic freedom isn’t just good policy – it’s essential for anyone who owns stocks or wants a prosperous future.

Yet stubborn myths keep blaming free markets for problems and pushing more government control. These stories ignore the hard numbers. Here’s the truth about the seven biggest myths, backed by the clearest evidence.

I constantly read books. “The Triumph of Economic Freedom” by Phil Gramm & Donald Boudreaux is a wonderful eyeopener! I believed a couple of these myths.

Read the book to see the evidence is clear.

You will learn:

• Why economic freedom and free enterprise are essential for strong, long-term stock market returns and widespread prosperity.
• How persistent myths blaming free markets for society’s problems distort history and policy.
• The real evidence showing how free markets – not government intervention – have driven the greatest gains in living standards in human history.
• Practical reasons why protecting open markets benefits investors, workers, and families alike.

Myth 1: The Industrial Revolution made workers poorer and more miserable.

People still picture dark factories and ruined lives in the 1800s. The facts say otherwise. Real wages (after inflation) for ordinary workers more than doubled in Britain between 1840 and 1900. Life expectancy jumped (men from about 40 to 48 years, women from 42 to 52). Literacy soared. People chose factory towns over farms because pay and opportunities were better. This was the start of the greatest rise in living standards in human history.

For nearly all of human history before the 1800s, living standards were essentially stagnant. The industrial revolution in the 1800s in Britain and the United States marked the most transformative and historically unprecedented improvement in living standards up to that point – and the foundation for all subsequent gains.

Myth 2: Robber-baron monopolies jacked up prices until antitrust laws saved consumers.

The story claims big oil and steel companies crushed rivals and gouged buyers until the government stepped in. Look at the actual prices. When Standard Oil began in 1870, kerosene cost 26 cents a gallon. By 1885 it had fallen to 8 cents, and by the 1890 Sherman Antitrust Act it was down to just over 7 cents. Steel-rail prices dropped 30% from 1870 to 1880 and then another 53% by 1890. Output in these industries grew faster than the rest of the economy, and prices fell faster than the overall price level. After the regulations hit, many rates (especially rail shipping) actually rose.

Antitrust laws were supposed to prevent monopolies from gouging consumers, but in reality, have mostly been used to protect weaker competitors and keep prices higher, not to deliver lower prices to consumers.

“Based on 90 years of hard evidence that reveals the overwhelming failure of this regulation, a bipartisan consensus was reached … in the 1970s and 1980s to bring that regulatory approach to an end.” It was finally repealed or reformed to focus only on clear harm to consumers.

Myth 3: A stock market crash caused the Great Depression & big government cured it.

Greedy markets crashed the economy; only heavy intervention fixed it. The evidence points the other way. A normal market downturn turned into a catastrophe by policy errors.

The Great Depression was prolonged into a decade of high unemployment primarily by government and central bank policies. The Federal Reserve allowed the money supply to shrink by about one-third between 1929 and 1933 while failing to act as a lender of last resort during bank panics and runs – causing thousands of bank failures and a severe credit crunch. Then, the Smoot-Hawley Tariff Act of 1930 raised tariffs sharply, triggering retaliatory trade barriers worldwide that crushed exports and international commerce. Finally, the New Deal’s interventions—such as wage controls (preventing wage cuts needed for adjustment), pro-union regulations that raised labor costs, and other price/wage rigidities – made it far more expensive and risky for companies to hire workers, discouraging job creation and slowing recovery for years. Unemployment remained extremely high – close to or above 20% for much of the 1930s.

These policy errors caused the longest and deepest depression in U.S. history.

Fed official Ben Bernanke later admitted the truth to Milton Friedman: “Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.” Tariffs, wage controls, and prolonged interventions created the pain and made it last a decade.

Free markets did not fail – policy errors did.

Myth 4: Free trade hollowed out American manufacturing.

Imports, especially from China, supposedly killed factory jobs and left the country weak. The numbers show manufacturing is still strong. U.S. industrial production capacity sits at all-time highs – well above levels from decades ago. Output has kept rising even as employment shifted. A careful study found that 88% of the manufacturing job losses from 2000 to 2010 came from productivity gains and better technology, not trade. We make more goods with fewer workers because machines and methods have improved.

Consumers enjoyed lower prices, and the country’s manufacturing industry – factories, machines, equipment, and infrastructure – grew dramatically.

Myth 5: Deregulation caused the 2008 financial crisis.

Wall Street ran wild without enough rules. Government policies fueled the fire. Easy money from the Federal Reserve, pressure on banks to make riskier home loans, and the special role of Fannie Mae and Freddie Mac created the housing bubble.

Government mandates on low-income lending rose steadily, requiring 30–40% of loans to be for low/moderate-income borrowers in the early 1990s. In the 2000s, this was pushed to 50–55%+, with tougher subgoals for very low-income borrowers. These quotas, especially via Fannie and Freddie, drove riskier subprime lending.

The crisis was not the result of free markets left alone; it was the result of distorted incentives created by public policy.

Myth 6: Income inequality is exploding under capitalism.

The rich race ahead while everyone else falls behind. Official figures hide the full picture. Census data claim the top 20% earn 16.7 times more than the bottom 20%. However, the official stats ignore 88% of the government programs for the poor. Once you count all government transfers (food stamps, Medicaid, housing aid, tax credits – most of which the Census ignores) and subtract taxes paid, that gap shrinks to about 4 times.

A significant factor in the income difference is that in the bottom 20% of households, only about .3-.5 people per household are working. In the top 20%, on average 2.0 people per household are working.

When poverty is measured properly – counting all government transfers that the official Census largely ignores – the deep or “intense” poverty rate (the kind involving real material hardship) falls to roughly 2–3% of the U.S. population.

The most visible and persistent cases of extreme hardship today, such as chronic homelessness and street poverty, are disproportionately driven by severe mental illness, drug addiction, and related issues (often co-occurring), not widespread material destitution or large traditional slums. Studies consistently show 30–70%+ of the chronically homeless population struggles with these problems, which create barriers to stability even when aid is available. This is very different from the mass urban poverty or shantytowns many people imagine from history or other countries.

Real income after inflation for the bottom fifth, including transfers, has risen roughly 300% since the 1960s, faster than the gains at the top. Consumption and material living standards for the bottom 20% are much closer to middle quintiles than official income numbers suggest.

Markets create wealth that is then shared through both wages and transfers.

Myth 7: Poverty remains stubbornly high because capitalism fails the poor.

Markets leave millions trapped with no way out. Adjusted numbers tell a different story. The official poverty rate hovers around 11–12% because the government refuses to count most of the $2.8 trillion in annual transfer payments as income. Include those benefits and the poverty rate falls to 2–3%. The remaining hard cases are mostly people struggling with addiction or severe mental illness whom the programs cannot easily reach.

Lower-income Americans today have far better housing, cars, appliances, and medical care than previous generations. Economic freedom reduces poverty by creating jobs and lowering the cost of everyday goods.

Free Enterprise Built Our High Living Standards

Every one of these myths collapses under the data. When people can freely invent, invest, trade, and compete, wages rise, prices fall, and ordinary lives improve. The stock market is one of the purest expressions of that system—it lets millions share in the gains.

Government overreach – through bad money policy, protectionism & tariffs, price-raising regulations, or distorted incentives – creates or worsens the very problems it claims to solve. Our comfortable modern lives exist because of economic freedom, not despite it. Protect that freedom, keep markets open, and living standards will keep climbing for the next generation.

Conclusion: Invest in the Future of Freedom

From my own experience seeing the full finances of thousands of people, the people with money are usually the ones that invested in stock market “equity” investments or in their own businesses.

By embracing economic freedom, we create the conditions for innovation, growth, and opportunity. As equity investors, we can all benefit by putting capital to work in the stock market – backing the companies that deliver better products, more jobs, and higher living standards – and participating in their growth. When free enterprise thrives, your portfolio and society both win. Protect that freedom, invest confidently, and help build a more prosperous world for everyone.

Ed

The post Why Economic Freedom and the Stock Market Make Us All Richer appeared first on Ed Rempel.

As we hit the halfway point of 2026, it’s the perfect moment to step back and talk about what really builds lasting financial freedom: staying focused on your long-term plan amid all the noise.

Think of your financial plan as the GPS for your life. It’s not a dusty document – it’s a dynamic, living tool that evolves with your goals, family changes, dreams, and circumstances. It guides decisions around retirement, education, major purchases, risk protection, legacy – and your financial freedom. It gives you clarity and confidence to enjoy the present while preparing for the future.

Your Financial Plan is really a life plan.

At our practice, we specialize exclusively in financial planning. We don’t manage investments in-house. Instead, we partner with elite independent portfolio managers and all-star fund managers who have exceptional long-term track records and processes we deeply trust. This allows us to focus 100% on what we do best: building and maintaining interactive financial plans tailored to your life.

Our Unchanging Principles

We are goal-focused, plan-driven, long-term investors working over years and decades to help you achieve your most important financial goals.

Our process is always the same:

• Clearly quantify your goals.

• Build a rational, in-depth plan to achieve them.

• Align a well-diversified portfolio (managed by our trusted partners) that’s suited to support that plan.

• Track your progress and all the actions needed for you to achieve the life you want.

Unless your goals change, the plan stays steady – and so does the overall investment approach. We don’t react to daily headlines, economic forecasts, or market swings.

We believe that the economy can never be consistently forecast, nor the markets consistently timed (except maybe taking advantage of the buying opportunity after a large market decline.) So we’ve decided that to capture the full long-term returns of our equity portfolio, we must remain fully invested in it in “good” markets and “bad.”

From experience, this works exceptionally well long term.

What a Wild First Half of 2026!

This has been one of the most eventful six-month periods in recent memory. We’ve seen geopolitical tensions, energy market swings, shifting interest rate expectations, heavy market concentration, dramatic plunges in assets like Bitcoin and precious metals, and even the largest IPO in history – centered around spacecraft, of all things!

How do we make sense of this chaos for your portfolio? The answer is: we don’t try to. None of these short-term storms change your long-term goals or your Plan. That’s actually something to celebrate – because it has nothing to do with our disciplined strategy.

We remain broadly diversified global equity investors – and stay invested. The markets have consistently provided strong gains over long time periods and we want to fully participate in the growth. It’s the opposite of what many investors do – chasing whatever’s already run up the most.

What really stands out is the continued strength underneath the surface: the earnings growth of high-quality companies, expanding profit margins, rising dividends, and ongoing innovation. These are the fundamental drivers that matter over time.

Of course, markets can – and likely will – experience sharp corrections when least expected. We can’t time them, so we plan to ride through them as we always have, supported by strong businesses and our trusted investment partners.

Exciting Tailwinds Ahead

Beyond the turbulence, there’s a lot to feel optimistic about:

• Strong growth in the earnings of high-quality companies continues to create opportunities across many sectors. Huge gains for our clients in the last 6 months – and earnings are rising just as fast!

• Artificial Intelligence (AI) is transforming industries and daily life, driving productivity gains we’re only beginning to see. I’ve been part of a business coaching group with many other business owners. They are all struggling with how to get the maximum benefits from AI.

• The longevity revolution, powered by AI and medical breakthroughs, points toward healthier, more active lives for much longer – a gamechanger for retirement and lifestyle planning. I have been very active in this longevity movement.

• The restart of space exploration is igniting innovation, new industries, and possibilities that seemed like science fiction just a few years ago.

These powerful trends reinforce why staying invested and plan-focused is so powerful.

The Bottom Line

Staying invested through volatility is like taking your “behavioural Vitamin C” – it protects you from emotional decisions that derail most investors and keeps you moving steadily toward financial freedom.

Your interactive financial plan is the foundation. It keeps you grounded, purposeful, and prepared no matter what headlines appear. It keeps you focused on your progress to the life you want – so you can fully participate in the long-term growth of the market.

Here’s to a strong second half of 2026 and continued progress toward the life you want!

Stay focused. Stay invested.

Ed

The post Stay Invested – Your “Behavioural Vitamin C” to Build Real Financial Freedom appeared first on Ed Rempel.

For decades, the bedrock of mainstream financial planning has been built on a comforting, two-part rule: diversify your wealth between stocks and bonds, and steadily shift toward the safety of fixed income as you grow older. But according to Toronto-based veteran tax accountant & fee-for-service financial planner, Ed Rempel, this time-honoured tradition might actually be putting your long-term financial security at risk.

Drawing on pioneering academic research, Rempel is challenging conventional retirement wisdom by advocating for a bold alternative: keeping a 100% equity portfolio throughout your entire life.

CLICK THE LINK BELOW TO READ THE ARTICLE BY DENNY JONES:

Get Financial Freedom Tips Article: Rethinking Retirement: Why Ed Rempel Backs a 100% Equity Strategy for Life

The catalyst for this change is a landmark study titled “Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice,” authored by finance professors Aizhan Anarkulova, Scott Cederburg, and Michael S. O’Doherty. By analyzing long-term data from 39 developed nations in vast investment horizons, the researchers arrived at a conclusion that matches what Rempel has observed over his decades-long career. An all-equity approach vastly outperforms traditional stock-bond splits.

The study highlights an optimal lifetime framework consisting of 33% domestic stocks, 67% international stocks, and absolutely zero percent bonds or cash. For many everyday savers, the idea of abandoning bonds entirely sounds reckless. However, Rempel explains that long-term math paints a completely different picture.

“The optimal allocation avoids fixed income investments and chooses an all-equity strategy,” Rempel notes. “This result may seem surprising given the vaunted diversification potential and safety offered by bonds. However, bonds become riskier and more correlated with domestic stocks as the investment horizon grows.”

Over a short timeframe, bonds do exhibit lower volatility. But over a 30-year retirement window, their real returns are routinely eaten away by inflation. The study found that bonds offer a meager average real return after inflation of just 0.95% annually, compared to 7.03% for international stocks. Additionally, while international stocks maintain their diversification benefits over time, bonds actually become more closely tied to domestic stock performance during prolonged periods, failing to provide the safety net investors expect.

Sticking to the traditional, conservative path comes with a steep price tag during your working years. According to the study’s data, an investor utilizing a standard balanced portfolio must save nearly twice as much money (19.3% of their income) to achieve the exact same retirement lifestyle as someone saving just 10% of their income in a 100% equity portfolio. Those relying on popular age-based target-date funds still have to save 61% more.

The benefits of the all-equity approach carry over into retirement itself, directly challenging the notion that retirees must pivot to cash and bonds to avoid running out of money. Under a standard 4% retirement spending rule, a couple using a traditional balanced stock-bond strategy faces a 16.9% chance of exhausting their funds. For target-date funds, that risk climbs to 19.7%. In stark contrast, the all-equity framework drops the probability of financial ruin to a mere 7%.

“There is no economically meaningful gain from holding bonds at any point during their lifetimes,” Rempel states, echoing the study’s findings. “The long-horizon return data suggest that diversifying with international stocks, rather than with bonds, improves investor results for long-term appreciation and capital preservation.”

Of course, the biggest hurdle to a 100% equity strategy isn’t the math, but human psychology. Watching a portfolio fluctuate wildly during a market downturn can test the resolve of even the most disciplined investor. Rempel acknowledges that while market drawdowns cause intense psychological strain, retreating to fixed income out of fear is often a math error disguised as safety.

“Our results, as a whole, do not suggest that the all-equity strategy is safe; they merely suggest that it is safer than the common alternative,” Rempel writes in reference to the study. “Given the relative safety and strong growth potential of equities, retirement savers and retirees would likely benefit from adopting a ‘set it and forget it’ strategy that fully invests in domestic and international stock.”

Ultimately, Rempel’s message to investors is clear: true long-term safety doesn’t come from avoiding market ups and downs. It comes from owning high-growth assets that outpace inflation and protect your purchasing power over a lifetime. By replacing bonds with broad international equities, savers can build more wealth, enjoy a higher retirement income, and minimize the risk of outliving their money.

The post Get Financial Freedom Tips Article – Rethinking Retirement: Why Ed Rempel Backs a 100% Equity Strategy for Life appeared first on Ed Rempel.

Louise (not her real name) has far more money than she is ever likely to spend. She has always invested in equities and is comfortable with them. However, now at age 84, she is wondering whether she should invest more conservatively.

This is a case study about the “Multi-Millionaire’s Dilemma.”

Louise says:

“Many of my women friends have the same concern: Is my asset allocation suitable for me? Specifically, what proportion should I invest in GICs versus broad-market index ETFs? Tax efficiency is also a concern.”

In my latest blog post, video and podcast episode you will learn:

• What is the “Multi-Millionaire’s Dilemma”?
• How is Louise’s situation similar to the “Multi-Millionaire’s Dilemma”?
• What reasons might she have for investing more conservatively with GICs?
• What reasons might she have for staying invested in equities?
• How can understanding the odds of losing money and the potential for growth help her decide?
• What are the odds that her investments will be worth less at the end of her life?
• How much could they be down in a worst-case scenario?
• How much less is she likely to earn by switching from equities to GICs?
• How can she simplify her investments if she stays in equities?

CLICK THE LINK BELOW TO READ THE ARTICLE BY MARY TERESA BITTI:

Does this 84-year-old suffer from the ‘Multimillionaire’s Dilemma?’

Louise’s Story

At 84, Louise is looking to simplify her investment portfolio, minimize tax, and make sure she maintains her current lifestyle. This includes continuing to travel five to six times a year, albeit more locally than her past global adventures, and age in place in her home in Vancouver, bringing in any additional help she might need.

To this point, Louise has built and managed a portfolio largely composed of equities. About a year ago, she sold most of her stocks and now has $1 million in nine guaranteed investment certificates (GICs) in three different financial institutions currently paying out about 3 per cent every other month. She has $70,000 in dividend paying stocks, $80,000 in two equity exchange traded funds (ETFs), $220,000 invested in gold wafers, $110,000 in cash, $130,000 in a Tax-Free Savings Account and $110,000 in a Registered Retirement Income Fund, both also invested in GICs. 

Last year her annual income was $66,000 ($27,000 from an employer pension, Canada Pension Plan and Old Age Security, $3,000 in dividends and $36,000 in interest income from her GICs). Her largest expenses are monetary gifts to her family, 18 charities which include support of two Himalayan children, and personal costs. In total, she spends $10,000 a month to maintain her lifestyle. To meet shortfalls, she cashes in GICs.

“I am single with an independent Living Apart Together (LAT) partner and no children. I am not worried about leaving an estate and prefer to support people and causes while I’m alive,” said Louise, who is debt-free and in addition to her investments, also owns her condo valued at $900,000.

“I made a healthy portion of my net worth in the stock market, but as an octogenarian, I have to consider that I may not have enough time to recover from fallen growth positions in a downturn,” she said. 

“I am no longer concerned with FOMO. I just want reasonable placement of my investable dollars and simplification of my financial picture.”

To that end, she would like advice on what to do with her holdings in gold and whether or not she should stay almost exclusively invested in GICs or direct a portion to an all-in-one ETF or other investment. 

“Many of my women friends have the same concern: Is my asset allocation suitable for me? Specifically, in what proportion should I invest in GICs and broad index ETFs? Tax efficiency is also a concern.”

Ed’s Insights

Louise has $1,720,000 in investments and is 84. Moving to mainly GICs means her investment average return is down to about 3.2%/year – barely above inflation. Her money is parked. Average return only $55,000/year. It was almost $140,000/year average with investments growing in equities.

She only spends $66,000/year, so she won’t run out of money. She is in lower tax brackets, so tax-efficiency is only a moderate issue. Her income is comfortably below being affected by the OAS clawback and far above the level to be affected by the GIS clawback.

At age 84, if she is of average health, she has a 50% chance of reaching age 93 and a 20% chance of age 98. She should plan for at least 10-15 more years.

Bottom line: Louise has far more money than she needs and her life expectancy is likely 15 years or less. What investment allocation makes sense for her?

We call this the “Multi-Millionaires’ Dilemma”. We have seen it many times. Far more money than you will spend during your life. Continue investing for growth or switch to conservative?

Here are 2 possible ways to think about it:

Go conservative:

• She could decide to just avoid losing any money. Invest in GICs to avoid being down at the end of her life.
• Her portfolio is her security. I meet wealthy people that say, “I’m already rich. Why make more? I just have to avoid making a mistake and losing it.”

Continue investing for growth:

• She was comfortable with her equity investments, so she could choose to just keep the investments she had. The odds of her equity investments growing during her life are very high. Over the long run, equities have crushed everything else. If you look at the last hundred years, stocks have returned about 10%/year on average. She could easily live another 10-15 years or more. That is long enough for compounding to still matter a lot.
• Her money is her freedom. More money means more options in life. She can enjoy it or give more to her family or causes important to her.
• The “multi-millionaire’s dilemma” can be insightful. The classic version is this: She has far more money than she will ever need. If she was walking down the street and found a $100 bill, would she bother to pick it up? She does not need the money and it takes a little effort to pick it up. On the other hand, it’s easy to pick up and only takes a second. What would she do? Similarly (but not as simple), if she is comfortable with equities and highly likely to have them grow, why not?

General questions are often clearer when you see the numbers.

• What are the odds that her investments will be down at the end of her life?
• How much are they likely to be down in the worst-case scenario?
• How much less is she likely to make by switching to GICs from equities?

The “Max Loss” is per $1 million of her portfolio.

To understand this, if she lives 10 more years, the worst 10-year return in the modern stock market was a loss of 1.4%/year. If this worst-case happens, she would be down 14%, or $245,000. Her $1,720,000 portfolio would be down to $1,475,000. That is not a lot with the size of her portfolio.

In 10-year periods, the markets have been down only 3% of the time, so it is quite unlikely she would be down and not recover during the next 10 years. By being in GICs vs. equities for the next 10 years, the average return she could expect to lose would be about 5%/year (3% return of GICs vs. equity return conservatively 8%/year), or at least $860,000 in lost growth.

In 20-year periods, there has not been a loss. The worst case is a gain of 6.5%/year and she would gain $1,291,145 on each million she invests. The worst-case scenario is over 20 years is great news!

Looking at the numbers for 10 years or longer, the case for staying in equities is quite strong. She is likely to be $860,000 or more ahead with only a 3% chance of being down a little bit.

There is, of course, a risk that equities could lose more or make more than these figures. Nothing is guaranteed. But looking at expected returns based on history can make the decision much clearer.

For Louise, any option could be fine. It is up to her. Staying in equities when she was comfortable with them and can make far more could make sense. Avoiding any loss could also make sense.

If she stays with equities, she can simplify by buying one broad-based equity ETFs like the MSCI World Index or S&P 500, or working with a portfolio manager to look after it for her.

Ed

The post National Post article: Does this 84-year-old suffer from the ‘Multimillionaire’s Dilemma?’ appeared first on Ed Rempel.

Every week, someone tells me they want to retire by 40.

My first question is always the same: why?

The FIRE movement promises freedom decades earlier than traditional retirement. 

Online, it’s often presented as a fairly simple formula: save aggressively, invest consistently, and escape the workforce early.

But in Canada today, is FIRE actually realistic — or has it quietly become a strategy mostly for high earners, extreme savers, and people willing to take bigger risks than they admit?

I recently sat down with Canadian Press reporter Kumutha Ramanathan to discuss what I’ve seen from real clients pursuing financial independence and early retirement.

No hype. No fantasy projections. Just the math, the psychology, and the tradeoffs people rarely talk about honestly.

Here’s what we covered:

• The income level where traditional FIRE actually starts becoming mathematically possible in Toronto
• Why one popular version of FIRE may actually be harder than the original approach
• The Canadian realities most FIRE discussions barely mention
• What early retirees often discover emotionally after leaving work decades early
• The five biggest mistakes FIRE communities consistently make
• Why disciplined savers can still end up with portfolios that are too small
• The difference between needing income and needing cash flow
• The first thing I ask anyone who says they want to retire at 40

In my latest video, podcast episode and blog post you’ll learn my full answers from the interview, including the parts most FIRE discussions tend to leave out.

CLICK THE LINK BELOW TO READ THE ARTICLE BY KUMUTHA RAMANATHAN:

Financial Independence, Retire Early: The Math Behind the Viral Money Movement

The dream is seductive: retire in your thirties, ditch the commute, and spend your days on your own terms.

The FIRE movement — “financial independence, retire early” — has attracted millions of followers across Reddit threads and YouTube channels, promising that aggressive saving and disciplined investing can buy your freedom decades earlier than expected.

Yet for Canadian millennials staring down $2,000-plus rents and stagnant wages, the question is increasingly blunt: is FIRE genuinely achievable, or is it a strategy reserved for the already comfortable?

Here are my complete answers from an interview with Kumutha Ramanathan from Canadian Press. If you are considering FIRE, these extra details are quite insightful.

1. The traditional FIRE model assumes a savings rate of 50–70%. In a city like Toronto, or other expensive Canadian cities, where a one-bedroom apartment now costs upwards of $2,400 a month, is that number mathematically achievable for the average millennial — or is FIRE quietly a strategy reserved for high earners?

The traditional FIRE model in Toronto is for higher income people, frugal couples or people either living extremely frugally or doing extremely aggressive strategies. In all cases, FIRE is not easy and you need a plan to get there.

For example, an average Millennial in Toronto earns about $75,000, which means they bring home $60,000, or $5,000/month (assuming they will maximize their RRSP). To retire on a similar income in 20 years, such as starting at age 20 and retiring at 40, they would need to invest about $4,000/month, leaving only about $1,000/month. Rent alone for a one-bedroom is typically about $2,400/month, so that is not possible. It could be possible to live on $1,000 for all other expenses if you can find a way to live rent-free, such as living with parents. Most would consider this extreme. A single person would need to earn about $140,000/year to make it work by saving $4,000/month and retiring 20 years later on $75,000/year.

For a couple with both earning $75,000/year, they should be able to save $4,000/month, so traditional FIRE is achievable. They bring home $10,000/month total, pay $2,400 rent and save $4,000, which still leaves $3,600/month for all other expenses, which is not especially tight. Retiring on $75,000/year total (not each) before tax is a reasonable, but it is a basic retirement lifestyle.

It is possible to achieve FIRE with a quarter to one half the cash flow used for saving by doing extreme leverage. For example, live with your parents for 2-3 years and save $125,000. Then take a 3:1 loan of $375,000 and pay interest only, reinvesting the tax refunds. That can achieve FIRE in a total of 20 years with far less cash flow – say $1,000/month instead of $4,000/month.

2. Beyond traditional FIRE, variations like Coast FIRE and Barista FIRE promise a softer path to financial independence. Are these more realistic for the average Canadian, and do you see them being successfully implemented with your clients in practice?

Coast FIRE and Barista FIRE promise a softer path because you semi-retire by quitting your job, but take a job you consider easy, such as barista or mowing golf course lawns or consulting part-time, to continue to make income for quite a few years. Ideas like Barista FIRE make FIRE quite a bit easier, but we actually don’t see them often. Most don’t want to quit their job until they are confident they will never have to work again. Instead of having to work as a barista for 10-20 years, they can have more freedom by working 2-3 more years with their full-time job with a similar result.

Coast FIRE is actually harder. It assumes you get ahead of your goal and then can keep working and stop saving because your portfolio alone can grow enough. FIRE is hard to achieve. Getting quite a bit ahead so you can coast is even harder.

Some people who achieved FIRE do something they enjoy that might make some money. However, the very important difference is that if you have achieved FIRE, you do not have to work. You have the confidence to know you are financially independent. Barista FIRE means you need a side income for quite a few years.

3. FIRE plans rarely account for Canada-specific realities — reduced CPP payouts from decades of missed contributions, no employer health benefits for potentially 30 years, and TFSA and RRSP limits not designed for early retirees. How significant are those blind spots, and how do you address them in a client’s financial plan?

These are usually not significant factors. If you retire at age 40, CPP is still 20-30 years away. Paying your own medical costs is usually only $500-1,000/year, and buying a private basic medical plan is not much more. RRSP and TFSA limits combined are close to 30% of your income which is not enough, so FIRE means you are also investing non-registered or doing leverage. Borrowing to invest can be something like a super-RRSP because the payments are fully tax-deductible and support a significantly larger investment than contributing the same amount to RRSP. For example, $5,000/year can be a small RRSP contribution or a payment on a $100,000 investment loan. Both are a $5,000 tax-deductible payment, but one supports $100,000 of investments.

4. In your professional experience, do clients who achieve FIRE in their mid-to-late thirties tend to report satisfaction, or do you see patterns of regret around the experiences and relationships they deferred during the accumulation years in the name of saving?

We have only ever seen satisfaction from achieving a difficult goal, financial freedom and a ton of time freedom. The ones we see have a Plan and are confident they have enough. They don’t worry that they may have made a mistake.

When I ask retired people how long it took for them to get used to not going to work, the typical answer is very short – 2-4 weeks – just long enough to realize it’s not just a vacation.

5. There is well-documented research around the psychological toll of early retirement, including the loss of structure, professional identity, and social connection. As a financial expert, how much weight do you give to those non-financial variables when advising a client who is pursuing FIRE?

All of these are real issues whenever you retire. It’s not just your salary you lose. It’s also your routine, your identity and your regular social connections.

We find most people in FIRE have specific reasons they want more time freedom and most are married. We discuss it, but most have it mainly figured out. If they don’t, then we ask if they are really ready or if they should just work a bit longer.

Many FIRE people don’t stop working totally. You can’t watch Netflix all day. Many keep doing some parts of their job that they enjoy, do some consulting, have a side hustle, or they volunteer or have hobbies. These can be a huge help with these emotional issues.

6. You work with clients across different life stages. Do early retirees come back to you struggling, financially, emotionally, or both? Is returning to some form of work more common than the FIRE community likes to admit?

Many plan something part time for fun before they quit their job. We find it quite rare that they are struggling a year or more later. Most figure it out beforehand or realize it in the first few months. The ones we see have a Plan. It’s not like they quit their job and then realize they don’t have enough.

FIRE people tend to love the time freedom and the money freedom. It is great for your self-confidence. The majority feel they have moved into a new very exciting part of their life.

7. If a 28-year-old sat across from you tomorrow and said, “I want to retire by 40” — what would your honest, unfiltered advice be? And what is the one thing the FIRE subreddits and YouTube channels consistently get wrong?

The first thing is we ask why. They need a why for their personal motivation, because FIRE is not easy. Then they need a Plan. What is their specific goal, how big a portfolio do they need by when, and what is the specific plan to get there? The Plan tells them how much they need to invest and the rate or return they need to get there. It usually means they need to be all in equities to be confident of a high enough long-term return. It also tells them which strategies they need, which may involve borrowing to invest, since FIRE usually requires taking bold steps.

The 5 biggest things the FIRE discussions miss are:

1.      FIRE usually requires keeping your foot on the gas all the time.

2.      You need confidence in equities long-term.

3.      You need to focus on the size of their portfolio and tax efficiency (not just the rate of return).

4.      You will need cash flow not income.

5.      FIRE is not easy to achieve so you need a Plan and to really go for it!

For example, they want to get the full return of equities, so they buy index ETFs, but they buy several ETFs including some with lower expected returns, which means they don’t end up with the full return of equities. Or they are not confident in the long-term return of equities, so they add fixed income or gold or something defensive, which drags down their returns.

You get a larger portfolio either by long-term compounding or borrowing to invest. People trying for FIRE often have good rates or return, but small portfolios. Borrowing to invest, such as a 3:1 No Margin Call loan get you ahead much faster than focusing just on return, since you start with a dramatically larger portfolio. These loans usually only allow broad-based mutual funds or ETFs, which might mean you can get ahead faster by letting go of some niche high-risk investment and get the loan instead.

Many FIRE people feel they need income, such as dividends or interest, to finance their lifestyle, but they need cash flow. Income is taxable cash flow. They can get cash flow with “self-made dividends”, which mean you just sell a bit of your growth investments each month. This process allows you to hold your growth investments right through retirement and is very tax efficient.

Ed

The post Financial Independence, Retire Early: The Math Behind the Viral Money Movement appeared first on Ed Rempel.

Many Canadians with $1 million or more saved for retirement still feel financially insecure.

I see this all the time.

People work hard, save consistently, invest for decades, and build substantial portfolios, yet still aren’t sure they can retire comfortably.

In many cases, the issue is not a lack of money. It’s a lack of clarity.

Most people have never defined what they actually want their retirement lifestyle to look like or created a proper financial plan that shows how their investments, taxes, income, and spending all work together over time.

A financial plan is really a life plan. Once you connect the numbers to the lifestyle you want, retirement often becomes much clearer and less stressful.

In my latest article for Money PIP, I’ll explain:

• Why many Canadians still feel uncertain about retirement, even with significant savings
• The real question you should ask instead of “Do I have enough to retire?”
• Why retirement lifestyle matters more than generic savings targets
• How inflation, taxes, CPP, OAS, and withdrawal strategies affect your long-term income
• Why many people are financially independent earlier than they realize
• How a comprehensive financial plan can help give you confidence in your future

CLICK THE LINK BELOW TO READ THE ARTICLE BY VARSHA:

Why Does Retirement Feel Uncertain – Even with a Large Portfolio?

Canadians have followed traditional retirement advice for years. Work hard. Save consistently. Invest wisely. Pay off debt. Many households have done exactly that. Yet a surprising number still feel uncertain about retiring comfortably. How can you have confidence you will have financial freedom?

Financial planner and blogger Ed Rempel says this disconnect shows up in conversations with clients who appear financially prepared on paper but feel uneasy about the future.

“A lot of people actually have more than enough to retire,” says Rempel. “But they still feel uncertain because they’ve never figured out what their retirement lifestyle looks like or created a proper financial plan that shows the numbers will work.”

In Canada, retirement anxiety is common. A BMO survey from February 2026 found Canadians now believe they need about $1.7 million to retire comfortably, up from $1.54 million in 2025. At the same time, about 36% of Canadians say they are unlikely to reach their retirement savings goal.

Concerns about inflation also change how Canadians view retirement. An earlier survey by the same bank found that nearly 63% of Canadians say rising living costs have increased their worries that retirement savings will not last long enough.

Despite these fears, Rempel says households that seek financial advice are actually in better shape than they realize. The problem is not always a lack of savings. Usually, the issue is uncertainty about what those savings are meant to support.

“People ask, ‘Do I have enough money to retire?’” says Rempel. “The real question should be ‘Enough for what?’”

A financial plan is really a life plan – what is the life you want and will be able to afford? It should let you look at different lifestyles and investing strategies until you find one that is both a reasonable retirement lifestyle and reasonable for you to achieve.

For example, you may find that you are investing too conservatively or in a way that costs too much in tax for your investments to provide for you after inflation. A financial plan should allow you to ask, “What would it take to afford extras we want, such as more travel.”

Retirement numbers can feel abstract without a defined lifestyle attached to them. Some retirees plan to travel frequently, maintain two homes, or spend heavily on hobbies and family experiences. Others want a quieter retirement with lower costs. Without knowing what retirement will look like day to day, many people struggle to determine whether their savings will truly support their future.

Research suggests that this uncertainty is common. Surveys from the Canada Pension Plan Investment Board show that 59% of Canadians worry about outliving their savings. Simultaneously, people who work with a structured financial plan tend to report higher confidence about their long-term savings.

According to Rempel, a comprehensive financial plan is the only way to be confident that you will have enough for the lifestyle you want – and exactly what to do to achieve it.

It changes how people think about retirement by integrating investments, income, taxes, and desired spending into a single long-term plan.

“A strong investment portfolio is important, but confidence usually comes from seeing how everything works together over time,” he says.

Retirement discussions focus heavily on large savings targets. Headlines frequently suggest Canadians need more than $1 million to retire. Those figures can create anxiety, especially for people who feel they are falling short.

Yet these broad estimates rarely reflect the personal part of retirement spending. Someone who plans to travel extensively or support adult children financially may need far more than someone with modest lifestyle goals. Rempel says personalized planning reveals that a person’s actual retirement needs differ significantly from national averages.

“When clients see projections showing their income lasting for life, even after accounting for inflation, the uncertainty often disappears. They finally see how their savings translate into real income,” he explains.

Canada’s retirement system also adds more challenges. Government benefits such as the Canada Pension Plan and Old Age Security form a foundation for many retirees, but the timing of those benefits, tax considerations, and withdrawal strategies from registered accounts can impact long-term income and tax.

A good plan lets retirees model these factors over decades, rather than relying on rough estimates. That process can reveal how different choices affect financial security later in life. It can give you confidence in your future.

Rempel says many clients initially approach retirement planning with significant hesitation. Some believe they must continue working for several more years. Others fear that unexpected expenses or a market downturn could derail their plans.

Yet the results of a thorough analysis often surprise them.

“Once we map out their lifestyle and run the projections, a lot of people find they are already financially independent,” says Rempel. “The money was there all along. They just needed a plan that showed them exactly what to do and how it would last.”

The post Money PIP article: Why Does Retirement Feel Uncertain – Even with a Large Portfolio? appeared first on Ed Rempel.

Gas prices are up from about $1.30/litre to $1.75/litre across Canada this year. 

There is conflict in Iran. Markets are reacting to geopolitical uncertainty once again.

So what should investors actually do during times like this?

Should you move more conservative?

Or is reacting emotionally what hurts investors most?

In my latest video, podcast episode and blog post you’ll learn:

• If you go conservative, when do you buy back in?
• Does politics affect the markets much?
• When will a year not be an “uncertain time”?
• Does market timing work? What do studies say?
• What is the “Go Kart Strategy” of investing?
• The one way to time the market effectively.
• The good news and bad news of planning for retirement.
• What is the one thing most investors get wrong?
• Why you need to keep your foot on the gas to get the long-term market returns.
• What is Ed’s personal strategy?

If you go conservative, when do you buy back in?

• Going more conservative now based on news events is trying to time the market.
• If you sell because of some event, then you can only be ahead if you buy in at a lower point. What is your plan to buy in at a lower point – when things look worse?
•  Investors tend to sell when the trend is bad and buy back in when the trend is good, but that is usually when the market is at least 10-20% higher.
• You have to guess right twice – when you sell and when you buy back in.

Does politics affect the markets much?

• Numerous studies and long-term historical analyses from firms like Capital Group, T. Rowe Price, CFRA Research, and academic papers consistently show that politics has only minor and temporary effects on the stock market. Short-term volatility rises around elections due to uncertainty, but long-term returns are driven far more by economic fundamentals (corporate earnings, interest rates, growth) than by politics.

• Markets have delivered strong positive returns across every type of political environment.
• News is also increasingly unreliable. News media have found they get more viewers by telling one-sided stories and exaggerating to create fear than they do by having unbiased news.
• A Gallup poll released on October 2, 2025, found that only 28% of Americans say they have a “great deal” or “fair amount” of trust in the mass media (newspapers, television, and radio) “to report the news fully, accurately, and fairly.”
• Investing based on politics or news is not an effective way to invest.

When will a year not be an “uncertain time”?

• One of my pet peeves is the expression in many news stories – “We are in uncertain times.”
• When are times NOT uncertain?? Every year will always be an uncertain time!
• In 2026, we have gas prices and a war. Here are the issues from every past year this century:

Does market timing work? What do studies say?

• Studies across academia, investment firms (Vanguard, Morningstar, JPMorgan), and behavioral research (DALBAR) consistently show that market timing—trying to predict and act on short-term market moves—rarely works and typically reduces long-term returns compared to a simple buy-and-hold strategy.
• The core reasons are behavioral biases (buying high/selling low), the difficulty of being consistently right twice (on exit and re-entry), and transaction costs/taxes.
• You need unrealistically high accuracy: Nobel laureate William Sharpe’s landmark 1975 study (“Likely Gains from Market Timing”) found that a market timer must be correct ~74% of the time (right direction and on bull vs. bear periods) just to match the market after costs—far higher than random chance (50%).
• Individual investors “guess right” on market direction only about half the time (per DALBAR’s Guess Right Ratio), but the dollar impact of bad guesses far outweighs good ones.
• DALBAR’s Quantitative Analysis of Investor Behavior (QAIB) reports (tracking actual investor cash flows since 1994): Average equity investors lag the S&P 500 by 1–5%+ per year over 10–30-year periods due to poor timing. Example: With rolling 20-year periods, investors earned ~5.5% annualized vs. S&P 500 ~9.9%.
• For example, March, 2009 was the bottom of the Great Financial Crisis after a decline of about 45%. That month also broke a record with $20-30 billion in net redemptions of stocks. Investors sold massively at the bottom – the worst possible time!
• Morningstar “Mind the Gap” studies (latest 2025): Over 10 years, the average dollar invested in U.S. funds or ETFs earned ~1.2%/year less than the funds themselves (e.g., 7% investor return vs. 8.2% total return). This “behavior gap” equals ~15% of the potential return lost to timing.
• Bottom line: Buy-and-hold investors usually outperform those that try to time the market – by a lot!
• The saying is true: “Time in the market beats timing the market.”

What is the “Go Kart Strategy” of investing?

• I recently went Go Karting on a family cruise. Lots of fun with nephews, nieces & their kids.
• How do you get the best lap time with Go Karts? Keep your foot on the gas at full speed the entire time. Works everywhere except the sharpest curves.
• What should you do before the sharp curves? I used to think I should slow down by coasting before the curve and then cut the corner as close as possible. However, it took a couple seconds to get back to full speed after the curve.
• Then I found a faster way. Keep my foot fully on the gas the entire time, but pump the brake just briefly before the curve so I slow down but the engine stays revved to the max. Take the curve wider to get around the curve without skidding. Then hit the speed boost as soon as I start coming out of the curve.
• The secret is to focus on maximizing speed coming out of the curve, not on slowing down before the curve. Keeping the engine revved high and hitting the speed burst can mean one second after the curve I’m going faster than before the curve.
• Investing is similar. Investors tend to focus on how much to slow down before or during an event, instead of focusing on how to maximize the growth coming out of it.
• I call investing this way the “Go Kart Strategy”. Keep your foot fully on the gas the entire time and focus on maximizing the growth coming out of any market downturn.

The one way to time the market effectively.

• Trying to guess a high point in market is very difficult because most years are up. Large gain years are mostly followed by another gain. Gains are very common. About 75% of years are up.
• The one reliable market timing method is that large declines in the broad markets have always recovered. Large losses are rare. There have been only 4 years in the last 90 that the S&P500 was down more than 20%. Large losses have been only 5% of the time.
• Our “Market Timing Rule of Thumb”: Whenever the market is down 20+%, look for creative ways to find more money to invest.
• This is the one method I have found to work reliably. Getting this one right alone can mean you outperform the markets.

The good news and bad news of planning for retirement

• From writing thousands of Financial Plans, we see the good news and the bad news.
• Bad news: It takes more money to retire comfortably than you think.
• Good news: You can get there more easily than you think.
• For example, if you want to retire on $100,000/year, let’s say the government pensions will give you $20,000, so you need $80,000/year from your investments.
• To estimate how much you need, the “4% Rule” is a good estimate. I found in my detailed study about it that the amount you can reliably withdraw from your investments and increase by inflation for 30+ years is:

o   Equity investments                  4%/year

o   Balanced investments              3.5%/year

o   Fixed income                            2.5%/year

• Withdrawing 4%/year to give you $80,000/year plus inflation means you need $2 million in investments to retire, if you are high in equities.
• With more conservative investments, you need more than $2 million.
• $2 million is probably more than you thought. That is not a lavish retirement, but you need to be a multi-millionaire to afford it!
• The good news is that you can get to $2 million by investing only $1,500/month for 30 years. That is $18,000/year, which is about your RRSP room if you earn $100,000/year.
• In other words, in most cases, just maximizing your RRSP and possibly TFSA for 30 years is often enough to retire with the lifestyle you want.
• That is probably easier than you thought.
• But you need to average the long-term return of the markets.

What is the one thing most investors get wrong?

• To have the future life you want, you need to get the rate of return in your Financial Plan as a long-term average. If that is based on an equity return, you need to be fully in equities on average through your life – not just most of the time.
• You need to keep your foot on the gas to get the long-term returns of the markets.
• Your Financial Plan is based on the long-term average return. If you are not fully invested for long-term growth all or nearly all the time, you are likely to fall short.
• The one thing most investors get wrong is that they want to get the full return of equities, so they buy index ETFs, but they buy several ETFs including some with lower expected returns, which means they don’t end up with the full return of equities. Or they are not confident in the long-term return of equities, so they add fixed income or gold or something defensive, which drags down their returns.
• For example, if you invest in equities for 30 years but switch to fixed income or gold every 5^th year because of some event, you are highly likely to get lower returns. Or you hold 20% fixed income or gold or other defensive investment all the time. Your long-term average return with either of these methods is expected to be about 7%/year, instead of 8%/year for the market conservatively.
• Your retirement portfolio and retirement income end up 17% lower for life because you were not fully in equities for growth the entire time.

What is Ed’s personal strategy?

• Personally, I use my Go Kart Strategy.
• I have been 100% invested for growth for all of the last 35 years. I have owned no fixed income or defensive investments at any time – and I am quite sure I never will.
• I am standing on the gas pedal all the time.
• Plus, whenever the market is down 20% or more, I look for a creative way to take advantage of it. Do my annual investment sooner, or find extra cash to invest, or increase my leverage.
• If I can get more money into the market after a decline, then my personal return will be higher than the return of the investments themselves. Easy way to outperform!

Ed

The post Don’t Let Today’s Headlines Wreck Your Retirement appeared first on Ed Rempel.

You’ve worked hard, built up a few million dollars, and now you’re seventy-five, retired, and staring at your portfolio wondering — do I really need to keep riding the stock market rollercoaster? 

Or is it finally time to play it safe?

That’s the multi-millionaire’s dilemma, and it’s a lot more common than you might think.

We have seen it many times. Far more money than you will spend during your life. 

Continue investing for growth or switch to conservative?

In my latest video, podcast episode and blog post you’ll learn:

• What is the “Multi-Millionaire’s Dilemma”?
• Why consider going conservative?
• Why consider continuing to invest for growth?
• What is the maximum that equities are likely to be down at the end of your life?
• What are the odds equities are down over periods of 5, 10, 15 or 20 years?
• How much growth are you likely giving up by switching from equities to GICs?
• Can the numbers make this clearer?
• What is your money for?
• Why Ed will be 100% equities his entire life.

Multi-Millionaire’s Dilemma

“Multi-Millionaire’s Dilemma”: You have far more money than you will ever need. You are walking down the street and find a $100 bill. Would you bother to pick it up?

You don’t need the money and it takes a little effort to pick it up. On the other hand, it’s easy to pick up and only takes a second. What would you do?

Similarly (but not as simple), if you are comfortable with equities and they are highly likely to grow, why not stay invested for growth?

This post is about people that have been investing in equities, are comfortable with it, and now have a portfolio far larger than they will need for the life they want – even if they live unexpectedly long. However, they are getting older and their life expectancy is 5 or 10 or 15 years.

What investment allocation makes sense?

Why consider going conservative?

You turn on the news, watch your account drop twenty percent in a few months, and suddenly the math feels different. Why have the emotional stress? At seventy-five, do you have time to wait for the market to come back?

Your portfolio is your security. I meet wealthy people that say, “I’m already rich. Why make more? I just have to avoid a mistake and losing it.”

That’s where conservative investing starts to look appealing. Just switch everything to GICs or bonds so you so you don’t lose money. You can avoid being down at the end of your life.

Why consider continuing to invest for growth?

The case for staying in stocks is pretty simple on paper. Over the long run, equities have crushed everything else. If you look at the last hundred years, stocks have returned about ten percent a year on average. Even if you’re seventy-five, you could easily live another fifteen or twenty years. Twenty years is long enough for compounding to still matter a lot.

Plus, if you have five million dollars, even a bad decade in the market isn’t going to wipe you out. You’re not living paycheck to paycheck — you’re living off a portfolio most people would kill for. Why give up that extra growth just because you’re older?

Your money is your freedom. More money is more options in life. You can enjoy it or give more to my family or give more to causes important to you.

Bonds mean you pay a lot more tax and they can lose money by getting killed by inflation. Keep investing tax-efficiently to make at least more than inflation – and hopefully a lot more.

Equities can support you living comfortably. You can get a reliable, tax-efficient cash flow from your equity investments with self-made dividends by just selling a bit every month. It’s a monthly deposit of the amount you choose to your bank account – just like a salary. Let your money keep growing to feel safer about your lifestyle.

You have been comfortable with equity investments for many years, so just keep the investments you have. The odds of your equity investments growing during your life are quite high and it can be a lot more money. The math of compounding is amazing.

Can the numbers make this clearer?

Those are the 2 main arguments. Many people make this decision based on their gut.

However, questions like this are clearer when you see the numbers.

• What is the worst-case scenario? What is the maximum that equities are likely to be down at the end of your life?
• What are the odds that equities are down from today at the end of your life?
• How much growth are you likely giving up by switching from equities to GICs or bonds?

Here are the numbers based on calendar year returns in the modern stock market (since 1935). They show:

• How much of a decline has the worst-case scenario been?
• What is that in dollars for every $1 million you have?
• What are the odds that equities are down at the end of your life?
• How much growth are you giving up by selling your equites to buy bonds or GICs? Equities should conservatively make 8%/year, and GICs or bonds about 3%/year. The table shows simple math excluding the compounding, assuming you spend or give away the money.

Here is a short version:

To understand this, let’s say you believe you have 10 years left to live. The worst 10-year return in the modern stock market was 1.4%/year. If this worst-case happens, you would be down 14%, or $143,000. Your $1 million portfolio would be down to $857,000. The worst-case is not really down a lot with the size of your portfolio.

In 10-year periods, the markets have been down only 3% of the time in the modern stock market, so it is quite unlikely you would be down and not recovered during the next 10 years. That is not a 3% chance of the worst-case scenario. It is a 3% chance of being down at all.

By being in GICs vs. equities for the next 10 years, the average return you could expect to lose would be about 5%/year (3% return of GICs or bonds vs. equity return conservatively 8%/year). Losing 5%/year is $50,000/year, or $500,000 in lost growth over 10 years. This does not include compounding. It assumes you spend the $50,000 or give it to your kids or charity every year. An extra $500,000 is a good number and gives you more freedom.

Looking at the numbers for 10 years or longer, the case for staying in equities is quite strong. You are likely to be $500,000 or more ahead with only a 3% chance of being down a little bit.

What about 5 years? If you are quite sure you have less than 5 years left to live, then a worst-case scenario could be being down 37% or $370,000 at the end of your life. The risk of being down at all based on history is about 12% – still low, but not irrelevant. The most likely scenario is that you would be missing out on $250,000 or more of growth.

The worst-case loss of $370,000 is larger, but it is very unlikely. The $250,000 growth is the average growth you are likely to lose. The markets have tripled in 5-year periods, so the maximum growth could be much higher, but it’s best to look at most likely outcomes.

Looking at the numbers for 5 years, the case for staying in equities is less strong, but still there. You are likely to be $250,000 or more ahead with only a 12% chance of being down a little bit plus a very low chance of being down quite a bit.

There is, of course, a risk that equities could lose more or make more than these figures. Nothing is guaranteed. But looking at expected returns based on history can make the decision much clearer.

The truth is that any option could be fine. It is up to you. Avoiding any loss could make sense. Staying in equities when you are comfortable with them and can make far more could also make sense.

It is always worthwhile to look at the numbers. Understand the risks, how likely they are, and how much growth you would lose. The numbers can make it a lot clearer for you.

What is your money for?

When we talk with people that have more money than they will ever spend, they are usually equity investors and have been for many years and are comfortable with equities. They usually have a bigger purpose for their life than just enjoying it.

It is wise to plan to have enough money to maintain your desired lifestyle, even if you live much longer than expected – and even if you have major unexpected expenses later in life. Have a comfortable margin of safety so you don’t have to worry about money.

What if you have much more than that? If you will never spend your money, then it goes to your estate or whoever you give it to. The money you won’t spend won’t be wasted. It’s smart to still be smart with that money.

We talked with people that invest conservatively to feel safe with their money. They expect to live 5 or 10 more years. All the money they won’t spend will go to their kids. Meanwhile, all their kids are investing in equities. When they pass away, their conservative investments will go to their kids who will mostly invest it in equities.

In other words, your extra money is probably really your children’s money and should be invested smartly to help them in the future. That probably means investing with a longer-term time horizon for long-term growth.

Why Ed will be 100% equities his entire life.

I will always invest 100% in equities for a few reasons:

1. I’m a huge believer in humanity, continuous growth and free enterprise, and I want to participate in it. The stock market is where we see human ingenuity and ambition, and new technologies that improve our lives. And the stock market has provided high, reliable growth over longer periods of time through history. It is the most reliable, high-growth asset class – which is why it is most effective for retirement planning.

For me, even if I knew for a fact I have only one year left, 73% of years are up, so staying invested in equities is still the best choice.

2. I fight aging every step of the way. I have so much to live for. I’m in the best longevity programs I can find and in better shape than 15 years ago. I believe that medical science will figure out how we can start living decades longer in 10 or 20 years.

I would not accept it if doctors told me I have an incurable disease with only a short life left. I would be searching for any options, including experimental treatments all over the world. I would fight it until the end – which means I could easily live longer than expected.

3. How many years you have left is uncertain. What happens if you live much longer than you think? You can believe you have only 5 years left and look at the numbers on the table to see what makes sense for you. But what makes you think you have only 5 years left? That is usually doctors telling you what happens on average – if you have an average lifestyle and don’t do anything unusual to help yourself. The average years left doctors tell you means half of people live longer. There are constantly new medical discoveries. You can look after your health and improve your odds.

4. My money is not just for me. I have family to leave it to and a charitable foundation that will get much of it. The longer I am in equities, the more money is likely to go to all these causes that are important to me.

I hope these numbers can help you make an informed decision in your life. But as for me, I will always be in equities.

Ed

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“The stock market is random.”

That’s what Random Walk Theory suggests.

But when you look at market history, the evidence tells a very different story.

In periods of extreme market stress, something interesting often happens. Large losses are usually followed immediately by large gains.

A few things investors often overlook:

• The biggest market losses and gains often happen close together.
• Severe declines create rare buying opportunities.
• Investor behaviour such as fear, panic, and herd thinking drives many market moves.
• Some of the strongest bull markets happen when sentiment is the worst.
• Stocks are less risky & more reliable over 20-year periods than random walk suggests.
• Bonds & cash are more risky and less reliable over 20-year periods than random walk suggests.
• A simple way to beat the markets.

Markets may feel unpredictable in the short term, but they often reflect something very consistent: human behaviour.

In this article I explain why market history challenges Random Walk Theory and what long-term investors can learn from it.

CLICK THE LINK BELOW TO READ THE FULL FEATURE HERE:

Most Inside article: Toronto-based Financial Planner Ed Rempel Debunks The Random Walk Theory

In periods of extreme market stress, fear tends to travel faster than facts. During the week of March 16 to 20, 2020, global markets dropped roughly 18 percent in a matter of days as the early reality of Covid set in. Many investors opened their accounts to see losses approaching 30 percent and assumed the worst was still ahead. What followed instead was one of the sharpest rebounds in modern market history, with stocks gaining more than 12 percent the very next week.

That pattern is not an exception, according to Toronto-based financial planner and blogger Ed Rempel.

He argues that large market losses tend to cluster with large gains, a behaviour that runs directly against the popular belief that markets move in an unpredictable random walk.

“The largest losses and the largest gains are usually right after each other, “Rempel says. “That tells us markets react emotionally in the short term, not randomly.”

The random walk theory suggests that stock prices move independently from one period to the next, much like flipping a coin. Yesterday’s outcome does not influence tomorrow’s result, and patterns are seen as illusions rather than useful signals. This idea is closely tied to the efficient market hypothesis, which claims that prices already reflect all available information at any moment.

Market history tells a different story.

If those ideas held up in real life, investors would have little reason to analyze past market behaviour. Timing would never work. Fundamental research would add no value. Crashes and bubbles would represent fair prices, even when driven by panic or euphoria.

Large market declines are rare, but when they happen, they are almost always followed immediately by strong recoveries. Severe downturns stand out as unusual events, and the market response that follows them is anything but random.

Behavioral finance helps explain why. Investors tend to herd, overreact to headlines, and anchor decisions to recent price levels. Loss aversion leads people to sell near market bottoms and hesitate to reenter, even when conditions improve. Those emotional reactions push prices well below long-term value during crashes, setting the stage for sharp rebounds once fear subsides.

Academic research has also challenged the idea that stocks behave like a random walk over long periods. In his book Stocks for the Long Run, Professor Jeremy Siegel examined how volatility changes over time for stocks, bonds, and cash. He found that the longer stocks are held, the less unpredictable they become compared to what random walk theory would suggest. Bonds and cash did not show the same improvement, particularly during extended periods of inflation.

In other words, stocks are significantly less risky and more reliable over 20-year periods and longer than the random walk suggests. Bonds and cash are the opposite, being significantly more risky and less reliable over 20-year periods than random walk suggests.

The reason, Siegel noted, is that extreme stock market losses are usually followed by strong gains, while poor returns in bonds or cash tend to persist. They are usually caused by inflation which tends to remains high for extended periods.

Rempel applies this idea in a practical way. His approach is not about predicting exact turning points or abandoning diversification. Instead, he focuses on staying invested and recognizing when fear has pushed markets into rare territory.

“When the market drops more than 20 percent, history shows it has almost always been a good buying opportunity. You don’t need perfect timing. You need the discipline to act when others are frozen,” says Rempel.

The strategy can be a simple way to beat the markets. Investors stay invested during normal conditions focused on index-like returns or better. When a major decline occurs, additional money is invested while stocks are on sale.

It may take some creativity to find extra money to invest. It might mean accelerating contributions, using savings earlier than planned, or temporarily borrowing with a repayment plan. The specific method matters less than recognizing the opportunity.

Waiting on the sidelines for a crash is not part of the plan. Severe declines are too infrequent for that approach to make sense. On average, losses of more than 20 percent appear about once every 17 years, though they sometimes arrive closer together. Delaying long-term investing in anticipation of the next crash usually costs more than it saves.

Losses of more than 20 percent occur in roughly six percent of calendar years. Gains of more than 20 percent occur far more often, appearing in more than one-third of all years since the 1920s. That imbalance matters. That is why buying after a market decline almost always works, while selling after a market gain rarely works.

Real-world examples support the approach. After the market fell roughly 40 percent during the 2008 financial crisis, many investors exited stocks entirely. In early 2009, stock funds saw tens of billions of dollars in withdrawals. By the end of that same year, the market had risen more than 25 percent.

The Covid crash followed a similar path. Markets fell more than 30 percent in a month, then recovered most of those losses within weeks. Investors who added during the decline were rewarded quickly.

This pattern explains why discussions involving Ed Rempel often focus on his emphasis on investor behaviour rather than short-term forecasts. His work reveals how emotional reactions, not randomness, drive the most dramatic market moves. These discussions tend to return to one core message: understanding market history can lead to better decisions during stressful moments.

“The market is not a coin flip. It reacts to human behaviour, and human behaviour follows patterns,” Rempel concludes.

The random walk theory is influential in textbooks, but market history tells a different story. For long-term investors, recognizing that large losses are usually followed by large gains can turn fear into a strategic advantage. Buying more after a market decline of more than 20% can be an easy way to beat the market.

Ed

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