Slider Image

Financial independence: Making a dream come true

Posted on Tuesday November 03, 2020

Financial independence: Making a dream come true

Young retirees in their forties are the envy of the world. The FIRE movement, which stands for Financial Independence, Retire Early, has been the subject of many blogs and podcasts recently. Do you want to be part of it? What strategies do you need to put in place to get there? What kind of lifestyle can you expect?

To answer these questions, we spoke with Olivier Le Moignan, Wealth Management Advisor at UNI in Campbellton and Investment Advisor at Credential Asset Management Inc. He was adamant: “To become financially independent, you must have a stable long-term strategy. You have to invest early and consistently.” He helps people understand what financial independence is, the best ways to achieve it, and the benefits of the freedom it provides.

What does financial independence mean?

Money can’t buy you happiness...but it certainly helps! According to Le Moignan, you are financially independent when you “no longer need to work to support yourself.” In practical terms, this means that you have “accumulated enough assets and passive income to cover all your day-to-day and discretionary expenses during retirement.”

To retire very early, around the age of 40 or 45, Le Moignan suggests considering a more-or-less conservative lifestyle, which is not for everyone. But each type of person has their own strategy!

Olivier Le Moignan
Wealth Management Advisor at UNI in Campbellton and Investment Advisor at Credential Asset Management Inc.

It’s never too early to start saving

The early bird gets the worm. And the early saver gets to retire!

Le Moignan says you have to start saving at the beginning of your career. “I often say that if you work, you can save. Even if it’s just $25 a week to start, it’s best to start early. Besides, it’s encouraging to watch your assets grow! As well, having assets makes it easier to get credit and enjoy better rates. Ultimately, this translates into greater financial independence, for example, by saving you from having to use a co-signer to buy a house. When you have net worth, you gain the bank’s trust, but more importantly, you gain self-confidence. Confidence is the key to long-term success and financial independence.”

The most forward-looking young people will be rewarded. Le Moignan points out that personal needs and standards of living change over time in ways that aren’t always predictable. “Someone who retires early may have many plans, but their tastes and needs may change over time. For example, the pandemic has made retirement in the South less attractive to many. Perhaps people will prefer second residences closer to home.”

Starting to save early by following a plan will give you an advantage and a certain flexibility to adjust your plans in relation to your income throughout your life.


Saving for the future

Do you want to say goodbye to the world of work as soon as possible? Let’s talk about it! Would you prefer semi-retirement? There are options! Whatever your retirement plans, our advisors will guide you toward the best solutions.

Check to see if you’re on the right track for reaching your retirement financial goals with our retirement assessment tool.


Financial needs at retirement

Who wouldn’t love to live out their golden years in comfortable retirement! According to Le Moignan, financial needs are usually less in retirement because by that time most people have eliminated most major working life debts, such as car loans and mortgages. This sounds like great news, but it’s important to be realistic.

Government support programs for retirees cover basic living expenses, they don’t provide the level of comfort most people want to enjoy. “As the baby boomers reach retirement age in ever-increasing numbers, the pressure on public plans will be greater and greater, and it’s impossible to predict what the future holds in terms of public finances and general government policies,” he says. That’s why he suggests looking at public plans as add-ons and avoid making them the focal point of your strategy.

So you must save. But how much? The answer is simple: as much as possible! “If you’re able to save about 10% of your gross income, you’ll be in an excellent position to enjoy your retirement when you’re still fit and healthy. If you also have an employer pension, you can look forward to a very comfortable retirement,” says Le Moignan.

Financial independence: A goal that requires sacrifice

If you don’t want your savings to vanish into thin air, don’t put all your eggs in one basket.

“Retirement in your forties is not only possible, it can be very doable if you manage your personal finances with a very tight fist and save a very high proportion of your income, around 50%,” says Le Moignan. However, it’s not just a matter of putting money aside. You also need to “make good investments and make the most of opportunities the markets provide. There are several options, including mutual funds, self-directed funds, and various real estate opportunities.”


Investing in the stock market

“Mutual funds are high-performance tools and can be a good fit with the investor’s social or environmental values, for example,” says Le Moignan. “They are turnkey solutions available in all investment vehicles, such as TFSAs and RRSPs. In addition, Periodic Savings Plans (PSPs), which are automatic payroll deductions, make it possible to continuously replenish savings and limit the impact of market fluctuations.

Handle your own investments with Qtrade

Managing your own retirement investments with an online tool such as Online Investing can be a good idea for people who know the market and are willing to take the time. “You have to like doing it!” says Le Moignan. “You can save on management fees, but they’re already very low in co-operative institutions like ours.” Feeling bold? Try your luck! Do you have the right touch? Discuss it with a UNI Advisor.

Investing in real estate

Investing in real estate is a good way to diversify your portfolio, according to Le Moignan. “It’s part of most people’s strategies, if only through their primary residence, but it’s not necessarily the best solution for everyone. It can really take up a lot of time and have a negative impact on your quality of life.” He therefore suggests that you see real estate as a sideline—an extra asset in your portfolio.


Semi or full retirement?

Le Moignan encourages people to stay active, for example by continuing to work part-time. “The advantage of working longer is not only financial, but also personal. Working keeps you fit—physically, cognitively, intellectually, and socially—which can really pay off in the very long term.” For example, some people take advantage of retirement to change careers or to volunteer. “Often, it’s about choosing a less demanding and more satisfying activity. We’re seeing that more and more, and it’s a positive for a lot of people.”

There are also financial advantages to postponing retirement. “By the time full retirement comes, you’ll have accumulated more and spent less of your savings. Many government programs also pay out more when you delay retirement by a few years.” Why not take advantage of it?

Remember that it’s never too late to start investing. To establish a solid plan and reach your goals, consult our Wealth Management Advisors or Financial Planners. They’re the experts in making dreams come true!

Savings and investment management: Mutual funds are offered through Credential Asset Management Inc. Mutual funds, other securities and securities-related financial planning services are offered through Credential Securities, a division of Qtrade Credential Securities Inc. Credential Securities is a registered trademark of Aviso Wealth Inc.

Online brokerage services are offered through Qtrade Investor, a division of Credential Qtrade Securities Inc. Qtrade is a registred mark owned by Aviso Wealth Inc.

This article is provided as a general source of information and should not be considered personal investment advice or a solicitation to buy or sell any mutual funds.

You might also like :

Investments and COVID-19: How to protect your assets
Financial Independence: How to Start Working Less or Retire Earlier
A golden (and early) retirement requires preparation

For more information

Contact us
Make an appointment