Wealth for Your Life

Disclaimer: I am not a financial advisor. None of this is financial advice. I encourage you to do your own research.

“Folks, I’ve declared a state of emergency in the province of Ontario…” flanked by a team of concerned policymakers, our fearless premier of Ontario solemnly announced through our television that he was taking measures to “stop the spread” of the respiratory virus Covid-19. For two weeks businesses, libraries, childcare centers, bars and restaurants would shutter. Essential businesses like grocery and liquor stores would stay open. Across the room my laptop made a ‘woosh’ sound with the arrival of a company-wide email alerting us that all offices would be closed until further notice.

“This sounds serious,” Victor said. “They closed our office to the public, and the gym. I guess I could work out… here?”

We looked around our cozy one-bedroom apartment. Always a health nut, Victor was known to hit the gym 5 days a week, often using the bench press and squat rack. Would he be able to maintain his muscle mass on planks and pushups alone?

“We can go for some nice walks in the park,” I offered, picking up the remote to switch channels.

“All playgrounds, sports fields, picnic areas and other park amenities will be closed and taped off, fences locked!” the authoritative words scrolled along the bottom of the screen.

“Crap,” I said.

“Maybe we should buy a skipping rope,” Victor suggested. “And pick up some wine and groceries before things get crazy.”

I knew what he was alluding to. While Covid-19 had crept up on us slowly, things had really escalated in the past few weeks. The World Health Organization had declared the Coronavirus a pandemic. Global stock markets were crashing lower every day. And this past weekend my Mom had urged me to go to Loblaws immediately, having just returned herself.

“The chickens are literally flying off the shelves!” she had warned. By the time I got to the grocery store many of the aisles were already stark white, toilet paper now a coveted luxury.

“Okay but we’re going to have to hold our breath,” I said, “and stay six feet away from everyone. Oh, and Lysol our phones when we get home…”

And so began the first phase of what would be a once-in-a-century pandemic. Two weeks became two months. In the long stretch of March to May, the daily grey skies only darkened our fears of the virus.

In the morning I would awake to the sound of Victor’s skipping rope hitting the low ceiling lamp. Over coffee we would review our portfolios, worth far less than the day before. Then it was Teams meeting after Teams meeting so my corporate overlords could assure me they were “here” for me but that I was still expected to “deliver,” more than ever. Then move into the bedroom so Victor could take his meeting at the dining room table. Food became the only thing anyone could control at the time and so, in our tiny kitchen I would whip up comfort dishes like chicken cacciatore, garlic shrimp, pasta and stew. At 5 p.m. we would crack open a juicy cabernet and read together on the couch, dust motes dancing in the evening spring sun.

After 13 years together and three years of marriage, this was the first time Victor and I were actually living together, day after day. No flying home from Winnipeg after a week together, no driving back to Toronto after a weekend in Hamilton. With both our offices closed and government orders to stay in our “social bubble”, we were prohibited from seeing our families in Toronto. And so we made the best of it, together. That little peach-colored apartment became my universe, Victor my best friend, my protector, the one who felt my forehead in the middle of the night when I was certain that this time, I really had been hit with the virus. The one who assured me sleepily, that everything would be okay.

As the months rolled by, with every paycheque we both continued to invest what we could into the Canadian Couch Potato portfolio. I don’t know where we got the confidence to keep from selling our entire portfolio and hiding our cash under our mattress. Maybe it was the fact that while the market had dropped significantly, it began to show early signs of recovery. Maybe it was the fact that we both had jobs in an economy where so many people had lost theirs. Maybe it was because, other than food and booze, there was literally nothing else that we could spend our disposable income on so why not throw it into the stock market? Or maybe it was because we had already lost so much that there was no turning back now – we were in this whether we liked it or not. And so we stayed invested, and continued to invest, as the pandemic progressed, and the world continued to spin. Masks became mandatory. Donald Trump mocked Dr. Fauci and Trudeau dyed his hair. George Floyd was killed by a white police officer, spurring global outrage and a series of Black Lives Matter protests. The world continued to spin out of control. And then, one day in May, my little one-bedroom universe came to a halt.

“I got my posting message,” Victor said as he walked through the door after a socially-distanced afternoon at the office.

My heart sank. For the past few months Victor had been a prime candidate for an isolated posting in Goose Bay, a small town out East where people commute to work on snowmobiles and the closest Walmart is an hour’s drive.

“Goose Bay?” I asked meekly. I knew I had to respect the needs of the Forces, and support Victor no matter what.

Victor pulled his mask from his ears and shook his head. “North Bay,” he smiled. North Bay, the gateway to the North, a brochure-like town on Lake Nipissing, four hours’ drive north of Toronto with its own airport, hiking trails and bike paths. Victor walked over, hugged me and held my face in his hands. Those strong, loving hands that I had held in mine for so many years, and most recently, for so many months of uncertainty.

“Will my angel think about coming with me?” he asked. “Because if you want to stay in Toronto with your family, I totally understand…”

“Shh,” I said, wrapping my arms around Victor’s neck and pulling him close. “Congratulations my love, this is so exciting,” I said, kissing his cheek.

I quickly thought it over. My office would be closed until at least September. Our portfolios were starting to bounce back. I could afford to move up north with Victor even if my company eventually called me back to the office one day. I felt a swell of excitement and fear swirl in my heart, lifting me up until I was standing on top of a mountain, upon the precipice of the unknown. It was the same feeling I had felt when I made the decision to go back to school ten years earlier, a decision that changed me into the person I was now. The same feeling that told me to take the leap back then was urging me to take another leap now. Only this time it wasn’t just about me, it was about Victor too.

“Yes,” I said. “Let’s do it. Let’s move up north together.”

Repeatable steps I took that you can too!

• The Covid-19 pandemic was a Black Swan event, meaning it was rare and unexpected. There will be new black-swan events in the future. Days, weeks and months where the market plunges 20-30% out of nowhere. Prepare yourself now. Make sure you have enough of an emergency fund on hand so you won’t have to withdraw from your portfolio if the market plunges. And when the market does inevitably plunge, if you are still making a paycheque, continue to invest through the drops. Your future self will thank you. See chapter 13 on Bear Markets for more.
• Listen to your heart. Not all decisions are about money. After being away from Victor and getting to live with him through Covid, it was important to me that we stay together. I listened to my heart and made the decision to join him in North Bay. I could never have anticipated this opportunity when I first started investing, but luckily my portfolio could support me in my decision. I hope a large, healthy portfolio will make it easy for you to listen to your heart too.

Disclaimer: I am not a financial advisor. None of this is financial advice. I encourage you to do your own research.

One day in summer of 2018, Victor and I got our wish. After three years in Winnipeg and one year of officially being married (!), he was being posted to Hamilton, Ontario, a 45 minute drive from Toronto without traffic, an hour and a half with. We managed to snag one of the last available apartments, a coral-colored one-bedroom in a low-rise condo building next to the military center in the heart of downtown. Our landlord Sam, a 60-something man from Cyprus with a thick accent and warm smile, practically ripped up the formal lease before we had a chance to sign it, insisting that he was ‘old school’, and there was no need to check our references.

“Let’s get a coffee instead,” he suggested.

Two hours and several espressos later we left Starbucks with a guaranteed apartment and a new friend. Having suffered through my share of crazy landlords in the past, Sam single-handedly restored my faith in Ontario landlords and quite possibly humanity. As the months rolled by and the appliances began to fail, no task was too small for Sam to drive out to Hamilton from his home in Toronto, sometimes late at night, to fix whatever was leaking under the sink.

“You guys,” he said one day as he dried off his hands with a rag, “the apartment is yours as long as you want it. But promise me one day you will buy a house.” Sam believed in property, and he wanted us to get ahead financially.

I felt a little guilty not telling Sam that while we were renting his one-bedroom apartment for $1,500/month we were both squirreling away thousands of dollars a year. In the down market of 2018, and the up market of 2019 we bought the same Canadian Couch Potato portfolio we had been buying since 2015, with the exception of bonds, which we both felt were no longer needed since we both had pretty good job security.

So far our plan had been working out swimmingly. At the end of 2019 my portfolio crossed the 400k mark. Combined with my company pension, I was now worth 500k. “Oh sweetheart you’re worth much, much more to me,” my Mom said when I told her the news. “Now why don’t you help set the table?”

But life in 2019 was not without its stresses. While my company had always promoted hybrid work, I was still expected to be in the office at least three days a week. On Sunday nights after a nice dinner with our families, Victor and I would drive the hour back to Hamilton, the stunning sunsets failing to dissuade my “Sunday scaries” for the week ahead. On Mondays I would work from our dimly-lit apartment, then commute to Toronto where I would subway into the office Tuesday, Wednesday, Thursday, returning to Hamilton on Friday nights. Then Victor and I would head all the way back to Toronto on Saturday to see our families…to say our lives were hectic would be an understatement. While I was overjoyed to be seeing Victor more frequently than ever before and thrilled with our stress-free rental situation in Hamilton, the back-and-forth was starting to weigh heavily on me. I wasn’t sure how long I could keep this up, especially as in-office pressures continued to mount. But I knew I had to keep working, saving and investing more than ever. Victor’s Hamilton posting was only for a year or two. He would be posted to a smaller city next, most likely far away from Toronto. His next posting could very well be the one that I joined him for, if my portfolio grew large enough. I doubled down and cut every lavish expense except our cherished vacations, and stuffed every spare penny into the index.  

Then, one day in March 2020, the whole world changed.

Repeatable steps I took that you can too!

• Consider the benefits of renting vs buying. When you rent, your costs are fixed. You know exactly how much you will owe for rent and utilities. Your landlord will be the one spending money to pay property taxes, maintenance fees, replace broken appliances. Renting a nice, safe apartment can often leave some extra money for renters to invest and enjoy their lives. And you won’t be spending all your time fixing things.
• Read Mr. Money Mustache’s blog post, ‘The True Cost of Commuting’ to understand the toll commuting can take on your wallet, mental and physical health, and the environment. In today’s world of hybrid work it may very well be worth it to live outside the city if you only have to commute every few days for a bigger paycheck. Still, commuting can take its toll. Can you negotiate to work remotely one more day a week? Stay downtown with friends or family so you’re not driving back and forth? Switch to the bus or train so you can relax instead of losing your mind in traffic?
• When life gets hectic, remember why you started saving money in the first place. You likely started with a goal. Keep at it, keep investing. You can do it!

Disclaimer: I am not a financial advisor. None of this is financial advice. I encourage you to do your own research.

When I ran out of things to cut, I started to learn everything I could about personal finance and growing wealth in the stock market. I read and listened to The Canadian Couch Potato blog and podcast. I read A Random Walk down Wallstreet, The Millionaire Next Store, The Wealthy Barber. I binge-read Financial Independence Retire Early (FIRE) blogs like JL Collins, Mr. Money Mustache and Millennial Revolution, which all encouraged me to look for peace and happiness in experiences instead of stuff.

I started to look around at the stuff I owned. Why did I think I needed so many things? Why did I have a closet full of clothes yet still nothing to wear? And what was the environmental cost of it all? I learned that millions of used textiles are thrown away into landfills every year – 500 million kilograms a year at the time of this writing (source). And even when I donated my clothes to a good cause, a “significant amount” still ended up in the landfill or waterways (source). With every item I had ever owned now sitting in a landfill refusing to decompose, I was harming our planet – not to mention my wallet. Imagine if I had invested the money over the years instead of wasting it on extra clothes I didn’t really need. How much bigger would my nest egg be?

I needed to make some changes. 

As I continued to question my role as a consumer, I found myself attending my friend Frances’s clothing swap. She had noticed garbage bags full of clothes piling up in her basement and had the genius idea that someone else might want them. By swapping our old clothes with each other we could extend an item’s life cycle, keeping it out of the landfill for longer. On that cold spring afternoon 20 women crammed into Frances’s apartment, chardonnay in hand, cheering as we took turns modelling our new treasures found in each other’s trash. The room was full of smart, educated women spanning low to high incomes, but we had one thing in common. We had all spent an exorbitant amount of our disposable income on clothes. Clothes that had once been ‘this season’s must-have’ but were now discarded in bulging garbage bags. Was that why I had a closet full of clothes and still nothing to wear? Because the women’s fashion industry had brain-washed me into thinking I constantly needed to keep up with this season’s “look”? All this time I had wandered through malls in search of the perfect outfit or accessory, but I was really on a never-ending climb up consumer mountain. And I was poorer for it.

I tried on a red fitted top that France’s friend Hannah had donated. It may have once cost only $30 at a retail chain. There was a little hole in the back of the neck. But the red brought out the colour in my cheeks and the low neckline showed off my collarbone, now prominent from all my outdoor running. Once $30 and now free to me, somehow this was the most flattering top I had ever worn.

“Red is your colour!”, Frances exclaimed. “You need to wear that every week!”

“I’ll take it,” I said. That was the moment I stopped climbing consumer mountain. I vowed to stop spending all my hard-earned money on clothes that would eventually end up in a landfill. It wasn’t worth the environmental – or financial cost.

Later that night I looked through my closet and pulled out a few outfits that I had previously overlooked. Two pairs of jeans, one pair of ballet flats, and a few tops to wear to the office, including this new red one. This was all I needed.

For the next two years, every time I rocked that red top in a high stakes meeting or on a museum date with Victor I felt like I was saving money, just by extending the top’s life and not buying another one. And I felt peace knowing I wasn’t harming our planet with useless stuff. I felt free, like I didn’t need my job to pay for any more outfits to wear to my job, just so I could buy more outfits. And that feeling was exhilarating.

As I let go of the need for “more”, I found an anonymous quote that seemed to describe the shift that I felt occur within me. “The richest man is not he who has the most, but he who needs the least” – unknown.

I couldn’t agree more. I copied down the quote, but changed “he” to “she”.

Repeatable steps I took that you can too!

• Before spending more money on another outfit, try going “shopping” in your own closet. Are there any items you haven’t worn in a while that could use some love?
• For any other items you haven’t worn in a while, consider organizing a clothing swap with friends. By exchanging clothes with one another you will be keeping textiles out of the landfill for longer. And if you have extra household items in good condition, you can organize a garage sale with neighbours or post an ad on Kijii. Who knows, you might even make some money!
• If clothing swaps and garage sales are not possible, consider giving some items you no longer use to charity. You can drop off most clothing at Goodwill and pots and pans at Salvation Army. And next time you’re out window shopping, ask yourself if you really need that shiny new object. If you want it and you think you’ll use it, then go for it. But if you can already envision it collecting dust on a shelf, consider saving the money and investing in your portfolio instead.

Disclaimer: I am not a financial advisor. None of this is financial advice. I encourage you to do your own research.

2015 was the year of the app. There was an app to log your calories, measure your sleep, and yes, keep a budget. Even as an Android user the options were endless. I chose the best free app at the time, Moneywise Pro. I logged all my expenses on the app, forecasting months in advance. I included my income and fixed expenses such as my 2k/month savings, rent, utilities, cable, gym pass and yoga studio. Once I saw how little money I had leftover to pay for groceries, dinners out with friends, spa days and take-out, I decided to do some cost-cutting. I cancelled my cable and monthly memberships to my gym and yoga studio, opting to run outside for free and do yoga in my apartment. I kept my monthly dinner dates with my best friend since catching up over tacos in a cozy candle-lit bar helped us both get through the long dark winter. I tried to cut the things I could live without and kept what was important to me.

“Are you sure you want to give up your yoga membership?” my Dad asked, concerned, during Sunday dinner.

“Dad, I simply cannot afford it. I’m on a budget now,” I said proudly.

“But you love yoga!” He protested. Maybe he was right. Was I giving up too much? While I was steadily working towards a future of financial freedom, my one life was here and now. Millennials loved using the term YOLO (You Only Live Once). What if died tomorrow? Would I wish that I had spent more money on the present moment enjoying myself? Or, would 40-year old me wished that I had saved even more? I wrestled with this question for everything I gave up, and hoped like heck that I would still be alive in my 40s to enjoy the large portfolio I was growing.

While I worked through my budget and corresponding existential crisis, I still had an actual job to go to. On the subway I started playing around with an app called Loan Calculator that calculated compound interest. Compound interest is what Albert Einstein called “the eighth wonder of the world,” and it is what makes index investors wealthy over time. It means that the interest you earn on your original investment goes on to make its own interest. Then that interest goes on to make its own interest. Meanwhile your original investment is still making more interest… all of your interest gets compounded together until it’s one giant green arrow rocketing towards the sky!

I already knew from reading Millionaire Teacher that the stock market has returned an average of 10 percent per year over the last hundred years (source). But because I was on a time crunch to build my nest egg by my 40s I thought it better to forecast more modest future returns which would force me to save more. I settled on an annual return of 6 percent per year, which would allow for an 8 percent real return, 2 percent of which would be attributed to future inflation.

“Let’s see,” I would think to myself. “I have 100k now, and I’m saving $2,000 per month. If the market returns 6 percent every year for the next five years, that’s…$273,509!” My eyes widened at the thought of becoming a quarter-millionaire in just five years. “Now what if I bring my lunch to work, only buy ONE nice outfit for the office and stop getting manicures, saving me another $250/month? That would grow to almost $300,000!” I almost spit out my latte. “What if I stopped buying lattes…” I quickly became addicted to this game and started to ruthlessly cut every frivolous expense I could find. For me the act of budgeting and plugging those potential savings into a compound interest calculator worked hand in hand. Once I saw the future compounded returns of something I had budgeted for, I could evaluate it and decide if it made more sense to enjoy the luxury now, or forego the short-term pleasure, invest the money and reap the benefits in the future.

While I’m not suggesting you give up every little thing that makes you happy, after running the numbers myself I think it’s at least worth doing this exercise to see how much your daily expenditures are truly costing you in the long run. Then you can run your own “cost/benefit analysis” to decide if you want to keep the item or invest the money instead. In other words, is the short-term pleasure worth the opportunity cost that the invested money could make if invested longer-term in the stock market? And not every expense makes us happy, like the extra money we might be spending on bank fees and credit card interest. Could that money be redirected into the stock market? Could you switch internet providers and get the same service but for cheaper, freeing up capital for your long-term financial freedom?

Before you run the numbers, let me first tell you about my life-long coffee addiction that cost me over a quarter million dollars in stock market returns.

One of my earliest memories is of my Mom enjoying a cup of coffee in the living room. I was an energetic two-year-old and she needed her caffeine fix! I was curious as to what she was drinking and pawed at her for a taste. Exhausted, she dipped her finger into her mug and let me try a tiny taste of the creamy, sweet goodness. Surely a two-year-old would be turned off by the smokey bitterness that only adults appreciate. But I was hooked. By the time I was in grade five I was brewing myself a pot of coffee every morning before softball practice. Three years later Starbucks opened their first stores in Canada, one conveniently placed at the top of my street. I started knocking back frappucinos on my morning subway rides to middle school. By 16 I was working for the caffeine giant, inhaling double-espresso shots during long shifts. And today I’m still hooked, no morning complete without my morning Nespresso pod.

Now, imagine if I had taken the money from just one coffee per day, every day since I was two years old, indexed to inflation, and invested it in the S&P 500. I would have started with one dollar per day in 1985 and ended at about $2.62 per day in 2025, investing faithfully through severe market drops like 1987’s Black Monday, the Dot Com crash from 2000 to 2002, the Great Financial Crisis from 2008-09 and through Covid. By the time I was 42 years old, I would have an extra, wait for it…$268,450 in today’s dollars (see figure 2)! The amazing thing is that I would have only invested a maximum of $40,000 over the years. But by starting early and investing consistently through market ups and downs, over $200,000 would have been “free money” from capital gains and re-invested dividends. Money that was made passively over my lifetime, thanks to the power of compounding, while I enjoyed a caffeine-free existence.

If I could do it all over again, would I go back in time and give up every single creamy cup of java? Maybe, maybe not. Coffee has brought me a lot of joy and energy! But if giving up just one cup of coffee per day and investing the difference can potentially buy you a future of financial freedom, imagine what giving up larger expenses could do?

Repeatable steps I took that you can too!

• Download a budgeting app to your phone.
• Log your income, expenses and money you plan to invest.
• Review your budget. Is there anything you can easily cut? Anything you can’t live without? Remember that growing your wealth takes time. It’s a marathon, not a sprint, and you want to set yourself up for success by keeping the things that make you happy.
• Get to know compound interest. Download a compound interest calculator like Loan Calculator and plug a few numbers in. What would happen if you invest an extra $100 per month at 6 percent return over 5 years? 10 years? What if you invest $200 per month instead? Once you see how compound interest can work in your favor, you’ll understand why it truly is the eighth wonder of the world!
• Review any workplace pension plan or share program. Employers will often match your contributions up to a certain percentage. Consider opting into the maximum contribution if your monthly budget can handle it.

Disclaimer: I am not a financial advisor. None of this is financial advice. I encourage you to do your own research.

In this chapter we will cover how to set up a DIY investing account and make your first purchase

Back home in Toronto, I called my financial advisor to tell him I was planning on managing my own investments. “No problem-o,” he said cheerily. “It’s your money!” Maybe he wasn’t so bad after all, I thought. Then he mentioned that since I was transferring my actively managed mutual funds to my brokerage, and those funds had been specific to his firm, he would need to sell everything, incurring large capital gains. There would also be a charge to move my money over. I would pay another large tax bill this year, and this time no Keg gift certificate. But it would all be worth it once I was in control of my investments.

I made an appointment with my bank and set up three accounts: Non-registered, Registered Retirement Savings Plan (RRSP), and Tax-Free Savings Account (TFSA). I filled out a series of forms to transfer over my now sold investments from my financial advisor’s firm. Luckily my bank covered the $100 in ‘leaving fees’ that my old firm charged to move my money over. While I waited for the money to be transferred, I took the Vanguard risk tolerance test. It turned out I was a balanced to growth investor. Based on my test results, the Canadian Couch Potato recommended that I invest in low-cost index funds that tracked the Canada, US, International and Bond market indexes at 25% each. My ideal fund was Vanguard Growth ETF Portfolio (VGRO), which tracked the Canada, US and International indexes like VEQT, but added in some bonds for protection. The idea was that if the market took a dive and equities went down, the fund would rebalance automatically by selling the overweighted bonds and buying equities on the cheap.

After a few weeks the money from my sold expensive bond funds was in each of my three accounts, and I was ready to buy some low-cost index funds! With the click of a button I bought VGRO for each account. At the time I had to pay $9.95 per transaction, but since then several brokerages like Questrade, BMO, Scotia iTrade and Wealthsimple now offer commission-free trading on select Vanguard index funds. I encourage new investors to consider this when choosing their trading platform.

Despite the $9.95 transaction fees, my 100k nest egg was no longer bleeding money in actively-managed expensive bond funds. In fact, within a few weeks my low-cost globally-diversified portfolio was already in the green! I had created a money-machine that would passively churn a profit while I slept. Now I just needed to make sure I invested as much new money as I could from every paycheck going forward.

In Millionaire Teacher, Andrew Hallam had suggested I set up automatic transfers to ensure that every time I got paid the money would automatically go into my brokerage account (Hallam, 2017). This way I would be paying myself first before I accidentally spent the money on something else. 

I called up my bank and asked to set up automatic transfers from my chequing account into my brokerage account on the 1^st and 15^th of each month, because those were the days I would receive my paycheque. Since my rent was due on the 1st, I would have less disposable income earlier in the month than in the middle of the month. I asked for only $500 to come out on the 1^st and $1,500 to come out on the 15^th when I would have fewer bills to pay. TD was able to set up automatic purchases of index funds for me, which at the time were the TD e-series index funds. They would do this every month on the 20^th to ensure the money from my transfers on the 1^st and 15^th would be available. The lady over the phone gave me an extra tip that would set my investments up for even more success.

“And of course, you’ll want the automatic DRIP,” she said. She explained that DRIP stood for Dividend Re-investment Program. This would ensure that every time a dividend was paid, it would automatically be re-invested, without me having to do anything. Since my portfolio was 100k, I could expect to receive around $2,000 a year in dividends! As I look back, I am grateful to this lady for suggesting I apply a DRIP across my whole portfolio. I know myself well enough to know that if the $2,000/year from dividend payments had just been deposited into my account, I likely would have spent it on something frivolous. Instead, year after year, the dividends have been automatically re-invested, creating a snowball effect and helping my investments grow. My back-of-the-napkin math suggests that at least 5% of my portfolio today can be attributed to the re-invested dividends over the past 10 years.

Soon money from each paycheque was being automatically transferred and invested into the Canadian Couch Potato portfolio. I was already making capital gains and I was looking forward to my first dividend payment in a few months. But as my investments grew so did my anxiety. Not long after I had committed $2,000 every month to my savings plan, did I realize that I was underwater. With $2,000 a month no longer available to pay for my rent, utilities, cable/internet, groceries, TTC pass, lunches and coffees, fancy gym membership and outfits for the office, I started to put everything on my credit card, incurring interest in the process. What I was making in the stock market I was losing to the credit card companies. I quickly realized, if I was going to avoid financial ruin by collection agency, I would need to make a budget – and stick to it.

Repeatable steps I took that you can too!

• Select your brokerage. I used TD Canada Trust because I was already a client. However, I still had to pay $9.95 a trade for Vanguard index funds. Since then, brokerages like Questrade and Wealthsimple now offer commission-free trades, and platforms like BMO, National Bank and Scotia iTrade offer free trades on some Vanguard funds. Of these, Wealthsimple is currently the only brokerage who will set up automatic purchases. For the rest, you’ll need to go in once a month or so and purchase your ETFs whenever the money is in your account.
• Set up the following Canadian accounts: non-registered, Registered Retirement Savings Plan (RRSP), Tax-Free Savings Account (TFSA), and First Home Savings Account (FHSA) if you have not owned a home for four years. Note, each of these accounts will have an allowable amount that you can invest, which you should be able to find out from your CRA account. Be careful not to go over your allotted amount otherwise you will get dinged by the tax man.
• Transfer any existing nest egg into your new accounts. Note, if you are already invested in actively-managed mutual funds not offered by your new brokerage then your old brokerage may need to sell the funds first. Be sure you can handle the potential tax bill. Ask your new brokerage to cover any transfer fees from your old brokerage.
• Purchase a low-cost, broad-based Vanguard index fund that tracks the US, International and Canadian indexes, with a bond component depending on your risk profile. For a globally-diversified index portfolio aggressive investors can buy Vanguard All-Equity ETF Portfolio (VEQT). Growth investors can buy Vanguard Growth ETF Portfolio (VGRO) which adds in 20% bonds for stability, and balanced investors can purchase Vanguard Balanced ETF Portfolio (VBAL) which is 60% equities and 40% bonds.
• When using large amounts of money to buy or sell ETFs, always use limit orders to ensure you are setting a limit on the price. Justin Bender of PWL Capital has some great YouTube videos on how to purchase ETFs by using limit orders. His playlist can be accessed here.
• Ensure you set up a Dividend Re-investment Plan (DRIP) for every account, so that your dividends are automatically re-invested. One day you may choose to turn off the DRIP so you can live off your dividends in retirement, but you can easily do that in the future.
• If you receive a paycheque every two weeks, set up automatic transfers from your chequing account to your brokerage. Keep in mind that you will likely have more bills due on the 1^st of the month, such as rent or mortgage, so you might want to set up less on the 1^st of the month and more on the 15^th of the month.

Works Cited

1. Hallam, A. (2017). Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (1st ed., pp. 148-9, 153, 261-268, 338-45). John Wiley & Sons, Inc., Hoboken, New Jersey.

Disclaimer: I am not a financial advisor. None of this is financial advice. I encourage you to do your own research.

Since I first read Millionaire Teacher, I have learned more about the stock market’s incredible wealth-building power and how low-cost index funds can enable us to harness that power for our own portfolios. I have also learned more about how high-fee, actively managed funds can just as easily rob us of our hard-earned money and jeopardize our future financial freedom. This has led me to do my own analysis on portfoliovisualizer.com to see the numbers for myself.

While we can’t predict future stock market returns, we can look at historical stock market returns to see how much our portfolio would have grown over the years if we had been invested in a low-cost S&P 500 index fund for the last couple of decades. We can also see how much money we would have lost to a high-fee, actively managed fund and compare the two portfolios. So let’s get on our rhinestone-studded jump suits and disco-dance our way back to the 1970’s…

Back in 1976 Vanguard founder John C. Bogle launched the very first low-fee S&P 500 index fund called the Vanguard 500 Index Fund (VFIAX) (source). This was great news for investors because it meant that groovy cats like you and me could finally invest in a fund that tracked the overall stock market for the low cost of 0.04%. Bogle’s S&P 500 index fund really started to take off in 1982 at the dawn of a new bull market, allowing boom-box carrying 80’s investors to invest in the stock market for a low cost (source). And what a prosperous investment it would have been! If we look at VFIAX’s performance through the website Portfoliovisualizer.com, we can see that just $10,000 invested in VFIAX in 1985 and left to compound over 40 years would be a whopping $765,015 in today’s dollars, even after paying the small 0.04 percent MER (see figure 1)!

Now imagine if, instead of investing $10,000 in a low-cost index fund we had invested our hard-earned $10,000 in a high-fee actively managed mutual fund that invested in the exact same companies, but charged a 2.5 percent MER. Surely paying 2.5 percent per year in fees would not make that much of a dent to our future wealth, right? Well, the results are staggering. Instead of having $765,015 after 40 years, we would be left with just $282,361. By paying the mutual fund company 2.5 percent every year, particularly in years when the markets were down, we would have lost $482,654 to fees! Now we wouldn’t have actually paid $482,654 in fees, but because the mutual fund company would have continued to charge us 2.5 percent during severe market drops, like during 1987’s Black Monday, the 2000-2002 Dot Com crash and the 2008 Great Financial Crisis, that 2.5 percent annual fee would have removed 30 to 50 percent more shares from our portfolio during market drops, eroding our future wealth.

Now, in theory it might make sense to pay higher fees if active fund managers could deliver stellar returns year after year, but research shows this is next to impossible. In fact, legendary investor Warren Buffet once famously bet a group of highly-paid hedge fund managers one million dollars that he could beat their actively-managed expensive hedge funds with his simple low-cost S&P 500 Vanguard index fund over a nine year period (source). The hedge fund managers thought they had this in the bag. Afterall, they had access to world-class information, a team of eager interns and the best and brightest minds in money management! But alas their victory was not to be. While the hedge funds managed to outperform the market index in the first and eighth year of the competition, Buffet’s simple but mighty low-cost S&P 500 index fund beat the hedge fund managers in seven out of nine years, winning him the bet by an average of almost 5% per year (source). Buffet walked away with $854,000 compared to the hedge fund managers’ measly $220,000 and a million-dollar winning prize, which he generously donated to charity (source).

Since Buffet’s winning bet, further research has shown that active fund managers rarely beat the market index. A 2022 study by the Dow Jones Market Indices found that not only do most active fund managers underperform the market index most of the time, but they are even more likely to underperform the longer they are invested. Over a 20-year investing time horizon, active fund managers underperformed the S&P 500 market index 95% of the time, even before charging their wealth-eroding fees. Some readers of the study might argue, wait a minute, weren’t there at least some years when the active fund managers outperformed the index? And didn’t the hedge fund managers in Warren Buffet’s wager win at least two out of nine rounds, hmm? Well, the study says these occasional winnings are only due to “random luck”, the kind you’re likely to find at any given casino.  

Have you ever been to a casino? I remember the first time I sat down at a slot machine in Niagara Falls. I can still hear the plinking video-game music and smell the coffee-stained carpet. I put a crumpled $20 bill in the slot machine, pulled the handle, and…won! Little red lights flashed, and jubilant music played as the slot machine tallied up my winnings. This is too easy, I thought as I pulled the handle again and…lost. Again, and…lost, until my original $20 and all my winnings were gone. The house had won. What gives? Turns out my inability to replicate my initial luck was due to the same statistical improbability that prevents active fund managers from outperforming the market year after year. Luck had won me my first round, but because Lady Luck is as random as she is fleeting, I was unable to replicate my success with subsequent spins. I may have gotten lucky once, but as the minutes passed and my clammy hand continued to pull the handle, my chances of losing only increased.

This is why active fund managers are more likely to underperform the market the longer they are invested. While random luck may give them the odd year of outperformance, there is an “overwhelming probability” that their luck will soon disappear, and they will underperform in the long run (source, study).

Once we see how much the stock market has grown over the years, and the damage that high MER fees would have made to our portfolios, we can make better investing decisions now for the future. Will the stock market continue its 100-year-long ascent and be exponentially higher in 40 years than it is today (source)? No one knows for sure. Past results are of course no guarantee of future results. But my prediction is that consumers will keep buying products, companies will keep re-investing in efficiencies, those efficiencies will lead to higher earnings and the stock market will continue to rise over time – with volatility, bear markets and recessions along the way.

One thing is certain though. Whether the stock market continues to chart new heights or dips into bear market territory, if we are invested in low-cost index funds, we can expect our returns to match those of the stock market. But if we are invested in high-fee, actively managed funds we will undoubtedly be spending a portion of our future wealth on fund managers and lost opportunity.

Wouldn’t your future wealth be better spent on you?

Disclaimer: I am not a financial advisor. None of this is financial advice. I encourage you to do your own research.

On the flight back to Toronto I started reading Millionaire Teacher by Andrew Hallam. I liked how he was a fellow Canadian who became a millionaire by age 40 on a teacher’s salary through extreme frugal living and consistent investing. He did crazy things like turning the heat off in the dead of winter, running 20 km to work and eating fresh clams that he caught in a nearby river. I was intrigued.

Hallam explained that the stock market is a bunch of publicly traded companies that issue shares for people like you and me to buy (Hallam, 2017). When we buy even one share, we technically own a part of that company (Hallam, 2017). That company, take Amazon for example, uses the money from our investment to make its business more efficient (Hallam, 2017). For example, Amazon might build a bigger warehouse so it can ship even more products to its consumers, which will likely lead to higher profits. The company can then choose to invest those profits back into the business or return the profits to shareholders as a dividend (Hallam, 2017). Profits, or ‘earnings’, are what typically guide the underlying share price of a company, although, as Hallam reminds us, there can be times when the stock price strays and shoots up or drops dramatically (Hallam, 2017). While it can be difficult to pick individual winning stocks, Hallam suggests that if we invest in the whole stock market through a low-cost index fund, we can likely expect our investment to rise overtime with the overall stock market (Hallam, 2017).

But what exactly was an index fund, I wondered, as the airplane engines rumbled. Outside the window grey clouds puffed by as we flew through the darkening sky.

As I kept reading Millionaire Teacher, I learned that an index fund tracks a stock market index, which usually includes hundreds, sometimes thousands of companies (Hallam, 2017). For example, the S&P 500 is a stock market index comprised of the top 500 US companies. An S&P 500 index fund tracks the S&P 500, so if the S&P 500’s total returns are, say, 10% this year, the fund will give investors an identical return, minus any small Management Expense Ratios – also known as MERs (Hallam, 2017). MERs are the cost to manage and run the fund, and they are usually low for index funds because index funds are passively rebalanced by an algorithm instead of a human. Actively managed mutual funds on the other hand – like the expensive 2.5 percent MER bond fund I was currently invested in – are managed by humans, so they need to charge higher fees to pay that human’s salary (Hallam, 2017).

I opened my packet of salted airline almonds. I thought about what I was learning about the wealth-building power of the stock market, how consumer demand can generate profits, how those profits can make companies more efficient, and how high earnings can push stock prices even higher. It seemed like index funds allowed investors to take part in stock market returns for a low cost. It was clear that I needed to switch from my expensive, poor performing bond funds and start investing in low-cost index funds that tracked the stock market. But what index fund should I choose? There were so many different ones!

As I chewed my almonds, I remembered how the Canadian Couch Potato recommended that I build a globally diversified portfolio of low-cost index funds that equally tracked the stock market indexes of Canada, the US, and International markets. One fund, called the Vanguard All-Equity ETF Portfolio (VEQT) would allow me to invest in all three markets equally for the low, low MER of 0.24 percent.

I thought back to VEQT’s webpage that Victor and I had looked at earlier. We had noticed that 30 percent of VEQT tracked the Canada stock market index, 45 percent tracked the US Total Stock Market index, and 25 percent tracked international stock market indexes from Europe to Asia to emerging markets. I recognized many of these companies and industries, from Canadian banks, oil and gas to US companies like Microsoft, Starbucks and McDonalds to global companies like Nestle and HSBC. These companies would likely continue serving consumers, investing in their businesses and making profits for years to come. Higher profits would mean higher share prices and maybe even dividend payments.

I finished the last of my almonds and began flipping through my stack of investment books. Pages of charts showed the stock market continually reaching new heights over the last 100 years. I wondered, if I invest in VEQT now, will my portfolio rise year after year with higher share prices and regular, juicy dividend payments?

It seemed almost too easy.

Just as I started reading Hallam’s chapter on fear and greed, the plane hit a pocket of unexpected turbulence. I clutched the seat with one hand and kept reading. Hallam explained that the market is unpredictable (Hallam, 2017). There have been some major stock market drops like after 9/11, during the start of the Iraq war in 2002-03 and during the Great Financial Crisis of 2008-09 (Hallam, 2017). But those drops ended up being golden buying opportunities for Hallam, because he was able to buy more stocks on sale.

“Scraping together every penny I could,” Hallam says he threw money into the stock market “like a crazed shopper at a going out of business sale.” (Hallam, 2017). Being greedy when others were fearful, to quote Warren Buffet, was what allowed Hallam to become a millionaire by age 40 on a teacher’s salary.

Just then the plane shook from left to right. My stomach dropped. The woman next to me cried out in terror.

“Is this normal?” I asked the flight attendant. My heart was now beating rapidly. My breath quickened. 

“Yup,” she said, placing both hands against opposite overhead compartments for balance.  

The plane dropped suddenly and the woman next to me grabbed my arm. We both shrieked. I kept reading as we bounced along.

“A plunging stock market is a special treat for a wage earner…younger people who will be adding to their portfolios for at least five years or more need to celebrate when markets fall” (Hallam, 2017). The book flew out of my hand and onto the floor.

I closed my eyes and tried to breathe slowly. I tried to focus on what I had just read and not the out-of-control aircraft bounding through the sky. I was a young person who would be adding to my portfolio for at least five years. Would I have the courage to keep investing through the next stock market crash? I was barely making it through this turbulent plane ride.

After a few terrifying minutes the turbulence passed. The woman next to me loosened her grip. I felt a surge of adrenaline knowing that I had survived another flight. Was this what investing was like? A thrilling concoction of fear followed by a dopamine rush and the urge to do it all again? If so, sign me up!

By the time we sailed over the twinkling Toronto lights and landed safely at Pearson Airport, I had a new favourite book that would change the course of my life. I decided I wanted to become a millionaire, just like Andrew Hallam. I also had a clear investment strategy:

• Set up a brokerage account through my bank
• Based on my investing risk assessment and using the Canadian Couch Potato model portfolio as a guide, invest my current nest egg in a Vanguard Index Fund that tracked Canada, US and International indexes, like VEQT, VGRO or VBAL
• Continue to invest in a low cost globally diversified portfolio with every paycheque – especially through the sudden and unpredictable drops.
• Disclaimer: Vanguard’s all-in-one funds like VEQT, VGRO and VBAL were not available in 2015 when I started investing. I wish they had been because you only have to buy one fund to be globally diversified and Vanguard rebalances for you. Instead I reviewed the fund prospectus for VCN and VXC which tracked the same Canada, US and International indexes as VEQT does today. When I began investing, I added in VAB for my bond component. Vanguard has since launched VGRO which equally tracks the Canada, US, International and bond indexes, the same indexes that the Canadian Couch Potato Model Portfolios have always recommended.

Repeatable steps I took that you can too!

• Once you’ve taken the Vanguard investor quiz and selected your model portfolio from the Canadian Couch Potato website, have a closer look at the recommended fund (i.e., VEQT, VGRO or VBAL). You’ll likely find several companies you recognize. The fund’s webpage should also list the 12-month yield, which is how much you would have received in dividends if you were invested in the fund over the past year. It’s usually around 1 to 2 percent annually. I like Vanguard because it was the first company to provide low-cost index funds but there are many other financial companies nowadays that offer low-cost broad-based index funds.
• Have a look at the fund’s Management Expense Ratio (MER). It should be less than 0.30%. If it’s more than that, keep lookin’!
• Before you hit “buy”, remember that the stock market can be volatile, and big one-day drops can come out of nowhere. Make sure you are comfortable sticking to your investment strategy through the sudden and unpredictable drops. We’ll get into buying our first index fund in the following chapters.  
• Remember that when stocks are down, it also means they are on sale.

Works Cited

1. Hallam, A. (2017). Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (1st ed., pp. 153, 261-268, 338-45). John Wiley & Sons, Inc., Hoboken, New Jersey.
2. Bortolotti, D. (n.d.). Model Portfolios. Canadian Couch Potato. https://canadiancouchpotato.com

Disclaimer: I am not a financial advisor. None of this is financial advice. I encourage you to do your own research.

I have always had an independent streak, especially when it came to money. Ever since I was old enough to walk to the Little Bee Mart variety store with my friends, planning what flavor of freezie I was going to buy with my saved allowance, I have loved saving, spending and earning my own money. This thrill of extra income is likely what motivated me to get my first real job at the local movie theatre at age 15. After I was downsized from the theatre due to budget cuts, I scored what would be my best job ever, Starbucks Barista. I loyally worked shifts throughout high school, closing the store late on school nights, opening at 5 a.m. on weekends, my hair and clothes reeking of coffee, my workplace becoming my social life. I can remember feeling a sense of purpose as I slung lattes across the bar towards tired customers, making the occasional grumpy one smile. As a university student I pounded the pavement and scored two summer internships in a trendy advertising agency downtown. There, the sexy brands and glitzy swag seduced me into starting my post-university career at an even trendier agency, this one with its own slide, free-flowing beer on tap, and a team of senior male partners. Most of them were kind, thoughtful leaders who made me feel like I was part of something important. I loved collaborating with them on electric brainstorm sessions and exciting industry research. But a few bad apples prone to fits of narcissistic rage and borderline sexual harassment made the experience bittersweet.

I eventually left for a more professionally-run firm. And while I experienced far less objectification and yelling at the Wonderful Agency, the recession of 2008-09 brought its share of stress, and I found myself part of a skeleton staff desperately trying to manage a tsunami of projects. My manager had the unsavory habit of informing me I would be leading a high-stakes 20-person client presentation on the elevator ride up. I started arriving at the office at 8 a.m. and leaving at 7 p.m., exhausted but still unprepared for whatever public speaking surprise awaited me the next day. In the dark days of February, I didn’t see the sun. By 25, I was burnt out.

It was around this time when I met my future husband. We locked eyes in a bright lager-scented piano bar one night and while our physical chemistry could have set fire to the place, fate was sealed the moment he asked me if I was truly happy in life. I told him no, not yet at least, but inside I was bursting with a kind of excitement I had never felt around the immature boys from my youth. Victor was not just interested in my looks, he was interested in me. And as I gazed into his dark eyes, his warm smile crinkling the corners of his tanned skin, I knew I was looking into the eyes of my husband. Minutes later when he tipsily blurted out “marry me!”, I knew we were on the same page. Some love stories take time. Ours was instantaneous. Victor quickly became the love of my life, caring for me in ways I didn’t know I deserved or needed. He would drive across the city to pick me up from my evening writing classes, dropping me off with a kiss before heading home. When my family’s first beloved dog passed away Victor was at my door with a stuffed teddy bear and tears in his eyes. In his arms I was home, the sound of his gravelly voice temporarily eliminating any worries, all my fears.

With Victor’s encouragement I applied to a Master in Journalism program in Southern Ontario, where I temporarily escaped the corporate world and found peace in a slowed-down life spent reading, writing and marathon training, experiencing all seasons as I ran through rain and snow. I emerged a year later a more confident me, fortunate to graduate debt-free.  At the age of 28 I was recruited for a digital role at a global consumer goods company. This was by far the best company I had ever worked for. No one yelled or made objectifying comments about the interns. I was given ample notice whenever I was tasked with delivering a terrifying boardroom presentation, of which there were many. I joined Toastmasters to work on my fear of public speaking. And as the years rolled by, I became good at my job in digital marketing. Around this time Victor made the brave decision to join the Canadian Armed Forces. For years he had dreamed about serving his country, being part of something bigger than himself. I admired his bravery and supported his decision, but in the back of my mind I worried about what this would mean for our relationship, not to mention his safety. But Victor had always supported my dreams. I was now being called to support his.

So that’s how, in late 2015, I found myself in Winnipeg, Manitoba where winter days commonly hit -40 degrees Celsius. Victor had recently been posted out there and my manager was letting me work remotely so I could see my fiancé every five weeks. So far, we were having a great time exploring the city’s innovative restaurant scene and ice sculpture festivals. One day, as the people outside started their frozen cars with an electric cord attached to a pole, Victor and I were reviewing our finances. Now in our early 30s, we had both saved quite a bit over the years.  

“You know,” he said, “You’ve got a pretty big nest egg saved. But your guy’s got you all in bonds! You should at least be invested in some equities. The market’s been on a tear lately!”

“Yeah but I need to preserve my capital if I ever want to buy a condo,” I said, trying to remember exactly how my financial advisor had explained it over lunch at Pusateri’s. I had been too distracted by the Keg gift card he had given me as an “apology” for over-contributing to my RRSP and causing a higher tax bill. I hadn’t even paid attention to the many mutual funds I was invested in.  

“Yeah,” Victor said, “but bonds have only returned 1% this year, and…hey, click here for a second?”

My mouse hovered over the bond fund’s prospectus as the cold wind rattled our windows. I opened the PDF.

“See this thing called MER?” Victor explained. “That stands for management expense ratio. Basically it pays for someone to manage the fund. It looks like you’re paying 2.5% to the fund company, plus you may even be paying your financial advisor a commission to buy it for you.” I thought back to our lunch at Pusateri’s. Had I paid for lunch?

“If you have $100,000 invested in this bond fund, that means you’re paying $2,500 a year, whether the fund makes money or not,” Victor said.

“So not only has my financial advisor left me with a higher tax bill, but I also just sent some fund manager to Mexico?” I asked, alarmed.

“Yup, and you’re paying them every year,” Victor said.

Victor showed me the Canadian Couch Potato website and model portfolios of low-cost index funds from Vanguard. They were arranged in order of risk tolerance: conservative, balanced and aggressive. Each portfolio provided a mix of stocks and bonds depending on your risk tolerance. We looked at the fund prospectus for a couple of funds. They all had an MER of 0.24 percent or less, far lower than what I was currently paying.

“The best thing to do,” Victor offered as he went over to the kitchen to make tea, “is take Vanguard’s online test to figure out what your risk tolerance is. How would you feel if there was a crash and your 100k was cut in half, like during the 2009 recession?” I shuddered as I thought back to my dark days at the Wonderful agency. Everyone I worked with had lost money in the stock market.

“Then once you know your risk tolerance, you can use the Canadian Couch Potato portfolios to start buying some low-cost Vanguard index funds,” Victor said as he pulled out two mugs and popped a tea bag in each.

“And then I can be the one going to Mexico!” I said, as the deep rumble of a snow blower sounded in the distance. A vacation sounded nice. I thought about the upcoming deliverables waiting for me at the Toronto office. Meetings with directors, townhall presentations, quarterly updates to the CEO. My remote working situation meant that I would spend the next five weeks in Toronto frantically catching up with back-to-back in-person meetings. I was starting to feel like I was being pulled in two different directions, my heart in Winnipeg, my career in Toronto. And my investments…stagnating? How long could I keep this up?

“I say just keep saving and investing for now,” Victor said, as if reading my mind. “You have a great job right now, and who knows where the military might post me next.” We both knew what he meant. The needs of the Forces came first. Victor could be posted anywhere, anytime. The fact that he had been posted to Winnipeg, a city with direct flights from Toronto, was a rarity.

 “They may send me to Goose Bay next, or the Yukon. Milk?”

“Mm-hmm,” I answered, distracted. The Yukon. Practically a continent away from Toronto. With no direct flights and questionable internet bandwidth, there was no way I could ever work remotely from there. How many more years could we keep our long-distance relationship thriving across this vast country of ours? And even if Victor stayed in Winnipeg for the next 10 years, would I still be flying back and forth in my forties? I closed my laptop as my anxiety started to build.

“You know you can always move out with me. It would be a nice break for you if you’re burnt out from the corporate world. You can let your investments grow and we can live off my salary,” Victor said sweetly, handing me a steaming mug.

“That’s so generous of you,” I said between sips, “but I’ve always felt like I need to make my own money, you know? I want to be able to pay my own way, go on trips with friends, or out for dinner when I want to. And I don’t know if I’m ready to leave Toronto behind…my job, Toastmasters, my yoga studio, my friends…” my voice cracked as I pictured giving up all the things that made me, well me. Everything except Victor.

But then, as I had found myself doing lately, I pictured the alternative. I saw myself in my 40s, wrapping up a work call as I rushed down the street in painful high heels, all the while missing Victor. I pictured Victor all alone on pitch black winter nights cooking himself a healthy meal, drying the dishes before getting started on the laundry. He was already doing great on his own, but I longed to be the one to take care of him. I longed to live with him under one roof. And although I was not ready to leave my life in Toronto, I knew eventually I would have a choice to make, and I would always choose Victor.

As I came to terms with every conflicting emotion I had kept inside since Victor joined the Canadian Forces, I cried tears of frustration, worry and sadness.

“Oh sweetheart,” Victor said softly, setting my tea on the coffee table and pulling me close. He kissed the top of my head. Outside the snow blower had stopped and a flurry of snowflakes fell silently.

After a couple of minutes, he said “I’m so sorry I don’t know where I’m going to be posted next. I know how difficult it must be for you. I just know that I want to be with you.”

Victor’s soothing voice never failed to calm my most overwhelming fears. The future was as clear as mud, but there was no doubt in my mind that Victor was my future.

“Your happiness is the most important thing in the world to me,” Victor continued, “and if that means you staying in Toronto so you can have your life, then we’ll make it work. I can ask to be posted closer to you too.”

I wiped my tears with the backs of my hands. “It’s okay,” I said. “I’ll keep working in Toronto for now. Who knows, maybe in five years we’ll have a lot more money saved”. I popped my laptop back open.

“I think that’s the best COA. Sorry, course of action” Victor said in military speak. “In the meantime, you can keep saving, keep contributing to your pension, company shares, EI…”

As Victor listed off a world of corporate benefits I stared at my 100k-worth of pricey, poor-performing bonds. I wondered, if I were to invest my nest egg in the stock market through the Canadian Couch Potato portfolio, how long would it take to double? To triple? And how much would I need in order to leave the corporate world behind? Growing my wealth could take years, but I knew the longer I stayed in my comfortable Toronto bubble, the harder it would be to eventually leave.

The next day we ventured downtown to The Forks indoor market to try Winnipeg’s world-famous cinnamon buns. The sun shone brightly and bounced off the snow, reflecting golden light across the wooden coffee tables. I looked around and took in the scene of buzzing cafes, artisan candle makers and galleries showcasing Indigenous art. A polar bear made of light grey marble stood proud, conveying a calmness that could only be found in this prairie city of friendly people, artistic expression and cozy restaurants.

I pulled apart the soft pillowy dough drenched in buttery brown sugar glaze and popped a piece in my mouth. There was something special about Winnipeg, the “cultural cradle” of Canada. I decided I would be open to a future outside of Toronto, wherever that may be. But if I was going to give myself the chance of leaving the big city – and a future career, I would need to build one hell of a nest egg. I was also going to have to learn everything I could about managing my own money.

“What do you feel like doing next?” Victor asked as he reached for another piece of my cinnamon bun.

“Let’s head over to Chapters,” I said. “I want to get a book on investing.”

Repeatable steps I took that you can too!

• When picturing your future, think about how financial freedom might help you live the life you want. Would a large nest egg allow you to leave a stressful job, move to a different city, spend more time with loved ones?
• If you are currently invested in the stock or bond market, consider switching from high-fee actively managed mutual funds to a passively-managed, globally diversified portfolio. Not only will this save you management fees over the years, but research shows that actively-managed funds rarely beat the market index. We will learn more about this in the next two chapters.
• Take Vanguard’s online investor quiz to see what asset allocation you are comfortable with (100% stocks, 80% stocks/20% bonds, 60% stocks, 40% bonds)
• Review your Vanguard quiz results against the Canadian Couch Potato model portfolios to see what low-cost funds they recommend.
• Pick up a beginner book on building wealth in the stock market. Recommendations include Millionaire Teacher by Andrew Hallam, The Simple Path to Wealth by JL Collins and A Random Walk Down Wall Street by Burton G. Malkiel.
• Some people may still be more comfortable having a professional manage their money for them. This can be a good option for investors who are worried they might sell in a panic when the market drops. If that’s you, there are some low-cost “robo-advisors” out there like Wealthsimple or Justwealth who will invest your money in a low-cost portfolio of index funds and charge a small management fee. Even if you choose to engage a more affordable robo-advisor, I still recommend learning about how the stock market works and how to invest through index funds. Learning to manage your money is an important skill in wealth-building, and no one will care as deeply about your money as you. Over time you may find you have the knowledge and confidence to manage your investments on your own.

Works Cited

Bortolotti, D. (n.d.). Model Portfolios. Canadian Couch Potato. https://canadiancouchpotato.com

Disclaimer: I am not a financial advisor. None of this is financial advice. I encourage you to do your own research.

I’m sitting on a white sand beach, the sun casting sparkles on the turquoise water, making it shimmer. I pick up my drink and take a sip, cool sweet coconut swirling around my tongue.

I set my drink down and pull out my phone. As I log into my investment portfolio, I sit up to shield the sun, making sure I’m not seeing things. But it’s there and it’s real. My portfolio has grown large enough that just a small percent could easily cover all my expenses for the past year, albeit humbly. I may not be rich like the people who own the yachts parked along the shore, but I have enough to live a comfortable life, on my terms. I am financially independent.

When you are financially independent, the concept made famous by Your Money or Your Life authors Vicky Robin and Joe Dominguez, and the F.I. in the F.I.R.E. movement (Financial Independent Retire Early), you have enough financial resources to cover your lifestyle without having to rely on paid labor (Robin & Dominguez, 2015). Achieving financial independence has less to do with lottery winnings, high incomes or inheritances and more to do with learning to budget and manage one’s money, investing in the often-volatile stock market and cultivating an affordable lifestyle that can be financed with a globally diversified portfolio built over many years.

While this concept may pique some people’s interest, not everyone wishes to pursue financial independence. It takes a certain kind of personal finance nerd to dedicate their blood, sweat and tears to building a portfolio large enough to fully fund their future lifestyle. Guilty as charged. Financial Freedom, on the other hand, is Financial Independence’s little sister. Financial Freedom is about saving and investing enough now so that your future self can have more options to live life on your terms. The portfolio you start building today may one day allow you to retire a decade earlier. Or perhaps take a year off work to travel. Or step away from a stressful job to care for a loved one. The good news is, whether you are interested in dipping your toe in the warm waters of financial freedom or going all the way and becoming fully financially independent, the steps are the same: Envision what you want your future to look like and how a healthy portfolio could support your dreams, learn how the stock market works, begin investing in low-cost index funds, learn to keep a budget, and stay the course – through bull market highs and bear market lows. You get to choose how much of your time, money and energy you put towards building a financially free or financially independent future.

Why am I telling you this, you ask. Shouldn’t I be ordering another pina colada and enjoying my newfound freedom? The truth is, the only reason I discovered the concept of financial independence in the first place, and had the courage and confidence to pursue it, is because of the Financial Independence (F.I.) community. This community is chock-full of authors, bloggers and podcasters from all walks of life who shared their own journeys, their frugal budgets through times of inflation, their fluctuating portfolios through bull and bear markets. When I needed guidance and motivation, I listened to their unique stories, challenges and triumphs. Stories of leaving the corporate world behind to start a successful business, write a best-seller from a beach in Thailand, or simply spend extra time with family. It is this online community that taught me how to become a do-it-yourself investor, how to prioritize my future financial health, and to see that I too might be able to one day live off my portfolio. Now that I’ve reached the finish line, I believe it is essential that I and other members of the F.I. community continue to share our stories and experiences, success and failures to help newcomers pursue financial freedom of their own. After all, our family, friends and neighbours are likely not pursuing financial freedom with the same intensity as the online F.I. community. When we are on the road less travelled, it can help to know there is a community out there cheering you on.

So this is my story. Why I chose to pursue financial freedom in the first place, how I got started, and the actionable steps that I took along the way, many of which are tried and true steps that others have taken before me.

Just 10 years ago I was a stressed-out 30-something living paycheck to paycheck in an expensive city, while my military husband was posted 2,000 km away. I quickly realized if I was ever going to leave the corporate world behind and live with him full time while still maintaining my independent streak, I would need to build a portfolio large enough to support myself. Now, I get to fall asleep every night next to my husband and wake up each morning without an alarm clock and the freedom to do whatever I want. With no work, commuting or financial stress and a big, beautiful world at my doorstep, I am officially living the life of my dreams.

And you can too.

How might financial freedom help you live the life your dreams? Would it allow you to switch careers, retire to that cottage on the lake, explore the open roads in an RV? Your reasons, priorities and journey will be different than mine, but the steps I took can be adapted and repeated. This is simply my own story of how I learned to take control of my finances, discovered peace in minimalism and built a portfolio that powers my life. In the following chapters I cover the steps I took to begin investing, from opening my own brokerage account to breaking up with my high-fee financial advisor. I recall the change I felt occur within me as I discovered minimalism over the years. And I describe the highs and lows associated with home ownership, from the emotional to the financially prudent, as some members of the F.I. community have shown that a paid off home can indeed be a component in a financially independent life. At the end of each chapter I summarize the steps I took, repeatable steps that you can take to build your own version of financial freedom. I hope you will find the stories in each chapter entertaining, but if my amateur writing fails to engage you or if you are on a time crunch, just skip to the end of each chapter to get the actionable steps that you can take to begin to build your financial future.

If you are just beginning your journey towards financial freedom, I hope my story will help you get started. If you’re half-way through, I hope I can motivate you to keep going. The finish line is in sight. Your reasons for pursuing financial freedom will be unique to you, but the end goal is the same. Financial freedom gives us all more options to live life on our terms.

Works Cited

Robin, V., & Dominguez, J. (2015). Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence (2nd ed.). Penguin Books.