During the last two weeks, my blogs have dealt with “soft” issues. I call them soft because they cannot be solved by applying mathematical calculations or financial planning principles.

Instead, the reader must apply behaviour psychology to gradually understand the issues.

In my blog on ​risk tolerance​, I made the point that risk tolerance is based on personal experience and is unique. So, if I feel comfortable with 30% of my net worth in stocks, then that is the path I should follow. I also recommend against comparing your own risk tolerance to anyone else’s. That can lead to sleepless nights and poor investment decisions.

In my blog on ​getting rich carefully​,​ I explained that I’m not a big risk taker and I will never “bet the farm” on a single investment. This kind of speculative investing does not fit my personality, so I will never become Warren Buffet and I’m totally fine with that. I’m the happiest when I follow my personal approach rather than trying to match other people’s investment approach.

Today I’d like to touch on another soft issue (don’t worry, I have many technical blogs in the queue).

Recently, a book title caught my attention: ​Too Much and Never Enough​ by Mary Trump. I haven’t read it, but I have been contemplating the meaning of the title and my own drive to accumulate “enough.”

Long time readers of this blog remember that I grew up in a modest family, where money was always in short supply, and that I started working at a young age to help my family make ends meet.

Although I never felt poor, I could see the strain that money placed on my parents and their relationship. Today, I know that my childhood shaped my drive for wealth and my low risk tolerance.

As I get closer to the big 60, I ask myself two questions:

1. Have I become so obsessed with the accumulation of money that I’ve missed the point of achieving financial independence?
2. Will I ever accumulate enough wealth to feel I have enough?

My series of ​blogs ​called “When can I retire and how much do I need?” discuss the mathematics of the question.

But after re-reading them recently, I feel the complete answer includes an honest assessment of one’s definition of “enough.”

I have often recommended that retirees accumulate enough assets to generate between 60-70% of pre-retirement income in retirement.

For example –

If you spend $100,000 per year during your working career, you should expect to spend around $60,000-70,000 in retirement. Using the 4% rule, you would need a portfolio of approximately 1.5M to 1.75M ($60,000*25 and 70,000*25) to achieve the retirement goal.

Is that enough in my case? Or would more retirement income make me happier, say, $125,000? I would then increase my retirement pool to approximately $3.1M ($125,000*25).

Does it make sense to conclude that more money makes us happier? My answer has always been a resounding YES. But in fact, the evidence suggests otherwise.

In 2010, Princeton University performed a ​now famous study​ ​to determine how much money people need to feel content and at what point increasing their salary no longer improved their happiness.

The answer they discovered at the time was approximately ​$75,000 USD​. Today, that would translate to about ​$90,000 USD​.

Here’s what the Princeton study says:

“More money does not necessarily buy more happiness, but less money is associated with emotional pain. Perhaps $75,000 is a threshold beyond which further increases in income no longer improve individuals’ ability to do what matters most to their emotional well-being, such as spending time with people they like, avoiding pain and disease, and enjoying leisure. According to the ACS, mean (median) US household income was $71,500 ($52,000) in 2008, and about a third of households were above the $75,000 threshold. It also is likely that when income rises beyond this value, the increased ability to purchase positive experiences is balanced, on average, by some negative effects. A recent psychological study using priming methods provided suggestive evidence of a possible association between high income and a reduced ability to savor small pleasures.”

A ​2018 Purdue study​ came up with the same results (in US dollars):

“It’s been debated at what point does money no longer change your level of well-being. We found that the ideal income point is $95,000 for life evaluation and $60,000 to $75,000 for emotional well-being. Again, this amount is for individuals and would likely be higher for families.”

Here’s a summary Purdue offered:

“The study also found once the threshold was reached, further increases in income tended to be associated with reduced life satisfaction and a lower level of well-being. This may be because money is important for meeting basic needs, purchasing conveniences, and maybe even loan repayments, but to a point. After the optimal point of needs is met, people may be driven by desires such as pursuing more material gains and engaging in social comparisons, which could, ironically, lower well-being.”

For me, the studies are not so much about any exact amount of money needed to be happy.

One of my strongest takeaways is that more money leads to negative experiences, such as comparing one’s net worth with that of others.

Many of you know that one of my passions is cycling. The rider motto “ride your own ride” means resist the urge to compare your speed or number of miles with other riders.

Yet I invariably compare myself to the fittest and strongest climber in the group. Of course, this robs me of the joy of my own successes and sense of achievement…

Do you find yourself comparing your investment returns to the “geniuses” you see the media? Do you compare your net worth/income to the richest people in the world?

Or even just to a person you know who earns more, invests more, and has more stuff?

When we make these comparisons, we become less happy and move further away from living. As I’ve said before, ​comparison is the thief of joy.

In my new book, ​Live Well, Stay Rich, Never Retire​,​ I suggest we strive to live deliberately based on personal goals, and compare the progress we make toward those goals and not to what others have achieved.

As I have pondered how much is enough for me, I developed five prompts to help you answer the question for yourself:

1. Separate spending from happiness.

A faster car, bigger house, more stylish clothes are all nice to own, but they don’t actually add to our happiness and may cause us to work harder and longer and miss out on life’s positive experiences. So, go through your expenses and determine which bring you happiness and which cause you to give up more than they’re worth. Be honest, thoughtful and deliberate.

2. You are not your business or profession.

I often define myself as a financial planner but in reality, I’m much more than what I do. I’m a father, a son, a brother, a friend, and a mentor—and of course a cyclist and a blog writer too.

A complete assessment of my progress and success should include a fair measurement of all aspects of my life, not just my profession.

3. Stop comparing yourself to others.

Comparing yourself to others is similar to the sin of envy, which is the resentful covetousness of the traits or possessions of someone else. In fact, envy is one of the seven deadly sins and was the inspiration behind Cain killing his brother Abel, because Cain coveted the favour God showed Abel.

Proverbs 14:30 says, “A heart at peace gives life to the body, but envy rots the bones.”

The rise of social media makes comparing our lives with others much easier and can cause a vicious circle of comparison leading to unhappiness leading to more comparisons and more unhappiness, and so on.

In 2021, let’s work on comparing ourselves to our own progress in meeting our goals and take time to appreciate how far we have come rather than focusing on how far we still have to go.

4. Learn to appreciate the life you have.

At the end of life, what will you regret doing or not doing? Take it from someone who has experienced a great loss that the answer will not be “making more money.” Much more likely will be all the family, friend or life experiences we missed because of work commitments.

5. What’s your purpose of life?

In my Live Well book, I argue that the purpose of life is to use your passions to become the best person you can be. I also say that becoming your best self is possible when money worries are eliminated by achieving financial independence, which makes it possible to dedicate your life to growing and improving as a person.

After a certain income, happiness reaches a point of diminishing returns and increases at a decreasing rate. More money doesn’t mean more happiness.

In fact, it may actually mean more problems and less satisfaction.

Given this, it’s imperative that everyone become financially literate and we all make the best financial decisions possible with the funds we already have.

If you find yourself on a human “hamster wheel” and your high income is not making you and your family happy, please give me a call. The ​Dri team​ can help you define your goals and determine when you have “enough.”

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Never Retire Profile

Galen Weston Sr.

You can’t really be a Canadian and not know the name Galen Weston. Galen Jr. is the one we see in the Loblaws commercials for President’s Choice products and has recently succeeded his father as CEO of George Weston Ltd. At 80 years old, Galen Sr. continues to remain involved in the business, on various boards and committees, and with the Weston Foundation, which supports education, land conservation, science and much more in Canada. For his charitable work, Weston was appointed as an Officer of the Order of Canada in 1990, awarded the Order of Ontario in 2005, and made a Commander of the Royal Victorian Order in 2017. Galen is married to Hillary Weston, who served as the Lieutenant Governor of Ontario from 1997 to 2002 with an emphasis on issues related to women, young people, and the homeless population. The Westons continue to work in the social and philanthropic sphere, well after “retirement.”

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The process of finding a wealth advisor can be overwhelming. It is our job to make that process simpler and easier. Dri Financial Group’s proprietary ​Wealth Navigator Process​ is designed with you in mind. It’s structured framework helps you make an informed decision and feel confident in our team and management practices before we get started.

We offer you a range of services from creating bespoke financial plans and providing investment advice to helping you take advantage of our investment models. If you would like more information on the ​Wealth Navigator Process​ ​or our team, call me any time at 416.355.6370 or email me at​ ​richard.dri@scotiawealth.com​.
—
Beyond helping you manage your finances, we take pride in motivating, educating and helping you expand your financial literacy. We are here to answer any questions you have and to help you feel in control of your financial destiny.

If you are ready to dive deeper into your financial literacy journey, we have a wide range of free tools and educational resources available.

• Subscribe to our ​Never Retire Newsletter
• Contact us to ​order a complimentary e-book
• Check-out our latest ​Wealth Navigator P​odcast
• Follow me on ​LinkedIn

source https://richarddri.ca/how-much-money-do-i-really-need/

Jeff Adamson, Co-Founder of NEO Financial, is my very special guest on the podcast today. As the Co-Founder of SkipTheDishes, Jeff disrupted the food delivery business by identifying a consumer expectation gap and designing a more efficient and mutually rewarding system. He and his team at NEO are now hard at work trying to do something similar with the financial sector.

On today’s episode, Jeff shares the areas where he finds the financial services industry lacking and identifies issues with current banking apps. He then goes on to introduce details regarding NEO’s innovative rewards program, Canada’s ability to support such a program, NEO’s current competitors, its financing, and recruiting and motivating its labor force. Be sure to stay to the end to hear Jeff’s vision for NEO over the next five years.

Disrupting the Financial Sector with Jeff Adamson

Download the full transcript here

Highlights:

• People who work at NEO come from building one of Canada’s most successful consumer startups
• SkipTheDishes is one of the first profitable food delivery companies globally
• NEO forms a bridge between retail brands and the customers
• NEO is already causing both big banks and small banks to start talking a lot more about innovation and about the need to change
• Canadians deserve better when it comes to banking

Quotes:

“The opportunity we see is really to enrich the lives of millions of Canadians by providing them an experience that’s on par or better than every other experience that they have in everyday life.”

“The approach that we’ve taken is one where we partner up with great Canadian brands, great local brands, great regional and national brands.”

“I’m not aware of any Canadian companies taking the type of merchant-centric approach that we are.”

“There’s a lot of people who were in “safe jobs” over the las t nine months that are now scratching their heads about what they’re going to do when they have to go back to work or if they even have a job to go back to.”

“As Canadians, we have to want better than we have right now. We certainly deserve better than we have right now. We’re at risk of being left behind when it comes to our
banking.”

Follow us on social:

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Listen to more podcasts by Richard Dri:

Avoiding COVID Burnout with Dr. Irene Cop

Running a Law Firm in the age of COVID-19 with Russell Alexander

Investment Policy Statements – Why are they important?

source https://richarddri.ca/disrupting-the-financial-sector-with-jeff-adamson/

Are you a big risk taker? I’m not.

But I must admit to feelings of jealousy when I hear about some people hitting the jackpot by investing in or starting companies in Canada and the US.

Here are some headlines that generated a bit of envy lately:

“Elon Musk is the World’s Richest Person in 2021.” According to the article, his net worth rose by 548% in a single year.

“Shopify CEO Tobi Lutke joins ranks of Canadian billionaires as shares of tech company take off.” The 37-year-old founder of Shopify is one of the few billionaires in this country to get rich from Canadian-made tech, says the Financial Post.

Even on my Twitter account, I come across stories like that of 39-year-old Jason DeBolt, who plans to retire from the profits he made by investing in Tesla.

Here’s his January 7 tweet –

Yes, I am jealous of this group of investors, and I often wish I had started a world-changing company or invested in the likes of Google or Apple or Shopify when they were still small.

But the truth is, I’m not a big risk taker. It’s not in my DNA.

There are also those Toronto real estate investors who, over the last 15 years, have profited from declining interest rates, net positive immigration trends, and a strong local economy. Many have become “rich” by investing in single-family homes or multi-family properties or even buying land across the GTA.

But like I said, I’m not a major risk taker.

• I diversify my investments.
• I cap my exposure.
• I avoid start ups and Initial Public Offerings (IPOs).
• I buy dividend growth companies, such as the bank stocks (TD Bank, Royal Bank), utilities (Enbridge, Canadian Utilities), consumer stocks (Metro, Dollarama, Canadian Tire), Railways (CNR) or insurance companies (Power Financial, Intact).

They are profitable companies, dominate their industries, and have a history of consistently growing their dividends.

So the question you might be asking yourself is, “Why isn’t Richard investing in the high flyers and getting rich quickly?”

The answer lies in the old adage: know thyself.

Last week, I offered different traveller profiles: those who seek cliff diving thrills and those who prefer to tour Scotland’s whisky distilleries. There’s a good time to be had in either case, so long as the trip matches the traveller’s personal risk tolerance.

I also made the argument that the same risk tolerance analysis helps investors select the appropriate split between risky and virtually risk-free investments. Investors with low tolerance to market swings up and down feel comfortable investing a larger portion of their portfolio in guaranteed investments, such as GICs or Government bonds, thereby minimizing the downside but also capping the upside potential.

The same is true when it comes to determining why I have never invested in a stock that has hit the moon and made me instantly rich. The answer is that I simply don’t have the personality to make the investments of money and time needed to become super wealthy.

I tend to worry too much.

So if I was in that situation, my worry would likely lead to rash, emotional and, ultimately, poor investment decisions.

It’s not like I have never bought a flyer thinking or hoping that it will become a 10 bagger. But whenever I take this approach, I find myself obsessing about the stock, which overwhelms my limited brain capacity and makes it difficult to think about my other investments or business and professional responsibilities.

Advice from a wealth advisor? Hope is not an effective or sustainable investment strategy.

Invariably, I sell the high flyer, usually at a financial loss and after many hours of wasted time and thought…It’s just not worth it.

Over the years, I have concluded that I’m not a big risk taker, and the outcomes are better for me and my family when I live my life within this framework.

I’m not saying the people who pursue a high-growth strategy are doomed or careless. I am saying, I personally don’t have the intestinal fortitude required to make a life-altering bet on a single idea. I know myself, and I cannot live under this type of financial strain.

Over the years, I have learned that I feel comfortable with a “get rich carefully” approach.

And when I start fantasizing that I can become the next Jeff Bezos, I quickly remind myself that I am not him. My approach to financial independence is my own, and I should not compare myself to anyone else.

My occasional comparisons are not limited to industry billionaires. I sometimes compare investment returns with friends or peers and feel defeated if mine are inferior. When this happens, I remind myself I have a unique risk tolerance, and my stock selection fits my personality and, consequently, the investment returns I achieve.

Comparison is the thief of joy. I firmly believe this adage. To sum up: Personality -> risk tolerance -> stock/bond selection -> unique investment returns.

Allow me to explain how my personal investments are arranged in order to achieve my “get rich carefully” goal.

Here are my six strategies:

1. I own a home in mid-town Toronto that is debt free and will remain debt free: I know I could leverage the property and have the equity working harder, but I sleep very well knowing that if my business goes poorly, I will still have a roof over my head and should be able to weather the storm.
2. I use Mint.com to track my expenses and help avoid overspending: And I save approximately 20% of my net income.
3. Approximately 20% of my portfolio is in guaranteed investments: I like investments such as GICs, providing some downside protection.
4. I own and rent out two multi-family income properties in mid-town Toronto: The buildings are fully rented, and rent covers the mortgage payments and all the operating expenses. The mortgage balances are currently less than 30% of the value of the properties and, when fully paid off, the rent will form part of my retirement income.
5. I own an investment portfolio of dividend-paying stocks: See the Richard Dri Dividend Growth Model, and they will also provide a growing source of income in retirement.
6. When I turn 65 (it’s getting closer!), I will be eligible for full CPP and OAS payments: These payments are worth approximately $20,000 per year plus a defined benefit plan pension from Scotiabank worth approximately $40,000.

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Next year I turn 60, so my accumulation of wealth and achievement of financial independence didn’t come quickly.

Instead, it was a slow march over many years, involved raising three kids, and included a few missteps. But I can honestly say that my “get rich carefully” approach works, fits my personality, and has allowed me to enjoy my journey.

If you’re in the wealth accumulation stage and need help determining your personal risk tolerance and investment strategy, please call my office and make an appointment to speak with me.

I have been successful in achieving financial independence for many clients, for myself, and I can help you too.

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Never Retire Profile

Bill Belichick

It’s hard to argue with 17 AFC division titles, 13 appearances in the AFC Championship Game, nine Super Bowl appearances, and a record six Superbowl titles. That’s why, at the age of 68, Bill Belichick continues to serve as head coach of the New England Patriots, after having helped the New York Giants, much earlier in his career, to two Superbowl titles. Off the field, in June 2020, the NFL’s longest-running active head coach and the Patriots’ ownership responded to the Black Lives Matter movement and the death of George Floyd with a public statement denouncing systemic racism and pledging to advance equality. When he declined the Presidential Medal of Honor offered this year, Belichick said, “One of the most rewarding things in my professional career took place in 2020 when, through the great leadership within our team, conversations about social justice, equality and human rights moved to the forefront and became actions.” The Patriots won’t win the title this year, but Belichick keeps coaching and leading the way.

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The process of finding a wealth advisor can be overwhelming. It is our job to make that process simpler and easier. Dri Financial Group’s proprietary ​Wealth Navigator Process​ is designed with you in mind. It’s structured framework helps you make an informed decision and feel confident in our team and management practices before we get started.

We offer you a range of services from creating bespoke financial plans and providing investment advice to helping you take advantage of our investment models. If you would like more information on the ​Wealth Navigator Process​ ​or our team, call me any time at 416.355.6370 or email me at​ ​richard.dri@scotiawealth.com​.
—
Beyond helping you manage your finances, we take pride in motivating, educating and helping you expand your financial literacy. We are here to answer any questions you have and to help you feel in control of your financial destiny.

If you are ready to dive deeper into your financial literacy journey, we have a wide range of free tools and educational resources available.

• Subscribe to our ​Never Retire Newsletter
• Contact us to ​order a complimentary e-book
• Check-out our latest ​Wealth Navigator P​odcast
• Follow me on ​LinkedIn

source https://richarddri.ca/getting-rich-carefully-vs-getting-rich-quickly/

Richard Dri Canadian Dividend Model

US Dividend Growth Model

Richard Dri Earnings Momentum Model

Richard Dri Tactical US Model

Canadian Smart Fixed Income Model

US Smart Fixed Income Model

source https://richarddri.ca/richard-dri-models-4/

At the outset, let me say this: if you stayed invested in 2020, congratulations! You made history.

In 2020, the TSX experienced a record 39% difference between its lowest point of the year and its final closing value. This kind of market volatility can make a person feel like an inexperienced or like a well-seasoned investor all in a matter of one year

If you haven’t had a look yet, here’s the 2020 S&P/TSX data:

In client portfolios, our exposure to bonds, our strategic movements into and out of stocks (with our tactical models), and our quarterly dividend income paid, minimized our portfolio volatility and, by year end, most client portfolios posted positive returns.

Despite the full recovery of the market, the question I have been pondering is:

Did you stay invested during the lows of March 2020?

This question touches on individual risk tolerance. Let’s examine possible answers by comparing different types of travel and the risk tolerance involved in investing in stocks.

So here’s a simple mind experiment: First, imagine the future, when COVID-19 is no longer a threat and world citizens can travel freely and safely again. Now, imagine two travellers…

One heads out to visit friends in San Francisco, relax and catch up, maybe take in a Giants game. The other flies to Tahiti to surf the famous—and famously dangerous—Teahupo’o waves and stay in the five-star resort nearby.

Clearly, one travel plan contains more risk than the other.

It may also offer more reward: warm sun, beautiful beaches, luxury resort, stunning views.

Why are some people drawn to adventure travel while others prefer low-key leisure? Part of the answer lies in a person’s risk tolerance.

Some travellers would jump at the chance to run with the bulls at Pamplona while others would prefer to sit on a dock by a lake. Clearly, that first type has an extremely high risk tolerance.

A person’s risk tolerance influences their travel decisions—and their approach to investing in stocks.

Some investors are comfortable holding 100% of their portfolio in stocks and do not worry when the market declines, as it did in March 2020. Other investors are kept awake with even a small percentage of stock in their portfolios, and their fears drive them to sell during the first market drop they experience.

During the early years of my career, I was puzzled by the actions of those who panic during market declines, despite knowing that, historically, stocks perform well in the long term (over 10 years or more).

During every serious market decline I have witnessed, and there have been many (like the tech crash of 1999, the financial crisis of 2008, and of course the pandemic correction of 2020), a handful of clients have called and requested that all their investments be liquidated and placed in safe, guaranteed investments until the crisis ends. Usually, their market timing is terrible, and they sell at market bottoms or very close to it.

Why do investors sell when the market declines? I believe the answer lies in their risk tolerance.

Readers of this blog are aware that at Dri Financial Group, we ask existing and new clients to continually evaluate their risk tolerance when the market declines. Most investors end up somewhere in the middle of a low-to-high scale, with a moderate risk tolerance

Getting risk tolerance correct is so important, because we believe that investors will remain invested during market corrections if their asset allocation is appropriate for their risk tolerance.

For example, I ask clients to estimate how much of a market decline they would tolerate before anxiousness motivates them to sell their stocks. Let’s assume the client believes that they will sell if their portfolio declines by 20% or more. On a $1M portfolio, a 20% decline puts the value at $800,000.

I then ask the client to imagine how they would feel if they turned on their computer and learned that their portfolio was now worth $800,000. Would they panic and sell? Would they buy more stock? Or would they turn off their computers and stay the course?

If the client believes they would stay the course, I then assemble an asset allocation that minimizes the downside at -20%. I may suggest an asset allocation of 60% equities and 40% fixed income. Assuming stocks decline by 40% and bonds increase by 7% during a market decline, the expected return for a 60/40 allocation is approximately -21% for this client.

The objective is to build an asset allocation that maintains the downside risk within a client’s comfort level, hence reducing the possibility that they will sell during market corrections.

Another investor may place their comfort level at -10%. For this person, the fixed income component must be increased in order to reduce the volatility of stocks. Obviously, the opposite is true for investors with a comfort level of, say, -40%.

By now, the travel analogy is probably crystal clear.

Some investors are content in owning 100% equities, while others would prefer a 30% exposure. Some travellers want two swim with the sharks in Fiji. Others want to visit the Shedd Aquarium in Chicago.

The objective is to ensure that your actions are consistent with your risk tolerance, otherwise you will be an unhappy traveller and investor—one who sells during market corrections.

The simple lesson: identify your risk tolerance and set your asset allocation accordingly.

It’s also important to hold in mind that if you really are a Shedd Aquarium type, don’t waste any mental time on wishing you were the bull-running or shark-swimming type. Understand and be content with who you are—checking in periodically to see if you risk tolerance changes over time.

Also, if you have a low tolerance for market volatility, it’s not wise or profitable to have a large exposure to stocks. Minimize the stock exposure, increase your fixed income, and stop comparing your returns to the TSX or your friend’s investment portfolio.

Remember, a more aggressive portfolio would probably lead to many sleepless nights and may cause you to sell during market downturns.

Know your limitations. Know what you are and aren’t capable of doing or handling. Then decide: Do you want to paraglide in Nepal or tour the wine regions of France?

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Never Retire Profile

Bob Dylan

The celebrated singer-songwriter has been in the news lately for having sold his entire catalogue—more than 600 songs over almost 60 years—to Universal Music for an estimated $300 million. As one of the best-selling music artists of all time, having sold more than 100 million records in his lifetime, Dylan continues to create and perform at age 79. His many awards include the Presidential Medal of Freedom, ten Grammys, a Golden Globe and an Academy Award. In 2016, he was also awarded the
Nobel Prize for Literature “for having created new poetic expressions within the great American song tradition.” A poster boy for the Never Retire philosophy, Dylan is known for having said, “A man is a success if he gets up in the morning and gets to bed at night, and in between he does what he wants to do.”

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The process of finding a wealth advisor can be overwhelming. It is our job to make that process simpler and easier. Dri Financial Group’s proprietary ​Wealth Navigator Process​ is designed with you in mind. It’s structured framework helps you make an informed decision and feel confident in our team and management practices before we get started.

We offer you a range of services from creating bespoke financial plans and providing investment advice to helping you take advantage of our investment models. If you would like more information on the ​Wealth Navigator Process​ ​or our team, call me any time at 416.355.6370 or email me at​ ​richard.dri@scotiawealth.com​.
—
Beyond helping you manage your finances, we take pride in motivating, educating and helping you expand your financial literacy. We are here to answer any questions you have and to help you feel in control of your financial destiny.

If you are ready to dive deeper into your financial literacy journey, we have a wide range of free tools and educational resources available.

• Subscribe to our ​Never Retire Newsletter
• Contact us to ​order a complimentary e-book
• Check-out our latest ​Wealth Navigator P​odcast
• Follow me on ​LinkedIn

source https://richarddri.ca/how-does-your-risk-tolerance-impact-your-investment-success/

The first trading session of 2021 began with a whimper on Monday, with all three major U.S. markets dropping more than 1%, as risk appetite wavered over uncertainty regarding the U.S. Senate runoff elections in Georgia and surging coronavirus cases. The Dow plunged 383 points, the S&P 500 fell 55, while the Nasdaq dropped 190 points. However, the TSX bucked Monday’s trend, rising 94 points, thanks to a strong rally in materials stocks, as the price of bullion rose more than 2% to its highest level in nearly two months amid a slide in the U.S. dollar.

U.S. stocks bounced back modestly Tuesday as investors eagerly awaited the outcome of the closely contested Georgia races. A Democratic sweep of both seats would make it much easier for President-elect Joe Biden’s administration to pass new legislation, including additional fiscal stimulus. U.S. stocks also got a boost from news that U.S. manufacturing activity jumped in December. In Canada, the TSX hit its highest levels since February as the energy sector saw oil prices surge to a 10-month high.
Wednesday was an historic day in the U.S. – in more ways than one — as Dems took control of the Senate with Georgia runoff victories for both Jon Ossoff and Raphael Warnock, the state’s first-ever black senator. The unexpected results from Tuesday’s election upended markets, sending investors on a buying spree of bank shares and other cyclicals that stand to benefit from further stimulus. Conversely, big tech names declined more than 2% as investors worried that a Democratic- controlled Congress would lead to higher taxes and tighter regulations. Meanwhile, 10-year U.S. Treasury yields climbed above 1% for the first time since March as investors dumped government bonds in anticipation of more government borrowing.

Read more…

source https://richarddri.ca/markets-react-as-dems-take-senate-races-trump-mob-storms-capitol/

With all that happened in 2020, we have perhaps more reasons than usual to look back and reflect on a challenging and tumultuous year as we head toward what we all hope will be a calmer, safer and more prosperous one.

If you’re like me, you’ve already enjoyed a few “top lists” of 2020 or you’ve made your own.

Maybe you have some favourite Netflix shows you’ve been recommending to friends. Or the best recipes you’ve pulled off for the first time. Or the finest cocktails you mixed for all your Zoom social events. Or maybe your quirky reading habits over the past year have compelled you to share your most-loved facts about space (​like that every star you can see at night is bigger and brighter than our sun​) or about sports ​(like that fencing has been in the Olympic Games since the very beginning in ancient Greec​e) or about whatever has caught your interest…

Because one of my most fulfilling pastimes is writing these blogs, it makes the most sense for me to share with you my top five favourites from 2020.

Why only five?

First, because that means I am focusing on only ​the best of the best​ (in my humble opinion). Second, because I’m linking them below, and you may not have time to cruise through ten or twenty of these. But with only a few moments required to peruse each, I’m pretty sure that five is manageable, even if you’re having a busy day.

So without further ado, here are my top five blogs (counting down, of course!) from 2020—ones that I enjoyed writing and sharing with you and that I think have lasting value.

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Blog #5: 3 blessings COVID-19 has offered me

This one came out in May, not long into the pandemic. But like you, I was already feeling the effects of this strange new world.

In this blog, I share some of the benefits that I believed then and still believe have come along with the terrible scourge that is COVID-19.

Times of challenge and even suffering can reveal important truths to us. They can teach us a few things.

From my perspective, I have learned a lot about relationships in three broad categories: with my friends, with my family, and with my spending.

Here’s just one fact I shared in that blog that may resonate with you: being home so much, I realized how much STUFF I own. Like, a lot. Sometimes, two or three versions of the same thing. I wonder if you have noticed something similar. In my case, I developed a rule to curb thoughtless spending.

Click here​ to learn more about some silver linings in the very dark clouds COVID-19 has brought.

Blog #4: 9 secrets to help keep personal finances simple when life is complicated

This blog is fairly recent, but I thought about it a lot before I wrote it and I’ve been thinking about it since.​ Why?​ Because I’m a big believer in simplifying life whenever possible.

We humans can get ourselves tied up into complicated knots, including with our finances. It’s worth spending a bit of time untying those knots so we can think, breathe and live a little easier.

In this blog, I share some approaches to managing your bank account, credits cards, bill payments, household chores and more.

Overall, with life as complicated and busy as it is, I suggest being guided by a simple question every time you face a task: not “HOW am I going to do get this done?” but “WHO should do this?”

Spend more time on your “unique ability” – the passion and talent that makes you successful. Spend less time on tasks that others can take on.

Find out more​ about how and why to adopt this approach and in which areas of your life.

Blog #3: What to do and not do during a market turndown

This blog is as relevant now as it was when I first published it. And, history being what it is, it will continue to be useful as we head into the future.

In our current situation with this coronavirus, we’re all going to see losses. But long term, the stock market has always delivered growth.

This is why I always advise my clients to make portfolio decisions based on reason and evidence, not emotion. Downturns come and go. Giving into fear and worry makes us more likely to act rashly rather than calmly.

To promote calm and reason, I offer seven tips in this blog for managing a market downturn—the first being “stay the course.” This is where I discuss risk profile, which helps every investor to be mentally and financially prepared to navigate a bear market which, statistically, happens about every six years.

Read more​ about staying the course and six other tips for weathering market volatility.

Blog #2: To help or not help your child buy a home. That is the question.

Why include this blog on a top five list? Because this question comes up again and again. And whether it’s a question for you today or in the future, it’s a big one.

It’s about our relationship with our kids—even our grandkids.

It’s about money.

It’s about emotion.

And it’s also about our own ability to retire.

You may think, “Hey Richard, have you heard about this pandemic? Now is not a time when people are thinking of buying homes.” To which I would reply, “But you are wrong, my friend. Working from home has shifted people’s thinking about home purchasing, to the point where ​housing prices​ have actually increased during the pandemic.”

Of course, this doesn’t necessarily translate to helping a child buy a home.

After all, some 20- and 30-somethings are actually moving back in with mom and dad during this pandemic. But at the same time, many of those in the younger demographic are starting or advancing their careers from home rather than heading to work in an office. The whole idea of working from home as a possible long-term career option is partly responsible for our active real estate market.

So this year, next year or in a few years, many of my clients may be asking themselves whether they should help their child buy a home.

Here are ​my thoughts​ on that topic.

And my #1 blog for 2020: When can I retire and how much do I need?

Why is this #1? Because it’s the most common question I hear from clients and readers of my blog.

We all want to achieve personal financial freedom.

With it comes the flexibility that banishes worry and allows us to focus on becoming a better spouse, parent, sibling, citizen, co-worker, philanthropist…whatever we can and want to be.

The ​Dri Financial Group​’s guiding philosophy is “​Live Well, Stay Rich and Never Retire​.” Achieving financial independence is the “Stay Rich” part. When you achieve your definition of rich, you can become your best self and “Live Well.”

So it’s natural for people to ask, “When will I have saved enough money?”

Of course, it’s​ not a simple question to answer. To start with, you’ll want to focus on the ​capital requirement and the​ income requirement—​ which is what I cover in ​Part 1​ of what is actually a four-part series on “When can I retire?”

Oh right, that’s another reason that this blog is #1 for 2020—because it’s actually four blogs! I guess I snuck that in there. But why not? You can read just ​Part 1​ or the whole kit and kaboodle.

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That’s my top five. I hope you enjoy them. I also hope that 2021 is starting well for you and will only get better. I think we can all agree that this year has great potential to kick 2020 to the curb!

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Never Retire Profile

Janet Yellen

The first woman ever to Chair the US Federal Reserve (2014-2018) has recently been nominated by President-elect Joe Biden to become the first woman to serve as US Secretary of the Treasury.

This 74-year-old economist graduated summa cum laude from Brown University in 1967 and earned her PhD from Yale University in 1971. Yellen has taught at Harvard, the London School of Economics and the University of California, Berkeley, and is now professor emerita at Berkeley’s Haas School of Business.

She will be taking up her new position in a particularly difficult economic climate, with high US unemployment rates and political tension around stimulus payments for citizens. Yellen is in favour of federal spending to help alleviate suffering and address the economic damage caused by the pandemic.

The only woman to earn a PhD in economics at Yale those five decades ago, Yellen continues to break gender barriers into her seventh decade.

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The process of finding a wealth advisor can be overwhelming. It is our job to make that process simpler and easier. Dri Financial Group’s proprietary ​Wealth Navigator Process​ is designed with you in mind. It’s structured framework helps you make an informed decision and feel confident in our team and management practices before we get started.

We offer you a range of services from creating bespoke financial plans and providing investment advice to helping you take advantage of our investment models. If you would like more information on the ​Wealth Navigator Process​ ​or our team, call me any time at 416.355.6370 or email me at​ ​richard.dri@scotiawealth.com​.
—
Beyond helping you manage your finances, we take pride in motivating, educating and helping you expand your financial literacy. We are here to answer any questions you have and to help you feel in control of your financial destiny.

If you are ready to dive deeper into your financial literacy journey, we have a wide range of free tools and educational resources available.

• Subscribe to our ​Never Retire Newsletter
• Contact us to ​order a complimentary e-book
• Check-out our latest ​Wealth Navigator P​odcast
• Follow me on ​LinkedIn

source https://richarddri.ca/teamdfgs-top-5-blogs-of-2020/

source https://richarddri.ca/best-wishes-from-the-dri-financial-group/

Readers of my books and blog know my mantra: Live Well, Stay Rich, Never Retire. I put “live well” first, because having money isn’t about having money. It’s about being the best version of you: realizing your dreams for your life, your relationships, and your recreation.

In second place, “stay rich” refers to how to hold onto as much of your money as possible, so it can continue to grow, bringing you security and freedom.

Last, I say “never retire,” for two main reasons: one, your income is reduced, and two, what makes life challenging and interesting is also often reduced. Instead of retiring, hold on to the part of your work you love the most and keep doing that while you also enjoy new adventures.

Nowhere do I say “get rich quick.” Because it generally doesn’t work that way. Achieving financial independence is, for most of us, a longer, slower road. And it can be an enjoyable journey.

Barring inherited wealth, an unusually lucrative career event, or a winning lottery ticket, “rich” and “quick” don’t generally come together—and when people try to make it happen, elevated risk and the potential for error are always just around the corner.

What is the more steady-paced, sustainable and practically guaranteed way to get and stay rich?

• Enter a career field with above-average salaries.
• Stay away from bad debt.
• Pay off student loans quickly.
• Put aside 20% of your gross income for retirement savings and invest some portion in the stock market.
• Spend less than you earn.
• Don’t buy cars and houses you can’t afford.
• And do all of this throughout your entire adult life.

But what if you want to move at a faster pace? Increase your wealth quicker? Be richer younger?

There are some ways to do this that are low risk and some that greatly increase risk. I’m not a person who recommends rolling the dice on risky investments or propositions. But they do exist as options.

Here are five ways to accelerate wealth accumulation and become richer at a younger age.

1. Make more money.

If you make more money, you can save and invest more money. But obviously, this is not a snap your fingers and ye shall receive scenario. Making more money generally means working harder at what you do and putting in longer hours.

If you own your own business, you could take on more of the responsibilities, farm out less work to others (thus saving those expenses), take on more clients, and put in more hours. People in their younger years tend to be more willing to adopt this lifestyle—or perhaps just have to, in order to get established. As we get older, with families and other interests, it gets harder.

Alternately, you could add in a second job of some kind. That could range from earning income from a hobby (writing, photography, web design, etc.) to working for a friend or another business.

Firefighters are famous for taking on second jobs—carpentry, roofing, real estate, personal training—though their work schedules often make this easier than finding extra time would be for me or you.

If you’re particularly entrepreneurial, you may even be able to create a full-fledged second business rather than sell your services on a site like Upwork, hand-crafted items on platforms like Etsy, or work for someone else.

All of these options take a lot of time. That is their main drawback. But if you have time, there is a good chance you can convert it into income and, therefore, additional investments.

2. Radically underspend.

Yes, spend less than you earn goes on the “get richer at a moderate pace” list. Spend radically less goes here. It may not be an exciting option. But it has zero risk and can speed up your journey to wealth.

So instead of putting 20% of your gross income into savings and investment, you would increase that to 20% of net income. Or 30%. Or 40%. The trick is, you have to live very simply and modestly.

You can visit a site like Networthify to play around with how savings rates impact your years until retirement.

For example:

Assuming a current portfolio value of zero (just for the sake of illustration), if you earn $100,000 per year and your savings rate is 20%, you can expect to work about 36 years before having enough to retire. If your savings rate is 30%, that’s 28 years. If it’s 40%, that’s 21.5 years.

Obviously, those numbers change dramatically depending on your portfolio value and your yearly expected expenditures (i.e., lifestyle). But you can see the impact of radically underspending.

The concept really boils down to radically saving and investing as a result of radically underspending. If you like living the simple life, this could be a great option for you.

3. Get as much as you can out of your money.

You want your money to make money for you. And to work as hard—or harder—than you do. What are some options?

One is to be more aggressive in the asset allocation of your portfolio. Yes, this means taking on more risk. It also means more potential reward.

Consider the historical returns from 1926-2019 of the following portfolio models:

• 100% bonds: 6%
• 50% stocks and 50% bonds: 8.6%
• 100% stocks: 10.2%

Few people choose either of those 100% options, but if you increase your stock to bond ratio from 60/40 (9% return) to 80/20 (9.7% return), you can likely knock a year or two off your working life. You have to be able to accept the additional volatility and resist selling during a downturn. That may be difficult, depending on your personality.

You can also choose riskier stocks, but they don’t always pay off. This isn’t something I would recommend for the average investor. But then again, I’m not really a get-rich-quick kind of advisor. I’m just sharing a few tactics here that some people deploy.

4. Use more leverage.

Leverage refers to using borrowed money to purchase an asset, such as real estate. The most straightforward example is a mortgage on your own home. Another is to use real estate purely for investment.

Let’s say you purchase a property with cash. If it doubles in value over the next 25 years, you have doubled your money. If you purchase the same property with 20% down and 80% borrowed, you will have increased your return by sixfold (minus what you’ve paid off on the loan).

Leverage sounds pretty good—unless the property falls in value by 20%, in which case you have a total loss. Purchasing in cash obviously incurs only a 20% loss.

There is potential for a good return when real estate values rise, as they tend to over time. But you never know what the next five or ten years will bring. Leverage works better in real estate markets that are likely to rise in value over the long term—though depending on how long that term is, your riches may not arrive as quickly as you would like.

5. Keep your nest egg for yourself.

Another way to get your hands on more money is to keep it all for yourself rather than leave any to anyone else. That means not leaving the equity in your home or your life insurance to someone else, such as children.

This is certainly not a path I would choose, but it exists as an option.

You can borrow against your home or sell it and rent instead, using that money for yourself. You can borrow the cash value of your whole life insurance and use that money to retire earlier.

Basically, this approach is all about living off of everything you have and cutting out inheritances. Hey, some people do it.

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So what do you think of these “get richer quicker” strategies?

• Which appeal and which don’t?
• Which make you uncomfortable with the risk involved and which don’t?
• How do you feel about keeping all of your money for yourself?

I can help you to assess which—or whether any—of these options could work well for you. And how to put them in place as advantageously as possible. Give me a call any time.

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Never Retire Profile

Bruce Springsteen

It seems that The Boss just never quits. From his debut album, Greetings from Asbury Park, NJ in 1972 until this year with the release of Letter to You, Bruce Springsteen has been putting out original music for almost 50 years. Known especially for his strength as a songwriter and his creative collaboration with the E Street Band—including the “Big Man” Clarence Clemens on sax, for many years—Springsteen is working as hard as ever in his 70s. His 2017-2018 run of live performances, Springsteen on Broadway, mixed music with stories from his life and earned him a Tony Award, and the subsequent album gained a top-ten ranking. The “working class poet” and recipient of the Presidential Medal of Honor is planning to tour again in 2022, illustrating just how much Springsteen was born to run.

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The process of finding a wealth advisor can be overwhelming. It is our job to make that process simpler and easier. Dri Financial Group’s proprietary ​Wealth Navigator Process​ is designed with you in mind. It’s structured framework helps you make an informed decision and feel confident in our team and management practices before we get started.

We offer you a range of services from creating bespoke financial plans and providing investment advice to helping you take advantage of our investment models. If you would like more information on the ​Wealth Navigator Process​ ​or our team, call me any time at 416.355.6370 or email me at​ ​richard.dri@scotiawealth.com​.
—
Beyond helping you manage your finances, we take pride in motivating, educating and helping you expand your financial literacy. We are here to answer any questions you have and to help you feel in control of your financial destiny.

If you are ready to dive deeper into your financial literacy journey, we have a wide range of free tools and educational resources available.

• Subscribe to our ​Never Retire Newsletter
• Contact us to ​order a complimentary e-book
• Check-out our latest ​Wealth Navigator P​odcast
• Follow me on ​LinkedIn

source https://richarddri.ca/considering-how-to-build-wealth-quickly-heres-what-you-need-to-know/

Technology stocks climbed Monday, extending a 2020 rally that’s fueled much of the market’s gains since March. The Nasdaq was up 62 points, while the Dow lost 185 and the S&P dropped 16. As of Monday, the Nasdaq was up nearly 40% for the year, while the S&P and Dow had added 13% and 4.6%, respectively. While markets climbed early on growing hopes for a new U.S. stimulus deal, optimism faded later in the session as investors weighed the potential for further lockdowns in the U.S. In Canada, the TSX lost 161 points, weighed down by the energy, financials and materials sectors.

Growing hopes for an economic relief package sent markets higher Tuesday, as U.S. lawmakers continued to make progress during negotiations Monday evening. By Tuesday’s close, the Dow was up 338 points, the S&P added 47, while the Nasdaq jumped 155 to hit yet another record high. The TSX was also up more than 100 points, led by the materials sector, which saw gold prices gain over the likelihood of additional stimulus.

Markets were slightly mixed Wednesday, with the Dow down 44 points, while the S&P and Nasdaq added 6 and 63 points, respectively. In Canada, the TSX ticked higher 61 points. Although stimulus hopes remain high, that was offset somewhat by U.S. retail sales data, which showed a 1.1% drop in November from the prior month, with restaurants, department stores and car dealerships hit especially hard.

Stimulus hopes were once again front and centre for investors Thursday, as U.S. lawmakers closed in on a roughly $900 billion relief deal that includes another round of cheques to struggling U.S. households. In the U.S., the labour market recovery took a step back as new jobless claims rose to 885,000. By Thursday’s close, all three major U.S. benchmarks hit closing records, while the TSX added 85.

source https://richarddri.ca/u-s-markets-hit-record-highs-on-stimulus-hopes/