29 from Canada

[Lazarus]

Good luck to you.

 

[Milton]

The only books I have read are "Rich Dad, Poor Dad", "The Wealthy Barber" and "Stop Working". I do not recall the exact name of the third book. It was about buying blue chip stocks at low prices and wait for the dividends to grow.

Wow, you are really missing out. Try Dicken's "Bleak House", or the Trollope classic "The Way We Live Now". Mark Twain and Stephen Leacock are good, too. Or Henry Fielding, E.M. Forester, Jane Austen, etc. etc.

 

[CDN_47]

You're doing great so far. $230,000 in home equity at your age is fantastic ... just be prepared for a dip in the market. If you're not planning on moving for a while, you should be able to weather the dips.

At your current savings rate, I doubt you'll be able to retire before 50. You make a decent income, but TO is an expensive city ... and your mortgage is going to suck a huge chunk of your income. If your main goal is to retire early, you're going to have to look at reducing expenses, or finding more income. No easy solutions I'm afraid. Like someone had previously stated, life has a tendancy to throw game-changing curves at a person. Sometimes good (spouse that makes a bunch of money), and sometimes bad.

If you're main goal is to retire early, then you're also going to want to use all the tools at your disposal. Compounding interest is a key one. Definitely get a TFSA set up. It's as simple as going to the bank and asking them to set one up for you. They'll try to sell you on their investments, but you can simply move cash in and take your time with any investment type decisions. Or, if you're more of a DIY investor, set up an online discount brokerage account. Once set up, you can separately set up a TFSA account. Once set up, you simply move cash in, and choose your investments. The only thing I'd caution you about is to know the rules regarding TFSA's before transferring any monies into, or out of the account. There are penalties for going over the limit.

I'm not saying you can't retire at 40, but not in your current situation. Having said that, you're doing way better than I was at your age. Well done!

 

[naggz]

Just a quick note on Canadian Health Care.

I don't know Ontario's Health Care at all, but in Alberta, most prescriptions are not covered, as well as dental costs and many other health related expenses.

Canadian health care is significantly less expensive than State side (especially for emergency / life threatening care), but it's not completely free either. You should budget for some basic medical / dental insurance, or set some money aside for these costs.

 

[RISP]

If your expenses after paying down the mortgage really go down to 35K, you would need "only" 875K-1Mio. of invested assets. This does not include your home equity!
That seems doable. Once my mortgage is paid and I downgrade I would have maybe another 200k.

Not meaning to rain on your parade, but another 200k will not get you there. You currently have about 105k (Cash 40k, Stocks 40k, RRSP 25k) of assets that are or could be invested. Money tied up in house or car doesn't help.

 

[zxcvlkj]

So by January 2, 2013, you could transfer up to $25,500 into a TFSA.

i'll look into this in the new year.

Wow, you are really missing out. Try Dicken's "Bleak House", or the Trollope classic "The Way We Live Now". Mark Twain and Stephen Leacock are good, too. Or Henry Fielding, E.M. Forester, Jane Austen, etc. etc.

i'm not much of a reader. summary of the point would be appreciated.

e.g.
rich dad, poor dad = acquire assets
wealthy barber/richest man in babylon = save 10%
stop working = purchase low blue chip stocks with dividend growth

Just a quick note on Canadian Health Care.

I don't know Ontario's Health Care at all, but in Alberta, most prescriptions are not covered, as well as dental costs and many other health related expenses.

Canadian health care is significantly less expensive than State side (especially for emergency / life threatening care), but it's not completely free either. You should budget for some basic medical / dental insurance, or set some money aside for these costs.

same in ontario.

Not meaning to rain on your parade, but another 200k will not get you there. You currently have about 105k (Cash 40k, Stocks 40k, RRSP 25k) of assets that are or could be invested. Money tied up in house or car doesn't help.

based on my math i'm 30% there with two decades to go.

 

[RISP]

based on my math i'm 30% there with two decades to go.

You've cut your retirement age back to 49? That's smart. I was still under the impression that you are planning for a very quick exit from the workforce.

Would you kindly explain how 105k/875k=30% ? Because based on MY math, this is 12%.

 

[My Dream]

Are we to assume you will remain single with no kids for the rest of your life, oh and no girl/boyfriend for ever? Not that there is anything wrong with it!

I think $875k is too low as I didn't retire in the Toronto area with less then 1M and still I wonder if it's enough based on the economy.

 

[PennStateCLJ]

10% savings rate means you'll work for a long time.

Check out this article by Wade Pfau on savings rates, look at the chart in particular.

http://www.fa-mag.com/news/is-there-a-safe-savings-rate-7860.html

 

[martyp]

Really . . . you are way too young to give up on w*rk. My advice is to find something you like to do. If you can't find worthwhile w*rk how are you going to find something worthwhile to do in retirement for the next 50-60 yrs?

I ER'd at 55 but I'm thankful I had 30 yrs of w*rk I loved.

 

[zxcvlkj]

8 year update

Hi,

After lurking for a few weeks, I've decided to join and request some insight. I am almost 30 (single, no kids) looking into retiring as early as possible as I am sick of working.

Financial situation:
House 600k
Car 50k
Cash 40k
Stocks 40k
RRSP (equivalent to 401k) 25k
Income 65k-90k
Expense 50k
Mortgage 370g
Debt 0

Once I have paid off my mortgage I think I can retire. I am wondering what I can do with my cash and I am thinking about purchasing an additional property for rental income to speed up the mortgage payment. I do not want to invest into anymore stocks as I would like to diversity.

Suggestions for a self-managed business (if it exist)?
Thoughts on how I can retire as early as possible?
Retiring at 35-40 an achievable goal?

Hi everyone,

8 years later and I decided to update my progress as I'm living the semi-retired life for over a year (even more now with covid19).

I'm now 37 with my financial situation:
-120k in stocks generating 6k dividends annually
-60k TFSA
-150K RRSP
-3 properties total value at 1.6m generating 55k
-850k mortgage
-20k cash
-55k net income annually
-0 debt outside of mortgage
-75k annual expense


I have increased my networth by taking on more mortgage debt. I am unable to retire full time due to my mortgage (majority of my expenses).

I am still looking at purchasing a small business once COVID19 simmers down. Hopefully I can increase my investment income to cover my expenses and I have been trying to conceive with my partner for 2 years now, we may go with invitro when things goes back to normal. Wish me luck and any advice would be appreciated.

 

[HI Bill]

I have increased my networth by taking on more mortgage debt.

Can you please clarify? The only way I can see that taking on more mortgage debt increases one's net worth is when the value of the equity in the property exceeds the debt. This is very hard to do early on, especially if one puts 10 or 20% down.

Net worth = assets - liabilities

 

[Sunset]

OP - Really great to see an update.

you have done amazingly well at saving, hopefully you are also having fun.

I'm guessing your properties are near Toronto, do they have rent control ?

I personally would not count the house I live in as part of assets, since most folks would not sell their house and live in a tent.

I'd suggest if you have not already done it, to have as little mortgage on your home (since homes in Canada are not tax deductible for taxes) and have all the mortgage money on your rentals.

<edit> I didn't see the beginning of this thread so now I know you are in GTA. Also maybe it's a good time to refinance the mortgages due to low interest rates ?

 

[zxcvlkj]

Can you please clarify? The only way I can see that taking on more mortgage debt increases one's net worth is when the value of the equity in the property exceeds the debt. This is very hard to do early on, especially if one puts 10 or 20% down.

Net worth = assets - liabilities

The equity value in the properties does exceed the mortgage debt I incurred.

8 years ago I had a home equity value of 230k (600k-370k)

My home equity value is now 750k (1.6m-850k)

 

[zxcvlkj]

OP - Really great to see an update.

you have done amazingly well at saving, hopefully you are also having fun.

I'm guessing your properties are near Toronto, do they have rent control ?

I personally would not count the house I live in as part of assets, since most folks would not sell their house and live in a tent.

I'd suggest if you have not already done it, to have as little mortgage on your home (since homes in Canada are not tax deductible for taxes) and have all the mortgage money on your rentals.

<edit> I didn't see the beginning of this thread so now I know you are in GTA. Also maybe it's a good time to refinance the mortgages due to low interest rates ?

They are rent control and I increase them yearly according to the Ontario guidelines.

I count home equity as I am not sure if I want to retire in Toronto.

Mortgage interest can be written off for rental properties. I just renewed my mortgages prior to COVID-19 shutdown.

Thanks for the suggestions

 

[Scrapr]

are your tenants still paying rent? I'm not familiar with the rental situation in Canada. Here in the States renters are having a hard time

 

[zxcvlkj]

are your tenants still paying rent? I'm not familiar with the rental situation in Canada. Here in the States renters are having a hard time

Canadians are getting $2000/month if you make under $1000/month for 4 months. The properties rented out are to couples. I'm not sure of their current financial situation, but I assume they have a minimum income of $4000 per unit. They haven't requested any type of deferrals at the moment.

I'm unfamiliar with the states situation. I know about $1200 cheque and not everyone qualifies. Do they have an extend support system after?